Balmoral Farm Limited v Otago Regional Council
[2014] NZHC 1815
•14 August 2014
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV 2013-412-000463 [2014] NZHC 1815
BETWEEN BALMORAL FARM LIMITED
Plaintiff
AND
OTAGO REGIONAL COUNCIL Defendant
Hearing: 30 July 2014 Counsel:
C S Withnall QC and C J Lucas for Plaintiff
A J Logan and S Anderson for DefendantJudgment:
14 August 2014
JUDGMENT OF WHATA J
[1] The Otago Regional Council (ORC) owns a 51.6284 hectare farm at Inch Clutha, near Balclutha. Balmoral Farm Limited (BFL) is a lessee of that farm pursuant to a lease dated 24 April 1992, which commenced 1 July 1989.
[2] Clause 3(e) of the lease provides for a renewal of the lease in the following terms:
… for a further term of 21 years … at a rent to be determined by valuation at the then fair annual ground rent of the land and premises hereby demised only without taking into consideration any buildings or improvements, such valuation to be made in manner provided by the first schedule to the Public Bodies Leases Act 1969 … . (emphasis added)
[3] ORC contends that the reference to “improvements” in clause 3(e) does not include “clearing, grassing or draining” being the lessor’s development improvements that form part of the demise. BFL says that they are improvements
and there is no reason to read down the clause 3(e) to exclude them.
BALMORAL FARM LIMITED v OTAGO REGIONAL COUNCIL [2014] NZHC 1815 [14 August 2014]
[4] The key agreed issue therefore is whether:
… the defendant Council was required to fix the fair annual rent pursuant to a valuation made without taking into consideration any “improvements” including the value of any “development improvements”.
Background
[5] The parties produced an agreed statement of facts which are largely co- extensive with the pleadings. I do not propose to replicate the agreed statement in full, but I have relied upon it for the purposes of this narrative and the resolution of the central issue.
The current lease
[6] In addition to clause 3(e), the lease contains a number of provisions which are material to the interpretative exercise.
[7] Clause 3(g) of the lease provides:
Clause 3 to 16 (inclusive) of the First Schedule to the Public Bodies Leases Act, 1969 shall apply to these presents (except where inconsistent with the context) as fully and effectually as if set out at length herein PROVIDED HOWEVER that “one calendar month” shall be substituted for “two calendar months” in line one of clauses 4 and 5 of the said First Schedule of the Public Bodies Leases Act 1969.
[8] Clauses 3 to 5 of Schedule 1 of the Public Bodies Leases Act 1969 are incorporated into the lease and provide as follows:
3
In making the said valuation no account shall be taken of the value of the following improvements on the said land: [Specifying, as the lessor thinks fit, the kinds of improvements, whether made during the term or at any other time, which are not to be taken into account in the valuation of the rent.]
4
As soon as possible after the said valuation has been made, the lessor shall give to the lessee notice in writing informing him of the amount of that valuation and requiring him to notify the lessor in writing within 2 calendar months whether he will accept a renewal lease at the rent specified in the notice.
5
Within 2 calendar months after the giving of that notice to the lessee, he shall give notice in writing to the lessor stating—
(a) that he desires to accept a renewal lease at the rent stated in the notice given to him by the lessor; or
(b) that he requires the rent for the renewal lease to be determined by arbitration; or
(c) that he does not desire to accept a renewal leased.
[9] Other obligations in the lease include:
(a) To pay rates, taxes, charges, assessments and impositions and outgoings in clause 1(c).
(b) To repair and maintain in clause 1(d).
(c) To keep the demised premises free of rabbits and other noxious vermin and the like in clause 1(g).
(d)To eradicate, destroy and keep the demised premises free and clear of gorse and other noxious weeds in clause 1(h).
(e) To use farm, cultivate and manage the property in a proper and husband like manner in clause l(i).
(f) To leave the demised premises laid out in good permanent English grasses and clovers in an appropriate mix with proper quantities of seed in clause l(j).
