Rahal v Sohal Associates Limited

[2025] NZHC 2803

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-1172

[2025] NZHC [2803]

UNDER

the Arbitration Act 1996

IN THE MATTER

of an application for leave to appeal an arbitration award

BETWEEN

DAVINDER SINGH RAHAL and JIVAN

JYOTI RAHAL as trustees of the Times Trust
Plaintiffs

AND

SOHAL ASSOCIATES LIMITED

Defendant

Hearing:	28 August 2025
Appearances:	A T Grant for the Plaintiffs S E Wroe for the Defendant
Judgment:	25 September 2025

JUDGMENT OF MACGILLIVRAY J

This judgment was delivered by me on 25 September 2025 at 4:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Deputy Registrar

………………

Solicitors:

Shortall Lawyers, Auckland Pidgeon Judd, Auckland

RAHAL v SOHAL ASSOCIATES LIMITED [2025] NZHC [2803] [25 September 2025]

Introduction

[1]    Davinder Rahal and Jivan Rahal, as trustees of the Times Trust (the Trustees), seek leave to appeal from partial awards made by Royden Hindle as arbitrator of disputes between the trustees and Sohal Associates Ltd (Sohal).

[2]    If granted leave to appeal, the plaintiffs would seek orders on appeal varying the awards.

Background

[3]    The trustees own a commercial property at 736 Great South Road, Manukau. By deed of lease dated 1 April 2020 (the lease), the trustees leased to Sohal “the premises and the carparks (if any) described in the First Schedule” for a term of five years with three rights of renewal. Schedule 1 describes the premises as “all of the landlord’s building at 736 Great South Road, Manukau” and the carparks as “common shared parking to be allocated by the landlord from time to time”.

[4]    Sohal operates a restaurant business from the premises. The uncovered carparking surrounding the premises are used by its staff and customers.

[5]    Disputes developed between the trustees and Sohal, including over rent, outgoings, maintenance, and the use of the carparks. In 2022, the parties commenced arbitration and appointed Royden Hindle as arbitrator. The arbitrator gave his first partial award in May 2023, which determined Sohal’s counterclaims against the Trustees. Davinder Rahal explains in his affidavit that the Trustees did not participate in this first stage of the arbitration process due to lack of funds and Mr Rahal’s health issues. He explains that once his health and financial position improved, the Trustees re-engaged in the arbitration and pursued the Trustees’ claims against Sohal.

[6]    The arbitrator determined the Trustees’ claims in his third partial award.1 In his fourth partial award, he awarded costs to Sohal on the basis that it had been the substantially successful party with respect to the third partial award.

1      The second partial award addressed costs on the first partial award.

[7]    Only two of the Trustees’ claims against Sohal are relevant to the application for leave to appeal against the third partial award. The first relates to Sohal’s right to use the carparks at the property and the second to Sohal’s obligation to pay for property management fees as outgoings.

The carpark claim

[8]    In June 2024, the Trustees notified Sohal that they intended to convert the carparking at the property into paid parking from 1 July 2024. Sohal disputed their right to do so. Itobtained interim relief from the arbitrator allowing it to continue to use the carparks pending determination of the substantive dispute on this issue.

[9]    In the Trustees’ amended points of claim in the arbitration, the Trustees alleged that Sohal has no legal right under the lease to control the use of carparks at the property. They alleged that they had the right to withdraw Sohal’s rights to use the carparks so that the Trustees could control the carparks for their own use. The Trustees sought a declaration that “[they] are entitled to control the use of the carparks at the Premises, and that the Respondent has no such right under the Lease.” They sought a further declaration that Sohal’s interference with their use of the carparks from 1 July 2024 (by obtaining interim relief) constituted a breach of contract. In the alternative, the Trustees alleged that Sohal’s continued use of the carparks was trespass. The Trustees claimed damages for loss of income from the proposed paid parking.

[10]   The arbitrator dismissed the Trustees’ carparking claims in the third partial award.

The outgoings claim

[11]   The Trustees claimed that Sohal had wrongly failed to pay, as outgoings under the lease, invoices for property management services issued by Auckland Property Management (APM) and before that Pro-Edge Property Management (Pro-Edge). The amount claimed as at the date of the third partial award was around $29,000.

