Te R�nunga o Ng�i Tahu v Attorney-General
[2022] NZHC 1643
•12 July 2022
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2021-485-000328
[2022] NZHC 1643
BETWEEN TE RŪNANGA O NGĀI TAHU
Plaintiff
AND
ATTORNEY-GENERAL
Defendant
Hearing: 23 May 2022 Appearances:
A R Galbraith QC, R E Brown and G F Dawson for Plaintiff M Heron QC, C Tyson and D Hunt for Defendant
Judgment:
12 July 2022
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
This judgment was delivered by me on 12 July 2022 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
TE RŪNANGA O NGĀI TAHU v ATTORNEY-GENERAL [2022] NZHC 1643 [12 July 2022]
Table of Contents
Para No
Background [6] High Court Rules 2016
[30]
Clause 10.5
[34]
The Crown’s submissions
[44]
High Court Rule 5.49(3)
[45]
High Court Rule 15.1
[51]
What are the issues?
[55]
My analysis
Has Ngai Tahu’s claim been resolved by accord and satisfaction or merger in judgment?
[56]
Is Ngai Tahu’s claim dependent upon a finding by the arbitrator that the Criwb breahed the relativity mechanism?
[83]
Is Ngai Tahu’s claim time-barred by s 11(1) of the Limitation Act 2010?
[86]
Is Ngai Tahu precluded from making a claim in respect of the Waikato
River Co-Management Claims Redress Amounts by the Deed of Settlement in relation to the Relativity Mechanism Dispute dated 22 May 2015?
[97]
Is Ngai Tahu precluded from making its claim insofar as it relates to the Rotoehu West write-down and school site losses because of the absence of a finding of the arbitrator that those amounts are CRAs?
Is Ngai Tahu’s claim otherwise an abuse of process?
[99]
[102]
A final remark
[105]
Result
[106]
[1] Te Rūnunga o Ngāi Tahu (Ngāi Tahu) and the Crown settled certain historical claims under the Treaty of Waitangi. The Deed of Settlement contained a mechanism to maintain the relativity of Ngāi Tahu’s settlement to the total value of redress provided in settlement of all historical Treaty claims (the relativity mechanism).
[2] Ngāi Tahu brings this proceeding seeking interest on amounts that, following arbitration between the parties, have been found to be owing under the relativity mechanism. Ngāi Tahu’s claim for interest is advanced as damages for breach of contract or at statutory rates under the Judicature Act 1908 and the Interest on Money Claims Act 2016.
[3]The Crown considers Ngāi Tahu is not entitled to interest on any basis.
[4] The application before me relates only to Ngāi Tahu’s first cause of action for interest as damages. The Crown seeks an order dismissing the first cause of action under r 5.49(3) of the High Court Rules 2016 on the basis that the Court has no jurisdiction to hear it. Alternatively, it asks the Court to strike out the first cause of action under r 15.1 (1) as disclosing no reasonably arguable cause of action, or as an abuse of process.
[5] Ngāi Tahu argues the claim for interest as damages is clearly within the Court’s jurisdiction, was preserved by the arbitration agreement between the parties, is well arguable, and is not an abuse of process.
Background
[6] Ngāi Tahu registered a claim with the Waitangi Tribunal in 1986 as Wai 27, and the claim was investigated at hearings before the Tribunal from 1987 to 1989. On 1 February 1991, the Waitangi Tribunal issued its report, but made few formal recommendations because Ngāi Tahu and the Crown had requested the Tribunal to issue findings on the principal issues but leave it to the parties to negotiate a settlement.
[7] Ngāi Tahu and the Crown signed a Deed of Settlement on 21 November 1997. The Ngāi Tahu settlement, and an earlier settlement between the Crown and Waikato-
Tainui, were the first substantial Treaty settlements. It was unfamiliar territory for all involved.
[8] Ngāi Tahu considered its settlement was insufficient as the redress represented a very small percentage of the value of lands lost in its rohe. Practical considerations influenced its decision to settle, such as the affordability and palatability of the settlement from a public and political perspective. Further, the settlement was negotiated against the backdrop of a “fiscal envelope” by which the Crown proposed to limit the total value of all Treaty settlements to $1 billion (in 1994 dollars). While the Crown abandoned the fiscal envelope policy, Ngāi Tahu’s position is that it continued to influence negotiations. In these circumstances, and crucial to Ngāi Tahu’s acceptance of the Crown’s settlement offer, a series of “bolt-ons” were introduced which included a relativity mechanism, as had been included in Waikato- Tainui’s settlement.
[9] The relativity mechanism is contained in section 18 of the Deed of Settlement. It is complex. Broadly, the relativity mechanism provides for the Crown to make further five yearly payments to Ngāi Tahu (if Ngāi Tahu makes a claim for such payments) in the event the aggregate value of redress paid or otherwise transferred by the Crown in respect of historical Treaty claims exceeds $1 billion (in 1994 dollars).1 The relativity mechanism is intended to maintain the relative value of Ngāi Tahu’s settlement as a fixed percentage (approximately 16.1 per cent) of the real value of all Treaty settlements until 2044.
[10] The relativity mechanism does not capture all items of settlement redress or value transferred by the Crown to iwi in settlement of Treaty claims. It sets out evaluative principles for determining what value should be counted towards the aggregate value of Treaty settlements against which relativity is to be maintained.
[11] The key concept under the relativity mechanism is the “Claim Redress Amount” (CRA). Under cl 18.2 of the Deed of Settlement, the Crown is required
1 The deed of settlement defines "Historical Claim" as one made against the Crown on the basis of the principles of the Treaty of Waitangi which arises from any act or omission of the Crown that occurred on or before 21 September 1992.
annually to provide a statement setting out its calculation of the Present Value of the Total Redress Amount. The Total Redress Amount is the sum of all CRAs. It is a running total of the redress provided by the Crown to settle claims based on historical breaches of the Treaty of Waitangi calculated in 1994 dollars.
[12] The calculation of the Total Redress Amount is required to be made on or about 30 September in each year. Ngāi Tahu is required to advise the Crown, within 40 business days of receiving the Crown’s statement, if it disputes the Crown’s calculation. If it does not dispute the calculation, it will be deemed to have accepted it.
