WAI-O-TAPU LIMITED PARTNERSHIP v THE TRUSTEES OF NGATI TAHU NGATI WHAOA RUNANGA TRUST [2017] NZHC 2597

WAI-O-TAPU LIMITED PARTNERSHIP v THE TRUSTEES OF NGATI TAHU NGATI WHAOA RUNANGATRUST [2017] NZHC 2597 [24 October 2017]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-463-000085[2017] NZHC 2597BETWEEN WAI-O-TAPU LIMITED PARTNERSHIPApplicantAND THE TRUSTEES OF NGATI TAHUNGATI WHAOA RUNANGA TRUSTRespondentHearing: 17 October 2017Appearances: S Mills QC and P Crombie for ApplicantR E Schultz for RespondentJudgment: 24 October 2017JUDGMENT OF VENNING JThis judgment was delivered by me on 24 October 2017 at 4.30 pm, pursuant to Rule 11.5 of the HighCourt Rules.Registrar/Deputy RegistrarDateSolicitors: Cooney Lees Morgan, TaurangaLee Salmon Long, AucklandCopy to: S Mills QC, AucklandApplication for leave[1] Wai-O-Tapu Ltd Partnership (the lessee) seeks leave to appeal an award of theHon Robert Fisher QC (the arbitrator) in which he determined a rent review betweenthe lessee and the trustees of Ngati Tahu – Ngati Whaoa Runanga Trust (the lessor) inrelation to a property known as Wai-O-Tapu Thermal Wonderland (Wai-O-Tapu).1Wai-O-Tapu[2] Wai-O-Tapu is leased under a deed of renewal of lease dated 25 September2000. The lease incorporates all of the terms of an original lease from 1969 except inrelation to rent in the initial period. The final expiry date of the lease is 30 June 2033.[3] In 2010 the lessor was assigned the land and its reversion as part of a Treaty ofWaitangi settlement. On 31 October 2012 the lessee purchased the tourism businessof Wai-O-Tapu, including the leasehold interest in the land.[4] The lease requires rent reviews every five years or whenever the lessee subletsor assigns any part of the land. The previous rent review was completed in 2010. Itestablished the rent at $205,000 plus GST. No review was conducted in 2012 whenthe lessee acquired the lease.[5] The subject property is a largely undeveloped 125 ha site consisting ofimprovements, natural geothermal features and bush. The lessee operates a well-known geothermal tourism business there.The arbitration[6] The rent became due for review on 1 July 2015. The parties were unable toagree the appropriate rent review and submitted the issue to arbitration. The arbitratorwas appointed sole arbitrator to determine the rent review. Although the initialarbitration agreement purported to submit two inconsistent disputes for determination1 Ngati Tahu – Ngati Whaoa Runanga Trust v Waiotapu Ltd Partnership (Partial Award) RobertFisher QC, 10 May 2017 (the Award).the matter was resolved following a pre-hearing conference, the minute of whichrecorded:21. The first topic concerns the definition of a dispute which is the subjectnow of the arbitration agreement of 20 December 2016. It is agreedthat the dispute for determination is "what was the current market rentfor the subject property as at 1 July 2015?"[7] International Valuation Standards confirms current market rent as:3 the estimated amount for which a property, or space within a property,should lease on the date of valuation between a willing lessor and a willinglessee on appropriate terms in an arm's length transaction, after propermarketing wherein the parties had each acted knowledgeably, prudently andwithout compulsion[.][8] Both parties called experts at the arbitration. The lessor called Mr GaryCheyne, a registered valuer, who proposed a rent of $1,139,400 per annum; and MrMichael Lowe, a chartered accountant, who proposed a rent of $972,000 per annum.The lessee called Mr Gerrard Wilson, a registered valuer who proposed a rent of$287,200 per annum; and Mr Eric Lucas, a chartered accountant who proposed a rentof $300,000 per annum. As the arbitrator noted, by the end of the arbitration the lessorwas contending for $2,400,000 per annum. The arbitrator fixed the rent at $1,139,400per annum.Jurisdiction for the application[9] As relevant, cl 5 of the Second Schedule to the Arbitration Act 1996 states:5 Appeals on questions of law(1) Notwithstanding anything in articles 5 or 34 of Schedule 1, any partymay appeal to the High Court on any question of law arising out of anaward—(a) if the parties have so agreed before the making of that award;or(b) with the consent of every other party given after the makingof that award; or2 Ngati Tahu-Ngati Whaoa Runanga Trust v Waiotapu Ltd Partnership (Minute of Conference No.2)Robert Fisher QC, 22 December 2016.3 As set out in the document titled "Joint Brief: Wai-O-Tapu Geothermal Wonderland 1 July 2015Rent Review".(c) with the leave of the High Court.