Broadwith v Grampians Station Limited
[2024] NZHC 2363
•22 August 2024
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2023-409-77
[2024] NZHC 2363
IN THE MATTER of breach of contract BETWEEN
ELIZABETH JANE CHAPMAN- BROADWITH
Plaintiff/Respondent
AND
GRAMPIANS STATION LIMITED
Eighth Defendant/Applicant
Hearing: 30 July 2024 Appearances:
B G Walker and A M Hutton for Plaintiff/Respondent J M McGuigan and T S Burtenshaw for Eighth Defendant/Applicant
Judgment:
22 August 2024
JUDGMENT OF ASSOCIATE JUDGE LESTER
CHAPMAN-BROADWITH v GRAMPIANS STATION LIMITED [2024] NZHC 2363 [22 August 2024]
[1] ‘Grampians’ is the name of a high country farm near Tekapo. Grampians was, prior to 2017, owned by a family partnership in which the plaintiff/respondent, Elizabeth Chapman-Broadwith (Elizabeth) held a 6.67 per cent interest. One branch of the family (the Hopes) held a 45 per cent interest and wished to buy the Grampians.
[2] Elizabeth, as part of agreeing to the sale by the partnership, negotiated the ability to buy a parcel of Grampians land. That agreement is called the Heads of Agreement and is dated 29 August 2017. The Hopes incorporated Grampians Station Limited (GSL) to complete the purchase from the partnership pursuant to a contract also dated 29 August 2017. GSL settled the purchase on 24 July 2018 and Elizabeth received her share of the purchase price as a selling partner.1
[3] The Heads of Agreement provided that Elizabeth could select one of four parcels of land to purchase.
[4] Ultimately, Elizabeth opted to acquire what is referred to in the Heads of Agreement as “Red Land and RS31880” (the Red Land). Elizabeth selected the Red Land towards the end of 2021 and as required by the Heads of Agreement, GSL entered into an agreement for sale and purchase with Elizabeth, which is dated 10 November 2021 (the contract).
[5] Elizabeth’s sale and purchase agreement for the Red Land contained a LIM condition. Elizabeth had until 24 November 2021 to satisfy that condition. On 30 November 2021, Elizabeth’s solicitor, by email to GSL’s solicitor, sought an extension to satisfy the LIM condition, to which there was no reply. There was no further communication between Elizabeth’s solicitor and the solicitor acting for GSL
1 GSL had not been incorporated at the time of the Heads of Agreement. The Heads of Agreement is signed by partners who were previously the first to seventh defendants in this proceeding. As a result of an issues conference where GSL accepted it was bound by the terms of the Heads of Agreement, it was accepted there was no point retaining the first to seventh defendants and the proceeding was discontinued against them. GSL accepts it is bound by the Heads of Agreement based on the pleading of an implied term to that effect. Elizabeth’s position in respect of the present application is in no way prejudiced by the removal of the signatories to the Heads of Agreement (the first to seventh defendants) as parties to this proceeding.
between the request for an extension of time and GSL avoiding the Red Land contract on 18 February 2022 on the ground the LIM condition had not been satisfied.2
[6] Elizabeth disputes the validity of that cancellation and in the alternative says that under the Heads of Agreement she remains entitled to purchase the Red Land.
[7]GSL has applied to strike out Elizabeth’s claim or for summary judgment.
Terms of the Heads of Agreement
[8] The background to the Heads of Agreement recited that as part of Elizabeth agreeing to the sale of the Grampians, she wished to purchase a parcel of land at Grampians. The ‘Background’ recorded:
C. This heads of agreement sets out the basic terms agreed between the parties for Liz to purchase a parcel of land at the Grampians, and as a result of which agreement, for Liz to sign an agreement for sale and purchase for the Hope Trusts to purchase the balance of the Grampians.
[9]The purpose of the Heads of Agreement is to:
1.1.1Confirm that the parties intend to enter into such legally binding agreements in relation to Liz’s purchase of land at the Grampians (Grampians Land Proposal);
[10] The Heads of Agreement recorded at 1.1.2 that one of its other purposes was to:
1.1.2Confirm that the parties intend to enter into good faith negotiations and carry out other investments and applications to resolve the Grampians Land Proposal, and subject to those good faith negotiations and other investigations and applications, finalise the Grampians Land Proposal to the satisfaction of the parties and record those agreements as legally enforceable obligations (Contract); and
(emphasis added)
2 Under cl 9.10(5) of the contract, set out at [18] below, a contract is avoided, not cancelled, if a condition is not fulfilled. There being no cancellation under the Contract and Commercial Law Act 2017, the Court’s power to grant relief under s 43 of that Act does not arise.
[11] After detailing the land options that were available, the Heads of Agreement recorded at cl 3.1:
The parties will enter into a Contract for Liz (or her nominee as purchaser) to purchase Liz’s Grampians Land Parcel which includes the following terms (Contract Terms):
(emphasis added)
[12] The structure of the land option clause was sequential. Elizabeth had until a specified date to opt for what is called the Whales Back Land. If Elizabeth opted not to acquire that block, the clause dealing with the next block recorded: “then the next parcel of land which the parties agree Liz may purchase” was the Red Land. Had Elizabeth not opted to purchase the Red Land, she could go onto the next option with that clause repeating the words just quoted, as did the final option.
