B S Developments No.12 Limited v P B & S F Properties Limited HC Wellington Civ-2003-485-2279
[2005] NZHC 1666
•8 April 2005
IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY CIV-2003-485-2279
BETWEENB S DEVELOPMENTS NO. 12 LIMITED
Plaintiff
AND P B & S F PROPERTIES LIMITED
Defendant
AND HORSFALLS LIMITED
First Third Party
AND WAYNE DYER
Second Third Party
Hearing: 15 - 18 February 2005
Appearances: E J Horner for plaintiff
B A Corkill with D G Dewar for defendant J A Langford for first third party
T Stevens for second third party
Judgment: 8 April 2005
In accordance with r 540(4) the Registrar is directed to endorse this judgment with the delivery time of 4.30 p.m. on 8 April 2005.
JUDGMENT OF MACKENZIE J
Introduction
[1] This is an action for specific performance in respect of a contract for the sale of a property at 170-172 Thorndon Quay, Wellington (“the property”). That contract was entered into on 27 June 2003 between the plaintiff as purchaser and the defendant as vendor. The contract was conditional upon the completion of “due diligence” by the defendant by 11 July 2003. The defendant purported to give
notice, through its solicitors, on 8 August 2003 confirming the contract. The essential issue between the plaintiff and the defendant is whether the contract was capable of being confirmed on that date. The first third party and second third party are respectively the real estate agency and the salesman involved in the transaction. Relief is sought against them in the event that the plaintiff is successful.
Background
[2] I set out first a general summary of the principal events. This summary sets out my findings on background factual issues. I deal in more detail with the evidence about the critical events, where there are relevant factual issues which must be resolved, later.
[3] The defendant is a company owned by Mr and Mrs P B and S F Hawkes, who each hold 50% of the shares and are the two directors. It owns the property at 170-172 Thorndon Quay. That land is essentially vacant land, leased to a car- parking company. The property was purchased in July 2000. Mr and Mrs Hawkes are the proprietors of a business called Amalgamated Video, which has a number of retail outlets. They intended to develop the property as a commercial outlet to be occupied by their own business and other tenants. By May 2003 they had commissioned engineers and architects, had had negotiations with a potential major tenant and obtained resource consent and a building proposal.
[4] Mr and Mrs Hawkes had not mentioned the possibility of selling the property to anyone, but within the space of one week in May 2003 received two approaches from potential purchasers of the property. Mr Dyer, a commission salesman representing Horsfalls, visited the office of Mr and Mrs Hawkes. Mrs Hawkes knew Mr Dyer and the firm Horsfalls from previous dealings. Mr Dyer told her that he had an interested client who wanted to buy the property. She was surprised to receive this visit, because they had never expressed any interest in selling the property at that time. Mrs Hawkes told Mr Dyer that it was not on the market and that she would need to talk to Mr Hawkes about it but doubted that they would sell. She talked to her husband about it. He did not want to sell, but Mrs Hawkes was interested.
[5] Mr Dyer returned with an offer for $1.5 million. The offer was dated 20 May and was from Building Solutions Ltd. It contained a “due diligence” clause, requiring fulfilment or waiver within 10 working days. Mr Dyer left the offer with Mrs Hawkes for them to consider it.
[6] At about the same time, another company approached Mr and Mrs Hawkes and had some discussions. That company submitted an offer for $1.7 million. It is not necessary to describe in detail the discussions with that party.
[7] Mrs Hawkes discussed the offer presented by Mr Dyer with her husband. He was not interested. Mrs Hawkes told Mr Dyer that, when he subsequently visited. He took the document away but came back a couple of days later with the offer increased to $1.55 million. Mr and Mrs Hawkes were both there and talked about it. Mr Hawkes said that the offer was too low. Mr Dyer asked what sort of price they would want, and Mr Hawkes said that they might consider $1.8 million.
[8] Mr Dyer subsequently returned, with an offer of $1.8 million, with a due diligence clause, to be satisfied within 60 days. There was discussion between Mrs Hawkes and Mr Dyer about that 60 day period, in which Mrs Hawkes indicated that that period was too long. Mr Dyer left, leaving the document with Mrs Hawkes. She later spoke to Mr Dyer by telephone and told him that her husband was definitely not interested in an offer with a 60 day clause, and Mr Dyer came back and collected that offer.
