Privy Council finds in favour of Sir Wallace

Press, 2 December 1987, Page 4

Privy Council finds in favour of Sir Wallace

By

PETER O’HARA

of NZPA, London

f*£ ~7a

The Privy Council over-ruled the New Zealand Court of Appeal yesterday and judged the former Prime Minister, Sir Wallace Rowling, not guilty of negligence in a 13-year-old case which revolved around a failed Te Anau tourist resort -

The then Mr Rowling, who was acting in his capacity as Minister of Finance, had committed no breach’of duty, a judgment delivered in Downing Street by the Council’s judicial committee said. Takaro Properties, owned by an American, Stockton Rush, won damages of $300,000 plus interest of $400,000 and costs of $50,000 in the Court of Appeal from, ultimately, the taxpayer. But the Privy Council has restored the earlier High Court decision by Mr Justice Quilliam in Mr Rowling’s favour with unspecified costs for the sevenday London hearing and the Court of Appeal case. Mr Rush’s dream of building a luxury tourist lodge was dashed in the early 19705, during the time of the last Labour Government, and he blamed the Minister of Finance for making an administrative law error.

Mr Rowling had rejected an application for an injection of Japanese capital into Takaro’s ailing resort in 1974 and it stayed closed after the Minister’s refusal. The judicial committee said yesterday that the “real attack” on Mr Rowling had been that he was so obsessed by a desire to see the 1000 hectares of Upukerora Valley, formerly Crown Land, revert to New Zealand ownership that he “was not prepared to consider anything else.” But, said the judgment delivered by the committee’s chairman, Lord Keith, of Kinkel, “what emerges from the evidence is a picture of a

Minister acting in accordance with what he conceived to be his duty.” “As a matter of sheer common sense, it must be unlikely that the Minister should, in such circumstances, have been guilty of negligence.” The judgment by Mr Justice Quilliam in the High Court that Mr Rowling was not negligent had been “very careful,” and there were no grounds upon which the Court of Appeal could “properly interfere” with it, the Law Lords decided. Five of them, including Lord McKay, who became Lord Chancellor a few weeks later, sat on the committee which heard the Rowling case in July. The others were Lord* Brandon, Lord Templeman and Lord Goff. It should be one of the last big New Zealand cases to go before the

Council. The Government is taking steps to remove that highest right of appeal for New Zealanders. The case also posed a weighty precedent for the Privy Council because of the negligence finding on a Cabinet Minister. Lord Keith said, “The character of the claim is novel. “So far as their Lordships are aware, it has never previously been held that where a Ministry or other governmental agency mistakes the extent of its powers and makes, a decision which is later quashed on the ground of excess of statutory powers, or of an irrelevant matter having been taken into account, an aggrieved party has a remedy in damages for negligence.” There was a "danger of overkill,” the judgment said, and the “imposition of liability may even lead to harmful consequences.” “Once it became known

that liability in negligence may be imposed on the ground that a Minister has misconstrued a statute... the cautious civil servant may go to

extreme lengths in ensuring that legal advice, or even the opinion of the court, is obtained before decisions are taken.” The committee said that Mr Rowling could reasonably regard the reversion factor, as well as eight other factors to which he spoke, as "matters bearing on the safeguarding of the development of New Zealand.” The Law Lords “doubt whether there is good reason for construing the defined ‘development of New Zealand’ as narrowly as did the Court of Appeal,” the judgment said. The Court of Appeal, comprising Judge Woodhouse, Judge Cooke, Judge Richardson, Judge McMullin and Judge Somers, had decided that if the Minister had not been negligent the Te Anau project would have had a chance of succeeding. Mr Rush moved his family to New Zealand in search of a better lifestyle and bought the South Island land to build a topclass trout fishing and tourist resort for wealthy overseas visitors. A golf course was part of the concept. The project called on a Japanese textile company, Mitsubishi Rayon, for help when it ran into financial trouble. But Mr Rowling declined two applications for permission to inject capital, the latter one submitted it in a way that

Takaro thought complied with overseas ownership rules. The High Court found in August, 1974, that a "dominant influence” in the Minister's refusal was. his “irrelevant” desire' that the land should revert to New Zealand ownership and it ordered him to reconsider the ap-; plication. j' But by April, 1975, the Japanese company and a New Zealand consortium headed by the Tse Group and the leading businessmen, Sir Clifford Plimmer and Mr Doug Myers, had withdrawn support A receiver was appointed and Mr Rush started his negligence action. " t Although Mr Rowling had been directed by the Court to reconsider Takaro’s application for issuing shares to Mitsubishi Rayon he never did so. The judicial committee said Mr Rowling’s evidence in New Zealand led when “fairly read... to a

perfectly sensible result "For this simple reason ‘ their Lordships consider that the Court of Appeal were not with all respect entitled to depart from the conclusion reached by Quilliam J. on the issue of the reversion factor.” Mr Justice Quilliam had' decided that the Minister believed he was entitled to take the reversion factor into account but only if it did not stand alone as a reason. Factors'detailed by Mr Rowling included doubt about the viability and location of the project and the under-capitalisa-tion and indebtedness of the company, as well as the contention that it was not in the best interest of New Zealand development at the time with: building resources needed elsewhere. Mr Rowling had at no stage acknowledged that he knew he was not entitled fb take the reversion factor into account, the High Court judge said^ ; The judgment said, "With the utmost respect to the Court of Appeal, their approach appears to have ignored the important finding of fact by Quilliam J.”"’ - “Their Lordships do not consider that the Minister’s evidence can pro-’ periy be interpreted as having meant...that the Minister knew that it was not open to him to take the reversion factor into account” The interpretation favoured by the Court of Appeal “required that the Minister have been in a most extraordinary state of mind,” the judicial committee said.