[13] Clauses 18.3 and 18.4 deal with the process by which Ngāi Tahu may make a claim for further redress. Clause 18.4 relevantly provides:
If [Ngāi Tahu] makes a claim pursuant to clause 18.3, and the Present Value of the Total Redress Amount … exceeds $1,000 million, then the Crown shall pay to [Ngāi Tahu] such further sum as is necessary to ensure that the sum of the Real Value of the Ngāi Tahu Redress Amount, and the Real Value of any Additional Ngāi Tahu Redress Amounts… is the Agreed Relativity Percentage of the Real Value of the Total Redress Amount… The sum to be paid shall be further adjusted for CPI movements from 31 December… to the end of the quarter immediately before the payment is made.
[14] Clause 18.5 provides that Ngāi Tahu may make a claim under cl 18.3 on more than one occasion but no more than every five years or after the end of 2044.
[15] Clause 18.6.1 provides that if Ngāi Tahu makes a claim the Crown will, within 20 business days, provide to Ngāi Tahu a statement indicating whether any amount is payable under cl 18.4 and, if so, how much that amount is.
[16] Under cl 18.6.2, if the Crown’s statement indicates that any amount is payable to Ngāi Tahu, the Crown must pay that amount within the later of 40 business days after the date of the Crown’s statement or if an appropriation is required, as soon as practicable after the appropriation is made, but in any event not more than six months from the date of the Crown’s statement.
[17] Clause 18.7 deals with disputes. It provides that if Ngāi Tahu makes a claim and disputes the amount that is payable by the Crown, the parties will enter into a
dispute resolution process, but if they cannot agree on a method of resolution of the dispute, either party may exercise its legal rights against the other. Further, cl 18.7.2 states that in the event of a dispute:
the Crown will pay the amount not in dispute as required under clause 18.6.2 and, if it is finally determined that a further amount is payable, will pay such amount within 10 Business Days after the date on which the determination is made or, if a further appropriation is required, as soon as practicable after the appropriation is made but, in any event, not more than 6 months after the date on which the determination is made. There is no agreement as to whether interest is or is not payable.
(emphasis added)
[18] Ngāi Tahu monitors a range of sources to determine Crown spending on settlement of historical Treaty claims. It has in each year, in accordance with the relativity mechanism, provided a dispute letter setting out the grounds upon which it disputes the calculations in the Crown’s relativity mechanism statement.
[19] In October 2012, the Crown advised Ngāi Tahu and Waikato-Tainui that the relativity mechanisms were triggered and provided its calculation of the amount then payable to the iwi parties. Ngāi Tahu considered this was not the full amount payable and on 28 November 2012 it made its first claim under the relativity mechanism. It was agreed the Crown would pay the amount it had calculated as being payable (which it did on 19 December 2012) and the parties would, consistent with cl 18.7, enter into a dispute resolution process in order to determine any further amount payable.
[20] In discussions between the parties it was agreed that arbitration would be the best way forward, but the terms of reference to the arbitrator were subject to dispute and negotiation. Ultimately, an arbitration agreement was entered into on 8 August 2013. The arbitration agreement was between Ngāi Tahu, Waikato-Tainui and the Crown. Sir Andrew Tipping was appointed arbitrator.
[21] One of the contentious issues was the question of interest. The Crown’s position was that the arbitrator was to have no power to award interest. That was described in correspondence by Ngāi Tahu as a “deal breaker”. Ultimately it was agreed the arbitration agreement would record the parties were unable to agree on the issue of interest, and their positions would be preserved.
[22]The arbitration agreement recorded the dispute between the parties as:2
The [Crown] notified the Claimants that its obligation to make an additional payment to each of the Claimants had been triggered in the 2011/2012 year. The Claimants made claims, in terms of the relativity mechanisms, and the Crown has made payments to the Claimants on the basis of the [Crown’s] calculations. However, differences have arisen between the parties as to the nature and extent of the [Crown’s] obligation under the relativity mechanisms as at 30 June 2012.
[23] The parties were to file pleadings,3 a staged process was to be followed,4 and there were to be no appeals from the arbitrator’s awards.5 The arbitrator would make one or more interim awards in relation to each stage of the hearing and the awards were to include reasons.6 The arbitrator had no power to award interest unless agreed.7
[24] For the purpose of determining each claim the arbitrator was to determine whether an amount in issue:8
(i)is or is not a Claim Redress Amount;
(ii)if it is a Claim Redress Amount, whether it comes within any of the exclusions contained in the relativity mechanism provisions;
(iii)if it is a Claim Redress Amount and is not covered by one of the exclusions, whether it should or should not have been so included, in whole or in part, in the calculation of the Total Redress Amount as at 30 June 2012; or
(iv)has already been so included; and
(v)if it should have been so included, in whole or in part, the financial year (ending 30 June) in which it should have been included.
[25] In light of the arbitrator’s determinations, the Crown was to calculate the real value of the Total Redress Amount up to and including 30 June 2012 and to also
2 Recital C.
3 Clause 2.
4 Clause 7.1(a).
5 Clause 6.1(d).
6 Clause 10.1.
7 Clause 10.5.
8 Clause 10.2.
calculate any additional amount payable to the iwi parties in terms of the relativity mechanisms.9 Any dispute as to the calculation was to be referred to the arbitrator.10
[26]Most relevant of all in the present context is cl 10.5, which provides as follows:
The relativity mechanisms each record that the parties were unable to agree the question of interest at the time of the Deeds of Settlement. The parties remain unable to agree the question of interest and wish to preserve their respective positions in this regard. To this end, the parties agree that, in the event that any further amount is payable in light of a determination by the Arbitrator, the parties will at that time discuss whether the question of interest (including whether any interest should be paid on any further amount payable and, if so, the amount of interest to be paid) should be referred to the Arbitrator or the High Court for determination. Failing agreement between the parties, it is acknowledged that the Claimants may seek to have the question of interest determined by the High Court. If it is agreed that interest should be paid on any additional amount payable to the Claimants, or it is determined by the Arbitrator or the High Court to be payable, the parties agree that such interest will be payable only for the period commencing on 20 December 2012 (being the day after the day on which the payments referred to in Recital C were made by the [Crown] to the Claimants) and ending on the day before the day that payment of the relevant additional amount was made by the [Crown] to the Claimants (both dates inclusive).
[27] On 9 August 2013, Ngāi Tahu (and Waikato-Tainui) filed a statement of claim in the arbitration. They pleaded over 280 individual settlement redress items the iwi said should be considered CRAs. In addition, they pleaded breaches of various duties and included claims for damages and interest. The Crown objected to the pleading on the basis that the arbitrator’s remedial powers were limited to determining whether a disputed item was or was not a CRA (as per cl 10.2 of the arbitration agreement) and the arbitrator had no power to make declarations as to breach of contract, or to award damages or interest. Following the Crown’s objection, the iwi parties filed an amended statement of claim which removed the damages and interest claims.
