GLENTHORNE STATION LIMITED v UNIVERSITY OF CANTERBURY [2023] NZHC 849

GLENTHORNE STATION LIMITED v UNIVERSITY OF CANTERBURY [2023] NZHC 849 [19 April 2023]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2022-409-000070[2023] NZHC 849IN THE MATTER OF The Arbitration Act 1996BETWEEN GLENTHORNE STATION LIMITEDApplicantAND UNIVERSITY OF CANTERBURYRespondentHearing: 7 March 2023Appearances: S P Rennie and F H Scrase for the ApplicantH R Smith and J W C Nicolle for the RespondentJudgment: 19 April 2023JUDGMENT OF GENDALL JIntroduction and background[1] Before the Court is an Application for Determination of Separate Questionspursuant to r 10.15 of the High Court Rules 2016 filed on 26 April 2022. Thisapplication concerns the issue of whether those separate questions about the release ofan interim and supplementary arbitral award (the Awards) should be determinedindependently of substantive applications brought by the Applicant Glenthorne StationLimited (Glenthorne) both to set aside the Awards and for a grant of leave to appealthose Awards.[2] Glenthorne, a farming company, owns and operates a South Island highcountry station, in part on pastoral land leased from the respondent, the University ofCanterbury (the University) and in part under leases from the Crown. For the pasteight years, the parties have been involved in a lengthy arbitral dispute (theArbitration) over the appropriate level of rental to be paid for that portion of thepastoral land owned by the University and leased to Glenthorne (the Land).[3] As I understand the position, assessment of the rental in question requireddecisions on:(a) whether the Crown Pastoral Land Act 1998 (CPLA) (Glenthorne'sposition) or the Public Bodies Leases Act 1969 (PBLA) (theUniversity's position) applies to the lease;(b) if the PBLA applies, whether amenity values should be taken intoaccount; and(c) the appropriate rental.[4] The Arbitration in question involved hearings which took place on 7 – 9November 2019, 17-19 February 2020, and 10 – 12 March 2020. Those hearingsaddressed which Act either the CPLA or the PBLA applied to the determination of therental. As Arbitrators the University had appointed its valuer, Philip Murray (MrMurray), Glenthorne had appointed its valuer, Paul Mills (Mr Mills) and the partiesagreed that Bill Wilson KC (Mr Wilson) would be the third Arbitrator/umpire. Thosethree men formed the appointed Arbitration Tribunal (the Tribunal) at the time.[5] According to the University:(a) From 26 February 2020, Glenthorne had made various claims that theUniversity had failed to disclose all correspondence with its valuers andprevious valuation reports (including draft reports), that the Universityor its lawyers had falsified or altered emails that had been disclosed,that Mr Murray was not impartial and lacked independence, and thatany disclosure by Mr Murray or the University was late.(b) Glenthorne did not, however, challenge Mr Murray as Arbitrator underArticle 13, Schedule One to the Arbitration Act 1996.[6] During the arbitral hearing on 10 – 12 March 2020 the University says it wasagreed that Mr Murray and Mr Mills would not participate in the determination of therental valuation, meaning that these men would only participate in an award decidingwhich Act of the CPLA and the PBLA applied and whether amenity values should betaken into account here. Mr Murray and Mr Mills were then to resign as Arbitratorsso that they could give valuation evidence before Mr Wilson, who would determinethe quantum of the rental assessment alone.[7] It seems then that on 24 July 2020 all three men as Arbitrators signed theInterim Award but it was not, however, released to the parties at that point.[8] More than a year after the last arbitral hearing date, Glenthorne on 9 April 2021gave formal notice under Article 13(2) of Schedule One to the Arbitration Act,challenging the continued appointment of Mr Murray as an Arbitrator. This challengewas made Glenthorne claimed on the basis of Mr Murray's alleged lack of impartialityand his lack of independence. Glenthorne requested the Tribunal to decide thechallenge, and to establish a procedure for doing so under Article 13. A number ofMemoranda followed from counsel for the parties relating both to this challenge andto requests which had been made for further disclosure.[9] Mr Wilson, it seems, then sought legal advice to assist him relating to thelogistics and managing delivery of the Awards.[10] Later, in December 2021 and January 2022:(a) Mr Rennie for Glenthorne asked Mr Wilson to consider withdrawingfrom his office as Arbitrator/umpire.