(2) The High Court shall not grant leave under subclause (1)(c) unless itconsiders that, having regard to all the circumstances, thedetermination of the question of law concerned could substantiallyaffect the rights of 1 or more of the parties.(10) For the purposes of this clause, question of law—(a) includes an error of law that involves an incorrectinterpretation of the applicable law (whether or not the errorappears on the record of the decision); but(b) does not include any question as to whether—(i) the award or any part of the award was supported byany evidence or any sufficient or substantialevidence; and(ii) the arbitral tribunal drew the correct factualinferences from the relevant primary facts.The criteria in cl 5(1)(a) and (b) do not apply.[10] The lessee seeks leave to appeal under cl 5(1)(c) above on the grounds that:(a) The arbitrator erred in holding that where known, or capable ofestimation, the profitability of a subject site and what a notional lesseewould pay for access to that profitability are the primary issues indetermining the current market rent.(b) The arbitrator erred in determining the current market rent on the basisof a valuation methodology that resulted in an assessed rent thatsubstantially exceeded a current market rent that could be supported bydirect comparison methodology.(c) The arbitrator erred in holding the fact that a valuation methodologymay have conventionally been used to determine market rents in therelevant market is irrelevant to the determination of current market rentwhere the methodology does not sufficiently take account of theprofitability of the subject site.(d) The arbitrator erred in holding that for the purpose of determiningcurrent market rent, a notional lessor is to be regarded as not beingwilling to accept a rent that is lower than the amount the lessor wouldreceive if it operated a business on the subject site itself.[11] In addition, but not before the Court for determination at present, the lesseeseeks to set aside the award on the grounds of two alleged breaches of natural justiceand on the basis the arbitrator exceeded his jurisdiction.[12] There are effectively two threshold issues to be determined on the currentapplication:(a) the questions proposed are questions of law; and(b) the determination of the questions of law could substantially affect therights of one or more of the parties.Procedure[13] In Gold & Resource Developments (New Zealand) Ltd v Doug Hood Ltd theCourt of Appeal suggested that the hearing of an application such as this should bebrief.4 The Court observed:[57] The hearing of the application should be kept brief. It should bemerely an opportunity for the Judge to ensure that he or she has a grasp of thearguments and so enabling a determination to be made of whether theapplicant has, in light of the nature of the point of law and the factors to beconsidered, established a sufficiently strong case to justify the grant of leave.As Lord Donaldson MR said in Ipswich Borough Council v Fisons plc [1990]Ch 709; [1990] 1 All ER 730 (CA), at p 722; pp 732-733:"a decision on whether or not to grant leave to appeal to the High Courtshould be arrived at after only brief argument. It is not the function of thejudge to hear the putative appeal, before deciding whether or not to grantleave."[58] If the Judge decides to grant leave, reasons should ordinarily not begiven. It is undesirable that the Judge who is to hear the substantive argumentshould be embarrassed or influenced by the existence of written reasons.4 Gold & Resource Developments (New Zealand) Ltd v Doug Hood Ltd [2000] 3 NZLR 318 (CA).[59] If leave is not granted, the Judge should deliver a short judgment forthe benefit of the parties indicating, where necessary, whether the matter inissue is considered to be one-off, and why the case did not meet the requiredstandard. A detailed analysis of the alleged error of law is not required.[14] The High Court Rules 2016 reflect these considerations at rr 26.15–26.18.Threshold issues[15] The Court of Appeal in Gold & Resource Developments (New Zealand) Ltdalso acknowledged that the requirement that determination of the questions of lawcould substantially affect a party's rights was a precondition only, and not enough ofitself to justify the granting of leave.