[12]   The arbitrator rejected the Trustees’ claim for recovery of the management fees. While the arbitrator accepted that the Trustees were able to pass on and Sohal was obliged to pay a reasonable amount for the cost of property management services properly incurred in relation to the lease, he was unwilling to award the amount claimed on the basis of the evidence available to him in the arbitration.

Costs awarded to Sohal in the fourth partial award

[13]   In the fourth partial award dated 12 March 2025, the arbitrator determined that Sohal had the greater degree of success in relation to the third partial award and should be entitled to costs. He awarded Sohal 65 per cent of its costs and disbursements which he regarded as a conservative award and, if anything, generous to the Trustees. On that basis, the Trustees were obliged to pay $41,000 plus GST to Sohal in respect of its legal costs and disbursements in the arbitration since 27 May 2024.

[14]   The Trustees say that if the challenged aspects of the third partial award are varied on appeal, the fourth partial award on costs should also be varied. They seek leave to appeal the forth partial award on that limited basis.

Approach to applications for leave to appeal arbitral awards

[15]   Leave to appeal an award can be granted only if the appeal involves the determination of a question or questions of law that could substantially affect the rights of the parties.2 If this pre-condition is met, then the Court must exercise its discretion as to whether leave should be granted.

[16]   In exercising the discretion, the Court should consider the following factors, in addition to any other considerations relevant to the circumstances of a particular case:3

(a)The strength of the challenge and the nature of the point of law: where the question is a one-off point of little precedent value, leave will rarely be granted unless there are very strong indications of error. In other

2      Gold & Resource Developments (New Zealand) Ltd v Doug Hood Ltd [2000] 3 NZLR 318 at [11].

3 At [54].

cases, the somewhat less stringent standard of a strongly arguable case of error is required.

(b)How the question arose before the arbitrator: if the question is the very point which the arbitrator was asked to decide, that will weigh against leave being granted. Leave will more readily be granted if the issue of law arose incidentally or unexpectedly during the arbitration.

(c)The qualifications of the arbitrator: where the parties have chosen to put their dispute on a legal issue in the hands of a legally qualified arbitrator, it will be harder to obtain leave to appeal.

(d)The importance of the dispute to the parties: if the dispute is of great importance to the parties, that will weigh in favour of granting leave.

(e)The amount of money involved: if the amount involved is very substantial, that will also weigh in favour of granting leave.

(f)The amount of delay involved in going through the courts: the cost and delay involved in an appeal must be balanced against the amount involved.

(g)Whether the contract provides for the arbitral award to be final and binding: where the parties have so agreed, the Court should lean towards giving effect to the parties’ desire for finality.

Does the carpark appeal involve the determination of a question or questions of law that could substantially affect the rights of the parties?

[17]   I am satisfied that the correct interpretation of the words “common shared parking to be allocated by the Landlord from time to time” is a question of law, notwithstanding that the interpretative process involves findings as to the factual matrix and post-contractual conduct of the parties.

[18]   I am also satisfied that the determination of the Trustees’ carparking claim substantially affects the rights of the parties. The effect of the determination is that the Trustees cannot deprive Sohal of use of the carparks and therefore cannot convert them into paid parking. The lease has 15 years to run.  Mr Rahal planned to institute a paid parking regime which he says would generate $5,670 a month. Over the remaining term of the lease, that would amount to over $1,000,000 in income from parking.

[19]   Ms Wroe, for Sohal, says that the Trustees indicated at the time of the arbitration that the property had been sold by the Trustees and that there is no evidence that Sohal’s use of the carparks as  tenant has impacted the  value of the property.  Mr Rahal’s affidavit suggests no sale has been concluded. His assertion that potential buyers are only interested if the carparks are not part of the leased area is not supported by any documentary evidence. Nonetheless, I am satisfied that the Trustees’ inability to put the carparks to an alternative use for possibly the next 15 years makes the issue one that substantially affects the rights of the parties.

Do discretionary factors favour leave being granted to appeal the carpark determination?

The nature of the point of law and the strength of the challenge

[20]   Mr Grant argued that the carpark issue was potentially of precedent value for other commercial lease disputes. This was a standard form lease and a clause providing for the use of carparking under a commercial lease had never been given significant or close interest in case law. While that may be so, the dispute in this case is not about the meaning the words of the standard form, but the meaning of the bespoke description of carparking in sch 1 to the lease. The interpretation of those bespoke words is unlikely to have value beyond the parties to the case.

