IN THE COURT OF APPEAL OF NEW ZEALAND CA272/2016 [2017 ... · wall, cutting down trees and erecting...
Transcript of IN THE COURT OF APPEAL OF NEW ZEALAND CA272/2016 [2017 ... · wall, cutting down trees and erecting...
PETER BRENT HOME HUBBARD & ORS v KIWIRAIL LIMITED [2017] NZCA 282 [4 July 2017]
IN THE COURT OF APPEAL OF NEW ZEALAND
CA272/2016
[2017] NZCA 282
BETWEEN
PETER BRENT HOME HUBBARD
AND HARLEY HAYNES
First Appellants
OCEANIC PALMS LIMITED
Second Appellant
AND
KIWIRAIL LIMITED
Respondent
Hearing:
3 May 2017 (further submissions received 10 and 17 May
2017)
Court:
Miller, Gilbert and Katz JJ
Counsel:
First Appellants in person
M L Campbell and L M McGlone for Respondent
Judgment:
4 July 2017 at 2.15 pm
JUDGMENT OF THE COURT
A The appeal is dismissed.
B The first appellants must pay the respondent costs for a standard appeal
on a band A basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Gilbert J)
Introduction
[1] This is an appeal against a judgment of Fogarty J given in the High Court on
20 May 2016 declining an application for relief against forfeiture of a lease for non-
payment of substantially increased rent following a rent review.1 The appellants
claim that the proposed rent increase is disproportionate and excessive having regard
to the characteristics of the leased land and the terms of the lease, including the
lessor’s right to terminate on 24 months’ notice. They claim that the proposed rent is
inequitable and amounts to a frustration of the lease. They also claim that the
lessor’s decision to increase the rent to such an extent was made in bad faith and was
unreasonable. They claim that the decision is judicially reviewable under the
Judicature Amendment Act 1972 because the lessor is a state enterprise.
Facts
[2] Oceanic Palms Ltd has been engaged in palm landscaping since 1989. Its
core business is growing and transplanting mature palm trees. Peter Hubbard and
Harley Haynes are its directors and shareholders. They state that their aim is to make
a significant contribution to the Auckland urban environment. They have been
involved in several major projects for Auckland Council, including transplanting
mature nīkau palms in Karangahape Road, Queen Street and at Vector Arena.
[3] Oceanic Palms’ nursery and horticulture business is based in Onehunga,
Auckland on land it leases from KiwiRail Ltd under a deed of lease dated 28 June
2010. The leased land is held by the Crown on behalf of New Zealand Railways
Corporation for railway purposes and is administered by KiwiRail. The land may not
be disposed of without the consent of the Minister of State Owned Enterprises who
must have due regard to the future development of the railways.2
[4] The lease was negotiated over a nine-month period from about
September 2009. At that time, the land had been vacant for a number of years, it was
in a bare state and parts of it were prone to flooding. KiwiRail allowed
Oceanic Palms to occupy the land rent-free for three months from December 2009 to
1 Hubbard v KiwiRail Ltd [2016] NZHC 1061 [High Court judgment].
2 New Zealand Railways Corporation Act 1981, s 24(a).
the commencement date under the lease of 1 March 2010. During this period,
Oceanic Palms improved the condition of the land by removing old tyres and other
rubbish that had been dumped there, introducing fill and compacting it to level the
land, addressing the flooding problems, laying gravel, removing a perimeter rock
wall, cutting down trees and erecting fences. KiwiRail paid Oceanic Palms $20,399
for this work which included 194.5 hours charged at $30 per hour for
Messrs Hubbard and Haynes’ labour.
[5] Oceanic Palms has since planted over a hundred palms, trees and shrubs and
many others are displayed in containers. It has also relocated three buildings onto
the site and constructed shade houses. It would be a major undertaking for the
appellants to relocate their business to new premises.
[6] The agreed rent for the initial term of the lease, a period of five years
commencing on 1 March 2010, was $34,300 per annum.3 KiwiRail advised
Oceanic Palms on 29 October 2009 that the rental “is not the current market rent and
is a concession granted to Oceanic Palms”. KiwiRail declined Oceanic Palms’
request to limit any rent increase after five years to movements in the consumer price
index and advised it on 14 December 2009 that if the right of renewal was exercised,
the rent would be reviewed to the current market rent.