[9] At the end of June, Mr Dyer visited again. Mrs Hawkes told him that there was interest from another party. Mr Dyer said that he would go and see his client and believed his client was now going to make an offer that they would be happy with. Mrs Hawkes told him that it would have to be a genuine, clean, quick, clean offer. Within a day, Mr Dyer came back and presented an offer at $1.8 million with a 10 day due diligence period.
[10] Mr and Mrs Hawkes referred the offer to their solicitor, Ms James. She reported to them by fax on 25 June 2003, suggesting some alterations to the form of contract. That letter was referred to Mr Dyer, who sent a fax to the solicitor stating
that B S Developments were happy with the contents of that letter. Ms James faxed Mr Dyer’s fax to Mr and Mrs Hawkes. The proposed agreement for sale and purchase was amended by the addition of a new page containing the amendments proposed by Mrs James.
[11] On 27 June 2003, Mr and Mrs Hawkes attended on Ms James and they discussed the two offers that were then on the table, that from the plaintiff and that from the party I have referred to in paragraph 6. Ms James went through both offers with them, comparing the two. Mr and Mrs Hawkes decided to accept the plaintiff’s offer. Ms James then telephoned Mr Burrell, who was a director of the plaintiff and was handling the matter for the plaintiff. She told him that his offer had been accepted. She asked who the plaintiff’s solicitor was, so that she could send the agreement to the solicitor. Mr Burrell said that he did not know who he would be instructing. She asked if she should fax the agreement to him. Mr Burrell asked her to courier it to him and said he would refer it to a solicitor. Mrs James couriered the agreement accordingly.
[12] On 8 July 2003, Mr Dyer rang Mrs Hawkes. He said his client wanted a meeting. The earliest this could be arranged was on 10 July. Mrs Hawkes said to Mr Dyer that that did not sound good, and she asked why the purchaser would want to see them when the contract had to be confirmed by 11 July. She said that if the purchaser thought he wanted an extension of time on the contract he was not going to get it. Mr Dyer said that he did not know why Mr Burrell wanted to see them.
[13] Mr Dyer and Mr Burrell came to see Mr and Mrs Hawkes on 10 July. Mr Burrell made it clear that he wanted an extension of time. The meeting became somewhat heated. Mr and Mrs Hawkes made it clear that anything beyond 10 days for satisfaction of the due diligence clause was not acceptable, and that no extension of time would be given.
[14] Mr Dyer telephoned Mrs Hawkes later that day to discuss the meeting. Mrs Hawkes rang Ms James and reported on the meeting. Late on the afternoon of 11 July, Mr Dyer sent a fax to the defendant’s solicitors. The fax header shows it
was sent at 5.15 p.m. Ms James saw it on the following day, Saturday. That fax read:
Please note that unfortunately I cannot get the purchaser to become unconditional within the 10 day time-frame. Therefore the contract is at an end.
Ms James forwarded a copy to Mr and Mrs Hawkes.
[15] On 6 August, Mrs Hawkes received a phone call from Mr Horsfall. He asked if they still owned the property and, when told that they did, asked to see them. He came to see Mr and Mrs Hawkes. Mr Horsfall told them that he had become aware that Mr Burrell was acting as if he had purchased the property and, in particular, that he had instructed agents to market the property.
[16] After he had left, Mrs Hawkes phoned Ms James. She reported what Mr Horsfall had said. Ms James then wrote to Bayleys, the other real estate company which Mr Horsfall had indicated was involved, and to Horsfalls. She sent a copy of the letter to Mr Horsfall to Mr Burrell. That letter said:
We understand that you have advised our client that Richard Burrell is marketing this property. We enclose a copy of your firm’s fax to us of 11th July which cancelled the conditional contract between Mr Burrell’s company and our client. Even without this fax, the contract would have lapsed for lack of confirmation or waiver of special conditions.
We are instructed that the property is not on the market.
