Kawakawa Station Limited v New Zealand Walking Access Commission [2019] NZHC 791

KAWAKAWA STATION LIMITED v NEW ZEALAND WALKING ACCESS COMMISSION [2019] NZHC 791 [11 April 2019]

JUDGMENT OF CULL J

[1] This case concerns a protest to jurisdiction for this Court to hear and determine judicial review proceedings arising from an arbitration agreement. A dispute has arisen between Kawakawa Station Limited (Kawakawa Station) and the New Zealand Walking Access Commission (the Commission) over a walkway recommendation made by the Commission over Kawakawa Station’s land.

[2] By virtue of a consent granted to Kawakawa Station by the Overseas Investment Office (OIO), Kawakawa Station acquired the freehold interest in sensitive land at Kawakawa Station at Cape Palliser, Wairarapa, together with a leasehold interest in the adjoining land, owned by the second applicants. The consent was subject to conditions. The two conditions relevant to this proceeding require Kawakawa Station to implement any recommendations of the Commission (condition 6), and endeavour to have any disputes between the parties resolved by arbitration (condition 8).

[3] Following an unsuccessful mediation between the applicants and the Commission on 10 December 2018, the Walking Access Commission placed a caveat over Kawakawa Station, to protect its interest before Kawakawa Station settles the sale of the land to a New Zealand purchaser. The Commission filed an originating application for an order that the caveat not lapse.

[4] Both applicants filed a notice of opposition to the Commission’s application and filed judicial review proceedings challenging the lawfulness and reasonableness of the Commission’s walkway recommendation. The Commission filed an appearance under protest to jurisdiction, on the grounds that any dispute between Kawakawa Station and the Commission was to be resolved by mediation and, failing that, by arbitration. The Commission seeks a stay of the judicial review proceedings under article 8(1) schedule 1 of the Arbitration Act 1996 and an order referring Kawakawa Station to arbitration.

[5] This proceeding concerns the two preliminary issues:

(a) the stay application; and

(b) the caveat application.

[6] Just prior to the hearing commencing, the parties had reached agreement that the caveat placed by the Commission over Kawakawa Station’s land shall lapse on 15 April 2019. This will enable Kawakawa Station to proceed with an agreement for sale and purchase of the land in June 2019. I made formal consent orders in relation to the caveat during the hearing. These are addressed and set out at the end of this judgment.

[7] The focus of this decision is on the Commission’s protest to jurisdiction and application for stay of the applicants’ judicial review proceedings.

Background

[8] Kawakawa Station is a New Zealand registered company, owned and controlled by investors from overseas. For the purposes of the OI Act, Kawakawa Station is an overseas person.

[9] On 4 November 2014, Kawakawa Station entered into a sale and purchase agreement to purchase the land, known as Kawakawa Station at Cape Palliser,
Wairarapa. Because it is an overseas person, Kawakawa Station applied to the OIO for consent to acquire the freehold interest in Kawakawa Station and the leasehold interest in the adjoining land, Ngawi Station, which is Māori freehold land, owned by the second applicants, the trustees of Kawakawa 1D2 Ahu Whenua Trust (the Trust),

[10] In 2 June 2015, the relevant Ministers granted consent under the OI Act permitting Kawakawa Station to invest in “sensitive land” (the OI consent), namely to acquire a freehold interest in 1379 ha of land at Kawakawa Station and a leasehold interest in approximately 785 ha of land at Ngawi Station, subject to specified conditions of consent. It is the conditions of consent, particularly conditions 6 and 8, which lie at the heart of this stay proceeding. They stipulate as follows:

WAC Consultation

6. The Applicant must consult with the New Zealand Walking Access Commission (“WAC”) to determine what the Applicant can reasonably do (having regard to the proposed use of the relevant land) to provide, protect or improve public walking access over the relevant land or part of that land (such as the registration of new instruments) (“Walking Access”). The Applicant must:

(a) Write to the Operations Manager at WAC… copying in the Overseas Investment Office, within 15 working days from the date of settlement advising that the Applicant wishes to consult about Walking Access …

…

(b) Implement any Walking Access recommended by WAC (“WAC Recommendation”) within two years from WAC making the WAC Recommendation, or such other timeframe as mutually agreed between the Applicant and WAC. The cost of any Walking Access shall be borne by the Applicant up to a maximum of $10,000, excluding GST.

