Phillimore Imperial Limited v St John's College Trust Board
[2017] NZHC 2854
•21 November 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2016-404-003288 [2017] NZHC 2854
BETWEEN PHILLIMORE IMPERIAL LIMITED
Plaintiff
AND
ST JOHNʼS COLLEGE TRUST BOARD Defendant
Hearing: 20 November 2017 Appearances:
J K Stewart/HFK Munkowits for the Plaintiff
I McEntagart/C Bryant for the DefendantJudgment:
21 November 2017
JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN
This judgment was delivered by me on
21.11.17 at 3:30pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
PHILLIMORE IMPERIAL LIMITED v ST JOHNʼS COLLEGE TRUST BOARD [2017] NZHC 2854 [21
November 2017]
[1] Both the plaintiff and the defendant have filed applications for further discovery. Each application is opposed by the other.
Background
[2] The proceeding concerns the interpretation of a lease contract between the defendant (St John’s) and the plaintiff (Phillimore), namely clause 20 of the lease between St John’s as lessor and Lion Nathan Property Limited (Lion Nathan) as lessee and in particular what the words “major redevelopment of the buildings erected on the said land” mean, and whether by reference to those words, Phillimore has or has not completed a “major redevelopment” on the leasehold land.
[3] The leasehold land is at 44 Queen Street, Auckland (the land). The buildings on the land are called the Imperial Building and the Boathouse.
[4] If there has been a major redevelopment in the terms contemplated by the lease then rent reviews will occur every seven years. If not, then rent reviews remain at 21 years.
[5] The lease was executed between St John’s as lessor and Lion Nathan as lessee on 23 November 1993 for a renewed 21-year term. Since then the lessee’s interest in that land has been transferred:
(a) From Lion Nathan to Imperial Buildings Limited on 7 March 2003. (b) From Imperial Buildings Limited to I B Trust on 12 August 2003. (c) From I B Trust to AMP on 24 August 2007.
(d) From AMP to Phillimore on 11 September 2009.
[6] Over 2010 – 2011 Phillimore undertook a restoration project that involved refurbishing buildings on the land and on the adjacent land at 48 – 56 Queen Street over which Phillimore has registered freehold title. The restoration works undertaken
to the buildings on the leasehold land formed only part of the overall restoration project.
[7] On 1 September 2012, the lease came up for renewal and the parties corresponded regarding a renewal lease but could not agree as Phillimore says its works did not constitute a “major redevelopment” as that term is used in clause 20 of the lease. St John’s argues to the contrary.
[8] Phillimore has initiated declaratory judgment proceedings to resolve these matters which are, in essence, about whether rental reviews should occur every 21 years (as Phillimore contends) or every seven years (as St John’s contends).
[9] Factual issues for consideration upon this proceeding include:
(a) What were the buildings like pre-development? (b) What were they like following redevelopment? (c) The cost of redevelopment.
(d)How the buildings have changed in terms of their functionality, use, value and any other relevant measures.
St John’s discovery application
[10] It is St John’s position upon its application for further discovery, that most of the information relevant to these issues is primarily held by Phillimore as the owner and developer of the buildings.
[11] St John’s application concerns a further discovery of 16 items (now 15 items) of which the first 12 address the scope of the development works and the cost of that work, and the remaining four relate to changes in the building following redevelopment, in terms of functionality, use and value.
[12] By its request for discovery of the scope of redevelopment works and the cost of that work, St John’s argues the central and perhaps only issue in this proceeding is whether there has been a major redevelopment of the buildings – indeed as is the focus of the Phillmore’s declaratory judgment claim.
[13] It is not necessary by this judgment to summarise the extensive submissions of counsel for and against St John’s discovery application.
Conclusion
[14] While St John’s discovery requests are extensive, the Court is satisfied there is proper reason to justify discovery to the extent sought. St John’s seeks the Court’s ruling in relation to 16 items for further discovery, namely:
Item 1: The architect’s response to a design brief provided by Phillimore in 2009, including design and initial pricing for a new building on the site.
Item 2: The documents containing assessment or calculations in respect of the feasibility and return on investment of the redevelopment options for the site, including refurbishment of the existing buildings and construction of new buildings/a tower.
Item 3: [This no longer being required it having since been provided by Phillimore.]
Item 4: Fearon Hay’s submission for the NZIA Design Awards (part of which is contained in PIL.01.0039 of the plaintiff’s discovered documents and any other award submissions.
Item 5: Being the book of photographs prepared by Canam
Construction illustrating the works that were undertaken.
Item 6: Canam’s dilapidation report as referred to in the Phillimore’s discovered documents, and any other reports provided by Phillimore’s contractors or consultants regarding the condition of the buildings and the scope of works required”.
Item 7: Comprising a complete set of as-built drawings (as required in the various specification documents on the Council file.
Item 8: The variations register, and the variation order requests or notices to contractor providing details of those variations.
