Attfield v NZLF Limited
[2015] NZHC 3308
•18 December 2015
IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY
CIV-2015-412-000058 [2015] NZHC 3308
UNDER the Land Transfer Act 1952 IN THE MATTER OF
of an application pursuant to s 143
Land Transfer Act 1952 for an order that caveat be removed
BETWEEN
SYDNEY EARL ATTFIELD Plaintiff
AND
NZLF LIMITED Defendant
Hearing: 9 December 2015 Appearances:
A J Logan for Applicant
D J Ballantyne for RespondentJudgment:
18 December 2015
JUDGMENT OF ASSOCIATE JUDGE OSBORNE ON APPLICATION FOR REMOVAL OF CAVEAT
Introduction
[1] The applicant, (Sydney) Earl Attfield, owns a property of some 821 ha near Alexandra (the property). It was subdivided off a larger block in 2014. The respondent, NZLF, has a caveat over the title. The Court is hearing Mr Attfield’s application for an order that the caveat be removed.
The basis of the caveat
[2] NZLF is a company owned by Geoffrey Day and his wife. NZLF, by its caveat, claimed an interest in the property under an agreement for sale and purchase
dated 21 March 2013 (the 2013 agreement). Mr Attfield agreed to sell NZLF the
ATTFIELD v NZLF LIMITED [2015] NZHC 3308 [18 December 2015]
property (once it had been subdivided off a larger property). The purchase price was
$3,272,000.
[3] The subdivision occurred and the title issued for the property.
[4] Under the 2013 agreement, the purchase was to be completed on 20
November 2014. That did not occur. Mr Attfield took the position that NZLF had failed to settle and issued a cancellation notice. When he initiated the caveat lapsing procedures, NZLF initiated High Court proceedings which resulted in a settlement deed dated 13 February 2015 (the settlement agreement). After setting out matters of background the settlement agreement provided:
1. The vendor shall withdraw the cancellation notice dated 20
November 2014 of the sale and purchase agreement between the parties dated 21 March 2013.
2.The parties shall treat the sale and purchase agreement as continuing to have effect and the vendor agrees to extend the date for settlement of the sale and purchase agreement under clause 18(d)(iv) to 15 May
2015.
3.The purchaser shall arrange for survey and resource consent to enable clause 34 of the sale and purchase agreement to be given effect to.
4.The vendor shall cooperate with the purchaser and sign all documents necessary to give effect to clause 34.
5.Upon receipt of survey from the purchaser, identifying the location of easements to give effect to clause 34, the vendor shall prepare and provide to the purchaser draft easements for the conveyance of water, electricity (if required) and access.
6.In all other respects the terms of the sale and purchase agreement shall apply.
7.In the event the purchaser is unable to settle on 15 May 2015 and the vendor elects to cancel the sale and purchase agreement, the purchaser shall withdraw the caveat registered over the vendor’s property.
8.The High Court proceedings shall be discontinued upon the signing of this Deed with each party responsible for their own costs.
9.This deed may be signed in counterparts. All executed counterparts will together constitute one document.
[5] Clause 34 of the 2013 agreement had provided:
Dairy Creek Scheme
The Vendor agrees that the land sold herein shall include land upon which the headworks infrastructure for the proposed Dairy Creek scheme are to be located AND FURTHER the Vendor agrees and undertakes that he will provide all easements over the land to be retained by him to enable the Dairy Creek scheme to proceed.
Non-settlement of the 2013 agreement
[6] By reason of the settlement agreement, the date for settlement of the purchase and completion of title issue had become 15 May 2015.
[7] NZLF did not settle the purchase on that date.
[8] Mr Attfield’s solicitors gave notice of cancellation upon the expiry of the working day. They called upon NZLF to execute a withdrawal of the caveat pursuant to clause 7 of the settlement agreement.1
[9] NZLF has refused to withdraw the caveat. By its notice of opposition, it asserted for a number of reasons that Mr Attfield was not entitled to cancel the agreement. Latterly, it is also argued, through Mr Ballantyne’s submissions, that Mr Attfield’s method of cancellation was invalid.
Application to remove caveat – the principles
[10] The principles which I adopt in relation to Mr Attfield’s application are these:
(a) The burden of establishing that the caveator has a reasonably arguable case for the interest claimed is upon the caveator.
(b)The caveator must show an entitlement to, or beneficial interest in, the estate referred to in the caveat by virtue of an unregistered agreement or an instrument or transmission, or of any trust expressed or implied:
s 137 Land Transfer Act 1952.
1 Above at [4].
(c) The originating application procedure is unsuitable for the determination of disputed questions of fact – an order for removal of the caveat will not be made unless it is clear that the caveat cannot be maintained either because there was no valid ground for lodging it or that such valid ground as then existed no longer does so.
(d)When a caveator has discharged the burden upon the caveator, there remains a discretion as to whether to remove the caveat, which will be exercised cautiously.
(e) The Court has jurisdiction to impose conditions when making orders.
Mr Attfield’s case
[11] The basis of Mr Attfield’s application can be simply stated.
[12] Mr Attfield accepts that, short of cancellation of the agreements, NZLF had a caveatable interest in the property.
[13] Mr Attfield says, however, that when the date for completion arrived on 15
May 2015, NZLF did not complete. He points to the contemporary documentary record which indicates that NZLF was not in a financial position to complete. Mr Attfield wishes to move on in order to finally sell a property which he has been endeavouring to sell (upon subdivision) since 2013.
NZLF’s grounds of opposition
[14] The central ground of opposition is that Mr Attfield has not effectively cancelled the settlement agreement and the varied 2013 agreement. The specific grounds can be grouped into three:
(a) Variation agreement
NZLF asserts that a “side agreement” was reached on 14 and 15 April
2015 varying the requirements of settlement under the settlement agreement.
(b) Breaches of the agreement by Mr Attfield
NZLF asserts that Mr Attfield was himself in breach of the settlement agreement by failing to co-operate with NZLF:
(i)in giving effect to clause 34 (of the 2013 agreement) and clause 4 of the settlement agreement; and
(ii) in giving access to the property. (c) Invalid cancellation
NZLF asserts that Mr Attfield’s cancellation was invalid because:
(i)time was not of the essence and had not been made of the essence;
(ii) there had not been gross or protracted delay by NZLF; and
(iii)Mr Attfield’s cancellation (by not invoking the cancellation procedures under clause 10 of the 2013 agreement) must have been based on repudiation or substantial breach under the Contractual Remedies Act 1979, but Mr Attfield did not have valid grounds on either basis.
[15] The last ground of opposition, as to an invalid form of cancellation, was the subject of discussion at the start of the hearing. It did not appear in NZLF’s notice of opposition dated 13 July 2015. The notice of opposition had not been amended and NZLF did not seek leave to amend it. However, when Mr Ballantyne filed his synopsis of submissions (dated 4 December 2015, filed 7 December 2015), he included as the “preliminary issue” two pages of submissions as to the invalidity of Mr Attfield’s form of cancellation. I reserved for argument whether leave should be granted to NZLF to pursue this additional ground of opposition. Mr Logan, for Mr Attfield, opposed leave. But he indicated that he had had some opportunity to consider the point raised and could present oral submissions on it. I therefore heard
submissions on the issue, reserving my decision on whether to grant leave to NZLF
to rely on this ground.
Evidence
[16] The affidavit evidence was given:
(a) for the plaintiff – by himself; his solicitor, Gillian Clarke; and a surveyor, Geoffrey Weller; and
(b) for the defendant – by himself.
[17] Each party required the other’s witnesses for cross-examination and the witnesses were so examined.