History relating to lease
The tender process and initial tenancy
[10] In 1965 the Otago Catchment Board called for separate tenders for the “leasing of Inch Clutha Farm Property and Purchase of Improvements”. The particulars and conditions of the tender are set out in a document dated 29 May 1965
issued by the Commissioner of Crown Lands on behalf of the Otago Catchment
Board. The general description of the land and improvements stated:
Flat land of medium-high fertility. Approximately 140 acres in good grass. Buildings comprise homestead, cottage and full range of outbuildings – all in reasonable order. Other improvements comprise fencing, water supply equipment, power installation, planting, layout.
(Note: In addition to the above improvements there is also clearing, grassing and draining but neither tender need cover these items. These particular improvements are not required to be purchased.)
[11] The tender document also stipulated that, inter alia, the following general condition will need to be incorporated in any lease:
6. …
(e) He will be required to maintain all improvements at present in existence and to keep these, together with any improvements thereafter erected on the land in good substantial repair, order and condition.
[12] Other relevant particulars provided:
(a) Tenderers with the option of tendering to purchase improvements either for cash or on a deferred payments basis over a period of up to
20 years (cl 2).
(b)There was to be an initial tenancy of up to three years, during which the Board proposed to carry out further river control works on the property including stop banking; and a subsequent 21 year term of a perpetually renewable lease (cls 1 and 3).
(c) The tendered amount for leasing of the land would set the annual rent for both the initial tenancy and the 21 year term (unless the lease was assigned or transferred, in which case the Board reserved the right to review the rental bearing in mind the price paid by the incoming lessee) (cls 4 and 5).
(d) The rent would be re-assessed by the Board at the end of each 21 year
term on renewal, and specified in cl 4 that “[i]n the event of any
difference of opinion arising as to the correctness of renewal rents these will be determined by arbitration in the same manner as is laid down in the Public Bodies Leases Act 1908”.
(e) Conditions were to be included in the lease to the effect that:
(i)The Board would have no responsibility or liability as a result of damage to land or improvements by flooding (cl 6(a)).
(ii)The lessee must farm the land diligently in a husbandlike manner (cl 6(b)).
(iii) The lessee must keep the land free of pests (cl 6 (c)).
(iv)The lessee must trim live hedges and fences and keep the land free of noxious weeds (cl 6(d)).
(v)The lessee must apply fertiliser in accordance with normal practice (cl 6(f)).
(f) Unless purchased for cash, the successful tenderer was required to insure all buildings for their full insurable value (cl 7).
[13] The form of tender repeats the distinction between the lease for the land and the purchase of improvements, except clearing, grassing and draining. Attachment A is a typed copy of the relevant part of the tender document.
[14] Mr Clifford Brian Marshall was the successful tenderer. His tender was
£1,050 per annum for the lease and £7,000 for the purchase of the improvements. A problem with the legality of the proposed agreement was identified and a licence to occupy was issued for an initial three year lease term and a separate deed drawn up for the purpose of the purchase of the improvements. A deed of agreement dated
1 February 1966 listed the improvements for sale as follows:
Fencing, two dwellings, cowshed/dairy, implement shed, other miscellaneous buildings, water supply equipment, power installations, shelter planting layout.
[15] The agreed statement of facts also includes various references to the Board subsequent dealings with Mr Marshall on the issue of improvements and rental value. It records:
23.In the Defendant’s files, there is a document entitled “Good Husbandry Report”, dated 18 September 1967 which was produced by the Commissioner of Crown Lands. The Commissioner was administering the tenancy as the Board’s agent. The document describes Mr Marshall’s tenure and states that the Crown Improvements being purchased by the Lessee are: “Fencing, two dwellings, cowshed/dairy, implement shed, other miscellaneous Buildings, water supply equipment, power installation and planting” and that there are “nil” improvements included in the rental value.
24. In the Defendant’s files, there is also a Board report dated 30 April
1969, in which a J Gillies, the Board’s engineer recorded an approach that had been made to the Board on behalf of Mr Marshall. The report cites that Marshall had “…raised concern about the removal of construction debris at the bottom of section 7, the re- soiling and/or regrassing of the area stripped on this part of the property and on Carter’s property, the filling in of a hole in the sandhills area, and the filling in of holes on Section 10 above the road.”