[13] Detailed terms then follow including the use of a cob cottage on the Grampians, a lease back to GSL of the land Elizabeth was to purchase, the grant to GSL of a right of first refusal to purchase Liz’s Grampians Land Parcel, and other terms.
[14]Clause 3.2 of the Heads of Agreement provided:
3.2 Notwithstanding any other provision of this Heads of Agreement, Liz shall have a right to withdraw from the purchase of Liz’s Grampians Land Parcel (without disclosing her reasons) at any time up until settlement of the sale and purchase of Liz’s Grampians Land Parcel under the Contract.
[15] The Heads of Agreement provided for the terms of the purchase contract to be finalised by expert determination if such could not be agreed.
[16] Under the Heads of Agreement, Elizabeth agreed to sign the contract under which GSL was purchasing the Grampians — hence both the Heads of Agreement GSL’s purchase contract from the partnership having the same date.
Agreement for sale and purchase 10 November 2021
[17] Elizabeth opted to purchase the Red Land. The parties were able to agree to the terms of the purchase contract which was drafted by Elizabeth’s solicitor. The
contract was on the ADLS Tenth Edition Agreement for Sale and Purchase of Real Estate. It had a number of special conditions, including cl 20.1:
20.1 Land Information Memorandum. The approval of the purchasers’ solicitor of all resource management and town planning matters concerning the property and locality and all information disclosed by a Land Information Memorandum obtained in respect of the property within ten (10) working days of the date of this agreement. This condition is inserted for the sole benefit of the purchaser.
[18] The operation of these conditions is governed by cl 9.10 of the contract which provides:
9.10Operation of conditions
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 included shall 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 immediate return of the deposit and any other moneys paid by the purchaser under this agreement and neither party shall have any right or claim against the other arising from this agreement or its termination.
(6)At any time before this agreement is avoided, the purchaser may waive any finance condition and either party may waive any other condition which is for the sole benefit of that party. Any waiver shall be by notice.
The request for an extension
[19] On 30 November 2021, Elizabeth’s solicitor emailed the solicitor acting for GSL as follows:
Thanks for confirming the amended water supply map is approved. I now attach the signed water supply deed with the updated map (unsigned but approved by correspondence).
In terms of the water supply deed, the one thing I’m not clear on is how we might register that on the titles. I’m wondering if Linz might take a look at
something with a map on it and say no unless its surveyed. Did you have any thoughts on this? It crossed my mind we could do a simple agreement which says basically the parties have an agreement between them in relation to water rights. That simple agreement would presumably be registrable as an AG instrument, and basically just advises there is an agreement to be considered. What would you think about something like that?
I have noted that our client’s timeframe on the LIM condition has passed. The LIM has only just arrived. Can we have an extension on that condition for a few days. I’ve looked at the LIM and its fine my end but I just want to get our clients to approve.
Thanks, it would be good to get the updated documents when you can. I am also expecting to get the licence to occupy for the cob cottage to you shortly.
On the nutrient information condition, could you advise how the vendor complies with the Council nutrient rule requirements on the property? Is the vendor farming under a permitted activity status for nutrient loss purposes? If that’s the case our client could expect the same permitted activity status to apply to the land to be leased to the vendor?
[20] As noted earlier, there was no further communication between the parties until 18 February 2022 when GSL’s solicitor sent an email that said:
We advise that as the LIM condition (Clause 20.1) has not been satisfied, we are instructed to cancel the Agreement dated 10 November 2021.
Again, in this context, GSL’s right was to avoid the contract, not cancel it, but its intent was clear.
GSL’s applications summarised
[21] GSL says the Head of Agreement has been discharged by performance. Under the Heads of Agreement, Elizabeth was able to select a block of land to purchase, which she did (the Red Land). GSL entered an agreement for sale and purchase (the contract) with Elizabeth as required by the Heads of Agreement, thus discharging its obligation under that Heads of Agreement to enter into a contract for Elizabeth to purchase her nominated block (cl 3.1 set out at [11] above).
[22] As to the contract, GSL’s position is that this is a conventional situation of it avoiding a contract for non-satisfaction of a condition. As GSL did nothing after the letter of 30 November 2021 requesting an extension to satisfy the LIM condition, there is no basis upon which it can be said it represented time was no longer of the essence or that Elizabeth had waived the LIM condition which was for her sole benefit. GSL
says the contract is at an end and accordingly Elizabeth’s claim under the 10 November 2021 contract cannot succeed.
What orders does Elizabeth seek?
[23] Elizabeth’s case is based on both contracts still being alive or at least the Heads of Agreement still being enforceable in the event that the 10 November 2021 contract is not available.
[24] Elizabeth says the cancellation of the 10 November 2021 contract was ineffective because:
(i)the letter of 30 November 2021, when considered in terms of the wording of the LIM condition, confirmed that decision;
(ii)because the LIM condition was for Elizabeth’s sole benefit, her silence after 30 November 2021 was a waiver of the condition;
(iii)it was not open to GSL to avoid the contract on the basis of a condition that was for Elizabeth’s sole benefit; and
(iv)the delay in GSL giving notice of avoidance from the date the LIM condition was to be satisfied (24 November 2021) to its avoidance email of 18 February 2022, amounted to waiver of its right to do so.