Chronology
[18] Mr Logan provided a succinct chronology of relevant events from 2013 to
2015. For NZLF, Mr Ballantyne adopted Mr Logan’s chronology. As it has been a helpful reference in hearing submissions and giving this judgment, I adopt the chronology as Schedule 1 to this judgment.
Variation of the settlement and title requirements?
NZLF’s case
[19] By its notice of opposition, NZLF asserted that a “side agreement” had been reached on 14 and 15 April 2015 whereby the sale of the land would proceed and a dispute over the location of the headworks and easements for the Dairy Creek Irrigation Scheme (the Dairy Creek scheme) could be settled at a later date (the side agreement).
[20] The headworks for the Dairy Creek scheme and Mr Attfield’s commitment to
provide easements over his retained land in connection with that scheme were the
subject of clause 34.2 I will return below (at [91]) to NZLF’s allegations that there had been a failure of cooperation by Mr Attfield. I am at this point examining the assertion that there was a side agreement varying settlement and title arrangements.
Mr Attfield’s evidence
[21] As the applicant, Mr Attfield gave his affidavit evidence first. (It was subsequently supplemented in reply.)
[22] Mr Attfield referred to events from 13 February 2015, when the settlement agreement had been signed. NZLF needed to progress survey and resource consent requirements. The evidence of Mr Attfield and his solicitor, Ms Clarke, identifies, as shown in Schedule 1, repeated attempts by Ms Clarke (and others) to chase progress on the part of Mr Day. Mr Day’s solicitor, Graeme Todd, repeatedly responded that Mr Day either had not responded or was slow to respond. It is now clear from his oral evidence that Mr Day’s focus in this period was primarily on getting finance arranged.
[23] There was however progress in relation to the headworks and the easements on 8 March 2015. That day, Mr Day arranged for the surveyor, Mr Weller to attend a meeting with him and Mr Attfield on site. The 2013 agreement had recognised the need for survey work and the parties had agreed to share equally the costs of such work. The purpose of the 8 March 2015 site meeting was to identify the land required for the headworks and easements provided for in clause 34.
[24] The cross-examination of the witnesses has produced a remarkable consistency as to the outcome of the 8 March 2015 site meeting. That clear picture is to be contrasted with what seemed to be a dispute as to outcome in the affidavit evidence.
[25] In their affidavits, Mr Attfield and Mr Weller identified a clear agreement which was reached at the 8 March 2015 site meeting. The agreement was that:
2 Above at [5].
(a) NZLF’s pump house (the headworks) was to be sited on a block of land approximately 1,600 m2, which Mr Weller drew approximately (marked “A”) on an aerial photograph which he brought to the site meeting. Area “A” would need to be subdivided off Mr Attfield’s land and transferred to NZLF;
(b)NZLF’s access to the pump house was to be secured by easement over Mr Attfield’s land across a strip which Mr Weller drew approximately (marked “B”) on the same aerial photograph;
(c) Mr Attfield was to grant to NZLF the right to access a slip area within area B and to allow NZLF to carry out slip-stabilisation works (which might require resource consent);
(d)Mr Weller was to finalise a plan which he was to email to Ms Clarke and Mr Day; and
(e) NZLF would then arrange for survey and resource consent to enable clause 34 to be implemented.
[26] Mr Weller completed the plan the next day (9 March 2015) and forwarded it to Ms Clarke and Mr Day, as agreed the previous day.
[27] In his affidavit, Mr Day’s evidence of the site meeting significantly differed from that of Mr Attfield and Mr Weller. Mr Day in his affidavit set out a number of matters on which he deposes there had been a failure of co-operation or agreement. He stated:
9The deed of settlement, which settled the earlier proceedings, sought to clarify the parties’ rights and obligations pursuant to the agreement for sale and purchase dated 21 March 2013 (specifically clause 34.0) and provided an amended date for settlement of 15 May
2015. Regrettably, the deed of settlement was not well drafted and the issues we encountered the first time around regarding the location of the head works and easements for the dairy creek water scheme remain.
10 NZLF seeks to have the head works situated on the area marked
“NZLF” in the plan annexed hereto and marked “D”. Attfield does
not agree to the location proposed by NZLF and seeks to have the head works situated above the water line in the area marked “Attfield”.
11 A further issue has arisen that was not anticipated by us regarding the stability of the surrounding site where there is a historical slip. NZLF has been advised that the slip will require stabilising before any development of the site can begin. This slip will also requires [sic] NZLF to instruct geotechnical engineers, including divers for the base of the slip, which Attfield is hindering.
12The slip can be seen in the photos annexed as exhibit “D”. The reason NZLF require the slip to be stabilised is that if it were to collapse it would prevent water from entering the reservoir from Lake Dunstan, and any draw into the pumping station that is to be built at the head works. The risk is simply to [sic] high and would prevent investment in infrastructure on the land being irrigated via the dairy creek irrigation scheme.
13NZLF has made a number of attempts to give effect to clause 34.0 as amended by clause 3 of the deed of variation and come to an arrangement for the issue outlined above to be addressed. These attempts have been frustrated by Attfield who has not cooperated and actively prevented NZLF and contractors from entering onto his land for the purpose of undertaking assessments of the land to be used for the head works, and not agreeing to the site for the pumping station.
14In the absence of being in a position to access the site of the proposed head works and determine the freehold section being acquired, NZLF experienced considerable difficulty in completing the funding proposals necessary so that it would be in a position settle the agreement for sale and purchase. I discuss this further below.
[28] In summary, Mr Day was saying:
(a) The provisions of the settlement agreement (in particular clause 3) left uncertainty as to what was required in relation to headworks and easements for the water scheme.
(b)NZLF (through Mr Day) then made a number of unsuccessful attempts to reach agreement on the headworks and easements.
(c) Mr Attfield did not cooperate with Mr Day and had prevented NZLF
and its contractors from accessing the land.
(d) Because of the lack of access and cooperation of Mr Attfield, NZLF
had experienced difficulty in advancing its funding arrangements.
[29] In the end, this affidavit evidence of Mr Day as to a lack of cooperation and agreement on the part of Mr Attfield counts for nothing as, under cross-examination, Mr Day conceded that an agreement was reached on 8 March 2015 in the terms identified by Mr Attfield and Mr Weller. It was clear from Mr Day’s oral evidence that, although he had expressed that day his preferences (even strong preferences), in the course of the meeting he came to agree to the suggestions of Mr Weller and Mr Attfield. That correct position was clear at a number of points in his cross- examination but the following passages are particularly pertinent. Mr Logan cross- examined Mr Day as to the outcome of the site meeting on 8 March 2015. He first questioned Mr Day as to the area for the pumphouse (Area “A”):
Q. Well at the end of the discussion, at the end of the site visit, the area that Mr Weller has marked, is A, page 100, it’s the area which all three of you agreed on?
A. Had to, it didn’t matter what I said on that day, it was irrelevant.
Q. On the day you agreed with that area didn’t you?
A. Well I had to because at the end of the day it didn’t matter what I said, they wanted it up there, we wanted it down here, you don’t put a pump station up there and at the end of it, I thought, look I’m not going to get anywhere, you know, with this conversation and for this meeting.
Mr Logan then questioned Mr Day as to the area for the access easement (Area “B”):
Q. Now in front of you, Mr Weller drew out area B? A. Yes.
Q. Above the slip? A. Yes.
Q. To access the slip and to carry out any works that were necessary to stabilise it?
A. Well to identify the area where it was and what we wanted to try and achieve, yes.
Q. And you, Mr Attfield, Mr Weller agreed on that, on the day, the 8th of March?
A. For the area for the slip, yes.
Q. And the understanding of you all, was that Mr Weller would tidy that up and present you with a more formal version of it?