[7] The lease was varied from 1 December 2013 by increasing the leased area
from 4,496 square metres to 4,985 square metres and the rent to $37,502 per annum.
This was recorded in an agreement dated 8 December 2014.
[8] The lease provides for a single right of renewal for a further five years from
1 March 2015. Oceanic Palms has exercised this right of renewal.
[9] The rent may be reviewed by KiwiRail by giving written notice to
Oceanic Palms specifying the annual rent to apply from the sole rent review date,
being 1 March 2015. This rent is “to be determined by [KiwiRail] to reflect the
current market rent of the Leased Land, based on the highest and best use of the
Leased Land, as at the Rent Review Date”. The leased land is defined as the land
3 All amounts referred to in this judgment are exclusive of GST.
described in the first schedule to the lease and held by Her Majesty the Queen in
right of New Zealand for railway purposes.
[10] On 9 December 2014 KiwiRail gave notice that it had determined the market
rent for the land as being $123,200 per annum. The lease provides that
Oceanic Palms may give written notice within 28 days of receipt of KiwiRail’s notice
disputing that the proposed new annual rent reflects the current market rent of the
Leased Land. Unless it gives such notice within the 28-day period, Oceanic Palms is
deemed to have accepted the new annual rent specified in KiwiRail’s notice.
Oceanic Palms did not respond within the 28-day period but KiwiRail has not sought
to enforce the deemed acceptance.
[11] The lease provides that if the rent cannot be agreed, the rent dispute shall be
submitted to a single arbitrator, if one can be agreed upon, or, otherwise, to two
arbitrators (one appointed by each party) and an umpire (appointed by the
arbitrators). The lease requires Oceanic Palms to pay the rent specified by KiwiRail
in its notice until the new rent is determined by agreement or arbitration and then
adjusted accordingly.
[12] CBRE Ltd, a leading valuation firm, was engaged by KiwiRail to assess the
market rental as at 1 March 2015. CBRE carried out this assessment using both the
traditional and classical approaches. The traditional approach involves determining a
market value for the freehold interest in the land and ascribing a market return taking
into account the lease terms. CBRE assessed the unimproved land value at $375 per
square metre or $1,869,375. Having regard to the terms of the lease, including the
lessor’s right to terminate on 24 months’ notice, CBRE assessed the market annual
return as being 6.25 per cent. The derived market rent was therefore $117,000 per
annum. The classical approach involves identifying market rentals for other
comparable properties and then making appropriate adjustments to reflect differences
in the physical characteristics of the land, the terms of the lease and risk (security of
return). Using this approach, CBRE assessed the market rental at $22.50 per square
metre or $112,000 per annum. Taking into account both of these analyses, CBRE
adopted $115,000 as the assessed market rental.
[13] Oceanic Palms engaged Knight Frank, another well-known firm offering
commercial valuation services, to assess the market rental. It carried out its
assessment relying solely on the traditional approach. It valued the unimproved land
at $1.5 million. It noted that for many years, industrial land in Auckland suburbs had
achieved “a rack rental rate” of between six and 6.5 per cent. However, in the
current low-interest-rate environment, it considered that the market rent for the land
would be no more than six per cent per annum. Knight Frank discounted this general
market rate to five per cent to reflect the five-year lease term and the right of
termination on 24 months’ notice. On this basis, Knight Frank assessed the market
rent at $75,000 per annum.
[14] The valuers conferred and on 22 June 2015 they made a joint
recommendation to the parties that the rental should be fixed at $100,000 per annum
for the period commencing 1 March 2015. This is acceptable to KiwiRail and it has
invoiced Oceanic Palms on the basis of this figure rather than the higher amount
stipulated in its notice. However, Oceanic Palms does not accept the valuers’ joint
recommendation and has continued to pay the original rental amount.
[15] Oceanic Palms is not prepared to participate in an arbitration to resolve the
dispute because it does not consider that this could produce a rent determination low
enough to be acceptable to it. Although it seeks relief against forfeiture of the lease,
it effectively wants the lease to be set to one side for the purposes of determining the
rent.
[16] Because no progress towards resolution was being made, KiwiRail gave
notice on 17 September 2015 under s 245 of the Property Law Act 2007 advising that
unless Oceanic Palms paid the outstanding rent within 10 working days, KiwiRail
intended to cancel the lease. This did not produce the desired response.
