KUSABS AND ORS v STAITE AND ORS [2018] NZCA 106

KUSABS AND ORS v STAITE AND ORS [2018] NZCA 106 [20 April 2018]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA652/2017[2018] NZCA 106BETWEEN ANDREW MARUTUEHU KUSABS ANDORS AS TRUSTEES OF THE TUMUNUILANDS TRUSTFirst ApplicantsANDREW MARUTUEHU KUSABS ANDORS RETIRED AS TRUSTEES OF THETUMUNUI LANDS TRUSTSecond ApplicantsAND PETER DANIEL STAITE AND ORS ASTRUSTEES AND AS REPRESENTATIVESOF THE BENEFICIARIES OF THEWHAOA NO 1 LANDS TRUSTFirst RespondentsPETER DANIEL STAITE AND ORS ASTRUSTEES AND BENEFICIARIES OFTHE NGĀTI WHAOA MĀORIRESERVATIONSecond RespondentsEDIE TE HUNAPO MOKE AND PIPIPHEOBE MOKE AS PERSONALREPRESENTATIVES OF THE ESTATE OFEDWARD PAURINI MOKE, AS AFORMER TRUSTEE OF THE WHAOANO 1 LANDS AND NGĀTI WHAOAMĀORI RESERVATIONThird RespondentsHearing: 19 February 2018Court: Asher, Brown and Clifford JJCounsel: M S McKechnie and AFS Vane for First and Second ApplicantsJ B Orpin-Dowell and J P Koning for First and SecondRespondentsNo appearance for Third RespondentsJudgment: 20 April 2018 at 12.30 pmJUDGMENT OF THE COURTA The application for an extension of time to appeal is granted.B The first and second respondents must pay the applicants one set of costsfor a standard application on a band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Clifford J)Introduction[1] The first respondents, the trustees of the Whaoa No 1 Lands Trust (Whaoa),have for some time leased land to the applicants, the trustees of the Tumunui LandsTrust (Tumunui). That leased land is adjacent to land owned by the secondrespondents, the trustees of the Ngāti Whaoa Māori Reservation (the ReservationTrust).[2] In March 2017 Heath J gave judgment on a dispute involving, amongst otherthings, the terms of the lease between Whaoa and Tumunui.1 On 19 October 2017Tumunui filed a notice of appeal against that judgment (the first judgment), and twosubsequent decisions of Heath J:(a) of 27 July 2017 (the second judgment), correcting under the slip rulean obvious error relating to the date on which the lease from Whaoa toTumunui began;2 and1 Staite v Kusabs [2017] NZHC 416. Those proceedings also concern an issue between Tumunuiand Whaoa involving the Reservation Trust. That aspect of the proceedings is not relevant here.2 Staite v Kusabs [2017] NZHC 1758.(b) of 22 September 2017 (the third judgment) granting a recall applicationby Tumunui.3[3] The Deputy Registrar rejected that notice of appeal. He said Tumunui couldnot appeal more than one judgment in a single notice of appeal. Moreover, Tumunui'sappeals against the first and second judgments were by then out of time.[4] Tumunui reviewed that decision. Miller J was satisfied that a single notice ofappeal might, if nothing turned on it, address more than one decision. But here, by thetime Tumunui's notice of appeal was filed on 17 October, it appeared to be out of timeas regards the first judgment. Moreover, the fact that the second and third judgmentsconcerned a recall application suggested that time ran from the first judgment.[5] In the interests of practicality, however, Miller J directed that the notice ofappeal of 19 October 2017 be accepted as an effective notice of appeal against thethird judgment, and be treated as an on notice application under r 29A for leave toappeal the first and second judgments out of time (if indeed they were).[6] On that basis, Tumunui applies for:(a) directions that its notice of appeal dated 19 October 2017 were filedproperly and within time; or, alternatively(b) orders granting leave to bring those appeals out of time.Facts[7] A degree of confusion was occasioned by the terms of Heath J's judgments,and by the way this matter came before us. In the hope of avoiding similar confusionin the future, we set out, in more detail than might normally be called for in a judgmentsuch as this, our understanding of the factual background to these applications.3 Staite v Kusabs [2017] NZHC 2299.[8] In the substantive proceedings, and as relevant, Whaoa sought relief againstTumunui based on alleged breaches of fiduciary duties on the part of a common trustee(Mr Moke). Those breaches, Whaoa said, had caused it to agree to Tumunui originallyacquiring the lease from the previous lessee and, when the validity of that lease wasquestioned, to renewing and extending that lease on a materially disadvantageousbasis.4 Having found that Mr Moke had breached his duties to Whaoa the question forHeath J became the appropriate relief to order. Whaoa sought rescission of the leaseor alternatively damages. Tumunui resisted rescission, particularly given theimprovements to the land it had been responsible for during its time as lessee and thelosses it would incur if, without compensation as provided in the lease, the lease wasterminated.[9] On the question of relief, and in the first judgment, Heath J reasoned:(a) The renewed and extended lease had erroneously excluded from thecapital value of the land, and therefore from the basis on which leasepayments were calculated, improvements made by the original lessee.5Only improvements made by Tumunui itself should have been soexcluded.6 That error had, he concluded on the basis of the expertevidence he had heard, resulted in a significant advantage to Tumunuiand a like detriment to Whaoa.7(b) Whilst Mr Moke was not responsible for that error, the question waswhether Tumunui should be entitled to retain the benefit of the wronglyexpressed rental formula, having regard to Mr Moke's involvement innegotiations for the new lease on both sides of the transaction.8(c) Heath J was satisfied that some relief was required, but was notpersuaded that rescission or an order for damages was appropriate. On4 Staite v Kusabs, above n 1, at [170].5 At [210].6 At [210].7 At [214].8 At [214].his own initiative during the hearing he raised with counsel thepossibility of rectification and sought submissions on the point.9(d) Heath J concluded that the lease should, indeed, be rectified.10 To doso would do no more than remove a benefit Tumunui was neverintended to receive.