A. That’s correct.
Q. Concept plan which he did and that was emailed to you on the 9th of
March wasn’t it?
A. Well yes if it says it, yes.
Q. Page 101 if you don’t believe?
A. No it’s okay.
Q. Email from Geoff Weller, Gillian Clark and Geoff then finishes .Co.
NZ.
A. Yes.
Q. And you got attached to that email his tidier version –
A. On 102?
Q. – concept plan, on 102. You didn’t get back in touch with Mr Weller and say that’s not what we agreed did you?
A. No that’s correct I didn’t.
Q. You didn’t get in touch with Ms Clarke or Mr Attfield and say that’s
not what I want?
A. No I didn’t.
Q. You didn’t instruct Mr Todd that that was unsatisfactory did you? A. No.
Q. Mr Todd raised no protest on your behalf? A. No.
Q. And nothing at all was said about that arrangement being unsatisfactory down to the 15th of May was there?
A. I don’t believe so, no.
Q. Well first the suggestion that there was something unsatisfactory about Mr Weller’s plan of 102, was when you filed your affidavit in these proceedings?
A. Once we’d found out basically what had been going on in the
background. Our focus was to get the contract settled.
And later, in an exchange with the Court, Mr Day added:
Q. They thought, the surveyor said it, that you had an agreement and
you’ve accepted you did?
A. That's right I accepted what, what went on there on that day.
[30] After he received Mr Weller’s finalised plan on 9 March 2015, Mr Day failed (as he accepted in his cross-examination) to give any of the instructions needed to finalise the documents needed for resource consent, subdivision and title issue. There was no point at which Mr Day needed or indeed called for further cooperation from Mr Attfield. Mr Attfield had done all that he was required to do. At no point did Mr Day request further access to the site for either himself or NZLF’s contractors.
[31] Accordingly, from his own answers in cross-examination, Mr Day’s evidence in his affidavit in paragraphs 9 – 14 (above at [27]) has been shown to be unreliable and misleading. It is clear beyond doubt that the Court can place no reliance on Mr Day’s evidence in the passage set out at [27] above. The evidence of Mr Attfield and Mr Weller is clearly correct, as conceded by Mr Day in cross-examination.
Mr Weller’s credibility
[32] I record briefly, if only to dismiss it, a concern raised by NZLF in relation to Mr Weller. It was identified in the affidavit evidence of Mr Day although not cited as a particular ground of opposition in the notice of opposition. Mr Day made allegations of a conflict of interest on the part of Mr Weller. Mr Weller had evidently prepared in the past a desk-top plan of the potential route of an irrigation scheme other than the Dairy Creek scheme with which Mr Day is involved. Initially during the hearing Mr Ballantyne, on behalf of NZLF, pursued the conflict point in that he cross-examined Mr Weller partly in relation to a supposed inconsistency between the headworks site and intake site proposed by Mr Weller at the 8 March 2015 meeting and the proposed route of the other scheme. Mr Weller deflated the point of cross- examination by noting, as he had earlier explained, that his plan for the other scheme was a desk-top plan prepared without inspection or knowledge of the site. In other
words, Mr Weller drew that plan upon the basis of the client’s proposed line by
reference to survey information and without knowledge of the ground conditions.
[33] The implication of Mr Day’s evidence and the initial cross-examination was that Mr Weller had somehow abused his position and duties by promoting the interests of Mr Attfield and/or demoting those of Mr Day. This might have been particularly relevant to credibility issues affecting the Court’s determination in relation to the oral discussions of 8 March 2015 and consequently the arguability of Mr Day’s earlier assertion that Mr Attfield had been unco-operative and that agreement had not been reached on headworks and easements.
[34] Once Mr Day made his concessions as to the points of agreement reached on
8 March 2015, any relevance to the “conflict” criticism fell away. In his closing submissions, Mr Ballantyne appropriately indicated that he was not taking his submissions in relation to Mr Weller’s conduct any further. Beyond that concession, I positively find that on the evidence before me, there was no basis for any criticism whatsoever of Mr Weller in relation to the impugned conduct.
Position by April 2015
[35] A central focus of the 13 February 2015 settlement agreement had been to provide to NZLF the opportunity to reach agreement in relation to the location of the headworks and the necessary easement and to then arrange for survey and resource consents to implement clause 34.
[36] Through the agreements reached on 8 March 2015 and the work done by Mr Weller to complete a plan on 9 March 2015, the next step required was for NZLF to give the necessary instructions to professionals (including Mr Weller) to complete the survey, resource consent and legal applications and formalities. At 9 March
2015, the parties had two months in which to meet the 15 May 2015 deadline for completion. The settlement agreement did not contain any requirements or stipulations relating to NZLF’s raising of finance in that period – NZLF’s financial ability to complete was assumed by the settlement agreement which focussed on implementation of the clause 34 requirements by 15 May 2015.
[37] Mr Day, for NZLF, did not take the required steps, even when Mr Attfield and his solicitor chased progress.
The Day/Attfield discussions of mid-April 2015
[38] Chronologically, NZLF’s first ground of opposition is, as I have summarised above at [14](a), that a “side agreement” was reached on 14 and 15 April 2015 varying the requirements of settlement, which Mr Attfield refused to implement.
[39] The specific ground of opposition was:
[Mr Attfield] failed to agree to settle the sale of the land and give effect to a side agreement that had been reached on 14 and 15 April 2015 whereby the sale of the land would proceed and the dispute over the location of the headworks and easements for Dairy Creek Irrigation Scheme could be settled at a later date.
Mr Day’s evidence
[40] In coming to the detail of Mr Day’s evidence, I first identify what the parties still had to do as at 14 April 2015.
[41] By reason of the agreements reached on 8 March 2015, the sites for the headworks and easements were set. The work that remained to be done was to attend to matters such as final survey, resource consent and title issue, the responsibility for which lay with Mr Day.
[42] Accordingly, as the parties came to mid-April 2015, one month from the
15 May 2015 deadline, what Mr Attfield understood still had to be done was the completion of those survey/resource consent/title matters.
[43] NZLF gave no evidence as to the time which would be required, if instructions had been issued in mid-April, to complete such attendances. In the course of Ms Clarke’s examination, I therefore asked her how long would be required for such matters. Her evidence was that it would be longer than the month which remained to the settlement date of 15 May 2015.
[44] In the affidavit evidence of Mr Day, which I now come to, it is clear that Mr Day is asserting that the “side agreement” which he reached with Mr Attfield in mid-April was necessary in order to overcome a dispute or “impasse” which had developed in relation to the site of the headworks and easements. Notwithstanding that evidence of Mr Day, the parties had for the reasons I have stated, already reached agreement on those matters on 8 March 2015. There was no “impasse” as alleged by Mr Day.
[45] But this is how Mr Day described the context and relevance of the mid-April discussions with Mr Attfield:
16.NZLF dispute that the notice of cancellation is valid. It accepts that it had not obtained titles for all the land being purchased pursuant to the agreement for sale and purchase as varied by the deed of settlement, but says that it could not as Attfield was in default of his obligations under clause 4 of the deed of variation and was therefore not himself in a position to settle his obligations under clause 34.0. Further, NZLF had obtained finance sufficient to settle but required a firm arrangement to give effect to clause 34.0 of the agreement for sale and purchase prior to settlement.
17This was agreed between me and Attfield in our discussions on 14 and 15 April 2015, and is set out in Attfield’s lawyer Gillian Clark’s email of 11 May 2015, … In her email she alleges that NZLF has not yet given effect to cause 34.0 to enable the transfer of land containing the infrastructure and creation of the necessary easements. That is not the case for the reasons that I have outlined. It was Attfield who was refusing to agree to the location of the head works. In any event, she goes on to record Attfield’s earlier agreement that he would settle the land sale on 15 May 2015 with the clause 34.0 matters being completed post settlement.
