Since the Supreme Court decision in Zurich v Cognition [2014] NZSC 188, the two sides of the same coin approach applicable to summary judgment proceedings adopted in the UK, when it had a similar provision in its Act, has been debunked. Quoting from the provisions of article 8, Justice Arnold confirmed that a stay must be granted in any court application (where there is an agreement to arbitrate in place), unless (1) the agreement to arbitrate was invalid for some reason, (2) the defendant was not acting bona fide in asserting that there was a dispute, or (3) there was, in reality, no dispute. Whether or not the dispute had any merit is not, following the Supreme Court's judgment, a relevant issue.
It is only once that analysis is concluded, and a stay refused, that the court could then go on to consider whether or not there is an arguable defence which could resist summary judgment.
Linco Properties v Townhouse Motel [2020] NZHC 2404 concerned the lease of a motel in Timaru. The landlord claimed over $65,000 in rental arrears, which was the subject of the application for summary judgment; the defendant claimed that there was an agreement to arbitrate in the lease and the parties were in dispute over the fair rental for the premises.
The High Court held that there was no dispute to which the arbitration agreement could attach. The parties may be in discussion over a rent reduction, to enable the tenant to sell the business, but that was not a discussion which had legal consequences on the tenant's obligation to pay the rent which was due. This may be a specious analysis, as any agreement to reduce the rent would obviously have legal consequences, the analysis must be correct. Any such negotiation would need to be undertaken in the context that there was a legal obligation which the landlord was entitled to enforce.
The arbitration agreement, in that context, was inoperative.