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IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY CP.655/98
 

 BETWEEN: METROWATER LIMITED
  a duly incorporated company and a Local
  Authority Trading Enterprise pursuant to the
  provisions of the Local Government Act 1974
  and having its registered office at the corner
  of Mt Eden and Mt Albert Roads, Three
  Kings, Auckland, and carrying on business as
  owner and supplier of water and wastewater
  services

 Plaintiff
 A N D THE DISPUTES TRIBUNAL
  First Defendant

 A N D JAMES NETZLER GLADWIN
  Printer, registered proprietor and occupier of
  22a Walsall Street, Avondale, Auckland

 Second Defendant

Hearing: 24 June 1999

Judgment: 24 June 1999

Counsel: R J Beech and Nicholas Wright for plaintiff
Ross Burns for first defendant (granted leave to withdraw)
 Second Defendant in person assisted by Ms Penelope Bright
  as McKenzie friend.

_____________________________________________________________________________________

ORAL JUDGMENT OF WILLIAMS J
_____________________________________________________________________________________
 

Solicitors:
Chapman Tripp Sheffield Young, DXCP24029 Auckland
Crown Solicitor, DX CP24063 Auckland for first defendant (granted leave to withdraw)
 
 

In this matter the plaintiff, Metrowater, seeks an order essentially by way of prohibition, to prevent the first defendant, the Disputes Tribunal, from taking any further step in connection with an application made to the tribunal by the second defendant, Mr Gladwin.  Metrowater is the other party to that application.  The application for the order of prohibition is based on the assertion that the matter before the Disputes Tribunal is beyond its jurisdiction for any one of a number of reasons to be discussed later.

The background to the matter is that Metrowater is a Local Authority trading Enterprise established by the Auckland City Council in 1997. Its business is to provide water to consumers within the city and to receive wastewater from those consumers. Pursuant to the Local Government Act 1974 s594Q Metrowater's principal objective is to operate as a successful business.

The City's decision to set up Metrowater and the way in which it has transacted its business since its establishment has been a matter of vocal criticism by a number of consumers of whom Mr Gladwin, is one. The opposition relates both to the setting up of Metrowater and to the way in which it has divided its services, and also to the way in which it has charged consumers for the water and the services they receive.

Put generally, as the Court understands it Metrowater's claim is that it has a contractual relationship with its consumers.  In about June 1997, Mr Gladwin, one of the registered proprietors of a property at Avondale, and all other consumers were sent a letter from Metrowater together with some accompanying booklets and a pricing schedule.

Some two or three months later Mr Gladwin and all other consumers were sent an information pack explaining a new system of wastewater charges.  It is not today the function of this Court to decide what is the nature of the legal relationship between Metrowater and its consumers. As will appear, that is a matter which will be determined in proceedings recently issued by Metrowater for that purpose.

The booklet just referred to contains a number of pages setting out what Metrowater asserts are the terms of its contract with its customers.  Amongst those provisions include several relating to the applicability or inapplicability of various statutes such as the Consumer Guarantees Act 1993 and the Sale of Goods Act 1908, the rights and obligations of the parties respectively including disconnection, resumption of supply and cancellation, and a provision which purports to provide that if any of the terms are not binding it is only those terms which are effectively excised from the contract in deciding the terms of the relationship.  The information booklet also contains a number of other provisions which may in due course be considered as impacting on the terms and conditions of the relationship between Metrowater and its customers.

Whether there is a contract between Metrowater and its customers and, if so, what are the terms of that contract are directly put in issue in the proceedings to which reference was earlier made, recently issued by Metrowater and seeking various declarations. Mr Gladwin, his fellow registered proprietor and Ms Bright, are named as defendants. The claim seeks the appointment of an amicus curiae and also seeks an assignment of the case to a Judge. During the course of this hearing, as a result of discussions with the Executive Judge, that assignment will occur immediately and doubtless the Judge so assigned will then wish to convene a conference with the parties in order to ensure that the matter reaches a hearing as soon as practicably possible. Mr Gladwin advised that he intends to consider being represented in that case. No doubt the assigned Judge will also wish to consider whether or not an amicus should be appointed to ensure that the issues in the case are properly crystallized and all arguments for and against the issue are fully put.