[17] Mr Burrell acknowledged that he had received the fax, but said that he binned that fax in frustration. He said that he did not agree with the defendant’s solicitor’s “take” on the situation.
[18] Mr Burrell instructed his solicitor on 7 August 2003 to confirm the agreement. Mr Caughley wrote to Ms James in these terms on 8 August:
We act for the purchaser and have recently received the agreement dated 27 June 2003. We are instructed to confirm clause 14 of the agreement and have been asked to enquire where the deposit should be paid.
[19] Mr Dyer was in Wanaka when the later events occurred. He had resigned from Horsfalls shortly after 11 July. He said that on or about 8 August he
remembered having a conversation with Mr Burrell when he was in Wanaka. He subsequently rang the defendant’s solicitors from Wanaka. Ms James was not available. He left a brief message. His message as recorded by the receptionist was:
Re Thorndon Quay
Sent fax saying contract at an end due to no contact from his client and he had to go to Wanaka on a family matter. So clearing desk before he left. He will call next week.
[20] Subsequently, Mr Caughley continued to take steps to settle the contract and arranged for a caveat to be lodged. The defendant refused to settle, and these proceedings were issued.
Issues
[21] Ms Horner for the plaintiff included a statement of the issues in both her opening and closing submissions. It is convenient to deal with the matter by following that statement of the issues. That reads as follows:
Was the Agreement of 27 June 2003 (being Agreed Document (AD) 6) capable of being made unconditional by the plaintiff on 8 August 2004; which requires answers to the following questions:
(a)Was the Agreement void or merely voidable, after the end of the 10 working day timeframe for the due diligence condition? If voidable then:
(b)Did the fax of 11July 2003 from Mr Dyer of Horsfalls limited to the defendant’s solicitor bring the Agreement to an end? This in turn requires answers to the following:
(i)Was Mr Dyer for Horsfalls limited an agent of the plaintiff? If yes then:
(ii)Did Mr Dyer he have the plaintiff’s authority to avoid the Agreement?
(c)If the Agreement was not avoided on 11 July 2003, was it avoided on 6 August 2003? This requires answers to the following questions:
(i)Is the vendor’s solicitor’s fax of 6 August 2003 to Mr Horsfall a notice to the plaintiff by the defendant? If yes then:
(ii)Do the words used in the fax avoid the Agreement? If no then:
(iii)Is the vendor’s solicitor’s fax of 6 August 2003 addressed to Bayleys a notice to the plaintiff by the defendant? If yes, then:
(iv)Do the words in that fax avoid the Agreement? If no, then:
(d)Are there any other reasons why the Agreement was not made unconditional by the plaintiff on 8 August 2003?
Arguments of waiver and estoppel require consideration.
(e)If the Agreement was capable of being confirmed as being unconditional by the plaintiff on 8 August 2003, did the fax from the plaintiffs solicitor to the vendor’s solicitor of 8 August 2003 render the Agreement unconditional?
(f)If yes to the preceding question, was there a mutual mistake and if so, should relief be granted to the defendant under the Contractual Mistakes Act 1977.
(a) Was the agreement void or merely voidable after the 10 day period?
[22] This contract was on the REINZ/ADLS form of agreement for sale and purchase of real estate, 7th Edition. It contained a special condition described as a “due diligence” condition. It is necessary for me to discuss the relevant provisions in more detail later. On this question, it is sufficient to note that under clause 8.7 of the standard form the “due diligence” condition is a condition subsequent, time for fulfilment is of the essence, and, if the condition is not fulfilled by that time, either party may avoid the contract by giving notice to the other. It is clear that, under clause 8.7, notice of fulfilment of a condition can be given after the expiry of the time specified, but before avoidance (Sanders v O’Connor (1986) 2 NZCPR 492). Thus, the contract is of a class which is voidable, not void, after the expiry of the time period.
(b) Did the 11 July fax bring the agreement to an end?
[23] The answer which I have given to question (a) is given on the basis of the standard conditions of contract, and without considering the effect of the specific circumstances following the formation of the contract. Question (b) requires consideration of those circumstances.
