Nicholas v Apex Agencies Ltd [2012] CKLC 6; Application 81.12 (19 March 2012)

IN THE HIGH COUR OF THE COOK ISLANDS
HELD AT RAROTONGA
(LAND DIVISION)

APPLICATION NO. 81/12

IN THE MATTER of Section 409B of the Cook Islands Act 1915 (as inserted by Section 2 of the Cook Islands Amendment Act 1978-79)

AND

IN THE MATTER of an application to Determine Capital Value of the land the subject of a Deed of Lease dated 17 September 1952 in respect of the land known as TE TAMANU SECTION 100A, AVARUA

BETWEEN:

PHILIP NICHOLAS for an on behalf of the Landowners of the land
Applicant

AND:

APEX AGENCIES LIMITED
trading as Toa Petroleum, current lessee of the subject land
Respondent

Hearing: 19 M2012

Counsel: Mr Arnold for Applicant

Mr Dale & Mr Manarangi for Respondent

Date: 19 March 2012

JUDGMENT OF CHIEF JUSTICE WESTON

[1] There is an application for Interim Injunction before the Land Division of the High Court which was filed earlier this year. On Friday last an application for a Final Injunction was filed which essentially raises the same issues but in slightly different form. I have heard argument today in relation to both applications and in a number of respects the applicant now raises new issues and argument.

[2] This has been explained on the basis that it became necessary to raise these issues because the matter was being heard by me and not by a specialist Land Division judge. With respect, I do not accept that is an adequate explanation for the process followed by the applicant. It has been known for a short while that I would be the judge hearing this case. In any event, some of the new matters raised appear to be of a substantive character and not simply those that might be said to arise within the assumed knowledge of a Judge of the Land Division of the Court.

[3] Having said that, I have heard argument today. It is clear that the matter has to be dealt with and, due to other business of the Court over the next two weeks, the only way I can deal with the matter is to deliver my judgment now.

[4] The lease, which is at the heart of this case, expires on 30 April 2012. If I were to leave this matter unresolved now, and then delivered a decision once I had returned to New Zealand, it would give the parties virtually no time to make arrangements. For that reason I am delivering my decision now. That means it may not be as well expressed or as comprehensively explained as would otherwise be desirable. Nevertheless I believe I have reached a sufficiently clear view and can explain that in this judgment.

Substantive Proceeding

[5] Mr Arnold advises me that the interim injunction application is brought in support of what he called the substantive proceeding which is a claim brought for rent arrears in relation to the subject lease. I understand this application is made in terms of s 409B of the Cook Islands Act but I have not actually seen that proceeding. Nevertheless it has been explained to me and I do not think that the process has suffered because the particular papers were not present before me today.

[6] It is clear that a number of difficult issues arise in that substantive matter including the determination of the capital value of the land, the effect (if anything) of the Limitation Act, and in respect of the obligations of the lessee and the lessor to commence and then progress the rent review machinery provisions in the lease.

Jurisdiction

[7] Mr Arnold raises a number of matters regarding the Court’s jurisdiction. First he argues that s 409(e) of the Cook Islands Act governs the Court’s jurisdiction rather than s 9 of the Judicature Act. These provisions are as follows:

409. Miscellaneous jurisdiction of Land Court – In addition to the jurisdiction elsewhere conferred upon [the Land Court] by this Act,

(e) to grant an injunction prohibiting any person from dealing with or doing any injury to any property which is the subject matter of any application to the Court.

9. Injunction, certiorari, mandamus, and prohibition – The High Court may exercise by way of order in the ordinary course of its civil procedure jurisdiction in respect of injunction, certiorari, mandamus, and prohibition, including the power to award damages in lieu of injunction.

[8] Secondly, Mr Arnold relies upon Article 64 of the Constitution to argue that the jurisdiction of the Land Division in relation to native title is sui generis. I do not find Article 64 particularly helpful in that regard but I have no difficulty accepting that the Land jurisdiction in the Cook Islands is sui generis.

[9] Thirdly, Mr Arnold argues by reference to the decision of Burnett v Lethbridge [1916] NZGazLawRp 30; [1916] NZLR 367 that technicalities should not be allowed in effect to subvert the interests of those holding native land title. The particular extract in that decision which he relies on is as follows:

The provisions of the Native Land Acts are intended for the protection of the Natives and for the furtherance of public policy. They are certainly not intended to enable Europeans, who have had the full benefit of valid contracts with Natives, to escape their liabilities under the contracts, upon the ground that technicalities intended solely for the protection of Natives have not been complied with.

