IN THE Court of appeal OF new Zealand

I TE KŌTI PĪRA O AOTEAROA	
 CA144/2021
CA163/2021
 [2022] NZCA 405

	
BETWEEN	
LOW VOLUME VEHICLE TECHNICAL ASSOCIATION INCORPORATED
First Appellant

NEW ZEALAND TRANSPORT AGENCY
Second Appellant	
	
AND	
DRIVE NZ CLASSIC LIMITED
Respondent	

Hearing:	
26 April 2022	

Court:	
French, Clifford and Courtney JJ	

Counsel:	
R J Gordon and A S Kirk for First Appellant
N F Flanagan and N E Copeland for Second Appellant
K I Bond for Respondent	

Judgment:	
26 August 2022 at 11.30 am	

JUDGMENT OF THE COURT

A	The appeal is allowed.  
B	The respondent’s cause of action in negligence is struck out.
C	The High Court’s costs order is set aside.  The appellants are entitled to costs in that Court on a 2B basis together with reasonable disbursements.
D	The respondent must pay the appellants costs for a complex appeal on a band A basis and usual disbursements.  
____________________________________________________________________

REASONS OF THE COURT

(Given by Clifford J)
Introduction
[1]	This appeal involves the regime established under the Land Transport Act 1998 (the LTA) and the Land Transport Management Act 2003 (the LTMA) to ensure vehicles produced or modified in low volumes (LVVs) — here 10 Skoda Yeti vehicles modified for drivers in wheelchairs — are safe to operate on New Zealand roads.  That regime, of inspection and certification, is found in the Land Transport Rule: Vehicle Standards Compliance 2002 (the Rule) made by the Minister of Transport pursuant to s 152 of the LTA.
[2]	The Rule itself does not specify the standards for inspection and certification.  Rather cl 6.4(1) the Rule establishes generic requirements, namely that a vehicle:
(a)	is safe to be operated; and
(b)	has been designed and constructed using components and materials that are fit for their purpose, and is within safe tolerance of its state when manufactured or modified; and 
(c)	complies with the applicable requirements; and
(d)	has not suffered water damage as specified by the Director under 11.1; and
(e)	has undergone specialist inspection and certification if required by 6.5, and that the specific aspects of the vehicle have been certified.
[3]	It is the requirement in cl 6.4(1)(c) to comply with “applicable requirements” that does the Rule’s heavy lifting.  In the great majority of cases inspection and certification for use in New Zealand are based on manufacturers’ warranties and certificates of compliance with applicable recognised standards and on regulatory approval of vehicles in, typically, their place of manufacture or in other larger jurisdictions where they are marketed.  By definition that approach is not suitable for the inspection and certification of LVVs.  The applicable requirements for safety inspection and certification of LVVs are found in the Low Volume Vehicle Code (the Code).
[4]	The appellants, the Low Volume Vehicle Technical Association Inc (the Association) and the New Zealand Transport Agency (the Agency) have central roles under that regime: the Agency, to appoint and supervise certifiers; the Association, to establish, maintain and develop the Code.
[5]	The respondent, Drive NZ Classic Ltd (Drive NZ), modified the 10 Skoda Yetis and subsequently become involved in a dispute with the Agency and the Association about their safety and certification.  Drive NZ sued the Agency and the Association in negligence for damages.  Drive NZ did so, alleging the Agency and the Association owed the following “non-delegable” duty of care:
to set up, conduct and administer the low volume vehicle inspection and certification process in a reasonably competent manner and to a prudent standard.
[6]	The Association and the Agency applied to strike out Drive NZ’s claim.  In the High Court at Auckland, Peters J declined that application.  This is an appeal against that judgment: the Judge having granted leave to appeal her decision.  
Background
Regulatory context
[7]	The phrase “applicable requirement” is defined in the Rule as follows:
Applicable requirement means any requirement specified or incorporated in an Act, regulation, code or rule listed in Schedule 1 that applies to the design, construction, condition, equipment, modification, repair or maintenance of a specific vehicle.
[8]	Schedule 1 of the Rule lists certain Acts, regulations, rules and, specifically, the “Low Volume Vehicle Code”.  It is by inclusion in sch 1 that provisions are incorporated “by reference” into the Rule.  
[9]	The “Low Volume Vehicle Code” is defined in the Rule as “the Code of the Low Volume Vehicle Technical Association Incorporated”; in other words, the Code of the Association.  Neither the Rule, the LTA under which the Rule is made, nor the LTMA, which gives the Agency responsibility for the Rule, contain any explanation of the identity or role of the Association as author of the Code.
[10]	The LTMA does, however, provide for the delegation or contracting out of the Agency’s functions and powers.  Section 97 of that Act provides:
97	Agency must consider delegating or contracting out functions and powers
In the course of performing its functions and exercising its powers, the Agency must consider whether it could most efficiently and effectively perform those functions and exercise those powers by means of its own operations, or by delegating or contracting out those operations to appropriate persons.
