Te Puru Holiday Park Limited v Hambleton
[2017] NZHC 1357
•20 June 2017
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2017-419-000029 [2017] NZHC 1357
BETWEEN TE PURU HOLIDAY PARK LIMITED
AND TE PURU MANAGEMENT COMPANY LIMITED
Appellants
AND
LORNA AND BRYAN HAMBLETON PAULINE LOCKETT
ALLAN THOMSON
ALLEN AND JODIE NICKALLS ALLISTER COOMBE
…./Contd
Hearing: 19 June 2017 Appearances:
I Millard QC for the Plaintiffs
S Hughes QC for the DefendantsJudgment:
20 June 2017
JUDGMENT OF WOOLFORD J
This judgment was delivered by me on Tuesday, 20 June 2017 at 4:30 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors: B Nabbs, Cambridge
Auld Brewer Mazenbarb McEwen, New Plymouth
Counsel: I Millard QC, Wellington
S Hughes QC, New Plymouth
TE PURU HOLIDAY PARK LIMITED & ANOR v HAMBLETON & ORS[2017] NZHC 1357 [20 June 2017]
ANDREW MCKERROW
…./Contd
BRUCE AND TINA LINDOP BRUCE LYNN
CRAIG AND AMY RUSSELL DAVE TREBILCOCK
FRANK AND JEAN JONES GAEL MCINNES
GARY AND VERONICA LISTER
GRAEME FROST
GRANT AND MARILYN HOPKINS IAN AND LORRAINE CHANDLER
JOHN SHERWOOD
KEVIN AND RONNY JORDAN MAX AND BERYL NEWDICK
PETER HORTON PETER MAHON
RAEWYN FERGUSSON
ROBYN WILLIAMS ROGER GORDON
SANDRA MCGREGOR
TOM AND CAROLYN ROBERTSON TREVOR AND DOT DAVIES
GRAHAM AND YVONNE LOWE
WAYNE MORLAND
TREVOR AND SHIRLEY BROWN BRIAN GWYNN
TIMOTHY PLUIJMERS Respondents
Introduction
[1] On 31 August 2016, David John Clark, a legally qualified arbitrator and a principal in the law firm Wilson McKay, issued an arbitral award in a dispute arising between Te Puru Holiday Park Ltd (TPL) and Te Puru Management Company Ltd (TPML), the owner and manager of the Te Puru Holiday Park in Thames (the campground), and a number of long-term campers who had acquired and owned exclusive rights to individual lots located within the campground (the lot owners). Mr Clark issued two further awards dated 25 October 2016 and 15 March 2017 to clarify the quantum of liability and the issue of costs.
[2] The dispute was over two matters:
(a) The liability to pay rates to Thames Coromandel District Council (the Council) and, in particular, rates which are imposed by the Council on a SUIP basis (Separately Used or Inhabited Parts of a rating entity); and
(b)The liability to pay legal fees arising from litigation which arose out of a dispute between the Council and TPL and TPML and whether the lot owners are liable to pay a share of the same.
[3] TPL and TPML now apply for leave under cl 5(1)(c) of Schedule 2 of the Arbitration Act 1996 on a proposed question of law arising out of the award. The proposed question of law is as follows:
Was the arbitrator entitled to hold that levies raised by TPL and TPML for the recovery of rates imposed by the Council on a SUIP basis (Separately Used or Inhabited Parts of a rating entity), while caught by the 10 per cent cap on annual increases of levies on lot owners generally do not count as part of a levy when assessing the 10 per cent cap for the next year?
Approach to application for leave
[4] In Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd the Court of
Appeal set out the procedure on an application for leave as follows:1
1 Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd [2000] 3 NZLR 318 (CA).
[57] The hearing of the application should be kept brief. It should be merely an opportunity for the Judge to ensure that he or she has a grasp of the arguments and so enabling a determination to be made of whether the applicant has, in light of the nature of the point of law and the factors to be considered, established a sufficiently strong case to justify the grant of leave. As Lord Donaldson MR said in Ipswich Borough Council v Fisons PLC [1990] Ch 709, 722:
a decision on whether or not to grant leave to appeal to the High Court should be arrived at after only brief argument. It is not the function of the judge to hear the putative appeal before deciding whether or not to grant leave.
[58] If the Judge decides to grant leave, reasons should ordinarily not be given. It is undesirable that the Judge who is to hear the substantive argument should be embarrassed or influenced by the existence of written reasons.
[59] If leave is not granted, the Judge should deliver a short judgment for the benefit of the parties indicating, where necessary, whether the matter in issue is considered to be one-off, and why the case did not meet the required standard. A detailed analysis of the alleged error of law is not required.
