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Quay Lease Limited v Greenstone Energy Limited [2011] NZCA 112 (29 March 2011)

Last Updated: 5 April 2011


IN THE COURT OF APPEAL OF NEW ZEALAND
CA49/2010
[2011] NZCA 112

BETWEEN QUAY LEASE LIMITED
Appellant

AND GREENSTONE ENERGY LIMITED
Respondent

Hearing: 17 November 2010

Court: Chambers, MacKenzie and Simon France JJ

Counsel: S A Grant and E A James for Appellant
P J Radich and L I Van Dam for Respondent

Judgment: 29 March 2011 at 3 pm

JUDGMENT OF THE COURT
  1. The appeal is allowed.
  2. The summary judgment entered in favour of the respondent is quashed.
  1. The order for costs made in the High Court is quashed. Costs in that Court are reserved.
  1. The respondent must pay the appellant’s costs in this Court for a standard appeal on a band A basis and usual disbursements. We certify for second counsel.

REASONS OF THE COURT


(Given by MacKenzie J)

Introduction

[1] This is an appeal against a judgment of Associate Judge Robinson delivered on 15 December 2009[1] granting summary judgment to the respondent, ordering that a rental rebate covenant contained in the lease between the appellant as lessor and the respondent as lessee continues to bind the parties.
[2] The issue which arises on this appeal is whether a prompt payment rebate, which was applicable under s 85 of the Land Act 1948 (the Act) in 1962 when the lease was entered into, and which has been applied ever since, continues to be binding on the appellant (Quay Lease). Associate Judge Robinson held that it does. Quay Lease appeals against that finding.

History: The lease and the legislation

[3] In September 1962, Shell Oil New Zealand Ltd entered into a lease of land situated in Mt Maunganui. That company later changed its name to Shell New Zealand Ltd and recently to Greenstone Energy Ltd. We refer to it as Shell. At that time, the Crown was the owner of the land, and the Act applied to it. The lease between the Crown and Shell was a renewable lease under s 63 of the Act for a term of 33 years with a perpetual right of renewal for the same term. The term of the lease commenced on 1 January 1963. The lease was on a standard form. That standard form contained the following provision which is of particular importance in this case:

(e) That these presents are intended to take effect as a renewable lease under the Land Act 1948 and the provisions of the said Act and of the regulations made thereunder applicable to such lease shall be binding in all respects upon the parties hereto in the same manner as if such provisions had been fully set out herein.

[4] In March 1992 the Crown transferred the land, subject to the lease, to Landcorp Investments Ltd, a subsidiary of Landcorp Farming Ltd, a state-owned enterprise under the State-Owned Enterprises Act 1986. Under that Act, the Land Act provisions continued to apply to the land. In December 1995, Landcorp and Shell executed and registered a memorandum of renewal and variation of the lease for a second 33 year term commencing on 1 January 1996. In October 2003 Landcorp transferred the fee simple to the appellant (Quay Lease). In September 2007, Quay Lease and Shell entered into a variation of lease fixing the rent payable for the second 11 year period of the renewed lease term and otherwise confirming the provisions of the lease.
[5] When the Land Act was originally enacted in 1948, the rent payable under all perpetually renewable leases was fixed by s 63 of the Act. Section 63(3) provided:

The yearly rent payable for the first term of a renewable lease shall be an amount equal to four and one half per centum of the rental value of the land as determined by the Board.

[6] Under the Act, there was a rebate for prompt payment of rent by a lessee. Section 85(1) provided:

A holder of a lease or license under this Act who is not in arrears with any instalment of rent under his lease or license shall be entitled to a rebate of one-tenth of each half yearly instalment of rent if that instalment is paid within one month after the day appointed for the payment thereof.

[7] In 1956, both of those provisions were amended by the Land Amendment Act 1956, s 2. In s 63, the words “four and one half per centum” and in s 85(1) the words “one-tenth” were deleted and in both cases substituted by the words “such proportion as may be fixed by the Governor-General, by Order in Council”. Section 2 further provided:

(3) The first Order in Council made after the commencement of this section fixing any rates or proportions for the purposes of any of the enactments amended by subsections one and two of this section shall be deemed to have had effect as from the seventh day of June, nineteen hundred and fifty-six.

