Brent Hubbard and Harley Haynes. Photo / Dean Purcell
Brent Hubbard and Harley Haynes. Photo / Dean Purcell
KiwiRail is out of pocket by more than $565,000 from a dispute with two palm growers who refused to pay rent they owed the state-owned enterprise for Auckland land they once rented.
The rail company has revealed the cost of its battle against Brent Hubbard and Harley Haynes of OceanicPalms: $240,000 lost rent, $172,000 in the lease dispute and $153,000 to attempt to recover money.
Hubbard and Haynes once grew their plants on surplus KiwiRail land at Onehunga near the railway line. But when they didn't pay the rent, KiwiRail had their company liquidated and then tried to get the money back.
Hubbard and Haynes have for years tried to challenge that, claiming Oceanic Palms was solvent and they disputed KiwiRail's claim for back rent - and even trying to undermine the liquidation process by attempting to give their palms away.
Kate Jorgensen, KiwiRail chief financial officer, told the Herald in 2018 that the enterprise was "owed approximately $240,000 by Oceanic Palms after the business failed to pay its lease on commercial land in Onehunga. We have been through several legal processes to retrieve this debt".
The parties went through many hearings in the High Court, Court of Appeal and Supreme Court, forcing KiwiRail to hire legal experts. The self-represented Hubbard and Haynes lost litigation, with the Supreme Court's patience being exhausted after the palm growers tried seven times for extensions pre-hearing.
Under the Official Information Act, the Herald asked KiwiRail how much the SOE had been forced to spend on the matter.
The rail company has revealed the cost of its battle against Brent Hubbard and Harley Haynes of Oceanic Palms.
A response issued said that on external counsel KiwiRail has spent: $172,347 on the lease dispute, which included:
• A rent review process leading to the valuers agreeing a market rent for the property occupied by Oceanic Palms;
• Issuing Property Law Act notices;
• Responding to the Oceanic Palms' application for court orders restraining the rent increase. This application included 16 different grounds none of which succeeded in the High Court, KiwiRail said;
• Responding to the appeal from that judgment.
KiwiRail had to spend a further $153,406 to enforce rent arrears and regain vacant possession, which it said included:
• Negotiations with Oceanic Palms on timeframes for them to vacate the site;
• Responding to numerous applications, be they for stays or other orders, appeals, and numerous memoranda from the other side;
• Responding to two different ancillary proceedings, a judicial review and an application to the High Court for documents.
"Due to the nature of the dispute, much of the litigation was handled by our external counsel, Russell McVeigh, although internal counsel was in an oversight role during this matter," the SOE said.
But the true cost to the state-owned business is actually far higher than $565,000.
"We do not hold figures for the numbers of hours spent by internal counsel on this matter, as they do not time sheet their hours on civil claims, nor does KiwiRail have a corporate recovery charge that is specifically applied to individual cases of this nature.
"However, we do note that this was an extended process which would have required many hours of work over not just our internal counsel, but also our property team and communications team to process Official Information Act requests and correspondence sent to ministers," the SOE said.
Costs have been awarded to KiwiRail in several of the judgments against Oceanic Palms, and KiwiRail has sought to recover costs and rental debts incurred by Oceanic Palms.
"As a necessary step to recover costs, KiwiRail applied to liquidate Oceanic Palms, with an application to proceed to liquidation, and appoint a liquidator taking place in early 2018.
"In later appeals, KiwiRail has sought security for costs, and they have been awarded against the appellants - Oceanic Palms, Hubbard and Haynes in their personal capacities," KiwiRail said.
"We note in the latest judgment, the Supreme Court did not make any order as to costs, and as legal proceedings with Oceanic Palms have been lengthy and we are pleased to see them concluded, we do not intend to make any claim as to costs in this matter," the SOE said.
Another aspect of the case which had not been quantified was the loss of potential earning from the valuable site while the palm growers were occupying it and not paying rent.
Asked for their opinions about the process, Haynes and Hubbard told the Herald this month: "We strongly disagree with the judgment of the Court of Appeal and the recent Supreme Court judgment."
They object to valuation on the land they once rented, cited other cases and said KiwiRail should have behaved differently towards them and other people.
They remain convinced they are right and KiwiRail is wrong, despite all the court decisions which went against them.