Item 9: The building contract between Phillimore and Canam, and any separate contractors engaged by Phillimore.
Item 10: A complete copy of the 31 October 2011 waiver application (the first page of which is at PIL.03.0173 of the plaintiff’s discovered documents.
Items 11 and 12: Relating to costs. Documents evidencing the total costs for the redevelopment works (including design works, and works undertaken by other consultants or contractors after conclusion of the base build works) including, but not limited to:
(i) Consultants fees
(ii) Contractors engaged on the tenancy fitout and basement works (to the extent that Phillimore paid for or contributed to those costs);
(iii) Fees and development contributions (if any) paid to
Council.
Item 13: Documents evidencing the price paid on the sale of the buildings from AMP to Phillimore.
Item 14: Documents recording any change in the leaseable areas of the original and redeveloped buildings.
Item 15: Documents recording vacancy rates and rents achieved in the redeveloped buildings.
Item 16: Valuations of the buildings following there redevelopment.
[15] The Court orders:
(a) Disclosure of the documents in Items 1, 4, 5, 10, 11, 12, 13, 14, 15 and
16.
[16] There will also be orders that:
(a)Phillimore shall disclose whether a feasibility study was undertaken for the project, and provide that study if its exists to the defendant (Item 2).
(b)Phillimore shall disclose whether any reports were provided by its contractors or consultants regarding the condition of the buildings and the scope of works required and provide those reports if they exist to St John’s (Item 6).
(c)Phillimore shall disclose whether Fearon Hay (or any other person) prepared plans, elevations or other architectural drawings of the completed works and provide those drawings if they exist to St John’s (Item 7).
(d)Phillimore shall disclose to St John’s the supporting documentation referred to in the contract instructions issued by Phillimore’s engineer/project manager (Item 8).
(e) Phillimore shall disclose to St John’s:
(i)The documents referenced in ATC 243 and schedule D to the amended 2011 construction contract; and
(ii) Details of any separate contractors used on the project, including the scope of works and costs paid to those contractors;
(iii) Item 9.
Phillimore’s discovery application
[17] Phillimore’s applications request discovery of St John’s correspondence between legal representatives in relation to negotiations of the lease with lessees in the following periods:
(a) From 1 September 1970 to 31 August 1991 (original lease).
(b) With Lion Nathan as lessee from 1 September 1991 until 31 August
2012.
(c)Between St John’s as lessor and the relevant lessee at the time that works were completed on the land including with Imperial Buildings Limited and/or I B Trust Limited.
(d)With AMP and/or their legal representatives relating to AMP’s works on the land in 2009.
[18] It is Phillimore’s position that these documents are clearly discoverable because:
(a)To be properly informed the Court must be aware of the commercial or other context in which the original lease and subsequent leases were negotiated and agreed; that correspondence derived from negotiations is relevant to the interpretation of “major redevelopment…” in clause
20 of the lease and identifying the objective meaning that the parties intended their words to convey.
(b)St John’s has remained the lessor throughout the 47 years these leases have endured.
(c) Such documents sought exist.
(d)Despite requesting the defendant on three occasions to confirm it has disclosed all documents and correspondence in its possession and control, the plaintiff has responded to say that it has complied with its discovery obligations.
[19] By its notice of opposition St John’s confirms its claim to have complied with its High Court Rule obligations and says also Phillimore has not disclosed sufficient grounds for its application.
[20] This judgment will not provide a summary of counsels’ submissions. It is sufficient to record that in the conclusion of submissions it was clear this application should not be granted.
[21] The Court accepts the defendant has complied with is discovery obligations in that it has included precontractual documents for the lease and renewal lease, and documents relating to works undertaken, or proposed to be undertaken by Phillimore’s predecessors.
[22] Counsel for Phillimore complains that St John’s has not, in its affirmation of documents or in subsequent correspondence, stated that it has disclosed all documents in the category sought. In the Court’s view St John’s was not required to do so – it having repeatedly affirmed that it had discovered all documents that met the requirements of HCR 8.7. Further no sufficient grounds have been advanced on behalf of Phillimore that will support an application for further discovery for there is no legal or factual basis for Phillimore’s assertion that St John’s has not discovered documents that should have been discovered.
[23] Phillimore is required to provide prima facie evidence that relevant documents exist, relevance being determined by reference to the pleadings. In this case the Court is satisfied Phillimore has not met this threshold.
[24] Phillimore’s application is dismissed.
Result
[25] St John’s has succeeded by its own application and in its defence of
Phillimore’s application for further/particular discovery.
[26] Costs are awarded to St John’s upon each application. The hearing time for each shall be fixed as a half day.
[27] The Registry is to schedule a further case management conference in March
2018 for the purpose of reviewing compliance with discovery obligations, and to consider the scheduling of a trial. Memoranda for that conference will be required no later than four working days prior.
Associate Judge Christiansen
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