Dispute Resolution

8. Should a dispute or difference arise between the Applicant and DOC [the Department of Conservation], the Applicant and WAC or the Applicant and NZAA [New Zealand Archaeological Association] in relation to conditions 5, 6 or 7 (“Dispute”), then the Applicant must:

(a) Endeavour to resolve the Dispute by mediation;

(b) If the Dispute is not resolved through mediation within 60 working days from the Dispute arising, endeavour to have:

(i) the Dispute referred to and finally resolved in arbitration in Wellington, New Zealand;

(ii) the tribunal consist of a sole arbitrator appointed by agreement between the parties or, if the parties cannot agree, by the President of the New Zealand Law Society; and

(iii) the arbitral proceedings conducted in accordance with the Arbitration Act 1996 or any other statutory provision then relating to arbitration;

(c) Share the cost of any arbitration and/or mediation equally with WAC or DOC as the case may be; and

(d) Provide a copy of any award made by the arbitrator to the Overseas Investment Office within 15 working days of the award being made.

[11] Under condition 6, the Commission made walking access recommendations to Kawakawa Station in May 2016. After a meeting on 4 July 2016 among the Commission, Kawakawa Station and neighbours to discuss these recommendations, the Commission revised its recommendations in September 2016 (the September 2016 recommendation). Further lengthy discussions and negotiations, including correspondence, has ensued between Kawakawa Station and the Commission over the lack of response by the Commission to the issues raised by Kawakawa Station and its neighbours at the 4 July 2016 meeting. On 16 November 2016, the Commission invited Kawakawa Station to identify an appropriate date which would record the date that a dispute has arisen, in order to invoke the dispute resolution processes under condition 8 of the OI consent.

[12] Despite further negotiations through to 2018, the Commission and Kawakawa Station could not reach agreement. In June 2018, the Trust sent a submission to the Commission regarding the impacts of the proposed walking access in the September 2016 recommendation. Negotiations continued throughout 2018, with the trustees of the Trust meeting with a representative of the Commission to discuss the Trust’s concerns in November 2018.

[13] On 10 December 2018, the Commission and Kawakawa Station attended a mediation, which did not result in an agreement between the parties. During the mediation, the Commission learned that Kawakawa Station intended to sell its land,
and on the day following mediation, the Commission lodged a caveat against the title to the Kawakawa Station land. Unbeknown to the Commission, the agreement for sale and purchase of the Kawakawa Station land was offered for tender by Kawakawa Station on 26 November 2018 and the vendor accepted the offer on 11 December 2018.

[14] Kawakawa Station took steps to require the caveat lapse and in response, the Commission filed an originating application for the caveat not to lapse. Kawakawa Station has a legal obligation under the agreement for sale and purchase to transfer its title to the purchaser on 19 June 2019.

[15] On 25 January 2019, Kawakawa Station and the Trust issued judicial review proceedings, challenging the lawfulness of the Commission’s September 2016 recommendation and the Commission’s decision to lodge a caveat. The applicants challenge the Commission’s recommendations, on grounds of breach of the Commission’s natural justice obligation to consult the Trust, predetermination, unreasonableness, taking into account irrelevant considerations, and failing to take into account relevant considerations. As the parties reached agreement about the caveat, it is unnecessary to set out the further grounds raised in respect of the caveat issue here. The parties agreed that the Commission’s caveat lapses on Monday 15 April 2019, which will enable the sale of Kawakawa Station to proceed.

The parties’ positions on jurisdiction

[16] The Commission makes an appearance under protest to object to the jurisdiction of this Court to hear and determine the judicial review proceeding. It says that a dispute has arisen between Kawakawa Station and the Commission over their consultation under condition 6. Both parties attended a mediation, which did not resolve the dispute. The Commission says Kawakawa Station is now required under condition 8 to endeavour to resolve the dispute by mediation and, failing that, by arbitration.

[17] Thus, the Commission seeks a stay of these proceedings under article 8(1) schedule 1 of the Arbitration Act 1996 and an order referring Kawakawa Station to arbitration, either pursuant to the Arbitration Act 1996 or under the High Court Rules 2016.
[18] In response, both Kawakawa Station and the Trust (the applicants) oppose the Commission’s application for a stay of the proceedings and referral to arbitration. They say that condition 8 is neither a privative clause ousting the Court’s “supervisory function” or an arbitration agreement but is a regulatory condition. In any event, they say the Commission is not a party to the “agreement”.

