Argosy Property no.1 Limited v Spire Kool Limited

[2019] NZHC 3014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-1118

[2019] NZHC 3014

BETWEEN

ARGOSY PROPERTY NO. 1 LIMITED

Plaintiff

AND

SPIRE KOOL LIMITED

Defendant

Hearing:

16 October 2019

Appearances:

M A Keil for the Plaintiff

No appearance by or on behalf of the Defendant

Judgment:

19 November 2019

JUDGMENT OF POWELL J

This judgment was delivered by me on 19 November 2019 at 3.30 pm pursuant to R 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors/Counsel:      Ellis Gould Lawyers, Auckland

M A Keil, Shortland Street, Auckland

ARGOSY PROPERTY NO. 1 LIMITED v SPIRE KOOL LIMITED [2019] NZHC 3014 [19 November 2019]

[1]    The plaintiff, Argosy Property No. 1 Limited (“Argosy”), seeks summary judgment against the defendant, Spire Kool Limited (“Spire Kool”). Specifically, Argosy seeks specific performance of an agreement for sale and purchase by Spire Kool requiring it to complete the purchase of a property at 1478 Omahu Road, Twyford, Hastings (“the property”).

[2]    Although Spire Kool have taken no steps to defend these proceedings the Court must still be satisfied it is appropriate to grant summary judgment and in particular specific performance.

Legal principles

Summary judgment

[3]    The plaintiffs must satisfy the court that the defendants have no defence to their claims. The established principles in relation to summary judgment were summarised by the Court of Appeal in Krukziener v Hanover Finance Ltd:1

[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

Specific performance

[4]    In Perkins v Purea, Asher J emphasised the discretionary nature of the equitable remedy of specific performance where he said:2

Specific performance is equitable in origin. The normal remedy for breach of contract is recovery of damages. It has been described as an exceptional

1      Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162.

2      Perkins v Purea (2008) 9 NZCPR 266 at [114].

remedy, which is available to ensure that justice is done (Co-Operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 at p 11; Attorney-General for England and Wales v R [2002] 2 NZLR at p 120). It has been emphasised that specific performance is not available as of right. The judicial discretion to award the remedy must be exercised in a principled way. It has also been held that the effect of a remedy on a third party can be a relevant factor in relation to the granting of specific performance (Butler v Countrywide Finance Ltd [1993] 3 NZLR 623).

[5]    An order for specific performance will not be granted if a defendant can rely on one of the established equitable defences and that even outside the establishment of an equitable defence, the court retains a discretion to withhold making an order where there are “sufficient reasons of conscience or expediency against it.”3 In deciding whether to grant specific performance, the court may also consider hardship to third parties.4

What has happened?

[6]    The affidavit of Saatyesh Bhana, the asset manager of Argosy confirms that Argosy is the owner of the property, currently leased to Everest Kool Property Limited (“Everest Kool”).

[7]    On 15 October 2018 Spire Kool, a company based in London, signed an agreement for sale and purchase in respect of the property. This was countersigned by Argosy on 30 October 2018 after Spire Kool’s New Zealand solicitor, David Quigg, wrote on 29 October 2018 confirming a number of changes to the agreement for sale and purchase. Together the agreement for sale and purchase and the letter of 29 October 2018 make up the contract between the parties (“the agreement”).

[8]    The key terms of the agreement were that Spire Kool would purchase the property from Argosy for the sum of $10,200,000 (plus GST if any). The settlement date was set for 27 March 2019 but clause 3.16 of the agreement provided:

In every case, if neither party is ready, willing, and able to settle on the settlement date, the settlement date shall be deferred to the third working day

3      Peter Blanchard (ed) Civil Remedies in New Zealand (2nd ed, Thomson Reuters, Wellington, 2011) at 360.

4      Andrew Butler Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [24.4.5] and [24.4.5].

following the date upon which one of the parties gives notice it has become ready, willing, and able to settle.

[9]    The agreement was conditional upon Argosy’s board of directors approving the sale of the property within 10 working days of the date of the agreement, and this was satisfied on 30 October 2018 when Mr Bhana notified Spire Kool by email that the board of Argosy had given its approval.