[11]	As we understand it, the Agency has for some time now contracted the Association to carry out a significant role in the regulation of LLVs.  The most recent form of that contract from July 2012 is the Low Volume Vehicle Certification System Operating Agreement (the Operating Agreement).  The introduction to the Operating Agreement records:
This agreement recognises the very special and unique relationship that exists between [the Association] and [the Agency], as a result of the two organisations having worked successfully together since 1990 to bring the Low Volume Vehicle Code (the Code) into New Zealand’s land transport compliance frame-work.  
[12]	The Operating Agreement provides for LVV regulation by the Association in conjunction with the Agency in the following way.
[13]	The Association is responsible for establishing standards and operational requirements against which vehicle safety is assessed, and communicating those standards and requirements to LVV certifiers, the motoring public and participating organisations.  It also provides specialised technical and operational advice and support to assist the Agency to fulfil “its responsibilities relating to the application of the Code”.  In particular the Association is responsible for issuing what are known as “certification plates” for LVVs following inspection and confirmation of compliance by authorised certifiers.
[14]	The Agency is responsible for appointing those certifiers, for the ongoing oversight of certifiers and for the provision of certifier support to the Association to enable it to fulfil its obligations under the Operating Agreement.  Reflecting, perhaps, that the Code had by 2012 been in existence for some time the Operating Agreement did not expressly provide for the promulgation of the Code.  It does expressly provide, however, that the Agency and the Association are to work together for the application and continuous improvement of the Code and to ensure that, wherever possible, all aspects of the Code continue to be incorporated by reference within the appropriate legislation.  
[15]	Possibly reflecting the Association’s historical role in the formulation of the Code, the Operating Agreement provides that the Association is the exclusive owner of all copyright and intellectual property rights in relation to the Code.  
[16]	The final underpinning of the regulatory status of the Code as authored by the Association is found in s 165 of the LTA.  Section 165 provides for incorporation by reference in the Rule of material sourced not from the public agencies of the State but, as it were, externally.  Section 165(1) provides:
(1)	The following, whether in written or electronic form, may be incorporated by reference in a rule made by the Minister, the Governor‑General, or the Agency:
(a)	standards, requirements, or recommended practices of another State or an international organisation:
(b)	standards, requirements, or rules of the NZ Standards Organisation, or a body or organisation outside New Zealand that has functions corresponding to the functions of the NZ Standards Organisation:
(c)	material formulated by a specialist public sector organisation or a specialist private sector organisation:
(d)	any other material or document that, in the opinion of the Minister or the Agency (as the case may be), is too large or impractical to be printed as part of the rule.
[17]	At the hearing of this appeal counsel for the Agency confirmed the Association’s status as a “specialist private sector organisation” (s 165(1)(c)), qualifying it to author documents appropriate for incorporation by reference into the Rule.
[18]	Those arrangements led Drive NZ to describe the LVV inspection and certification regime as “self-regulation by hobby car enthusiasts”.  Whilst the affidavit of Mr Johnson, the chief executive of the Association, described the Association’s role by reference to the wording of the Rule and the Code, some support for Drive NZ’s characterisation may be found in another document incorporated into the Code at that time, namely the “New Zealand Hobby Car Technical Manual”.  The introductory section of that manual describes aspects of the development of the regulatory framework.  It is sufficient to note the following remarks of Mr Johnson in that manual:
The reason for the level of success in the LVV system in New Zealand is down to one simple factor — the rules are written for enthusiasts, by enthusiasts.  In most other countries, regulations for hobby vehicles are written by their government, rather than by representatives of the enthusiasts, and the outcome of that is always, as far as we are aware, unsatisfactory for both parties.
The pleadings
[19]	A statement of claim generally pleads, that is asserts, facts rather than matters of law.  On a strike out application the pleaded facts are treated as being true, the question being whether if true they disclose a reasonably arguable cause of action.
