Home | Databases | WorldLII | Search | Feedback New Zealand Bill of Rights Act Reports

Dairy Industry Restructuring Amendment Bill (Consistent) (Sections 19, 25(c)) [2012] NZBORARp 8 (16 March 2012)

Last Updated: 26 April 2019

Dairy Industry Restructuring Amendment Bill

16 March 2012 ATTORNEY-GENERAL LEGAL ADVICE

CONSISTENCY WITH THE NEW ZEALAND BILL OF RIGHTS ACT 1990: DAIRY INDUSTRY RESTRUCTURING AMENDMENT BILL

1. We have considered whether the Dairy Industry Restructuring Amendment Bill (“the Bill”)

(PCO 15205/12.0) is consistent with the rights and freedoms affirmed in the New Zealand Bill of Rights Act 1990 (“the Bill of Rights Act”). We understand that the Bill will be considered by the Economic Growth and Infrastructure Committee at its meeting on Wednesday, 21 March 2011.

2. We understand that the Bill may be subject to further amendment before it is submitted to the Economic Growth and Infrastructure Committee. We will provide supplementary advice should this prove necessary.
   
3. The Bill amends the Dairy Industry Restructuring Act 2001 (“the Act”) to allow Fonterra to

restructure its capital by moving to a system referred to as Trading Among Farmers (“TAF”). Under TAF, farmers can trade their Fonterra shares in a market based on share prices and share availability. The Bill also establishes a Milk Price Panel to oversee and advise Fonterra on farm gate milk price setting.

POSSIBLE INCONSISTENCIES WITH THE BILL OF RIGHTS ACT

Section 19(1) – Freedom from discrimination

4. Section 19(1) of the Bill of Rights Act affirms the right to freedom from discrimination on the grounds of discrimination in the Human Rights Act 1993. These grounds include, amongst others, family or marital status.
   
5. New section 150E(2) of the Bill requires that the chair and a majority of the members of the Milk Price Panel are independent. The definition of “independent” excludes specified relatives of shareholding farmers. This may impose a limit on the right to be free from discrimination on the grounds of family or marital status.
   
6. Where a provision is found to pose a limit on a particular right or freedom, it may nevertheless be consistent with the Bill of Rights Act if it can be considered a reasonable limit that is demonstrably justified in terms of section 5 of that Act. Following the guidance of the New Zealand Supreme Court decision in Hansen v R [1], the s 5 inquiry may be summarised as:

1. does the objective serve a purpose sufficiently important to justify some limitation of the right or freedom?
2. if so, then:
   1. is the limit rationally connected with the objective?
   2. does the limit impair the right or freedom no more than is reasonably necessary for sufficient achievement of the objective?

3. is the limit in due proportion to the importance of the objective?
   

7. The purpose of new section 150E(2) is to prevent conflicts of interest. As the Milk Price Panel will have the power to recommend the base milk price, it is important that a majority of the panel are independent from shareholding farmers.
   
8. The limit appears to be rationally connected with the objective of avoiding potential conflicts of interest. The limit does not impair the right any more than is reasonably necessary, and it is proportionally connected to the purpose, because the definition of

“relative” in the Bill is confined to close family members. This appears to be an appropriate way of ensuring the Milk Price Panel is free from conflicts of interest.

9. We therefore conclude that excluding close family members of shareholding farmers from being considered an independent member of the panel is justified.
   

Section 25(c) – Right to be presumed innocent until proved guilty according to law

10. Section 25(c) of the Bill of Rights Act affirms the right to be presumed innocent until proved guilty according to law. This means that an individual must not be convicted where reasonable doubt as to their guilt exists. The prosecution in criminal proceedings must therefore prove, beyond reasonable doubt, that the accused is guilty.
    
11. New section 150E(3) in the Bill makes it an offence for the new co-op to, without reasonable excuse, fail to ensure that the chair and a majority of the members of the Milk Price Panel are independent.
    
12. New section 150E(3) appears to limit s 25(c) of the Bill of Rights Act because, once the prosecution has proved that the accused committed the act in question, the accused must prove a defence on the balance of probabilities to escape liability. Usually, an accused must merely raise a defence in an effort to create reasonable doubt. An accused person who cannot prove a reasonable excuse may be convicted even though reasonable doubt exists as to that person’s guilt.
    
13. In addition to the guidance provided by the Supreme Court in Hansen v R set out above, we consider the following factors are relevant in assessing whether such offences can be justified:
    
    1. the nature and context of the conduct to be regulated
    2. the ability of the defendant to exonerate themselves and the risk of conviction of an innocent person, and
    100. the penalty level.

14. The offence is designed to ensure that the majority of the Milk Price Panel remains independent and free from potential conflicts of interest. As the Milk Price Panel will have the power to recommend the base milk price, a strong deterrent is required to prevent potential conflicts of interest.
    
15. The new co-op is responsible for appointing the members of the Milk Price Panel, including the chair, and is therefore likely to be in the best position to provide a reasonable excuse for failing to comply with the provision in question (for example, that a member of the Milk Price Panel misled the new co-op as to his or her family relationship with a shareholding farmer).
    
16. The offence is punishable by a fine not exceeding $200,000 and a fine of $10,000 for each day that the offence continues. This appears to be a high penalty; however, the penalty applies to a specific, non-natural person (the new co-op), rather than the general public. Further, the new co-op will be a large entity with substantial financial

assets. Therefore, a substantial penalty is needed to act as a meaningful deterrent.

17. We consider therefore that this offence provision appears to be consistent with section 25(c) of the Bill of Rights Act.
    

CONCLUSION

18. We have therefore concluded that the Bill appears to be consistent with the rights and freedoms affirmed in the Bill of Rights Act. This advice has been prepared by the Public Law Group and the Office of Legal Counsel.
    

Melanie Webb

Acting Chief Legal Counsel Office of Legal Counsel

Footnote 1

Hansen v R [2007] NZSC 7

In addition to the general disclaimer for all documents on this website, please note the following: This advice was prepared to assist the Attorney-General to determine whether a report should be made to Parliament under s 7 of the New Zealand Bill of Rights Act 1990 in relation to the Dairy Industry Restructuring Amendment Bill. It should not be used or acted upon for any other purpose. The advice does no more than assess whether the Bill complies with the minimum guarantees contained in the New Zealand Bill of Rights Act. The release of this advice should not be taken to indicate that the Attorney-General agrees with all

aspects of it, nor does its release constitute a general waiver of legal professional privilege in respect of this or any other matter. Whilst care has been taken to ensure that this document is an accurate reproduction of the advice provided to the Attorney-General, neither the Ministry of Justice nor the Crown Law Office accepts any liability for any errors or omissions.