[25] If the above are not sufficiently arguable to avoid Elizabeth’s claim being struck out or summary judgment being entered, Elizabeth says the Heads of Agreement entitles her to a new contract to purchase the Red Land or, it is as an independent bar to GSL avoiding the contract. There is not in fact a brightline between the two arguments. As I will develop, Mr Walker, counsel for Elizabeth, was forced to acknowledge that if Elizabeth’s position is correct, it must mean she has an absolute entitlement to the Red Land in effect, come what may.
GSL’s summary judgment application requires leave
[26] Summary judgment by defendants must be brought either at the time the statement of defence is served or, if later, only with leave of the Court. It is common ground that leave is required in this case.
[27]Associate Judge Sussock recently set out the test for the granting of leave in
Viand Holdings Ltd v Leonard:3
(a)Has the delay in filing been satisfactorily explained?
(b)Are the merits of the case for the relief sought — in this case, summary judgment — particularly strong and, therefore, deserving of determination at a latter time by the Court than is prescribed by the Rules?
(c)Is there a risk of a miscarriage of justice by determining the application at the later point in time?
Delay
[28] Mr Walker made detailed submissions as to why leave should be declined and in particular submitting GSL’s delay in bringing this application had not been adequately explained.
[29] This proceeding was commenced on 2 March 2023. Grampians filed its defence on 14 April 2024 and the first seven defendants (see footnote 1) filed their defence on 12 June 2023 with a reply to the statement of defence being filed on 8 August 2023.
[30] At the first case management conference, Associate Judge Paulsen made the directions sought in a Minute dated 18 September 2023. There had been discussions between counsel and by way of a joint memorandum orders were sought that required
3 Viand Holdings Ltd v Leonard [2021] NZHC 1675 at [20], citing Tip Top Ice Cream Co Ltd v Polarland Ltd (2002) 7 NZBLC 103,564 at [28].
Elizabeth to file any amended statement of claim within 10 working days which would have been by Monday 2 October 2023. The first amended statement of claim was a little delayed, being filed on 8 November 2023.
[31] Before the amended statement of claim was filed, the Court directed an in-persons issue conference be held. On 3 November 2023, counsel were advised that the issues conference would be held on 22 February 2024.
[32] The result of the issues conference is touched on at footnote one. A Minute, dated 22 February 2024, recorded an amended statement of claim as against GSL only was to be filed and served by 4 April 2024. GSL was to file its defence by 26 April 2024. The second amended statement of claim was filed on 1 May 2024. The statement of defence was filed on 13 May 2024, and the application for summary judgment/strike out was filed on 5 June 2024.
[33] Mr Walker is critical of this application not being brought when the proceeding was commenced, given the essence of the proceeding has not changed. While it is true the proceeding has not fundamentally changed, Gampians knowing in September 2023 that a further statement of claim was to be filed and that there was to be an issues conference in early 2024, could well reasonably wait to see the final shape of the claim before deciding whether to bring a strike out or summary judgment application.
[34] A defendant applying for summary judgment very early on in a proceeding could potentially face criticism for “jumping the gun” when the final form of the proceeding is not clear. Allowing the passage of some time to see if the nature of the claim is refined, may be warranted.
[35] I do not consider there has been inexplicable delay in this case. The last statement of defence was filed on 12 June 2023 (the first to seventh defendants having separate representation to GSL), but it cannot be said that there was true independence of separation between those defendants and GSL. Within three months of the last defence having been filed, an amended statement of claim was foreshadowed. To have
applied for summary judgment or strike out when an amended statement of claim was to be filed would be precipitous.
[36] In short, GSL awaited the final form of the pleading before deciding whether to pursue summary judgment. As Ms McGuigan, counsel for GSL, submitted the proceeding is substantively at an early stage as the time has gone into fine tuning the parties and the further pleadings.
[37] GSL’s evidence is that following the issues conference, Elizabeth would be repleading her claim to expedite the claim to substantial change after the conference. While there has undoubtedly been delay, I consider the delay is adequately explained through GSL wanting to see the final shape and nature of the pleading before committing the parties to the costs of a strike out/summary judgment application.
[38] Accordingly, I conclude that the delay that has occurred is not a compelling factor against the granting of leave.
The merits
[39] I do not repeat the analysis of the merits that appear below. I conclude that the merits are particularly strong and therefore deserving of determination at a later date than prescribed by the High Court Rules 2016 (the Rules).
Miscarriage of justice
[40] While the test for granting leave at [27] above refers to there being a risk of a miscarriage of justice by virtue of determining the application at a later point in time, counsel referred generally to the issue of miscarriage of justice.
[41] I have already noted that the proceeding is at a relatively early stage substantively. Had there been a number of substantive steps already undertaken by Elizabeth then she will have incurred potentially unnecessary costs, but costs can always be adjusted.
[42]Mr Walker submitted:
30. In many respects, the miscarriage has already occurred. It was only because the applicant agreed to admit an allegation that it is bound by the HOA that the respondent agreed to release defendants one to seven. Clearly the respondent would not have been agreed to this had an application for summary judgment been foreshadowed. It is noted that the claims against former defendants one to seven have not been disposed of on a final basis and those parties could be brought back in.