(4) Notwithstanding anything in subsections one, two, and three of this section, the provisions of the principal Act shall continue to apply, as if this section had not been passed, -

(a) To every lease or licence granted before the seventh day of June, nineteen hundred and fifty-six, during the term thereof that was current on that date:

(b) To every lease or licence granted after the seventh day of June, nineteen hundred and fifty-six, during the term or first term thereof, as the case may be, where at any time before that date any officer of the Department had committed the Crown to the granting of a lease or licence at the rates in force before that date.

[8] The first and only Order in Council made under those provisions was the Land Act (Rental and Interest) Order 1957, passed on 21 August 1957. Clause 3 provided:

For the purposes of s 63(3) of the Act the proportion of the rental value of the land payable as yearly rent is hereby fixed at five and a half per cent.

[9] Clause 8 provided:

The rebate to which a lessee or licensee is entitled under s 85(1) of the Act shall be calculated as if the rent were fixed at five per cent of the rental value of the land or, in the case where there is no rental value of the land, the rebate shall be one-tenth of the half yearly instalment of rent.

[10] When the present lease was entered into in 1963, those provisions were in force. The lease recorded the rental payable in these terms:

The clear annual rent of £1,242−9−0 calculated on a rental value of £27,610−0−0 payable without demand by equal half yearly payments in advance on 1 January and 1 July in each year.

[11] The figure of £1,242−9−0 is equal to four and a half per cent of the rental value of £27,610−0−0. Under the Order in Council, the rent ought to have been five and a half per cent. The reason for this anomaly is not apparent from the evidence. It gives rise to a question whether the disparity rendered the lease an illegal contract.
[12] Because the amended Act, and the Order in Council, applied to the lease at the time that it was entered into, the fixing of the rent at four and a half per cent of the rental value of the land rather than five and a half per cent as prescribed in the Order in Council has created an anomaly in respect of the rent rebate under s 85. This land clearly had a rental value, which the clause fixing the rent states. That means that under the amended s 85, and the Order in Council, the rebate was to be calculated as if the rent payable was five per cent of the rental value of the land. That would in this case result not in a rebate but in a premium.
[13] The provision has not been applied according to the literal effect of clause 8 of the Order in Council. The parties have proceeded, at the time of the initial lease and thereafter, on the basis that the rebate had the effect of reducing the rent payable from the stated figure of four and a half per cent to four per cent of the rental value of the land.
[14] By the Land Amendment Act 1968, s 63(3) and s 85(1) were further amended, in each case by revoking the words “such proportion as may be fixed by the Governor-General, by Order in Council”, and substituting the words “such proportion as may be fixed by the Minister of Finance”. That amendment did not immediately affect this lease. There was a savings provision in s 7:

Savings

Notwithstanding anything in section 3 or section 5 or section 6 of this Act, the provisions of the principal Act and of the orders and regulations revoked by those sections shall continue to apply, as if those sections had not been enacted, to every lease, licence, purchase document, mortgage, or other security in force immediately before the date of the commencement of this Act during the term thereof that is current on that date.

[15] The next significant legislative change was the Land Amendment Act 1970, which made changes to s 63(3). It provided for rent reviews at 11 year intervals during the 33 year term and set a process for fixing the rental value of the land for the subsequent 11 year periods. Previously, the rent had been fixed for the full 33 year term, based on the rental value at the beginning of that term. The mechanism whereby the proportion of the rental value payable as rent was fixed by the Minister of Finance was also repealed. The rent was now fixed by statute at four and a half per cent of the rental value. While s 63 was changed, so that the rental rate was now fixed by statute and not by the Minister of Finance, there was no corresponding change to s 85.
[16] The application of those changes to existing leases was provided for in s 1(3) of the 1970 Amendment Act as follows:

Notwithstanding anything contained in any lease or in the principal Act or any former Land Act, but subject to section 13 of this Act, the provisions of this Act shall apply with respect to leases granted under the principal Act or any former Land Act and current immediately before the commencement of this Act.

[17] Section 13(2) provided:

Notwithstanding anything in section 2, section 3, section 9, or section 11 of this Act, the provisions of the principal Act shall continue to apply, as if those sections had not been enacted, to every renewable lease or pastoral lease in force immediately before the date of the commencement of this Act during the term thereof that is current on that date.

