Companies accused of lessening competition seek security for undertaking as to damages
The High Court recently found it unnecessary for a refrigerated container industry service provider alleging anti-competitive and unconscionable conduct to provide security for its undertaking as to damages.
IRS International Pty Ltd, an Australian company focusing on servicing refrigerated containers known as reefers, took legal action against the defendants ContainerCo (NZL) Ltd and Qube Logistics Ltd, which operated container depots across New Zealand.
IRS claimed that the defendants were liable for anti-competitive conduct substantially reducing competition and amounting to a misuse of market power.. The defendants allegedly imposed unreasonable fee increases for accessing their depots in violation of the Commerce Act 1986 and the Fair Trading Act 1986.
Previously, IRS accessed the defendants’ depots without charge. However, in 2018, the defendants introduced fees for depot access based on health and safety concerns. IRS initially accepted the agreed charges of $3.50 per reefer. Over time, these fees increased. ContainerCo raised its rates to $15.50 per reefer, while Qube increased its fees to $15 per reefer.
IRS requested an interim injunction to maintain access to the defendants’ depots at the earlier rates of $7 per reefer for ContainerCo and $3.50 per reefer for Qube. Paying the new fees would render its New Zealand operations unsustainable and would force it to cease its business and lay off staff, IRS said.
Ahead of the November hearing, the parties agreed to an “interim interim” arrangement. Under this agreement, IRS would continue accessing the defendants’ depots at the previous rates. On the other hand, the defendants would invoice IRS at the new rates but would not enforce payment of the increased fees until the resolution of the interim injunction.
The issue before the court was whether IRS had to provide security for its undertaking as to damages, namely a guarantee that it could compensate the defendants if the injunction caused financial harm to them.
In IRS International Pty Limited v ContainerCo (NZL) Limited [2024] NZHC 2266, the New Zealand High Court issued a decision holding that IRS did not need to provide security for its undertaking as to damages.
The defendants’ undertakings to allow IRS access to their depots at the previously agreed rates should remain in effect until the hearing this November, the court ordered.
IRS was financially capable of meeting its obligations if it failed to obtain interim relief, the court concluded. IRS provided financial statements showing that its New Zealand operations generated over $18m in revenue in the 2023–24 financial year, with a net profit of approximately $859,000, the court noted.
IRS had sufficient financial backing, not only from its New Zealand operations but also from its parent company, Daikin Industries Ltd, a Japanese-based air conditioning conglomerate, the court added. The court found no evidence that IRS would evade its obligations.