[24] It is necessary first to consider the capacity in which Mr Dyer (or, through him, Horsfalls) was acting when he sent the 11 July fax. The plaintiff submits that Mr Dyer and Horsfalls were the agent of the vendor, and had no authority to convey to Ms James the purchaser’s intention that the contract should be at an end. The defendant submits that, in sending that fax, Mr Dyer was acting as the agent of the purchaser, and that the advice that the contract was at an end, being given by the purchaser’s agent, has the effect of bringing the contract to an end.
[25] The contract contains the standard provision concerning the agency of the real estate agent. Clause 11.1 provides (in this case with the addition of the words in square brackets):
If the name of a licensed real estate agent is stated on the front page of this agreement it is acknowledged that the sale evidenced by this agreement has been made through that agent whom the vendor appoints as the vendor’s agent to effect the sale. The vendor shall pay the agent’s charges including GST for effecting such sale. [2% plus GST to Horsfalls Ltd MREINZ]
The name of Horsfalls is stated on the front page.
[26] However, it is necessary to look beyond that provision in determining on whose behalf Mr Dyer was acting on 11 July. It is legally possible for a person to act as agent for more than one party to a particular transaction. That is to say, a person may act as agent for one party in respect of some aspects of a transaction, and as agent for another party in respect of other aspects. Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52, cited by counsel for the defendant, is an example. That case highlights, at para 77, the need to be specific as to the extent and purpose of the agency for each of the parties. So, clause 11.1 is not conclusive as to the status of Horsfalls, or Mr Dyer, for all purposes. Nor can it be conclusive as to their status in the period before the contract was signed. Each part of the transaction needs to be considered, and the facts relevant to that part examined, to determine the nature and extent of the agency for that part of the transaction.
[27] Mrs Hawkes in her evidence spoke of Mr Dyer referring to “his client”. Mr Dyer denied that he had referred to either the plaintiff or Mr Burrell as “my client”. He said that his general practice is not to refer to people as “my client”, and that he tends to refer to purchasers as “the purchaser” or “the buyer” or by their
name. I am satisfied that Mr Dyer did refer to Mr Burrell or the purchaser as his “client”. I prefer the evidence of Mrs Hawkes in this regard. There is confirmation of this in the note of telephone call which Mr Dyer made to the defendant’s solicitors on 8 August. Ms Parr, the receptionist, gave evidence. Her contemporaneous record of the conversation, set out above, uses the word “client”. I am satisfied that Ms Parr would not have written that word in her note unless Mr Dyer had used it. While Mr Dyer’s use of that word to describe Mr Burrell is not conclusive as to his status as the agent of the plaintiff, it is a useful indicator of the nature of the relationship.
[28] The original approach to Mr and Mrs Hawkes came from Mr Dyer. Mr Dyer said that in early 2003 he had spoken with Mr Burrell very generally about properties in the Thorndon Quay area. I find that the approach to Mr and Mrs Hawkes was a direct result of Mr Dyer’s knowledge of Mr Burrell’s interest in the property. Three offers were prepared, and submitted by Mr Dyer to Mr and Mrs Hawkes. Those offers had not been solicited by Mr and Mrs Hawkes, and Mr Dyer had been given no authority by the defendant to negotiate with potential purchasers and present offers. I am satisfied that Mr Dyer, in presenting those offers to the defendant, was not acting as its agent. He was acting as agent for Mr Burrell, or Mr Burrell’s company.
[29] I am also satisfied that Mr Dyer was acting as agent for Mr Burrell or the purchaser, and not as agent for the vendor, in arranging the meeting on 10 July. Mrs Hawkes’ evidence (which I accept) was that Mr Dyer said that “his client” wanted a meeting. Mr Burrell, in cross-examination, agreed that the meeting was instigated by him, and that he asked Mr Dyer to contact Mr and Mrs Hawkes on his behalf to arrange the meeting, for the purpose of persuading them to extend the time for confirming due diligence. In the light of that evidence, I find that Mr Burrell was not dealing with Mr Dyer as the agent of the defendant in arranging the meeting, but rather was instructing Mr Dyer, as his agent, to arrange the meeting.
