Hubbard v Kiwirail Limited - [2017] NZCA 375

IN THE COURT OF APPEAL OF NEW ZEALAND

CA272/2016
[2017] NZCA 375

BETWEEN	PETER BRENT HOME HUBBARD AND HARLEY HAYNES First Appellants
AND	OCEANIC PALMS LIMITED Second Appellant
AND	KIWIRAIL LIMITED Respondent

Hearing:	28 August 2017
Court:	Harrison, Duffy and Williams JJ
Counsel:	Appellants in person M L Campbell and L M McGlone for Respondent
Judgment:	28 August 2017

ORAL JUDGMENT OF THE COURT

AThe application for stay of execution of this Court’s judgment delivered on 4 July 2017 is declined.
BThe appellants must pay the respondent costs on a band A basis as for a standard application for leave to appeal and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Harrison J)

Introduction

On 4 July 2017 this Court dismissed an appeal by Peter Hubbard, Harley Haynes and their company Oceanic Palms Ltd (collectively Oceanic) against a judgment delivered by Fogarty J in the High Court on 20 May 2016 declining an application for relief against forfeiture of a lease of premises in Onehunga for the non-payment of an increased rental following a review.[1] Oceanic now applies for a stay of execution of this Court’s judgment pending determination of their application for leave to appeal to the Supreme Court. Mr Campbell for KiwiRail Ltd, which opposes the application, advises that Oceanic’s submissions in support of the application for leave to the Supreme Court are not due until 8 September 2017.

Background

[1]Hubbard v KiwiRail Ltd [2016] NZHC 1061 [HC judgment]; aff’d [2017] NZCA 282 [CA judgment].

The brief circumstances of the application for a stay are as follows.
KiwiRail owns land at Onehunga. In 2009 it agreed to lease the premises to Oceanic for a period of five years commencing on 1 March 2010. The initial rental was $34,300 per annum. At the time KiwiRail advised Oceanic that the agreed rental was not the current market rental but was concessionary. KiwiRail also declined Oceanic’s request to limit any rent increase after five years to movements in the consumer price index.
In December 2013 the lease was varied by increasing the leased area and the rent to $37,502 per annum. The lease provided a single right of renewal which Oceanic exercised for a further term of five years from 1 March 2015. Critically, the agreement entitled KiwiRail to review the rent by giving written notice to Oceanic specifying the annual rental to apply from the rent review date. KiwiRail gave notice that it had determined the market rent for the land as $123,200 per annum. For unexplained reasons Oceanic did not respond within the agreed 28-day period. Nevertheless, despite Oceanic’s deemed acceptance of the new rental, KiwiRail did not seek to enforce its legal right.
Instead both sides engaged valuers. CBRE for KiwiRail gave a derived market rental of $117,000 per annum; Frank Knight for Oceanic assessed the rental at $75,000. The valuers then conferred. They made a joint recommendation to the parties that the rent should be fixed at $100,000 for the renewed term. That recommendation…

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: [2017] NZCA 375
Decision Date: 28 August 2017

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard an application from Peter Brent Home Hubbard, Harley Haynes, and their company, Oceanic Palms Ltd, against KiwiRail Limited. The application was for a stay of execution of the Court's judgment, which had dismissed the appeal against a High Court judgment declining relief against the forfeiture of a lease due to non-payment of an increased rental following a review. The High Court had previously dismissed Oceanic's application for relief against forfeiture of the lease for non-payment of the increased rent, which was determined by a rent review clause in the lease agreement.

The Court of Appeal needed to decide whether to grant a stay of execution of its judgment pending the determination of Oceanic's application for leave to appeal to the Supreme Court. The appeal was based on a combination of allegations of bad faith and breach of contract, but the Court found these grounds to be unsustainable. The Court also considered whether KiwiRail would suffer prejudice if a stay was granted, given the outstanding debt and Oceanic's financial circumstances.

The Court of Appeal declined to grant a stay of execution of its judgment. Oceanic was required to pay KiwiRail costs on a band A basis for a standard application for leave to appeal, along with usual disbursements. The Court found that Oceanic's application for leave to appeal had no merit, and further delays would prejudice KiwiRail's rights. Additionally, Oceanic had not taken reasonable steps to preserve its position pending the determination of its application for leave to appeal.

Orders