[18] For this lease, the original rent of £1,242-9-0 applied, by virtue of the saving provisions in s 7 of the 1968 Amendment Act and s 13(2) of the 1970 Amendment Act, for the full 33 year term from 1962 to 1995. After the lease was renewed from 1 January 1996, Landcorp and Shell continued to proceed on the basis that a prompt payment rebate applied. In the 1995 memorandum of renewal and variation of lease between Landcorp and Shell, the rent was specified at $39,150 calculated on a rental value of $870,000. That is four and a half per cent of the rental value. The rent actually paid from 1995 was $34,800. That is four per cent of the rental value. So, throughout the period the land was owned by the Crown or Landcorp, a rebate for prompt payment of half a per cent was applied, reducing the effective rent to four per cent.

The sale to Quay Lease and the rebate questioned

[19] In 2003, Landcorp decided to sell a number of parcels of land which were subject to perpetually renewable leases. These included the land leased to Shell and another parcel leased on similar terms to Mobil Oil New Zealand Ltd. Landcorp prepared an information memorandum for potential purchasers in July 2003. The information memorandum described the standard rent, rebate and late payment penalty in these terms:

Standard gross rent is 4.5% per annum of the value of Land Exclusive of Improvements at the time of the last rent review. Gross rent is “plus GST” (if applicable).

Standard rebate for prompt payment (i.e. within one month of the due date) is 0.5% of rental value. This has been the rebate percentage under section 85(1) of the Land Act since 1 April 1956 when it was set by Order in Council, and has not been changed since. The net rent shown in the Financial Analysis of Leases at Appendix A1 is the gross rental less rebate. Landcorp automatically applies the rebate when charging the rent due.

Landcorp’s practice is that any amount not paid by the Lessee to the Lessor within one month of the due date will incur penalty interest at the rate of 17% per annum, calculated on a monthly basis from the due date until the end of the month preceding the actual date of payment (whether before or after judgment). This is in lieu of (and in practice is less than) the rent rebate automatically applied.

[20] The information memorandum contained a table which showed the rent actually paid, at four per cent of the then applicable rental value of the land, and the rent which would be payable at four per cent of the rental value if it were reassessed at 2003 values. The current net rent was said to be $34,800 not $39,150. That reference in the information memorandum was to the nett rent, after the 0.5 per cent rebate.
[21] Quay Lease became the purchaser of the freehold of the properties leased to Shell and Mobil in 2003. On 10 August 2007, close to the end of the first 11 year term of the renewed lease, Quay Lease’s lawyers wrote to the Commissioner of Crown Lands. The letter (which referred to the Mobil lease, but applied equally to the Shell lease) said:

Sub-clause (6) of section 85 provides that the decision of the Commissioner of Crown Lands on any question relating to a rebate under this section shall be final and conclusive.

Our client does not believe that a rebate of 0.5% is appropriate, now that the Land is privately owned. As the lease is between two private companies, there does not appear to be any justification for providing a rental rebate simply because the rent has been paid on time.

We request that the Commissioner address the need for a rebate of 0.5% in relation to the lease between our client and Mobil Oil. While the Land Act directs that the Minister of Finance must set the rebate rate, we believe that sub-clause (6) of section 85 makes LINZ the appropriate entity to deal with this enquiry.

[22] The Commissioner of Crown Lands replied on 28 August 2007, and said:

I note that the land owned by your client company was originally Crown land under the Land Act 1948. It was transferred to Landcorp, which, in turn, transferred the land to your client. The land was transferred subject to the existing “renewable lease” granted under s 63 of the Land Act 1948.

Since the time of the transfer of the land out of Crown ownership, the provisions of the Land Act 1948 no longer apply to the land. For that reason, the Commissioner’s role, which is one authorised by that statute, and the role of the Minister of Finance also ceased.

[23] The letter expressed the view that the Land Act 1948 had ceased to apply to this land following the sale to Landcorp, and went on to say:

Accordingly, the Commissioner has no role to play in relation to the lease over your client’s land.

[24] Quay Lease’s lawyers responded to that letter on 6 September, disagreeing with the Commissioner of Crown Lands’ view as to the application of the Land Act following the sale to Landcorp and again asking:

We would appreciate if you would consider whether a rebate of 0.5% is appropriate now that the land is privately owned.

[25] The Commissioner responded to that letter on 17 September and said:

Accordingly, I remain of the view that the Commissioner has no role to play in relation to the lease over your client’s land.

