POWERS OF COURT

Dominion, Volume 37, Issue 65, 11 December 1943, Page 8

POWERS OF COURT

Fixing Fair Rent Above Basic Rent FULL BENCH OPINION The power of the Supreme Court ou an application under the Economic Stabilization Emergency Regulations, 1942, to fix a fair rent in excess of the basic rent fixed by the regulations and. if so, what principle or principles should be followed, were questions dealt with by the Full Court in judgments given in Wellington yesterday* . The Otago Harbour Board (plaintiffs) as landlord of certain land in Dunedin, applied under the regulations for an order determining the fair rent of land ot which Mackintosh, Caley, Phoenix, Limited (defendants) are tenants. As the quest.jpns involved were of general importance, and there is no right of appeal, it was arranged between Mr. Justice Northcroft, to whom the application was made, and counsel, that the questions of law be brought before a full bench of judges for consideration and determination. . Defendants held the land under 14 years’ lease from 1929 at 1612 per annum. That was reduced by the National Expenditure Adjustment Act. 1932, by 20 per cent., to £489. This reduced sum had continued to be paid and was the actual rental on September 1. 1942. The term expired on June 30, 1942. In accordance with the terms of the lease valuations were then made and the fair annual ground rent fixed at £6BO. A lease for a further 14 years’ term was purchased at public auction by defendants in May, 1943. Though the rent for the new term was fixed at £6BO. nevertheless only £489 was payable, this being the basic rent under the regulations, unless plaintiff could obtain an order fixing the fair rent at an amount in excess of that. The Chief Justice stated that there was no doubt that there was power to fix a fair rent in excess of the basic rent, but this was the exceptional case, not the normal. This raised the second question of the principle or principles to be followed in fixing the fair rent. _ The answer to that depended on the interpretation of regulation 16 (subclause 2) which made it plain that there might be cases in which the freezing of rents at September 1, 1942, was not to apply That was the exceptional case. Mr. Justice Blair, Mr. Justice Northcroft and he had decided on the following as the answer to be given to this question; “The basic rent may be exceeded only if upon consideration of all the relevant matters, but disregarding those prohibited by regulation 16.(1) from being taken into account, and having due regard to the general purpose of the regulations, the court is satisfied (the onus on this point being on the landlord) that there are special circumstances which make it fair and equitable in the opinion of the court that the basic rent should be exceeded. It is impossible to lay down a definition of special circumstances. It is fdr the court to decide on the facts of each case whether or not there are ‘special circumstances.’ Mr. Justice Smith, in his judgment, held that there was clearly power to fix a fair rent in excess of the basic rent. Regarding the second question he stated that counsel for plaintiff relied on the award of an umpire as a “special circumstance,” submitting that arbitration was tbe fairest method for determining a rental and that the fairest method, when adopted by the parties, should be regarded as a “special circumstance.” This submittion was not well-founded. The procedure of arbitration, even if it be the fairest, was of much too general use to be a “special circumstance of the case.” But where the award appeared as a consequence of an agreement made between the parties before Sept. 1, 1942, by which they were bound to accept the award as fixing the upset rental for a particular property for a period after Sept. 1, 1942. bis opinion was that if the agreement and the award were not within the proviso to regulation 14 (1) they constituted “special circumstances of the case” for the purpose of regulation 16. They were matters of fact belonging to the particular case where which were not excluded by regulation 16 (1) and which indicated, as between the parties, that the fair rent should exceed the basic rent. Whether this special circumstance, by itself, or in combination with other special circumstances of the case would be sufficient to justify the court that there should be an upward adjustment of the basic rent was another matter. The agreement and the award might be criticized and weighed because the court, which had to consider the public interest as well as the rights of the parties, could not be bound by them. The result would depend on the conclusion reached by the court when it applied the principles for determination under regulation 16.