Hubbard v KiwiRail Ltd - [2016] NZHC 1061

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-003145 [2016] NZHC 1061

BETWEEN
PETER BRENT HOME HUBBARD

AND HARLEY HAYNES First Applicants

OCEANIC PALMS LIMITED Second Applicant

AND

KIWIRAIL LIMITED Respondent

Hearing: 21 April and 16 May 2016

Counsel:

Applicants in person
M L Campbell for Respondent

Judgment:

20 May 2016

JUDGMENT OF FOGARTY J

This judgment was delivered by Justice Fogarty on
20 May 2016 at 11.30 a.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:
Russell McVeagh, Wellington

HUBBARD AND HAYNES v KIWIRAIL LIMITED [2016] NZHC 1061 [20 May 2016]

Introduction

[1] On 21 December 2015, the first and second applicants applied to this Court for:

(a) an order preventing the respondent from increasing the rent pursuant to a recent rent review by more than 50 per cent;

(b)an order preventing the respondent from re-entering and terminating the lease between it and the applicant in relation to the premises at
44a Alfred Street, Onehunga, pending agreement between the parties or further order of the Court; and

(c) an order that the respondent pay the applicants’ costs of and incidental

to these proceedings.

The application

[2] This application relies on the Property Law Act 2007 (the Act), sub-part 6, which addresses remedies and relief for cancellation of leases. This is a section of the Act which codifies the principle of equity which enables the Court to give relief to tenants or lessees against cancellation of lease.

Description of the lease

[3] The subject of the lease is a large block of land of 4,985 square metres, of somewhat irregular shape, located within a block of land in the suburb of Onehunga. Land to the north of the block is zoned for residential usage, although a large part of it is vacant, whilst to the south of the block it is zoned Business 4 and 5, thereby allowing industrial activity.

[4] The lease commenced on 1 March 2010 for a term of five years with a right of renewal for a further term of five years. This dispute arises out of the rent setting for the second term. However, the five year term has to be read with the second schedule. This schedule contains one clause which is as follows:

The lessor may give Twenty-Four (24) months notice should the land be required for rail purposes. The termination provision will only take effect should the lease be renewed on 1 March 2015.

[5] Part two of the lease deals with rent and outgoings. Clause 2.2 deals with rent review. The rent review date is also 1 March 2015.

[6] The rent review begins by the landlord, known in the lease as “ONTRACK”,

giving notice to the lessee:

Specifying the annual rent, such rent to be determined by ONTRACK to reflect the current market rent of the leased land, based on the highest and best use of the leased land, as at the rent review date.

[7] There then follows a process whereby the lessee…

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 Hubbard v KiwiRail Ltd 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: [2016] NZHC 1061
Decision Date: 20 May 2016

CaseChat Overview and Summary

Hubbard and Haynes, as lessees of a property located in Onehunga, Auckland, sought an order preventing KiwiRail Limited, the respondent, from increasing the rent following a recent rent review by more than 50 percent, as well as an order preventing KiwiRail from terminating their lease. The applicants also sought an order that KiwiRail pay their costs for these proceedings. The applicants argued that KiwiRail's conduct amounted to derogation of right and that the quadrupling of the rental had not been justified. The central issue for the court to determine was whether the rent set by the valuers was justified, and whether KiwiRail's conduct amounted to derogation of right.

The court found that the applicants' arguments for derogation of right were not arguable and that the applicants' conduct amounted to derogation of their own grant by not paying the assessed rent. The court concluded that the merit in the application for relief against cancellation of the lease depended completely on whether or not the rent agreed by the valuers was justified. The court determined that neither valuer had squared up to the rent review test set by the lease, and that both valuers had gone straight to the traditional and classic valuation methods without examining the standard set by the lease. The court held that the applicants' arguments for non-payment of the assessed rent were not sufficient, as the lease provided for the rental to be paid even while the parties went to arbitration. The court dismissed the applicants' applications, with two qualifications. The applicants had one calendar month from the date of the judgment to pay the arrears of rental at the new rate, or KiwiRail could cancel the lease. Additionally, the applicants had one calendar month to formally dispute the rent, so that the dispute could be submitted to arbitration. KiwiRail Ltd was awarded costs on a 2B basis.

Orders