Accordingly, KiwiRail’s solicitors served a further such notice on 1 December 2015
requiring the outstanding rental to be paid by 16 December 2015 failing which
KiwiRail intended to cancel the lease. This notice prompted Oceanic Palms to apply
for relief against the proposed cancellation under s 253 of the Property Law Act.
High Court judgment
[17] Oceanic Palms advanced 16 grounds in support of its application for relief
against forfeiture but Fogarty J found that most of these were simply not arguable.4
The Judge considered that the fate of the application depended entirely on whether
the rent agreed by the valuers was justified.5 The Judge observed that by employing
the traditional method, the valuers may have ignored the disadvantages of the
particular lease terms.6 Nevertheless, even accepting that the rent jointly
recommended by the valuers might be challenged successfully through arbitration,
the Judge concluded that this did not excuse Oceanic Palms from paying the
increased rental in the meantime in accordance with the lease requirements.7
[18] For these reasons, Fogarty J dismissed the application but allowed
Oceanic Palms a further opportunity to avoid cancellation of the lease by taking two
steps within one calendar month from the date of delivery of the judgment. The first
was to pay KiwiRail the arrears of rent and the second was to formally dispute the
rent so that it could be submitted to arbitration. Oceanic Palms has not taken either
of these steps and, instead, has appealed against the judgment.
Grounds of appeal
[19] The appellants’ grounds in support of their appeal can be summarised as
follows:
(a) They have been the subtenant or tenant of KiwiRail for over 15 years.
(b) The rent has been set at a disproportionate and excessive level
considering the character of the tenancy established during this period
and the character of the land itself.
(c) Enforcing the lease will cause undue hardship and result in the
appellants losing their livelihood.
4 High Court judgment, above n 1, at [22]–[29].
5 At [39]–[40].
6 At [59].
7 At [63]–[64].
(d) The High Court put to one side the question of whether the new rent
amounts to a frustration of the lease.
(e) The valuers failed to comply with the terms of the lease in carrying
out the valuation and grossly over-valued the property as a result.
(f) Due to a misunderstanding, Fogarty J wrongly thought that the
appellants had the ability to pay the assessed rent.
(g) KiwiRail, as a government-owned entity, has a duty to act morally,
responsibly and considerately but has failed to do so.
(h) KiwiRail is obliged under s 4 of the State-Owned Enterprises Act
1986 to assist the community in which it operates when it can.
(i) The appellants’ business, which is directed to improving the
environment for Auckland citizens, is worthy of KiwiRail’s support.
(j) The Court should take into account social and other factors when
considering an application for relief against forfeiture.
[20] In their amended notice of appeal, the appellants sought an order that the rent
not be increased at all or, failing that, an order that the increase be no more than 30
per cent of the former rent. They also sought a direction requiring KiwiRail to
compensate any past or present tenant who can demonstrate that they have been
treated harshly, immorally or inconsiderately by KiwiRail since July 2014.
[21] The appellants applied on 28 April 2017 to add a further ground of appeal
seeking judicial review of KiwiRail’s decision to charge the increased rent. They
contend that KiwiRail’s decision was unreasonable and made in bad faith. They also
withdrew their alternative request for an order limiting any rent increase to 30 per
cent of the former rent, contending that there should be no increase.
[22] The appellants argue that KiwiRail’s decision was unreasonable because it
disregarded the following asserted facts:
(a) If the lease is cancelled, a new tenant will be able to establish a small
business utilising improvements and basic amenities provided, and
largely paid for, by Oceanic Palms.
(b) The use to which the land can be put is limited by Council
regulations.
(c) Horticulture is not the highest and best use of the land.
(d) The land has been tailored to Oceanic Palms’ specific usage.
(e) No other tenant has ever taken up significant occupancy on the land.
(f) Only a dedicated and capable group of people would be prepared to
take the steps required to establish a business on the land.
(g) Oceanic Palms makes a worthwhile contribution to the community.
[23] Oceanic Palms advances the following propositions in support of its
contention that KiwiRail acted in bad faith in setting the new rental:8
(a) KiwiRail encouraged Oceanic Palms to take up occupation of the land
and then made it impossible for it to continue as a tenant.
(b) KiwiRail acted in bad faith in demanding a full market rent in the
circumstances.
