Fullers Bay of Islands Limited v Otehei Bay Holdings Limited HC Auckland Civ-2009-404-007207
[2011] NZHC 133
•23 February 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2009-404-007207
BETWEEN FULLERS BAY OF ISLANDS LIMITED First Applicant
ANDINTERCITY GROUP (NZ) LIMITED Second Applicant
ANDOTEHEI BAY HOLDINGS LIMITED First Respondent
ANDEXPLORE NZ (2004) LIMITED Second Respondent
ANDMINISTER OF CONSERVATION Third Respondent
Hearing: 17-18 February 2011
Counsel: J D McBride and R W Jenson for the Applicants
S J Katz and D J Minhinnick for the First and Second Respondents with S Pilkington appearing on 18 February in place of Mr Minhinnick
M Moodie for the Third Respondent (present on the first day only)
Judgment: 23 February 2011
JUDGMENT OF ASHER J
This judgment was delivered by me on Wednesday, 23 February 2011 at 11am pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel:
Bell Gully, DX CP20509, Auckland 1140. [email protected]
Russell McVeagh, DX CX10085, Auckland 1140. Email: [email protected]Crown Law Office, PO Box 2858, Wellington 6140. Email: [email protected].
FULLERS BAY OF ISLANDS LIMITED V OTEHEI BAY HOLDINGS LIMITED HC AK CIV-2009-404-
007207 23 February 2011
The application
[1] The applicants, Fullers Bay of Islands Ltd and Intercity Group (NZ) Ltd, referred to as ―Fullers‖, and the first and second respondents, Otehei Bay Holdings Ltd and Explore NZ (2004) Ltd, referred to as ―Otehei‖, run competing tourist service businesses, including ferry services, in the Bay of Islands. Following a defended hearing, by a judgment of 24 September 2010 Fullers as plaintiffs succeeded in obtaining certain orders against the respondents relating to the lease of
Otehei Bay and their activities.[1] This application is by Fullers requesting further
[1] Fullers Bay of Islands Ltd v Otehei Bay Holdings Ltd HC Auckland CIV-2009-404-7207,
24 September 2010.
interim orders pending the determination of an appeal under r 12 of the Court of
Appeal (Civil) Rules 2005.
A brief background
[2] Urupukapuka Island is owned by the Crown and administered by the Department of Conservation, and the Minister is the third respondent in this appeal. At Otehei Bay there is a wharf and modest resort facilities. For many years Fullers ferries had called at the wharf at Otehei Bay at Urupukapuka Island, the largest island in the Bay of Islands, so that their patrons could enjoy the bay and its facilities.
[3] It is not necessary to go into the detailed history of the leases of the bay and the use by Fullers and Otehei of the wharf and facilities. Since 4 June 2009 Otehei have been the lessees of about five hectares of land containing the wharf and resort. Otehei had obtained an assignment of the lease and purchased the resort from the previous owners who were in receivership. As full competitors of Fullers, tensions quickly arose between Otehei and Fullers as Fullers continued to attempt to disembark passengers. Otehei were not prepared to allow Fullers or their patrons to use the wharf and resort as they had done before, and took steps as lessee to stop
them doing so.
[4] Fullers issued proceedings pleading that they were entitled to use the wharf at Otehei Bay and that Otehei’s lease was unlawful. On 8 December 2009, Heath J issued an interim injunction, ordering that Otehei should not deny Fullers reasonable access for their vessels to transport passengers to and from the island, or access across the leased land.[2]
[2] Fullers Bay of Islands Ltd v Otehei Bay Holdings Ltd [2010] NZRMA 306 (HC).
[5] Hugh Williams J heard the substantive proceedings and in his judgment of
24 September 2010 declared that Fullers were entitled to access to the wharf on certain terms.[3] He declared that the Crown and the lessees had acted unlawfully in entering into the leases of the island, because they were not authorised by a concession under Part 3B of the Conservation Act 1987. He considered that Fullers had succeeded on all three of their causes of action. However, he did not grant Fullers all the relief they sought and did not declare the lease invalid or restrain
Otehei from continuing to exercise their rights as lessees.
[3] Above n 1.
[6] Otehei have appealed against the decision of Hugh Williams J to the Court of Appeal. Pending appeal, on 18 October 2010 Andrews J heard an application by Otehei for a stay of the order declaring the action of entering into the lease to be unlawful.[4] She declined to grant to Otehei all the relief sought, but made an order restraining the Minister of Conservation from taking any steps to enforce the order declaring the action of entering into the lease unlawful. The effect of this has been that Otehei have continued as lessee, while observing the interim injunction restraining orders issued by Heath J.
[4] Fullers Bay of Islands Ltd v Otehei Bay Holdings Ltd HC Auckland CIV-2009-404-7207, 2 November 2010.