[20]	Drive NZ’s statement of claim included a detailed pleading, in effect a summary, of the regulatory framework followed by its pleading of facts.  Its pleaded duty of care would appear to be based on its assessment of the regulatory framework.  Its factual pleading provides the narrative of the ways in which it asserts the Association and the Agency breached that duty of care.
[21]	The following summary is sufficient for our purposes:
(a)	In 2011 Drive NZ, then owned by Roger Philips and his wife Carol as to 50 shares each, was in business as a producer of LVVs by modifying regular vehicles.  In 2011 Drive NZ began modifying Skoda Yeti vehicles to render them suitable and safe to be driven by a person in a wheelchair.  In all, 10 such vehicles are involved in these proceedings — referred to as Cars 1 to 10 in the pleadings.  
(b)	Car 1 was modified conventionally using welded steel.  An LVV certifier, Mr Munro, inspected and certified Car 1 and submitted a compliance certificate to the Association.  The Association duly issued an LVV certification plate.  In June 2012 Drive NZ modified Car 2 in a similar way to Car 1, but using bonded composites instead of steel and a bespoke rear suspension.  As with Car 1, after those modifications Car 2 was also certified as compliant by another LVV certifier, Mr Stokes, and the Association issued an LVV certification plate.
(c)	In September 2012 Mr and Mrs Philips incorporated U Drive Mobility (NZ) Ltd (UDM), also owned by them in equal shares.  UDM acquired the Drive NZ business between October 2012 and June 2013.  UDM modified Cars 3 to 10 in the same way as Drive NZ had modified Car 2.  As with Car 2, it did so under the direction and with the assistance of Mr Stokes.  Mr Stokes certified those cars to the Association.  The Association issued LVV certification plates for Cars 3 and 5 to 8 but not for Cars 4, 9 and 10.  UDM sold all eight cars to members of the public.  
(d)	In November 2012 a Mr Simpson became a half shareholder with Mr and Mrs Philips in UDM.
(e)	In May 2013, following a complaint, the Association reviewed the compliance certificate submitted for Car 10.  As a result the Association identified modifications to Car 10 which, it said, required design approval.  It notified Mr Stokes, the responsible certifier.  Mr Stokes applied for design approval.  That was declined.  At the Association’s request UDM was advised by Mr Stokes that it was required to close its production facilities whilst further testing of the vehicles was carried out by Mr Stokes in conjunction with the Association.  
(f)	Over the rest of 2013 there was an ongoing engagement between UDM on the one hand and Mr Stokes, the Association and the Agency on the other.  By late 2013 the Agency had written to UDM confirming previously identified non-compliance with certification requirements and advising of revocation of certifications.  That month the Agency notified UDM customers of those matters.  
(g)	Throughout 2014 UDM, the Agency and the Association co‑operated to attempt to resolve issues.  Independent experts were involved.  By late 2014 the Agency had satisfied itself that, although the vehicles had been modified to standards outside the applicable requirements set by the Code, it was possible certificates of exemption could be issued for the vehicles confirming — on an alternative basis — their safety and conformity with necessary operational requirements.  Ultimately certificates of exemption were issued for all eight of Cars 3 to 10 based on a range of further inspections, testing and modifications.  
[22]	Reflecting that pleaded narrative, in summary Drive NZ particularised the Association and the Agency’s breaches of the duty of care said to be owed to it as follows:
(a)	by the Association, for what had transpired to be its erroneous assertion of compliance failures and associated safety issues and for the flawed process adopted by it in dealing with UDM; and
(b)	by the Agency, for failing to properly supervise both the Association and the Agency’s certifiers, as evidenced by the erroneous assessments made by the Association and the flawed process it had followed resulting in erroneous revocation of certifications.  
[23]	Drive NZ filed its proceeding in June 2019.  It did so in its own name, notwithstanding that (i) it had sold its business to UDM in September 2012, (ii) had arranged for Mr Simpson to become a half shareholder and director in UDM in November 2012, (iii) that Mr Simpson had become UDM’s sole director in February 2016 and its sole shareholder in March 2016, so that (iv) thereafter neither of Drive NZ nor the Phillips had any interest in UDM.  It did not plead a factual basis upon which it was entitled to assert what were, if they existed, rights clearly belonging to UDM.  At the same time, throughout its statement of claim it referred to duties owed to UDM and losses UDM had incurred, which it estimated as being in excess of $5 million.  
[24]	It subsequently transpired in doing so Drive NZ had relied on an assignment by UDM to it dated 24 June 2019, that is the same day as it filed its proceedings, of UDM’s asserted rights against the Association and the Agency arising from these events.
The strike out application