(c) KiwiRail used “legal trickery” by making “spurious demands” under
s 244 of the Property Law Act to exact payment when other, simpler,
means are available to achieve the desired result.
(d) KiwiRail failed to take account of Oceanic Palms’ financial position
in setting the rent.
8 Additional grounds were also listed but these were not relevant to KiwiRail’s decision to
increase the rent under the subject lease and we have therefore not referred to these.
(e) KiwiRail seeks to take advantage of the fact that most tenants would
rather pay an artificially inflated rent than meet the costs of relocating.
Analysis
Availability of judicial review
[24] KiwiRail is a subsidiary of KiwiRail Holdings Ltd, a state enterprise.
Although we have grave doubts that KiwiRail’s decision to increase the rent has the
requisite public character to be amenable to judicial review, we will assume, without
deciding, that it does.
Bad faith
[25] For the reasons that follow, we are satisfied that there is no basis for the
appellants’ contention that KiwiRail acted in bad faith in deciding to review the rent
to a market rent in accordance with the lease. Rather, the evidence shows that
KiwiRail has accommodated Oceanic Palms in many ways throughout their tenancy,
including in connection with the rent review process. KiwiRail has not sought to
take advantage of Oceanic Palms’ failure to dispute the proposed new rent within 28
days, as required under the lease to avoid deemed acceptance of the new rent.
KiwiRail has also not attempted to enforce its right to payment of the rent set by its
trigger notice, only the reduced amount jointly recommended by the valuers.
KiwiRail demonstrated considerable patience in allowing Oceanic Palms to continue
in occupation for many months despite non-payment of any increased rental from 1
March 2015. It remained willing throughout to resolve the dispute through the
arbitral process provided under the lease and only took the step of giving notice of its
intention to cancel the lease when it became clear that Oceanic Palms would neither
pay the increase nor engage in arbitration.
[26] KiwiRail advised Oceanic Palms that the rent agreed for the initial five-year
term of the lease was a concessionary rent. KiwiRail also made it clear, as is
recorded in the lease, that the rent would be reviewed to a market rental at the
expiration of the initial lease term in the event that Oceanic Palms exercised its right
to renew the lease for a further five years. Oceanic Palms took occupation of the
land on this basis and exercised its right of renewal with full knowledge that
KiwiRail had the right to insist on a full market rental from the rent review date. It is
simply not arguable that KiwiRail acted in bad faith in exercising its right to review
the rent to a market rent in accordance with the lease. That is exactly what it said it
would do prior to the lease being signed.
[27] The suggestion that the service of notices in accordance with the mandatory
requirements of the Property Law Act is “spurious” and constitutes “legal trickery”
is untenable. KiwiRail was not obliged to take into account Oceanic Palms’ financial
position in setting the market rent. There is no basis for the contention that the rent
jointly recommended by the valuers was “artificially inflated” or a cynical demand
intended to take advantage of the costs Oceanic Palms would incur if it relocated its
business elsewhere. KiwiRail gave notice of the intended rent increase in December
2014 leaving Oceanic Palms plenty of time to consider whether it wished to exercise
its rights of renewal in the face of the proposed rent increase.
Unreasonableness
[28] The principal objective of every state enterprise is to operate a successful
business and to be as profitable and efficient as comparable businesses that are not
owned by the Crown.9 KiwiRail is not obliged to subsidise Oceanic Palms’ business,
whether or not it makes a worthwhile contribution to the community. KiwiRail’s
decision to seek a market rent for the premises in accordance with the lease cannot
be challenged as unreasonable. The particular rent sought by KiwiRail was jointly
recommended by the independent expert valuers respectively retained by the parties.
It cannot be said that KiwiRail acted unreasonably in relying on their advice. That a
new tenant will be able to utilise the improvements made to the land by Oceanic
Palms or that the land has been tailored to Oceanic Palms’ specific usage is beside
the point. Similarly irrelevant is that horticulture may not be the highest and best use
of the land. The parties agreed, and the lease directs, that the market rent is to be
assessed based on the highest and best use of the land at the rent review date. Such
use must inevitably take into account any restrictions imposed by Council.
9 State-Owned Enterprises Act, s 4(1)(a).
[29] For these reasons, we consider that Oceanic Palms’ belated attempt to
broaden the scope of the appeal by adding judicial review as a ground does not assist
its case.