[30] Following that meeting, Mr Dyer contacted Mr Burrell the following day. He had no instructions from Mr and Mrs Hawkes to do so. He said that he telephoned Mr Burrell from his car and asked him what he was going to do about the contract. He said that Mr Burrell replied something like he didn’t think it was going to
happen. He said that the conversation was brief and ended at that point, and he took this conversation to mean that Mr Burrell was not going ahead. Mr Burrell initially, in his prepared brief, said that on 11 July he did not speak or correspond or otherwise give any instructions to Mr Dyer or anybody else at Horsfalls Ltd. However, the evidence clearly established that there had been two telephone calls between Mr Dyer and Mr Burrell on that date, and in cross-examination he said that he was mistaken and that he did speak to Mr Dyer on that day. He was asked in cross- examination if he had any recollection as to what he said to Mr Dyer about the prospects of confirmation of the contract and said, “I would have said to him it was not going to happen today”. He was asked whether he would have expected Mr Dyer to report that back to the vendors or their solicitors and said that he would.
[31] I hold that, in conveying the advice of what he had been informed by Mr Burrell, Mr Dyer was acting as the agent of the purchaser. I find, on the basis of what was said between Mr Dyer and Mr Burrell in their telephone discussions, that Mr Dyer had actual authority to convey what is contained in the first sentence in the fax of 11 July, that is, “Please note that unfortunately I cannot get the purchaser to become unconditional within the 10 day time-frame”.
[32] Furthermore, if I am wrong in the conclusion that Mr Dyer was acting as agent for the purchaser, and, because of the agency clause in the contract, Mr Dyer is to be regarded as the agent of the vendors, I consider that the outcome, so far as the first part of the fax is concerned, is the same. Mr Dyer did speak to Mr Burrell on 11 July. So, whether the fax is to be regarded as a communication by the purchaser’s agent to the defendant’s solicitor, or as a report by the defendant’s agent to the defendant’s solicitor of information conveyed to the defendant’s agent by Mr Burrell, the result, so far as the first part of the fax is concerned, is the same.
[33] The more problematical part of the fax is the second part, which reads “Therefore the contract is at an end”. I find that Mr Burrell did not instruct Mr Dyer to inform the defendant’s solicitor that the contract was at an end. On the evidence, I am satisfied that Mr Burrell was endeavouring to keep the contract alive, and it would have been inconsistent with that to have authorised a specific statement that the contract was at an end.
[34] However, although Mr Dyer did not have express actual authority to convey that message to the defendant’s solicitor, I consider that Mr Dyer had either implied actual authority, or apparent authority, to do so. He was, as I have held, acting as the purchaser’s agent in writing the fax of 11 July. I have held that he had actual authority to convey the message contained in the first part of the fax. It would in those circumstances be quite unrealistic to hold that he did not also have authority to convey the purchaser’s intimation that the contract was at an end. It was suggested that the second sentence of the fax was merely an expression of opinion by Mr Burrell as to the effect of non-confirmation, and that, if that opinion were incorrect, it could have no effect. I consider that the whole of the fax must be considered. Read as a whole, I consider that, to the extent that notice of avoidance from the purchaser was required, the fax constituted such notice.
[35] In the light of those findings, I turn to consider whether the fax of 11 July brought the contract to an end. In considering this question, the terms of clause 8.7 and clause 14 of the contract require detailed consideration.
[36]Clause 8.7 provides as follows:
If this agreement is expressed to be subject either to the above or to any other condition(s), then in relation to each such condition the following shall apply unless otherwise expressly provided:
(1)The condition shall be a condition subsequent.
(2)The party or parties for whose benefit the condition has been inserted must do all things which may reasonably be necessary to enable the condition to be fulfilled by the date for fulfilment.
(3)Time for fulfilment of any condition and any extended time for fulfilment to a fixed date shall be of the essence.
(4)The condition shall be deemed to be not fulfilled until notice of fulfilment has been served by one party on the other party.
(5)If the condition is not fulfilled by the date for fulfilment, either party may at any time before the condition is fulfilled or waived avoid this agreement by giving notice to the other. Upon avoidance of this agreement the purchaser shall be entitled to the return of the deposit and any other moneys paid by the purchaser and neither party shall have any right or claim against the other.