[43] I do not accept the above submission. I have commented at footnote 1 that Elizabeth’s position is not prejudiced through the discontinuance. GSL’s application presupposes it is bound by the Heads of Agreement. Elizabeth’s case does not depend on whether her former partners were committed to obtaining GSL’s agreement to sell the Red Land to her or whether GSL had a direct obligation to do so. If anything, the latter is a stronger position.
[44] Mr Walker then refers to the absence of discovery. However, ultimately this application turns on the meaning of the agreements. Mr Walker submits there is:
Clearly, … an unwillingness to provide documents relevant to the objective intention of the parties.
[45]Mr Walker submits that to not permit discovery would create unfairness.
[46] However, this is not a case where there are factual disputes in relation to any matter relevant to the context in which the Heads of Agreement or the 10 November 2021 agreement fall to be construed. Elizabeth does not suggest there are documents that she was shown or made aware of that could be relevant to the interpretation of either agreement. As there are not disputed facts relevant to interpretation, it is not a case where discovery would be required for trial. The inability to identify material areas of discovery, if anything, indicates that leave should be granted, that is, the application is one capable of being dealt with summarily.
Conclusion on leave
[47] I am satisfied it is appropriate to grant leave in the circumstances I have outlined. Leave is granted to GSL to seek summary judgment. Leave is not required in relation to the strike out application.
[48] I approach GSL’s application on the basis of an assessment of whether summary judgment is appropriate, given the affidavit evidence that has been filed. The principles are not in dispute.
[49] Under r 12.2(2) of the Rules, the court may make a judgment against the plaintiff if the defence satisfies the court that none of the causes of action in the plaintiff’s statement of claim can succeed.
[50] GSL has the onus of proving, on the balance of probabilities, that Elizabeth’s claims cannot succeed.4 Mr Walker referred to Stevens v Barron, which he submitted emphasised that a defendant must convincingly demonstrate that the plaintiff’s claims are untenable.5 Granting summary judgment to a defendant is not appropriate where the ultimate determination of the case can only be made after a full hearing.6
LIM condition
Was the LIM condition in fact confirmed?
[51] Mr Walker, counsel for Elizabeth, notes the LIM condition in the Special Conditions of the contract refers to “approval of the purchaser’s solicitor”, whereas the LIM condition in the Standard Terms (which does not apply because of the LIM condition in the Special Conditions: cl 1.5(3)), requires the purchaser to give their approval. Mr Walker submits this means that when Elizabeth’s solicitor in the 30 November 2021 letter said: “I’ve looked at the LIM and its fine at my end…” that constituted solicitor’s approval. That the solicitor went on to say she wanted Elizabeth’s approval, Mr Walker submits, is not relevant because cl 20.1 was not
4 Westpac Banking Corporation v M M Kembla NZ Ltd [2001] 2 NZLR 298 (CA) at [60]-[61] and [73]; and Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26].
5 Stevens v Barron [2014] NZCA 82 at [9(c)].
6 At [9(b)].
conditional upon such approval — it required only the purchaser’s solicitor’s approval. The reference in seeking client approval was redundant.
[52] I am not able to accept this submission. The full sentence of which Mr Walker relies on in part is:
I’ve looked at the LIM and its fine at my end but I just want to get our clients to approve.
[53] The solicitor, while indicating her own view, was not confirming the LIM condition — she was holding off doing so until her client (Elizabeth) gave approval. Nor did the solicitor intend her email to be confirmation of the condition because she sought an extension of time to provide confirmation. It is not possible to construe the email as if the reference to the extension of time to confirm and to obtaining client approval did not exist.
[54] That the overall tenor of the letter of 30 November 2021 suggests the contract is advancing — it attached a water supply agreement — does not remove the conditionality of the “approval”. “The purchaser’s obligation is to provide an unconditional notification of fulfilment”.7 The author of the 30 November 2021 email was not trying to give such notification.
Waiver of condition by Elizabeth through delay
[55]Waiver:8
… occurs when the party entitled to the benefit of the condition by words, written or oral, or by conduct leads the other party to believe that the condition will no longer be relied upon as affecting the obligation to complete. It must amount to an unambiguous representation arising out of a positive and intentional act done by the party granting the concession with knowledge of all the material circumstances.
(footnotes omitted)
7 D W McMorland Sale of Land (4th ed, Cathcart Trust, Auckland, 2022 at 212).
8 At 217-218.
[56]McMorland notes that under the ADLS form, cl 9.10(6) provides:9
(6)At any time before this agreement is avoided, the purchaser may waive any finance condition and either party may waive any other condition which is for the sole benefit of that party. Any waiver shall be by notice.
(emphasis added)
[57] The LIM clause was expressly for Elizabeth’s benefit so it was a condition she could waive. However, cl 1.4(1) of the contract provides that: “All notices must be served in writing”.
[58] The short point is that because there was no communication between Elizabeth and GSL or their solicitors between 30 November 2021 and the time of avoidance (18 February 2022), the contractual pre-conditions for waiver, that is, notice in writing by Elizabeth, were not met.
[59]McMorland notes:10
The requirement of notice in writing, though inserted to achieve certainty for each party of their rights, can be bypassed in either of the two normal ways: by waiver or by estoppel. In both cases there must be a clear and unequivocal representation of fact, which may be written, oral or by conduct. To be effective as a waiver the representation must be made with knowledge of all the material circumstances, and as the requirement of writing is for the benefit of both parties, there cannot be a unilateral waiver of the requirement, though the words and conduct of each party considered together may be construed as a joint waiver. For a representation to give rise to an estoppel, it is the perception of the representee which is important so that the representation can be effective without knowledge of the circumstances, and may not have amounted to a waiver, but it must have been relied upon by the other party to alter their position, possibly to their detriment.