[28] The arbitration hearings commenced in December 2013. To date, the arbitrator has issued six awards determining whether particular disputed items are or are not CRAs. Further, in light of the awards, and the clarification of the scope of the relativity mechanisms, the iwi parties have withdrawn some claims and the Crown has
9 Clause 10.3.
10 Clause 10.4.
accepted some amounts as CRAs. Where the arbitrator has found an item is a CRA, the Crown has paid further amounts, adjusted for CPI movements.
[29] The interest claims that are the subject of this proceeding arise from the arbitrator’s third and fifth awards. In the third award of 26 February 2018, the arbitrator considered whether two disputed items were CRAs. The first concerned funding the Crown paid annually to support Waikato-Tainui and other Waikato River iwi to engage in co-management arrangements for the Waikato River. The other matter concerned the transfer of a farm property to resolve a boundary dispute in relation to Pouakani claims. In the fifth award of 21 May 2020, the arbitrator found that transfer values of certain Crown forest land were to be brought into account as CRAs but two further items were not.
High Court Rules 2016
[30]Rule 5.49 relevantly provides:
Appearance and objection to jurisdiction
(1)A defendant who objects to the jurisdiction of the court to hear and determine the proceeding may, within the time allowed for filing a statement of defence and instead of so doing, file and serve an appearance stating the defendant’s objection and the grounds for it.
(2)The filing and serving of an appearance does not operate as a submission to the jurisdiction of the court.
(3)A defendant who has filed an appearance may apply to the court to dismiss the proceeding on the ground that the court has no jurisdiction to hear and determine it.
(4)Revoked.
(5)At any time after an appearance has been filed, the plaintiff may apply to the court by interlocutory application to set aside the appearance.
(6)The court hearing an application under subclause (3) or (5) must
(a)if it is satisfied that it has no jurisdiction to hear and determine the proceeding, dismiss the proceeding; and
(b)if it does not dismiss the proceeding under paragraph (a), set aside the appearance.
…
(8) The court, in exercising its powers under this rule, may do so on any terms and conditions the court thinks just and, in particular, on setting aside the appearance it may extend the time within which the defendant may file and serve a statement of defence and may give any
directions that appear necessary regarding any further steps in the proceeding.
…
[31]Rule 15.1(1) provides:
Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
[32] In Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd the Supreme Court held r 5.49 provided an unqualified right to challenge the jurisdiction of a court to hear a proceeding.11 Under r 5.49 the onus is always on the defendant to establish the Court does not have jurisdiction.12 The Supreme Court also recognised there is clearly an overlap between rr 5.49 and 15.1 and it will often be convenient to apply under both of them.13 Here, there is a good deal of overlap in the grounds relied upon by the Crown under both rules.
[33] The principles to be applied under r 15.1 are well-established. The Court will exercise its power to strike out a pleading sparingly and only in clear cases. Further, the Court has traditionally been wary of the potential inefficiency of applications to strike out part of a pleading but that may be justified if it could substantially reduce the burden of trial or preparing for trial.14
11 Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94, [2013] 1 NZLR 804.
12 Robert Osborne (ed) McGechan on Procedure (looseleaf ed, Thomson Reuters) at [HR5.49.14] citing Huang v Huang [2021] NZHC 2902 at [45].
13 At [34].
14 McGechan on Procedure, above n 12, at [HR15.1.08] citing Whitman v Airways Corp of NZ Ltd
(1994) 8 PRNZ 155.
Clause 10.5
[34] Fundamentally, this application turns upon cl 10.5 of the arbitration agreement which, Ngāi Tahu says, preserved its right to claim interest and to have its claim determined by the Court.
[35] Ngāi Tahu filed affidavits of Rakihia Tahumatā Tau and Christopher John Ford, both of whom hold senior positions with Ngāi Tahu. Their evidence concerned the negotiations for Ngāi Tahu’s Deed of Settlement (particularly as it related to the question of interest and the relativity clause) and the arbitration agreement, the arbitration process so far, and the manner of investment by Ngāi Tahu of the Treaty settlement funds for the benefit of Ngāi Tahu whanui.
[36] The Crown curtly dismisses the affidavits of Messrs Tau and Ford as hearsay and inadmissible evidence of Ngāi Tahu’s subjective intent. I do not agree. It appears to me that, consistent with the objective approach to be taken to contractual interpretation in New Zealand, as set out in Firm PI Ltd v Zurich Australian Insurance Ltd15 and Bathurst Resources Ltd v L & M Coal Holdings Ltd,16 the affidavits contain much relevant and admissible evidence which the Court may have regard to in interpreting cl 10.5 of the arbitration agreement.
[37] The issue of whether the Crown would pay interest on amounts payable under the relativity mechanism has always been contentious. Ngāi Tahu’s position has been that interest should be payable; the Crown’s position that it should not. Under the Deed of Settlement, the matter was left on the basis that there was no agreement whether interest “is or is not payable”.17 Clearly it was anticipated the matter may have to be addressed at a later time.
[38] Not surprisingly then, the question of interest was raised again when disputes arose as to amounts payable under the relativity mechanism. The correspondence between the parties and counsel indicates it was foreshadowed a claim for interest
15 Firm PI Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60]- [61].
16 Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696.
17 Clause 18.7.
would be based on the loss of opportunity for Ngāi Tahu to invest additional funds that may be found to have been payable.
[39] Under cl 18.7 of the relativity mechanism, the parties had to resolve their disputes by negotiation, agree to resolve them by an alternative dispute resolution process, or, if agreement on a method of resolution could not be agreed, either party could exercise their legal remedies, which would include referral to the High Court. Ngāi Tahu made known that the Crown’s requirement that an arbitrator was to have no power to award interest was likely to prevent agreement on the terms of an arbitration agreement. The solution reached, recorded in clause 10.5, was to preserve each party’s position and again park the question of interest until such time as it was known whether any further amounts were payable under the relativity mechanism.
[40] The parties recognised in cl 10.5 that the question of interest would only arise if from the arbitration process further amounts were found payable over and above what the Crown had already agreed to pay under the relativity mechanism. Whether that was the case would depend upon the determination of questions the parties referred to the arbitrator, primarily whether disputed amounts should have been included by the Crown as CRAs in its calculation of the Total Redress Amount as at 30 June 2012. This is reflected in cl 10.5 when it states:
To this end the parties agree that, in the event that any further amount is payable in light of a determination by the Arbitrator, the parties will at that time discuss whether the question of interest (including whether any interest should be paid on any further amount payable and, if so, the amount of interest to be paid) should be referred to the Arbitrator or the High Court for determination.
