FOODSTUFFS (WELLINGTON) CO-OPERATIVE SOCIETY v HOLDEN & Anor [2014] NZHC 490

FOODSTUFFS (WELLINGTON) CO-OPERATIVE SOCIETY v HOLDEN & Anor [2014] NZHC 490 [18 March 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2013-470-000223[2014] NZHC 490BETWEEN FOODSTUFFS (WELLINGTON) CO-OPERATIVE SOCIETYPlaintiffAND DAVID ANDREW HOLDEN and MARIEALICE HOLDEN as trustees of the D &M HOLDEN TRUSTDefendantsHearing: On the papersAppearances: R Laurenson for PlaintiffN Campbell QC for DefendantsJudgment: 18 March 2014JUDGMENT OF WOOLFORD J[on application for leave to appeal]This judgment was delivered by me on Tuesday, 18 March 2014 at 11.00 ampursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors: Gillespie Young Watson, PO Box 30-940, Lower HuttAnnanLaw Limited, PO Box 13383, Tauranga 3141Counsel: R Laurenson, PO Box 5606, Wellington 6145N Campbell QC, PO Box 4338, Shortland Street, Auckland 1140Introduction[1] David and Marie Holden apply for leave to appeal to the Court of Appeal from my judgment of 16 December 2013 in which I allowed an appeal against anarbitrator's award.Background[2] Foodstuffs (Wellington) Co-operative Society Limited (Foodstuffs) lease premises from David and Marie Holden in their capacity as trustees of the D & M Holden Trust (the Trust). Foodstuffs continues to pay the fixed annual rent, but has stopped paying the one per cent of gross sales in excess of $5.2 million per annum required by the lease, as it had closed the supermarket business it ran from the site and opened a supermarket across the road.[3] B J Paterson QC found that Foodstuffs was in breach of the provision in its lease with the Holdens that obliged it to duly and punctually pay rent. He found that Foodstuffs was required to continue to pay turnover rent as it was obligated to keep the supermarket open on the premises, or in the alternative, sublease or assign the premises to another business with a turnover of at least $5.2 million per annum. He determined that Foodstuffs was liable for additional rent based on turnover of $186,283.00.[4] Foodstuffs appealed against the arbitrator's award on a question of law to this Court.1 I considered that the arbitrator had erred in his approach to the interpretationof the lease. I considered that the words in cl 2.19 "other than as premises forcarrying on in an efficient and proper manner the businesses of a Supermarket or for any other use as may be a predominant use under the operative District Scheme for the zone within which the demised premises are situated" could not be read down tomean that only a supermarket or other business with turnover of at least $5.2 million per annum could lease the premises. The plain words of the lease presented no turnover requirement and to hold otherwise would be to substantially rewrite the clause. I held that Foodstuffs was only liable to pay the fixed annual rent to the Trust.1 Foodstuffs (Wellington) Co-operative Society Ltd v Holden [2013] NZHC 3379.Leave application[5] David and Marie Holden seek leave to appeal to the Court of Appeal against my decision on the following questions of law:(a) Whether clause 2.19 of the lease is to be interpreted as I found, or as the arbitrator found;(b) Whether, even if clause 2.19 is interpreted as I found, the plaintiff is liable in damages for its breach of its obligation in clause 2.19; and(c) Whether, even if clause 2.19 is interpreted as I found, the plaintiff is liable for turnover rent in the same amount as found by the arbitrator.[6] Foodstuffs opposes the application on the grounds that the question of law set out in [5](a) above is not capable of bona fide and serious argument and does not involve a public or private interest of sufficient importance to outweigh the cost and delay of a further appeal. In relation to the questions set out at [5](b) and [5](c) above, Foodstuffs opposes the application as these questions were not before this Court and are outside any question of law which might be advanced on this application for leave to appeal. Additionally Foodstuffs opposes the application on the grounds that these questions are not capable of bona fide and serious argument, do not involve a public or private interest sufficient to outweigh cost and delay, and are not of general public importance.Relevant law[7] The power to grant leave to appeal to the Court of Appeal arises under clause 5(5) of Schedule 2 of the Arbitration Act 1996 – "with the leave of the High Court,any party may appeal to the Court of Appeal from any determination of the High Court under this clause."[8] The test for the High Court in granting leave to appeal to the Court of Appeal is set out in Waller v Hider.2 In Snee v Snee the Court of Appeal reaffirmed the2 Waller v Hider [1998] 1 NZLR 412 (CA) at 413-414.strictness of the Waller v Hider test as a necessary requirement of a functioning Court system.3 In Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd, the Court of Appeal adopted Randerson J's summary of the test toapply under cl 5(5), which is effectively the Waller v Hider test:4(a) The appeal must raise some question of law capable of bona fide andserious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal.(b) Upon a second appeal, the Court of Appeal is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below.(c) Not every alleged error of law is of such importance either generally or to the parties as to justify further pursuit of litigation that has been twice considered and ruled upon by a Court.Decision[9] In my view, the first question of law is not capable of bona fide and serious argument and does not involve a public or private interest of sufficient importance to outweigh the cost and delay of a further appeal. There is no public or private interest in arguing this question before the Court of Appeal as the issue is one of contractual interpretation, the approach to which has been authoritatively decided by the Supreme Court in Vector Gas v Bay of Plenty Energy.5 There is no need for an appeal to clarify the law in this area. The correct interpretation of cl 2.19 was found by a straight application of contractual interpretation principles.[10] The applicants' second question of law is the same as the first and in my view, is therefore also not capable of bona fide and serious argument. The second question is whether, on my interpretation of cl 2.19, Foodstuffs is liable for damages3 Snee v Snee [2000] NZFLR 130 (CA) at [15] – [22].4 Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd [2008] 2 NZLR 591 (CA) at [33].5 Vector Gas v Bay of Plenty Energy [2010] NZSC 5, [2010] 2 NZLR 444.in the amount found by the arbitrator for its breach of cl 2.19 when the arbitrator found that the only way the plaintiff could have complied with the obligation was to operate a supermarket from the premises. My interpretation was that cl 2.19 did not require the operation of only a supermarket business on the premises. The premisescould be used in the words of cl 2.19 "for any other use as may be a predominant use under the operative District Scheme " The second question of law is answered –the arbitrator was wrong to find that only a supermarket could be operated from the premises.[11] The third question of law was not argued before me. It is inappropriate for leave to be granted on this question. As Foodstuffs has said, the applicants did notcross appeal to this Court from the abitrator's award or file additional grounds in this Court to support the arbitrator's award.Outcome[12] I decline to grant leave to appeal to the Court of Appeal..Woolford J