Attorney-General v Barker Bros Ltd

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Attorney-General v Barker Bros Ltd
Coat of arms of New Zealand.svg
Court Court of Appeal of New Zealand
Full case nameAttorney-General v Barker Bros Ltd
Decided17 June 1976
Citation(s)[1976] 2 NZLR 495
Court membership
Judge(s) sitting Richmond P, Woodhouse J, Cooke J
Keywords
contract formation, certainty

Attorney-General v Barker Bros Ltd [1976] 2 NZLR 495 is a cited New Zealand case regarding the legal concept of certainty regarding contract formation. [1] [2] It reinforces in NZ case law the English case of G Scammell & Nephew Ltd v Ouston [1941] AC 251.

G Scammell and Nephew Ltd v HC&JG Ouston [1941] 1 AC 251 is an English contract law case, concerning the certainty of an agreement. It stands as an example of a relatively rare case where a court cannot find some way in which a contract can be made to work.

Contents

Background

The crown leased an airstrip in Te Hapupu, Chatham Islands from Barker Bros for a term of 5 years, with the lease giving the crown a right of renewal. Clause 2 stated "The terms and conditions of any such renewal renewed lease shall be as agreed upon the parties at the time, but the [renewed] rent shall not be less than the amount payable hereunder". Unfortunately, the lease gave no explicit method to calculate the new rent if the lease was later renewed.

Chatham Islands New Zealands most remote group of inhabited islands

The Chatham Islands are a New Zealand archipelago in the Pacific Ocean about 800 kilometres (500 mi) east of the South Island of New Zealand. The archipelago consists of about ten islands within an approximate 60-kilometre (37 mi) radius, the largest of which are Chatham Island and Pitt Island. Some of these islands, formerly cleared for farming, are now preserved as nature reserves to conserve some of the unique flora and fauna. As of 2013 the islands had a resident population of 600. The local economy depends largely on conservation, tourism, farming, and fishing.

However, clause 18, was an arbitration clause which said "In the case of any difference or dispute arising as to any clause, matter or thing herein contained or implied, or by arising in any way in respect of this deed such difference or dispute shall be decided by ... [arbitration]".

Arbitration Mediated dispute resolution method

Arbitration, a form of alternative dispute resolution (ADR), is a way to resolve disputes outside the courts. The dispute will be decided by one or more persons, which renders the "arbitration award". An arbitration award is legally binding on both sides and enforceable in the courts.

When the crown later tried to renew the lease, Barker Bros tried to substantially increase the rent from $6,750 per year, to $13,000, which the crown found was excessive and refused to pay. Barker Bros, then argued the lease had now ended, whilst the crown argued the dispute should be referred to arbitration, as per clause 18 of the lease agreement.

As a result, the crown sought a declaration from the court to have the matter referred to arbitration, which Barker Bros defended (successfully) that the lease renewal clause lacked certainty i.e. a mechanism to set the new rent, making it an incomplete contract and thus legally unenforceable.

The crown appealed.

Held

The Court of Appeal ruled that the contract could be renewed, as the new rental could be set via arbitration, as per the lease's arbitration clause. Barker's previous declaration was set aside.

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Arbitral tribunal a panel of adjudicators to resolve a dispute by way of arbitration

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References

  1. Chetwin, Maree; Graw, Stephen; Tiong, Raymond (2006). An introduction to the Law of Contract in New Zealand (4th ed.). Thomson Brookers. p. [ page needed ]. ISBN   0-86472-555-8.
  2. Walker, Campbell (2004). Butterworths Student Companion Contract (4th ed.). LexisNexis. p. 31. ISBN   0-408-71770-X.