[25]	The Association and the Agency applied for strike out on the grounds Drive NZ’s statement of claim disclosed no reasonably arguable cause of action.  The principal ground for that assertion was that UDM’s purported assignment of its causes of action to Drive NZ was void as being an assignment of a bare right of action to an assignee with no “genuine commercial interest” in the enforcement of the claim.  They argued further it was not reasonably arguable that either the Association or the Agency owed a relevant duty of care.  Drive NZ had no prospects of successfully establishing foreseeability and proximity.  Even if it could, policy considerations would inevitably result in its claim failing.
The High Court decision
[26]	The Judge first considered the Agency and the Association’s contention the assignment from UDM to Drive NZ was, being — as all parties accepted — the assignment of a bare cause of action, void because Drive NZ could not establish it had a “general commercial interest” in the enforcement of UDM’s rights.  The Judge noted the law in this area was not straight forward, particularly given that recent cases have focused on assignments in the context of litigation funding agreements.  That said, she noted the following observations of the majority of the Supreme Court in one of those cases:
[77] 	The essential issue is whether the SPF Documents amount to the assignment of a bare cause of action.  If they do, the question that must then be addressed is whether such assignment is “impermissible” in Waterhouse terms, which it would be unless it fell within one of the recognised exceptions, identified by the respondents as either an assignment to a party that had an antecedent commercial relationship with the assignor or an assignment by a liquidator. 
[27]	More specifically, the Judge focused on Drive NZ’s proposition that the facts Drive NZ and UDM had a transactional relationship as vendor and purchaser, and at relevant times were associated companies because of common shareholdings, evidenced the existence of Drive NZ’s claimed genuine commercial interest.  Having referred to the competing authority she had been referred to, she concluded:
[73] 	Coming back to this case, the least that can presently be said for [Drive NZ] (that is, absent any additional evidence) is that it was the vendor of intellectual property and goodwill to UDM; [Drive NZ]’s shareholders owned 50 per cent of UDM at the time the cause of action arose; and the steps the defendants took regarding Cars 3 onwards — whatever the rights and wrongs of them — will have caused loss to UDM, and therefore all its shareholders, Mr and Mrs Phillips included.  Having regard to the Supreme Court’s statements in Waterhouse and PricewaterhouseCoopers, and the outcome in Massai, I think it is insufficiently clear the matters I have just listed will be insufficient to support the assignment.  I decline to strike out the claim on this ground accordingly.
[28]	Turning to the second ground on which strike out was claimed the Judge noted that at trial Drive NZ would need to establish foreseeability of loss and a sufficiently proximate relationship to base a duty of care.  If those matters could be established, the Court would then need to consider the argument, here essentially a policy one, whether it was fair, just and reasonable to impose the claimed duty.
[29]	In argument, the Association and the Agency relied on Attorney-General v Carter to argue the principles expressed in existing authority precluded recognition of the alleged duty.  That case involved a successful strike out application by the Ministry of Transport where it had been sued in respect of certificates of survey it had issued for a vessel following assessment of the vessel’s safety and seaworthiness.  That vessel was purchased by the plaintiffs, but it later proved to be worthless and was sold for scrap.  This Court found that because the legislative purpose of the certificate was to certify the safety of the vessel, and was not intended for economic purposes, there was insufficient proximity.  Moreover, the class of persons entitled to rely on the certificate were the passengers or crew who were on the vessel, rather than the plaintiffs.  The safety focus of the regime also counted against recognising that duty of care. 
[30]	For its part, Drive NZ distinguished the outcome of Carter by reference to the case of Oceania Aviation Ltd v Director of Civil Aviation, where the Director of Civil Aviation was sued in negligence for revocation of a certifier’s licence to act as such.  The point was that in Oceania Aviation this Court had found sufficient proximity, and had only refused to acknowledge the duty of care on policy grounds.  
[31]	The Judge accepted Drive NZ’s argument that, on the basis of Oceania, it was not possible to conclude it had a hopeless case as regards foreseeability and proximity.  As to policy considerations, whilst they might prove determinative at trial they were not “so obvious” that Drive NZ’s claim should be struck out.  
This appeal
[32]	As noted, the Agency and the Association bring this appeal against the High Court ruling on their strike out application with the leave of the High Court.  The Association only appeals on the duty of care questions of foreseeability and proximity, and the wider policy issues.  The Agency, in addition to appealing on those grounds, also appeals on the “no genuine commercial interest” ground.
