Caisteal an Ime Limited v Mount Cass Holdings Limited
[2025] NZHC 1494
•9 June 2025
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2024-409-000096
[2025] NZHC 1494
UNDER the Arbitration Act 1996 IN THE MATTER OF
an appeal against an arbitral award
BETWEEN
CAISTEAL AN IME LIMITED
Appellant
AND
MOUNT CASS HOLDINGS LIMITED
Respondent
Hearing: 30 May 2025 Appearances:
K W Clay for Appellant
J J Gasson for Respondent
Judgment:
9 June 2025
JUDGMENT OF PRESTON J
This judgment was delivered by me on 9 June 2025 at 3.00 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date……………
CAISTEAL AN IME LIMITED v MOUNT CASS HOLDINGS LIMITED [2025] NZHC 1494 [9 June 2025]
[1] The parties Caisteal An Ime Limited (Caisteal) and Mount Cass Holdings Limited (Mount Cass) are tenant and landlord, respectively, under a deed of lease of commercial premises at Akaroa.
[2] In a decision of 6 December 2024 (the 2024 judgment) I dismissed Caisteal’s appeal against an arbitral award which determined that the lease includes an annual rent review.1
[3]Caisteal seeks leave for a second appeal.
Background
The dispute
[4] Before the arbitrator, Caisteal contended there was no right of rent review available to Mount Cass under the lease as completed by the parties.
[5]The dispute concerns cl 11 of the deed of lease:
11. RENT REVIE W DATES (Specify revi insert dates for renewal dates terms. Unles specified ther reviews. Wher conflict in dat
rent review dat
ew type and
1. Market rent review dates:initial term,
and renewal Nil
s dates are e will be no
e there is a 2. CPI rent review dates:
es, the market Annually
e will apply.)
[6] The parties had deleted the market rent provision, entering “Nil” and inserted under the CPI rent review provision the word “Annually”.
[7] Caisteal’s position was that the use of the word “Annually” to identify the date for a rent review was insufficient to meet the requirement to specify a date for rent review. It claimed before the review provision could be effective, an actual date was
1 Caisteal An IME Ltd v Mount Cass Holdings Ltd [2024] NZHC 3706 at [24].
required to be inserted. In substance, it argued that no agreement for a rent review had been concluded and it was therefore under no obligation to pay an increased rent.
[8] Mount Cass’ position was that the lease provided that a CPI rent review was to take place annually on the anniversary of the lease. Mount Cass submitted that given the market rent review provision had been struck out with the word “nil” written below and the CPI rent review had not been crossed out, the word “annually” had to be given effect.
The arbitrator’s determination
[9] The arbitrator found against Caisteal. He held Mount Cass was entitled to a CPI rent review on each anniversary of the commencement date of the lease. He determined that the word “Annually” was inserted prior to execution of the document and, given the parties deliberately used the term “Annually”, the only objective conclusion available was that the parties intended there would be an annual CPI rent review. Accordingly, he concluded “the only rational conclusion is that [the rent review] was to occur annually on the anniversary of the commencement date of the Lease”.
The appeal to the High Court
[10] The parties’ agreement provided for a right of appeal to this Court, on a question of law.2
[11]Caisteal proposed the question of law:3
[Is there] a rent review under the [Deed] when [it] states at clause 11 of the First Schedule that unless dates are specified there will be no reviews and no dates were specified.
[12] Before me, Caisteal in essence argued the arbitrator was wrong in finding there was a right of rent review, as the parties’ insertion of the word “Annually” did not sufficiently specify a date as required.
2 By agreement under the Arbitration Act 1996, sch 2 cl 5(1).
3 Caisteal An IME Ltd v Mount Cass Holdings Ltd, above n 1 at [28].
[13] Mount Cass opposed the appeal. It argued there was no justiciable question of law, only a (further) challenge to the arbitrator’s determination of the facts by orthodox interpretation of the contract terms. In any event, the arbitrator’s decision was substantively correct.
