D M Roberts Limited v Mudgway - [2013] NZCA 187

IN THE COURT OF APPEAL OF NEW ZEALAND

CA454/2012
[2013] NZCA 187

BETWEEN	D M ROBERTS LIMITED Appellant
AND	MARK SHANE MUDGWAY AND LEE ANNE MUDGWAY Respondents

Hearing:	20 February 2013
Court:	Stevens, French and Ronald Young JJ
Counsel:	K Cotter and W T Nabney for Appellant M J Fisher and P M Hardie for Respondents
Judgment:	30 May 2013 at 11.30 am

JUDGMENT OF THE COURT

AThe appellant’s application for leave to adduce further evidence is dismissed.
BThe appeal is dismissed.
CThe appellant must pay costs to the respondents on a band A basis with a 25 per cent uplift plus usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by French J)

Table of Contents

Para No

Introduction  [1]
Factual background  [5]
The decision of the High Court  [27]
Grounds of appeal  [36]
The summary judgment application  [45]
The application for a stay  [55]
Appeal against costs  [63]
Costs on this appeal  [68]
Outcome  [71]

Introduction

D M Roberts Ltd (D M Roberts) refused to give its consent as lessor to the proposed assignment of a lease unless certain conditions were satisfied. The respondents Mr and Mrs Mudgway, who were seeking the consent, contended that the refusal was unreasonable. They issued summary judgment proceedings in the High Court. D M Roberts opposed the summary judgment application and also applied for a stay on the grounds that the dispute ought to go to arbitration in accordance with an arbitration clause in the lease.
Both applications were heard by Associate Judge Doogue. The Associate Judge found that D M Roberts had no arguable defence to the summary judgment application. He granted various declarations sought by the Mudgways and declined D M Roberts’ application for a stay.[1] In a later decision, the Associate Judge also awarded costs against D M Roberts.[2]
[1]Mudgway v D M Roberts [2012] NZHC 1463.
[2]Mudgway v D M Roberts [2012] NZHC 1981.
D M Roberts now appeals both decisions. In addition, the company has filed an application for leave under r 45 of the Court of Appeal (Civil) Rules 2005 to adduce further evidence.
The key issues raised by the appeal are:
(a)Were the conditions that D M Roberts sought to impose simply a statement of existing rights and obligations under the lease, or did they constitute additional obligations?
(b)In determining whether a dispute existed for the purposes of art 8 to the First Schedule of the Arbitration Act 1996, did the Associate Judge err in applying an “arguable defence” test?

Factual background

Mr D M Roberts was a very generous benefactor. His company, D M Roberts, owned a large rural property on Old Kaimai Road, Tauranga. In 1985, the company granted a 999 year lease over the land to trustees for the purpose of providing a recreational centre for students attending Tauranga Boys’ College.
A written memorandum of lease was duly signed on 18 March 1985, the lessees being the trustees of a trust which was to be incorporated and called the…

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.

Keep reading for free

Create a free CaseChat account to read D M Roberts Limited v Mudgway and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2013] NZCA 187
Decision Date: 30 May 2013 at 11.30 am

CaseChat Overview and Summary

In the case of D M Roberts Limited v Mudgway, the dispute involved the interpretation and enforcement of a lease agreement, specifically the Memorandum of Lease concerning a tourist lodge. The court had to decide whether the defendants, the Mudgways, had wrongfully withheld consent to the assignment of the lease by the plaintiffs, D M Roberts Limited, to a new party. The plaintiffs also sought a declaration that the defendants' conditions for granting consent were unreasonable and arbitrary.

The legal issues before the court included whether the defendants had the right to impose conditions on the assignment of the lease and whether such conditions were reasonable. Furthermore, the court needed to determine if the plaintiffs were entitled to assign their lease interest to the proposed assignee, R H Pryor or Nominee, and if the assignment would constitute a breach of the lease. Finally, the court had to decide whether the plaintiffs were entitled to have the court stay the proceedings in favor of arbitration, as per the Arbitration Act 1996.

The Associate Judge rejected the plaintiffs' argument that a stay should be granted based on the mere existence of a dispute. The court found that the plaintiffs needed to demonstrate a real question to be tried, and they were unable to do so given the judge's interpretation of the lease. The judge granted several declarations in favor of the plaintiffs, including that two staff members of the tourist lodge were entitled to reside there with their children, that the defendants unreasonably withheld their consent to the assignment, and that the plaintiffs were entitled to assign their lease interest to R H Pryor or Nominee.

The court's final orders included the declarations mentioned above, affirming the plaintiffs' rights under the lease and the invalidity of the defendants' conditions for consent. The court did not grant the stay of proceedings in favor of arbitration, finding that the plaintiffs had not met the necessary criteria under the Arbitration Act 1996.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Finally, there remained the issue of the stay application. That had been brought in reliance on art 8(1) of the First Schedule of the Arbitration Act 1996 which provides:Arbitration agreement and substantive claim before court – (1) A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting that party’s first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed, or that there is not in fact any dispute between the parties with regard to the matters agreed to be referred. Counsel for D M Roberts submitted that in light of art 8, the only basis on which the Mudgways could prevent a stay was if there was no dispute between the parties. However, the existence of a dispute was self-evident and therefore the stay should be granted. It was further submitted that insofar as the Court of the Appeal decision in Royal Oak Mall Ltd v Savory Holdings Ltd suggested that the company was required to go further and show that it had an arguable defence, that decision had been decided under different legislation and had been overtaken by the enactment of the 1996 Arbitration Act.[4] [4]Royal Oak Mall Ltd v Savory Holdings Ltd CA106/89, 2 November 1989. Those arguments were rejected by the Associate Judge. Following Pathak v Tourism Transport Ltd, he found that any changes in the legislation were not such as to require a different approach and therefore it was necessary for D M Roberts to demonstrate there was a real question to be tried.[5] This it was unable to do in light of the Judge’s interpretation of the lease.[5]Pathak v Tourism Transport Ltd [2002] 3 NZLR 681 (HC). The Associate Judge then granted the following declarations:[6](a)“Under the terms of the Memorandum of Lease two staff members of the tourist lodge being operated on the demised land are entitled to reside there with their children”;(b)“The defendant unreasonably and/or arbitrarily [withheld] its consent to a proposed assignment of the lease by the plaintiffs to R H Pryor or Nominee contrary to clause 5 of the Memorandum of Lease by making its consent conditional on:(i)the proposed assignee signing the acknowledgement sought in Sharp Tudhope’s letter to Jones Howden dated 22 December 2011”; and/or(ii)the assignor and the proposed assignee agreeing to the variations to the lease set forth in the Fifth Schedule to a proposed Deed of Assignment of Lease (at exhibit “T” to the affidavit of D M Roberts sworn 15 March 2012.)(c)“The plaintiffs [were] entitled to assign their interest in the lease to R H Pryor or Nominee and such assignment, on terms that the assignee would sign a Deed of Covenant confirming that it would abide by the terms of the lease and of any resource consent relating to the property, would not have constituted a breach of the lease”.