[19] Further, they submit their judicial review proceeding challenges the lawfulness of certain decisions made by the Commission, in accordance with the right to judicial review guaranteed under s 27(2) of the New Zealand Bill of Rights Act 1990 (NZBORA) and is not a proceeding brought in a matter which is the subject of an arbitration agreement.

The issues

[20] The key issues in this proceeding are therefore:

(a) is condition 8 an arbitration agreement under the Arbitration Act 1996?

(b) if condition 8 is an arbitration agreement:

(i) which parties does it bind?

(ii) are the judicial review proceedings matters to which the arbitration agreement applies?

(c) should the Court grant a stay of proceeding and refer the matter to arbitration, either pursuant to the Arbitration Act 1996 or the High Court Rules 2016?

[21] I will now deal with each of these issues in turn.

Is condition 8 an arbitration agreement under the Arbitration Act 1996?

[22] The contest between the parties is whether condition 8 entitled “Dispute Resolution” constitutes an arbitration agreement under the Arbitration Act 1996 (the
Act), or whether it is merely a regulatory obligation imposed by the OIO on Kawakawa Station to endeavour to enter into an arbitration agreement with the Commission.

[23] The starting point is s 2(1) of the Act, which defines an arbitration agreement:

2 Interpretation

(1) In this Act, unless the context otherwise requires, –

…

arbitration agreement means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not

…

[24] I turn then to consider the form of arbitration agreements. There are no fixed rules or forms concerning arbitration agreements. Article 7 of schedule 1 of the Act describes what may constitute an arbitration agreement. Under article 7(1), an arbitration agreement may be made orally or in writing and may be in the form of an arbitration clause in a contract, or in the form of a separate agreement. Importantly in this context, article 7(2) provides:

A reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement, provided that the reference is such as to make that clause part of the contract.

[25] Arbitration is founded on the consent of the parties to the arbitration agreement and the contractual nature of arbitration underpins the Act. Lord Mustill in Pupuke Service Station Ltd v Caltex Oil (NZ) Ltd said:

Arbitration is a contractual method of resolving disputes. By their contract the parties agree to entrust the differences between them to the decision of an arbitrator or panel of arbitrators, to the exclusion of the courts, and they bind themselves to accept that decision, once made, whether or not they think it right.

[26] The authorities reinforce the principle that the courts should uphold arbitration clauses, thus giving effect to the intention of parties to resolve their disputes by arbitration. In Marnell Corrao Associates Inc v Sensation Yachts Ltd, Wild J referred to the general principle that:

… Courts should uphold arbitration, by striving to give effect to the intention of parties to submit disputes to arbitration, and not allow any inconsistencies or uncertainties in the wording or operation of the arbitration clause to thwart that intention. That is stated in Redfern & Hunters Law and Practice of International Commercial Arbitration (3rd ed), 1999, pp 172-173. To similar effect is Russell on Arbitration (21st ed) 1997, para 2-006, citing the Privy Council’s decision in Queensland Electricity Generating Board v New Hope Colleries Pty Ltd [1989] 1 Lloyds Reports 205. Their Lordships’ opinion was delivered by Sir Robin Cooke, who said (at p 210):

At the present day, in cases where the parties have agreed on an arbitration or valuation clause in wide enough terms, the Courts accord full weight to their manifest intention to create continuing legal relations.

[27] More recently in Carr v Galloway Cook Allan, the Supreme Court held that the context in which the phrase “arbitration agreement” is used throughout the Act indicates that it has a broad meaning, and confirms that courts should strive to give effect to the objective intentions of the parties.

[28] Here, condition 8 is labelled “a dispute resolution” clause and forms part of the consent which was granted by the OIO to Kawakawa Station, to enable it to invest and acquire freehold and leasehold interests in sensitive land. By virtue of condition 6, Kawakawa Station must consult with the Commission to improve public walking access over the land and it must implement any walking access recommendations by the Commission within two years from the Commission making its recommendation, or such other timeframe as was mutually agreed.

[29] In the event that Kawakawa Station and the Commission cannot agree, and a dispute arises, the OIO imposed condition 8, a dispute resolution requirement on Kawakawa Station. That condition required Kawakawa Station to endeavour to resolve the dispute by mediation and failing that, to endeavour to have the dispute referred to and finally resolved in arbitration. Kawakawa Station acquired the sensitive land and made its investment, accepting those conditions.