[26] It is clear from that correspondence that Quay Lease was contending that s 85(1), as amended by the 1968 Amendment Act, applied to the lease. As noted at [14] the section, so amended, provided for the Minister of Finance to fix the prompt payment rebate for such leases, by prescribing a proportion of the rental value of the land. At the time of that correspondence, Quay Lease was under the mistaken understanding that the Minister of Finance had prescribed a rebate of one-half of one per cent of the rental value. It appears that Landcorp and Shell have also had that same understanding. In fact, it has been discovered since the hearing in the High Court that, contrary to that understanding, no figure has ever been fixed by any Minister of Finance under s 85.
[27] On 12 September 2007, Quay Lease and Shell entered into a variation of the lease. That provided:

The covenant to pay rent and the annual rent is deleted and substituted with the following:

The Lessee shall pay to the Lessor from 1 January 2007 for a period of 11 years an annual rental of $490,095.00 plus GST calculated on a Rental Value of $10,891,000.00 (excluding GST) payable without demand by equal half yearly payments in advance on the 1st day of January and the 1st day of July in each and every year during that period. The rent is respect of the remaining period of the Lease shall be determined in the manner provided in section 132A of the Land Act 1948.

For the purposes of this instrument “Rental Value” shall have the same meaning as under the Land Act 1948.

Except as expressly varied under this instrument all covenants, conditions and restrictions contained or implied in the Lease shall remain in full force and effect.

That rental is four and a half per cent of the rental value. There was no specific reference in the variation of lease to a rebate.

[28] By letter dated 8 February 2008 Quay Lease’s lawyers wrote to Shell advising that as from 1 July 2008 Quay Lease would not be applying the 0.5 per cent rebate to the rental. Shell contested that position by letter dated 27 June 2008.
[29] To complete the relevant narrative, we note that in March 2010, Shell sought approval to the grant of certain charges over the lease. Under cl 2 of the lease, the approval of the Land Settlement Board is required before any such charge is granted. Shell’s request for approval was made to Quay Lease as the then current owner of the freehold.

The proceedings

[30] Quay Lease issued proceedings on 2 April 2009 seeking summary judgment on its claim for the following declarations:
  1. A declaration that section 85 of the Act does not apply as a statute to the lease, and the Quay Lease is not otherwise bound by the section’s provisions contractually as a term of the lease.
  2. Alternatively, a declaration that all references to the Minister and the Commissioner in the lease must be read as references to Quay Lease and that Quay Lease is entitled to set the rebate at a proportion of its choice, including 0%.
  1. An order that Shell pay the additional rental owing from 1 July 2008, plus interest.

[31] Shell counterclaimed for summary judgment in the following terms:

(a) Summary judgment be entered in favour of the defendant, declaring that the rental rebate covenant continues to bind the parties and that the reference to the Minister of Finance is to be given its plain meaning.

[32] The nub of the main issue between the parties can be very shortly stated:

The Associate Judge’s decision

[33] In his judgment, Associate Judge Robinson first described the background and the respective cases for the parties. He then said that although the Land Act 1948 no longer applies to the land leased to Shell because it is no longer Crown land, certain provisions of the Land Act continue to apply because the parties have covenanted to incorporate those provisions in the lease. He discussed the relevant provisions and held that s 85 of the Act continues to apply to the lease. That proposition was not, as he saw Quay Lease’s case, in dispute. He said:

[17] Counsel for Quay Lease accepts that if the provision for rent rebate contained in s 85 creates a covenant that runs with the reversion then by operation of s 113 Property Law Act 1952 and s 231 Property Law Act 2007 Quay Lease is bound by that rent rebate covenant.

[34] He then discussed the application of those provisions, applying the test set out in P & A Swift Investments (a firm) v Combined English Stores Group PLC,[2] to determine whether the relevant covenant touches and concerns the land. He concluded that the rent rebate covenant does affect the land and consequently is binding on Quay Lease. He further noted that, in any event, Quay Lease was bound to the rent rebate covenant by reason of its entry into the deed of variation of lease on 12 September 2007, relying on the last paragraph as set out in [26]. He said:

[24] The rent rebate by agreement and regulation has been fixed and applied by the parties for more than forty years. Clearly, such rent rebate will continue at the existing rate unless the parties agree to vary the rebate or the Minister of Finance fixes the rebate in terms of s 85.

