Highgate on Broadway Limited v Devine - [2012] NZHC 2590

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

CIV-2012-406-000136 [2012] NZHC 2590

IN THE MATTER OF the Arbitration Act 1996

AND

IN THE MATTER OF an application for a determination under
Article 16 of the Act

BETWEEN HIGHGATE ON BROADWAY LIMITED Applicant

ANDARTHUR LAWRENCE MICHAEL DEVINE
Respondent

Hearing: 3 October 2012 at Wellington

Counsel: D J Clark for Applicant
L P Radich for Respondent

Judgment: 16 October 2012

In accordance with r 11.5 I direct the Registrar to endorse this judgment with the delivery time of 3.00pm on the 16th day of October 2012.

RESERVED JUDGMENT OF COLLINS J

Introduction

[1] The applicant is a landlord. The respondent was a tenant of the landlord. The landlord asks me to declare that an arbitrator has no jurisdiction to hear and determine a dispute between the landlord and the tenant which the tenant has referred for arbitration. The landlord also asks me to quash a preliminary decision of
the arbitrator or, in the alternative, stay the arbitration.

HIGHGATE ON BROADWAY LIMITED V DEVINE HC BLE CIV-2012-406-000136 [16 October 2012]

[2] In this judgment I rule against the landlord. I have concluded there is no legal impediment to the arbitrator hearing and determining the dispute between the parties. There may, however, be an issue as to when the arbitrator should undertake his task. However, I am not prepared to stay the arbitral proceeding.

Background

[3] The background to the parties’ dispute is fully traversed in reserved

judgments delivered by:

(1) MacKenzie J on 10 November 2011; and

(2) Kós J on 10 September 2012.

The first of these judgments is subject to an appeal. The second judgment dealt with security for costs in relation to the proceeding that I have to determine. Kós J found in favour of the tenant.

[4] The tenant leased premises in the landlord’s building in High Street, Blenheim from which the tenant conducted a hairdressing business. The lease was for a five year period from 1 September 2006 with a right of renewal for a further five year term.

[5] In November 2010 there were discussions between the landlord and tenant over renewal of the lease. Those discussions appeared to have resulted in agreement to renew the lease. However, the landlord prepared a new lease on terms that were different from the existing lease. No new lease was finalised.

[6] The tenant fell behind in paying his rent. The landlord gave notice that if the outstanding rent was not paid within ten working days the lease would be cancelled. That notice did not comply with the requirements of s 2451 of the Property Law Act
2007 (the Act). A second notice was sent that gave the tenant until 4 August 2011 to

pay the rent arrears. The rent arrears were paid to the landlord’s then solicitors at

1 Which concerns the cancellation of a lease for breach of the covenant to pay rent.

9.30am on 4 April 2011. However, on 5 August 2011 the landlord cancelled 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.

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Details

Case: [2012] NZHC 2590
Decision Date: 16 October 2012

CaseChat Overview and Summary

The case of Highgate on Broadway Limited v Devine involves a landlord, Highgate on Broadway Limited, and a tenant, Arthur Lawrence Michael Devine. The dispute centers on the landlord's cancellation of a lease for breach of the covenant to pay rent. The tenant sought relief against the forfeiture of the lease and damages for the landlord's wrongful cancellation. The primary legal issue before the court was whether the arbitration agreement between the parties remained valid and whether the arbitrator had jurisdiction to hear the dispute. The landlord argued that the tenant's decision to seek relief in the High Court meant the tenant had waived their right to arbitration.

Collins J determined that the arbitration agreement remained valid and that the arbitrator had jurisdiction to hear the dispute. The court found that the tenant's mistaken inclusion of a damages claim in the High Court proceedings did not prevent them from pursuing the arbitration clause in the lease. Furthermore, the court held that the tenant's claims under the Property Law Act 2007 could not be resolved by arbitration, but this did not preclude the tenant from seeking damages in arbitration. The court also dismissed the landlord's argument that the presence of the landlord's former solicitors as a third party impacted the arbitration agreement.

The court concluded that there was no legal impediment to the arbitrator hearing and determining the dispute. While it was sensible to defer the substantive arbitration hearing until after the Court of Appeal determined the landlord's appeal, the parties should proceed with preliminary steps in arbitration. The court dismissed the landlord's application, and the tenant was awarded costs on a scale 2B basis.

Orders