Judgment
[14] In the 2024 judgment, I proceeded on the basis (without deciding) that the appeal raised a mixed question of fact and law and given the divergence of authorities on whether such a mixed question was capable of founding an appeal under sch 2 cl 5 of the Arbitration Act 1996 (the Act), I would deal with the appeal on the merits rather than make a definitive finding on the jurisdictional issue.
[15] As noted, the submissions for Caisteal on the appeal sought to relitigate the issue which had been before the arbitrator, contending that the parties’ insertion of the word “Annually” did not sufficiently specify a date as required.
[16] In dismissing the appeal, I found no error was disclosed in the arbitrator’s approach. He determined the issue of contractual interpretation applying orthodox principles informed by the approach set out by the Supreme Court in Bathurst Resources Ltd.4
[17] I concluded that the parties must have intended to insert the word “Annually” and intended the deletion of the market rent review provision and addition of the term “Annually” to be effective. The parties were free to shape their bargain as they saw fit. Having agreed to use the term “Annually”, it overtook the standard terms of the lease contained in brackets in cl 11. Having agreed that a CPI review would occur annually, that bound Caisteal and it could not be heard to say that its agreed use of that term was of no effect.
4 Bathurst Resources Ltd v L&M Coal Holdings Ltd [2021] NZSC 85.
Principles: application for leave for a second appeal
[18] Clause 5 of sch 2 of the Act deals with appeals on a question of law. The initial appeal was brought pursuant to cl 5(1)(a). Clause 5(5) relevantly provides for a second appeal, to the Court of Appeal against the determination of this Court, by leave.
[19] The Court of Appeal in Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd, held that the criteria for leave to appeal to be granted under cl 5(5) of sch 2 of the Act is whether the appeal raises some question of law or fact capable of bone fide and serious argument in a case involving some interest, public or private, of sufficient important to outweigh the cost and delay of further appeal.5
[20]McGechan on Procedure notes that:6
It is now generally accepted that, in applications under cl 5(5), the principles generally applicable to second appeals would be applied: Cooper v Symes.7 It is not simply a question of demonstrating error; there must be an issue of sufficient importance to justify a further appeal.
[21]This approach was approved in Downer Construction.8
Analysis
The grounds relied on for leave
[22]The question of law said to arise for which leave is sought is:
Is there a right to a rent review in the Deed of Lease (Auckland District Law Society (6th edition) form) when there is no date(s) specified in the Deed of Lease?
[23] Mr Clay, counsel for Caisteal, submits the question whether there is a rent review under the deed of lease is one worthy of further consideration and that the appeal raises a question of law or fact capable of bona fide and serious argument. Mr Clay submits that the appeal involves a matter of public and/or private interest as
5 Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd [2007] NZCA 355, [2008] 2 NZLR 591 at [30] citing Waller v Hider [1998] NZLR 412 at 413.
6 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR 26.14.01].
7 Cooper v Symes (2001) 15 PRNZ 166.
8 At [33].
it involves the interpretation of the Auckland District Law Society Deed of Lease (Sixth Edition) 2012(5) (the ADLS Lease Form) being a form in common use, and that the appeal is of sufficient importance to outweigh the cost and delay of a second appeal.
[24] For the respondent Mr Gasson submits the proposed question does not identify any question of law capable of serious argument. Further, he argues the question does not arise as a result of this Court’s judgment because I determined (upholding the arbitrator’s finding) that a date for a rent review was specified.
Discussion
[25] I do not consider the appeal raises a question of fact or law capable of bona fide and serious argument. Notwithstanding Mr Clay’s submissions, I do not accept the premise underlying his proposed question of law—that no date was specified for the rent review—is reasonably arguable.