[30] The applicants submit that condition 8 is not an arbitration agreement for the purposes of the Act, but is an obligation imposed by Ministers on Kawakawa Station only, to endeavour to enter into an arbitration agreement with the Commission in certain circumstances. The applicants focus on the words in condition 8: “the Applicant must endeavo[u]r to”. Their submission is premised on the basis that there has been no agreement between Kawakawa Station and the Commission to go to arbitration. There has simply been an agreement by the OIO to impose a condition on Kawakawa Station to endeavour to enter into arbitration, if a dispute between Kawakawa Station and the Commission arises. This, they say, does not make the condition an arbitration agreement.

[31] Further, the applicants place reliance on an email dated 20 December 2018, from the Commission to Kawakawa Station, in which the Commission said:

… There is a requirement under condition 8 of the OIO consent that if the dispute is not resolved by mediation, Kawakawa Station Limited must endeavour to have the dispute resolved by arbitration, costs to be shared.

…

Please advise what Kawakawa is proposing in relation to arbitration.

[32] The applicants submit that any obligation to arbitrate under condition 8 relates solely to Kawakawa Station and the clause is drafted on the basis that arbitration under condition 8 requires a further submission agreement between Kawakawa Station and the relevant agency.

[33] Although condition 8 appears as a condition of ministerial consent through the OIO, I consider it operates as a condition of land acquisition, much in the same way as conditions are inserted into an agreement for sale and purchase. Kawakawa Station has accepted those conditions imposed on it by the OIO and in so doing has agreed to them. It therefore has an obligation to comply with those conditions, which became binding when it made its investment and acquired the land.
[34] Although condition 8 is not in the form of a signed agreement between Kawakawa Station and the OIO, it is in the form of an arbitration agreement under article 7(2), schedule 1 of the Act. It appears in an OIO land consent, which on a contractual analysis, takes the form of an offer of sale and purchase. In the same way that parties entrust differences between them to the decision of an arbitrator and bind themselves to accept that decision, as Lord Mustill described, I find that by its acceptance of the OIO’s conditions, Kawakawa Station agreed to be bound to endeavour to mediate and arbitrate in the event of a dispute with any one of the named parties it had to consult. Here it is the Commission.

[35] I turn then to consider whether a clause, which grants only one party a right to refer a dispute to arbitration, amounts to a binding arbitration agreement. As Williams & Kawharu on Arbitration observes, “there can be a unilateral arbitration agreement where only one of the parties is obliged, or entitled, to submit disputes to arbitration.” This has been confirmed by the court in Pittalis v Sherefettin, where Fox LJ held that an arbitration agreement may validly give only one party the right to refer disputes to arbitration:

There is a fully bilateral agreement which constitutes a contract to refer. The fact that the option is exercisable by one of the parties only seems to me to be irrelevant. The arrangement suits both parties … Both sides have, therefore, accepted the arrangement and there is no lack of mutuality.

Similarly, in NB Three Shipping v Harebell Shipping Ltd, Morrison J held that a clause conferring an option on the owners only, to refer a dispute to arbitration, was a binding arbitration clause.

[36] Plainly here, the obligation to arbitrate under condition 8 is on Kawakawa Station. As part of its obligation, it must endeavour to arbitrate with the Commission. The OIO has nominated the Commission as one of the parties with whom Kawakawa Station must consult on walking access over its land. Because the Commission is not a party to the agreement, Kawakawa Station cannot require or bind the Commission to arbitrate. The most that Kawakawa Station can do, in my view, is endeavour to arbitrate with the Commission. If, therefore, Kawakawa Station had tried to have its dispute with the Commission referred to arbitration and the Commission refused, Kawakawa Station’s obligation under its deemed contract with the OIO would have been satisfied.

[37] In the present circumstances, however, it is the Commission who has asked Kawakawa Station to attend mediation and now is requesting Kawakawa Station to satisfy its obligation to endeavour to have the dispute resolved by arbitration. There is no impediment to Kawakawa Station having the dispute referred to and resolved by arbitration because the nominated party by the OIO, namely the Commission, is a willing and ready participant. The obligation rests on Kawakawa Station to follow through with the arbitration, as it has a willing Commission, ready to submit to arbitration.

[38] The reference in the Commission’s email to Kawakawa Station’s proposal in relation to arbitration does not import into the condition that there must be a submission agreement between Kawakawa Station and the Commission. The Commission, in my view, is simply asking what steps Kawakawa Station is taking in relation to the arbitration, such as the proposed name of the arbitrator and the venue. Kawakawa Station must endeavour to refer the dispute to arbitration in Wellington.