18Attfield and I had discussed this proposal earlier in discussions we had on 14 and 15 April 2015 (outlined below). Her email reflected our discussions. I had insisted that this side agreement, which she refers to implicitly, be recorded in writing so as to provide sufficient comfort for the funders to enable settlement.
19It was clear during our discussion in mid April that we were at loggerheads over the location of the head works and that impasse had not be [sic] resolved by the time of his lawyer’s email of 11 May
2015. Hence her email provided for NZLF to settle the land, and settle the head works site and easements pursuant to a further
agreement.
20In response to the email of 11 May 2015 from Gillian Clark, NZLF’s funder’s lawyer spoke with her on 15 May 2015 and followed the discussion up with an email that set out the basis on which NZLF was in a position to settle the land.
21The email, which was sent following their discussion, recorded that NZLF, through its nominee, had secured funding sufficient to settle but, as a result of the impasse around clause 34.0, a side agreement would need to be formally entered into to resolve the impasse. Again, this reflected Gillian Clark’s advice and our earlier agreement.
22It is NZLF’s position that, through its funder, it was ready, willing and able to settle those parts of the contract capable of being settled on 15 May 2015, but that effect needed to be given to the agreement I had reached with Attfield during our discussion on 14 and 15 April
2015, and set out in Gillian Clark’s email on 11 My 2015.
23No response was received by NZLF’s funder’s lawyer to the proposal to settle despite the impasse over clause 34.0 caused by Attfield not agreeing to the site for head works.
[46] That was not the last passage in Mr Day’s affidavit relating to the mid-April discussions. In the affidavit, he proceeded to specifically respond to matters contained in Mr Attfield’s affidavit. At one point, Mr Attfield had produced an email dated 5 May 2015 which Mr Todd (for NZLF) had sent to Ms Clarke (for Mr Attfield) advising that NZLF was close to confirming a deal to obtain finance.
[47] Mr Day referred to that evidence and in his affidavit responded:
36 I refer to paragraph 10A of Attfield’s affidavit. I phoned Attfield on
14 and 15 April 2015 to confirm that finance had been approved for the project sufficient to settle on the follow [sic] basis:
36.1That he enter into a side agreement whereby the site for the head works and easement for the proposed water scheme could be confirmed at a later date on terms; or
36.2That he extend the timeframe for settlement and provide unrestricted access to the site to enable NZLF and its engineers, surveyors and agents the ability to properly determine the site for the head works and easements for the proposed irrigation scheme.
37Annexed … are copies of my telephone phone records from Spark New Zealand Trading Limited which record the date, time and duration of my telephone calls to Attfield …
37.1 Our first telephone discussion was on 14 April 2015 at
12:24:08 pm and lasted for 52 seconds.
37.2Our second telephone discussion was on 15 April 2015 in the evening on 15 April 2015 at 20:33 and lasted 1 minute,
38 seconds.
38 Annexed … are copies of my diary entries for 14 and 15 April 2015
which related to these calls.
38.1In my diary entry for 14 April 2015 I have written: “Rang Attfield. Lunch Time. Told Earl funding was sorted so we could get contract settled and if not get inlet sorted. Would need side agreement to give funders comfort over that area since it’s important. Brief call.”
38.2In my diary entry for 15 April 2015 I have written: “Rang Attfields after 8:20pm. Confirmed with him that the fund was there to settle. They accepted that. I told Attfield that funder would require side agreement to cover inlet issues. Attfield accepted that. I said that I would leave it up to funders lawyers to get in touch with their lawyers closer to settlement date to arrange that and our lawyers GT Law would not be involved. Attfield agreed to this. Attfield said not long to go etc. and I said all good things take time they say. Short call must have been doing other stuff.”
Mr Attfield’s response
[48] Mr Attfield followed up the mid-April discussions at the time and has also provided responding affidavit evidence in this proceeding.
Mr Attfield’s follow-up at the time
[49] Mr Attfield’s evidence is that he does not himself attend to emails. He says that his wife, Bernadette (Bernie), does that for him. On 16 April 2015, Mrs Attfield sent an email to the lawyers acting for Mr Attfield in these terms:
Just to update. Geoff Day rang last night at 8.30 pm to say he was waiting for somebody to return from overseas (didn’t day [sic] who) and he would know more in a couple of weeks so would be back in touch then. Earl reminded him that time is marching on.
[50] In the absence of subsequent contact from Mr Day or Mr Todd, Ms Clarke emailed Mr Todd on 5 May 2015 noting:
This matter was extended by deed to 15 May 2015 to enable your client to give effect to cl 34 and settle. My client is not aware of any steps taken by your client to give effect to cl 34 in terms of survey or resource consent, other than the initial meeting and discussion with Geoff Weller.
Our client does not intend to give any further extensions in time. Can you please advise your client’s position to settlement on 15 May 2015?
There was then a series of emails, all on 5 May 2015. Mr Todd emailed back stating:
You can be assured I continue to chase my client for progress reports and I keep getting told he is close to confirming a deal to obtain finance to enable him to settle this purchase and others.
I am aware there is a meeting in Christchurch tomorrow with a prospective financier.
I am sorry I cannot offer any further advice other than to say I am aware that my client is in turn aware of the deadline and that there is little prospect of any extension being granted.
Ms Clarke then by email thanked Mr Todd and recorded that she looked forward to hearing from him within the next day or so. Mr Todd emailed back to Ms Clarke stating that as soon as he knew something he would let her know.
[51] There was no further communication from Mr Todd or Mr Day in the following days.
[52] On 11 May 2015, Ms Clarke sent a further email to Mr Todd recording:
I am attaching a settlement statement and our settlement instructions in respect of this matter. I understand your client is still hoping to obtain funding to settle on Friday although I have not heard further from you.
As your client has not yet given effect to cl 34 to enable the transfer of land containing infrastructure and creation of easements as provided for in that clause, I would imagine your client, if he obtains finance to settle on Friday, intends to carry out those steps after settlement. Without prejudice to our client’s right to cancel if settlement does not take place on 15 May 2016, our client is agreeable to settlement taking place in all respects on 15 May with the cl 34 matters to be completed by your client post settlement in accordance with the deed of settlement. The areas involved have been identified by Geoff Weller and the terms of the deed of settlement can continue to apply post settlement although we would expect a sunset clause of say nine months on when cl 34 is to be finally given effect to.
Can you please advise your client’s position to settlement in giving effect to
cl 34 post settlement.
[53] Mr Todd replied immediately that he would take instructions.
[54] When Mr Todd did not contact Ms Clarke, the latter emailed him on 14 May
2015 to enquire whether Mr Todd was setting up an EDlink.3 Mr Todd replied:
3 Short for E-dealing link (for electronic transaction on the Land Transfer Register).
No I haven’t at this stage as I am still awaiting confirmation of instructions. I was advised yesterday that it was looking favourable that funds would be available but that a further 7-10 days may be needed to put everything in place. I am advised Geoff day [sic] has advised the Attfields of this.
As soon as I know something definite, I will be in touch with you.
Ms Clarke that day emailed back to Mr Todd stating:
I just want to clarify that the Attfields have not given any extension to the settlement date provided in the Deed of Settlement.
Mr Todd promptly replied:
I fully accept that.
[55] When NZLF took no steps on the date for settlement, 15 May 2015, Ms Clarke gave notice of cancellation at 5.14 pm. In the meantime, Mr Todd had not responded to the offer (contained in Ms Clarke’s 11 May 2015 email (above at [52])) to hold over the completion of clause 34 matters.
