Blakeman v General Distributors Limited - [2014] NZHC 2169

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-1322 [2014] NZHC 2169

UNDER The Declaratory Judgments Act 1908

IN THE MATTER OF

a Deed of Sublease

IN THE MATTER OF

an Application for summary judgment

BETWEEN

IAN THOMAS HAMILTON BLAKEMAN AND CRAIG MAURICE JOHNSTON

Plaintiffs

AND

GENERAL DISTRIBUTORS LIMITED Defendant

Hearing: 26 August 2014

Counsel:

N S Gedye QC and R C Mark for the Plaintiffs
M R Crotty and M Eastwick-Field for Defendant

Judgment:

9 September 2014

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1] The plaintiffs are the two trustees of the Blakeman Trust. For convenient reference, I will refer to them collectively in this judgment as “the Trust”.

[2] In December 1994 the Trust took a lease of some land in Paihia. The intention was to build a supermarket on the land, and the Trust duly set about developing the land for that purpose. On 1 September 2003 the Trust entered into a sublease with the defendant (GDL), and GDL now operates a Countdown supermarket on the land.

[3] The Trust’s head lease is due to expire on 6 December 2014. It gives the headlessor an option on expiry – it can either give notice in writing to the Trust one
month before expiry that it wishes to purchase the improvements or, if it does not

IAN THOMAS HAMILTON BLAKEMAN AND CRAIG MAURICE JOHNSTON v GENERAL DISTRIBUTORS LIMITED [2014] NZHC 2169 [9 September 2014]

give that notice, it is required to grant the Trust a new lease. The effect of that provision is that the Trust may not know until 6 November 2014 whether it will have any further rights as lessee of the land after 6 December 2014.

[4] The sublease given by the Trust to GDL was for a term of 10 years commencing 27 August 2001. There was one right of renewal, for a term of approximately two years and eleven months, and that right was exercised by GDL. The sublease provides for a final expiry date of 1 August 2014.

[5] GDL wishes to continue to operate the supermarket on the land. Clearly it will not be able to do that if the Trust is not granted a renewal of the headlease (or a new headlease) in December 2014, or if the Trust does not purchase the land. But if one of those situations does arise, GDL says that it is entitled to a right of first refusal on a new sublease of the land (or a new lease if the Trust has bought the land). It relies on a clause in the sublease which it says requires the Trust to offer it a new sublease (or new lease) in those circumstances.

[6] The clause in the sublease on which GDL relies is cl 2.4. Briefly, the clause provides that if the Trust has purchased the freehold of the land, or if it is granted a new headlease or the renewal of the headlease, then, if GDL is not in breach of the sublease…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Blakeman v General Distributors Limited

Details

AGLC: Blakeman v General Distributors Limited [2014] NZHC 2169
Case: [2014] NZHC 2169
Decision Date: 9 September 2014

CaseChat Overview and Summary

The case of Blakeman v General Distributors Limited involves a dispute between the trustees of the Blakeman Trust, who are the plaintiffs, and General Distributors Limited, the defendant, over the interpretation and application of a sublease agreement. The plaintiffs, as trustees, subleased land in Paihia to the defendant, GDL, for the operation of a supermarket. The sublease contains a provision for a right of first refusal to a new lease or sublease if certain conditions are met, specifically if the plaintiffs purchase the freehold land or are granted a new or renewed head lease. GDL sought to exercise this right before the conditions were met, leading to the plaintiffs applying for summary judgment to declare that GDL had not validly exercised its rights under the sublease and that the plaintiffs were entitled to immediate possession of the land.

The court addressed several issues, including whether GDL was entitled to give notice under the sublease's right of first refusal clause before the specified trigger events occurred. The court concluded that GDL was not entitled to give such notice before the trigger events because the plain meaning of the sublease's terms indicated that the trigger events had to occur before GDL could exercise its right. The court also rejected GDL's argument for an implied term that would extend its rights beyond the sublease's final expiry date, finding that such an implication was not supported by the sublease's language or the parties' intentions. Given these findings, the court declared that GDL had not validly exercised its rights under the sublease and that the plaintiffs were entitled to immediate possession of the land. The plaintiffs were also awarded costs on a 2B basis, plus disbursements as fixed by the registrar.

Orders