(6)At any time before this agreement is avoided the purchaser may waive any financial condition and either party may waive any
condition inserted for the sole benefit of that party. Any waiver must be by notice.
Clause 14 provided as follows:
14. Due Diligence
14.1This agreement is conditional upon the purchaser being entirely satisfied with the property as a suitable property investment at the agreed purchase price following the Purchaser carrying out a due diligence investigation of the property, including (but not limited to) an investigation of the following:
(a)The proposed physical use of the property:
(b)The state of the title of the land;
(c)The overall financial suitability of the Purchaser’s proposed investment in the property and business;
(d)The overall financial suitability and commercial viability of the Purchaser’s proposed involvement of the property.
14.2The parties acknowledge that the condition in clause 14.1 above is inserted for the absolute and sole benefit of the Purchaser and may at any time prior to this agreement being avoided, be waived by the Purchaser giving written notice of waiver to the Vendor.
14.3The parties agree that satisfaction of the condition contained in clause 14.1 shall be at the sole and absolute discretion of the Purchaser and that if the condition is not fulfilled due to the Purchaser not being satisfied with any aspect of the property, the Purchaser shall not be obliged to state any reasons for the Purchaser’s lack of satisfaction.
14.4The date for satisfaction of the condition in clause 14.1 shall be the date being 10 working days from the date of this agreement.
[37] It follows from my factual findings as to the fax of 11 July that, to the extent that notice of avoidance under clause 8.7(5) was required to bring the contract to an end, the fax, given by Mr Dyer as agent for the purchaser, constituted notice under that subclause. Time for fulfilment expired, by the operation of clause 1.1(6), at
5.00 p.m. on 11 July 2003.
[38] If I am wrong in my conclusion that in sending that fax Mr Dyer was acting as agent for the purchaser, or if I am wrong in my conclusion that he had authority to bind the purchaser with respect to the second part of that fax, then it would follow that the comment in the second part of the fax, “therefore the contract is at an end”,
was not a communication made by the purchaser’s agent to the vendor. It is therefore desirable, though not strictly necessary, to consider whether the first part of the fax, standing alone, would have been sufficient to bring the contract to an end on 11 July.
[39] In this case, under clause 14.3, the purchaser was able to determine, in its sole and absolute discretion, that the condition was not fulfilled, and was not obliged to give any reasons for its lack of satisfaction with any aspect of the property. The information which was conveyed in the first sentence of the 11 July fax must be read in the light of that clause. When that is done, I consider that that part of the fax amounted to advice that the condition was not fulfilled, and the purchaser was not stating the reasons on which that non-fulfilment was based. I consider that to be the effect of the communication between Mr Burrell and Mr Dyer on which that part of the fax was based. Accordingly, it does not matter whether, in conveying that information, Mr Dyer was (as I have held) acting as agent for the purchaser, or whether he was acting as agent for the vendor, and Mr Burrell’s communication to him was communication with the vendor. In either case, there was communication from the purchaser to the vendor that the condition was not satisfied.
[40] In reaching that conclusion, I find that the meeting on 10 July is important. At that meeting, it had been made quite plain to Mr Burrell, by Mr and Mrs Hawkes, that there would be no extension of time. I hold that Mr Burrell can have been in no doubt at the conclusion of that meeting that a response from him as to whether or not the condition was satisfied was required on 11 July. Mr Burrell’s evidence was that at the conclusion of the meeting he said that he would keep working on it. Mrs Hawkes said that Mr Burrell left the meeting saying words to the effect that “Ah well, I’ve got one day left then to see what I can do”. I prefer the evidence of Mrs Hawkes, that words to that effect were used. But whether those words were used, or whether the matter was left on the basis that Mr Burrell described, I hold that Mr Burrell was in no doubt that a response from him as to whether or not he was satisfied as to the condition of the property was required on 11 July. The information which he conveyed to Mr Dyer on 11 July, and which Mr Dyer relayed to Ms James in the first part of the fax of 11 July, is to be understood in that light.
