The Chatham Islands’ stark beauty is offset by increased costs of transporting essential goods to its small population living 900 kilometres offshore. A challenge to fuel pricing failed in the High Court; fuel wholesaler Chatham Island Management Ltd was not obliged to price fuel at a level to protect local retail margins.
Chatham Island Management is a trading subsidiary of the Chatham Island Enterprise Trust, a charitable trust set up in the early 1990s to assist Island residents. Local concerns about fuel costs led the Trust to extend operations from the importation and wholesaling of diesel into retailing as well. Diesel is a critical resource on the Islands, not only for transport but also power generation.
Chatham Hardware Ltd, owned by Monique and Valentine Croon, also retails diesel with the Trust its sole supplier. They alleged the Trust was exploiting its monopoly position, in breach of the Commerce Act. In particular, they allege that when a 2016 supply agreement was signed there was a side deal requiring the Trust’s wholesale prices be set at a level allowing Chatham Hardware a nineteen per cent margin on a competitive retail price. The dispute headed for court after Chatham Hardware withheld payment of Trust wholesale diesel invoices totalling some $220,000.
Associate judge Johnston ruled there was no collateral side deal. Chatham Hardware’s margin at time of the 2016 deal may have been nineteen per cent, but the 2016 contract was explicit; the Trust can vary prices at any time and is not obliged to first consult the Croons. Judge Johnston also ruled there was no evidence of the Trust misusing its monopoly position. Chatham Hardware was ordered to pay the withheld $220,000 or face liquidation.
Chatham Hardware Ltd v. Chatham Island Management Ltd – High Court (5.12.22)
23.011