Without in any way attempting to be definitive, it is clear that there are a number of issues potentially arising and impacting on the legal relationship between Metrowater and its customers.  They might include what amounts to any offer and acceptance between the parties, whether there was any intention to create contractual relationships on the part of both, whether Metrowater's sending of the material reviewed to all its customers amounted to an offer to all the world and if so the legal consequences to customers on utilizing the services thereafter. If there is a contract, there is clearly room for debate as to its terms.  That debate would also need to consider whether the contract is entire or divisible and, if the latter, in what circumstances and by what means.   Questions of payment would need to be considered given that customers are invoiced in arrears for water and services already supplied and the impact of that accounting regime on the entitlement to future supply will need to be considered.  An issue that may arise in Mr Gladwin's case is whether the acceptance by Metrowater of his payments for water but not for waste services might amount to a compromise of his obligations.  Metrowater, though denying that it has a contract with Mr Gladwin has now, as a matter of precaution, taken steps to bring that contract to an end.  The effect and validity of Metrowater's actions may require consideration. There are a number of other issues which may well arise in that proceeding including whether the doctrine of prime necessity applies to the supply of water and wastewater services and if so the current status of that doctrine in New Zealand law generally and in relation to water in particular.  There may be terms and conditions implied by custom.   There may be issues of economic duress arising. There could, if the matter turns out not to be contractual, be quite difficult questions arising as to whether the relationship is determined by quasi contract and, if so, whether quantum meruit might apply.   Then there is the possible impact on the express terms of the contract of various statutes such as those earlier mentioned.  All in all, the terms of the relationship between Metrowater and its customers is by no means clearcut and obviously requires determination as soon as convenient.

That is particularly the case because Mr Gladwin and a number of others, he says about 800, have formed themselves into a non-party political grouping called Water Pressure, and have been utilizing political means to try and bring about Metrowater's dissolution or a reconsideration by the Auckland City of the way in which water and wastewater services are supplied to customers and the way in which they are charged for, including the rates of charging.

As earlier noted, Mr Gladwin has been paying for the water supplied to his property but has refused to pay for the wastewater services.   When Metrowater sought payment of the balance of his account Mr Gladwin filed the Disputes Tribunal application which is sought to be injuncted in these proceedings.  In the manner of applications filed under the Disputes Tribunal Act 1988 the application is informally phrased. It reads:

"Metrowater has illegally restricted my water supply to my home and are
threatening to completely shut it off.

I have paid for my water but not for waste water. I dispute that Metrowater has the legal right to interfere with my water supply, given that I have paid for the water.

My argument is that I have a contract with Metrowater to supply me with water.
Metrowater is in breach by their actions and this will cause me consequent loss.
Costs incurred will involve installing a tank, a sump and having water brought in
and paid for by myself from an alternate supplier.

Relief Sought
To make a ruling that gives me the right to receive a full water supply - given that I have paid for it."

That application was filed on 20 July 1998. Towards the end of the year it was approaching a hearing. Metrowater, to that point it appears, may not have taken legal advice concerning the application, no doubt because the Act expressly debars the appearance of lawyers in Disputes Tribunal hearings.   However, shortly before Mr Gladwin's application was due to be heard, Metrowater took legal advice and as a result sought and obtained from this Court an order prohibiting the hearing on a interim basis until this matter could be heard and argued on its merits.    As part of the preparation for the hearing, Mr Gladwin was invited to obtain legal advice, if necessary on Legal Aid.  He has, as is his right, declined to take legal advice and appeared and argued this matter himself with the assistance of his partner, Ms Bright, as a McKenzie friend.