[39] The only further matter, which requires agreement between “the parties”, and by that phrase in condition 8(b)(ii) means Kawakawa Station and the Commission, is the appointment of an arbitrator. In the event that there is no agreement, the arbitration clause provides that the President of the New Zealand Law Society can nominate an arbitrator.

[40] I find that condition 8 is a valid arbitration clause, binding on Kawakawa Station which accepted, and agreed to, that condition on its acquisition of the land. This places an obligation on Kawakawa Station to refer the matter to arbitration, given that the Commission has invited it to do so and is a willing participant in the process. While it is correct that the Commission is not a party to the consent, in the sense that the enforcement of the consent is in the hands of the OIO if Kawakawa Station does
not take any step to undertake arbitration, there is an arbitration agreement requiring Kawakawa Station to arbitrate with the Commission.

If condition 8 is an arbitration agreement, which parties does it bind?

[41] I have found that condition 8 is an arbitration agreement binding Kawakawa Station, and that although the Commission is not a party to the consent decision of the OIO, it is a party nominated by the OIO to mediate and arbitrate with Kawakawa Station. As I have found above, the Commission has indicated its willingness to have the dispute with Kawakawa Station referred to arbitration and the obligation now rests on Kawakawa Station to refer the matter to an arbitral process.

[42] The remaining question, however, is the Trust’s status in relation to the arbitration clause. Plainly, the Trust is not a party to the consent and nor is it a nominated party by the OIO in the conditions attaching to its consent.

[43] The Trust is the second applicant to the judicial review proceedings and challenges both the Commission’s recommendations for a walkway, which the Trust says will affect its land, and the lack of consultation with the Trust on the part of the Commission.

[44] On 1 November 2018, the Trust advised the Commission in writing of its interest in the recommended walking access proposed by the Commission. The Chief Executive of the Commission, Mr Cullinane, met with representatives of the Trust on 26 November 2018 for approximately two and a half hours. In addition, the Trust attended the mediation between the Commission and Kawakawa Station on 10 December 2018, and a further meeting was convened between the Trust and the Commission’s Board on 21 February 2019. The Trust’s attendance at the mediation was not opposed by the Commission and was supported by Kawakawa Station. Despite not being a nominated party under the dispute resolution clause, the Trust participated in the mediation, nevertheless.

[45] At the hearing, in response to the evidence filed by the Trust and to my questions, Mr Reid for the Commission submitted that the Commission consents to the Trust being involved in the arbitration and, indeed, if the Trust wishes to raise its
claims as to reasonableness or lawfulness of the Commission’s actions, the Commission would have no objection to that being raised within the context of the arbitration. In other words, the Commission is taking the view that all relevant issues should be before the arbitrator, including those matters raised by way of judicial review challenge about the Commission’s processes and recommendations, and including its consultation with affected parties.

[46] In Danone Asia Pacific Holdings Pte Ltd v Fonterra Co-Operative Group Ltd, Venning J, in dealing with the issue of stay, canvassed the authorities where parties had simultaneous proceedings, raising the same factors and/or overlapping legal issues. His Honour noted the case of Carter Holt Harvey Ltd v Genesis Power Ltd, in which Randerson J accepted, in an obiter statement, that in a case “where there was a substantial degree of overlap of factors or legal issues between the arbitration and Court proceedings it could be “inappropriate” for both to proceed simultaneously even if the matters in the Court proceedings were not the subject of the arbitration.”

[47] I consider the Commission’s position here in relation to the Trust accords with Randerson J’s approach in Carter Holt Harvey Ltd. The Trust’s inclusion within the arbitration is not opposed by the Commission, and Kawakawa Station’s interests and the Trust’s interests are aligned. For these reasons, although it is clear the arbitration agreement does not bind the Trust, it is in the interests of the parties that the Trust proceedings are heard simultaneously with Kawakawa Station’s proceedings.

Are the judicial review proceedings matters to which the arbitration agreement applies?

[48] The applicants have issued judicial review proceedings, challenging the lawfulness of the Commission’s recommendations in May 2016 and the revised recommendations in September 2016, claiming that the Commission was exercising a statutory power under s 5 of the Judicial Review Procedure Act 2016. The applicants claim that the Commission, in formulating its recommendations, took into account irrelevant considerations, failed to consider relevant considerations, and ultimately reached a decision no reasonable decision-maker would have made in the circumstances, the latter ground being a claim of irrationality and/or unreasonableness. They also claim that the Commission predetermined the issue for consultation, because it considered that the sole walking access option for Kawakawa Station was access to Kawakawa Hut via the Otikaha Stream.