[41] The arbitration agreement contemplated that the parties might agree to refer to the arbitrator the question whether interest was payable on further amounts. It was agreed, however, that if the parties could not agree to refer the matter to the arbitrator, then the iwi parties had the right to go to the High Court. This is reflected in the words in cl 10.5:
Failing agreement between the parties, it is acknowledged that the Claimants may seek to have the question of interest determined by the High Court.
[42] The iwi parties’ right to go to the High Court clearly had to be founded upon further amounts being payable “in light of a determination by the Arbitrator”, but that did not require the arbitrator to make a finding as to what that further amount was. That was not a matter the arbitrator was to determine under clause 10.2. Clause 10.5 contemplated a determination by the arbitrator “in light” of which a further amount was payable before the iwi parties and the Crown would again engage on the question of interest. The decision by the iwi parties to file an amended statement of claim in the arbitration process, removing claims for damages and interest, must be viewed in this context. Further, the agreement to have the question of interest determined by the High Court must have contemplated a substantive rather than jurisdictional determination by the High Court.
[43] Finally, the Crown negotiated to include within cl 10.5 a limit on the period for which the iwi parties could claim interest. Interest on any additional amount payable, whether determined by agreement, arbitration or the High Court, was to be payable only for a period commencing 20 December 2012, being the date on which the Crown had made payment based on its calculation of its obligation under the relativity mechanism, and ending on the day before the day that payment of the additional amount was made. This also reflects an understanding between the parties that the claim for interest arose out of the payment by the Crown of amounts under the relativity mechanism that should have been paid at an earlier date.
The Crown’s submissions
[44]In summary, the Crown argues:
(a)The parties agreed to arbitrate, and their disputes have been disposed of by way of accord and satisfaction or merger in judgment.
(b)The damages claim cannot succeed as there is no finding of the arbitrator that the Crown breached the terms of the Deed of Settlement.
(c)A claim for damages is time-barred by s 11 (1) of the Limitation Act 2010.
(d)Insofar as the first cause of action concerns amounts referred to as the Rotoehu West write-downs and school site losses, there has been no finding of the arbitrator to support the claim.
(e)Insofar as the first cause of action concerns amounts referred to as the Waikato River Co-Management CRAs, it has been “substantively settled” by a Deed of Settlement in relation to Relativity Mechanism Dispute dated 22 May 2015.
High Court Rule 5.49(3)
[45] The Crown submits the Court’s jurisdiction to hear and determine Ngāi Tahu’s first cause of action is precluded by contract. It contends the parties agreed to arbitrate their disputes under the relativity mechanism for an agreed remedy, and this agreement precludes recourse to the courts. The agreed remedy is said to be:
… a determination of whether an item is, or is not, a CRA and subsequent further payment by the Crown.
[46] The Crown notes the courts have emphasised the importance of respecting parties’ contractual autonomy, and an election to arbitrate rather than litigate should be upheld, which is what the Crown asks here.18
[47] It contends the legal effect of a final award in an arbitration is to resolve the dispute by means of an accord and satisfaction of the parties; the accord being the agreement to submit the dispute to arbitration and the satisfaction being the making of the award in fulfilment of the agreement. The causes of action then merge in the final award and cannot subsequently be relitigated for a different remedy.
[48] The Crown argues that Ngāi Tahu’s first cause of action is not in any relevant sense a claim for interest but a claim seeking an “alternative substantive remedy” to that provided in the arbitration agreement, exposing the Crown to litigation by instalments, and it would fatally undermine the integrity and finality of the arbitration
18 Arbitration Act 1996, art 8(1) of sch 1; and Carr v Gallaway Cook Allan [2014] NZSC 75, [2014] 1 NZLR 792 at [32].
if the iwi parties could also go to Court to ask for damages for the same disputes previously resolved by the arbitrator. It says such an approach flouts common sense.
[49] The Crown does not accept that cl 10.5 of the arbitration agreement preserves a claim for interest or confers jurisdiction on the High Court to award interest as damages. Several arguments are advanced in relation to this. First, it says to view cl 10.5 as preserving a right to claim interest would defeat the purpose of arbitrating, and the Court should be slow to read in any exception to the exhaustive nature of an arbitration. Second, cl 10.5 does not mention damages for breach of contract. Third, cl 10.5 cannot encompass damages because the arbitrator has no power to determine liability for breach of contract to provide a jurisdictional foundation for a claim in damages. The arbitrator’s remedial powers are declaratory only. The Crown submits the awards at issue illustrate this point because the arbitrator made no finding there was a breach of any clause of the relativity mechanism to provide a basis for a damages claim. It submits that, “self-evidently”, there would need to be such a finding for Ngāi Tahu to come to the High Court for damages, and the absence of such a finding is “fatal” because the claim seeks to springboard off the arbitral findings.
[50] The Crown also submits the notion of contractual damages for breach are inapt in the context of the relativity mechanism. It says the mechanism sets out an iterative process for determining the amount to be paid to Ngāi Tahu. First, it requires Ngāi Tahu to make a claim following the Crown’s annual calculation. It then requires the Crown to pay its calculation and for the parties to enter into a process to determine whether any further amounts are payable. The Crown’s obligation to pay further amounts, it contends, does not arise until determined through the dispute resolution process as, until that point, “no party could say what that further amount is or would be”.
High Court Rule 15.1
[51] Relying on r 15.1, the Crown contends Ngāi Tahu’s first cause of action is an abuse of process. It relies on the arguments advanced under r 5.49(3) that the arbitrator’s awards do not involve findings of breach of contract and that the rights and obligations at issue have merged in the awards issued to date.
[52] A further argument is that a damages claim is time-barred under s 11 of the Limitation Act 2010. The Crown argues Ngāi Tahu’s claim is a money claim and has been filed outside the six-year limitation period from the date the relevant act or omission upon which the claim is based occurred, which was 19 December 2012.19 The Crown contends that cl 10.5 does not by its terms purport to disapply the Limitation Act or suspend its operation for damages.
[53] The next argument advanced is that the claim ought to be struck out in respect to amounts relating to the Rotoehu West write-downs and school site losses. As these amounts were conceded by the Crown to be CRAs without a determination by the arbitrator, it is said they cannot provide the basis for a damages claim.