(b) Glenthorne filed a Memorandum (dated 25 January 2022) with theTribunal, suggesting that Glenthorne could only infer there werecircumstances that had arisen affecting Mr Wilson's ability to performhis functions. This Memorandum stated:Glenthorne is of a mind to now request the High Court to decide theissue. Glenthorne is very reluctant to take this step but, in thecircumstances, does not consider it has any other realistic option.(c) Mr Mills (on 28 January 2022) also notified the parties that he did notconsent to any awards being issued until matters that had been raisedby Glenthorne had been resolved.(d) Mr Wilson (on 31 January 2022) issued the Awards. This was on thebasis, he said, that he was authorised by:(i) a majority of the Arbitrators (himself and Mr Murray) to releasethe Interim Award; and/or(ii) the parties to release the Awards.[11] By the Interim Award (which, as I note at [7] above, had been signed by allthree Arbitrators, Mr Wilson, Mr Mills and Mr Murray on 24 July 2020, but fromwhich Mr Mills subsequently retracted on 28 January 2022), the Tribunal purported todecide first, that the PBLA applied here (the University's position) and secondly, thatamenity values should be taken into account when fixing the rental at issue. ASupplementary Award (issued by Mr Wilson alone) then determined the lease rentalby applying the Interim Award. Mr Wilson's determination of the rental was lowerthan the University had suggested, but higher than Glenthorne had suggested.1[12] On 11 February 2022 Mr Mills issued what he described as an "IndependentAward" in which he decided the PBLA applied here but that amenity values shouldnot be taken into account when fixing the rental at issue.[13] Earlier, in his Memorandum released on 31 January 2022, Mr Wilson hadexplained that the Interim Award was being released on a provisional basis, subject toany "residual issues" (such as Glenthorne's allegations of bias and non-disclosure),that any of the parties might wish to pursue. According to the University, this meantthat it remained open for Glenthorne to have its allegations determined by theArbitrators, and depending on the outcome, the Interim Award could be made final,amended, or withdrawn. The University complained however that Glenthorne elected1 As I understand the position, on that current rental arbitration, the difference between the partieswas approximately $63,000 per annum.then not to take that path. Instead, it pursued its challenge in this Court by filing thepresent Applications both for Leave to Appeal, and for the Awards to be Set Aside.These were followed by Glenthorne's present Application for Determination ofSeparate Questions filed in April 2022. The University says it was only on 3 October2022 that Glenthorne asked the Arbitrators to find that the Awards were of no effectand should be withdrawn. On 23 December 2022, the further allegation was madethat bias and non-disclosure had "tainted the entire proceeding". In the meantime,however, the University took the view that:(a) On the challenge to Mr Murray as an Arbitrator, now that Glenthornehad involved the High Court on that issue, it is this Court which mustnow determine it. This is so that a final Award may be issued or theissues referred back to the Tribunal for re-determination;(b) On the request for further post-hearing discovery, the matters raised byGlenthorne have been raised too late, they seek disproportionate,privileged or irrelevant documents, and they have also already been putbefore the High Court and therefore are to be determined here.The present application[14] Glenthorne, in its present application, seeks orders that the following questionsbe decided separately from any other question and before trial in this proceeding:(a) Did the parties or all members of the Tribunal authorise Mr Wilson,pursuant to the requirement in Article 29, Schedule 1 of theArbitration Act 1996 to decide procedural issues, including to set asidethe challenge and disregard the requested order for disclosure, in orderfor him to be able to issue the Wilson Awards?(b) If the answer is "No", should the Wilson Awards be ordered to beimmediately set aside?[15] The pleaded grounds on which the orders are sought are set out in Glenthorne'sapplication as follows:(a) The questions are easily demarcated from the issues to be determined.(b) Any facts required to be put before the Court to determine the questionsare not contentious.(c) The determination of the above questions will either resolve the mattersat issue between the parties, or narrow the matters to be determined atany subsequent trial.(d) There is no significant overlap in the evidence required to determinethe questions, and the evidence required to determine the remainingissues and questions of law.(e) A separate questions' hearing is unlikely to cause any significant delayin finally resolving the proceeding...The law[16] This present application as I note is brought in reliance on r 10.15 of theHigh Court Rules 2016.