[49] The second applicant, the Trust, alleges the Commission breached natural justice in failing to consult the Trust over tikanga Māori applicable to the land affected by the proposed walking access on Kawakawa Station, when formulating its recommendations, and failed to take into account any and all cultural sensitivity issues arising from those recommendations.

[50] The second part of the judicial review claim challenges the lawfulness of the Commission’s decision to register a caveat against Kawakawa Station’s land. Because the parties have agreed that the caveat will lapse on 15 April 2019, these grounds of judicial review fall away for present purposes.

[51] The applicants say that the matters arising in the judicial review proceeding are matters going to the lawfulness of the Commission’s decision-making, which are not arbitrable and the determination of such matters by arbitration would be contrary to public policy. The applicants say that their judicial review proceedings are issued in accordance with the right to judicial review guaranteed under s 27(2) of the NZBORA. Further, they say the Trust is not a party to the agreement and the Trust’s rights have been affected in a manner not properly determinable by an arbitral tribunal.

[52] The basis of the applicants’ challenge is that the Commission has exercised a statutory power of decision in making its recommendations. The Commission submits that its recommendations are not reviewable for two reasons. First, it says they are not decisions but are recommendations, and secondly, its recommendations are currently subject to Kawakawa Station and the Commission submitting to arbitration to resolve the dispute between them. The Commission resists the judicial review from both applicants. In relation to the Trust, it points to its belated involvement in November 2018, the Commission’s subsequent meetings with members of the Trust, and the inclusion of the Trust in the mediation with all parties on 10 December 2018. These actions, it says, shows it has consulted with the Trust, and invites the Trust to be part of the arbitration.

[53] The Commission maintains its position that Kawakawa Station must now submit to arbitration to resolve the dispute that has arisen. The Commission, during the hearing before me, specifically invited Kawakawa Station and the Trust to place before the arbitrator any issue about the lawfulness of the Commission’s approach or any aspect of its recommendations as part of the issues to be resolved by the arbitrator.

[54] In their judicial review claim, the applicants have listed matters that they say the Commission has taken into account irrelevantly, including:

(a) the “substantial and identifiable” benefits test under the OI Act relating to sensitive land that is non-urban land exceeding five ha;

(b) the factors under s 17(2) of the OI Act and reg 28 of the Overseas Investment Regulations 2005 regarding a “substantial and identifiable” benefit;

(c) matters of national importance specified in s 6(d) of the Resource Management Act 1991 (the RMA); and

(d) matters specified in s 7(c) of the RMA which are specific to exercising powers or duties under the RMA only.

The applicants have also listed matters they say the Commission has overlooked, including:

(e) requirements under s 6(e) of the RMA to recognise and provide for the relationship of Māori and their culture and traditions with their ancestral lands, water, sites, wahi tapu, and other taonga as a matter of national importance;

(f) the Trust’s relationship with the land and waterways within the scope of the Commission’s recommendations;
(g) the provisions of the Commission’s own Code of Responsible Conduct relating to private land and landowners’ rights, tikanga Māori, and Māori relationships with land and waterways;

(h) the terms of condition 6 of the OI consent, namely, that Kawakawa Station was to consult the Commission about what Kawakawa Station can reasonably do to provide public walking access over the relevant land;

(i) Kawakawa Station’s intended use of the land;

(j) adverse impacts on the economic viability of Kawakawa Station and the Trust land if the Commission’s recommendations were implemented;

(k) other potential walking access routes from Kawakawa Station that would meet the requirements of s 11 of the Walking Access Act 2008;

(l) the likely requirement of consent from another landowner if access to Kawakawa Hut through Kawakawa Station land via the Otikaha Stream is maintained; and

(m) the prospect of unauthorised hunting on the Kawakawa Station land.

[55] I accept the Commission’s submissions that the applicants face two difficulties in relation to their judicial review challenge. The first is the claim that the Commission’s recommendations are “decisions” in the nature of the exercise of a statutory power under s 5 of the Judicial Review Procedure Act. I consider it is strongly arguable, as the Commission contends, that the Commission has not exercised a statutory power of decision-making. Instead, it has made recommendations, which are subject to further refinement, alteration, or determination in the event of arbitration.
[56] As the authorities reinforce, the availability of judicial review before a final decision has been made is wholly exceptional. It can occur, however, where the relevant process or preliminary recommendations are viewed as part of the decision itself. In this instance, I am not satisfied that the revised recommendations are in the nature of a substantive or final decision in these circumstances. This is the first impediment that the applicants face.