[30] We now turn to the grounds of appeal set out in the memorandum amending
the grounds of appeal dated 13 September 2016.
Overlapping grounds — grounds (g), (h), (i) and (j)
[31] Four of these effectively replicate the same grounds advanced in support of
the proposed application for judicial review and fail for the reasons already given.
These are: KiwiRail, as a government-owned entity, has a duty to act morally,
responsibly and considerately but has failed to do so (ground (g)); KiwiRail is
obliged under s 4 of the State-Owned Enterprises Act to assist the community in
which it operates when it can (ground (h)); Oceanic Palms’ business is directed to
improving the environment and is worthy of KiwiRail’s support (ground (i)); and the
Court should take into account social and other factors when considering an
application for relief against forfeiture (ground (j)).
Oceanic Palms’ particular circumstances — grounds (a), (c) and (f)
[32] Grounds (a), (c) and (f) can usefully be dealt with together because they all
relate to Oceanic Palms’ particular circumstances: it has been the tenant or subtenant
of KiwiRail for over 15 years (ground (a)); enforcing the lease will cause undue
hardship to the appellants (ground (c)); and the Judge wrongly thought that the
appellants could afford the assessed rent (ground (f)). These factors, which are
peculiar to Oceanic Palms, are not relevant in this case. This is because the lease
calls for the assessment of a market rent which is the rent a hypothetical, willing but
not over-anxious, informed lessee would agree to pay on the rent review date to
occupy the land on the terms and conditions of the lease and what a hypothetical
lessor, similarly described, would accept.10
The hypothetical lessor and lessee are
not influenced in this hypothetical negotiation by Oceanic Palms’ financial position,
the duration of its previous occupancy, or any costs that it may incur by having to
10
Granadilla Ltd v Berben (1999) 4 NZ ConvC 192,963 (CA) at [5]–[7].
relocate. The hypothetical negotiation occurs on the rent review date and is
unencumbered by these factors.
Frustration — ground (d)
[33] The appellants complain that the Judge did not address the question of
whether the new rent amounts to a frustration of the lease. The doctrine of
frustration can only apply if an unforeseen event occurs that is so significant as to
destroy the whole basis of the contract for lease. It is self-evident that the exercise of
an express right conferred under the lease to review the rent to market on renewal is
not an unforeseen event destroying the foundation for the lease. This argument is
misconceived and the Judge was right to reject it.
Assessed rent is excessive and outside the terms of the lease — grounds (b) and (e)
[34] We agree with the Judge that the application for relief against forfeiture
stands or falls on whether the trigger notice issued by KiwiRail stipulating the new
rent was valid. This turns on whether the notice was a valid exercise of KiwiRail’s
rights under the lease. If the notice was valid, it is clear that Oceanic Palms was
obliged under the terms of the lease to pay the stipulated rent, even if it did not
accept that it was an appropriate market rent, pending determination of the new rent
by agreement or arbitration. Ultimately, as the Judge said, this comes down to
whether the rent was assessed in accordance with the terms of the lease.
[35] Oceanic Palms’ focus on the size of the increase is a distraction. The
evidence shows that the initial rental was concessionary and below market. It is not
the correct reference point for gauging whether the assessed rental is a market rental
as at the rent review date, five years later.
[36] Clearly, the trigger notice could not be invalidated merely because the
stipulated rental could be shown to be in error and above a market rate. The parties
agreed that any dispute about the correct market rental would be resolved by
arbitration. They cannot have intended that the agreed arbitral process could be
subverted by the lessee contesting the validity of the trigger notice on the basis of
mere valuation errors. On the other hand, the trigger notice would not be valid if it
was based on a valuation not authorised by the lease, for example, if it valued land
and improvements not land only.
[37] The principle was explained by McHugh JA in Legal & General Life of
Australia Ltd v A Hudson Pty Ltd:11
While mistake or error on the part of the valuer is not by itself sufficient to
invalidate the decision or the certificate of valuation, nevertheless, the
mistake may be of a kind which shows that the valuation is not in
accordance with the contract. A mistake concerning the identity of the
premises to be valued could seldom, if ever, comply with the terms of the
agreement between the parties. But a valuation which is the result of the
mistaken application of the principles of valuation may still be made in
accordance with the terms of the agreement. In each case the critical
question must always be: Was the valuation made in accordance with the
terms of a contract? If it is, it is nothing to the point that the valuation may
have proceeded on the basis of error or that it constitutes a gross over or
under value. Nor is it relevant that the valuer has taken into consideration
matters which he should not have taken into account or has failed to take
into account matters which he should have taken into account. The question
is not whether there is an error in the discretionary judgment of the valuer. It
is whether the valuation complies with the terms of the contract.