[21]   I accept, however, that the carpark issue cannot be regarded as a “one-off” issue in the sense this term is used in Gold & Resource Developments.4 The arbitrator’s award determines rights for the whole remaining term of the lease, which could be

4      Stevely-Cole v Dilworth Trust Board [2020] NZHC 2843 at [39].

another 15 years if rights of renewal are exercised. As the issue is not a confined, “one-off” issue, the somewhat less stringent standard of a strongly arguable case of error applies.

[22]   The arbitrator identified and applied settled principles as to the correct approach to contractual interpretation.5 He identified as important background context the fact that the lease was for a restaurant business located away from a highly built-up CBD and outside from a residential area. Customer carparking would be important for a successful restaurant business in this location. As Ms Wroe submitted for Sohal, the landlord’s interpretation could have a significant impact on the value of the tenancy. If the Trustees were correct, Sohal’s restaurant, which is on a major arterial road, would go from one surrounded by ample free customer parking to one where its patrons would need to pay for parking.

[23]   The arbitrator identified that the property had only one building on it, and the carparks related to that one building. Under cl 49.1, Sohal had acknowledged that the landlord might in future build a motel or apartment building on the property “with a maximum of 17 Carparks at the back of the property which shall not affect in any way whatsoever the tenant’s business or Leased premises.” The arbitrator agreed with Sohal’s submission that the reference to “allocation” of carparks had primarily to do with the future possibility of allocating some parks to the proposed motel/apartment development.

[24]   The arbitrator considered the words of the lease. He identified the way in which carparks are described in sch 1 as being of primary importance. He was unable to read the words “Common shared parking to be allocated by the Landlord from time to time” as indicating that the Trustees would be able to simply exclude Sohal from using the carparks altogether or even to limit their use to five parks for staff.

[25]   The arbitrator then went on to look at the parties’ post-contractual conduct. From April 2020 to June 2024, Sohal used the carparks for the restaurant business

5      See Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444; Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432; and Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696.

without interruption and with no suggestion that this was pursuant to or contingent on a discretionary decision by the Trustees.

[26]The arbitrator concluded that:

The Lessee is entitled to use the carparks in a way that can properly be described as being in common and shared with the Lessors. Even accepting that the Lessors had some flexibility in allocating carparks if they were to proceed with a motel/apartment project adjacent to the property, I am quite certain that their powers do not extend to simply excluding the Lessee from using the carparks or reducing the number of carparks available to five.

[27]    I find no strong indication of error in the arbitrator’s conclusion. It is supported by the words of the contract, the commercial context, and the conduct of the parties throughout the first four years of the initial five-year term of the lease. Whatever view might be taken of how carparks could be reasonably “allocated” by the Trustees, it is hard to see how a right to exclude Sohal from using all carparking could be squared with Sohal’s entitlement under sch 1 to “common and shared parking”. To put that another way, it is hard to see how the landlord allocating no parking to Sohal could be said to be allocating “common and shared parking”.

[28]   The trustees’ main textual argument is that the words “if any” in cl 17.1 form part of the description of carparking in sch 1 and import a general and unfettered discretion as to whether to allocate carparks to Sohal. That is a weak argument in my assessment. Clause 17.1 is a standard form clause which directs the reader of the lease to sch 1 for the description of the premises and carparks (if any) particular to the lease in question. The words “if any” reflect that while there will always be premises, there may or may not be carparks attached to premises under the particular lease. The description of carparking in sch 1 does not include the words “if any”.

Other discretionary factors

[29]   Mr Hindle is a highly experienced and legally qualified arbitrator chosen by the parties. The Trustees’ challenge is to his determination on the very point he was

asked to decide.   These  factors  weigh  against  leave being granted.   In words of Lord Mustill in the Pupuke Service Station Ltd v Caltex Oil (NZ) Ltd:6

Having agreed at the outset to take his disputes away from the Court the losing party may afterwards be tempted to think better of it, and ask the Court to interfere because the arbitrator has misunderstood the issues, believed an unconvincing witness, decided against the weight of the evidence, or otherwise arrived at a wrong conclusion. All developed systems of arbitration law have in principle set their face against accommodating such a change of mind. The parties have made a choice, and must abide by it.

[30]   In the present case, the importance of the dispute to the Trustees and the amount of money at stake are essentially the same factor. The significance of the carpark determination is that it prevents the Trustees from converting the carparks into income-earning paid parking. While this is a factor weighing in favour of leave, it does not outweigh the factors against granting leave.

