Pearce v Wilkinson CA65/95 [1996] NZCA 263 (14 February 1996)

Last Updated: 12 February 2019

_{IN THE COURT OF APPEAL OF NEW ZEALAND C.A. 65/95}

BETWEEN GARY LESLIE JOHN PEARCE and

SHARON MARY PEARCE of Whangarei, Taxation Consultants

_Appellants

A N D ERROL EDWARD WILKINSON Retired, JUNE GLADYS WILKINSON, Widow and EAN INNES BROWN, Chartered Accountant, all of Whangarei, Trustees of the Wilkinson Family Trust

_Respondents

Coram: Richardson J.

Thomas J. Temm J.

Hearing: 14 February 1996

Counsel: J.W. Watson for Appellants

G. Whiting for Respondents

_{Judgment: 14 February 19961996}

JUDGMENT OF THE COURT DELIVERED BY TEMM J.

This appeal arises out of a refusal by the High Court to grant a declaration in respect of a lease of office premises in Whangarei where the appellants were the lessees and the respondents were the lessors. The original deed of lease, dated 11

March 1980, conferred upon the lessees the right to occupy the premises in question for a period of two years from 1 December 1979 to 30 November 1981. The lease contained a clause entitling the lessees to have rights of renewal in the following terms:

"36. IF the lessee shall during the said term duly and punctually pay the rental payable hereunder and well and faithfully observe and keep all the terms conditions agreements provisions and restrictions on the part of the lessee herein contained up to the expiration of the said term and shall have given notice in writing to the lessor at least three (3) calendar months before the expiration of the said term (or its renewal) of the desire of the lessee to take a renewed lease of the premises then the lessor will at the cost of the lessee grant to the lessee a renewed lease of the premises for a further term of two (2) years commencing from the expiry of the said term (or its renewal) at a rental to be agreed upon or failing agreement to be determined by arbitration under the provisions of the Arbitration Act 1908 and its amendments and otherwise upon and subject to the same terms conditions agreements provisions and restrictions as are herein contained including this present provision for renewal for a further three renewals but this clause shall not be deemed to confer on the lessee the right to obtain renewals beyond the expiry of the said term for any period or periods exceeding in total ten (10) years PROVIDED THAT the rental to be agreed upon or fixed for any renewed term shall not be less than the rental payable for the preceding term."

This clause, as can be seen, entitled the lessees to keep the premises for a maximum period of ten years, up to 30 November 1989 if they chose to exercise the rights of renewal conferred upon them by this clause.

On 11 July 1987 the parties entered into a new deed varying their lease. By that deed there was a new renewal clause which was as follows:

"2. THAT if the Lessee shall during the said term duly and punctually pay the rental payable hereunder and well and faithfully observe and keep all the terms and conditions and agreements, provisions and restrictions on part of the Lessee contained herein up to the expiration of the said term and shall give notice in writing to the Lessor at least three (3) calendar months before the expiration of the said term of the desire of the Lessee to take a renewed lease of the premises and (sic) the Lessor will at the cost of the Lessee grant to the Lessee a renewed lease of the premises for three (3) further terms of two (2) years commencing from the expiry of the said term at a rental to be agreed upon or failing agreement to be determined by the provisions of the Arbitration Act 1908 and its amendments and otherwise

upon and subject to the same terms and conditions agreements provisions and restrictions as are herein contained PROVIDED THAT the rental to be agreed upon or fixed for any renewed term shall not be less than the rental payable for the preceding term."

By this clause the lessors granted to the lessees the right to keep the premises until 30

November 1989 and if they chose to exercise the rights of renewal contained in it, they would be able to occupy the premises until 30 November 1995. The deed also provided for the payment of Goods and Services Tax, for the situation that would arise if there was a redevelopment of the site and other matters. In other respects the original lease was confirmed and the rental continued at the same rate as before.

On 17 January 1990 the parties signed a further deed which is in the following terms:

_{"RENEWAL OF LEASE DATED 11/3/80}

Commencing 1/12/79

IT IS HEREBY AGREED as follows:

1. THAT the term of the within written Deed of Lease is hereby extended as from the 1st day of December 1989 to the 30th day of November 1991.

2. THAT the rental shall remain at FOUR THOUSAND NINE HUNDRED AND NINETY SIX DOLLARS (4,996.00) per annum plus GST $416.33 per calendar month plus GST) as from the 1st day of December 1989 to the 30th November

1991.

SAVE as expressly hereby varied the said Deed of Lease and all the conditions restrictions and stipulations contained or implied therein shall remain in full force and effect."

It is clear from the document that the parties intended the appellants to continue to occupy the premises as lessees for a further two year period, that is until 30

November 1991 and the appellants did so.

The appellants' argument is that this document was an extension of the lease and not a renewal as promised in the 1987 deed, a point to which we shall return later.

On 28 November 1991 the parties entered into a further deed in the following terms:

"RENEWAL OF LEASE DATED 11/3/80

commencing 1/12/91

IT IS HEREBY AGREED as follows:

1. THAT the term of the within written deed of lease is hereby extended as from the 1st day of December 1991 to the 30th day of November 1993.