25.Mr Gillies further reported that “…Apart from the removal of the construction debris…the other claims do not appear to be covered in the terms and conditions of the lease and no consideration should be given them for this reason”.
(Emphasis as per Agreed Statements of Facts)
The 1973 lease
[16] The farm was then leased under the Public Bodies Lease Act 1908 to
Mr Marshall with an agreement to lease executed on 15 October 1973 for a term of
21 years commencing 1 July 1968, with a perpetual right of renewal for a like term. Clause 3(e) of the 1973 agreement provided for a renewal on the same terms as the present lease except it referred to the First Schedule to the Public Bodies Leases Act
1908. Clause 3(g) of the 15 October 1973 agreement was altered by hand and states:
Clause 3 to
1516 (inclusive) of the First Schedule to the Public Bodies Leases Act,19081969 shall apply to these presents (except where inconsistent with the context) as fully and effectually as if set out at length herein PROVIDED HOWEVER that “one calendar month” shall be substituted for “two calendar months” in line one of Clauses 4 & 5 of the said First Schedule of the Public Bodies Leases Act19081969.
[17] Clause 3 of the Schedule provides:
“In making the said valuation no account shall be taken of the value of the following improvements on the said land: [“Specifying, as the leasing authority sees fit, the kinds of improvements, whether made during the term or at any other time, which are not to be taken into account in the valuation of the rent.”]
Sale of Mr Marshall’s interest
[18] In late 1973 Mr Marshall sold his interest in the leased land by public auction. At about the same time the Board wrote to the Valuation Department asking it to assist the Board in fixing an adequate rental. This was later set at a “Value of Land Exclusive of Improvements as at 14.11.73. $30,000”.
[19] The assignment of the leasehold land was later confirmed by the Board with a revised annual rental of $1,800 per annum and the transfer was subsequently confirmed.
[20] There is no copy of any deed of assignment between Mr Marshall and Ranch Farms Limited on the Board’s file. There is also no record on the Board’s file of the Board advising either Ranch Farms Limited or its solicitors as to the special valuation it had obtained from the Valuation Department, nor as to the basis that it had fixed the revised annual rental, and there is no record extant as to the basis upon which the new rent was fixed. The rent is 6% of the unimproved value of the land.
The 1982 Lease
[21] In 1982 a new lease was entered into between the Board and Ranch Farms
Limited (previous name of BFL) as lessee. This lease also ran from 1 July 1968.
The 1982 lease contains the same clauses 3(e) (relating to the renewal and rent review) and 3(g) (incorporating cls 3-16 of the First Schedule of the Public Bodies Leases Act 1969) as the current 1992 lease. The 1982 lease, however, does not purport to be made under the Public Bodies Leases Act 1969, but cls 3-6 inclusive of the First Schedule of the 1969 Act are incorporated by reference in cl 3(g). Ranch Farms Ltd changed its name to the current Balmoral Farms Ltd in 1986.
The 1989 rent review correspondence
[22] By letter dated 19 January 1989 the plaintiff gave notice of its intention to renew the lease for 21 years from 1 July 1989.
[23] In a letter to BFL on 30 January 1989, Mr Orchiston, a registered valuer employed by the Board, advised the plaintiff company:
To ensure there is no misunderstanding the Valuer acting for the Board will be instructed that the rental fixing basis excludes structural improvements only.
That is, the fair annual rental will be supported by the Valuation of Land Act
1951 definition of ‘Land Value’, and not the Land Act 1948 definition of
‘land exclusive of improvements’.
[24] This letter, made in the context of the 1989 rent review, was the first recorded suggestion in the defendant’s file that the rental fixing basis excluded structural improvements only.
[25] By letter dated 3 February 1989 that position was challenged by the plaintiff, which recorded:
I do not agree that the definition of land value as contained in the “Valuation of Land Act 1951”, should be used for the purposes of assessing the rent for the renewal term.