[33]	Reflecting the emphasis placed on those arguments, we first address the appellants’ contention Drive NZ’s pleadings in negligence do not disclose a reasonably arguable cause of action.
Analysis
Overview
[34]	We start by referring to the Supreme Court’s decision in Couch v Attorney-General.  In that decision the Court considered an appeal in which the High Court had struck out a claim — a decision upheld by this Court — that alleged the Department of Corrections failed to exercise reasonable care in the supervision of a parolee who had seriously injured the plaintiff and murdered three others.  The Supreme Court unanimously allowed the claim to proceed to trial.  
[35]	Elias CJ, with whom Anderson J agreed, set out the well settled principles to be applied on an application for strike out.  In summary, the jurisdiction is exercised sparingly, in circumstances where an action is so clearly untenable that it cannot succeed.  In the context of a claimed novel duty of care, the Chief Justice explained:
[32]	It is often not easy to decide whether a duty of care not previously recognised by authority is owed to the plaintiff … It may be unrealistic to expect that the pleadings and arguments to support a claim will always be adequate at an early stage of the proceedings.  Caution in disposing of such cases on a summary basis is necessary both to prevent injustice to claimants and to avoid skewing the law with confident propositions of legal principle or assumptions about policy considerations, undisciplined by facts.  
[33]	It is inappropriate to strike out a claim summarily unless the court can be certain that it cannot succeed.  The case must be “so certainly or clearly bad” that it should be precluded from going forward.  Particular care is required in areas where the law is confused or developing.  And in both X v Bedfordshire County Council and Barrett v Enfield London Borough Council liability in negligence for the exercise or non-exercise of a statutory duty or power was identified as just such a confused or developing area of law.  Lord Browne-Wilkinson in X thought it of great importance that such cases be considered on the basis of actual facts found at trial, not on hypothetical facts assumed (possibly wrongly) to be true for the purpose of the strike-out.  Lord Slynn in Barrett was of the same view:
the question whether it is just and reasonable to impose liability of negligence is not to be decided in the abstract for all acts or omissions of a statutory authority, but is to be decided on the basis of what is proved.
[34]	Proper and necessary limits to liability in negligence do not require blanket immunity through over-restriction of the circumstances in which a duty of care arises.  There is particular risk of such over-restriction on summary consideration on strike-out policy considerations are said to preclude a duty of care.  …
(Footnotes omitted.)
[36]	The Chief Justice further explained that in her and Anderson J’s view, a claim should not be struck out as disclosing no duty of care “unless there is clear legal impediment to its succeeding at trial”.  In a similar vein, Tipping J, with whom Blanchard and McGrath JJ agreed, said a claim should only be struck out on the ground that policy militates against a duty of care only if it can be said that this is “undoubtedly so”.
[37]	It is to be remembered that the role of the regulatory regime administered by the Department of Corrections was to protect the safety of the public, and it was a member of the public who was asserting the existence of the tortious duty of care.  That is not the case here.  The regime of inspection and certification is for public safety, but it is a regulated person who is asserting a duty to protect from economic loss.  That is a crucial consideration.  
Negligence
[38]	Given the present context and the policy considerations in play, the general approach taken by this Court in Carter, referred to above at [29], provides a good example of the application of the recognised framework for our analysis.  Although Carter was decided five years before Couch, it not only involved an application for strike out of a claim for a novel duty of care, but also one where policy considerations were of considerable importance in determining the ultimate question of whether it was fair, just and reasonable to recognise the claimed duty.
[39]	Following an analysis of the leading cases, including Carter, Professor Todd in Todd on Torts summarises the approach taken in cases involving claimed novel duties as follows:
(3)	In novel or borderline cases where the duty question needs to be decided, the courts have found it helpful to divide the inquiry into two stages.  First, they ask whether the defendant should reasonably have foreseen injury to his or her “neighbour”, in the sense of a person who is closely and proximately affected by the defendant’s conduct.  Secondly, they weigh up any broader implications for the community in recognising or denying a duty.
(4)	The two-stage approach provides us with a structure for determining disputed duty issues, but cannot in itself direct us towards any particular conclusion.  Nor, indeed, can the Caparo inquiry into what is “fair and reasonable”.  Ultimately the court must make a value judgment based upon its assessment of all the relevant circumstances.