[57] The second difficulty facing the applicants is that the matters in the judicial review claim not only overlap with the matters that would be the subject of arbitration in resolving the dispute, but are more properly the province of the arbitrator and an arbitral proceeding. The applicants acknowledged during the hearing that if the judicial review proceedings are heard before the arbitration, the detail of what is at issue between the applicants and the Commission are not matters that can be resolved by a Court in judicial review. The result they seek to achieve on judicial review, if successful, is that the Commission is directed to reconsider its recommendations. If that occurs, the applicants submit, the Commission has to properly consult with both applicants and restart the process.

[58] The opportunity for addressing the Commission’s failings is now available to both applicants. If the Trust wishes, it can advance its challenge to the Commission’s process and to the reasonableness of the Commission’s recommendations. The detail of the challenge, it seems to me, is more appropriate for arbitration. As Lord Woolf MR has said:

The courts should not permit, except for good reason, proceedings for judicial review to proceed if a significant part of the issues between the parties could be resolved outside the litigation process.

[59] I accept, of course, that the applicants have a right to judicial review guaranteed under s 27(2) of NZBORA, and in certain circumstances significant questions of law have not been appropriate matters to be the subject of arbitration. That said, as Williams & Kawharu on Arbitration observes:

… given the legislative confidence in the arbitral process which is reflected in s 5 of the New Zealand Act, it is suggested that few types of arbitration agreement or subject matters will be deemed non-arbitrable for s 10 [that is, public policy] purposes. Instead, the Act creates a general preference in favour of the arbitrability of disputes …

This is consistent with the general trend of expanding the scope of arbitrable subject matters.

[60] In this case, Kawakawa Station has an obligation to have its dispute with the Commission referred to arbitration. The matters the applicants have raised challenge the way in which the Commission has formulated the proposed walkway. The detail of the accessway and what considerations were taken into account in proposing it is entirely suitable to arbitration.

[61] I find that the judicial review proceedings are not an impediment to the dispute being referred to arbitration, because the Commission’s recommendations do not have the status of a final decision and the factors raised by the applicants are suited to arbitration in these circumstances.

Should the Court grant a stay of proceeding and refer the matter to arbitration, either pursuant to the Arbitration Act 1996 or the High Court Rules 2016?

[62] Under article 8(1) schedule 1 of the Arbitration Act, the Court has the power to order a stay of proceedings and refer the parties to arbitration:

8 Arbitration agreement and substantive claim before court

(1) A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting that party’s first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed, or that there is not in fact any dispute between the parties with regard to the matters agreed to be referred.

[63] The applicability of article 8(1) depends on whether the proceedings, in this case the judicial review proceedings, are brought in a matter which is the subject of an arbitration agreement. As I have found that condition 8 is an arbitration agreement and the subject matter of the dispute is pleaded in factual detail in the applicants’ judicial review proceedings, this Court should grant a stay and refer the parties to arbitration, unless the arbitration agreement is null and void, inoperative, or incapable of being performed.

[64] In doing so, I am cognisant that the Commission is requesting the referral to arbitration. Although no argument was raised in respect of whether the Commission is a party under article 8(1), I am satisfied that the Commission is a party to the arbitration. “Party” is defined under the Act as meaning:

A party to an arbitration agreement, or, in any case where an arbitration does not involve all of the parties to an arbitration agreement, means a party to the arbitration.

[65] As outlined, the OIO has nominated the Commission as a party to an arbitration where a dispute arises between the Commission and Kawakawa Station. There is standing, therefore, for the Commission to make its request for a stay. Given my findings in respect of the arbitration clause and the dispute which has arisen between Kawakawa Station and the Commission, I find that there is a “prima facie” case for the existence of a valid arbitration agreement and the judicial review proceedings should be stayed, with the parties being referred to arbitration.

[66] An additional factor supporting this conclusion is the fact that the parties have already submitted to the dispute resolution clause, by attending mediation. Condition 8, therefore, has already been engaged as a dispute resolution clause and by the conduct of both Kawakawa Station and the Commission, the parties have submitted to the dispute resolution clause and should now proceed to the next step in that process, namely, arbitration.