[26] There was an internal report dated 3 March 1989 on the rent assessment, which was approved by Mr Orchiston. This report recommended a rent increase up to $7,200 per annum, and included the following clauses:
2.8 Board’s Interest
The Board owns the land (undeveloped state plus development improvements, i.e. clearing, grassing).
2.9 Lessees Interest
The Lessee owns the structural improvements, shelter and timber.
2.10 Rental Value
Land Values (Board’s Interest)
…
5. RENTAL BASIS
There is no clause in the lease exactly defining the Lessors (Rental Value) and Lessees interest, and on what basis the rent is to be set. However, the Board bought the property outright in 1965 and subsequently resold the structural improvements to the lessee. The Rental Value (Board’s Interest) is therefore the paddock value which includes development improvements.
[27] The Agreed Statement of Facts refers to a note referring to the lease to Balmoral Farms Limited from 1 July 1989, with a renewal clause, at an annual rental of $5200 and which stated “this assumes a rental value of $86000 at 6% in 1989”.
[28] The 1982 lease was then renewed on 24 April 1992, for a further term of
21 years from 1 July 1989.
[29] The insurance clauses 1(b) and 3(a) were originally included in the document but have been struck out before execution. The renewal and rent clause 3(e) remains the same as the 1982 lease. In all other respects the lease is identical with the 1982 lease, except that the word “board” has been struck out wherever it appears and the word “lessor” substituted.
[30] The rent in the 1992 lease was $5,200 plus GST.
[31] The shares of BFL changed hands in 1997, at which point, Russell John
Mosley, the company’s current director, became a shareholder and director.
2011 Rent review
[32] By letter dated 27 May 2011 the manager of Support Services for ORC, Mr Gerard Collings, advised the plaintiff that:
… the valuation has been received and that the annual rental for the full twenty one years from 1 July 2010 has been determined at $30,000.00 plus GST per annum.
[33] BFL’s solicitor then requested a copy ORC’s valuation and details of the improvements included in the valuation for the purposes of the rent review. Mr Collings responded to BFL’s solicitors by email stating:
Please find attached the original deed of agreement (sic) the improvements
purchased are listed in Schedule 2…
… With regards to the valuation, I am not in the habit of providing our valuation to tenants, The lease holders own valuation should be undertaken independently of ours. After that if there is a difference it would be appropriate for the Valuers/Arbitrators to exchange valuations.
I am however happy to provide the following excerpts from the valuation to confirm that the valuer has not include (sic) the leaseholder improvements within his assessment.
Tenure
…
-This assessment of fair annual rent of the land is under the Public Bodies Leases Act 1969 in accordance with Schedule One where the rent so valued shall be uniform throughout the 21 year period from 1 July 2010.
-In making the rental assessment no account has been made of the structural value of the buildings, other improvements and fencing on the land.
-Land developments are included in this rental assessment.
3.7 Improvements
There is an historic dwelling and a full range of farm buildings with the other improvements being fences and rural water supply.
All structural improvements including hedges and tress [sic] belong to the lessee and have not been included in this rental assessment.
The relief sought
[34] BFL therefore seeks the following declaration:
A declaration that under the lease, the rent for a renewed term must be calculated without taking into consideration any improvements, including any land developments;
[35] By contrast the defendant submits that any declaration should state:
… under the lease, the fair annual ground rent should be calculated by taking into consideration the Plaintiff’s possession, use and enjoyment of the Defendant’s improvements, including any land development, in particular “clearing, grassing and draining”.
(Emphasis in original)
Argument
[36] I will not dwell on the argument for the respective parties as the issue is reasonably discrete and my reasons will reveal where necessary my response to the key submissions.
[37] In essence Mr Withnall QC submits that there is no ambiguity, the lease speaks for itself – “any improvements” means all improvements without exception and the factual matrix supports this interpretation – that is the tender documents made it clear :
(Note: In addition to the above improvements there is also clearing, grassing and draining but neither tender need cover these items. These particular improvements are not required to be purchased).
