Onehunga palm growers declined appeal against KiwiRail rent hike, claim of 'corrupt' rate argument rejected

Brent Hubbard and Harley Haynes leased KiwiRail land. Photo/Dean Purcell

The Court of Appeal has declined to host another round of the long-running battle between two Auckland palm growers and KiwiRail over rent on an Onehunga property.

Justice David Collins delivered the latest blow to Oceanic Palms' directors Peter Brent Home Hubbard and Harley Haynes, declining their application filing for appeal.

This is the most recent court action in a protracted dispute beginning in 2015, when KiwiRail increased the rent on its Alfred Street property, leased by Oceanic Palms, from $37,000/year to $100,000/year.

Oceanic Palms refused to pay the increased rent and took unsuccessful legal action against KiwiRail, which said it must take a commercial approach to its ownership of 17,800ha of land.

Brent Hubbard and Harley Haynes. Photo / Dean Purcell

The palm growers wanted to argue in court that the rent increase was unreasonable and the valuation 'corrupt'.

However, the judge said there was an "absence of any merit to the appeal" as the court has already ruled on the rent increase.

"The valuation relied upon by KiwiRail was, however, found to be reasonable by this court," Collins wrote.

In May last year, KiwiRail chief financial officer Kate Jorgensen said the enterprise was "owed approximately $240,000 by Oceanic Palms after the business failed to pay its lease".

KiwiRail's application to have Oceanic Palms liquidated to recover the unpaid rent was successful and lawyers for the entity told the court that Oceanic's assets had now been sold.

"The appeal is now likely to be moot as the liquidation of Oceanic Palms is almost complete," Collins wrote.

Last year, Oceanic Palms liquidator Andrew McKay of BDO in Auckland said plants valued at an average $8000 each could be given away because they were now under his control.

He was reacting to an offer from Hubbard and Haynes to give away their palms after their company failed.

"They're the assets of the company and we will be dealing with them accordingly. The plants are secured in a yard which they can't get into because they've been locked out so they can't get to the trees to give them away," McKay said last year.

Hubbard and Haynes were on KiwiRail land. Photo / supplied

His comments follow statements from the two men who lost three court battles against their landlord KiwiRail. They said they wanted to give away palms - but KiwiRail also says the men are barred from giving away any plants on its land.

The palm growers said 130 plants were still on the site - land they rented from KiwiRail for years - but they now want councils, botanic gardens or other organisations to take them. Hubbard said they had already given away about 35 of their plants but 130 palms around 2-5m high had an average market value of $8000. Their free palm offer ends a long-running saga where the men who represented themselves in court lost at each round.

On October 6, the Supreme Court rejected their attempt at action against KiwiRail. The palm men wanted to challenge a Court of Appeal decision which they lost last year. The Supreme Court said no because there was nothing to suggest the appeal court's decision was wrong.

Oceanic had operated its business from the 4985sq m leased site of nearly half a hectare at 44a Alfred St, the court said, although Hubbard said they had initially leased a smaller plot in 2000. KiwiRail sought a rent raise in 2014 because the men were paying below the market rate. It gave them notice in 2014, the Supreme Court said, seeking $123,200 annually.

Each side engaged valuers and after consultation, they said the rent should be $100,000 a year. The palm men rejected that and wanted to pay their original rent.

Oceanic sold palm trees. Photo / Tania Whyte

The Court of Appeal said the men initially got the land rent-free in 2009 for the first three months. In fact, in a reverse landlord-tenant relationship, KiwiRail actually had paid the men $20,399 for work they did to the Onehunga site, including cutting down trees and putting up fences, the court noted.

By 2010, the rent was struck at $34,300/year but at that rate, KiwiRail said it was "not the current market rent and there is a concession granted to Oceanic Palms". The rent rose to $37,502 a year in 2013. A year later, KiwiRail said it had determined the market rent was $123,200/year then gave notice in September 2015 it intended to cancel the lease.

The palm men went to the High Court in 2016, asking Justice Fogarty to prevent the rent rising by more than 50 per cent. The Supreme Court summed up that case.

"The High Court rejected Oceanic's application for relief against forfeiture of the lease but Oceanic was given an opportunity to avoid cancellation of the lease by, within one calendar month from the date of delivery of the judgment, paying KiwiRail the arrears of rent and disputing the rent formally so that it could be submitted to arbitration. Oceanic took neither of these steps," it said.

Hubbard told the Herald: "Regardless of the right or wrongs of the purported debt and the contract, we are offering to give away a substantial quantity of palms to botanic gardens and councils around the country."