The issues on appeal

[35] In the initial notice of appeal, the appellant raised five grounds of appeal which may be briefly summarised as follows:

(1) It challenges the finding that s 85 of the Land Act continues to apply to the lease.

(2) It challenges the conclusion that the rent rebate covenant contained in s 85 affects the land so as to be binding on Quay Lease.

(3) It submits that the Judge was incorrect in finding that the rebate was expressly incorporated into the lease by the variation executed on 12 December 2007.

(4) It challenges the Judge’s finding that the rent rebate continues to bind the parties and that the reference to the Minister of Finance be given its plain meaning.

(5) It asserts that the judgment does not deal with many of the arguments raised for Quay Lease.

[36] Those grounds of appeal put the case for the appellant in a substantially different way from that addressed by Associate Judge Robinson. The Judge said that counsel for the appellant had accepted that the terms of the lease include a covenant to provide a rental rebate to Shell notwithstanding the fact that the land is no longer Crown land. Its contention in the High Court was that the covenant does not pass with the land. That is reflected in the judgment of the Associate Judge at [17], set out above.
[37] The essence of the appellant’s submission on those grounds of appeal is that the rebate originally provided for no longer applies because:
[38] In the alternative, the appellant submits that if the rent rebate provision does apply, then the appellant as lessor, has the ability to fix the quantum of the rebate.
[39] Shortly before the hearing, counsel for Quay Lease filed an application for leave to amend the grounds of appeal by adding two further grounds of appeal. First, that the rebate had been revoked in 1968. In a memorandum in support of that application, counsel for the appellant noted that at the hearing in the High Court, both parties understood that the rebate was set by Order in Council in 1957 at 0.5 per cent and had remained unaltered since that date. Both parties became aware during the preparation for the appeal that no rebate had, since the amendment in 1968, been set by the Minister of Finance or any other person or entity associated with the Crown. Second, that in seeking the consent of Quay Lease to give security over the lease, Shell had substituted Quay Lease for the Land Settlement Board in cl 2 of the lease. The appellant seeks to rely on that conduct of Shell as evidence to support a common interpretation of the lease by the parties.
[40] Counsel have helpfully prepared an agreed list of the issues which the parties consider arise from their respective contentions, as follows:
  1. If leave is required then should the appellant be given leave to amend its grounds of appeal to rely on the revocation of the rebate in 1968;
  2. Did clause (e) of the lease “lock in” the provisions of the Land Act and The Land Act (Rent and Interest) Order 1957 (“the Order”) in the form current when the lease was executed on 1 September 1962 or were the terms subject to change as the Act and any Orders were amended or repealed;
  3. When the lease was renewed in 1996, were the terms modified so that from the date of the renewal the lease incorporated the provisions of the Land Act current in 1996 and the revocation of the Order or did the terms remain unchanged;
  4. Was the rental rebate provision incorporated into the varied lease as a term of execution of the variation of lease in 2007 or not;
  5. Is s 85(1) of the Land Act a covenant and if it is a covenant is it personal to the Crown or does it go to the subject matter of the lease and run with the reversion so as to bind successors;
  6. Must the reference in s 85 to “Governor General by order in Council” or “Minister of Finance” be given its literal meaning or should Quay Lease be substituted for any reference to the Crown or its representatives throughout the lease;
  7. If the rental rebate has not survived the transfer to the appellant, is Shell entitled to advance an estoppel argument, and if so is Quay Lease estopped from denying the existence of the rental rebate provision?

Discussion

[41] It is convenient to discuss the respective contentions, and the submissions on them, by reference to that statement of issues.

(a) Leave to amend notice of appeal

[42] The respondent does not oppose the application to amend the notice of appeal. It is clearly desirable that all of the potential arguments for or against the respective contentions of the parties be considered on this appeal. There is no element of surprise as the new issues had become known in sufficient time before the hearing to enable both parties to prepare their submissions on that basis. Leave to file the amended notice of appeal is accordingly granted.

(b) Does clause (e) “lock in” the Act?