[38] In that case, the parties were bound by the valuer’s determination. Here, the
lessee has the right to contest the valuation through arbitration. This reinforces our
conclusion that mere valuation errors, even if they lead to a gross overvalue, will not
invalidate the trigger notice. Something more fundamental is required, such as the
wrong land being valued, or improvements being taken into account when the lease
requires that they be disregarded, or it can otherwise be shown that the valuation was
not in accordance with the lease. We are not persuaded that the rent sought by
KiwiRail, which is based on the valuers’ joint recommendation, can be dismissed as
falling outside the terms of the lease.
[39] CBRE noted the physical characteristics of the land, including that under the
then-proposed Auckland Unitary Plan it is located in a flood plain and a flood-prone
area. It also noted that the land is held for rail purposes and, for this reason, the lease
provides an early right of termination. CBRE considered a number of terminating
ground leases with two- to seven-yearly review frequencies on comparable land in
the same locality. This evidence indicated that the ground rent percentage returns
11
Legal & General Life of Australia Ltd v A Hudson Pty Ltd (1985) 1 NSWLR 314 (CA) at 335–
336.
ranged from 5.75 per cent to 6.5 per cent per annum. Taking into account that the
subject lease term was for a period of five years but with an early termination right
on 24 months’ notice, CBRE adopted a market rate of return of 6.25 per cent. CBRE
also considered the evidence of rentals struck in the market for comparable land in
the locality. These ranged from $17 per square metre to $27 per square metre.
Taking into account the size, location, profile, site improvements and quality of the
yard space, CBRE considered that $22.50 per square metre was an appropriate
reflection of the market rental for the subject land. The separate assessments based
on the traditional and classical approaches provided a cross-check. Because these
assessments yielded similar results, this provided a degree of confidence in the
accuracy of the outcome.
[40] Knight Frank’s approach on behalf of Oceanic Palms was arguably less
thorough in that it relied solely on the traditional approach. However, it is clear that
it also took into account that the land is retained for railway purposes and this is the
reason for the early termination right. Knight Frank expressly stated that it was
because of the specific lease terms, including this early termination right, that it
discounted the rental rate from six per cent to five per cent in making its assessment
of the market rent.
[41] It is clear on the face of the valuations that both valuers took into account that
the land is held for railway purposes and that the lease could be terminated on
24 months’ notice for this reason. In carrying out their assessments, they also took
into account the condition of the land, relevant Council restrictions including the
uses to which the land may be put, and the terms of the lease. Both disregarded the
lessee’s improvements. In summary, Oceanic Palms has not established that the
valuers overlooked the character of the tenancy or the land (ground (b)) or the terms
of the lease (ground (e)).
[42] Oceanic Palms may be able to demonstrate in an arbitration that the figure
jointly recommended by the valuers is above a market rental, for example, because
the wrong comparative data set has been chosen or because the adjustments made to
reflect the particular characteristics of the subject land and the lease terms were
inappropriate. However, that does not mean that the trigger notice was invalid.
Conclusion
[43] The appellants have made it clear that they are not prepared to pay any
increased rental. They acknowledge that such an outcome can only be achieved by
setting the lease to one side and ignoring the rent review provision. That is not a
proper basis for the Court to grant relief against forfeiture of a lease. Such relief is
generally only appropriate in circumstances where the Court can have reasonable
confidence that the lease terms will be complied with if relief is granted. That is not
the case here. If relief against forfeiture were to be granted, that would effectively
require KiwiRail to accept the initial concessionary rental agreed in 2005 for the
entirety of the lease. That would be contrary to the parties’ agreement and neither
fair nor equitable.
[44] The appellants have not established that the Judge made any appealable error
in declining to grant relief against forfeiture. The appeal must therefore be
dismissed.
Result
[45] The appeal is dismissed.
[46] The first appellants must pay the respondent costs for a standard appeal on a
band A basis and usual disbursements.
Solicitors:
Russell McVeagh, Wellington for Respondent