IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-8112

BETWEEN	EASTBAY & GLEN INNES MEDICAL CENTRE LIMITED
First Intending Appellant

AND	DR. JO WILLIAMS
Second Intending Appellant

AND	O'HANLON ENTERPRISES LIMITED Intended Respondent

Hearing:	14 July 2010

Counsel:	S Perese for Intending Appellants
R O Parmenter for Intended Respondent

Judgment:	19 July 2010 at 4:00pm

RESERVED JUDGMENT OF HUGH WILLIAMS J.

This judgment was delivered by The Hon. Justice Hugh Williams on
19th July 2010 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules

……………………………………………..
Registrar/Deputy Registrar

A.  Application for leave to appeal dismissed after discussion of contrasting criteria for second appeals in civil and criminal matters.

B.  Costs to intended respondent as per para [26]

EASTBAY & GLEN INNES MEDICAL CENTRE LIMITED AND ANOR V O'HANLON ENTERPRISES LIMITED HC AK CIV-2009-404-8112  19 July 2010

Issue

[1]       On  30  November  2000  the  intended  respondent,  O’Hanlon  Enterprises Limited, leased part of its property on the corner of Ashby Avenue and West Tamaki Road, Glen Innes, to its director, Dr Roblin, for a term of 15 years with a right of renewal of four years.   The demise was the portion of the “ground floor of the landlord’s building” shown on an annexed plan.  It comprised about two-thirds of the ground floor.  Dr Roblin operated his surgery from those premises.  The balance of the property was a separately leased flat.

[2]       The lease was assigned to the intending first appellant, Eastbay & Glen Innes Medical Centre Limited, on 3 May 2004 and a group of doctors operate their surgery from the premises.

[3]       Pursuant to the repainting obligation in the lease, Eastbay painted that part of the exterior of the building occupied by it in February 2007 but O’Hanlon took the view that the lessee’s obligation under the lease was to repaint the whole of the building.

[4]       The dispute as to the extent of the tenants’ repainting obligation under the lease was first litigated in the District Court where, in a judgment delivered on
10 November 2009, Judge Hubble held in favour of Eastbay’s view of its obligation.

[5]       O’Hanlon appealed and in an oral judgment delivered on 4 May 2010 this Court allowed the appeal and held the tenant’s repainting obligation under the lease was to paint the whole of the exterior of the building, not just the portion occupied by it.

[6]       Eastbay has now applied for leave to appeal to the Court of Appeal pursuant to s 67 of the Judicature Act 1908 and this judgment deals with that application.

Test

[7]       Because the test for granting leave for a second appeal is thought to be so well-known and so well-settled as to warrant little, if any, discussion in judgments on the topic, it may be timely to revert to first principles.

[8]       Section 67(1) of the Judicature Act 1908 provides that “the decision of the High Court on appeal from an inferior court is final” unless leave to appeal is obtained from, first, this Court or, on refusal, from the Court of Appeal (leaving the question of “leapfrog” appeals to the Supreme Court aside).

[9]       The statutory finality of High Court judgments on first appeals tends not to have been a major consideration in more recent cases, though it was certainly an issue earlier.

[10]     The contemporary test as set out in McGechan on Procedure is:

The appeal must raise some questions of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal. Not every alleged error of law is of such importance, either generally or to the parties, as to justify further pursuit of litigation already twice considered and ruled upon by a Court, so the test is a restricted one.  The scarce time and resources of the Court of Appeal are not to be wasted, nor additional expense for parties incurred, “without realistic hope of benefit”: Snee v Snee [2000] NZFLR 120;  (1999) 3 PRNZ 609 (CA), at pp 125-126;  pp 612-613, Waller v Hider [1998] 1 NZLR 412 (CA) at p 413.

[11]     That formulation certainly reflects what was said by the Court of Appeal in Waller, but in that case the formulation was said to be derived from Rutherfurd and Cuff v Broadlands Finance Limited.    Strictly, the observation in Waller can only partially be derived from those earlier cases.

[12]     True, in Rutherfurd, Salmon J said first that “... The Court must be satisfied that the appeal will raise some question of law or fact which is capable of bona fide

and serious argument” but went on to say that an applicant must show more than a “substantial question of fact which depends on conflicting evidence” and that “the interest which justifies the grant of leave to appeal must ... be some interest, public or private, beyond the mere direct interest of the appellant in the subject matter of the litigation”.   In Cuff, Somers J for the Court of Appeal said that Rutherfurd remained applicable, that “one appeal is normally to be sufficient” and the “guiding principle
in the end must be the requirements of justice”.   In that case, the Court of Appeal

granted leave because the “judgment of the High Court is clearly in error in respect of a substantial sum of money”.

[13]     It is to be noted that the test for the grant of leave in second appeals in civil matters differs slightly from the statutory criteria for the granting of leave for second appeals  in  summary matters.    Section 144(2) of the  Summary Proceedings  Act provides that a Court may grant leave for a second appeal in such matters:

... if in the opinion  of that Court the question of law involved in the appeal is one which, by reason of its general or public importance or for any other reason, ought to be submitted to the Court of Appeal for decision.

[14]     The phrase in s 144(2) “for any other reason” must be construed within the statutory criteria.