[38] Mr Logan responds that “clearing, grassing and draining” are the lessor’s unsold development improvements that preceded the lease and form part of the “land and premises hereby demised” by the lease. He therefore contends that a “fair
annual ground rent” must take into account those unsold improvements.1
1 Citing S & M Property Holdings Ltd v Waterloo Investments Ltd [1999] 3 NZLR 189 (CA); West Coast Settlement Reserve Lessees Association Inc v Valuation Appeal Committee for the West Coast Settlement Reserves [1997] 1 NZLR 413 (CA); Mandic v The Cornwall Park Trust Board (Inc) [2011] NZSC 135, [2012] 2 NZLR 194.
Resolution
[39] I agree with the plaintiff for the following reasons.
[40] First there is no ambiguity. Clause 3(e) refers to:
… a rent to be determined by valuation as the then fair annual ground rent of the land and premises hereby demised only without taking into consideration any buildings or improvements such valuation to be made in manner provided by the first schedule to the Public Bodies Leases Act 1969 …
(Emphasis added)
[41] On the plain words used, the fair annual rent must be fixed without taking into consideration any improvements. There is no dispute between counsel that “clearing, grassing and draining” are properly described as “improvements” to the land. I nevertheless put it to Mr Logan that we might approach the lease on the basis that these matters were not “improvements” at all for the purposes of the lease – ie that they inhere with the land for rent review purposes – and simply reflect the pre- existing condition of the land. He resisted this interpretation and maintained that they were “improvements” so I did not pursue this line further.
[42] Second, excising lessor development improvements from cl 3(e) introduces unnecessary ambiguity to an otherwise straightforward commercial leasing arrangement. If correct, the parties would be required to go searching for this special, yet undefined class of improvement. But that could only be for the one sided benefit of the lessor for no obvious reason, other than a subjective assessment of what the lessor claims to have intended to achieve with the lease. I come back to what I perceive to be the defendant’s unfairness argument below at [52]-[56].
[43] Third, I agree with Mr Withnall that the reference to “land and premises hereby demised only” in clause 3(e) simply demarcates the unimproved value of the demised land for the purposes of the rent review. Note that cls 1(b), (c), (d) and (e) dealing with the lessee’s covenants are all premised on the assumption that improvements overlay the demised premises. For example, cl 1(d) states:
At its own expense to repair, keep and maintain all buildings now or hereafter to be erected on the demised premises and all fences, both live and dead, and all dams, culverts, ditches, drains, watercourses, bridges, gates and things on upon or about the demised premises in good and substantial repair
and condition and will keep all drains and ditches properly cleaned out and in such repair and condition at the expiration or sooner determination of the said term to deliver up the same.
(Emphasis added)
[44] Clause 3(e) thus makes it plain that for rental review purposes, buildings and improvements (including the drains just mentioned) are not to be considered. I also accept Mr Withnall’s submission that cl 3(e) of the lease gives effect to, and is mandated by, cl 3 of the First Schedule to the Public Bodies Leases Act 1969, in that it specifies the kind of improvements that should not be included for valuation purposes.
[45] Fourth, the wider factual matrix at the time of the tender (being the genesis of the subsequent leases) does not support the exclusion of the so-called lessor development improvements from the definition of improvements in the lease review clauses. The tender documentation notified the tenderers that “clearing, grassing and draining” are “improvements”, but that “neither tender need cover them”. This logically suggests that the tenderer did not need to take these improvements into consideration for the purpose of a per annum rental or for the purchase of the improvements. Clause 4 of the tender documentation then states that the annual rental will not be increased above the figure tendered for the subsequent 21 years. That being the case it is difficult to then construe subsequent leases as if these “improvements” were nevertheless to be included in the valuation of the demise for rental review purposes.
[46] I accept that the tender form most obviously seeks to exclude these improvements from the cost of purchase as distinct from the lease rental, suggesting that they are in a special class. But that does not support the inference that “improvements” has a special, bifurcated meaning for the purpose of the lease review clauses. For example, condition 6(e) of the tender particulars refers to improvements in the following terms:
He will be required to maintain all improvements at present in existence and to keep these, together with any improvements thereafter erected on the land in good and substantial repair, order and condition.
