High Court Clarifies Procedure For Interim Relief For Disputes Pending Arbitration

The High Court has clarified the procedural steps in relation to staying court proceedings pending arbitration under a contractual provision, as well as the availability of interim relief for plaintiffs in those circumstances in Pindur v Koffeman [2025] NZHC 3458.

Background to the dispute

The dispute arose between two neighbours who each owned an undivided one-half share of a parcel of land, on which they each had the right to occupy a flat and an area of land under a cross-lease arrangement. The defendants began construction of a new dwelling on their portion of the land. The plaintiffs then issued the proceeding, alleging that the construction was in breach of the defendants' lease, which prohibited any structural additions to the dwelling without the plaintiffs' consent as lessors.

The plaintiffs sought an interim injunction preventing the defendants from undertaking further building work, while the defendants sought to have the proceeding stayed so that the parties' dispute could be determined by an arbitrator under the lease's arbitration clause.

The High Court's decision

Justice Lang made two orders. The first was to stay the plaintiffs' proceedings and refer the dispute to arbitration, in accordance with the lease provision. The second was an interim order prohibiting the defendants from taking any further steps towards completing construction of the new dwelling until the decision from the arbitration is made.

Stay of proceedings under the Arbitration Act

A stay of proceedings operates to effectively postpone the dispute to be heard by the court at a later date. Clause 26 of the lease stipulated that any dispute between the parties must be referred to arbitration. Article 8 of Schedule 1 to the Arbitration Act 1996 (Act) provides that a court shall stay proceedings and refer the parties to arbitration where those proceedings concern a matter which is the subject of an arbitration clause in an agreement.

The Court found that there was a live dispute between the parties and therefore stayed the proceeding so that the parties could have their dispute determined by arbitration. This confirms the jurisdiction of the High Court to stay proceedings brought before it where the parties to those proceedings have contracted to arbitrate disputes between them in the first instance.

Interim relief pending arbitration

The Court's focus then shifted to whether interim relief was available to the plaintiffs even though the proceeding was stayed. Articles 9 and 17 of Schedule 1 to the Act confirm that a court granting an interim measure before or during arbitral proceedings is not incompatible with an arbitration agreement between the parties.

After establishing jurisdiction to make the order, Lang J then set out that the test for interim relief in this context is the same as for an interim injunction. The test for an interim injunction involves an assessment of:

• whether there is a serious question to be tried;
• where the balance of convenience lies; and
• where the interests of justice lie in the case.

The issue of a serious question to be tried was disposed of easily, given that the plaintiffs strongly denied the defendants' claims that the works had been consented to.

In assessing the balance of convenience, the Court first considered the lack of evidence for the defendants' contentions to be relevant to proving the prima facie merits of the plaintiffs' claim. Lang J then found that the defendants permitting work in circumstances where they arguably knew they did not have the required consent from the plaintiffs was a factor in favour of granting interim relief. After establishing that the plaintiffs did not delay in applying for injunctive relief against the defendants' construction works, the Court considered the prejudice to each party if an order for interim relief was made or not. Ultimately, if an order was made, the defendants' losses in rent and holding costs would be easily quantifiable. Conversely, if not granted, the defendants would likely complete construction and the plaintiffs' only compensation would be monetary.

The Court is ultimately concerned with protecting the status quo in the interests of justice for both of the parties going to arbitration. Lang J advised the parties to attempt to resolve their dispute through further discussion or mediation to avoid the costs and stress of contested litigation. This remark emphasises the importance of alternative dispute resolution procedures to resolve disputes in a way that is in the best interests of the parties.

Key takeaways from the decision

The decision clarifies the procedure for disputes where parties have agreed to arbitration:

• Any proceeding brought before the court will be stayed so the parties can go to arbitration first.
• If a party seeks an injunction in the meantime before and during arbitration, it may go to the court to apply for it.
• The conduct of the parties to the dispute will be relevant to the granting of any relief.
• The party must have a strong evidentiary basis for seeking any interim relief from the court.
• Parties should not delay in bringing proceedings once aware of the dispute.
• The granting of any relief will depend on an assessment of any prejudice to the relevant parties.

Wynn Williams has previously acted in a similar dispute on behalf of the defendants to successfully oppose an interim injunction being granted. In Foundation Village Ltd v Growing Spaces Ltd [2023] NZHC 2638, the Court found that granting interim relief would effectively pre-empt the arbitrator's decision and resolve the dispute for the plaintiff. The availability of interim relief in disputes of this kind depends on the nature of relief sought, whether it will protect the status quo between the parties, and whether it is consistent with the application of the Act.

Arbitration agreements are an effective way to resolve disputes before any complex litigation may arise. However, relief from the court to preserve the status quo is still available to the parties to such agreements.

If you would like any advice on or assistance with a dispute, or anything raised in this article, please get in touch with the team at Wynn Williams.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.