(footnotes omitted)
[60] However, there is no basis for submitting that GSL is estopped from relying on the requirement for waiver to be by written notice when, as I have said, there was no communication between the parties after 30 November 2021 until the contract was avoided.
9 At 221 and 223.
10 D W McMorland, above n 7, at 223.
[61] Again, the difficulty in an argument GLS waived the need for waiver to be by notice is that GSL did nothing after 30 November 2021 which could amount to a waiver — nor is any conduct by GSL pre-dating 30 November 2021 relied on. Mere delay/silence is not enough as such is almost always ambiguous. That is all the more so when the 30 November 2021 letter left confirmation of the LIM condition awaiting Elizabeth’s approval. The ball was not in GSL’s court — it was entitled to wait on Elizabeth’s solicitor and when confirmation was not forthcoming, it was entitled to avoid the contract.
Can delay by GSL in avoiding the 10 November 2021 contract amount to waiver of its right to do so?
[62] Elizabeth relies on delay or silence by GSL after its solicitor received the 30 November 2021 email.
[63] Estoppel by silence is discussed in Infinity Enterprises NZ Ltd v Kinara Trustee Ltd.11 The Court of Appeal referred to the following from Equity and Trusts in New Zealand:12
As Equity and Trusts in New Zealand goes on to explain:
New Zealand courts have analysed cases of estoppel by silence by asking whether the silent party was under a legal, as opposed to a mere moral or social duty to speak. However, very little guidance has been given on how to establish such a duty. The jurisprudence of the English courts is more developed and utilises a test based on the reasonable expectations of the silent party. In The Lutetian Bingham J held that:
[T]he duty necessary to found an estoppel by silence or acquiescence arises where a reasonable man would expect the person against whom the estoppel is raised, acting honestly and reasonably to bring the true facts to the attention of the other party known by him to be under a mistake as to their respective rights and obligations.
…
(emphasis added and footnotes omitted)
11 Infinity Enterprises NZ Ltd v Kinara Trustee Ltd [2020] NZCA 309, [2020] 3 NZLR 626 at [98]-[112].
12 James Every-Palmer “Equitable Estoppel” in Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) 601 at 632.
[64]The Court of Appeal in Infinity Enterprises NZ Ltd v Kinara also said:13
[102] The “reasonable person”, as those explanations make clear, is a reasonable third party. It is the expectations of that person, as ever the Court’s proxy, from whose standpoint the Court determines whether the expectation that a reasonable and honest person would speak out to correct an error known to her arises. Thus, when Equity and Trusts in New Zealand refer to the reasonable expectations of the silent party, they refer to the expectations that reasonable third party would have of the silent party.
[103] Various factors are relevant in determining whether a reasonable person would expect the silent party to speak out. Duties to warn mistaken parties are not owed to the world at large and will be rare between commercial parties dealing at arm’s length. Speaking of the various relationship based factors which may support the existence of a duty to speak out. Equity and Trusts in New Zealand refers to situations where:14
(a)the silent party has invited the other to repose trust and confidence in them;
(b)prior communications between the parties give rise to the duty; and
(c)past dealing between the parties which support reasonable (but erroneous) assumptions.
[65] What then were the true facts that GSL had to explain to Elizabeth or her error known to GSL that it had to correct? I can find none. The contract required Elizabeth “to do all things which may reasonably be necessary to enable the condition to be fulfilled by the date for fulfilment” — the onus was on her to satisfy the LIM condition by notice in writing or to waive it by such notice. The 30 November 2021 email, as I have said, stated Elizabeth’s solicitor was going to take her instructions on the LIM. GSL did not know why there had been no further communication from Elizabeth’s lawyer.
[66] While this was in a broad sense a family transaction, it was also one where the agreements between the parties were carefully worked out and comprehensive. Both the Heads of Agreement and the contract of 10 November 2021 were drafted by Elizabeth’s solicitor. She describes the Heads of Agreement as being “carefully negotiated and drawn”. The 10 November 21021 contract is similarly comprehensive.
13 Infinity Enterprises NZ Ltd v Kinara Trustee Ltd, above n 11.
14 Every-Palmer, above n 12, at 633.
The parties were dealing solicitor-to-solicitor. Nothing in the circumstances gave rise to a duty on GSL to speak, in terms of the above principles.15
Could GSL avoid the Agreement for non-satisfaction of a condition wholly for Elizabeth’s benefit?
[67]The second amended statement of claim pleads:
35.… the contractual effect of her failure to give notice within 10 days of the date of the agreement in circumstances where the condition was included solely for [her] benefit:
34.1 …
34.2Did not confer any right on [GSL] to cancel the agreement for [Elizabeth’s] failure to satisfy a condition conferred solely for her benefit where the failure did not cause any prejudice to or affect the rights of [GSL].
[68] The above pleading runs into the express terms of the contract. Clause 9.10(5), in respect of any condition in the contract and unless otherwise expressly provided for, provides:
(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 immediate return of the deposit and any other moneys paid by the purchaser under this agreement and neither party shall have any right or claim against the other arising from this agreement or its termination.