The direct intervention of NZLF’s “funders”
[56] The organisation to which Mr Day had been looking for funding is the Secured Finance Group (Secured). When the settlement date was imminent there was a direct intervention by Secured.
[57] On the afternoon of 14 May 2015, Mr Todd had forwarded to Des Knowles of Secured Ms Clarke’s email in which she confirmed Mr Attfield had not given any extension of the settlement date.
[58] On the morning of 15 May 2015, a solicitor Kirsten Todd, telephoned Ms Clarke. Ms Todd said that she acted for Secured. Ms Clarke has given evidence as to the content of this discussion, with reference to a contemporaneous file note. There is no other evidence as to the telephone conversation. I accept exactly what Ms Clarke has said, including that Ms Todd said she acted for Secured which was a new group of investors and did not involve NZLF at all. Ms Todd added:
(a) She wanted Mr Attfield to consider “transferring the contract in some way” to the new entity, which would complete the contract.
(b)The new entity would have finance but nothing binding could be entered into until 10 June as one of the investors was out of the country.
(c) Secured was seeking an extension of the settlement date to 10 June
2015.
[59] Ms Todd asked Ms Clarke to ask Mr Attfield to agree to that extension. Ms Clarke advised Ms Todd that she thought it was unlikely that Mr Attfield would agree to an extension in the circumstances of this particular contract but that she would ask him. At no point did Secured (through Ms Todd) offer to settle on 15 May
2015. Ms Clarke’s understanding of the call was that Ms Todd was not purporting to act for NZLF.
[60] Ms Clarke deposes that she received instructions from Mr Attfield (15 May
2015) and telephoned Ms Todd at 3.26 pm to advise that Mr Attfield had not agreed to an extension of time for settlement. Ms Todd asked Ms Clarke whether Mr Attfield would entertain a new offer. Ms Clarke explained that, upon cancellation, the property would be on the market but that nothing could be done until the current contract was cancelled.
[61] Later that evening, after Ms Clarke had sent her cancellation notice of the NZLF contract, Ms Todd emailed a form of agreement for sale and purchase in which an entity identified as CIT Investments (CM) Ltd would be purchaser for a reduced sum ($3 million), with conditions attaching to the agreement including time for due diligence by the purchaser.
Mr Attfield’s evidence
[62] Mr Attfield filed a reply affidavit in which he responded, in part, to Mr Day’s
evidence as to the mid-April discussions.
[63] Mr Attfield recorded:
7.At paragraph 17 and 18 and later in his affidavit Mr Day says that there were telephone communications between him and me on 14 and 15 April 2015 with agreement being reached in Ms Clarke’s email of 11 May 2015. At paragraph 38 of Mr Day’s affidavit he sets out what he says are the contents of the telephone communication. I confirm that a conversation took place on 15 April 2015 but I have no recall of having a conversation with Mr Day on 14 April although a brief call shows on Mr Day’s records. There may well have been a conversation on 14 April 2015 but it was obviously brief and not significant enough for us to record it in writing. In the case of the conversation of 15 April, I requested my wife Bernie to send an email to Ms Clarke when she got to work the next day, reflecting the conversation I had with Geoff Day. In that telephone conversation, I was not told by Mr Day that finance or funding was sorted. Mr Day was confident that funding would be sorted and told me that he would know within the next couple of weeks when an investor would be returning from overseas. This was the kind of conversation I had had before with Geoff Day and I reminded him that time was marching on in terms of settling the contract. We did not discuss a side agreement and did not agree to anything in that telephone call. There was nothing to agree to because it was a call advising his progress in obtaining finance. I was not told that the funders lawyers would get in touch with my lawyer and that Graeme Todd would not be involved. I have seen my wife’s email to Ms Clarke of 16 April 2015 … and that is consistent with my recall of the conversation.
8.After that telephone call, there were no further communications between Mr Day and me.
[64] Mr Ballantyne questioned Mr Attfield about the discussions on 14 and 15
April 2015. In the following exchange, Mr Attfield accepted in relation to what Mr Day calls the “side agreement” that Mr Attfield had agreed to give access to Mr Day to attend to the “Dairy Creek” matters after 15 May 2015:
Q. … what Mr Day says is that on the 14th he tells you that the funds were sorted for settlement?
A. Yep.
Q. And on the 15th that you reached an agreement and that agreement was that the property would be, the land would be settled on the 15th
–
A. Right.
Q. – and that a side agreement would need to be formalised for the location of the head works and the easements for the irrigation scheme. Do you accept that that side agreement was reached?
A. I – as far as I know it was, was that correct, um, at that stage I think most things were going through my lawyer, um, Gillian Clarke.
Q. I'll ask again, do you accept that that side agreement was reached that you would settle the land on the 15th and that –
A. Give him access to do everything down to Dairy Creek? Q. That's correct, at a later stage so that they could be done.
A. Yeah we – that would be right, yep as long as he paid up on the 15th.
[65] Mr Ballantyne went on to question Mr Attfield further on the mid-April discussions in this exchange:
Q. Just going back, you’ve said earlier that you accept there was an agreement reached on the 15th of April where the land would be settled on the 15th and that the easements and issuing of title in relation to the water infrastructure arrangements would be dealt with at a later date. I've asked you whether Roman numeral ii as a ground used for failure related to that side agreement that it was agreed would be resolved at a later date. Do you answer yes to that?
A. Well he hadn't, well he hadn't got the titles, that's right for the site, you're talking about the site at Dairy Creek, the freehold?
Q. That's correct.
A. Right, well he hadn't done that, and he hadn't paid.
Q. You accept though that there had been this agreement that that would be dealt with at a later stage, that the focus would shift on to settling the –
A. Yes but he had to pay on the 15th of May first, if he had paid on the
15th of May then we would have extended our time to let him come in, that correct, that would be my understanding.
[66] Still later in his cross-examination, Mr Ballantyne directly suggested to Mr Attfield that the affidavit statement “We did not discuss the side agreement and did not agree to anything in that telephone call” was inconsistent with Mr Attfield’s answers now given in cross-examination.
[67] Although Mr Attfield appeared not to accept that he had stated anything incorrectly, a series of questions elicited Mr Attfield’s confirmation that a degree of understanding had been reached as to the extension of time for the tidying up of
matters “like the easements and so on” after 15 May. The precise exchange in cross- examination was in these terms:
Q. You say, and this is about half way down on page 13, “We did not discuss the side agreement and did not agree anything in the telephone call.”
…
Q. Do you accept that that’s inconsistent with what you’ve said earlier?
A. Oh, we did not discuss this. All he said was that the money was on the way and well I'm thinking well yeah whatever.
Q. You’ve said earlier that you accept that there was a side agreement reached to settle the easements and the freehold land at the site for the infrastructure at a later stage and settle the land. Here you said that’s not the case, do you accept those statements are inconsistent?
A. When – a lot of this my lawyers are dealing with it, I'm out there doing my farming and when Mr Day says the money, the funds are available all I can think of, “Okay you’ve got a month to go, keep going and pay out.” I don't know what else I can really say, I honestly don't.
Q. Do you accept then that if that conversation had occurred and that agreement had been reached, Mr Day’s focus would shift to funding and settling the land on the 15th?
A. Why wouldn't he be thinking of doing that in February, February,
March, April. We’d designated the site for his freehold site.