[16] There can be little doubt that determination of the questions posed in thelessee's favour could substantially affect the parties' rights under the lease. Thecumulative effect of the difference between the rent fixed by the arbitrator over theprevious rent taken over the remaining term of the lease through to its expiry on 30June 2033 will be not less than $16,819,200 plus GST. Taken as a percentage increaseover the previous market rent, the current rent is an increase of 556 per cent.Questions of law generally[17] The real issue in the present case is whether the matters identified by theapplicant as errors of law are properly questions of law that meet the test for leave.The lessor submits that the first three questions are effectively matters of fact or atbest, mixed questions of fact and law rather than questions of law. The fourth questionis at best a mixed question of fact and law. The lessor submits the alleged errors oflaw fall well short of the standard required for the grant of leave.[18] The expression "mixed question of fact and law" is often used but as theSupreme Court pointed out in Bryson v Three Foot Six Ltd, the application of law tothe facts does not actually mix fact and law.5 In R v Vaihu the Court of Appeal stated:6 the legal consequences of facts as found by a Judge have long beenregarded as a conventional question of law.5 Bryson v Three Foot Six Ltd [2005] NZSC 34, [2005] 3 NZLR 721 at [25].6 R v Vaihu [2010] NZCA 145 at [23].[19] In the context of arbitrations the process of application of the law to the factswas discussed in the following way in Finelvet AG v Vinava Shipping Co Ltd:7Starting therefore with the proposition that the court is concerned to decide,on the hearing of the appeal, whether the award can be shown to be wrong inlaw, how is this question to be tackled? In a case such as the present, theanswer is to be found by dividing the arbitrator's process of reasoning intothree stages: (1) The arbitrator ascertains the facts. This process includes themaking of findings on any facts which are in dispute. (2) The arbitratorascertains the law. This process comprises not only the identification of allmaterial rules of statute and common law, but also the identification andinterpretation of the relevant parts of the contract, and the identification ofthose facts which must be taken into account when the decision is reached. (3)In the light of the facts and the law so ascertained, the arbitrator reaches hisdecision.[20] In relation to those stages Mustill J observed:8In some cases, stage (3) will be purely mechanical. Once the law is correctlyascertained, the decision follows inevitably from the application of it to thefacts found. In other instances, however, stage (3) involves an element ofjudgment on the part of the arbitrator. There is no uniquely "right" answer tobe derived from marrying the facts and the law, merely a choice of answers,none of which can be described as wrong.[21] As Mr Schultz submitted, if the question is regarded as a question of mixedlaw and fact, if it lends itself to more than two possible outcomes, the Court shouldnot interfere.9The standard to apply to the alleged error of law[22] The Court of Appeal in Gold & Resource Developments (New Zealand) Ltdconfirmed that this Court should consider the strength of the argument there has beenan error of law and the nature of the point. If the point is a one-off point, then unlessthere are strong indications of error, leave will rarely be given. Where the point has aprecedent effect then a strongly arguable case will normally be required for leave tobe granted. Mr Mills, appearing for the lessee, noted that in Trustees of RotoairaForest Trust v Attorney-General, a case involving ongoing rent reviews, Elias J7 Finelvet AG v Vinava Shipping Co Ltd [1983] 2 All ER 658 (QB) at 663.8 At 663.9 Shell (Petroleum Mining) Co Ltd v Vector Gas Contracts Ltd [2014] NZHC 31 at [47].approved a test requiring the applicant to demonstrate "real doubt" that the arbitratorwas wrong in law.10The questions of law in this case[23] Mr Mills acknowledged that the first three of the alleged errors arise from thecentrality given in the award to the known profitability of the subject site and thearbitrator's reliance on the excess earnings methodology promoted by Mr Lowe. Hesubmitted the excess earnings method was not a conventional methodology applied byvaluers to the valuation of rent. Rather it was methodology applied for valuingbusinesses. The two previous rent reviews had been conducted on the basis of theconventional direct comparison method. The fourth error of law relied on was that thearbitrator had applied a wrong legal test in asking what a notional lessor would expectto receive if it operated the business on the subject site itself and then treating thatfigure as a floor, below which the notional lessor would not accept a lessee's offer. MrMills submitted the law was clear: first, that the notional lessor was a willing lessorand not one who might refuse to lease at all; and second, that the issue was not whatthe lessor would like to receive but what the notional lessee would be willing to pay.