[69] The clause is clear. It confers on either party a right to avoid the contract. So much was confirmed by the Court of Appeal when referring to the equivalent of cl 9.10(6) in an earlier edition of the ADLS form where it said that the clause:16
… gives either party, i.e. each party separately, a right of avoidance if the contract is not fulfilled by the date for fulfilment, but such a notice can only be given at a time before the condition is fulfilled or waived.
(emphasis as per original)
15 GSL had no reason to believe Elizabeth misunderstood anything about the situation given she was represented by a solicitor who had set out Elizabeth’s position in respect of the LIM clause in the 30 November 2021 email.
16 Globe Holdings Ltd v Floratos [1998] 3 NZLR 331 (CA) at 4. See also Hawker v Vickers [1991] 1 NZLR 399 (CA) at 402-403, confirmed in Future Sustainable Development Ltd v Liu [2022] NZCA 249 at [31].
Conclusion on the status of the 10 November 2021 contract
[70] The basic facts are that when the LIM condition was not satisfied, GSL exercised an express contractual right to avoid the 10 November 2021 contract. GSL did nothing that could have led Elizabeth to believe it would not exercise that right given there was no communication between the parties from the 30 November 2021 email until the letter avoiding the contract. Nor was any prior communication to that effect. The requirements specified in the contract as to waiver and the ability to avoid the contract are clear. The contract was avoided on 18 February 2022 and I have dismissed the arguments advanced as to why GSL did not have the right to avoid the contract.
[71] It follows, I am satisfied that Elizabeth does not have a tenable cause of action to seek specific performance of the 10 November 2021 contract as GSL was entitled to avoid it when it did so.
Claim in respect of the Heads of Agreement
[72]Paragraph [36] of the second amended statement of claim says:
36.1 That by cancelling the ASP and by not transferring Liz’s Grampians Land Parcel to the plaintiff, the eighth defendant is in breach of its obligations pursuant to the Heads of Agreement.
[73]The order that Elizabeth seeks in respect of this cause of action is:
A. An order for specific performance requiring the eighth defendant to comply with its obligations under the Heads of Agreement which requires it to complete The ASP.
[74] The ASP pleaded is the agreement of 10 November 2021. Accordingly, the second cause of action is advanced as a means of reviving the 10 November 2021 contract.
[75] Mr Walker’s submission in relation to the Heads of Agreement is as follows. Prior to the Heads of Agreement there was a meeting of some of the partners resulting in a handwritten one page document called an “Agreement in Principle”. Mr Walker submitted this Agreement in Principle is relevant to the interpretation of the Heads of
Agreement in the event his submission, that the meaning of the Heads of Agreement is straightforward, is not accepted. It appears the “Agreement in Principle” was created at a meeting in late August 2017, given its contents show the meeting only shortly before the Heads of Agreement document dated 29 August 2017.
[76]The opening paragraph of the handwritten “Agreement in Principle” reads:
[F]or further discussion to incorporate into a Heads of Agreement sufficient to allow the Chapmans to sign the current S&P before the upcoming AGM on Tuesday.
“The Chapmans” being a reference to Elizabeth and the reference to “S&P” being a reference to the Agreement for sale and purchase from the partnership to GSL.
[77] There is then a separate bullet point in the “Agreement in Principle” which reads:
· Both families agree to the NEW Red Area (63ha) as in 25 Aug 2017 offer letter subject to:
(i)Old MDC Planning Rules being in effect. [a reference to McKenzie District Council]
But
(ii)If PC13 is in effect then both families agree to pursue avenues which will allow the Chapmans toownacquire a parcel of land compliant with the new P.C. 13 planning rule.
[78] The document recorded that the Chapman family agreed to investigate Whales Back as an alternative to the purchase of the new Red Land.
[79]The final paragraph of the “Agreement in Principle” reads:
The Intent is to draw up a ‘Heads of Agreement’ by Monday 28th Aug which will give Elizabeth Chapman sufficient confidence to sign The Grampians S&P before Tuesday 29 August AGM.
[80] Mr Walker emphasised the use of the word “acquire” in [77] above. He submits this proceeding in fact centres on the Heads of Agreement and whether GSL was only obliged to enter into an agreement for sale and purchase or whether the Heads of Agreement gave Elizabeth: “… the right to acquire and own a parcel of land as part of the overall deal”.
[81] Mr Walker submits that the 10 November 2021 contract was “simply a mechanism to implement what was recorded in the [Heads of Agreement], namely that [Elizabeth] purchase a parcel of land”.
[82] Mr Walker submits there is no ambiguity in the Heads of Agreement. He submits the wording of the Heads of Agreement records that Elizabeth is entitled to take ownership of a parcel of land in exchange for selling her share of Gampians to GSL.
[83] Mr Walker emphasised that cl 1.1.1 of the Heads of Agreement set out at [9] above, refers to the parties intending to enter legally binding agreements (plural) in relation to Elizabeth’s purchase of the land at Grampians. Mr Walker submits agreements plural means Elizabeth has the right to call for a further contract for the Red Land or alternatively, it means GSL could not avoid the 10 November 2021 contract.