…
Q. – there was this understanding on Mr Day’s request that if need be
other matters like the easement and so on could be tidied up after the
15th and that I think is clearly your evidence. What Mr Ballantyne’s done is pointed out that when you did your, when you did your affidavit, you – and bear in mind this is your second affidavit when you're responding to Mr Day’s evidence about a side agreement, at that stage you said in this affidavit, “We did not discuss a side agreement.” Mr Ballantyne’s pointed out that you’ve now accepted there was a discussion about a side agreement relating to the easements and do you accept or Mr Ballantyne’s asking is an inconsistency to that extent between what you’ve just told me and what you said here?
A. Well I just really I don't know, I, basically I probably, look I wasn’t even worried, all we're thinking if he pays on the 15th of May because we’d signed something or agreed to something earlier on somewhere along the lines that if he was to pay then we would still grant him access and that to get an easement and the freehold site to Dairy Creek adjoining his new purchase block of land off us. And that is written somewhere in a document, I know that for a fact.
[68] Accordingly it became clear that, although Mr Attfield had expressly in his affidavit rejected the suggestion that a side agreement had been discussed or agreed, he accepted during his examination that Mr Day had discussed with him in the mid- April discussions Mr Day’s need to tidy up the clause 34 matters after the 15 May
2015 settlement date. Given Mr Attfield’s blanket denial I need to examine with care any difference which, following the conclusion of the cross-examination of deponents, remained between Mr Day and Mr Attfield.
Discussion
[69] In making findings as to the outcome of the mid-April discussions, there are a number of material aspects. These aspects arise in the context of caveat proceedings in which the caveator must establish a “reasonably arguable case” without a requirement to establish a case on the balance of probabilities. If I am to find as fact an outcome of the April discussions which does not accord with Mr Day’s evidence, that needs to be because I am clearly satisfied as to the facts I find, having heard the witnesses.
[70] In assessing the evidence, I first note that Mr Attfield states that he has no memory of there being two separate discussions, with the first on 14 April 2015 and the second on 15 April 2015. It is not surprising that Mr Attfield would not recall whether two separate discussions occurred on those two days. The discussions were first raised by Mr Day three months after the event. The cellphone records which Mr Day produced indicate that the 14 April 2015 call to Mr Attfield’s telephone lasted a maximum of 52 seconds and the 15 April 2015 call a maximum of 1 minute
38 seconds. An inability to clearly distinguish two short calls occurring three months earlier and so close together on essentially the same subject matter is unsurprising. Mr Attfield’s evidence that:
… there may well have been a conversation on 14 April 2015 but it was obviously brief and not significant enough for us to record it in writing.
rings true.
[71] It was only Mr Day who made notes of the two telephone calls, while Mr
Attfield had his wife send an email to Mr Clarke the day after the 15 April
discussion, explaining what had happened. The content of the email is set out at [49]
above.
[72] Mr Day, in his examination, stated that he had made his notes contemporaneously. That might normally suggest some greater reliability when later recalling precisely what was discussed. However, the first sentence of Mr Day’s note of the 14 April 2015 telephone conversation is demonstrably unreliable. Mr Day began his note by recording:
Told Earl funding was sorted so we could get contract settled…
[73] Mr Day, at the start of his note for 15 April 2015, recorded in not dissimilar terms:
Confirmed with him that the fund was there to settle. They accepted that.
[74] The difficulty with these records is that, on Mr Day’s evidence before me, there was never a point at which funds were confirmed for NZLF. Throughout this period, the response of NZLF’s lawyer, Mr Todd, was to the effect that his client was still chasing funds. That continued to be the position right up until the time for settlement, as evidenced by Secured’s decision to try to negotiate a purchase by a different entity.
[75] Accordingly, the beginning notes which Mr Day made as to both the 14 and
15 April 2015 meetings can be correct notes of what he said only if he was on 14 and
15 April 2015 deliberately misleading Mr Attfield by stating that funds were arranged.
[76] I find that Mr Day did not make the statements that he recorded stating that funds were arranged. Such statements would be inconsistent with the position that was being relayed through NZLF’s solicitor, Mr Todd. It is also inconsistent with the understanding of the conversations which the Attfields promptly (on 16 April 2015) emailed to Ms Clarke, referring to Mr Day’s phone call at 8.30 pm on 15 April 2015. The email recorded that Mr Day had said:
… he was waiting for somebody to return from overseas (didn’t say who) and he would know more in a couple of weeks so would be back in touch then. Earl reminded him that time is marching on.
The correctness of Mr Attfield’s understanding of the mid-April discussions is
reinforced by Mr Todd’s email of 5 May 2015 when Mr Todd of his client that:
… I keep getting told he is close to confirming a deal to obtain finance to
enable him to settle this purchase and others.
[77] Accordingly, I find that Mr Day incorrectly recorded the beginning aspects of his discussions with Mr Attfield by suggesting that he had told Mr Attfield that funds were sorted or confirmed. Equally, I find that Mr Attfield clearly did not “accept that” on 15 April 2015, despite Mr Day making a record to that effect.
[78] I find as a consequence that Mr Day’s notes of the 14 and 15 April 2015 conversations are unreliable and that I must approach what is there recorded as to the “side agreement” with caution.
[79] I, therefore, now turn to the discussion of a side agreement itself.
[80] Despite Mr Attfield’s (affidavit) denial that a side agreement was discussed or agreed, I find on the evidence that Mr Day, in his (52 second) 14 April 2015 call, touched on the need to have an agreement whereby there would be further time to complete the clause 34 requirements and that in the 15 April 2015 discussion that possibility was somewhat advanced.
[81] I then must ask myself – in what way was a “side agreement” identified and
advanced?
[82] In the 14 April 2015 note, Mr Day identifies what he said as being:
… if not get inlet sorted. Would need side agreement to give funders
comfort over that area since it’s important.
[83] I accept that in the very brief conversation which occurred on 14 April Mr Day, having indicated that he was waiting for progress from others in relation to funding, must have said words to the effect that he needed to get the inlet sorted.
The “inlet” reference, when expressed to Mr Attfield, would have been clearly understood by Mr Attfield to be a reference to the clause 34 requirements. The purpose of the settlement agreement had been to allow time (until 15 May 2015) to complete/fulfil those requirements. As I have found, the mid-April discussions were against a background where Mr Attfield and Mr Weller had in the meantime reached agreement with Mr Day (on 8 March 2015) as to the physical details required for the pumphouse (including inlet) and easements. Mr Attfield could not have understood anything Mr Day said on 14 or 15 April 2015 to be a suggestion that Mr Day was reneging on the 8 March 2015 agreements on pumphouse and easements or was seeking to re-open those agreements.
[84] I then consider Mr Day’s note in relation to the 15 April 2015 conversation.
[85] Mr Day records “I told Attfield that funder would require side agreement to cover inlet issues.” This was a simple follow-on and parallel comment to the previous indication from Mr Day. In other words, Mr Day was indicating that he would need further time to complete the clause 34 requirements.
[86] Mr Day records that “Attfield accepted that.”
[87] Having heard both Mr Day and Mr Attfield under examination, including Mr Attfield’s concessions in cross-examination, I am satisfied that Mr Attfield did indicate that the Attfields were prepared to consider an extension of time for completion of the clause 34 requirements if the financial settlement took place on 15
May 2015. Mr Day, in his evidence, has accepted that at all times up to when the contract was cancelled he knew that Mr Attfield’s requirement was that the financial settlement had to occur on 15 May 2015 and that no extension was being granted in that regard.
[88] Mr Day’s record of the 15 April 2015 conversation then proceeds, but not with a note that Mr Attfield then agreed to the extension of time for completion of the clause 34 requirement. Rather, Mr Day’s record is that:
I said that I would leave it up to the funders [sic] lawyers to get in touch with their lawyers closer to settlement date to arrange that as our lawyer, GT Law, would not be involved. Attfield agreed to this.