[24] While acknowledging that an arbitrator has substantial discretion in fixing themarket rent and choosing the method of valuation, Mr Mills submitted that thearbitrator still has to apply a conventional methodology. In the present case thearbitrator had departed from conventional methods and was improperly influenced bythe excess earnings method of valuation promoted by Mr Lowe.[25] Mr Mills noted that Ms Neville, the Chief Executive Officer of the companywhich controls the lessee, had recorded that under cross-examination (the transcriptwas not available to the Court) Mr Cheyne said he could not do a direct comparisonmethodology assessment based on profitability due to the lack of profitabilityinformation for comparable sites. His current market rent assessment was heavilyinfluenced by the excess earnings assessment carried out by Mr Lowe.10 Trustees of Rotoaira Forest Trust v Attorney-General [1998] 3 NZLR 89 (HC).[26] Mr Mills argued that the difficulty with the excess earnings method was madeapparent when, in the closing submissions before the arbitrator, Mr Salmon hadsubmitted a rent calculated on the excess earnings method of $2.4 million would nothave been inconceivable.[27] Mr Mills referred to passages from a number of authorities in support. In ReA Lease, Wellington City Corporation to Wilson the Supreme Court (as it then was)observed that the City Corporation as lessor could not expect to obtain as ground rentanything more than a moderate rate of interest on the capital it had invested.11 Wherethere was only unimproved land, the interest would be on the capital value of theunimproved land, with all profits and premiums being awards of the lessee, with thelosses also being the lessee's liability, not the lessor's. Mr Mills submitted that thelease of Wai-O-Tapu was effectively a lease of unimproved land, and it was the lessee'sobligation to develop it as a tourist attraction.[28] However there is an important factual distinction between that case and thepresent. In In Re A Lease the Court had earlier directed a new lease to be given "atthe full improved ground rental".12 That ground rental was defined in the lease toexpressly exclude the value of any buildings or improvements. As Mr Schultzsubmitted, the comment from the judgment that:13The lessor must adjust his attitude. It must not expect to get what a prudentlessor would consider he ought to get. It must take the ground rental which areasonable but prudent lessee thinks it proper to give.must be read in that context. The appropriate rental was tied to the nature of the groundrental. It cannot be suggested in the present case that the arbitrator was not entitled toconsider the potential production capacity of the land. The decision in In Re A Leasecan be contrasted with the Drapery and General Importing Company of New Zealand(Ltd) v Mayor, Etc, of Wellington case, in which the Court recognised that productioncapacity of land was only one of three possible methods of valuation.1411 In Re A Lease, Wellington City Corporation to Wilson [1936] NZLR s 110.12 At s 111.13 At s 113.14 Drapery and General Importing Company of New Zealand (Ltd) v Mayor, Etc, of Wellington(1912) 31 NZLR 598.[29] As noted, Mr Mills submitted the arbitrator in the present case had departedfrom settled principles of valuation. He referred to the following passage from thejudgment of Turner J in Wellington City v National Bank of New Zealand PropertiesLtd:15The valuers are not, as I conceive the matter, to devise a figure from their owninner consciousness as a solution of the problem before them; what they areto attempt to do is to ascertain a value which, independently of the valuers'existence or calculations at all, is already a fact, capable of being perceivedthrough eyes sufficiently expert. It is the market value, postulating a market,which they are asked to ascertain. The methods by which the valuers set aboutascertaining this value will be selected by their expertise, and may be differentin different circumstances. But the resultant valuation should ideally be thesame, whatever method be used. It is still the same question that is asked -what is the rental . . . that ought to be payable? - and the question being thesame, the answer ought to be the same. It is true that in the case before usthe valuers found it impossible to use the method of comparing other rentalsobtainable for similar properties in the neighbourhood. This was because of acircumstantial accident. There was no neighbouring or comparable propertythe rental of which could be used as a standard of comparison. But thisaccident should not be allowed to indicate a method of valuation so differentas necessarily to lead to a result quite different from that which would havebeen obtained had there been neighbouring property to which to refer for thepurposes of comparison.