[17] Rule 10.15 provides:10.15 Orders for decisionThe court may, whether or not the decision will dispose of the proceeding,make orders for—(a) the decision of any question separately from any other question, before, at,or after any trial or further trial in the proceeding; and(b) the formulation of the question for decision and, if thought necessary, thestatement of a case.[18] McGechan on Procedure, addresses Rule 10.15 in some detail and states inpart:The starting point is the assumption that all matters in issue are to bedetermined in one trial because that will normally be the most expeditious andefficient manner for dealing with the proceeding[and]Consequently, the burden of displacing the presumption rests on the partycontending for split trials. The burden has variously been described as "notinsignificant", "moderate", and "heavy". An appropriate approach is toconsider whether the applicant has established good, preponderant reasons infavour of a separate question determination.2[19] And, whilst noting several judicial warnings, emphasising the risks involvedin ordering split trials, McGechan on Procedure goes on at para HR10.15.06 to set outsome principles and criteria for a court to take into account in deciding whether toexercise the discretion to order a split trial:HR 10.15.06 Principles(1) CriteriaThe main criteria that have been taken into account in deciding whether toexercise the discretion to order a split trial are:(a) The likelihood of delay in finally resolving the proceeding.(b) The probable length of the hearings if there is a split trial.(c) Whether a decision one way or the other on the separate question(s)would end the litigation.(d) The impact on the length of any subsequent hearing.(e) A balancing of the advantages to the parties and the public interest inshortening litigation against any disadvantages asserted by partiesopposing a split trial.(f) Demarcation difficulties in defining issues to be addressed at the firsttrial, and those left for the second.(g) Resulting difficulties of issue estoppel.(h) Inadvertent disqualification of a Judge who has expressed views at thefirst trial on matters for decision at the second trial.(i) Inadvertent findings at the first trial upon matters that are for fullevidence and argument at the second hearing.(j) The need to recall some witnesses at the second hearing.2 McGechan on Procedure, loose leaf edition, Thomson Brookers at HR 10.15.05 (1) and (2).(k) The duplication of time involved in the Court and counsel "coming upto speed" again for the second hearing.(l) The prospect of multiple appeals.(m) The need for a second round of discovery or other interlocutories andamended pleadings following the first trial.(n) Rostering difficulties in ensuring that the same Judge is available forthe second hearing.Those are the criteria listed in Turners & Growers Ltd v Zespri Group Ltd HCAuckland CIV-2009-404-4392, 5 May 2010 at [11]. They represent theCourts' experience gained over many decades.[20] Always taking into account the need to consider the individual circumstancesof each case, McGechan on Procedure at HR 10.15.06(3) nevertheless sets out apractical approach for analysis of the issues under r 10.15 in the following way:(3) A practical approachA practical approach in working through the criteria set out in (1) above isdemonstrated by Haden v Attorney-General HC Wellington CIV-2010-485-2380,4 November 2011 at [50]–[67], adopted in Karam v Fairfax NZ Ltd at [60]–[89].Those two cases addressed five questions in turn:• Question 1: Will there be difficult demarcation questions between thoseissues to be addressed at the first trial and those left for the second?• Question 2: Will the proceedings be brought to an end?• Question 3: What potential timesaving does the separate question offer?• Question 4: How will appeals be dealt with?• Question 5: Are there any other practical considerations tending one way orthe other?[21] I adopt that approach here as a suitable basis for analysis in this case.Question 1: Will there be difficult demarcation questions between those issues to beaddressed at the first trial and those left for the second?[22] In its submissions before me, Glenthorne raises, the prospect of this Courthearing the separate questions proposed on the papers. The University's position onthis aspect is that, if this Court does make an order for the determination of separatequestions, a hearing is required given that the dispute is factually complex. I agree.[23] This decision, therefore, addresses the simple issue as to whether an ordershould be made on Glenthorne's application that the suggested questions be separatelydetermined.