[54] Finally, the Crown argues the claim is an abuse of process as it relates to the Waikato River Co-Management funding as cls 5 and 6 of a Deed of Settlement between Ngāi Tahu and the Crown dated 22 May 2015 is said to preclude any claims or future claims Ngāi Tahu has under the relativity mechanism in respect of the 2009 Waikato River settlement. The Crown acknowledges this is not a complete answer to the claim but says its effect would be significant as the majority of the amount sought by way of damages is attributable to the Waikato River Co-Management funding.
What are the issues?
[55]I consider the issues before me are as follows:
(a)Has Ngāi Tahu’s claim been resolved by accord and satisfaction or merger in judgment?
(b)Is Ngāi Tahu’s claim dependent upon a finding by the arbitrator that the Crown breached the relativity mechanism?
(c)Is Ngāi Tahu’s claim time-barred by s 11 (1) of the Limitation Act 2010?
19 As noted earlier, this was the date that the Crown paid the undisputed amount to Ngāi Tahu, for which see [18] above.
(d)Is Ngāi Tahu precluded from making its claim insofar as it relates to the Rotoehu West write-downs and school site losses because of the absence of a finding of the arbitrator that those amounts are CRAs?
(e)Is Ngāi Tahu precluded from making a claim in respect of the Waikato River Co-Management funding by the Deed of Settlement in relation to Relativity Mechanism Dispute dated 22 May 2015?
(f)Is Ngāi Tahu’s claim otherwise an abuse of process as being contrary to the finality of arbitration between the parties and broader public policy interests in the finality of litigation?
My analysis
Has Ngāi Tahu’s claim been resolved by accord and satisfaction or merger in judgment?
[56] Ngāi Tahu is not seeking to make a general claim for contractual damages. Its claim is limited to interest compensating it for deprivation of the use of money it was entitled to under the relativity mechanism and which should have been paid in 2012. It measures this by what could have been earned had the money been received on time and invested for the benefit of Ngāi Tahu whanui, after making full allowance for the fact Crown payments are subject to CPI adjustments.
[57] I did not understand the Crown to argue that as a matter of law a claim for interest as damages is untenable.20 The availability of such a claim was recognised by the House of Lords in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners.21 In the High Court of Australia in Hungerfords v Walker, Brennan and Deane JJ described interest as damages as:22
20 The Interest on Money Claims Act 2016 recognises a claim for interest as damages at s 26(1) where it provides the Act does not limit or affect the ability of any person to bring a claim, or to continue any existing claim, in any court for interest at common law or in equity.
21 Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2007] UKHL 34, [2008] AC 561.
22 Hungerfords v Walker (1989) 171 CLR 125 at 152.
an actual award of damages which represents compensation for a wrongfully caused loss of the use of money and which is assessed wholly or partly by reference to the interest which would have been earned by safe investment of the money or which was paid upon borrowings which otherwise would have been unnecessary or retired.
[58] In Clarkson v Whangamata Metal Supplies Ltd, the Court of Appeal said the phrase “interest as damages”, although commonplace, is somewhat misleading as: 23
What is being claimed is compensation for the deprivation of the use of money. That value of that deprivation is quantified by the interest that could have been earned by investing the money, or avoided by retiring debt. The loss is interest-related, but this is only a factual matter rather than a legal classification of the claim.
[59] It is a curious aspect of this case that the Crown argues this Court has no jurisdiction in respect of Ngāi Tahu’s first cause of action but makes no such assertion in respect of the second and third causes of action claiming statutory interest. I understand a factor in this approach is the cost and resources of defending the first cause of action which are likely to be substantial as compared to the claims for statutory interest. However, in a letter dated 21 July 2021 from Crown Law to Ngāi Tahu’s solicitors, Bell Gully, Crown Law questioned the legal basis for any of the three causes of action relied upon by Ngāi Tahu. It asserted that Ngāi Tahu’s first cause of action for damages was not a claim for interest at all in terms of cl 10.5. It referred to the second and third causes of action as “largely claims for interest proper on amounts determined to be CRA” 24 and that:
We agree the interest proper on amounts determined to be CRA (rather than damages) is within the scope of the matters your clients signalled they might seek to test in the High Court in terms of clause 10.5.
However, at present, we cannot see the basis upon which your clients can rely on those chosen statutory provisions … as those provisions empower the High Court to award interest on proceedings before the High Court, not on arbitral awards.
[60] As Mr Galbraith submitted, given the position that is now taken that the Court has no jurisdiction to award interest at all, it is difficult to see what the Crown
23 Clarkson v Whangamata Metal Supplies Ltd [2007] NZCA 590; [2008] 3 NZLR 31 at [23].
24 I understand the term “interest proper” is intended to refer to interest on a sum determined to be payable otherwise than as damages.
considers cl 10.5 entitles Ngāi Tahu to do. However, the parties negotiated carefully over the terms of cl 10.5 and plainly considered it did have work to do.
[61] Related to this, the Crown negotiated to limit the period for which any claim for interest could relate. In an email dated 31 July 2013, the Crown’s counsel wrote to counsel for the iwi parties in relation to cl 10.5 and said:
We have clarified in the drafting that interest is only at issue for the period following when your clients allege a short fall in the payment arose. This reflects earlier discussions between counsel. We note that in previous correspondence on this issue you have referred to interest being sought from 30 June 2012. However, we assume you mean/would accept that interest is sought from the point the payment was due but not made (that is, 20 December 2012, being the day after payment of the undisputed amount). Accordingly, see our mark ups to clause 10.5 (attached)
Assuming the above is acceptable, the Solicitor-General is ready to sign the agreement for the Crown. Let me know once your clients are ready to proceed and we will arrange for the agreement to be executed and will send it through to you.
[62] The Crown’s stance gives rise to an issue of interpretation as to the meaning of the word “interest” in cl 10.5. The proper approach to contractual interpretation is an objective one. The Supreme Court noted in Firm PI Ltd v Zurich Australian Insurance Ltd that the aim is to:25
... ascertain “the meaning which the document would convey to a reasonable person having all the background knowledge which would have been reasonably available to the parties in the situation in which they were at the time of the contract.” This objective meaning is taken to be that which the parties intended. While there is no conceptual limit on what can be regarded as “background”, it has to be background that a reasonable person would regard as relevant. Accordingly, the context provided by the contract as a whole and any relevant background informs meaning.
(footnotes omitted).