[43] The essence of the contest between the parties on the second issue is whether the effect of cl (e) of the original lease (set out at [2]) was to render binding on the parties, as covenants contained in the lease, the provisions of the Act and the regulations as they stood at the time when the lease was entered into. As Mr Radich put it, the respondent’s submission is that the effect of cl (e) was to “cut and paste” the relevant provisions as they stood at the time the lease was executed into the lease, so that those provisions would, as between the parties to this lease, be binding notwithstanding any subsequent amendments to the Act or the regulations.
[44] The issue between the parties can be narrowed further. It relates particularly to s 85, and the period after the renewal of the lease in 1995. Quay Lease’s contention is that, from the 1995 renewal, s 85 applied in the form to which it was amended by the 1968 Amendment Act. On that analysis, the right to a rebate after 1995 was dependent upon the fixing of a rate by the Minister of Finance. Shell’s contention is that s 85 must continue to be read, after 1995, in the form which it stood prior to the 1968 Amendment Act. Section 85 in its previous form was locked into this lease by virtue of cl (e).
[45] If regard were had only to the statutory provisions as such, without taking into account the effect of their incorporation as covenants in this lease by cl (e), it is clear that the 1957 Order in Council would have ceased to apply to this lease after the end of the first 33 year term of the lease in 1995. That follows from s 7 of the Land Amendment Act 1968, set out at [14]. The essence of Shell’s submission is that, when the effect of cl (e) is taken into account, that result does not follow. Rather, the effect of cl (e) is to make the relevant provisions of the Act and associated regulations as those provisions and regulations stood on 1 September 1962 applicable to this lease for all time. Counsel for Shell submits that, given that the provisions of the Act are binding on the parties as a matter of statute, the purpose of incorporating the provisions of the Act and associated regulations into the lease must have been to give contractual effect to the relevant provisions that were in force when the lease was signed. Accordingly, counsel for Shell submits, those provisions as they stood in 1962 are locked in place as terms of the lease unless expressly varied by the parties to the lease or overridden by clear statutory language to that effect.
[46] A point in favour of the interpretation contended for by the respondent is that, if the effect of the clause is to lock in the provisions of the Act as they are from time to time, and not as they stood at the time of the original lease, the lessee will be subject to changes to the terms of its lease to which it has not agreed and which are imposed by Parliament. It is important however to bear in mind that, because Parliament is sovereign, the lessee would always face the risk of a change to its lease effected by legislation. The ability of Parliament to legislate in this way is limited, if at all, only by the convention which inhibits Parliament from legislating to interfere with private contracts.
[47] Mr Radich acknowledges that Parliament could legislate so as to override the terms of the lease. He submits that Parliament may, by clear language, do so. He submits that in s 1(3) of the Land Amendment Act 1970, Parliament used clear language to override the terms of any existing lease by the use of the words “notwithstanding anything contained in any lease ...”. Mr Radich places reliance on the contrast between the inclusion of those words in that amendment, and their absence from other savings provisions enacted in the various changes to the legislation, especially s 2(4) of the 1956 Amendment Act and s 7 of the 1968 Amendment Act.
[48] We do not attach to the words “notwithstanding anything contained in any lease ...” the significance for which Mr Radich submits. The intention of both the 1968 amendment and the 1970 amendment is clear from their terms. Each was intended to achieve the same essential result: the Act is amended but not so as to affect an existing lessee during the current term. Slightly different drafting techniques were adopted but the difference was not intended to achieve a different result.
[49] But if, contrary to that view, the difference in drafting is to be regarded as significant, we consider that there may be reasons for the different techniques used other than those contended for by Shell. We have described the effect of the changes made by the 1970 Amendment Act at [15]. It provided for rent reviews at 11 year intervals during the 33 year term. The standard form of lease used for perpetually renewable leases contained specific provision for the term. It provided that the lessee was “to hold the said premises intended to be here demised unto the lessee for the term of 33 years, commencing on the first day of [month] [year] ... . Yielding and paying therefor during the said term ... the clear annual rent of [amount] calculated on a rental value of [amount]”. So, the term of the lease was expressly stated in the lease itself. It was not merely incorporated by the operation of cl (e). It was clearly necessary for Parliament to override those express words in the standard form of lease, when enacting the right to rent reviews at 11 year intervals. We therefore do not think that the use of those words in the 1970 Amendment Act provides any significant support for the proposition that, where a provision of the Act applies by incorporation under cl (e) of the standard form, similar wording is necessary to render subsequent amendments to the statute binding on lessees.
[50] In all of the 1956, the 1968, and the 1970 Amendment Acts there are savings provisions, the broad effect of which is to recognise that the amendments will apply to existing leases, but to defer that application until the end of the current term. If the respondent’s submission as to the effect of cl (e) is correct, a savings provision would not be required for leases with that clause. On that analysis, the savings provisions would apply only to leases which did not have cl (e). As we have noted at [2], cl (e) is part of the standard form used for renewable leases under the Act. There is no evidence as to how widely that standard form was used, or whether there are leases which do not use that form, and do not contain cl (e). Because there is no evidence, we do not attach significant weight to the point that the savings provisions would be largely otiose if the respondent’s submission as to the effect of cl (e) were correct. But it is a pointer against the respondent’s contention.
[51] Section 125 of the Act has a bearing on the respondent’s submission that the provisions of the Act and the regulation as they stood at the time when the lease was entered into are applicable for all time. Subsection (1) provides:

The holder of any lease within the meaning of section 122 of this Act who exercises his right of renewal shall, notwithstanding anything contained in his lease or in any former Land Act or in any other Act as to the terms, conditions, and covenants to be included in the renewal lease, be granted a renewal lease in accordance with the appropriate provisions of this Act.

[52] Ms Grant submits that s 125 must be read as referring to the appropriate provisions of the Act current at the date that the lease is renewed. She argues that the use of the words “notwithstanding anything contained in his lease” overrides cl (e) so that, even if that clause might otherwise “lock in” the provisions of the Act as they stood at the date of the original lease, the renewal lease will be upon the terms of the Act as it stands at the date of renewal.
[53] Because this section had been focused on by counsel for the appellant for the first time only in reply, we gave counsel for Shell an opportunity to reply in writing. Mr Radich submits that s 125 does not rebut Shell’s argument that the words of cl (e) had the effect of locking into place the terms of the Act and regulations current when the lease was entered into in 1962. He submits that the “appropriate provisions of this Act” are those that were in force at the time the lease was entered into. He submits that s 125 should be read together with cl (e) of the lease which made s 125 part of the lease agreement as if it had been fully set out in the lease. He submits that this interpretation is consistent with cl (b) of the lease which provides:

That upon the expiration by effluxion of time of the term hereby granted and thereafter at the expiration of each succeeding term to be granted to the Lessee the outgoing Lessee shall have a right to obtain, in accordance with the provisions of s 63(4) of the Land Act 1948 a new lease of the land hereby leased at a rent to be determined in the manner prescribed by Part VIII of the Act for a term of thirty-three years computed from the expiration of the term hereby granted and subject to the same covenants and provisions as this lease including this present provision for the renewal thereof and all provisions ancillary or in relation therein.

[54] We are unable to accept Mr Radich’s submissions in this regard. Section 125, as a statutory provision, is always speaking, in accordance with s 6 of the Interpretation Act 1999. Section 125 applies when the lease is renewed, as a statutory provision, as well as a provision incorporated in the lease by sub-clause (e). At that point, by the operation of the section as a statutory provision, it applies “notwithstanding anything contained in [the] lease”. The right conferred by s 125 is to be granted a renewal lease in accordance with the appropriate provisions of the Act, as they stand at the time of renewal. We note that, on that view of s 125, there is congruity between that section and the various savings provisions, the effect of which is, broadly speaking, to apply amendments from the end of the current 33 year term.
[55] Those conclusions are sufficient to answer issues 2 and 3 as set out at [40]. As to issue 2, if the 0.5 per cent rebate was fixed by the Order in Council in force when the lease was entered into in 1962, then that remained in force until the lease was renewed in 1995. The change made by the 1968 Amendment Act did not apply during that initial term, because of the saving provision in s 7 of the 1968 Amendment Act. So, whether cl (e) of the lease “locked in” the relevant provisions or whether those were subject to change as the Act was amended, the Order in Council continued to apply throughout the first 33 year term. As to issue 3, when the lease was renewed in 1995, the terms were modified so as to reflect s 85 as it stood in 1995. That result follows from the operation of both s 7 of the 1968 Amendment Act, and s 125 of the Act. That means that there is no longer any rebate applicable under s 85 of the Act, since none has been fixed by the Minister of Finance under that section.