[47] Clearly then the successful tenderer obtained the benefit and burden of all existing and future improvements. This manifested itself in the subsequent leases that place a similar (though not identical) maintenance burden on the lessee as per
1(d) (drains), 1(h) (clearing), and 1(j) (grasses). The leases then refer to “improvements” without qualification in clauses 1(e), 3(b) and 3(e). Only cl 3(a) refers to improvements of a special kind, namely the improvements subject to the agreement resulting from the tender process. It is thus a notable exception and carries into the leases the effect of the purchase to the extent that it is necessary to do so.
[48] Fifth, and related to the last point, it would have been a very simple matter for the drafters of the leases to specify that the definition of improvements at cl 3(e) excluded “clearing, grassing and draining” or applied only to the lessee’s improvements.
[49] Sixth, I do not accept that general comments about the purpose of leases and rent reviews in S & M Property Holdings Ltd2 and Mandic3 cited by Mr Logan justify interpreting the reference at clause 3(e) to 'any improvements' to exclude lessor development improvements. S & M Property Holdings Ltd affirms the basic proposition that ground rent is the sum paid by the lessee "for use of land to be built on".4 The Supreme Court in Mandic explains that:5
The purpose of subtracting the value of the improvements is to prevent lessees paying rent on value they have created.
[50] And further:6
… The whole point of the exercise is to provide the lessor with a return calculated on a valuation of the land which excludes that portion of the value which has been contributed by the lessee in the form of substantial improvements of a permanent character.
[51] But it was for the contracting parties to define what improvements are to be excluded for rent review purposes.7 Plainly the clearing, grassing and drainage
2 S & M, above n 1.
3 Mandic, above n 1.
4 S & M, above n 1, at [70], citing Bartlett v Salmon (1855) 1 Jur NR 277, 43 ER 1142.
5 Mandic, above n 1, at [65].
6 At [81].
added value to the lease at the outset and are "improvements" in the orthodox sense of the term.8 Nevertheless the then owner specified that they were not improvements of a kind that required purchasing or affect the tender value for the lease. As I have said, a logical corollary of this is that these "improvements" were not to be included in the calculation of the base rental, and that inferentially the rental review was to be based on the value of the land without those improvements. There is some practical
and economic sense to this, because the matters identified require significant maintenance to be of ongoing value and presumably at a substantial cost to the lessee.
[52] Seventh, I have considered the authorities cited by Mr Logan to support his bifurcated definition of improvements. West Coast Settlement Reserve Lessees Association Inc v Valuation Appeal Committee for the West Coast Settlement Reserves9 appears most supportive of the Council’s position. In that case the Court considered valuation for rental purposes in the context of the Maori Reserved Land Act 1955. The leases in West Coast Settlement Reserve were subject to a statutory definition of improvements on land, namely all work done or material used on or for its benefit “at any time” by an owner or occupier.10 The Court held that “improvements” excluded from assessing rental should include only those occurring during the leasing of the land by the lessee (ie from the first lease).
[53] But, as the Court of Appeal noted:11
The expression “at any time” must be read in its historical context.”
[54] The Court of Appeal essayed that history at some length.12 It is sufficient to say that the language used reflected a legislative response to a complicated leasing
7 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [123], citing Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101 at [20], per Lord Hoffmann. These authorities were helpfully provided by Mr Withnall after the hearing. Mr Logan replied that the passages relied upon by Mr Withnall are not controversial.
8 Mandic, above n 1 at [45], citing Valuation of Land Act 1908, s 2 and referring generally to Cox v Public Trustee [1918] NZLR 95 (SC).
9 West Coast Settlement Reserves, above n 1.
10 At 430.
11 At 430.
history of previously confiscated Maori land and in circumstances where it could not have been the intention of Parliament to confer a windfall to lessees for improvements previously made by Maori land owners. The Court therefore concluded in that case:13
… The land ought to be envisaged as in its original state but with the Maori
clearings in the condition existing when such leasing began.