[30] Mr Mills submitted that Turner J rejected as invalid any methodology thatproduced a result quite different from a direct comparison methodology. But in thesame case, North P in his judgment said:16Now it is perfectly plain, if I have correctly understood the authorities, thatthe Courts have consistently declined to be drawn into considering principlesof valuation save in so far as they depend on purely legal considerations. Ofcourse if a lease, for example, contains a formula for fixing a rent, thearbitrators or the umpire must comply with the directions given to them in theinstrument. But short of anything like that, the method of valuation whichfinds favour with the arbitrators or the umpire is essentially a matter for them.[31] North P went on to cite with approval the comments of Lord Watson in Northand South-Western Junction Railway Co v Assessment Committee of the BrentfordUnion and Overseers of the Poor for the Parish of Acton:17My Lords, there are principles of valuation which depend on purely legalconsiderations, and any misapplication of these is open to correction by the15 Wellington City v National Bank of New Zealand Properties Ltd [1970] NZLR 660 (CA) at 678.16 At 669.17 At 670, citing North and South-Western Junction Railway Co v Assessment Committee of theBrentford Union and Overseers of the Poor for the Parish of Acton (1888) 13 AC 592 (HL) at 594.Courts. But there are also certain so-called principles of valuation, which aresimply formulae for arriving at the solution of questions of fact, which havecommended themselves to valuators of experience. There may be severalalternative formulae of that kind, all of them capable of leading to a just andreasonable conclusion. It is for the arbitrator, who is constituted the judge ofthe facts, to determine for himself which rule of that kind he will accept forhis guidance.[32] Further, as Mr Schultz pointed out, Turner J also said:18It is not for the Court to direct an arbitrator or umpire as to which of theprinciples of valuation should in a given instance influence him. And Irespectfully think that the Chief Justice was wrong when he concluded thatthe umpire had misdirected himself in law.[33] Next, Mr Mills referred to Modick RC Ltd v Mahoney and drew the Court'sattention to the observation that the relevance of evidence as to profitability mustnecessarily be limited.19 Also, as Gault J said:20 the relevance of [the lessee's] accounts is not to establish what the lesseecan afford to pay, but to bear upon what would be a reasonable rent over theperiod for which the rent is to be fixed in all the circumstances and in light ofthe use restriction in the lease.[34] There are several passages in the judgment of the Court in the Modick casewhich confirm that in certain circumstances the trading accounts of the businessconducted in the premises can be relevant, for example, where there is no orinadequate evidence of truly comparable rents. In such a case it is for the arbitrator todetermine whether such accounts are relevant.21 Also, in that case Hardie Boys J notedthat it could not be said that the profitability of the lessee was necessarily irrelevant tothe decision which the arbitrator was required to make.22[35] Mr Mills also referred to Granadilla Ltd v Berben as support for theproposition that if an unconventional methodology is used that does not apply a correcttest or standard, there will be an error of law.23 He referred to Blanchard J's comments:[14] It is important, we think, to see the umpire's resort to a return upon thevalue of the land in the context of the evidence before him and of the award18 At 677.19 Modick RC Ltd v Mahoney [1992] 1 NZLR 150 (CA) at 157.20 At 158.21 At 158 per Gault J.22 At 157.23 Granadilla Ltd v Berben (1999) 4 NZ ConvC 192,963.as a whole. A valuer should preferably begin by considering comparablelettings, making adjustments for differences in time, physical factors (likelocation, size and dimensions) and lease