[26] As I have already touched on, Caisteal agreed to insertion of the word “Annually” in respect of the CPI rent review clause in the deed of lease. As discussed in the 2024 judgment the word “Annually” was also included in the preceding agreement to lease between the parties, in a clause that was identical save that the word “Nil” does not appear below the struck-through words “Market rent review dates”.
[27] Mr Clay in reliance on the preceding chronology and interactions of the parties which were in evidence before the arbitrator argues that Caisteal never accepted that there had been agreement to a rent review. But this does not advance the basis for leave. There was no contest before the arbitrator that the deed was to be interpreted as executed and upon the wording mutually inserted (and that struck out) by the parties, which wording substantively reflected the earlier agreement to lease. Indeed, as both the original question of law before me on the substantive appeal and the question of law proposed on the application for leave indicate, Caisteal relies upon the wording of cl 11 and its interpretation.
[28] The parties having agreed to use the word “Annually” must have intended it to have some effect. Why else was it included? The parties did not intend to delete the
CPI rent review clause—had they done so, they would have struck the clause through in the same way that they deleted the market rent review clause. I do not consider there is a tenable argument that the parties having expressly deleted a market rent review clause and inserted the word “Annually” to the CPI clause can have intended that there be no rent review—as is the effect of Caisteal’s submission.
[29] Mr Clay’s submission, noted at [43] of the 2024 judgment, that there can be no rent review as no date is specified is a restatement of the issue addressed by the arbitrator. Mr Clay described this in oral submissions as the fundamental proposition to be advanced on the proposed second appeal: that “annually is not a date and therefore why go beyond that?” But this argument simply (again) begs the question as to the interpretation of the clause as executed by the parties, which I have found the arbitrator correctly—and inevitably—determined in Mount Cass’ favour.
[30] As noted and recorded in the 2024 judgment at [19], the arbitrator interpreted cl 11 starting from the position that the parties had agreed to use the term “Annually”.
[31] I do not consider Caisteal has framed an arguable response to the arbitrator’s conclusion that by inserting the word “Annually”, that can only indicate that the parties’ mutual intention was for there to be a CPI rent review on the anniversary of the commencement of the lease. In other words, Caisteal must submit that the word “Annually” is of no effect even though it was a term the parties agreed to use. No principled basis is advanced for treating the word as if it was not present.
[32] I dismissed an argument that the words in brackets in cl 11 meant the parties were not able to agree to use the term “Annually”.
[33] Mr Clay does not point to any authority for the proposition that the printed words in brackets on the form included as part of cl 11 prevented the parties from using the word “annually”. The lease itself contemplates that the parties are free to amend the clause as they think fit. Clause 47.1 of the lease directs that inserted terms prevail over printed terms. Mr Clay’s submission on this point amounts to saying where there is a conflict between the printed term/explanatory note referring to a date
and the parties inserting the word “annually”, the printed term prevails. Clause 47.1 means this submission is not open to Caisteal.
[34] For similar reasons a new argument Mr Clay raised in oral submissions for Caisteal does not disclose a ground for leave. Counsel suggests the contra proferentum rule—that any ambiguity is to be interpreted against the drafter—applies and means that cl 11 must be interpreted in Caisteal’s favour. But that ignores the wording of the clause as (mutually) executed by the parties, who nominated a CPI rent review and inserted the word “annually” in relation to that provision.
[35] I do not accept, as Mr Clay submits, cl 11 contains no specific dates nor a “reference formula”, as that is what the word “Annually” is.9 Again, this is a further iteration of the essential challenge considered but rejected by the arbitrator and this Court on appeal; that there is no rent review because the word annually “is not a date”. But “Annually” captures in one word that the date upon which the rent review will occur is the anniversary of the commencement of the lease.
[36] Nor do I accept that because the proposed appeal concerns a word inserted into the ADLS Lease Form it involves a question of public interest. While Mr Clay cites several authorities in support of that submission, none is on point; the use of the standard form does not elevate the issue by that reason alone. The proposed appeal does not relate to the meaning of a standard term of that document but the effect of a particular term inserted by the parties in their lease. In short, it is a case on its own facts.