[10] However, as Mr Arnold accepts, the concluding words of that passage are not applicable here and with respect I gain no assistance from the decision.

[11] Fourthly, Mr Arnold has drawn my attention to Rule 347, and following, and in particular Rule 354. He emphasises that these Rules prevail in the Land Division of the Court rather than Rule 127 which governs the general civil jurisdiction and which allows for the making of ancillary orders such as a requirement that an applicant should give an undertaking as to damages when seeking an interim injunction.

[12] Mr Dale has met these submissions by drawing my attention to s 18 of the Judicature Act and also to Rule 326 of the Code. As I read s 18 it appears to make it clear that s 9 of the Act would govern the jurisdiction of this Court in approaching its interim injunction jurisdiction. This seems to be reinforced by Rule 326 which is in the following form:

Except as otherwise expressly provided under any enactment or unless inconsistent with any other part of these rules, this part shall apply to any proceedings by the Court exercising the jurisdiction of the Land Division of the Court.

[13] The burden of Mr Arnold’s argument was that there could be no real alternative to an injunction in the form of damages or, to put it in another way, the fact that a claim may be remediable in damages is not necessarily fatal when it comes to an application for Interim Injunction in the Land Division.

[14] The general civil law is that, if a claim can be remedied in damages, the Court will be slow to order an Interim Injunction. The present claim is essentially about money so, at first blush, it might be thought that the usual rule should apply. However, I do think there is some substance in what Mr Arnold says when he submits that a claim in the Land Division may be in a slightly different category. For myself, and subject to the reservation in the previous sentence, I believe that the general rules which are applicable to Interim Injunctions should continue to apply even in the Land Division. Indeed, I have previously said this in relation to an application under Section 390A. In that case I made it clear that in appropriate instances the usual rules about assessing whether a case was seriously arguable, and where the balance of convenience lay, would also apply in the Land Division. I made it clear in that case that the Justice of the Peaces’ jurisdiction in relation to trespass and injunctions was not necessarily in that category.

[15] I have expressed some tentative views in relation to jurisdiction. For the reasons which follow it is not necessary for me to reach final views. However, in deference to argument, and in case it may be needed, I thought I should record my provisional views.

Lease

[16] Two key aspects of the lease were canvassed in argument. They arise from clauses 1 and 6 which are as follows:

1. The Capital Value shall be ascertained as follows:- If there shall be a system of Government valuation of lands in force in the Island of Rarotonga the capital value shall be such sum as shall be determined by the Government Valuer. If there shall be no system of Government valuation of lands in force in the said Island the capital value shall be determined by the Native Land Court in such manner and upon such evidence as the Court shall deem proper.

The words “Value of all improvements” shall mean the added value which at the date of valuation the improvements give to the land.

It shall be the duty of the Lessee on the dates aforesaid and at the expense of the Lessee to apply for and obtain such valuation or to apply to the Native Land Court to determine the capital value, but if the Lessee shall make default the Lessor may do so and recover the cost thereof from the Lessee.

6. The Lessee shall during the said term have the right to erect buildings on the said land and shall have the right to remove any such buildings at any time during the said term AND it is hereby agreed that all buildings and materials remaining on the land after a period of three months from the expiration or sooner determination of the lease shall become the property of the Lessors and no compensation shall be payable thereafter to the Lessee.

[17] Clause 1 deals with rental payments. This is to be read in conjunction with an earlier provision in the Deed of Lease which explains how rental is to be calculated. During the course of argument I was handed an extract from the minute book register from 1972 in which that obligation was amended. The exact impact of that amendment is a matter to be determined in the rental claim and I express no further view on it.

[18] The second aspect, that is Clause 6, deals with the status of fixtures brought onto the land. During the course of argument there was some discussion as to the status of the various tanks, pipes and buildings on the land. However, in closing, Mr Arnold made it clear that he accepted that the right in Clause 6 at the very least applied in relation to the tanks, pipes and buildings such that, in the absence of an order from this Court, the Lessee would be entitled to remove those items from the land.

[19] In the course of argument Mr Arnold emphasised just how unusual a provision that is in the Cook Islands’ context. Be that as it may, it is quite clear that the lease does provide for that.

Issues

[20] It seems to me there are two main issues to be resolved before I decide the applications made by the applicant.

[21] The first of those issues concerns whether the lease is for a term of 60 years plus some further period of 3 months during which the various items can be removed from the land.

[22] The second issue is whether this Court can and should grant what is now effectively an application for security in relation to an anticipated judgment in the rental case.

60 years plus 3 months?