terms, including duration. This iswhat was called by the umpire the classic approach. But if, as frequentlyhappens, in a specific case the valuer reaches the conclusion that there are no,or no adequate, comparable lettings he must perforce adopt another approachwhich accords with settled valuation practice. As we have indicated, thetraditional approach is such a settled practice. It was adopted for example, inWellington City v National Bank where nearly all the comparable leases hadexpired at the same time.Mr Mills submitted the approach taken by the arbitrator was not settled valuationpractice. He emphasised that it was "in accordance with legal principle" to have regardto comparable properties.24[36] The approach of valuing property by reference to anticipated profits is arecognised, albeit radically different valuation method.25 Importantly its use is said tobe principally in the field of recreation and entertainment in hotels, public houses, andcasinos. An example of its application is the case of Serene Hotels Pty Ltd v EppingHotels Pty Ltd.26[37] Profit-based valuations have been considered in past cases. In the WellingtonCity case the Court acknowledged three types of valuation methods, includingproductive capacity of the land as one.27[38] The weight of authority is clear. The arbitrator may choose what methodologyto adopt. To refuse to adopt a particular method is not a question of law. As the Courtof Appeal stated in Casata Ltd v General Distributors Ltd:28[66] Questions of evidence should, in any event, be the exclusivedomain of the arbitrators. The considered declinature to adopt a "sales oflessors' interest" methodology for assessing a ground rental rate is not aquestion of law. Arbitrators have a wide scope in determining whatmethodology to adopt. After considering all of the factors raised by the lessor,they were entitled to consider that the evidence of sales of lessors' interestsshould not be taken into account. Such a decision is, in any event, one of factand not law. 24 Citing Feltex International Ltd v JBL Consolidated Ltd [1988] 1 NZLR 668 (HC) at 672.25 Hill and Redman's Guide to Landlord and Tenant Law (LexisNexis, online ed) at [2382].26 Serene Hotels Pty Ltd v Epping Hotels Pty Ltd [2015] VSCA 228, (2015) V ConvR 54-871.27 Wellington City v National Bank of New Zealand Properties Ltd, above n 15, at 666.28 Casata Ltd v General Distributors Ltd [2005] 3 NZLR 156 (CA) at [66].[39] It is necessary to consider the arbitrator's decision in more detail to determinewhether, by reference to the excess earnings approach, he elevated the profitability ofthe site to the primary basis for determining rent and if so, whether any reliance onthat was an error of law.[40] In the present case the arbitrator rejected the methodology applied by thelessee's valuers as failing to take into account relevant considerations, namely theprofitability of the business. The direct comparison approach methodology employedby Mr Cheyne was based on the percentage of turnover to revenue. The comparisonwas with a number of other tourism activities, both around the Rotorua area and furtherafield[41] Mr Cheyne confirmed at para 44 of his brief of evidence that the approach thatwas central to his valuation skill set was the direct comparison approach. The methodsavailable under that approach were:(a) to consider rents for similar properties, which was not appropriate inthe present case;(b) to express rents in terms of key drivers, such as turnover and rent factoror percentage of revenue; and(c) look at profitability as a means of analysing rent. Practically there isoften limited information.Generally the method he took for arriving at the rent in the present case under thedirect comparison approach was that of analysing and applying a percentage ofturnover to revenue.[42] In Mr Cheyne's judgment, the appropriate rent percentage needed to be greaterthan 15 per cent on the basis of EBITDA comparisons. He settled on 18 per cent asbeing a suitable rent percentage. On that basis and applying that percentage to theadmissions revenue led to the rent of $1,139,400. While he relied on figures providedby Mr Lowe, Mr Cheyne's rent calculation was not an application of the excessearnings method.29[43] Ultimately the arbitrator took the figure of $1,139,400 proposed by Mr Cheyneas the market rent. In doing so he noted, having rejected the other valuations:[205] That brings me to the $1,139,400 proposed by Mr Cheyne. Althoughhis rental return of 18 per cent of admissions revenue was higher than the 5 to7.5 per cent derived from other geothermal attractions, the uplift was justifiedby the unusually high profitability of Wai-O-Tapu. His figure is alsoreinforced in a general way by the excess earnings evidence, however reducedthe weight of that evidence might be by the factors I have discussed. Itherefore adopt Mr Cheyne's figure of $1,139,400.