[40]	The context in Carter was the performance by a regulatory agency the Ministry of Transport, and its delegate Marine and Industrial Safety Inspection Services Ltd, of a survey required by regulation which had the purpose of ensuring the safety and seaworthiness of a vessel in the public interest.  As Tipping J for the Court put it:
[22] 	Whether it is fair, just and reasonable to hold that a duty of care is owed by defendant to plaintiff in a situation not covered by authority is conventionally addressed in terms of proximity and policy: see for example Price Waterhouse v Kwan at p 41, para [6], and of course South Pacific Manufacturing Co Ltd v New Zealand Security Consultants & Investigations Ltd [1992] 2 NZLR 282.  Generally speaking, proximity is concerned with the nature of the relationship between the parties whereas policy is concerned with the wider legal and other issues involved in deciding for or against a duty of care.  …
…
[24] 	If the defendant has, or is deemed to have, assumed responsibility to the plaintiff to be careful in what is said or written, thereby creating proximity, it will usually, subject to policy considerations, be fair, just and reasonable to hold the defendant liable for want of care.  …
[41]	Where, as is generally the case, there is not voluntary assumption of responsibility there is a close relationship between the proximity and the policy assessment.  Tipping J explained:
[26] 	In most cases, however, there will be no voluntary assumption of responsibility.  The law will, however, deem the defendant to have assumed responsibility and find proximity accordingly if, when making the statement in question, the defendant foresees or ought to foresee that the plaintiff will reasonably place reliance on what is said.  Whether it is reasonable for the plaintiff to place reliance on what the defendant says will depend on the purpose for which the statement is made and the purpose for which the plaintiff relies on it.  If a statement is made for a particular purpose, it will not usually be reasonable for the plaintiff to rely on it for another purpose. Similarly, if the statement is made to and for the benefit of a particular person or class of persons, and the plaintiff is not that person or within that class, it will not usually be reasonable for the plaintiff to place reliance on it so as to oblige the defendant to assume responsibility for carelessness in its making.
[27]	… When, as in the present case, the environment which brings the parties together is legislative, the terms and purpose of the legislation will play a major part in deciding the issues which arise.  It is the legislation which creates and is at the heart of the relationship between the parties.  It will often contain policy signals bearing on that aspect of the inquiry.
[42]	As in Carter, consideration of the legislation — the interests and parties it serves to protect — has proved to be decisive in other cases.  The Association points to other examples in which claims of novel duty have been rejected on the basis the legislation was not designed to protect the claimants against economic loss.  In the present case, the purpose of the regulatory framework established under the LTA and the LTMA, as contained in the Rule and as administered by the Agency and its delegates, including the Association, is road safety: that is, the safety of the drivers and users of motor vehicles on the roads and other users of the roads such as cyclists and pedestrians.  That purpose serves to enable the fulfilment of the overarching purpose of the LTA, which is to promote safe road user behaviour and vehicle safety by providing for a system of rules governing road user behaviour, the licencing of drivers, and technical aspects of land transport, and to recognise reciprocal obligations of persons involved.  
[43]	Accordingly, in our view it is manifest that Drive NZ does not come within the class of persons for whose benefit the regulatory requirements exist and nor, therefore, is it reasonable for them to claim reliance as such for their private, economic, interests.  No detailed analysis of the LTA, the LTMA, or the Rule is required in this situation for us to reach that conclusion.  
[44]	In our view those considerations point clearly to this being a case where, as in Carter, in terms of both proximity and policy it would not be fair, just and reasonable to recognise the duty asserted by Drive NZ.
[45]	In reaching the opposite conclusion, on the issue of proximity the Judge was of the view that Oceania Aviation showed it was reasonably arguable that such a duty could be recognised here.  
[46]	Oceania Aviation was not, we note from the outset, a decision on a strike out application.  It followed a High Court trial alleging that certain actions of the Director of Civil Aviation gave rise to causes of action in the torts of misfeasance in public office and negligence.  The High Court had dismissed the claims in their entirety.  Oceania Aviation Ltd appealed.  
