Planet Move Management Limited v Lightin' Up Film Services Limited

[2005] NZCA 2

IN THE COURT OF APPEAL OF NEW ZEALAND

CA88/04

BETWEENPLANET MOVE MANAGEMENT LTD

Appellant

ANDLIGHTIN' UP FILM SERVICES LTD AND LOVE YOUR GRIP LTD

Respondent

Hearing:6 October 2004

Court:Anderson P, Glazebrook and Hammond JJ

Counsel:P S J Withnall for Appellant

T J Anderson and S N P Dawson for Respondents

Judgment:8 February 2005 

JUDGMENT OF THE COURT

A        THE APPEAL IS DISMISSED.

B        The relief under the summary judgment entered against the appellant is varied by setting aside the order for rectification.  There will be substituted therefore a declaration that the appellant is bound by the terms of the Deed of Lease dated 3 November 1999, as varied by the Deed of Variation and Rent Review dated 22 November 2001. 

CThe respondents (jointly) will have costs of $6,000, together with their reasonable disbursements, if necessary as fixed by the Registrar.

____________________________________________________________________

REASONS

(Given by Anderson P)

[1]       This is an appeal against a summary judgment entered in the High Court at Wellington by Associate Judge Gendall in respect of a Deed of Assignment of Lease.

[2]       The respondents are lessors of premises pursuant to a Deed of Lease dated 3 November 1999, the lessee being Excess International (Wellington) Ltd.  The First Schedule to the lease specifies a term of four years and three months commencing 1 January 1999.  There is one right of renewal for four years, the renewal date being stated as 1 April 2003.  The schedule declares a final expiry date of 31 March 2007.  The stipulated rent is $48,000 per annum including goods and services tax and there are rent review dates of 1 April 2001, 1 April 2003, and 1 April 2005.

[3]       On 22 November 2001, the respondents, the lessee and the lessee’s guarantor entered into a Deed of Variation of Lease and Rent Review.  That varied the term to eight years and five months commencing on 1 January 1999 and expiring on 30 June 2007, specified a renewal date of 1 July 2007 and a final expiry date of 30 June 2011, and changed the rent review dates to 1 July 2003 and two yearly thereafter including any period of renewal.  Further, it made provision for the landlord to lease to the lessee eight containers for a period commencing 1 July 2001 to 30 June 2007.  The rent for the containers was fixed at $346.67 per month plus goods and services tax with two yearly rent reviews.  In a Schedule to the Deed of Variation there are no fewer than ten clauses which relate specifically to the terms of the container leasing. 

[4]       In or about September 2002 the appellants entered into agreements for the purchase of the business of the lessee and guarantor.  On 12 September 2002 the then solicitors for the appellants (Daniel Overton and Goulding) wrote to the solicitors for the vendors/assignor (Sean Kelly) with reference to the agreements.  The letter included the following advice:

We have copies of the Leases of the premises and will forward Deeds of Assignment as soon as they have been executed by the Assignee – probably today.

[5]       On 20 September 2002 the solicitors for the respondents informed the solicitors for the appellants that the lessor consented to the assignment of lease provided a personal guarantee was given by Mr B P Arlidge, a director of the purchasing companies.

[6]       A Deed of Assignment of Lease was prepared by the appellant’s then solicitors.  That was in a standard form of the Auckland District Law Society and contained, amongst other things, the following clause:

6.THE ASSIGNOR, the Assignee, the Landlord and the Guarantor all acknowledge that the current term under the Lease expires on the date set out in the First Schedule and the current rent is as set out in the First Schedule.

[7]       Clause 7 of the Lease provides as follows:

THE LANDLORD consents to the assignment but without prejudice to the Landlord’s rights powers and remedies under the Lease.  If any Lease Variations are specified in the First Schedule the Landlord, the Assignor, the Assignee and the Guarantor agree that as from the Date of Assignment the Lease is varied as set out in the Lease Variations.

[8]       The First Schedule to the Deed of Assignment identifies the premises and the Deed of Lease.  Appearing beside the phrase “CURRENT RENTAL” is the following:

$46,933.33 per annum (exclusive of GST) plus $4,160 per annum (exclusive of GST) for containers.

[9]       Beside the phrase “EXPIRY DATE OF LEASE” appear the words “31 March 2003 subject to right of renewal”. 

[10]     The last reference in the First Schedule is to “LEASE VARIATIONS:” next to which appear the words “Deed of Variation and Rent Review dated”.