[55] Plainly the prospect of open ended legislative drafting conferring an otherwise unjust enrichment on the lessees did not resonate well with the Court.
[56] By contrast, the present case involved a relatively straight forward tender process and the tenderer acquired the lease interest on the premise that he was not required to “cover” the “clearing, grassing and draining” for the purpose of his tender. Objectively assessed there can be no unfairness or unjust enrichment when the lessor specifically frames the bargain to exclude those matters from
consideration.14 If there is no unfairness or unjust enrichment at the inception of the
leasing arrangements, none can be imported into the lease when, consistent with this prior agreement, those matters were expressly excluded from consideration in subsequent renewals. Indeed the tenderer may well consider that he had been played false if 21 years later he found himself called to account for “clearing, grassing and draining” when he was told he did not need to cover them.
[57] Finally I have included in the background facts reference to subsequent dealings. Wholesale Distributors Ltd v Gibbons Holdings Ltd15 is authority for the
proposition that such dealings may assist in contractual interpretation. But those
12 At 418 and 419. The primary issue in the case was whether or not the unimproved value of the land for rent review purposes needed to include the notional existence of native trees on the affected blocks. If correct, the Maori land owners would benefit from the corresponding increase in the unimproved value. The Court rejected the incorporation of “phantom trees” for the purposes of the assessment based on a clear legislative intent that the lessees were to be encouraged to clear the trees for the purposes of pastoral farming. Conversely, the Court of Appeal rejected the contention that the lessees should benefit from the clearing undertaken by the Maori land owners and that Parliament by using the language of “at any time” was concerned only to ensure that the lessees’ improvements during the full course of the leasehold were taken into account, in effect reversing the outcome in Re a Lease, Native Trustee to Crocker ([1935] NZLR 1030 (SC)). In that case the Supreme Court interpreted the rent fixing provision to mean that only the improvements during the period of renewal just expiring were to be taken into account.
13 West Coast Settlement Reserves, above n 1, at 430.
14 Vector Gas Ltd, above n 7.
15 Wholesale Distributors Ltd v Gibbons Holdings Ltd [2007] NZSC 37, [2008] 1 NZLR 277.
dealings do not provide a clear picture from which firm conclusions can be drawn. In 1989 the valuer for the Board was instructed that the “rental fixing basis excludes structural improvements only”. But this was challenged by the lessee (see [25] above). Then in 2011 the valuation recorded that “in making the rental assessment no account has been made of the structural value of the buildings, other improvements and fencing on the land.” It notes that “land developments are included in the rental assessment.” This is also challenged by the lessee.
[58] In these circumstances, I place no weight on subsequent dealings, save to the extent that clause 3(e) has remained constant.
Outcome
[59] I find that the reference at clause 3(e) to improvements includes “clearing, grassing and draining”.
[60] The declaration sought by the plaintiff is in broader and, with respect, unqualified terms. Some opportunity must be given to the parties to formulate a declaration in accordance with my finding to the extent that one is still necessary. Ten working days should suffice.
[61] The plaintiff is entitled to costs on a 2B basis and disbursements as fixed by the Registrar.
Solicitors:
Lucas and Lucas Limited, Dunedin
Ross Dowling Marquet Griffin, Dunedin
Attachment A
Tender Form
I, ………………………………………………………………………………………
(full name in block letters)
of ……………………………………………………………………………………....
(full postal address) (occupation)
hereby tender in accordance with the Conditions of Tender dated 29 May 1965 the following amount for the leasing of the property of 164 acres 2 roods 38 perches described as Sections 9, 10, 11, part 7 and Lots 11 and 12, Block XIII, Inch Clutha S.D and for the purchase of all improvements thereon except clearing, grassing and draining.
(a) £ …………………. per annum for the lease of the land.
(b) £………………….. for the purchase of the improvements.
Iwish to purchase these for cash/on deferred payments. (delete which does not apply)
3
0