[47]	There was, this Court found, nothing to justify the assertion of misfeasance in public office — which claim had been the principal focus of the proceedings below and on appeal.  The Court dealt with the claimed duty of care in negligence succinctly.  It noted that the claimed duty of care came close to equating the common law duty of care with a public law right to have powers exercised lawfully, which traditionally has not been thought to give rise to a right to damages.  The Court observed that counsel for the appellant had been unable, not surprisingly, to point to any case in which a public official charged with responsibility for public safety had been found to owe a common law duty of care to those who were being regulated in that public interest.  The Court then reasoned:
[67] 	It was entirely foreseeable that the appellant would suffer loss as a result of the Director’s action.  There was also the necessary proximity or closeness of relationship between the Director and the appellant, to whom his notices and directives were addressed.  But, against these factors, there was a very strong policy argument that it would not be just and reasonable to impose any duty of care.  The Judge was in our view right to conclude that, even if the postulated duty were to be confined to situations not involving an emergency exercise of power, the imposition of a duty to take care for the interests of suppliers of aircraft parts – the persons being regulated – would be likely to conflict with the Director’s primary duty to those potentially affected by the use of those parts in an aircraft.  It might well, as the Judge said, promote undue caution or reticence on the part of the Director and so impede his role as a protector of public safety.  This is an area where to err on the side of caution in the interests of the suppliers of a part might be to place the lives of pilots and passengers at some risk. 
[68] 	Gendall J said that “in the particular circumstances of this case” a duty of care was not to be imposed.  We too are content to leave the matter on that basis.
[48]	As can be seen, the analysis of proximity was closely linked to the Court’s assessment of foreseeability.  That it went no further than that is clear from the focused reasoning and conclusion that, given the regulatory context, it would not be fair, just and reasonable to recognise the claimed duty of care.  Our assessment is that Oceania Aviation provides little or no support for the propositions advanced by Drive NZ.  
[49]	Nor do we consider this Court’s decision in Attorney-General v Strathboss Kiwifruit Ltd provides support for Drive NZ’s position on foreseeability and proximity.  In that case, this Court considered there would have been sufficient proximity between the relevant Ministry of Agriculture and Fisheries personnel, who had decided to grant an import permit for pollen to be used in the commercial pollination of kiwifruit orchards, and some kiwifruit growers with “property rights” in kiwifruit vines or crops.  Those growers were at risk from the introduction of kiwifruit pathogens, as subsequently happened and caused loss.  Again, that case is distinguishable because the purpose of the regulatory regime here is not to protect the economic interests of LVV manufacturers and producers, but rather the interests of the public in road safety.  
[50]	We are satisfied that given the purpose of the regulatory regime and its expression in the Rule:
(a)	there was not a relationship of proximity between the Agency and its delegate the Association and Drive NZ; and 
(b)	to the extent of any broader analysis involved at the second stage, the regulatory framework is firmly against the recognition of the claimed duty of care.
[51]	Further support for our conclusion can be found in the fact that, as the Association submits, UDM was not without remedy.  When the Agency revoked the certifications in late 2013, UDM had a right of appeal to the District Court against that decision pursuant to s 106 of the LTA.  That right of appeal was not exercised at the time; and indeed, another six years passed till these proceedings were brought.
[52]	On the basis of the conclusions we have reached, it is not necessary to consider the validity of the assignment.  Having said that, were that to have been a live issue like the Judge we would not have granted strike out on that issue alone.  Whether there was a genuine commercial interest was essentially a factual assessment, not one that could easily be made before evidence had been heard and assessed.
Result
[53]	The appeal is allowed.
[54]	The respondent’s cause of action in negligence is struck out.
[55]	The High Court’s costs order is set aside.  The Agency and the Association are entitled to costs in that Court on a 2B basis together with reasonable disbursements.

[56]	In this Court, the Agency and the Association sought costs for a complex appeal on a band A basis and usual disbursements but did not press for certification for two counsel.  Drive NZ submitted this was a standard appeal and that certification for two counsel was unnecessary.  In the circumstances, we order that the respondent must pay the appellants costs for a complex appeal on a band A basis and usual disbursements.  

Solicitors: 
MinterEllisonRuddWatts, Wellington for First Appellant
Meredith Connell, Auckland for Second Appellant
Braun Bond & Lomas Ltd, Hamilton for Respondent