[41] Further, the nature of the condition is important in reaching that conclusion. This was not a case where compliance with the condition was in the hands of a third party (as, for example, with a condition as to finance). It was entirely within the discretion of the purchaser to decide whether it was satisfied with any aspect of the property. The purchaser was required to make that decision within the 10 day period. Mr Burrell was well aware that he would have to make the decision on the basis of the information then available, and that further time to make further inquiries had been refused.
[42] In those circumstances, I find that the communication between Mr Burrell and Mr Dyer, and between Mr Dyer and the purchaser’s solicitor, was a communication that the condition was not fulfilled. It was not intended to be understood, nor was it understood, as no more than a report on progress as to compliance with the condition, so as to leave the situation, as at the end of 11 July, as being one where the condition had not yet been fulfilled, but was still capable of fulfilment.
[43] Counsel for the defendant submits that the outcome of the 10 July meeting is to be regarded, if necessary, as a variation of the contract. Counsel submits that the effect of that meeting was to vary the effect of clause 8.7 so that, if the condition were not fulfilled by 11 July, the contract would automatically come to an end, without notice of termination. I do not consider that the events of the meeting on 10 July amounted to a variation of the contract. However, the outcome of the meeting of 10 July was, in my view, that the parties understood that any advice conveyed by the purchaser to the vendor by the close of the period for fulfilment of the conditions was to be a final decision as to satisfaction by the purchaser, so as to preclude the possibility of subsequent advice that the condition had been fulfilled.
[44] Clause 8.7(5) provides a method by which a contract may be brought to an end for non-fulfilment of a condition. That subclause applies where “the condition is not fulfilled by the date for fulfilment”. I do not consider that, on the facts as I have found them, that subclause applies. I consider that that subclause applies only where fulfilment of the condition has not occurred, and the condition is still capable of fulfilment. I consider that that subclause does not apply in the situation where,
before the date for fulfilment, the purchaser has advised that the condition is not and cannot be fulfilled.
[45] If that were not so, and clause 8.7(5) were the only means of termination for non-fulfilment, a purchaser who had advised, during the time for confirmation of the condition, that a condition could not be fulfilled would have a subsequent opportunity to recant from that position and advise that the condition had been fulfilled. The purchaser would have that opportunity for a change of heart, at least for the period set for the fulfilment of the condition, and, after that had expired, until the vendor gave a notice avoiding the contract. Further, if the only method of bringing a contract to an end when a condition could not be fulfilled was that contained in clause 8.7(5), then, even if it became apparent well before the end of the time for fulfilment of the condition that the condition could not be fulfilled, advice from the purchaser to that effect and notice of avoidance would not bring the contract to an end at that point. The purchaser, or the vendor, would have to wait until the time for fulfilment had passed, and then give notice of avoidance. In my view, that is an unduly pedantic construction, and one with potential difficulty and uncertainty for both vendor and purchaser.
[46] Accordingly, I consider that the advice from Mr Burrell to Mr Dyer, as reported in the first sentence of the fax of 11 July, was sufficient to bring the contract to an end. No additional notice of avoidance was required. I am therefore satisfied that, even if Mr Dyer was not authorised to give notice of avoidance, the contract was at an end on 11 July 2003.
[47] That conclusion makes it unnecessary for me to consider the further issues set out in para 21 above.
[48] In the course of the hearing, I heard expert evidence from three experienced conveyancing practitioners. I have not in this judgment referred to their evidence, and courtesy to them requires some explanation of that. I have found that the case is to be decided by reference to the contract, and the facts surrounding it. Evidence as to what an experienced practitioner should do in the circumstances does not assist in deciding the essential issues.
Conclusion
[49] For the reasons I have given, the plaintiff’s claim must fail. There will be judgment for the defendant against the plaintiff.
[50] In those circumstances, it is unnecessary for me to consider the claims against the third parties, except on the question of costs, and whether judgment should be entered under Rule 537 of the High Court Rules. Counsel may submit memoranda as to costs, and as to the form of judgment, if any, required by Rule 537.
“A D MacKenzie J”
Solicitors
Morrison Kent, Wellington, for plaintiff
Thomas Dewar Sziranyi Letts, Lower Hutt, for defendant Langford Law, Wellington, for first third party
Izard Weston, Wellington, for second third party
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