[44] It is important to record that in adopting Mr Cheyne's figure the arbitrator wasnot adopting the excess earnings approach. While the arbitrator referred to the figurebeing reinforced in a general way by Mr Lowe's evidence about excess earnings, itwas no more than a test of the result which he adopted.[45] In his "valuing conclusion" section the arbitrator correctly reminded himselfthat it was necessary to have regard to the considerations that were likely to influencea notional lessee in relation to the subject property, which must include anticipatedprofitability.30 That followed an earlier passage where the arbitrator again directedhimself that:31All that matters in the end is what rent hypothetical lessors and lessees wouldhave negotiated in the particular case. Conventional methods are helpful if,but only if, it can be demonstrated that they lead to that end.[46] The final error of law alleged is the way the arbitrator dealt with the propositionthat below a certain level of rent, it would have been economically rational for thelessor to take over and run the Wai-O-Tapu operation. It did not have to accept a rentwhich would be dramatically lower than the profits it could achieve if it ran thebusiness itself.29 At [167], [193] and [205] of the Award.30 At [194] of the Award.31 At [67] of the Award.[47] That proposition arose from a submission from Mr Salmon, counsel for thelessor at the arbitration. The arbitrator noted that at first sight that perspective mayseem difficult to reconcile with the authorities which focused on what a prudent lesseewould have been prepared to pay, rather than what a prudent lessor would have beenprepared to accept.32[48] Importantly, he concluded his consideration of the matter in the followingpassage:[73] In my view the primary focus in this case should continue to be thenotional lessee's perspective. If the lessor had been interested in running theoperation itself it would not have leased the property in the first place. So itis reasonable to assume that the notional lessor would prefer to lease theproperty to others rather than to embark on running its own business. Thatimplies a certain tolerance in the level of rent which a lessor would accept.[49] Although the arbitrator then went on to acknowledge the substance of MrSalmon's submission he again did so in the context that it was a useful check againstthe current market rent. The application of the notional lessor's perspective as a cross-check does not raise a seriously arguable question of law.[50] I am not satisfied that there is a strongly arguable case that the arbitrator fellinto error. The errors of law alleged fall well short of the standard required for grantof leave. Ultimately in preferring Mr Cheyne's result the arbitrator chose a particularapproach to valuation that was open to him.[51] As the applicant fails to meet the threshold it is unnecessary to consider thediscretionary matters. However, as relevant I observe:33• The qualification of the arbitratorThe arbitrator is a former High Court Judge well versed in the law.• The importance of the dispute to the partiesI acknowledge the importance to the parties of the significant increase in rent.32 Granadilla Ltd v Berben, above n 23; and Casata Ltd v General Distributors Ltd, above n 28.33 See Gold & Resource Developments (New Zealand) Ltd v Doug Hood Ltd, above n 4, at [54].• The amount of money involvedAs noted, the increased rent is significant.• The delay involved in going through the CourtThere should not have been any particular delay in proceeding through the Court.The applicant challenges the award on other grounds.• Whether the contract itself provides for the arbitral award to be final andbindingThere is no such provision.• Whether the dispute is international or domesticThe dispute is domestic.[52] If the applicant could have satisfied the threshold requirement, on balance Iwould have been minded to grant leave.Result[53] The application for leave is dismissed.Costs[54] Costs should follow the event in the usual way. Costs on a 2B basis would beappropriate.Review[55] The file will be reviewed at a teleconference at 9.00 am on 15 November 2017for any directions that may be required.__________________________Venning J