[10]   Although the deposit provided for in the agreement, totalling $1,000,000.00, was not paid on the due dates, Argosy took no steps to cancel the agreement and, on the contrary, undertook discussions with Spire Kool as to whether Spire Kool wished to make application to vary the agreement. In the event no offer to vary the agreement was made by Spire Kool, but settlement did not proceed on 27 March 2019 because neither party was ready, willing or able to settle on that date.

[11]   Instead, on 28 March 2018, Argosy’s solicitors wrote to Mr Quigg pursuant to clause 3.16 of the agreement advising that settlement date was deferred to 2 April 2019. In a response the same day Mr Quigg advised:

Thanks for you email and fax. Our client has asked us to communicate that they are still eager to complete this deal, and has advised that they have had an informal acknowledgement from your client that Spire Kool can make a ‘meaningful deposit’ and extend the settlement date by 6 months. Our client is currently trying to resolve the amount of the deposit internally, and has asked us to communicate that they are very keen to continue a dialogue with Argosy to lead to a successful completion.

[12]   Argosy’s solicitors subsequently confirmed their instructions to settle and provided a draft settlement statement to Mr Quigg.

[13]   Spire Kool failed to settle on the deferred settlement date and on 3 April 2019 Argosy served Spire Kool notice under clause 11.1 of the agreement that Spire Kool was required to complete settlement by payment of the sum of $10,142,235.72 together with interest in the sum of 16 per cent per annum on the unpaid purchase price from the deferred settlement date to the date of payment. The 12 working days’ notice under the settlement notice expired on 23 April 2019 and Argosy proceeded to issue the present proceedings seeking specific performance.

Discussion

[14]   Based on the evidence set out above, I am satisfied that Spire Kool has no defence to the claim brought by Argosy and there is otherwise no reason that an order for specific performance should not be made. In reaching this conclusion I note that not only has Spire Kool taken no steps to oppose the proceedings after the proceedings were properly served on it:

(a)Spire Kool did not dispute that neither party was ready, willing and able to settle on 27 March 2019 and instead subsequently confirmed that it wanted to proceed;

(b)the deferred settlement date was nominated in accordance with cl 3.16 of the agreement.

[15]   As at the date of hearing on 16 October 2019, the total payment required by Spire Kool in order to settle the transaction was $10,674,419.34, with interest continuing to accrue at 16 per cent per annum or $4,471.23 per day, although this is currently offset by rent received of $2,063.01 per day.

[16]   At the conclusion of the hearing I discussed with Ms Keil the form of the orders sought by Argosy so as to not require Argosy to return to Court in the event that Spire Kool breached the order for specific performance. Orders to achieve this end are set out below.

Decision

[17]I make the following orders:

(a)an order for summary judgment in favour of Argosy and for specific performance requiring Spire Kool to perform the agreement for sale and purchase dated 15 October 2018 between Argosy, as vendor and Spire Kool, as  purchaser  (“Agreement”)  in  respect  of  1478  Omahu Road, Twyford, Hastings being Lot 1 DP 26175 and Lot 4 DP 25325, Hawkes Bay Registry (the property);

(b)Spire Kool is to instruct a New Zealand solicitor to act for it on the purchase of the property;

(c)Spire Kool is to settle its purchase of the property under the Agreement by 24 January 2020;

(d)the purchase price payable by Spire Kool on settlement is to include interest under the Agreement;

(e)Spire Kool is to take steps to procure from the tenant of the property a release from liability to do certain works to the property for the benefit of Argosy, as required under clause 25.2 of the Agreement;

(f)after the date fixed for settlement, if Argosy shall give Spire Kool a written notice of its intention to cancel the Agreement within 12 working days and further gives a notice of cancellation on the expiry of the 12 working days, the parties shall not be required to comply with parts of this order relating to the Agreement, unless Spire Kool files an application at Court within the 12 working days of receiving the first notice and the application seeks an order declaring that Argosy is not entitled to cancel the Agreement;

(g)leave is reserved to the parties to apply for further directions;

(h)Spire Kool is to pay the plaintiff the costs of the proceeding on a Category 2 Band B basis and disbursements as fixed by the Registrar.

Powell J