Member Graham Kohler QC acts in novel contractual interpretation case involving Public Bodies Leases Act 1969

Graham Kohler QC recently acted for Pengelly’s Properties Ltd (Pengelly’s) in a novel contractual interpretation case concerning its lease of a property in Parnell to Christopher Sai Louie and Philip Creagh, trading as a partnership (Partnership).  Jane Barrow, a junior barrister to Shortland Chambers, also appeared for Pengelly’s.

The property in question had formerly been owned by the Auckland Harbour Board and leased to the New Zealand Dairy Board under the Public Bodies Leases Act 1969 (PBLA).  It had since been sold to private ownership (ultimately to Pengelly’s), the lessee’s interest assigned (ultimately to the Partnership), and the lease renewed.

In March 2018, Pengelly’s initiated a rent review under the renewed lease.  The operative clause provided that the rent review would be conducted in accordance with s22 of the PBLA.  The rent review was submitted to arbitration and a new rental amount was fixed.

The Partnership subsequently claimed that the rent review was void and ineffective and sought summary judgment to that effect.  It argued that Pengelly’s did not fall within the definition of “leasing authority” under the PBLA and, because the right to rent review arose by the incorporation of s 22 of the PBLA into the contract, Pengelly’s was not entitled to exercise that right.  Pengelly’s disputed this, brought a counterclaim on the basis that the rent review arbitration award was enforceable, and sought summary judgment for the payment of rent on that basis.

The Court relevantly held that:
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• The definition of “leasing authority” under the PBLA was not exhaustive and could be contextually applied to include “the lessor for the time being” (i.e., Pengelly’s).
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• The incorporation of s 22 of the PBLA in the lease required that section to be interpreted in its contractual, rather than legislative, context.  Given the renewed lease had been entered at a time when the land was already privately held and leased, the Court held that the Partnership’s interpretation would render the rent review clause inoperative.  The Court concluded that the parties could not have intended that outcome and, reading the PBLA in the broader context of the lease, “leasing authority” had the same meaning as “lessor for the time being”.

The Court therefore entered summary judgment for Pengelly’s on its claim for rent.  The Partnership’s application for summary judgment was declined.

The Partnership has appealed.

To read the judgment, click here.

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