[63] Ngāi Tahu’s position is that the word “interest” in cl 10.5 is used in its sense as payment for the loss of opportunity to invest the additional funds it should have received. I consider that is plainly arguable. There is nothing in the terms of cl 10.5 which suggests to me that some other more restrictive meaning was intended. Further,
25 Firm PI Ltd v Zurich Australian Insurance Ltd, above n 15, at [60] citing Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (HL) at 912 per Lord Hoffman.
the correspondence that passed between the parties and counsel in the negotiation of cl 10.5 foreshadowed the claim that is being made in the first cause of action.
[64] In an email of 6 July 2013 between Ngāi Tahu’s counsel, Mr Galbraith QC, and Mr Heron QC for the Crown, Mr Galbraith wrote:
For my part I still see a distinction between the calculation which is done within the settlement context, which is on a CPI basis, and (assuming iwi succeed in part of their claim) interest which iwi would claim to be payable for the period after June 2012. That is a payment for a loss of opportunity to invest the additional funds which they should have received. It is not a question of the Crown being good for the money. It may be that interest might only be awarded from the due date for payment of the June 2012 calculated amount but that should be for the arbitrator to decide.
[65]Mr Heron QC responded on 7 July and said:
I find it hard to see how loss of opportunity can be valued in any other way than interest, which again can be separated into time value of money and risk premium. Here iwi will receive compensation for receiving a payment later (in CPI terms), but because it is a situation of zero risk (and they are certain not to suffer a loss), the argument for additional interest is in my view not strong.
[66] Importantly, cl 10.5 was to “preserve” the parties’ respective positions in respect to interest. If, as the Crown contends, a claim for interest as damages is not within the jurisdiction of the Court, Ngāi Tahu’s position has not been preserved. Rather, Ngāi Tahu must be taken to have given up any right to claim interest at common law which it could have pursued in the High Court along with all other claims it has made in the arbitration.
[67] It makes no difference, in my view, that cl 10.5 does not mention interest as damages for breach of contract as the clause makes no mention of any other basis upon which interest might be claimed either.
[68] This takes me to the Crown’s contention that the arbitrator’s third and fifth awards finally resolved and disposed of the relevant disputes by way of accord and satisfaction or merger in judgment, and that a claim for interest is thereby precluded. Neither submission has merit in my view.
[69]The authors of Burrows, Finn and Todd on the Law of Contract in New Zealand
adopt this definition of accord and satisfaction:26
Accord and satisfaction is the purchase of a release from an obligation, whether arising under contract or tort, by means of any valuable consideration, not being the actual performance of the obligation itself. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration which makes the agreement operative.
[70] The Crown submits the parties have agreed to arbitrate their disputes under the relativity mechanism for an agreed remedy being a determination of whether an item is or is not a CRA, and subsequent further payments by the Crown which precludes further recourse to the courts. It argues that the legal effect of a “final award” in an arbitration is to resolve the dispute by means of accord and satisfaction of the parties. I do not accept this argument.
[71] The error in the Crown’s approach is that Ngāi Tahu did not agree, expressly or by implication, that its right to claim interest would be discharged by a decision of the arbitrator. The question of interest was not submitted to the arbitrator, but rather was expressly reserved for later determination, including, if necessary, by the High Court. As Ngāi Tahu correctly submits, the arbitrator’s remedial powers do not represent an agreed remedy in respect of the issue of interest, and there is no accord and satisfaction in respect of that issue.
[72] Nor does the doctrine of merger apply. The doctrine is described in Spencer Bower and Handley Res Judicata as follows:27
Any cause of action for which judgment is given by an English judicial tribunal merges in that judgment: transit in rem judicatam. The cause of action ceases to exist and cannot support a second action. This explains certain features of the doctrine; for instance, the rules, now abolished by statute, that a foreign judgment did not bar recovery on the cause of action, and that an English judgment against one or more persons jointly liable in contract or tort barred an action against any others. It also explains the principle that a promise to pay interest on a debt ceases to be effective once judgment is given for the debt.
26 Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (7th ed, LexisNexis, Wellington, 2022) at 768 citing British Russian Gazette Ltd v Associated Newspapers Ltd [1933] 2 KB 616 at 643-644.
27 K R Handley Spencer Bower and Handley Res Judicata (5th ed, Butterworths, London, 2019) at 280.
[73] In Zukowski v Royal Insurance Company of Canada, the Court of Appeal of Alberta identified the three principles that justify the doctrine of merger as: 28
(1)the general interest of the community in the termination of disputes between litigants, and
(2)the protection of individual litigants from oppressive proceedings in the form of successive claims on the same cause of action; and
(3)that any cause of action that results in a final judgment of a competent judicial tribunal is merged in the judgment and disappears as an independent entity as a judgment is regarded as of a higher nature than any cause of action.
[74] The authors of Spencer Bower and Handley note that there are six requirements to establish the plea, which are:29
(a)the former judgment can in law support the plea;
(b)it was in the terms alleged;
(c)the tribunal had jurisdiction;
(d)the former judgment was final and remains in force;
(e)the claimant is suing on the same cause of action; and
(f)the parties are the same, or their privies.
[75] Here, the Crown’s plea of merger cannot succeed because the awards of the arbitrator upon which it relies cannot in law support the plea and were not final.
[76] It has been held that declaratory judgments will not support a plea of merger. In Zavarco PLC v Nasir, Sir David Richards, in delivering the judgment of the Court of Appeal, said:30
[37] A declaration is a quite different remedy from judgment for a debt or damages. It makes sense to speak of a merger of a claim for a debt or damages
28 Zukowski v Royal Insurance Company of Canada (2000) ABCA 165 at [14].
29 At [19.03] and p.281.
30 Zavarco PLC v Nasir [2021] EWCA Civ 1217.
into a judgment for the payment of a specified sum as debt or damages, so creating “an obligation of a higher nature”. The lesser right is merged into the higher. The same cannot be said of a purely declaratory judgment, which itself imposes no obligation but only confirms the obligation which already exists. As Birss J aptly put it, “I do not see how a declaration which declares to exist the right which the claimant already had before judgment was given could be said to extinguish that pre-existing right. It does the opposite.
[38] It has been stated in all editions of Spencer Bower that the doctrine of merger does not apply to a declaration: … [N]o authority is cited for that proposition, but none can be when, so far as known, it has never previously been contended that it does apply to a declaration. It is, however, consistent with the underlying rationale of the doctrine. Moreover, it is hard, indeed I would say impossible, to think of a sound reason why a declaration of legal right or obligation should automatically bar a subsequent claim for enforceable relief.