[24] Interestingly, Kós J in Haden v Attorney-General3 observed:The interaction between issues in split trials is said to be the single mostimportant question for consideration by a Court, considering a r 10.15application..Issues in the two hearings desirably should be discrete.[25] Here, as I understand the position, the decision by Mr Wilson to issue theArbitral Award and the actual issue of the award were made purely on a provisionalbasis. Mr Wilson made it clear, in issuing this provisional award, that the parties couldraise certain matters and specifically that he did not decide issues on Glenthorne'schallenges to bias on the part of Mr Murray and disclosure questions.[26] Mr Wilson did not purport to resolve these issues and I repeat he clearly saidhe was issuing the award expressly on a provisional basis. It also seems clear thatMr Wilson was authorised to bring the long-running arbitration between the parties tosome form of closure. It is the case however that the arbitration did not come to a finalconclusion because matters were still reserved.[27] I am satisfied too at this point that it is not appropriate for any parties toendeavour to enforce the award when it was issued as it was on a provisional basisonly.[28] Essentially, then, Mr Wilson was endeavouring in this case to move on thearbitration and the interminable dispute between the parties, given too that it hadbecome stalled. In doing so, clearly, as I see it, he reserved the position that the partiescould pursue matters that were raised by taking these to the Tribunal. They had untilDecember 2022 to raise issues they wished to. Until December 2022 the parties,however, did not do so. Instead, Glenthorne filed in this Court the present application3 Haden v Attorney-General, HC, Wellington, CIV-2010-485-2380, 4 November 2011for leave to appeal the award and to set it aside. Doing so, Glenthorne has raised whatis says are natural justice concerns.[29] In this case I need to say also that the first question which it is proposed byGlenthorne needs to be answered in my view suffers from a range of difficulties. First,it suggests that Mr Wilson made a "procedural decision" to set aside Glenthorne's biaschallenge and to disregard its requested order for disclosure. No such proceduraldecisions in my view appear to have been made. Mr Wilson confirmed the awardswere expressly released on an interim basis and the outstanding procedural issues,namely those relating to the bias challenge to Mr Murray and disclosure, werereserved.[30] Next, Glenthorne, in my view, is in error when it contends that proceduraldecisions are required to be unanimous and here there was no unanimity. Article 29refers to "any" decisions of an Arbitral Tribunal. These decisions can be made by amajority of the Arbitrators. Accordingly, in this case it required only Mr Wilson andMr Murray to authorise any decision. This must include a procedural one.[31] Lastly, there is nothing in the Arbitration Act 1996 that prevents Arbitratorsfrom continuing arbitral proceedings and releasing Awards while an arbitrator such asMr Murray is under challenge (albeit one which the University says is out of time) orwhile a request for further disclosure remains outstanding.[32] As I see it, the Tribunal here was entitled to release the awards on aprovisional/interim basis as it did while issues of bias and non-disclosure were stillbeing considered. Article 13(3) of Schedule 1 of the Arbitration Act says that if achallenge to an arbitral procedure is not successful, the challenging party may requestthe High Court to decide on the challenge and that:While such a request is pending, the Arbitral Tribunal, including thechallenged arbitrator, may continue the arbitral proceedings and make anAward.[33] Further, it is clear in my judgement that the suggested second question inGlenthorne's present application ("If the answer is 'no', should the Wilson Awards beordered to be immediately set aside?") clearly leads to demarcation difficulties. In myview, those difficulties relate to properly defining the issues for each hearing. Further,they will not, in any event, resolve the dispute between the parties.[34] Glenthorne's unsupported assertion here is that a failure by all the Arbitratorsto authorise the release of the awards automatically leads to them being set aside. Thatis not so.[35] The basis on which a Court can set aside an arbitral award is outlined inArticle 34 of Schedule 1 of the Arbitration Act.[36] As I understand Glenthorne's setting aside application, it claims that a breachof natural justice has occurred, which perhaps might be seen as a breach of publicpolicy ground under the Article. For this to be established, Glenthorne necessarilymust show that it would "shock the conscience" to enforce the award, or that theintegrity of the Court's processes and powers would be abused by the enforcement ofthe Award.