Hutchison v Cliffe

[2019] NZHC 201

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-1795

[2019] NZHC 201

UNDER

the Arbitration Act 1996

IN THE MATTER

of an application for leave to appeal under article 5(1)(c) of schedule 2 of the Arbitration Act 1996

BETWEEN

LEANNA HUTCHISON and MARK ALAN STREET

Applicants

AND

IAN MICHAEL CLIFFE, VIVIENNE JOANNE CLIFFE and JOHN MERVYN CLIFFE

Respondents

Hearing:

5 February 2019

Appearances:

R B Stewart QC for Applicants

N R Campbell QC for Respondents

Judgment:

19 February 2019

JUDGMENT OF PALMER J

(Leave to appeal)

This judgment is delivered by me on 19 February 2019 at 11.00 am pursuant to r 11.5 of the High Court Rules.

.....................................................

Registrar / Deputy Registrar

Counsel/Solicitors:

R B Stewart QC, Auckland N C Campbell QC, Auckland

Kevin McDonald & Associates, Auckland Bell-Booth Sherry, Takapuna

HUTCHISON v CLIFFE [2019] NZHC 201 [19 February 2019]

What happened?

[1]    The parties are neighbours in Mays Street, Devonport, Auckland. In 2015, they had a dispute about a right of way which went to the High Court and was settled in 2016. Implementing the settlement required these and other neighbours to enter an Easement Agreement (the Agreement) to tidy up long-standing unsatisfactory titles. The Agreement also required the respondents to plant a new hedge along the boundary separating the two properties. The applicants have an existing “magnificent Eugenia hedge” (in the words of their counsel, Mr Stewart QC) along the boundary, with significant amenity value for their whole property.

[2]    A further dispute arose when the respondents erected a fence with star jasmine trailing from it. This was the subject of arbitration before the Hon Barry Paterson QC in December 2017. In an Award on Liability, of 7 March 2018, he held that building a fence, rather than a new hedge along the boundary line, breached the Agreement. An Award on Remedies was issued on 23 May 2018 which expressed a different view on the location for the new hedge than that in the Award on Liability. The Remedies Award may, or may not, have also addressed the implications of the new hedge for the applicants’ hedge.

[3]    There is now a dispute about the implications of these Awards for the very existence of the applicants’ Eugenia hedge. Will they have to remove some, or all, of their hedge? The applicants seek leave to appeal the Award on Liability in relation to three questions of law:

(a)Whether the arbitrator overlooked, and thereby misconstrued, express provisions of the Agreement which recorded the parties’ agreement as to where the new hedge was to be planted.

(b)Whether the arbitrator exceeded his jurisdiction in seeking to determine where the new hedge was to be planted.

(c)Whether the arbitrator erred in law by having regard to the Fencing Act 1978 when purporting to determine where Mr Cliffe was to plant the new hedge.

Law of leave to appeal

[4]    Article 5(2) of the Arbitration Act 1996 (the Act) provides the High Court must not grant leave to appeal on a question of law arising out of an arbitral award unless it considers “having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of 1 or more of the parties”. The Court of Appeal identified guidelines for the exercise of the discretion in Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd.1 That includes reasons not ordinarily being given if leave is granted, so as not to embarrass or influence the judge who hears the substantive argument.2

[5]    There are time limits within which an application for leave must be brought. Article 34(3) of sch 1 of the Act requires the application must be brought within three months of receiving the award or “if a request had been made under article 33, from the date on which that request had been disposed of by the arbitral tribunal”. Article 33 states, relevantly:

33        Correction and interpretation of award; additional award

(1)Within 30 days of receipt of the award, unless another period of time has been agreed upon by the parties,—

…

(b)if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.

If the arbitral tribunal considers the request to be justified, it shall make the correction or give the interpretation within 30 days of receipt of the request. The interpretation shall form part of the award.

…

(3)Unless otherwise agreed by the parties, a party, with notice to the other party, may request, within 30 days of receipt of the award, the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award. If the arbitral tribunal considers the request to be justified, it shall make the additional award within 60 days.

1      Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd [2000] 3 NZLR 318 (CA).

2 At [58].

(4)The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, interpretation, or an additional award under paragraphs (1) or (3).

Is the application within time?

[6]    The award on liability was issued on 7 March 2018. The applicants made their application on 22 August 2018. Mr Stewart QC, for the applicants, submitted the application was within time because it was made before the arbitrator had disposed of four requests under art 33. Mr Campbell QC, for the respondents, submitted it was not. I do not consider two of these requests satisfy the requirements of art 33:

(a)The respondents’ 23 March 2018 request for clarification of the orders to be made if agreement was not reached was not “agreed by the parties” under art 33(1)(b), was not an interpretation of the award and was disposed of by the arbitrator on 28 March 2018.

(b)The applicants’ request for a correction to the Award on Remedies of 19 June 2018 does not extend the time to appeal the Award on Liability.

[7]    However, the applicants’ 5 April 2018 memorandum sought further directions regarding the future of their existing hedge. In substance, it was a request for interpretation of the Liability Award and/or for an additional award. It related to issues that needed to be decided by the arbitrator in order to implement the Liability Award, were not decided in the Award, on which the arbitrator invited further submissions and on which both parties provided further submissions. The issues were not resolved until, at the earliest, the 23 May 2018 Award on Remedies. Arguably, one of the issues on which further directions were sought (whether the applicants’ existing hedge needs to be removed) was not resolved even in the Remedies Award due to conflicting statements in the Award; it is tempting to suggest the issue was hedged.3 And the arbitrator expressed a view in the Remedies Award about the location of the new hedge which he identified was inconsistent with the Liability Award, noting he could not correct it for that reason though he would have if he could have.4 In these unusual

3      Due to the apparent contradiction between paragraphs [11] and [14] of B J Paterson, Award on Remedies, 23 May 2018.

4      At [9]–[10].

circumstances, and by a narrow margin, I accept the application for leave is within time under arts 33(3) and/or 33(1)(b).

Should leave be granted?

[8]    The less I say about the merits of the issues on which leave to appeal is sought, the better, according to the Court of Appeal in Gold and Resource Developments (NZ) Ltd. Suffice to say that I agree there is sufficient indication of error, over issues that could substantially affect the rights of the parties, that I agree leave should be granted. Finality of the arbitration process is an important value but sometimes recourse to the courts is justified if it misfires. Despite that, the courts would welcome the parties and their experienced counsel resolving this dispute between themselves before a substantive appeal hearing.

[9]    I am satisfied the test for the grant of leave to appeal is met here. I grant leave as sought. I do not prejudge the outcome of that by making leave conditional on an undertaking by the applicants in the event they succeed, as sought by the respondents. Neither do I grant leave to the respondents to cross-appeal when they have not made the proper application to do so. In accordance with r 7.14 of the High Court Rules 2016, the Registrar must make arrangements for a case management conference on the first available date 15 working days after the date of this judgment.

Palmer J