[77] The arbitrator’s third and fifth awards make declarations as to whether amounts in issue were CRAs and should have been included by the Crown in the relativity mechanism calculations as at 30 June 2012. The awards do not deal with the consequences of the Crown failing to do so or determine any amount that is payable to the iwi parties.
[78] Further, to support the plea, the former judgment must be complete and final and nothing further must be needed to be done judicially to render it effective and enforceable.31 Here, the arbitration agreement provides that in light of the arbitrator’s determination, it is for the Crown to calculate any additional amount payable in terms of the relativity mechanism.32 Any dispute may be referred back to the arbitrator. Plainly, the arbitrator’s determination as to whether any amount is, or is not, a CRA was not to be the final word on the parties’ entitlement under the relativity mechanism.
[79] Finally, there is also authority that the doctrine of merger will not operate to extinguish a cause of action where the only parties who have an interest in the cause of action have agreed a judgment will not have that effect. This is because the policy considerations underlying the doctrine are not violated by parties making such an agreement.
31 K R Handley Spencer Bower and Handley Res Judicata, above n 27, at [20.08].
32 At cl 10.3.
[80] In Zukowski v Royal Insurance Company of Canada, the issue before the Court of Appeal of Alberta was whether the doctrine of merger could be avoided by a preservation agreement between the parties which was incorporated in a consent judgment. The Court held: 33
… the doctrine of merger of a cause of action in a judgment does not operate to extinguish a plaintiff's cause of action where (i) the only parties with an interest in the cause of action have agreed that the judgment will not have that effect, thereby waiving operation of the doctrine as between them, (ii) the right of the plaintiff to pursue further recovery against the same defendant or defendants is clearly preserved in the judgment, (iii) the rights of third parties are not directly affected, and (iv) preservation of the right to pursue further claims is not an inappropriate or pointless fragmentation of the cause of action."
[81] It is arguable that these requirements are fulfilled in this case and that cl 10.5 was in the nature of a preservation agreement whereby the parties put to one side the question of interest until such time as it was determined whether further amounts were payable under the relativity mechanism. In the event that further amounts were payable, the iwi parties had the right to have the question of interest determined by the High Court. Clause 10.5 would serve no purpose if the iwi parties’ rights merged in the arbitral awards.
[82] Accordingly, the Crown has not satisfied me Ngāi Tahu’s claim has been resolved by accord and satisfaction or merger in judgment.
Is Ngāi Tahu’s claim dependent upon a finding by the arbitrator that the Crown breached the relativity mechanism?
[83] The Crown’s argument is that the relativity mechanism provides a staggered payment obligation. Under it, the Crown is required to pay the amount it calculates is owing, but any further disputed amounts are not payable until after a determination by the arbitrator. On this basis, the Crown has not breached the relativity mechanism by failing to include in the amounts payable to the iwi parties, sums which were ultimately found to be CRAs following arbitration. I do not accept this submission.
33 Zukowski v Royal Insurance Company of Canada (2000) ABCA 165 at [14].
[84] I agree with Ngāi Tahu that the Crown’s principal obligation must be to calculate and pay the objectively-determined correct amounts under cls 18.2 and 18.4 to ensure relativity is maintained. To consider otherwise would be to accept that the Crown’s obligation is to pay only what it subjectively considers is owing, which cannot be correct. The interpretation I prefer is consistent with the arbitration agreement which requires the arbitrator to determine if a CRA should or should not have been so included in whole or in part in the calculation of the Total Redress Amount as at 30 June 2012.34
[85] Related to this, I also do not accept the Crown’s position there is no finding in the arbitration awards to support a claim the Crown breached any clause of the relativity mechanism. I was not referred to any express finding by the arbitrator that the Crown had breached the relativity mechanism but this is hardly surprising given the way the issues to be determined by the arbitrator were framed. However, if the arbitrator makes, as he did, a determination an amount should have been included as a CRA in the calculation of the Total Redress Amount, that is tantamount to a finding that the Crown has committed a breach of contract in calculating that amount.
Is Ngāi Tahu’s claim time-barred by s 11 (1) of the Limitation Act 2010?
[86]Section 11 provides:
Defence to money claim filed after applicable period
(1)It is a defence to a money claim if the defendant proves that the date on which the claim is filed is at least 6 years after the date of the act or omission on which the claim is based (the claim’s primary period).
(2)However, subsection (3) applies to a money claim instead of subsection (1) (whether or not a defence to the claim has been raised or established under subsection (1) if
(a)the claimant has late knowledge of the claim, and so the claim has a late knowledge date (see section 14); and
(b)the claim is made after its primary period.
(3)It is a defence to a money claim to which this subsection applies if the defendant proves that the date on which the claim is filed is at least
34 Cl 10.2(iii).
(a)3 years after the late knowledge date (the claim’s late knowledge period); or
(b)15 years after the date of the act or omission on which the claim is based (the claim’s longstop period).
[87] The Crown argues the damages claim is time-barred because it is a money claim filed outside the six-year limitation period from the date that Ngāi Tahu says the relevant act or omission occurred, being 19 December 2012.
[88] Ngāi Tahu submits that accepting the Crown’s position would lead to an absurdity because:
(a)The limitation issue would arise only if the Crown did not agree to refer the issue of interest to arbitration and the forum in which the issue of interest is resolved should not dictate the parties’ substantive rights.
(b)If further amounts are payable as a result of future awards, the iwi parties would not be able to claim interest on the late payment for those further amounts in the High Court, in contradiction to cl 10.5.
[89]Ngāi Tahu argues the claim is not time-barred for three reasons:
(a)The relativity mechanism arbitration commenced on 8 August 2013, tolling the limitation period for all relief that might be awarded in that proceeding, including interest for the purposes of s 11 of the Limitation Act.
(b)The claim for interest is ancillary to the relativity mechanism arbitration and that, given what was envisaged by cl 10.5, the Court should order that relief may be granted in respect of the claim for interest, as the arbitration, towards which the claim for interest is merely ancillary, was commenced in time.35
35 Limitation Act, ss4 and 50.
(c)The parties effectively contracted out of the limitation period because they entered into an agreement that was inconsistent with the limitation defence the Crown now seeks to advance.36
[90] In my view it is the third of these arguments that is strongest and plainly arguable. It relates to s 41 of the Limitation Act 2010, which provides:
Contracting out of defences
No provision of this Act makes ineffective, or prevents the enforcement of, an agreement that conflicts or is inconsistent with, or that modifies or prevents some or all of the operation or effects of, a defence under this Act.