[23] Mr Arnold drew my attention to s 469(1) of the Cook Islands Act which reads:

No native or descendant of a native shall be capable of alienating... Native freehold land whether by way of lease, licence, easement, right of taking the profits thereof or otherwise howsoever, for a longer term (including any term or terms of renewal to which the lessee, licensee or other alienee may be entitled) than 60 years computed from the time when the alienation takes effect in possession according to the tenor thereof.

[24] I believe this section makes it clear that a lease should be for 60 years and no more. Any argument that the lessee is entitled to leave its items (to use a neutral term) on the land and then remove them within the following 3 months would seem to be inconsistent with that statutory provision (notwithstanding the terms of Clause 6).

[25] Mr Dale argued a number of matters to the contrary. He argued that in a 60 year lease it might be expected there would be a 3 month period during which items could be removed. He emphasised there would be no prejudice to the applicants if that were the case. I do not accept those arguments. He also drew attention to Braidwood & Dunn [1917] NZGazLawRp 17; [1917] NZLR 269, a decision of a full Court of the then Supreme Court of New Zealand. He drew the Court’s attention to page 271 of that judgment. I am satisfied, however, that the case does not support the proposition which Mr Dale contended for.

[26] I do not believe that there is scope for this lease to continue beyond 30 April 2012 in any shape or form. Mr Dale accepted that if I reached that view his client would remove its items from the land before that day. He recognised that any conclusion that I came to on that score would be reached in the context of an interlocutory application and with less than complete argument. Subject to all of those limitations I have reached a view that the lease does not extend beyond 30 April and I now proceed on the assumption that in those circumstances the lessee will get everything off the land by 30 April 2012.

Security for a judgment?

[27] It seems to me this is where the nub of the case lies. Mr Arnold, on behalf of the landowners, is asking the Court to provide security for what he hopes is a favourable judgment in his client’s favour in the Land Division of the Court. Mr Arnold has now clarified, as I have said, that he accepts that Clause 6 entitles the lessee to remove the various items from the land. In that sense, then, the order that he seeks is directly inconsistent with the wording of the lease. That puts a high burden in front of the applicant if he is to succeed.

[28] In opposing this application Mr Dale argued that I had no jurisdiction to make such an order. On the basis of less than complete argument on this I am not prepared to reach such a conclusion today. I am prepared to proceed on the assumption that I do have jurisdiction.

[29] Mr Dale then argued that there was no evidence before the Court that his client, the lessee, would be unable to meet any judgment. He is quite correct. He offered to give me his client’s accounts. I rejected that offer on the basis that because there was no evidence by the Applicant before the Court there was no proper foundation by which I should assume that his client could not meet a judgment. Indeed, Mr Porter in his affidavit said that his company would be judgment-worthy. In that regard, I note Mr Arnold placed a provisional calculation before the Court that in the rental case there was an anticipation that the landowners would receive a judgment of between $250,000 and $350,000. Mr Dale said that that should be zero or thereabouts. It assists me in dealing with the current application to know what the applicant says the anticipated judgment sum would be.

[30] There was also argument before me as to who was to blame for the delays in effecting any rental review. While Mr Arnold has strongly argued that the lessee is at fault because it was the lessee’s primary obligation, I draw attention to the third unnumbered paragraph in Clause 1 of the lease which is set out above. This makes it clear that if the lessee does not initiate the rent review then the lessor may do so. Mr Arnold has argued that the lessor was not to know the terms of the lease but as a matter of law I am not prepared to proceed on that assumption.

[31] I can see no proper basis for me to conclude that security for judgment should be given. It is a most unusual order and it would be directly inconsistent with the terms of the lease. For the reasons set out above the application for Interim Injunction is refused. I am not prepared to order that there will be some payment made into Court, as a second best or as an alternative to that. That is for the same reasons that I believe that the Interim Injunction should be refused.

[32] In terms of the application for Final Injunction, I record Mr Arnold’s concession that I might not have jurisdiction because I was today dealing with the matter simply on the papers. That is my view. I do not believe it would be appropriate for me today to resolve an application for Final Injunction. That could only be done at the point the evidence was heard and then determined.

[33] For all the reasons set out above the application fails. On the face of it the respondent is entitled to costs.

[34] In relation to costs I invite Counsel to confer. If they are able to reach agreement then they should submit a memorandum. In the absence of that, I direct Mr Dale to file a memorandum within 10 working days from today, with Mr Arnold having a right of reply of a further 10 working days thereafter.

__________________________
Tom Weston
Chief Justice

Editorial Note: Derived from the Court's electronic records and believed to be correct and final.