Arbitration Act 1996 – application for special leave to appeal to Court of Appeal against High Court judgment refusing special leave to appeal to High Court – arbitral award on the proper measure of damages in a farm lease dispute – applicable principles – procedure – jurisdiction – scope of rule in Joyner v Weeks [1891] 2 QB 31 (CA) – question of law – interpretation and policy factors – whether substantial affecting of rights – whether “leap-frog” appeal – exercise of discretion – precedent – application for special leave to appeal to the Court of Appeal is declined [as there is no qualifying question of law]

Northash Limited v Zeff Farms Limited [2022] NZCA 471 (Cooper P and Goddard J)

Please note: this decision refers to the recent New Zealand case of The Gama Foundation v Fletcher Steel Limited [2022] NZCA 314 (Courtney and Dobson JJ) and the historic English case of Joyner v Weeks [1891] 2 QB 31 (CA)

Northash leased a dairy farm from Zeff but did not maintain the farm, particularly in relation to pasture and drainage. As a result, the pasture was seriously damaged. Zeff subsequently sold the farm in an unremediated state and claimed damages from Northash for breach of the lease.

The dispute was referred to arbitration. The arbitrator found that the cost of remediating the farm was approximately $537,000 (this sum included lost milk production of $407,000) but then determined that the proper measure of damages was the loss in value on the sale price of the farm when it had been sold in an unremediated state. The calculated loss on sale ($490,000) awarded by the arbitrator as damages payable by Northash to Zeff was therefore a lesser sum than the calculated total costs of remediation. The bulk of the calculated total costs of remediation was the forecast lost milk production.

Northash then applied for special leave to appeal the arbitral award to the High Court on a question of law, arguing that the proper measure of damages was approximately $130,000, being the cost of the remediation alone, a sum that did not include the forecast lost milk production.

Northash argued that Zeff was not entitled to recover the cost of lost milk production. Northash’s application to the High Court was unsuccessful, as was its application to the High Court for leave to appeal to the Court of Appeal.

Northash now applies directly to the Court of Appeal for special leave to appeal to the Court of Appeal about the unsuccessful High Court application.

Applicable principles – extensive discussion of procedure and policy, including relevant factors relating to the appeal of arbitral awards, the threshold for such appeals and the concept of “leap-frog” appeals, together with concern that the Court of Appeal could potentially hear a substantive matter that the High Court had not had an opportunity to consider – whether there was an appropriate question of law – whether there was an issue that substantially affected the rights of a party/the parties – whether future lost milk production could correctly be a measure of damages in these circumstances – discussion of the approach taken by the arbitrator against the background circumstances of the dispute – extensive analysis of the rule in Joyner v Weeks [in broad terms, that case relates to the correct measure of damages for repairs under a lease] – scope and extent of the application of the rule in Joyner v Weeks – consideration of the approach to damages under New Zealand law – assessment of the appropriateness of the exercise of the Court’s discretion – detailed reference to precedent

Held: Northash’s application for special leave to appeal to the Court of Appeal is declined [as there is no qualifying question of law].

Sacha Jugum is a senior solicitor at Brookfields and the editor of The Bulletin.