As part of the submissions made during the hearing, the Court was informed that a number of other disputes similar to Mr Gladwin's, have been filed before Disputes Tribunals and at least two or three of them have reached a hearing with varying success for the customers.  To date, however, it does not appear that the question of jurisdiction of Disputes Tribunals to hear such matters has been in issue. Mr Gladwin also advised the Court that there are, as he put it, a "queue" of other customers who have filed or are waiting to file Disputes Tribunal applications covering much the same matters.  That adds impetus to a necessity for the High Court proceeding seeking the declaratory judgment defining the legal relationship between the parties to be heard urgently.

The central question in this case is whether Mr Gladwin's application has been shown to be within the jurisdiction of the Disputes Tribunal.  The jurisdiction of those Tribunals appears principally in s 10 which relevantly reads:

"(1)   Subject to this section and to sections 11 and 12 of this Act, a Tribunal shall have jurisdiction in respect of-

(a) A claim founded on contract or quasi-contract; and
(b) A claim or a declaration that a person is not liable to another person in respect of a claim or demand. founded on contract or quasi-contract, made against that person by that other person; and
(c) A claim in tort in respect of-
 (i) The destruction or loss of any property:
 (ii) Any damage or injury to any property:
 (iii) The recovery of any property."
 

Some limitations on that jurisdiction appear in ss.11 and 12 but they do not appear to impact on this dispute. Pursuant to s 19 Tribunals are given power to make a wide range of orders, but only in terms of s 19 (1) that is to say "as regards any claim within its jurisdiction".

The first question therefore is whether the relationship on which Mr Gladwin's application is based is a claim founded on contract.

He takes the view that he has or had a contract with Metrowater but, for the reasons earlier rehearsed, the Court takes the view that whilst that may perhaps have been the case, it cannot be definitive about that and, even if there is a contract, what are the terms that will require decision in the other High Court proceeding.  However, what sets Mr Gladwin's claim apart from others who take a stance similar to his is that Metrowater has, as a precaution, cancelled any contract which it might be said to have had with Mr Gladwin (though the supply of water and services has continued pursuant to an undertaking given to this Court)   Therefore, even if there was a claim in contract, there is now no contract and it is thus the case that a ruling in the terms which Mr Gladwin seeks must necessarily now be beyond the capacity of the Tribunal to make even if it were to find in Mr Gladwin's favour on all other issues.

The second question is whether his application is based on a claim in quasi contract.  Again, for the reasons earlier outlined in relation to the other proceeding, that, too, may possibly turn out to be the basis of the legal relationship between the parties but at this juncture that cannot be asserted confidently as being the case.

Mr Gladwin's application is plainly not based on a claim in tort so the remaining question is whether it can be said to be a declaration such as that set out in s 10 (1) (b). The answer to that, too, is straightforward  Such declarations must be claims or demands "founded on contract or quasi contract" and for the reasons already discussed in the Court's view such cannot be necessarily said to be the case.

It follows therefore that, as far as Mr Gladwin's position is concerned, the Disputes Tribunal no longer has jurisdiction to hear his application if indeed it ever had that jurisdiction and accordingly the application for a prohibition must be granted.

As a tailpiece, Mr Gladwin asked that orders made in this proceeding might be extended to others who take an attitude similar to his.  The Court cannot do that.  It does not have the power to extend its order to any other claim, not least because it appears that Mr Gladwin's situation may be unique in that Metrowater has taken the precaution of cancelling any contract it might have had with him.   That sets his position apart.

For the present, however, the Court's order is that the first defendant should be restrained from hearing or deciding the merits of the second defendant's claim lodged with the first defendant on 20 July 1998.

Mr Beech responsibly acknowledged that Metrowater's stance on the question of costs is not to seek costs against Mr Gladwin and accordingly there will be no order.

The orders made do not terminate the undertaking given by Metrowater to this Court in this proceeding on 9 December 1998 to continue full water supply to Mr Gladwin's property but the continuation of that undertaking is to be further considered by the Judge assigned to deal with the declaratory judgment at the first conference convened in relation to that proceeding.

WILLIAMS J
 

24June 1999