[5] There is a statutory threshold set out in cl 5(2) of the Schedule 2 of the Arbitration Act before leave can be granted by the High Court under cl 5(1)(c). Clause 5(2) provides that the High Court is not to grant leave unless it considers that having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more of the parties. The Court of Appeal in Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd stated that once the statutory threshold has been met the Court should in each case exercise its discretion in a disciplined way by considering the following factors:
(a) The strength of the challenge/nature of point of law; (b) How the question arose before the arbitrator;
(c) The qualification of the arbitrator;
(d) The importance of the dispute to the parties; (e) The amount of money involved;
(f) The amount of delay involved in going through the courts;
(g)Whether the contract provides for the arbitral award to be final and binding; and
(h) Whether the dispute before the arbitrator is international or domestic.
Discussion
[6] After careful consideration, I have come to the conclusion that leave should not be granted in the present case for an appeal on a question of law. Judicial review of arbitral awards is limited by the Arbitration Act. As the Court of Appeal stated in Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd, Parliament has made clear its intention that parties should be made to accept the arbitral decisions where they have chosen to submit their dispute to resolution in such manner.
[7] I am of the view that the proposed question is a question of law and that the statutory threshold in cl 5(2) has been met. The determination of the question of law concerned could substantially affect the rights of TPL and TPML. The real problem is, however, the contract agreed between TPL and TPML and the lot owners in 2006 when Council rates were just $2,744 for the entire campground. The initial 2005/6 levy agreed between the parties was $1,500, of which only 1.4 per cent represented the individual lot owners’ share of Council rates.
[8] This was a bad bargain from the point of view of TPL and TPML. They did not envisage that the Council would change the basis of its rates charges to a SUIP basis. The 2016/7 levy is $2,183.50, of which more than 25 per cent represents the individual lot owners’ share of Council rates.2 TPL and TPML complain that this year’s levy of $2,183.50 is insufficient to pay all legitimate expenses.
[9] The bad bargain was compounded by the decision of TPL and TPML to limit the increase in levies between 2007/8, when notice was first given by the Council of their intention to impose rates on a SUIP basis, and 2015/6, when it settled its dispute with the Council and accepted that rates on a SUIP basis were legitimately imposed.
Over the eight year period between 2007/8 and 2015/6 during which TPL and TPML
2 The SUIP based rates for 2016/7 are $533.52 per lot or more than $36,000 for the entire campground.
were in dispute with the Council, levies only increased a total of 33 per cent from
$1,500 to $1,985. This took account of an increase in GST, the incorporation of a flood protection rate by the Waikato Regional Council of $12,000 per annum etc, but not the change in the basis of the rates sought to be imposed by the Council. The contract agreed between TPL and TPML and the lot owners allowed levies to be increased by 10 per cent per annum. TPL and TPML chose not to do so, however, in the mistaken belief that the Council did not have a legitimate basis for changing its method of rating the campground.
[10] What the arbitral award allows TPL and TPML to do now is to seek to recover the sum it paid in settlement of its dispute with the Council from lot owners by charging them the difference between the actual levies imposed in the years between 2007/8 and 2015/6 and the total of the levy imposed in the previous year plus 10 per cent. TPL and TPML complain that this will be insufficient to meet the sum it paid to the Council in settlement of its dispute.
[11] What they now seek through this application for leave to appeal on a question of law is, in effect, a complete re-calculation of levies for the eight year period by retrospectively increasing the levy by 10 per cent each year. TPL and TPML in fact chose to increase the levy by only 33 per cent over the entire period.
[12] TPL and TPML claim that the arbitrator’s decision not to allow the historical levies to be compounded, but to allow the present levy to be compounded, is illogical. The arbitrator had, however, no jurisdiction to rule on present levies, which are able to be increased by 10 per cent per annum according to the contract between the parties. It also seems to me that in dealing with historical levies, the arbitrator sought to maintain the decisions made each year as to the levies imposed rather than allow a complete re-calculation of the levies based on some sort of fair and just approach.
[13] Therefore, although I am of the view that TPL and TPML have an arguable case on appeal, the contract between the parties does not specifically allow for levies to be re-calculated in future years to take into account expenses in past years which had been foreseen, but not accounted for.
[14] The challenge by TPL and TPML is therefore arguable, but not particularly strong. It is a one-off point in the sense that it is unlikely to occur again and cannot be seen as having precedential value, either generally or to the parties themselves. It is accepted that levies are able to be increased by 10 per cent per annum in a compound manner going forward.
[15] Other factors that I have taken into account include the qualifications of the arbitrator. The arbitrator is legally qualified and has extensive commercial law experience. The parties had good reason to rely on his expertise. I have also taken into account the fact that the amount at issue is only $55,000 to $60,000, which is a relatively modest amount. A High Court appeal would also cost the parties a significant sum and add further delay.
[16] I do have some sympathy for TPL and TPML and their sole director, Mr Julian. Mr Julian has been a regular user of the campground in his personal capacity and consciously chose to limit levy increases over an extended period when he was in dispute with the Council. I sincerely hope that TPL and TPML are able to weather their challenging financial circumstances for the betterment of all campers.
Conclusion
[17] The application by TPL and TPML for leave to appeal on a question of law is dismissed. If the parties are unable to agree on costs, I will receive memoranda
within three weeks of today’s date.
Woolford J
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