[7] Fullers then appealed the decision of Andrews J to the Court of Appeal seeking confirmation that Hugh Williams J had determined Otehei’s activities at Otehei Bay were unlawful and unauthorised, and confirmation that Otehei were not entitled to exclude members of the public from any parts of the leasehold land. The
Court of Appeal dismissed that appeal stating that Fullers could not obtain injunctive
relief in a stay application by sidewind.[5] It observed that Fullers could always seek injunctive relief if they considered Otehei were acting unlawfully.[6]
[5] Fullers Bay of Islands Ltd v Otehei Bay Holdings Ltd [2010] NZCA 594 at [13].
[6] Ibid.
[8] On 21 January 2011, Fullers made this application for interim orders. The application was reworded in an amended application of 3 February 2011. The interim relief now sought is as follows:
The first respondent and its directors, officers, agents and employees be restrained from refusing members of the public entry to or service (on its normal terms and conditions) at its café and ablution facilities at Otehei Bay, provided that such restraint shall only apply:
(i) when the café and ablution facilities are open for business, at the discretion of the first respondent; and
(ii) to the extent it is not inconsistent with a concession held by the first respondent under Part 3B of the Conservation Act 1987.
[9] Thus, we have the somewhat unusual situation of respondents that have succeeded in obtaining judgment and costs in the High Court seeking interim orders under the stay provision of r 12 of the Court of Appeal (Civil) Rules.
What Fullers want
[10] Fullers have filed affidavit evidence, the effect of which is that the café and ablution facilities at Otehei are not being made available to Fullers patrons. Since Otehei took over the resort in mid-2009 they have refused to serve Fullers patrons save for a period of some months following the judgment of 24 September 2010. In recent times the position appears to have been rather fluid with Fullers patrons on occasions being allowed to use the Otehei facilities and on other occasions being diverted to alternative temporary facilities that Otehei have made available to them. The alternative facilities arrangement fell down when Otehei required Fullers to pay
$1,150 for the provision of such additional services. Fullers’ essential complaint is that Otehei are not treating Fullers passengers who disembark at the island and walk
onto the resort area in the same way as they treat their own passengers.
[11] In submissions for Fullers Mr McBride made it clear that Fullers would not object if there were no facilities made available to any members of the public by Otehei. What they objected to was Otehei following a discriminatory policy, favouring their own customers. He relies on a statement of Chambers J made when delivering the Court of Appeal judgment of 7 December 2010 rejecting Fullers’ appeal:
[13] If Otehei acts contrary to what Hugh Williams J has ordered in the period pending the hearing of the substantive appeal, it does so at its own risk. Andrews J’s order confers no immunity on Otehei, as its counsel, Mr Whata, accepted. Fullers, if they consider Otehei is acting unlawfully, can apply in the High Court for appropriate injunctive relief. Fullers have not, at least as yet, sought such relief. The proviso to Andrews J’s order that they now seek is in effect an attempt to obtain injunctive-like relief by sidewind. That course is clearly not open to them on this appeal.
The nature of the r 12 jurisdiction
[12] Otehei submit that the proceedings have been substantively determined in the High Court which is now functus officio. They submit that the only residual discretion is that conferred by r 12, to protect the position pending the determination of the appeal. They submit what Fullers are now seeking runs significantly against the tenor of the judgments of Andrews J and the Court of Appeal.
[13] Rule 12(3) provides:
12 Stay of proceedings and execution
…
(3) Pending the determination of an application for leave to appeal or an appeal, the court appealed from or the Court may, on application,—
(a) order a stay of the proceeding in which the decision was given or a stay of the execution of the decision; or
(b) grant any interim relief.
[14] Mr McBride noted that the comparable rule in the now revoked Court of Appeal (Civil) Rules 1997 empowered this Court or the Court of Appeal to ―grant other interim relief‖. The wording of the new rule of ―grant any interim relief‖ is
therefore wider than that of the old.[7] However, the discretion cannot be treated as unlimited. It is for ―relief‖ presumably from the effects of the judgment. The relief is stated to be ―[p]ending the determination of … an appeal‖. So it is ―interim‖; that is, to last only until the appeal is determined. Its purpose is to provide a mechanism to ensure that there will be no developments following the judgment that prevent justice ultimately being done between the parties when the appeal is heard. Buckley LJ in Minnesota Mining & Manufacturing Co v Johnson & Johnson[8] stated:
The object, where it can be fairly achieved, must surely be so to arrange matters that, when the appeal comes to be heard, the appellate court may be able to do justice between the parties, whatever the outcome of the appeal may be.
[7] Noted by Panckhurst J in Willowford Family Trust v Christchurch City Council [2006] 1 NZLR 791 (HC) at [7].
[8] Minnesota Mining & Manufacturing Co v Johnson & Johnson [1976] FSR 139 (CA) at 144.