[31]I exercise my discretion against granting leave to appeal the carpark issue.

Does the outgoings appeal involve the determination of a question or questions of law that could substantially affect the rights of the parties?

Outgoings

[32]   I consider that the proposed appeal on the outgoings issue does not involve a question of law that could substantially affect the rights of the parties.

[33]   The Trustees submit that the arbitrator erred by determining that they could not recover because Pro-Edge and APM had not charged the Trustees for their services but had instead sought to charge Sohal directly. Mr Grant also submitted that the arbitrator had made findings as to the type or level of supporting information that must be provided to substantiate a claim for the recovery of property management fees as outgoings, and that these amounted to findings of law. I disagree.

[34]   The arbitrator accepted that the Trustees were entitled to retain a property manager to stand between them and Sohal. He then made a series of factual or

6      Appendix to Gold & Resource Developments (New Zealand) Ltd v Doug Hood Ltd, above n 2.

evidential findings that led up to his overall conclusion that he was “not willing to award the lessors the amount claimed on the basis of the information that is available to me in this arbitration.”

[35]The findings of fact or inferences drawn from findings of fact included that:

(a)the charges were not supported by a letter of engagement or other written agreement;

(b)the charges did not appear to have been set on the basis of a percentage of rental nor calculated by reference to an hourly rate for hours worked;

(c)whether the amount charged was a reasonable sum for what the property manager actually did was unclear on the evidence;

(d)APM had not invoiced the Trustees or demanded payment from the Trustees for any of the services they provided for just short of two years, and while APM said it intended to do so in the future, its witness also said that APM was entitled to work “pro bono”; and

(e)there was “obviously something more going on here than [the arbitrator was] aware of” and “[to] put it bluntly, the amount claimed is just a figure that has been settled on as between APM and the lessors as appropriate for inclusion as a claim in this arbitral proceeding”.

[36]   A question of law does not include whether an award or part of an award was supported by evidence or any sufficient or substantial evidence, nor does the concept include whether the arbitrator drew correct factual inferences from the relevant primary facts.7 The arbitrator did not make findings of law about the level or type of information required to recover management fees as a rule. Rather, as Ms Wroe submitted, Sohal put the Trustees to the proof as to whether the fees were reasonable outgoings and the arbitrator concluded that the claim was not made out on the evidence. An appeal on this issue would necessarily involve a reconsideration of the

7      Arbitration Act 1996, sch 2, cl 5(10).

arbitrator’s assessment of the evidence and findings of fact, and could not be resolved by determining issues of law.

[37]   Mr Grant submitted that if the outgoings appeal raises a question of law, then it was significant in impact because it goes to whether his client could recover into the future over $1,000 a month. I disagree. The arbitrator did not determine anything about the Trustee’s ability to pass on management fees in future. He merely concluded that he was not satisfied the historic fees were recoverable from Sohal on the evidence before him.

Do discretionary factors favour leave being granted to appeal the outgoings determination?

[38]   As I have determined that the outgoings issue does not meet the threshold requirement for leave, I do not strictly need to address the discretionary factors in relation to the issue and I do so only briefly.

[39]   The Trustees’ claim regarding the non-payment of management fees from December 2022 to the date of the award amounted to around $29,000. As already stated, the arbitrator did not determinate the Trustee’s ability to pass on management fees in future. It is open for the Trustees, with better or different evidence, to pursue a claim for ongoing management fees. The arbitrator agreed, as a matter of principle, that Sohal was obliged to pay a reasonable amount for the cost of properly incurred management services under this lease.

[40]   Even if the arbitrator’s dismissal of the outgoings claim could somehow be framed as involving an error of law, the amount of $29,000 at stake on appeal, balanced against the cost and the delay involved in an appeal, would have caused me to exercise my discretion against granting leave.

Result

[41]   The Trustees’ application for leave to appeal the relevant parts of the third partial award is dismissed. As the application for leave to appeal the fourth partial

award on costs was contingent on overturning the relevant parts of the third partial award, the application for leave to appeal against the fourth partial award is also dismissed.

[42]   As the successful party, Sohal is entitled to costs on this application. If the parties cannot agree on costs, Sohal is to file and serve submissions limited to three pages (not including schedules) within ten working days. The Trustees are to file and serve submissions in response within 15 working days, also limited to three pages.

MacGillivray J