[67] If I am wrong that condition 8 is an arbitration agreement and my finding the Court should apply article (1) of schedule 1 of the Arbitration Act in staying the judicial review proceedings is inapplicable, I turn then to consider the Court’s power to grant a stay under r 15.1 of the High Court Rules 2016 and its inherent jurisdiction. Rule 15.1 provides:

15.1 Dismissing or staying all or part of proceeding

…

(3) Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.

(4) This rule does not affect the court’s inherent jurisdiction.

[68] The applicants submit the discretion under r 15.1 should be exercised only in “rare and compelling circumstances”. The High Court has recently held in Danone that “[t]here must be a real risk of unfairness or oppression to the defendant if the proceeding were allowed to continue.” The applicants submit this is not the case.

[69] In response, the Commission submits that the judicial review proceedings are a collateral attack on the arbitration agreement and are likely to cause prejudice and delay to the Commission. The Commission says further than an arbitration must be completed on an urgent basis, if an award is to be made prior to settlement of the sale of the land on 19 June 2019. If an award is not made before settlement, the right to walking access will be lost.

[70] The application of r 15.1(3) of the High Court Rules and the Court’s inherent jurisdiction to grant a stay in the absence of an arbitration agreement between the parties must be informed by the considerations in r 15.1(1). These include where there is no reasonably arguable cause of action (r 15.1(1)(a)), and where the pleading is likely to cause prejudice or delay, is frivolous or vexatious, or is otherwise an abuse of the Court’s processes (r 15.1(1)(b)-(d)).

[71] In exercising the Court’s jurisdiction to stay proceedings either under r 15.1(3) or its inherent jurisdiction, Venning J in Danone observed that the Court is entitled to impose procedures that are appropriate in the circumstances having regard to the nature and content of the litigation as a whole. He accepted, however, that the jurisdiction to grant a stay should be exercised only in rare and compelling circumstances, where there is a real risk of unfairness or oppression to the defendant if the proceedings were allowed to continue. As well as this, considerations of cost and convenience must weigh in favour of a stay. In that case, the application for stay was granted.

[72] I consider that a stay should be granted in these circumstances, because there is a real risk of injustice here if the arbitration does not proceed prior to the sale of the Kawakawa Station land. Kawakawa Station acquired the sensitive land on condition that a walkway may be secured over the land. Kawakawa Station has now entered into an agreement for sale and purchase, selling the land to a New Zealand citizen. If an award is not made before settlement, the Commission’s right to walking access may be lost.

[73] As I have concluded above, the subject matter of the judicial review proceedings will significantly overlap with the subject matter of the dispute at arbitration. It is not in the interests of justice for both proceedings to be heard at the same time, in separate jurisdictions. Not only will the costs be duplicated, there is a risk of inconsistent findings and delay.

[74] I am therefore satisfied that the Court, in its inherent jurisdiction and under r 15.1, should grant a stay of proceeding in these circumstances, in the interests of justice and considering the cost and convenience to all parties. I have issued this decision as quickly as possible, to enable the parties to begin the arbitration process without delay.

Conclusion

[75] To conclude on the issues overall:

(i) I find that condition 8 is an arbitration clause that is binding on Kawakawa Station. It places an obligation on Kawakawa Station to refer the matter to arbitration, given that the OIO has nominated the Commission as one of the parties with whom Kawakawa Station must consult and arbitrate if there is any dispute, and the Commission is a willing participant in the process.

(ii) Although the arbitration agreement does not bind the Trust, as the subject-matter of both applicants’ judicial review proceedings and the dispute that would be before arbitration are largely overlapping, the Trust proceedings should be heard simultaneously with the Kawakawa Station proceedings.

(iii) The judicial review proceedings should be stayed in accordance with article 8(1) of schedule 1 of the Arbitration Act 1996.

Result

[76] The application for stay is granted. The parties are directed to begin the arbitration process without delay.

Caveat proceedings

[77] By consent, the following orders are made in relation to the caveat application before the Court:

(a) a final order is made by the Court that the caveat against dealings with land under section 138 of the Land Transfer Act 2017 instrument 11315298.1 affecting record of title 470174 Wellington Land District owned by Kawakawa Station Limited lapses on and from 8.30 am on Monday 15 April 2019; and
(b) the final order is served by the Commission on the Registrar-General of Land by Monday 1 April 2019.

Costs

[78] If the parties are unable to agree on costs, counsel are to file memoranda within 15 working days of this decision.