[84] In my view, the second proposition is not tenable. The terms of the ADLS contract are clear. If a condition is not satisfied, either party could avoid it. Mr Walker’s submission that GSL was prevented from avoiding the 10 November 2021 contract by virtue of the terms of the Heads of Agreement would render much of the contract meaningless. GSL could not avoid the contract no matter the breach of condition by Elizabeth or, presumably not cancel it for breach of her obligations under the contract. Again, as I have noted, Mr Walker was compelled to acknowledge that for Elizabeth to be correct, she must have an absolute right to complete the purchase irrespective of circumstances.
[85] In developing his argument focused on cl 1.1.1 of the Heads of Agreement, Mr Walker submitted:
… clause 1.1.1 incorporated the word “purchase” which has a distinct legal meaning. “Purchase” means, “To acquire by way of sale for money or other valuable consideration.” A corollary is that the word “acquire” also has a distinct legal meaning which is, “To obtain ownership of, an interest in, or the benefit of goods or services.”
(footnotes omitted)
[86] Mr Walker submits the Heads of Agreement supports Elizabeth’s position but, even if there was ambiguity, the reference to the earlier handwritten Agreement in Principle supports Elizabeth’s interpretation of the Heads of Agreement.
[87] Mr Walker also relies on an earlier letter relating to Elizabeth’s acquisition of the Grampians dated 15 August 2017. In particular, he relies on:
Our clients are very mindful of the close family bonds, the long association of your clients’ family with the land, and respecting the Chapmans’ desire for some continued involvement through ownership of land in the District, the Hope Trusts wish to offer your clients the parcel of land comprising 453 hectares in Rural Sections 32394, 32395 and 32396 and described in Certificate of Title CB22F/783. A copy of the Certificate of Title is attached. The title is one of four freehold titles situated within the Grampians Leasehold Title in the eastern area known as the “Whalesback”.
[88] I am unable to see how the above documents assist in determining the meaning of the Heads of Agreement. Again, the Heads of Agreement was prepared by Elizabeth’s solicitor. Elizabeth says her Heads of Agreement “sets out the terms agreed”. The Heads of Agreement follows a clear path. Elizabeth selects a Lot following the sequential process referred to earlier. Once a Lot is selected, an agreement for sale and purchase is prepared incorporating the terms referred to in the Heads of Agreement and:
… all usual terms and conditions which would be included in similar agreements by solicitors practising in New Zealand provided that such provisions are not inconsistent with any express provision of this Heads of Agreement or the Contract Terms.
[89] Mr Walker’s description of the contract as “simply a mechanism” to implement the Heads of Agreement, while accurate, does not assist his argument. The Heads of Agreement was never going to be “settled” in the sense that the land selected by Elizabeth would be conveyed to her pursuant to the Heads of Agreement. Classification of the contract as a “mechanism” does not change its contractual significance as the contract recording the right to acquire the Red Land.
[90] Clause 1.1.2 set out at [10] above, records the Heads of Agreement was to “Finalise the Grampians Land Proposal to the satisfaction of the parties and to record those arrangements as legally enforceable obligations” (my emphasis). This is the contract referred to in the Heads of Agreement. Clause 1.1.2 is therefore an express
statement that the process in the Heads of Agreement was to finalise Elizabeth’s purchase. This can be compared with the weight Mr Walker seeks to place on agreements being in plural in cl 1.1.1. The use of plural is consistent with Elizabeth’s purchase being linked to the need to her to enter other agreements including an exclusive right to occupy the cob cottage, a lease back of the land to GSL that Elizabeth would acquire and a grant of a right of first refusal to GSL to acquire Elizabeth’s land.
[91] I find that GSL was obliged, pursuant to the Heads of Agreement, to enter into one agreement for sale and purchase in relation to the parcel of land selected by Elizabeth. When GSL entered the contract of 10 November 2021, the Heads of Agreement was discharged by performance. That is, GSL performed what it undertook to do under the Heads of Agreement and its obligations under that Agreement ended. Upon the 10 November 2021 contract being signed, GSL had no further obligations under the Heads of Agreement. The parties’ rights and obligations were then represented by the 10 November 2021 contract. As that contract was validly avoided, Elizabeth has no further contractual rights against GSL. Elizabeth cannot revert to the Heads of Agreement as if she can start the selection of land process afresh and then reselect the same Red Land and require GSL to enter a further agreement. On Elizabeth’s argument there could be no end to the number of times she could require GSL to enter a further agreement with her. GSL would be caught in a perpetual obligation to Elizabeth to continue to enter agreements with her. Of course, that is taking Elizabeth’s argument to an extreme end but it is the logical effect of her argument.
[92] I find the second cause of action is untenable as GSL was entitled to avoid the 10 November 2021 contract pursuant to its terms and was not restricted in doing so by the Heads of Agreement — nor does the Heads of Agreement give Elizabeth the right to resurrect the avoided contract or to call for a new replacement agreement.
Third cause of action — estoppel
[93] The third cause of action is only briefly pleaded. It repeats the preceding 35 paragraphs and pleads that on the basis of the prior pleadings, GSL is estopped
from denying Elizabeth her entitlement to the land. This pleading begs the question of the source and nature of the entitlement being denied.