[37] Mr Clay further submits that the conclusion I reached means that the words in brackets under the heading of cl 11, which state “… Unless dates are specified there will be no reviews. …”, are of no effect. That submission misconstrues the effect of the brackets. As I described in the 2024 judgment, the words in brackets can be characterised as marginal or explanatory notes or prompts to the person completing the Schedule.10 These words do not, as proposed by Mr Clay, prohibit the parties
9 The submission advanced the argument having regard to cl 10 of the preceding Agreement to Lease rather than cl 11 as completed but there is no material distinction between the clauses.
10 At [52].
agreeing to use the term “Annually” or any other term that they wish. Again, so much is clear from the presence of cl 47.1. In short, the words do not present a contractual or other barrier to the parties shaping their bargain as they saw fit.
[38] Nor did the 2024 judgment find, as Caisteal contends, that “the parties do not need to specify date(s) for there to be a rent review”. To the contrary I determined that in this case the parties’ use of the word “annually” necessarily indicated the term (and date) of the rent review agreed by the parties; upon the anniversary of the commencement date of the lease.
[39] Mr Clay also reiterates the argument ventilated before me on the appeal (as was advanced before the arbitrator) based on a seminar paper with commentary from some of the drafters of the lease. The drafters’ view was that they had designed the clause, that is the words in brackets, because in their view justifying a rent review by reference to a period of time was not sufficient because in their experience, doing so was giving rise to dispute. This material did not shed light on what the parties in this case meant by using the word “Annually”, the critical issue before the arbitrator, and this Court on appeal. First, as I held, the arbitrator considered this contextual material and determined it did not preclude the parties’ ability to use the word “annually” to identify the date for rent review. No error is disclosed in the arbitrator’s analysis. Second, as the respondent notes, the seminar paper does not have legal effect and in any event, the drafters of the lease provided that inserted terms prevail.
[40] Finally, and again as raised on the appeal Mr Clay argues there is a strong commercial interest in ensuring that parties to commercial contracts are able to rely upon a uniform construction being given to standard terms. He notes the ADLS Lease Forms are in common use and submits the commercial community is best served by certainty as to their interpretation. As with the more general proposition that (mere) use of the form renders the appeal one of public importance, this submission must be assessed on the facts of this case. The dispute is not the interpretation of one of the printed terms of the lease but of a term inserted by the parties. Again, that is to give the words in brackets below the “Rent Review Dates” heading some elevated status such that they bar parties using their own term.
Conclusion
[41] Caisteal’s arguments in support of leave reiterate the arguments considered but dismissed in the 2024 judgment.
[42] All are a variation on a theme: that the words in brackets prevented the parties using anything other than a specific date for the rent review. This submission does not confront the status of the words in brackets as marginal notes/explanatory notes, that the lease expressly provides that the parties can insert their own terms and that the certain terms prevail, nor that the parties agreed to use the term “Annually” and Mr Clay’s submissions give that agreement no effect.
[43] For these reasons I can see no bona fide and serious argument that the words in brackets in cl 11 prevented the parties contracting on the basis that the CPI review would occur annually.
[44]Accordingly, the application for leave to appeal is declined.
Costs
[45] There is no reason why costs should not follow the event. Costs were awarded in the 2024 judgment on a 2B basis, which costs have been paid. Mount Cass has the benefit of a solicitor-client costs clause but no submission was advanced before me addressing costs. Should costs be sought on this basis, Mr Riches, counsel for Mount Cass, is to file within 10 working days a memorandum with supporting evidence.
[46] Otherwise, the order of the Court will be that costs are awarded on a 2B basis with reasonable disbursements as fixed by the Registrar.
Solicitors:
Layburn Hodgins Ltd, Christchurch Saunders & Co, Christchurch
Copy to counsel:
K W Clay, Barrister, Christchurch
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Preston J
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