[11]     When the appellant’s former solicitors prepared the Deed of Assignment they plainly had details of the premises and containers, including the respective rentals.  They plainly also knew of at least the existence of the Deed of Variation and Rent Review.  But they may not have had an actual copy of that document because correspondence from the respondent’s solicitors to Daniel Overton and Goulding, dated 19 June 2003 states that a certified copy of the Deed of Variation of Lease and Rent Review was sent to the assignor’s solicitor on 28 November 2002, that is, ten days after the date on the Deed of Assignment. 

[12]     The letter of 19 June 2003 was sent by the respondent’s solicitors because the appellants were contending that the lease had expired on 31 March 2003 in terms of the First Schedule to the Deed of Lease before it was varied.  The fundamental question in the litigation is whether the appellants are bound to the lease term stipulated in the Deed of Variation. 

[13]     The respondents sought summary judgment claiming rectification of the Deed of Assignment to note thereon an expiry date of the lease as 30 June 2007 subject to a right of renewal.  They also sought a declaration that the appellants are bound by the terms of the lease as varied by the variation. 

[14]     Mr B P Arlidge swore an affidavit in opposition to summary judgment.  He stated he is a director of the appellant and that he did not become aware of the Deed of Variation of Lease and Rent Review until some time after signing the Deed of Assignment.  He deposed that he would not have signed the Deed of Assignment if he had been aware of the Deed of Variation.  But he is not the only director of the appellant, as may be seen from the signatures on the Deed of Assignment.  There is no evidence from any other Director of the appellant and nothing to suggest that the appellant company should not be imputed with knowledge of the relevant contents of the Deed of Variation. 

[15]     Associate Judge Gendall was satisfied that at the time of entering into the Deed of Assignment all parties to it had a common intention that they would be bound by the lease and Deed of Variation, the latter having a specified expiry date of 30 June 2007.  He was satisfied that there was no matter raised by the appellant which passed the threshold of credibility.  Indeed, he stated himself satisfied that the defences raised to the summary judgment application were bordering on the fanciful.  In his view the inclusion of the lease expiry date as 30 March 2003 in the Deed of Assignment was a simple typo or error and that it was not until the appellant had defaulted under its lease payments and faced the rent review that it raised the issue now in question.  He concluded that it was necessary to rectify the Deed of Assignment.

[16]     When the matter was argued before this Court the submissions focused on the issue of rectification but it appeared to the Court that interpretation of the documentation on its face favoured the respondent’s contention and that no issue of rectification properly arose.  An opportunity was given to counsel to provide further submissions in writing and these have been considered by the Court.

[17]     In our view the question is answered by clauses 6 and 7 of the Deed of Assignment to which we have already referred.  By virtue of clause 7 the appellant and Mr Arlidge as guarantor agree that as from the date of assignment (this being specified in the First Schedule as 13 September 2002) the lease is varied “as set out in the Lease Variations”.  It is not open to the appellant nor Mr Arlidge to contend that the lease is not varied as set out in the lease variation.  The appellant’s solicitor, who prepared the Deed of Assignment, specifically referred to a Deed of Variation and Rent Review.  There being only one such document no difficulty arises as to identification.  The appellant and Mr Arlidge may not have seen that document at the time they agreed to be bound by it but their imprudence does not prevent their being bound nonetheless. 

[18]     If there is an ambiguity created by clause 6 in conjunction with clause 7, then in accordance with normal principles of interpretation the document would be construed contra proferentem.  Relevant also is the elementary principle that documents should be construed, if possible, so that their terms are not contradictory.  On either or both of these approaches clause 6 ought to be interpreted as declaratory of the provisions of the Deed of Lease and clause 7 as declaratory of the terms and effect of the subsequent variation.  The terms of the Deed of Lease do in fact specify a term expiring on 31 March 2003.  The appellant has not asserted any estoppel by virtue of clause 6; it has simply chosen to disregard the binding effect of clause 7.

[19]     In our view the respondent was plainly entitled to judgment but in terms of a declaration, not rectification.  The latter doctrine depends on a misrecording of a common intention and we do not think that is strictly the case here.  The issue is a matter of interpretation.  The appropriate relief was in terms of the second prayer, for a declaration.

[20]     In our view there should be a declaration that the appellant is bound by the terms of the Deed of Lease dated 3 November 1999, as varied by the Deed of Variation of Lease and Rent Review dated 22 November 2001.  There will be a declaration in those terms accordingly.  The appeal is dismissed and the respondents are entitled to costs in the sum of $6,000 together with disbursements as may be fixed by the Registrar.

Solicitors:
Mulholland Rickit Law, Wellington for Appellant
Gibson Sheat, Wellington for Respondents