[89] The position which I find to have been reached is clearly evidenced by this part of Mr Day’s note. There was not an agreement as to extension of clause 34 requirements reached on 15 April 2015. Rather Mr Day raised the need for such an extension and agreed with Mr Attfield that the detail of an extension would be explored between the funder’s lawyer and Mr Attfield (or his lawyer) closer to settlement.
[90] I also find that Mr Attfield’s concluding comment (“that time is marching on”) as emailed by Mrs Attfield to Ms Clarke in the 16 April 2015 email was made to Mr Day at the end of the 15 April conversation. This is, in substance, confirmed by Mr Day’s record that “Attfield said not long to go, etc.”
[91] Thus, the evidence clearly establishes that in mid-April 2015, in a brief conversation begun on 14 April and concluded on 15 April, Mr Day indicated to Mr Attfield (not that funds for the purchase were arranged but) that progress with the funder was still being pursued and that, in any event, more time would be required after the settlement date to complete the clause 34 requirements. I find that matters were left between Mr Day and Mr Attfield on the basis that any particular request for extension would be pursued by the funder’s lawyer rather than NZLF’s lawyer and that any arrangement as to extension would be pursued closer to the settlement date.
[92] There was, accordingly, no “side agreement” in the sense of a variation of contract. All Mr Day and Mr Attfield agreed on was that there might be a further discussion (between the funder’s lawyers and Mr Attfield or his lawyers) closer to settlement.
Breaches of the agreement by Mr Attfield?
[93] For the reasons I have already set out, including particularly the agreements reached on site on 8 March 2015 and Mr Day’s subsequent inaction both in relation to those agreements (above at [29] to [31]), NZLF has not established as arguable the proposition that Mr Attfield himself committed breaches of the settlement
agreement. To the contrary I find that Mr Attfield did everything contractually required of him and that through his solicitor he actively pursued progress to the point of being prepared to discuss further variation of requirements.
Invalid cancellation
[94] As I have recorded at [15] above, this ground of opposition was raised by NZLF for the first time in Mr Ballantyne’s submissions filed 7 December 2015. Mr Ballantyne impliedly sought leave to amend the grounds of opposition to include the allegation that Mr Attfield’s cancellation was invalid.
[95] I now turn to examine the merits of the ground of opposition which NZLF seeks to advance, both with a view to determining the leave application and then, if necessary, dealing with the issue substantively.
Submissions for NZLF
[96] Rather than paraphrase Mr Ballantyne’s submissions, I set out the four paragraphs dealing with the “invalid cancellation” point:
9.Mr Attfield elected through his solicitor, Gillian Clarke, to cancel the contract by notice dated 15 May 2015. He did not invoke the cancellation procedure contained at Clause 10 of the Agreement. He therefore relies on an allegation that NZLF repudiated or substantially breached the Agreement entitling him to cancel the contract under s 7 Contractual Remedies Act 1979 by:
9.1Failing to settle on 15 May 205 in accordance with the sale and purchase agreement as varied by the Deed of Settlement; and
9.2Not obtaining title for all the land being purchased by NZLF (clause 18(d)(iv)).
10.While Clause 10 of the Agreement leaves open the possibility of immediate cancellation on the basis [of] repudiation/substantial breach, the difficulty for Mr Attfield is that he has to be certain the he can point to facts that, if established, amount to repudiation on NZLF’s part. It is submitted by NZLF that he has not done so sufficient to displace NZLF’s expectation that Clause 10 of the Agreement would apply.
11. In this regard, it is submitted:
11.1 There was no agreement between the parties that time was of the essence; clause 10 of the Agreement continued to apply in accordance with Operative Clause 6 of the Deed of Settlement and Variation “In all other respects the terms of the sale and purchase agreement shall apply”.
11.2 There was no gross or protracted delay by NZLF; settlement was set down for 15 May 2015 as an alternative extension under clause 18.0 (d) (iv). NZLF understood an agreement had been reached to settle the land on 15 May 2015, for which it communicated it was ready willing and able to do by way of nomination and sought settlement of that Agreement.
11.3 There is no suggestion that Mr Attfield would obtain a substantially reduced benefit, substantially increased burden or that the benefit or burden of the contract would be substantially different if he acted in accordance with Clause
10 of the Agreement when purporting to cancel the
Agreement.
12.Even if Mr Attfield had given notice pursuant to Clause 10 of the Agreement, his notice would be invalid as he was in substantial default of his obligations under the Agreement. He cannot rely on a breach which he himself induced. Mr Day’s evidence is that Mr Attfield “actively frustrated” the parties’ ability to give effect to Clause 34.0 of the Agreement and Clause 4 of the Deed of Variation dated 15 February 2015. It is submitted that Mr Attifeld’s default under the agreement had the effect of preventing NZLF from obtaining title for all the land being purchased by NZLF (clause
18(d)(iv)) as it could not resolve the location and route for the Dairy
Creek Irrigation Scheme.
(Footnotes omitted.)
[97] In summary, NZLF asserts that:
(a) The only applicable provisions for cancellation under the express terms of the contractual arrangements are found in clause 10 (“Notice to Complete and Remedies on Default”).4 Accordingly, so NZLF asserts, Mr Attfield had to serve a settlement notice upon NZLF, which would have required NZLF to settle on or before the twelfth working day after service of the notice.
(b)While the Contractual Remedies Act 1979 provides statutory remedies for breach, Mr Attfield, in order to bring himself within those
4 In the 2013 agreement the parties had adopted the standard form of agreement for sale and purchase of real estate, REINZ/ADLS 9th Edition 2012.
remedies, would have needed to establish that NZLF’s failure to settle
on settlement date earlier had:5
(i)substantially increased the burden of the contractual arrangements; or
(ii)substantially reduced the benefit of the contractual arrangements for Mr Attfield; or
(iii)transformed the benefit or burden of the contractual arrangements into something substantially different.
[98] I do not need to deal at this point with the further argument (in Mr Ballantyne’s paragraph 12) that Mr Attfield was not entitled to give a settlement notice because he was in substantial default of his obligations. I have found that Mr Attfield had met his obligations.
[99] Upon the basis of the analysis summarised at [97] above, Mr Ballantyne submitted that this was both an appropriate case in which to grant NZLF leave to add these grounds of opposition and, leave having been granted, NZLF’s caveat should be upheld on the basis that there had not been a valid cancellation of the contract, which is therefore running on.
Submissions from Mr Attfield
[100] Mr Logan’s submissions were necessarily presented orally (because the point concerning the mechanism of cancellation had been taken late). He did not file a written synopsis on the point.
[101] In response, Mr Logan first noted that Mr Attfield, for his cancellation, does not rely on either of the cancellation mechanisms (clause 10 of the 2013 agreement or the Contractual Remedies Act provisions) which Mr Ballantyne’s submissions
assumed.
5 By reference to the Contractual Remedies Act 1979, s 7(2) – s 7(4).
[102] Instead, Mr Attfield invokes clause 18(d)(iv) of the 2013 agreement as varied by the settlement agreement.
[103] Clause 18(d)(iv) provides:
(d) It is agreed that should any new boundary for the property to be purchased traverse any existing title(s) the Vendor may at his election either;
…
(iv) In the event that title(s) for the proposed subdivided lots being purchased by the Purchaser for whatever reason have not issued by 31st of August 2014 the Vendor, at his sole discretion, may either cancel this agreement and the deposit shall be forfeited by the Purchaser or, alternatively, extend the agreement to such time to enable the issue of title(s) and settlement. This clause is for the sole benefit of the Vendor PROVIDED the Vendor agrees not to cancel the agreement if the Purchaser has at all times acted expeditiously in attempting to obtain title(s).