[15]     It may be doubtful whether the difference in criteria between second appeals in civil and criminal matters was intended or, in the general run of cases, whether it makes any difference in application of the test.  Questions of law arising in either type of second appeals must be important for leave to be granted and, in the criminal area, of course, questions of fact play little part unless the circumstances are akin to those in s 385(1) of the Crimes Act 1961.  In the civil arena, questions of fact also have to be of sufficient importance to warrant a second appeal and, in the usual run of cases, those issues of fact will usually be ones of significant public interest.

[16]     However, here, the principal factor underlying all the grounds advanced in support  of  Eastbay’s  leave  application  is  that,  it  having  been  the  subject  of

contradictory decisions at the two levels which have considered its position to date, there is a question of fact of private interest of sufficient importance to warrant the cost and delay of a second appeal.  The use of the word “private” in the criteria for second appeals in civil matters is crucial to Eastbay’s application.

Discussion

[17]     It is, of course, acknowledged that Judge Hubble adopted the tenant’s view of its repainting obligations while this Court  adopted the landlord’s view and  that contrasting decisions not infrequently form the basis for the grant of leave to appeal in order that one or other of the earlier decisions will be upheld.

[18]     The question is, therefore, whether that situation poses a question of fact of sufficient private interest to justify this dispute being argued a third time.

[19]     It is clear that this Court’s view as to the correctness of its judgment is of little account but, nonetheless, as the earlier judgment endeavoured to demonstrate, the tenants’ repainting obligation in cl 3.8(b) was to “paint all the building” quinquennially - a phrase which was held to mean what it said – and not just the area demised “being that portion of the ground floor of the landlord’s building ... shown edged orange on the plan attached”.

[20]     In considering that question, it is noteworthy, as Judge Hubble pointed out, that when the tenant of the surgery was the director of the landowner, there was good reason for the tenant’s obligation to extend to the whole of the building, not just the demised portion, and it is also noteworthy that throughout this litigation – which has otherwise been managed very efficiently – neither party has thought to put in evidence the lease of that part of the O’Hanlon building not tenanted by Eastbay. From that, it may be deduced that the lease of the other part of the building contains no repainting obligation, a fact which would support the O’Hanlon view of the repainting obligation in the Eastbay lease.

[21]     The interpretation of the lease between these parties is therefore entirely a matter of private interest of what was agreed to be an unhappily drafted lease.  As remarked to Mr Perese for Eastbay during the hearing, this Court’s interpretation does not, as yet, appear to have excited any academic interest or comment in such publications as the New Zealand Law Journal or the Conveyancing Bulletin.  Those with an academic interest in such matters do not therefore appear, to date, to have regarded the interpretation this Court accorded the lease as a matter of importance beyond these parties.

[22]     Further,  in  considering  the  quantum  of  the  private  interest  at  stake,  the District Court pleadings – though unclear on the point – appear to assess the December 2007 cost of repainting the part of the building not leased by Eastbay at
$8926.88.  The building occupied by Eastbay appears to be about two-thirds of the building.  If that be correct, a rough estimate would therefore suggest that the cost to Eastbay of having to paint the whole of the building would be about $9000 extra for the 2007 repaint and approximately the same sum for the repaint due in 2012 plus a possible further repaint in 2017 if Eastbay exercises its right of renewal despite what it regards as an onerous repainting clause.

[23]     By contrast, the costs incurred up to the date of delivery of this Court’s judgment total nearly $17,000 – to which the costs of this hearing will need to be added if Eastbay’s application is dismissed – a cost which contrasts markedly with Eastbay’s extra repainting cost, past and in the future, if this Court’s judgment stands
- to say nothing of the costs to the parties of a further appeal.

[24]     Ultimately, having weighed all those issues, the Court concludes that this is no more than a private dispute between a landlord and a tenant over the extent of a badly drafted repainting obligation.  While repainting clauses are common in leases, the obligation in this case is an unusually worded one in a contradictorily drafted lease.  The point at issue is accordingly, if not unique, then nearly so.  The tenant’s obligations have only a financial consequence roughly comparable with its costs obligation to date and much less when the costs of the litigation to date and of a further appeal and this application are added.

Result

[25]     The Court’s view is, therefore, that Eastbay has failed to satisfy the Court that its private interest in the matter fulfils the requirements for granting leave for a second appeal in relation to this matter.  Its application for such leave is accordingly dismissed.

Costs

[26]   Mr Parmenter, for O’Hanlon, sought costs of $3346.88 pursuant to the obligation in the lease for the tenant to pay solicitor-client costs of enforcement.  He said he had tendered a draft bill and time-sheet to Mr Perese whose clients had accepted the figures.

[27]     There will be an order accordingly.

Solicitors:

.................................................................
HUGH WILLIAMS J.

Ed Johnston & Co, P O Box 2180 Waitakere City, for intending appellants
Email:  ed@edjohnston.co.nz
Peter Neumegen & Associates, P O Box 12 444 Auckland 1642 for intended respondent

Copy for:
S Perese, P O Box 47-114 Ponsonby, Auckland 1144
Email:   perese@xtra.co.nz
R O Parmenter, P O Box 1052 Shortland Street, Auckland 1140.
Email:   ray@parmenter.co.nz

Case Officer:	Adele.Shoebridge@justice.govt.nz