[37] And, in any event, even if Glenthorne was to be successful in establishing asetting aside ground, this Court retains a residual discretion not to set aside an award.This is evident from the use of the word "may" in the opening text of Article 34(2).The Court of Appeal has recognised that this Court must exercise the discretion withregard to the policies underpinning the Arbitration Act. Particular attention needs tobe given to the purposes of encouraging arbitration as a method of dispute resolution,and facilitating the recognition and enforcement of arbitral Awards.4[38] Examples do exist of a Court immediately setting aside an arbitral Award, butthe circumstances where this occurs are extreme and, in my view, are clearlydistinguishable from the present case.[39] It is true also that the interim award here originally was signed by all threeArbitrators but, before it was issued, Mr Mills withdrew his agreement to this. As Iunderstand the position, his independent award still reached the same conclusion as to4 Galloway Cooke Allan v Carr [2013] NZCA 11 at [66] and Kyburn Investments Ltd v BecaCorporate Holdings Ltd [2015] NZCA 290.the applicable Act but he had a difference of opinion about amenity value which heexplained in his decision.[40] Overall, I am satisfied the proposed separate questions advanced byGlenthorne cannot be determined in a vacuum. Any attempt immediately to set asidethe arbitral decision in my view is not appropriate in all the circumstances here.Instead, this Court will need to consider the extent to which any procedural deficiency(if established) might have had an impact on the outcome of the dispute and whetherthe Tribunal might have reached a different conclusion had it adopted what issuggested to be the correct approach. In my view, here this Court would not be ableto determine whether any unauthorised award, assuming it even reaches that view aftera full hearing, was consequential or not until a full exploration of all matters isundertaken. This is to include a consideration of all the relevant evidence.[41] Glenthorne's challenge to Mr Murray under the Arbitration Act is also arguablybarred by the time limitation contained in Article 13(2) of Schedule 1 of theArbitration Act. I leave that aspect on one side here, however.[42] For all these reasons, I am satisfied that if Glenthorne's present application isto succeed, there will be difficult demarcation questions between those issues to beaddressed at the first trial and those left for the second. The questions posed here inGlenthorne's application are not properly discrete. The appropriate course is for thisCourt to consider all matters raised by Glenthorne in one hearing and where the Courthas the benefit of evidence on contested matters.Question 2: Will the proceedings be brought to an end?[43] At the outset I need to say I am satisfied the entire proceeding here will not bebrought to an end if the proposed questions are answered in favour of Glenthorne.Glenthorne contends in its Application that the facts underlying the separate questionsare not contentious. In my view, that is not correct. First, it seems from submissionsadvanced for the University that Glenthorne's claim that the decisions to release theAwards was a "procedural decision" is firmly denied. There are conflicts in theevidence too relating to this. Mr Wilson, it seems, believed he was duly authorised bythe parties to release the Awards, but Glenthorne refers to conflicting evidence whichsays that it did not give Mr Wilson authority. Other parties, including perhapsMr Forbes KC and Mr Rennie, might be required to provide evidence to assist in whatmay be needed to properly determine this aspect.[44] And, in any event, even if Glenthorne could show that Mr Wilson was notauthorised to issue the Awards (which the University does not accept) arguably thoseAwards, it seems, can still be maintained if they were issued on a majority basis. TheUniversity also does not accept Glenthorne's allegation of apparent bias on the part ofMr Murray. To establish that the Awards should be set aside is likely to require afinding of bias and I am satisfied at this point this is not available, given Glenthorne'schallenge is out of time and the evidence to support its allegations would seem to beunsubstantiated.[45] If I may be wrong on this and Glenthorne is able to prove Mr Murray wasbiased, that is an issue that might go some way to tainting the Awards but not, as I seeit, their allegedly unauthorised release. Overall I am satisfied all substantive issueshere should be considered by this Court at a full hearing of all matters and not by wayof a separate questions hearing which would not bring these very long-standingproceedings to an end.Question 3: What potential time saving does the separate question offer?