Alexander Road Developments Limited v Thompson HC Wellington CIV-2009-485-1810

[2010] NZHC 2364

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2009-485-1810

BETWEEN  ALEXANDER ROAD DEVELOPMENTS LIMITED

Plaintiff

ANDERIC THOMPSON Defendant

Hearing:         16 November 2010

Appearances: C. Heaton - Counsel for Plaintiff

H. Rennie QC - Counsel for Defendant

Judgment:      30 November 2010 at 11.00 am

JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

This judgment was delivered by Associate Judge Gendall on 30 November 2010 at

11.00 am under r 11.5 of the High Court Rules.

Solicitors:           Morrison Kent, Lawyers, PO Box 10-035, Wellington

Avison Reid, Lawyers, PO Box 30430, Lower Hutt

ALEXANDER ROAD DEVELOPMENTS LIMITED V E THOMPSON HC WN CIV-2009-485-1810  30

November 2010

Introduction

[1]      In  this  proceeding,  the  plaintiff,  Alexander  Road  Developments  Limited, brought an action as vendor seeking specific performance on the part of the first defendant, Mr Eric Thompson as purchaser, of a contract for the purchase of two lots in an industrial subdivision at Alexander Road, Trentham.   The first defendant as purchaser, had purported to cancel the agreement pursuant to s 225 of the Resource Management Act 1991, and the plaintiff disputed that the cancellation was valid.

[2]      The matter was then set down for a Judicial Settlement Conference, which took  place  on  8  July  2010  before  Associate  Judge  Faire.    It  appears  that  the defendant offered to settle the proceedings by entering into a variation of the original agreement to purchase the two lots at an adjusted price being the 2010 current market value. The proceedings were adjourned to allow the parties to execute an agreement  in  settlement.  In  a  minute  dated  8  July 2010  following  the  Judicial Settlement Conference, Associate Judge Faire recorded the settlement reached in the

following terms:

1.	The parties have settled this proceeding.
2.	The  settlement conference  memoranda and  the  agreement recording the settlement are to be placed in a sealed envelope and kept on the court file and not to be opened without order of the court.
3.	The  proceeding  is  adjourned  for  a  telephone  conference  at  9am  on  6 September 2010. If counsel file a joint memorandum by 2 September 2010 confirming that the settlement agreement is still on track and indicate any further  appropriate  review  date  for  this  proceeding  appearances  on  6 September  2010  are  likely  to  be  excused  and  a  further  review  date conference will be fixed.
[3]	The	typed  settlement  agreement  dated  8  July  2010  (“the  Settlement

Agreement”) was placed in the Court’s sealed envelope.  Specifically, clause 10 of the Settlement Agreement provided:

10.       The terms of this agreement are conditional on the consent and approval of Westpac New Zealand Limited within ten working days of Westpac obtaining a copy of the agreed market valuation for the land.

[4]      As  it  happens,  the  Settlement  Agreement  was  never  performed.     The defendant now seeks costs, contending that the proceedings have come to an end,

while  the  plaintiff  maintains  first,  that  the  proceedings  were  only  conditionally settled by the Settlement Agreement, secondly, that the condition was not satisfied and thirdly, that the proceedings therefore remain on foot.

The Settlement Agreement

[5]      The  Settlement  Agreement  required  a  number  of  steps  to  be  performed, including the appointment of two valuers who would determine an agreed market value of the two properties. Pursuant to those terms, the plaintiff and the defendant each appointed a valuer and obtained a valuation report for the properties.

[6]       However, on 1 September 2010, the defendant advised the plaintiff that Mr Simpson, the plaintiff’s valuer, was unable to meet with the defendant’s appointed valuer because he apparently did not have instructions to discuss the valuation.  On 6

September 2010, this Court gave directions by consent that the valuers were to meet and attempt to reach an agreement as to the valuations for the two properties.   It seems those directions were not complied with.

[7]     When the plaintiff nevertheless went ahead and provided copies of the Settlement Agreement and the two valuations to Westpac, the bank said that it would not consent to the terms of the Settlement Agreement or to the price, and this was regardless of which of the two valuations was adopted.

[8]      On 20 September 2010, the plaintiff wrote to the defendant to inform him that Westpac would not consent to either of the market valuations which might be agreed in terms of the Settlement Agreement and that there was therefore little point in asking the valuers to confer as directed.  The defendant subsequently purported to cancel the Settlement Agreement pursuant to s 7 of the Contractual Remedies Act

1979.

[9]      The  defendant  now  submits  that  all  of  the  parties’  obligations  are  now contained in the Settlement Agreement, and that the prior proceeding concerning the original disputed sale and purchase agreement for the two sections is at an end. He claims that he was entitled to cancel the Settlement Agreement because the plaintiff repudiated that agreement by:

(a)Not instructing its valuer to meet with the defendant’s valuer and thereby ensuring that no “current market value” could be determined;

(b)       Not complying with this Court’s direction of 6 September 2010 that the valuers’ meeting pursuant to the settlement agreement was to take place by

13 September;

(c)        Failing to comply with clause 3 of the settlement agreement so that a

“current market value” could be ascertained;

(d)       Obtaining and adopting and seeking to implement a “decision” of Westpac when that bank at that time had no right to make any decision;

(e)       Failing to obtain and present a “current market value” to Westpac and to obtain its approval (or otherwise) of such value as agreed in the settlement agreement.