[94] Mr Walker, in his submissions, set out the particulars of the estoppel cause of action which would have been provided if requested as follows:
73. …
a.[GSL] represented to [Elizabeth] that, in exchange for the sale of her share of the Grampians to them, she would acquire by way of purchase, a parcel of land.
b.[Elizabeth] entered into the [Heads of Agreement] in reliance upon the above and would not have done so had [Elizabeth] known she would have but one chance to acquire land, and
c.Sale of [Elizabeth’s] share of the Grampians to [GSL] was to [Elizabeth’s] detriment because she no longer has a share in the farm, and
d.Cancellation of the ASP and refusal to perform the HOA by [GSL] is, in the circumstances, unconscionable.
[95] There are a number of difficulties with this formulation of estoppel. Firstly, GSL has not refused to perform the Heads of Agreement. It honoured its obligations under the Heads of Agreement by entering into the 10 November 2021 contract. GSL’s representation to Elizabeth that she could purchase a parcel of the Grampians’ land was not inaccurate. The Heads of Agreement gave Elizabeth an option to purchase, not an obligation to purchase. GSL gave Elizabeth what it was obliged to do under the Heads of Agreement, that is, it entered into an agreement for sale and purchase of the block of land she selected.
[96] The idea that Elizabeth would not have entered into the Heads of Agreement and the agreement for sale and purchase had she known she would have “but one chance to acquire land” is not based on a misrepresentation by GSL. The “one chance to acquire” is what the Heads of Agreement drafted by Elizabeth’s solicitor provides. Elizabeth was not misled by GSL in the manner suggested in Mr Walker’s paragraph 73b (set out at [94] above).
[97] Nor is the pleading of detriment one that is obvious. Elizabeth received her full share from the partnership of the Grampians sale proceeds. There was no discount to her distribution because of her purchase option.
[98] Nor is cancellation of the contract “unconscionable” when that is a right conferred on GSL by the Heads of Agreement and where responsibility for failure to confirm the LIM conditions does not lie with GSL.
[99] There is no failure to perform the Heads of Agreement by GSL. It was performed by GSL by entering the 10 November 2021 contract. Avoidance of the 10 November 2021 contract was valid, again, for the reasons I have given.
[100] Mr Walker sought leave to file supplementary submissions on the issue of estoppel. Grampians’ solicitor did not expressly oppose that leave request and advised they did not intend to respond.
[101] Mr Walker’s supplementary submissions seek to build an estoppel argument on a broader range of conduct. Mr Walker starts his review of what he considers is conduct relevant to the estoppel argument with steps taken following execution of the Heads of Agreement. He emphasis that Elizabeth agreed to the sale of Grampians to GSL and immediately co-operated in doing so. He emphases that Elizabeth, in reliance on the Heads of Agreement, went through a burdensome and expensive process of selecting a parcel of land to purchase which led to the execution of the 10 November 2021 contract. Mr Walker then submits Elizabeth instructed her solicitors to attend to the matters required by the 10 November 2021 contract.
[102] Mr Walker submits these matters indicate the conduct of both parties post execution of the Heads of Agreement was focused on settlement. He submits this means that; “In other words, the conduct demonstrated that the ultimate outcome would be ownership of a parcel of land for the respondent.” He submits Elizabeth relied on this in her selection of the parcel of land and subsequent entry into the contract.
[103]Mr Walker submits:
8. Cancellation of the [agreement for sale and purchase] on the narrowest of grounds (alleged failure of the LIM condition) means that the detriment to the respondent is the loss of her original interest in the farm (which she did not have to sell in the first place), the chosen parcel (which she expected to own), and the time and effort put into selection of the parcel of land. Accordingly, it is submitted that it is unconscionable for the applicants to be able to rely on cancellation of the [agreement for sale and purchase] in these circumstances.
[104] The difficulty with this analysis is that it relies on events pre-dating the contract in support of what amounts to the proposition that GSL was estopped from exercising its contractual right to avoid the contract.
[105] The general matters relied on by Mr Walker are incapable of supporting such an estoppel. In virtually every agreement for sale and purchase the parties enter it intending that it be completed. In almost every case the parties will have incurred costs in respect of the sale process whether it be obtaining valuations, property inspections or legal costs. Such intentions and expenditures leading up to the entering of an agreement for sale and purchase do not deprive the parties to their agreement for sale and purchase from exercising the rights created by that agreement. Such an estoppel to arise would require an express representation related to the particular contractual provisions. While it is not impossible for such a representation to have been made before the contract was made, such would have to be express and specific — general references to a general intention to purchase and the effort put into that purchase are not enough.
[106] I am satisfied that none of the causes of action relied on by Elizabeth can succeed. Accordingly, there is summary judgment for GSL against Elizabeth as sought. It was not suggested that an amendment to the pleadings could meet GSL’s criticism of the claim.
[107] Mr Walker said everything that could possibly be said in support of the opposition but I am satisfied the terms of the Heads of Agreement and the contract make Elizabeth’s claims untenable.
[108] While I can understand Elizabeth’s disappointment at missing out on the opportunity to purchase the land she wanted, responsibility for that outcome lies elsewhere.
Costs
[109] There is no reason why costs should not follow the event. Memoranda may be filed within 10 working days (not more than five pages) if counsel cannot agree on costs.
Associate Judge Lester
Solicitors:
Argyle Welsh Finnigan Limited, Ashburton Westburn Courts, Ashburton
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