[46] This is a complex dispute and it already has a significant and long history. Byits current Application to Set Aside the Awards, Glenthorne, as I see it, has raised anumber of issues which are interrelated. These also clearly relate to this Court'sdiscretion to set aside an arbitral award. No decision of this Court in the exercise ofits discretion can, in my view, be arrived at in a vacuum.[47] To grant Glenthorne's current application, this Court must be sure that thequestions posed by it are properly discrete and are not intertwined with other questionsof law or fact.55 All Seasons Properties Ltd v Brian Smith, Court of Appeal 28 May 1997, CA151/96 at page 1.[48] The questions posed, in my view, are not discrete here and the appropriatepathway is for this Court to consider all matters raised by Glenthorne in thisproceeding in one hearing and to hear all the evidence on contested matters.[49] A likely impact of a separate questions consideration in my view would simplybe additional delay with no potential timesaving achieved. It would only deal withone part of Glenthorne's setting aside application and without considering, as thisCourt would be required to do and in context, whether the Court should exercise itsdiscretion to set aside the awards. The time saving argument does not assistGlenthorne here.Question 4: How will appeals be dealt with?[50] As I have already noted, this matter already has a long and complex history. Alikely impact of a separate questions hearing and decision on that in my view wouldbe further rounds of appeals with the additional delays they would require. In theirinterim award the Arbitrators observed they had been:provided with thousands of pages of evidence, submissions and authorities.6[51] Subsequently, it seems, there have been no fewer than 25 Memoranda ofcounsel filed between the last hearing dates and the release of the awards (18 of thesefiled by counsel for Glenthorne) with even more, it seems, filed subsequently. Furtherappeals will only delay matters again. This aspect does not assist Glenthorne's presentapplication.Question 5: Are there any other practical considerations tending one way or theother?[52] Behind this question, as I see it, is essentially a reframing of the issue in r 10.15of the High Court Rules, which is whether any proposed preliminary hearing in thisproceeding is likely to expedite the proceeding, saving inconvenience, and expense,and without causing any countervailing injustice.6 Interim Award, dated 24 July 2020 at [6].[53] With the opening words of the first question posed by Glenthorne here, thereis likely to be an intense factual consideration of matters which preceded the releaseof the provisional awards. Like many matters in this proceeding, as I understand theposition, this is hotly disputed. I am satisfied any proposed preliminary hearing ofthose questions would not in any way expedite this proceeding saving inconvenienceor expense to the parties. The proposed separate questions in this case, in my view,are more complicated than might at first appear and some careful examination of manyaspects of the factual position would be required. The assumption in this case, as I seeit, is in favour of a single trial. There are significant countervailing factors tendingagainst the determination of a separate question here, which this Court must bring intothe balance.[54] As I have noted, the questions proposed for separate determination relatelargely to what is said to be the unauthorised release and the decision relating to"procedural issues". Glenthorne's application, if successful, in my view is likely torequire the Arbitrators and others to give evidence potentially on multiple occasionswhen that would not necessarily be the case for determination of the substantive issuesbefore the parties.Conclusion[55] For all the reasons I have outlined above, I find that Glenthorne has notdischarged the "not insignificant" burden/onus upon it of establishing that it isappropriate in this case to order that the proposed questions be decided separately.Orders[56] Accordingly, I order:(a) Glenthorne's Application for Determination of Separate Questions isdismissed; and(b) Costs are reserved. Counsel are encouraged to liaise with a view todetermining costs by agreement between them. In the event that costscannot be so agreed, then counsel may file memoranda sequentially(each memorandum not to exceed five pages) which are to be referredto me, and I will decide the question of costs based upon the materialthen filed.Gendall JSolicitors:Rhodes & Co, Christchurch for the ApplicantSimpson Grierson, Christchurch for the Respondent