(c) Other lease and legislation issues

[56] Since there is no longer a covenant in force to allow a rebate under s 85, it is unnecessary to consider issues 4, 5 and 6. In particular, it is unnecessary to consider whether such a covenant would be personal to the Crown or whether it would run with the reversion. That is the principal issue addressed by the Associate Judge, but, on the rather different way the case was argued before us and on the conclusions we have reached, it does not arise. It is also unnecessary to consider whether Quay Lease as the current lessor should be substituted for any reference to the Crown or its representatives throughout the lease. Nor is it necessary to address the consequences of the fact that the leased land is no longer Crown land as defined in the Act.
[57] Successive Ministers of Finance have obviously chosen, since 1968, not to exercise the power to grant rebates for timely rent payments. So far as we are aware, no one has challenged the failure to exercise that power. After more than 40 years of inactivity it is presumably unlikely that any future minister will choose to exercise the power, unless perhaps compelled to do so following a successful judicial review application. That unlikelihood is increased by the complications presented by the fact that, as in this case, some of the land to which a rebate would potentially apply is no longer owned by the Crown. We consider it imprudent to express any views on that topic in the present proceeding. The fact that the power had not been exercised has only recently come to the parties’ attention and Shell has not challenged the failure on the part of successive ministers to exercise the power. The fact of the matter is that Shell has had no entitlement to a rebate since the renewal of the lease in 1995.
[58] It is similarly unnecessary for us to consider the appellant’s submission that Shell has, by its application to Quay Lease for consent to grant security, substituted Quay Lease for the Land Settlement Board.

(d) Estoppel

[59] The final issue is whether Shell is entitled to advance an estoppel argument and if so whether Quay Lease is estopped from denying the existence of the rental rebate. As the foregoing discussion shows, all of the parties involved with this lease have, from its inception in 1962 until applicability of the rebate was disputed by Quay Lease in 2007, proceeded on the assumption that a prompt payment rebate applied to the lease. That assumption was, as we have held, a mistaken one, at least since 1995. The essence of Shell’s contention on this issue is that Shell should be entitled to the continued benefit of the rebate which all parties have treated as applicable. Shell seeks to categorise its claim as arising from an estoppel. That might be the appropriate legal categorisation in which to consider Shell’s proposition. It is also possible that it raises issues more appropriately addressed under some other legal categorisation. It may raise issues under the Illegal Contracts Act 1970, in that the position for which Shell contends might raise issues as to whether the lease complies with s 81(2) of the Act, which requires every lease to be not inconsistent with the Act. It might equally be possible that the parties’ mistaken (as we have held) assumption as to the rebate may bring into play the Contractual Mistakes Act 1977.
[60] The first question is whether Shell should be allowed to raise this aspect of the case. The Court will ordinarily take a restrictive approach to applications by parties who seek to alter the basis of the case on appeal.[3] This case has evolved considerably as it has progressed. The argument before us was considerably different from that in the High Court. The argument presented to us by Quay Lease developed significantly between the initial submissions and the reply. In those circumstances it would be unreal and unfair to confine the parties to the initial arguments, and to the evidence adduced as relevant to the matters in issue on the summary judgment application. For these reasons, we think that Shell should be permitted to raise the issues which it seeks to raise.
[61] However, we do not consider that it is appropriate for us to resolve those issues on this appeal. They will require more argument than we have heard. Additional evidence may be relevant. The issues are not suitable for resolution on an appeal from a summary judgment decision.
[62] The existence of these possible issues precludes the granting of summary judgment to either party. Accordingly, the appropriate disposition of this appeal is that the appeal is allowed. The summary judgment entered in favour of the respondent is quashed. The order for costs made in the High Court is quashed. In accordance with the usual practice, costs in that Court are reserved.
[63] The appellant is entitled to costs in this Court for a standard appeal on a band A basis and usual disbursements. We certify for second counsel.

Solicitors:
Hornabrook Macdonald Lawyers, Auckland for Appellant
Minter Ellison Rudd Watts, Wellington for Respondent

[1] Quay Lease Ltd v Shell New Zealand Ltd HC Auckland CIV-2009-404-1930, 15 December 2009.
[2] P & A Swift Investments (a firm) v Combined English Stores Group PLC [1988] 2 All ER 885.

[3] Paper Reclaim Ltd v Aotearoa International Ltd (Further Evidence) (No 2) [2007] 2 NZLR 124 at [15]-[16].

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