We have explained earlier in this judgment that an order for costs was
made against Air New Zealand in favour of parties other than the Civil
Aviation Division. As a matter of company policy the airline decided
that it would comply with that order although in doing so it has made no
admission that the order was validly made. In addition, however, the
airline was ordered to pay the Department of Justice the large sum of
$150,000 by way of contribution to the public cost of the inquiry. It is
that last order which is challenged in the present proceedings on two
grounds. The first is that the award involved a wrong exercise of the
discretion provided by s. 11 of the Commissions of Inquiry Act 1908. The
second ground is that in any event no award greater than $600 could be
made by reason of Rule III of rules made in terms of the statute and
gazetted on 11th February 1904.
The reasons given by the Commissioner for making the respective orders
against Air New Zealand are set out in a passage from the appendix to
the Report which is mentioned in this judgment under the heading
"Airline's attitude at Inquiry". And on behalf of the Attorney-General
it is said that the discretion was properly exercised for reasons
expressed to be related to "conduct at the hearing (which materially and
unnecessarily extended the duration of the hearing)[2]". However, the
reasons given[3] by the Commissioner do not stop there. The appendix goes
on--
"The management of the airline instructed its counsel to deny every
allegation of fault, and to counter-attack by ascribing total
culpability to the air crew ... Apart from that, there were
material elements of information in the possession of the airline
which were originally not disclosed ... it was not a question of
the airline putting all its cards on the table. The cards were
produced reluctantly, and at long intervals, and I have little
doubt that there are one or two which still lie hidden in the
pack."
When discussing the legal implications of the order for costs under that
particular heading earlier in the judgment we stated that on purely
verbal grounds it might be possible to draw refined distinctions between
parts of the Report which are highly critical of the position taken up
by the airline at the inquiry on the one hand and the effect this had on
the duration of the hearing on the other. But there can be no doubt that
in the context of this Report and the conclusions reached by the
Commissioner concerning conspiracy and otherwise any ordinary reader
would feel satisfied that the imposition of an order for costs in the
sum of $150,000 was nothing less than the exaction of a penalty. In
those circumstances and by reason of the conclusions we have reached
concerning the invalidity of the challenged paragraphs we are satisfied
that the order must be set aside.
Concerning the second ground advanced on behalf of the airline it is
sufficient to say that even if it had been appropriate to make an award
of costs in this case the amount was limited to the modest sum of $600.
At the beginning of this judgment we said that we had felt it necessary
to go at some length into the facts. This we have done both in order to
analyse the important questions raised in the areas of natural justice
and excess of jurisdiction and also because we have thought it to be in
the public interest to attempt to explain the factual issues that are
involved in the proceedings. We now express our conclusion that for the
reasons already given we are satisfied that the complaints of the
applicants are justified. Against that finding we return to the
beginning of this judgment where we said that we felt sure that
reputation can be vindicated and the interests of justice met by a
formal decision of this Court that will have the effect of quashing the
order of the Commissioner requiring Air New Zealand to pay costs in the
large sum of $150,000. We would make an order accordingly.
The Court being unanimous as to the result there will be an order
quashing the order of the Royal Commissioner that Air New Zealand pay to
the Department of Justice the sum of $150,000 by way of contribution to
the public cost of the Inquiry. There have been no submissions
concerning the costs of the present proceedings and that matter is
reserved.
_Solicitors_
Messrs. Russell, McVeagh, McKenzie, Bartleet & Co. of Auckland for
appellants.
Crown Law Office, Wellington, for first, fourth and sixth respondents.
Messrs. Keegan, Alexander, Tedcastle & Friedlander of Auckland for fifth
respondent.