[104] The necessary titles were not issued by 31 August 2014. As a consequence, the previous litigation to which I have referred ensued.
[105] By the settlement agreement the parties resolved that litigation and agreed:
2.The Parties shall treat the sale and purchase agreement as continuing to have effect and the vendor agrees to extend the date for settlement of the sale and purchase agreement under clause 18(d)(iv) to 15 May
2015.
[106] The settlement agreement then dealt particularly with the provisions of clause
34 of the 2013 agreement (which I have quoted at [5] above). By clause 6 of the settlement agreement, it was provided that in all other respects the terms of the sale and purchase agreement would apply.
[107] Mr Logan submitted that clause 18(d)(iv) provided a specific mechanism for cancellation in the event that the defined events or circumstances existed. Mr Logan submitted that Mr Attfield, therefore, did not need to rely on the alternative provision for cancellation by way of a settlement notice under clause 10 or by reason of provisions of the Contractual Remedies Act applying.
[108] In terms of the factual prerequisites for Mr Attfield’s election, Mr Logan noted that it was common ground that the titles required to give effect to clause 34 had not issued and the proviso to clause 34 did not apply because (as I have found) NZLF had failed to take the required steps. NZLF’s conduct clearly amounted to a failure to act expeditiously. It had in fact not acted at all on the clause 34 steps following the 8 March 2015 agreements.
[109] Therefore, submitted Mr Logan, the right of election existed. It came into existence at 5.00 pm on 15 May 2015, by reason of the definitions and provisions relating to “working days” under the general terms of sale.6 Mr Attfield was (through Ms Clarke) entitled to cancel by sending the email which Ms Clarke sent at
5.15 pm, stating “Our client elects to cancel the sale and purchase agreement.”
[110] Although the cancellation notice referred to the failure of NZLF both in relation to obtaining titles (with reference to clause 18(d)(iv)) and to financially completing the purchase, it is sufficient that one of those grounds existed to justify cancellation.
Mr Ballantyne’s response
[111] Mr Ballantyne submitted that upon the execution of the settlement agreement in February 2015, Mr Attfield’s right of election of cancellation ceased to exist. He said that, upon the arrival of the 31 August 2014 date for performance under clause
18(d)(iv), Mr Attfield, as vendor, had then the right of election set out in the clause. Mr Attfield could either cancel the agreement and forfeit the deposit or he could extend the agreement to a later time to enable the issue of titles and settlement. Mr Ballantyne submitted that once Mr Attfield made his election by extending the time for issue of titles and settlement, the operation of clause 18(d)(iv) was at an end. Thereafter, he submitted, Mr Attfield was required to follow the settlement notice
procedure under clause 10 in the event of later defaults.
6 Clause 1.2.
Discussion
[112] The issue raised for NZLF is essentially one of contractual interpretation. Objectively assessed, what was the intention of the parties as they expressed it in their contractual documents read in their context? Two provisions of the settlement agreement are particularly relevant and I repeat them:
2.The Parties shall treat the sale and purchase agreement as continuing to have effect and the vendor agrees to extend the date for settlement of the sale and purchase agreement under clause 18(d)(iv) to 15 May
2015.
…
6.In all other respects the terms of the sale and purchase agreement shall apply.
[113] The parties’ intention as expressed in clause 2 was not to simply insert into the 2013 agreement a new settlement date for the agreement but also to amend the specified date in clause 18(d)(iv) from 31 August 2014 to 15 May 2015. Clause
18(d)(iv) is not a clause which deals with the “settlement date” of a contract in the normal sense. Clause 18(d) deals with matters relating to boundaries and the issue of titles. In particular it contains the parties’ agreement as to what would happen if titles did not issue by a stipulated date. When the parties, through the settlement agreement, extended the date stipulated in the settlement agreement for the issue of titles (and therefore settlement) they did not purport to terminate the election (after cancellation or extension) available to Mr Attfield under clause 18(d)(iv).
[114] As a matter of the natural meaning of the settlement agreement, what the parties were doing was varying the 2013 agreement. By clause 2 in particular they varied clause 18(d)(iv). The settlement agreement itself was entitled “Deed of Settlement and Variation of Sale and Purchase Agreement”. Clause 6 expressly provided that “in all other respects the terms of the sale and purchase agreement shall apply”. Those terms include the provisions of clause 18(d)(iv) (as varied). The submission for NZLF, that by the settlement agreement Mr Attfield lost his right of election, including his right to cancel under clause 18(d)(iv), is not supported by the contractual terms themselves.
[115] In these circumstances it would be inappropriate to grant leave to NZLF to amend its grounds of opposition to include this ground and I will not be doing so. Had NZLF included this matter in its grounds of opposition, the ground would have failed for the reasons I have stated. The proposed ground of opposition had no prospect of success.
[116] There was an additional aspect to Mr Ballantyne’s submission in relation to clause 18(d)(iv). It related to the “side agreement” alleged by NZLF. Because I have found that a side agreement did not come into existence it is unnecessary that I make a determination in relation to this argument and I therefore record it only briefly.
[117] Mr Ballantyne submitted that on the basis of the evidence a side agreement had come into existence. The side agreement was that NZLF would still have to financially settle the purchase on 15 May 2015 but that the time for completion of clause 34 matters would be extended beyond 15 May 2015. On that basis, Mr Ballantyne submitted that (assuming clause 18(d)(iv) still applied), Mr Attfield had no right of cancellation in relation to the clause 34 matters. To the extent there had been a failure of financial settlement, Mr Attfield had to resort to the settlement notice procedures under clause 10.
[118] This argument fails on the factual findings in that I have found that there was no side agreement by which Mr Attfield agreed to extend time for completion of clause 34 matters.
[119] There is a further answer to this argument, as identified by Mr Logan. Mr Day was seeking an extension of time to complete clause 34 matters. But it was always made clear to him that Mr Attfield’s absolute requirement was for financial settlement to be completed on 15 May 2015. Agreement on the terms of a side agreement never occurred. Had such agreement occurred the Court would have been faced with a powerful argument that any accompanying extension of time for clause
34 matters was clearly conditional on financial settlement on 15 May 2015. It was not a part of any discussion between the parties that Mr Day might have an extension for clause 34 matters if he failed to financially settle as required on 15 May 2015.
[120] In the event, by reason of my other findings, I refrain from determining the application on these additional grounds.
Outcome
[121] NZLF has not established a reasonably arguable case in support of the proposition that the beneficial interest which it held under the 2013 agreement (as varied by the settlement agreement) continues to exist. To the contrary, the contractual arrangements between the parties have been cancelled and NZLF’s interest in the estate no longer exists.
[122] Mr Attfield is entitled to an order that the caveat be removed.
Costs
[123] Costs must follow the event.
[124] I have not heard from counsel as to the assessment of costs. Mr Attfield seeks costs on a solicitor/client basis, together with disbursements.
[125] I will reserve the quantum of costs and disbursements.
[126] In the event there is disagreement between the parties, counsel are to file and serve memoranda (four page limit) and the Court will determine costs and disbursements on the papers. Counsel for Mr Attfield is to file the first memorandum and counsel for NZLF is to respond within five working days.
Order
[127] I order:
(a) Caveat 9594158.1 lodged against Certificate of Title 665786, Otago
Registry, shall be removed.
(b)The respondent is to pay the applicant’s costs and disbursements, reserving for further determination the amount of costs and disbursements.
Associate Judge Osborne
Solicitors:
Ross Dowling Marquet Griffin, Dunedin.
Canterbury Legal, Christchurch.
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