[10] The relevant clause in the lease had read that rent should be paid: at a yearly rental calculated on the basis of five dollars per centum of thecapital value of the said land according to a special valuation carried out byValuation New Zealand provided always that for the purposes of suchvaluation there shall be deducted from the said capital value the value of allimprovements made on or to the said land by the lessee or its predecessorsince the 13th day of December 1961 and during the terms hereof by the lesseeand subsisting at the date of valuation (Emphasis added).Heath J ordered rectification as follows:11I make an order for rectification of the Tumunui lease to remove the words "orits predecessor since the 13th day of December 1961 and" from the Tumunuilease.[11] So, the effect of the order was to remove the italicised words from the lease.The Judge then explained:12The effect of that order is to require rental to be fixed in accordance with theformula in the lease but taking into account only improvements to the landmade by the Tumunui Trust since the lease commenced, on 1 July 1992. Theconsequence of this order is that adjustments will need to be made to the rentfixed for earlier periods.[12] In delivering judgment in those terms, Heath J reserved leave to any party toapply for further directions.13[13] Subsequently, two issues were raised:9 At [205].10 At [213].11 At [262(b)].12 At [262(b)].13 At [262(c)].(a) First, the parties pointed out that the Tumunui lease had commenced on13 December 1992, not 1 July 1992. In the second judgment Heath Jcorrected that error in his explanation pursuant to the slip rule.(b) At the same time, the parties drew to Heath J's attention the fact thatTumunui had gone into possession of the land in 1989, and hadundertaken substantial improvements prior to the formalcommencement of the lease on 13 December 1992. The question was,therefore, whether those improvements should — in terms of thesubstantive judgment given — also be excluded from the capital valueof the land for the purpose of calculation of rent due from Tumunui toWhaoa. Heath J considered that question was appropriate for a recallapplication.[14] It is that invited application for recall that was the subject of the third judgment.There Heath J varied not the terms of the original rectification order itself, but ratherhis explanation of its effect.14 He now noted its effect was that improvements effectedby Tumunui since it went into possession of the land in 1989 were to be excluded fromthe capital value of the land for the purpose of the calculation of rent.Analysis[15] In its notice of appeal of 19 October 2017 Tumunui challenged the order forrectification Heath J made in the first judgment. No such order should have been madeat all. Alternatively, Heath J had been wrong to do so on the basis of the limitedevidence he had heard. Whaoa's response to these applications would allow Tumunuito challenge the basis of rectification (the third judgment), but not whetherrectification should in fact have been ordered at all (the first judgment).[16] In advancing these applications, Tumunui argued that, until the third judgmenthad been given, the first judgment was still at large: of necessity, any appeal againstthe first judgment as recalled and reissued, following the third judgment, wouldinvolve the substance of the first judgment. On that basis, it had filed its appeal against14 Staite v Kusabs, above n 3, at [46].the first judgment in time. If it had not, then in terms of the principles outlined by theSupreme Court in Almond v Read,15 and applied by this Court in Edel Metals GroupLtd v Geier Ltd,16 these were circumstances which clearly called for the grant of leave.[17] For its part, Whaoa argued that Tumunui's actions in applying for correctionof the first judgment under the slip rule and for its recall as granted in the thirdjudgment, were inconsistent with its now signalled intention to appeal Heath J'srectification order. If Tumunui had all along intended to appeal, then it should havedone so. Tumunui's in time notice of appeal against the third judgment was sufficientfor justice to be done: while Tumunui would not be able to challenge the relief ofrectification itself, it could challenge the consequences of that relief.[18] We acknowledge that, in the circumstances which have arisen here, thequestion of whether Tumunui's appeal against the first judgment was in time is notwithout difficulty. It is not necessary for us, however, to resolve that technical issuehere. Rather, in terms of the principles that apply to applications for extensions oftime to appeal, we are satisfied that the application should, to the extent necessary, begranted for Tumunui to appeal the first judgment as it gave notice of its intention todo so on 19 October 2017.[19] This is a long running dispute. Since the release of the first judgment theparties have dealt with each other as regards to the resolution of that dispute on anongoing basis. Both parties were aware that Heath J had himself raised the issue ofrectification and that, whilst they had had the opportunity to make submissions on thatprospect, little or no evidence had been placed before the Court on the comparativecommercial consequences of termination, albeit without compensation, andrectification. Moreover, the disconnect between Mr Moke's breach of duty and theerror as to rent calculation which Heath J focused on may question the appropriatenessof rectification. These are in our view issues which, given the long history andcomplex nature of this dispute, Tumunui should be permitted to have determined onappeal.15 Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801.16 Edel Metals Group Ltd v Geier Ltd [2017] NZCA 359.[20] We can, moreover, identify no material prejudice to Whaoa associated with thepossible delay we have identified involved in Tumunui filing its notice of appealagainst the first judgment. The case has been proceeding for many years, and anydelay has been of comparatively short duration.Result[21] The application for an extension of time to appeal is granted.[22] The first and second respondents must pay the applicants one set of costs for astandard application on a band A basis and usual disbursements.Solicitors:Le Pine & Co, Taupō for ApplicantsKoning Webster, Papamoa for First and Second Respondents