[91]No authorities were quoted to me involving the application of s 41.37
[92] The Crown argues that cl 10.5 does not purport to disapply the Limitation Act and to interpret it in that manner involves adding words to the clause. It also submits that if the iwi parties had intended cl 10.5 to have that effect they could have been expected to have made that clear. For these reasons, it says time began to run against Ngāi Tahu for the bringing of any claim for interest from 19 December 2012. I do not accept these submissions.
[93] Section 41 does not require that parties expressly disapply the Limitation Act. It may suffice that an agreement conflicts or is inconsistent with a defence under the Limitation Act being relied upon. As noted by the Law Commission, there is no reason why parties should not be able to effectively agree that a limitation defence will not be taken for a particular period or at all.38
[94] Here, by cl 10.5, the parties have “preserved” for Ngāi Tahu the right to pursue a claim for interest through the High Court and, also, deferred the question of interest until “any further amount is payable in light of a determination by the arbitrator”. The Crown thereby agreed that Ngāi Tahu could seek to have the question of interest determined in a separate forum once a further amount was determined to be payable.
36 Section 41.
37 The only authority that I can find amongst my own research is Lee v Mangapapa B2 Incorporation
(2017) 140 Waikato Maniapoto MB 83 (140 WMN 83).
38 Law Commission Limitation Defences in Civil Proceedings (NZLC R6, 1988) at [266].
It must follow, in my view, that time does not begin to run against Ngāi Tahu from 19 December 2012 as the Crown submits.
[95] Ngāi Tahu’s right to claim interest would plainly not have been preserved if before the date of a relevant determination by the arbitrator, its claim can be defeated by a limitation defence. That is what the Crown now effectively contends in respect to the fifth award of the arbitrator which is dated 21 May 2020. Further, such an approach would mean that any claim for interest based on awards yet to be made would also be time-barred. Had that been contemplated, it is a reasonable inference that Ngāi Tahu would never have agreed to arbitrate with the Crown and would have taken its claims under the relativity mechanism (along with its claim to interest) to the High Court immediately.
[96] For those reasons, the Crown has failed to satisfy me that Ngāi Tahu’s claim is time-barred by s 11 (1) of the Limitation Act 2010.
Is Ngāi Tahu precluded from making a claim in respect of the Waikato River Co- Management Claims Redress Amounts by the Deed of Settlement in relation to the Relativity Mechanism Dispute dated 22 May 2015?
[97] I note that even if the Crown is correct about this matter, it is not a complete answer to Ngāi Tahu’s first cause of action. In any event, there really is insufficient evidence upon which I could find for the Crown on this issue. On the very limited evidence there is, it is arguable Ngāi Tahu’s claim is not defeated, even in part, by the terms of the 22 May 2015 Deed of Settlement.
[98] The Deed settled claims in respect of river settlements with the exception of “reserved claims”. Insofar as it relates to the river settlements, I understand Ngāi Tahu’s claim for interest concerns only the reserved claims not settled by the Deed. The ability of Ngāi Tahu to claim interest was preserved by cl 10.5 and not precluded by the river settlement deed.
Is Ngāi Tahu precluded from making its claim insofar as it relates to the Rotoehu West write-down and school site losses because of the absence of a finding of the arbitrator that those amounts are CRAs?
[99] Again, this is not a complete answer to Ngāi Tahu’s claim. But these amounts appear, again on the limited evidence before me, to fall within cl 10.5 as being sums payable “in light of a determination by the arbitrator”.
[100] The sums in issue were conceded by the Crown before, during or following the fifth stage of the arbitration hearing. There is a clear connection between the arbitration and the Crown’s acceptance the amounts in question were CRAs. This is identified in correspondence from Te Arawhiti to Ngāi Tahu dated 12 May 2020 and 7 July 2020. For instance, in the 7 July 2020 letter, the Chief Executive Officer of Te Arawhiti refers to the transfer of school sites and states, “In line with the guidance of the arbitrator, we have made adjustments to treat these losses as non-gifted claims redress amounts.”
[101] It is arguable in such circumstances, that the wording of cl 10.5 leaves it open to Ngāi Tahu to advance claims for interest on sums the Crown concedes during the arbitration process should have been included as CRAs, thus obviating the need for the arbitrator to make a formal determination in respect to them.
Is Ngai Tahu’s claim otherwise an abuse of process?
[102] The Crown objects that Ngāi Tahu is conducting litigation by instalments which would defeat the purpose of arbitrating and undermine the finality of the arbitration. I do not accept that submission.
[103] In short, I do not consider it an abuse for Ngāi Tahu to proceed with a claim in the manner the parties agreed is the most appropriate. The claim for interest as damages does not impact on the integrity or finality of the arbitration or expose the Crown to litigation by instalments in an illegitimate or unfair manner. It was agreed by the parties that the question of interest would be addressed only once “[a] further amount is payable in light of a determination by the arbitrator”. Ngāi Tahu is not
seeking to revisit any question that was resolved by the arbitrator. Further, cl 10.5 contemplates the question of interest being resolved by way of a sequential process.
[104] I find support for my view in the fact the Crown could have avoided the issue of this proceeding by agreeing to refer the question of interest to the arbitrator, which was a course contemplated by the arbitration agreement. It would be wrong that Ngāi Tahu’s claim could be defeated, not substantively, but only because of the Crown’s preference as to the forum in which it should be heard.
A final remark
[105] It might be considered odd that given the context of the dispute there is no prior reference in this judgment to Treaty principles. The reason for that is that counsel did not frame their arguments in that manner. Mr Galbraith did submit that Treaty principles are a relevant consideration in the interpretation of cl 10.5, and I should be sceptical of an interpretation that runs counter to those principles but did not develop the argument. While it appeared technical arguments advanced by the Crown challenging Ngāi Tahu’s ability to have its claim substantively determined before the High Court do not reflect the basis upon which the parties proceeded as active Treaty partners in the negotiation of the arbitration agreement and particularly cl 10.5, I am not required to and do not make a judgment about that. Had I been in doubt as to the result of the application I may well have called upon counsel to address me further on this aspect.
Result
[106]The Crown’s application is dismissed.
[107] Ngāi Tahu is entitled to costs. Counsel did not specifically address me on costs, but I would expect that agreement will be reached. In the event of any dispute, counsel may submit memoranda of no more than five pages within 21 days.
O G Paulsen
Associate Judge
Solicitors:
Bell Gully, Wellington Crown Law, Wellington
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