[10]     The defendant contends that the only issue remaining live in the present proceeding is the issue of costs.  He maintains he is entitled to costs here generally and pursuant to cl 11 of the Settlement Agreement.

[11]     The plaintiff’s position, on the other hand, is that the Settlement Agreement was always conditional on Westpac’s consent or approval, and that this condition has not been satisfied. According to the plaintiff, therefore, the proceeding must remain unresolved and on foot.

Discussion

[12]     It is helpful to emphasise, as a preliminary point, that at this stage, the present proceeding has not been formally dismissed or discontinued. The 8 July 2010 Minute of Associate Judge Faire clearly records that the proceeding was settled, but the Judge did not make orders in terms of the parties’ Settlement Agreement. Instead, he adjourned the proceeding. The defendant does not appear to dispute this. In Rofa Sport Management AG v DHL International (UK) Ltd [1989] 1 WLR 902, the Court of Appeal held that a stay of proceedings was not equivalent to a dismissal or discontinuance, and that an action in which all further proceedings had been stayed by settlement could not properly be regarded as dead. The present situation could in some way be seen as analogous to that in Rofa Sport Management AG.

[13]     Consequently, the real question here is whether, as a matter of contract, the parties entered into a Settlement Agreement that has brought the proceeding to an

end. In Green v Rozen [1955] 1 WLR 741, referred to in Divett v Skeates (2010) 19

PRNZ 653 at 657-8, Slade J held that where there is no order of the court, the court merely being told that the case has been settled:

... the court has no further jurisdiction in respect of the original cause of action, because it has been superseded by the new agreement between the parties to the action, and if the terms of the new agreement are not complied with the injured party must seek his remedy upon the agreement.

[14]     And,  in  Coromandel  Marine  Farmers  Association  (Inc)  v  The  Waikato Regional Council HC Auckland CIV-2004-485-2004, 5 October 2005, Randerson J concluded that he did not have jurisdiction to resume and consider the merits of an appeal that had been adjourned following settlement between the parties. Randerson J noted that he had not envisaged the settlement to be conditional (at [6]), and found that a settlement had clearly been reached.

[15]     However, where a Settlement Agreement itself is in issue, the court must still be in a position to determine whether the proceeding has in fact been brought to an end by agreement between the parties. In Raiser Developments Ltd v Trefoil Properties Ltd HC Auckland CIV-2005-404-5859, 16 November 2006, for example, Associate Judge Faire found that it was arguable that the agreement which was the subject of the proceedings had not been discharged by a settlement agreement, for the purposes of determining an application for an order that a caveat not lapse. Other examples are Corbett v Bolesworth HC Auckland CIV-2005-404-7172, 9 September

2009, where Woodhouse J held that a settlement memorandum constituted a binding agreement and that the plaintiff’s claim should thus be struck out, and Blenheim Lifestyles  Ltd  v Neumegen  & Co  HC  Blenheim  CIV-2004-406-128,  14  October

2008.

[16] The plaintiff submits that settlement here was conditional on the approval of Westpac Bank in accordance with cl 10 of the Settlement Agreement outlined at [3] above, and that this condition remained unfulfilled. The Settlement Agreement therefore came to an end, reverting the parties to their rights under the original unvaried sale and purchase agreement. The defendant in response claims that the plaintiff repudiated the Settlement Agreement. These issues are clearly of substantive significance and, in my view, cannot be appropriately resolved in the

context of what is here effectively an application for costs by the defendant. The issues raised by the parties’ respective positions seem to be whether the Settlement Agreement was conditional, whether the condition was ever satisfied or whether there were even reasonable attempts made to satisfy the condition, and therefore whether the Settlement Agreement effectively discharged the previous sale and purchase agreement and brought the present proceeding to an end.

[17]     It seems that the defendant may have several options open to him to resolve this matter. He could seek to have the matter determined by way of r 10.15, which provides that the court may make orders for the decision of any question separately from any other question before trial. This was the approach taken in Corbett v Bolesworth HC Auckland CIV-2005-404-7172, 26 November 2008 and in Blenheim Lifestyles  Ltd  v  Neumegen  & Co.    Alternatively,  the  defendant  could  bring  an application for summary judgment or even for strike-out.

[18]     So far as the plaintiff is concerned, it could simply take the position that its original proceeding remains on foot and put this to the test by endeavouring to proceed to trial.

[19]     Any of these approaches would clearly bring these matters to a head and allow them to be properly argued and considered by this Court.  To endeavour to do so under the guise of a costs application as the defendant has attempted here is not appropriate.

Conclusion

[20]   For the reasons outlined above, the defendant’s application for costs is dismissed.

[21]     A direction is now made that this matter is to be listed for a call in the Associate Judge’s Chambers List at 10.00 am on 26 January 2011 to timetable what further steps may be required in this proceeding.

‘Associate Judge D.I. Gendall’