Stevely-Cole v Dilworth Trust Board - [2020] NZHC 2843

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1186

[2020] NZHC 2843

UNDER the Arbitration Act 1996

IN THE MATTER

of an appeal against an arbitration before Raynor Asher QC

BETWEEN

SUSAN MARY STEVELY-COLE, CHRISTOPHER GRAEME COLE and

BRETT AVON LEAVETT in their capacity as trustees of the Mangahewa Trust

Plaintiffs

AND

DILWORTH TRUST BOARD

Defendant

Hearing:
9 September 2020; further submissions on 17 and

21 September 2020

Counsel:

JG Miles QC and KJ Jarvis for plaintiffs

DM Salmon and AW McDonald for defendant

Judgment:

30 October 2020

JUDGMENT OF FITZGERALD J

[As to application for leave to appeal against arbitral award]

This judgment was delivered by me on 30 October 2020 at 11:30am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Webb Farry, Auckland
LeeSalmonLong, Auckland

Stevely-Cole v Dilworth Trust Board [2020] NZHC 2843 [30 October 2020]

Introduction

[1] The applicants (the Trust) are the lessees of a property in Dilworth Avenue, Remuera in Auckland (the Property). The respondent (Dilworth) is the owner and lessor of the Property. The lease is a perpetually renewable ground lease. It provides for rent reviews every seven years.

[2] The most recent review period, and that in dispute in the present proceedings, is the annual rent to be paid for the seven-year period commencing on 12 August 2017 (the review period). The new rent is to be set by reference to the “fair annual rent” for the land. The rent for the previous seven-year period had been fixed at $125,000 per annum (plus GST). The parties were unable to agree on what the new fair annual rent should be. They agreed to refer that dispute to arbitration and appointed a retired Court of Appeal judge as arbitrator.

[3] The arbitrator subsequently issued an award dated 20 April 2020 setting the fair annual rent for the review period (the Award). In the arbitration, Dilworth contended that the new rent should be $364,000 per annum (plus GST), and the Trust said it should be between $125,000 and $157,500 per annum (plus GST). After a nearly two-week hearing in which a range of experts gave evidence, the arbitrator fixed the rent for the review period at $226,337 per annum (plus GST). The new rent accordingly fell slightly below the mid-point of the range suggested by the parties.

[4] The Trust is not happy with the outcome of the arbitration. But under the Arbitration Act 1996 (the Act), recourse against an arbitral award is limited to an application to set aside the award,1 and in some cases, to appeals on questions of law.2 Further, and unless otherwise agreed, a party must obtain leave of this Court to bring an appeal on a question of law.3 The parties did not agree in advance that they could appeal to this Court on a question of law and the Trust accordingly seeks leave to do so.

1 Arbitration Act 1996 [The Act], sch 1 art…

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.

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Details

Case: [2020] NZHC 2843
Decision Date: 30 October 2020

CaseChat Overview and Summary

In this case, the High Court considered an application by the plaintiffs, the trustees of the Mangahewa Trust, for leave to appeal against an arbitral award. The award, issued by an arbitrator, set the new rent for the plaintiffs' leasehold property in Remuera, Auckland. The plaintiffs argued that the arbitrator had erred in law by misapplying the principle of the "prudent lessee" and by failing to give adequate reasons for certain findings. The defendant, Dilworth, opposed the application for leave to appeal. The court found that the plaintiffs' proposed grounds of appeal did not give rise to a question of law, and therefore declined to grant leave for an appeal on a question of law. In relation to the adequacy of reasons, the court found that the arbitrator's reasoning was adequate, and the plaintiffs' argument was relatively weak. The court dismissed the application for leave to appeal and encouraged the parties to agree on costs.

Orders