This article first appeared in Law News Issue 9 (2 April 2015), published
by Auckland District Law Society Inc.
The High Court recently concluded that a victim of price-fixing could not
recover from one wrong-doer damages compensating for losses it suffered at the
hands of others. The decision offers a rare and important insight into the right
to damages under section 82 of the Commerce Act 1986 (Act).
New Zealand Bloom Limited v Cargolux Airlines International SA
 NZHC 109 is yet another chapter in the air cargo price-fixing saga. NZ
Bloom is a flower exporter. It alleged that Cargolux breached sections 27 and 30
of the Act by reaching agreements with other airlines to add fuel and security
surcharges to their prices for exporting products from New Zealand, which
freight forwarders then passed on to NZ Bloom.
NZ Bloom claimed that it had suffered nearly $340,000 worth of losses as a
result of the airlines’ agreements forcing it to pay inflated prices. Crucially,
only $40,000 of those overcharges were paid to Cargolux. The parties agreed that
the Court should determine a preliminary question before trial: could Cargloux
be liable to NZ Bloom in respect of the remaining $300,000?
The Court began by focusing on section 82 itself. Relevantly, the
section states that “every person is liable in damages for any loss or damage
caused by that person engaging in conduct” that amounts to a contravention or
being involved in a contravention of sections 27 or 30 of the Act. Justice
Peters took the view that section 82 required NZ Bloom to plead and prove that
the $300,000 loss was caused by Cargolux itself entering into or giving effect
to the alleged price-fixing agreements.
The Court then went on to consider NZ Bloom’s statement of claim. It simply
alleged that the price-fixing agreements between the airlines had caused loss to
NZ Bloom in that it was forced to pay $300,000 worth of overcharges. The Court
held that pleading to be defective. It did not allege that Cargolux’s conduct
had caused NZ Bloom to suffer $300,000 worth of losses, nor did it plead the
facts necessary to prove causation between Cargolux’s conduct and NZ Bloom’s
losses. Consequently, the Court answered the preliminary question in favour of
In reaching that conclusion, the Court made several important comments in
passing. First, it accepted that a plaintiff may be able to plead that a single
cartelist caused it loss simply because its significant market presence meant
that other players “followed it into the agreements”. Second, the Court pointed
out that it had not been asked to determine what kind of causal connection would
suffice under section 82 (e.g. it might be enough that the defendant’s conduct
was merely a “material cause” of the loss).
Brief though it is, the decision is significant. To begin with, it may cap NZ
Bloom’s recovery from Cargolux at $40,000 (a modest sum by comparison with the
costs of High Court litigation).
More widely, it will present a plaintiff in a cartel case with an important
choice. It must either proceed against all the cartelists with whom it did
business (with the attendant difficulties in terms of cost and complexity), or
carefully frame its claims against a single party so as to make it clear exactly
how that party caused the plaintiff’s wider losses. Until the law is clarified,
a plaintiff taking the latter option may need to assume that it must prove a
strong causal connection between the single cartelist and its wider losses.
It is also worth reflecting on the possible implications of the decision with
respect to the liability of multiple defendants. Some would assume that
cartelists should, like tortfeasors, be jointly and severally liable for the
harm done by their conduct. However, this decision leaves open to a cartelist
the argument that it has not caused the entire loss suffered by the plaintiff
and so should only be liable for a proportion of it. If accepted, that argument
could disadvantage even a plaintiff which carefully pleads its case against
multiple defendants should one of them become insolvent or otherwise evade the
jurisdiction of the New Zealand courts.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.