[15] Normally the rule is used by an appellant who is seeking to stay some or all of the orders that it is appealing. Here we have the unusual position of Otehei being the appellants, but the respondents Fullers being the parties seeking relief. I have no doubt that there is no bar to a respondent seeking relief. It could be expected, however, that such relief would be to protect or hold a de facto position, which could be confirmed and become permanent on appeal. Just as the interim injunction jurisdiction in r 7.53 of the High Court Rules is designed to protect the position of litigants pending the hearing of the relevant causes of action, so the interim relief should protect the position of the parties in a trial pending the hearing of the various points being raised on appeal or cross-appeal. The aim is to prevent developments in the interim which may stop the appellate Court being able to do justice on the points at issue, when they are determined. The rule is headed ―Stay of proceedings and execution‖. The relief sought must have a direct connection to the proceedings, or execution of the judgment.
[16] It has been held that where a Court has made a declaration of invalidity there is no jurisdiction to grant interim relief even on a partial basis.[9] However, Fullers are not seeking a stay of a declaration of invalidity. To the contrary they seek to support that declaration of invalidity, but seek further orders going beyond those made in the
judgment in their favour.
No basis for relief sought
[9] Willowford Family Trust v Christchurch City Council, above n 7, at [22]–[24].
[17] Fullers do not have to establish a serious question to be tried as they have actually established their causes of action in court. There is not only an arguable case; the case has been proven. This is not an application in the nature of an interim injunction pending the hearing of a proceeding.
[18] Otehei’s notice of appeal itself disputes the finding that the entry into the lease was unlawful. Success for Otehei will mean no orders at all. So that can give rise to no orders equivalent to those so sought in this application as interim relief. Fullers have cross-appealed. The cross-appeal seeks declarations that the registration of the lease was wrongly obtained and a direction that the registration be cancelled, a direction that Otehei apply for a concession and that the Minister of Conservation comply with Part 3B of the Conservation Act when considering such a concession. None of these points of cross-appeal, if successfully pursued, will give Fullers the relief they seek in this application. The cross-appeal does not state or imply that Hugh Williams J should have made orders requiring Otehei to make available their café and ablution facilities when open for business to all comers.
[19] It is not surprising that the cross-appeal does not seek such relief, as the statement of claim did not contain any cause of action alleging that Otehei were obliged to make available such facilities. As Ms Katz pointed out, the statement of claim does define recreation facilities, but in doing so makes no mention of the café and ablution facilities. They are not part of the activity in respect of which relief is sought.
[20] Mr McBride sought to argue that the terms of the cross-appeal are largely irrelevant, and that the cross-appeal is only being brought to try and clarify certain points in Fullers’ favour and would not be pursued should the substantive appeal be withdrawn. I do not consider that the relevant cross-appeal can be so easily dismissed. The relief sought under r 12 must protect the position that will be ruled on in the appeal. It cannot derive from a general wish to do justice between the parties. Justice is referenced only against the issues squarely raised on the appeal.
[21] Mr McBride went on to submit that the basis for the relief sought could be seen in the third cause of action of the statement of claim where it is pleaded that the lease and the operation of the resort were unlawful in that the resort could not be operated without a concession. However, if the lease is unlawful and the resort is being run unlawfully by Otehei, then to direct Otehei to carry out a particular service at the resort for Fullers patrons would be to perpetuate the unlawfulness, and it would be to make orders that go further than those sought in the third cause of action.
[22] Thus, Fullers are seeking interim orders which will give them relief they did not seek in their claim and are not seeking on appeal. This seems to me fatal to the application. Rule 12 is not designed to give a Court a general discretion to make any further orders it might consider just, to resolve further disputes that have arisen since the hearing. A Court cannot give relief in the jurisdictional vacuum of an unpleaded claim. The difficulty faced by Fullers in this application is demonstrated by the fact that the appeal will not be rendered nugatory by a refusal to make these orders. These orders have nothing to do with the registration of the lease or of the direction that there should be an application for a concession, sought in the cross-appeal. Nor do they have anything to do with the relief sought by Otehei in their appeal, which will be the setting aside of the orders made by Hugh Williams J. They have no direct connection to the proceedings, or execution of the judgment, and do not fall within the r 12 jurisdiction.
[23] This point is determinative of the appeal. However, I go on to consider some of the further points raised.
Nature of the orders
[24] Despite the restraining nature of the language used, Fullers are effectively seeking a mandatory injunction requiring their competitors Otehei to serve Fullers’ patrons at their café and provide ablution facilities. This was not something that Otehei have done since they assumed ownership of the lease in mid-2009, save for a period of approximately three months following the substantive judgment. The making of the orders Fullers seek will effectively change the status quo as it existed
at the time of the issue of the proceedings, and at the time of the judgment, and indeed at the present time. Moreover, it will require an ongoing relationship between Fullers (through their patrons) and Otehei.