2. THAT the rental shall remain at FOUR THOUSAND NINE HUNDRED AND NINETY SIX DOLLARS ($4,996.00) per annum plus GST $416.33 per calendar month plus GST) as from the 1st day of December 1991 to the 30th day of November 1993.

SAVE as expressly hereby varied the said Deed of Lease and all the conditions restrictions and stipulations contained or implied therein shall remain in full force and effect."

Again by this document the parties obviously intended that the appellants should continue to occupy the premises of the lessees for a further period of two years up to

30 November 1993 and they did so. The fact that the appellants should occupy as lessees is made quite clear by the last sentence in this document which is exactly the same as the last sentence in the 1990 document "Save as expressly varied the said Deed of Lease and all the conditions restrictions and stipulations contained or implied therein shall remain in full force and effect." This was in accordance with the intention of the parties as expressed in the 1987 deed entitling the appellants to occupy until 1993 and there was, under the 1987 deed, a further opportunity for the appellants to occupy the premises as lessees until 1995, if they wished to do so.

The appellants seek a declaration from this Court by way of appeal that the

1990 and 1991 deeds operate as extensions, not as renewals of the lease and that the appellants have two further rights of renewal. The argument is that in the way in which the 1990 and 1991 deeds were composed, that is "that the term of the within written deed of lease is extended" did not confer upon the appellants as lessees the

renewal of the lease, to which they were entitled under the terms of the appropriate clause in the 1987 deed.

This argument means that the appellants must place great weight upon the word "extended" and that it should be interpreted as something different from what it was, namely a renewal of the lease.

The learned Judge in the Court below reached the conclusion that the two deeds of 1990 and 1991 were in fact renewals of the lease which the respondents were obliged to confer in accordance with their obligations as expressed in the 1987 deed. He put the matter this way:

"In that variation of 8 July 1987, the plaintiffs were given further rights of renewal. The plaintiffs sought a renewal. Pursuant to that request, the document of 17

January 1990 was drawn up as "A renewal of lease dated 11 March 1980 commencing 1.12.79". It was clearly meant to be a renewal of the original lease. It says so. Being a renewal in accordance with the contractual provisions of the original lease, it then detailed the points of agreement between the parties as they varied or differed from the original. First, the term was extended for a further two years. Secondly, the rental was agreed upon. The term referred to in my view clearly, having regard to the history of the dealing, refers to the terms of occupation in the original lease. It is extended for two years. The document says no more and no less. It is recording an agreement reached between the parties. In effect, the plaintiffs may remain in possession a further two years from 1 December 1989 to 30

November 1991. In other words the term as described in the original lease of March 1980 is now to be 1.12.89 (which was the final year permitted under the original lease) until 30 November 1991. The rental agreed is then set out. The words "save as ..." are necessarily simply to ensure the rights and obligations of the parties during the two years are governed by the terms of the original document which, to that extent, remains in force.

No other inference, in my view, can be considered having regard to the history of the dealings between the parties, the requests for the renewals and the signing by both parties of a document which commences with the words "Renewal of lease". I do not regard those words simply as a label when, in my view, they correctly describe the subsequent provisions in the document. These words are not a label. They are part of a document. They are an integral part of it and it would be quite wrong and totally unreal for me to disregard their plain wording. I regard these words as an accurate description of the intention of the parties and consistent with what they had agreed to do namely, to extend the term of the lease for a further two years plus giving them the right to occupy the premises for that time and no longer subject to any right of renewal."

The appellants' argument requires this Court to rule that the Judge was wrong in his conclusion, partly because he made reference to some correspondence which had been exhibited. The Judge expressly discounted from his consideration evidence which had been given in affidavits as to conversations between the parties, because he rightly came to the conclusion that where deeds of this kind are not ambiguous, they should be interpreted according to the language that the parties have chosen. (See Benjamin Developments Ltd v Robert Jones Pacific Ltd [1994] 3

NZLR 189, 203).

It seems very clear to us that had the draftsman of the 1990 and 1991 deeds simply said that "the within written deed of lease is hereby renewed", that the appellants would have no argument. We come to the conclusion that both these deeds were intended by the parties to give to the appellants the right to occupy the office premises as lessees for an extra two year period in each case, as expressed, and that the word "extended" should not be interpreted in such a way as to have conveyed to them as lessees something less than a renewal of the lease.

They remained in occupation until 1993 under these two deeds and they did so as lessees because in each renewal it was explicitly recorded that the original deed of lease in 1980 "... and all the conditions restrictions and stipulations contained or implied" in it, should remain in full force and effect.

We come to the conclusion that the deeds of 1990 and 1991 correctly express the parties' intentions that the appellants should have and exercise the rights conferred in the deed of 1987, that they occupied the premises as lessees accordingly under the conditions of the lease and that the appeal against the judgment must fail. In our view the learned Judge in the Court below reached the right conclusion.

The respondent is entitled to costs on the appeal fixed at $3,500 together with all reasonable disbursements as fixed by the Registrar, including travelling and any accommodation expenses of counsel.

Solicitors: J.W. Watson, DX AP24589, Whangarei Connell Rishworth Gerard, DX AP 24503, Whangarei