[25] These seem to me to be discretionary factors which weigh very much against the granting of any interim relief. Fullers will get something that they did not have when they issued the proceedings, and there will be the ongoing potential for complaints and disputes as the parties work together by mandatory Court order. Will the Court next be asked to intervene because Otehei’s staff are not friendly to Fullers’ patrons? An injunction will generally not be granted requiring a defendant
to perform personal services.[10] Such an order would require constant supervision.
While I do not regard the nature of the services in this case as being so personal as to be a bar to relief being granted, it is a factor weighing against the grant of an injunction that a commercial relationship will be forced on competing parties, which may well give rise to ongoing problems.
[10] Sudholz v Nelson [1922] NZLR 710 (SC); New Zealand Dairy Factories and Related Trades Employees’ Industrial Union of Workers v New Zealand Cooperative Dairy Company Ltd [1959] NZLR 910 (SC).
[26] Mr McBride argues that the case is unusual and that Otehei are seeking to act as if they won on the lawfulness of their lease, whereas in fact they lost and are carrying on an unlawful activity with no concession. They are seeking to continue to exploit the competitive advantage that they obtained by the unlawful lease. The answer to this is that Otehei did in fact succeed in persuading Hugh Williams J not to make an order removing the leases from the title and declaring that Otehei’s resort operation was unlawful and unauthorised. Otehei’s actions are not inconsistent with the tenor of the judgment of Hugh Williams J, which is to make only limited and precise directive orders against Otehei. There is nothing outrageous in Otehei seeking to continue to exercise their rights as lessees, given the fact that after some initial hiccups they appear to have observed the terms of the interim orders of Heath J.
[27] I do not think that the judgments of Heath and Andrews JJ, or that of the
Court of Appeal, support Mr McBride’s claim for interim relief as he contends. In the decisions the courts appear to have been cautious about granting interim relief,
and where relief has been granted it has been on narrow and precise terms, and of a strictly restraining nature. I would not go so far as to accept Ms Katz’s submission that to grant the relief would be contrary to the tenor of those judgments, but I do accept that Mr McBride is asking the Court to go a lot further than it has before.
The balance of convenience
[28] Fullers do not suggest that they cannot operate their Bay of Islands tours and ferry trips in the present circumstances. Indeed, they will accept Otehei offering their patrons no facilities, providing that they offer no facilities to anyone.
[29] Fullers are presently able to disembark passengers on the island and those passengers are able to walk around the resort grounds. The only difficulty relates to the on-shore facilities available to them. The Fullers service has survived the uncertainties of the last 18 months. There must be options available to Fullers to provide alternative café and ablution facilities on their own boats when they are moored at the island. While it is inconvenient to Fullers to not have those facilities available on the island, and they may cost Fullers some customer goodwill, there is no indication of severe hardship should the status quo continue. The protests of one particular tour operator do not convince me that there is irreparable damage being done to Fullers’ goodwill.
[30] Further, if Fullers are able to sustain a cause of action that in some way Otehei have breached some duty or acted unlawfully in refusing to provide the café and ablution facilities, and that Fullers are entitled to damages, Fullers should be able to recover those damages from Otehei. They will not be particularly easy to compute, but there will be comparable figures from the position some years ago when Fullers had exclusive use of the island. These comparable figures should assist in assessing any financial impact on the Fullers brand. A reasonable assessment could be made. Damages could be an adequate remedy. But I observe that at present there is no cause of action pleaded by Fullers on which damages could be ordered in relation to the offer of facilities.
[31] Mr McBride argued that there would be damage to third parties in that the public will be inconvenienced in not being able to access good café and ablution facilities. However, that is a matter for Fullers. Otehei have undertaken to the Court to make an area available to Fullers should they wish to set up their own facilities. As I have observed, Fullers have boats from which facilities can be offered. The fact that the quality of service might be different from or worse than that offered to Otehei’s patrons is not the sort of clear disadvantage to a third party that can influence the exercise of the discretion.
Conclusion
[32] Far from rendering the appeal nugatory, the refusal of the orders sought will not impact on the appeal at all. The Court’s ability to do justice on the issues raised in the pleadings, and in the appeal documents, will be unaffected. Fullers are seeking something which they did not have before the proceedings were issued, and which they have not sought in those proceedings. If a wrong is being done to Fullers by Otehei, that wrong is not causing the sort of irreparable damage which is normally associated with a grant of interim relief. For these various reasons the application cannot succeed.
Result
[33] The application for interim relief is declined.
[34] Costs should follow the event. The first and second respondents, Otehei Bay Holdings Ltd and Explore NZ (2004) Ltd, will have costs on a 2B basis plus reasonable disbursements. I make no order in relation to the costs of the third respondent, which although helpfully represented, took no active part in the proceedings.
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Asher J
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