Ford v Coumat Limited

[2016] NZHC 2810

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2016-404-002692 [2016] NZHC 2810

UNDER	Land Transfer Act 1952
IN THE MATTER OF	an application by a registered proprietor for the early lapse of a caveat against dealings
BETWEEN	KERRY JAMES FORD Applicant
AND	COUMAT LIMITED Respondent

Hearing:	21 November 2016
Appearances:	M F Mabbett for the Applicant P F Dalkie for the Respondent
Judgment:	24 November 2016

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

24.11.16 at 3:00pm, pursuant to

Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

KERRY JAMES FORD v COUMAT LIMITED [2016] NZHC 2810 [24 November 2016]

The application

[1]      The applicant, Mr Ford applies to sustain his caveat over a property owned by the respondent (Coumat).

[2]      Mr Ford’s application is based on an agreement for sale and purchase dated

13 January 2016.  His caveat was lodged on 22 February 2016.  There is no issue that, when the caveat was lodged, Mr Ford had a caveatable interest.  However, it is Coumat’s position that it validly cancelled the agreement for sale and purchase in reliance on the settlement notice issued pursuant to its terms.

[3]      In  dispute  is  the  validity  of  Coumat’s  cancellation.    Mr  Ford  says  the cancellation  was  not  valid  because  at  all  material  times,  including  when  the settlement notice was issued, Coumat was in breach of the parties’ contract; and that Coumat was acting in bad faith in deliberately undermining the contractual bargain reached with Mr Ford.

Mr Ford’s case - overview

[4]      Mr Ford says the land was sold to him for the purpose of the development of a residential subdivision and that Coumat was required to give him access to the land for that purpose.  Instead it is claimed that Coumat actively and dishonestly sought to undermine the prospects of that development.   It is Mr Ford’s position that while those are serious allegations they are consistent with the evidence and reflect Coumat’s financial motive in keeping the deposit of $550,000 paid, and securing the benefits of Mr Ford’s work on the site.

[5]      The focus of Mr Ford’s application was upon claims of attempts by Coumat to undermine the development.  Three affidavits have been filed in support.  One of those by Mr Ford contains a chronology of the dispute including, it is claimed, evidence of Coumat’s conduct.

[6]      An affidavit has also been filed by Mr Scott, a solicitor of the firm that acted for Mr Ford at the time.  The third is an affidavit of Mr Carajannis, the President of

the Whitford Golf Club.  It is claimed that affidavit confirms certain aspects of Mr

Ford’s allegations.

[7]      Mr Ford has also filed a short reply affidavit.

[8]      It is at the centre of Mr Ford’s case that his contract relied on an implied term that Coumat would refrain from any conduct that was dishonest and was intended to undermine the contractual bargain.   Mr Ford says that a limited term against bad faith is implied into a range of contracts where there is some kind of inter- dependency between the parties.

[9]      In  effect  Mr  Ford  says  he  is  entitled  to  a  reasonable  period  of  time, unhindered by Coumat, so that he may settle the transaction as was intended.

[10]     Mr Ford’s application therefore needs to prove a threshold to maintain his caveat.   He needs to persuade the Court that an implied duty of good faith was contained within his purchase contract and, that there is a basis for his assertions of dishonesty that characterises Coumat’s actions in the circumstances.

Coumat’s response

[11]     Regarding the evidence of Mr Ford it is submitted on behalf of Coumat that Mr Ford’s affidavit is “overwhelmingly statement of opinion of varying kinds, such as suspicion and baseless allegations by Mr Ford of the dishonesty of [Coumat’s] Mr Hayhow”.

[12]     Counsel Mr Dalkie is critical of Mr Ford’s affidavit.  He submits there are no facts deposed to by Mr Ford.  He submits the implied term was not one that would be imposed by law into the sale agreement.

[13]     Mr Dalkie submits Mr Ford’s evidence is properly characterised as nothing other than opinion.  He submits the contract in question is not one which the Court would imply a term or a limited duty of good faith.

[14]     Mr  Dalkie  submits  the  evidence  of  Mr  Ford  and  his  solicitor  include derogatory and scandalous statements – but that those are primarily statements of opinion and therefore is not admissible evidence.  It provides nothing more than an opinion of someone’s point of view.

[15]     Counsel agree that if the issues presently before the Court were concerned with  disputed facts  then  such would  not  be  suitable for  determination  upon  an application to sustain a caveat – and the caveat should remain.1

[16]     Mr Dalkie’s point is that there are no matters of disputed fact because the claims by and on behalf of Mr Ford are not about factual issues but rather hearsay claims and assumptions only.  Mr Ford’s affidavit, counsel submits, mainly contains statements of opinion and derogatory accusations – but that these are not facts and that is why Coumat has not responded to them.  Facts do not arise, counsel submits, where there are statements of opinion and accusations deposed to that are not replied to; that a Court is only able to draw inferences from facts and cannot draw any conclusion at all from  opinion or accusatory or derogatory statements; and that clearly a Court must find certain facts exist before making rulings on the rights, duties and liabilities of the parties.

Background

[17]     Mr Ford is a property developer.  Coumat owned the property in question at Whitford.  It comprised around 8 hectares.  It was subject to resource consent for a residential development.

[18]     An agreement for sale and purchase was entered into on 13 January 2016. This was subsequently amended by an exchange of letters on or about 29 January

2016.

[19]     When the property was marketed and sold, consent had already been granted for the subdivision, and planning had already been started by a previous intended

purchaser.   It was a condition of the development resource consent that a water

1 Sims v Lowe [1988] 1 NZLR 656 at 659.

treatment  facility  was  required  to  be  built  on  neighbouring  land  owned  by the

Whitford Park Golf Club.

[20]     Mr Ford’s purchase was not subject to him obtaining finance.  The agreement

provided Mr Ford with unfettered access to the properties at all times. [21]   The contract provided for settlement on 29 July 2016.

[22]     It is Mr Ford’s evidence that he went about the development of the property and that critical steps included:

(a)       Negotiating a lease over the golf club land; (b)           Selling sections in the development;

(c)       Excavating  the  land  and  engaging  contractors  for  the  physical development of the site; and

(d)      Securing finance for the development.

[23]     The matters that are in dispute and which are the focus of claims of implied terms and dishonest conduct occurred during the development phase.

[24]     When  it  was  agreed,  by  way  of  variation  to  the  original  contract,  that settlement would occur on 29 July 2016, Mr Ford agreed to pay an additional deposit sum by way of instalments of $11,500.  When the instalment of 1 July 2016 was not paid there was an acceleration clause call-up.  By letter from Coumat’s lawyers dated

4 July 2016, settlement was required to take place.

[25]     A letter of same date from Mr Ford’s solicitors by way of response asserted the settlement notice was invalid because a charging order registered by a previous prospective purchaser remained on the title and because of such, it was claimed on behalf of Mr Ford, that he was not then bound to pay Coumat.

[26]     The response of Coumat’s solicitors that same day was by letter to Mr Ford’s solicitors reporting that an e-dealing facility had been established and that Coumat was ready and able then to settle. A first settlement notice was delivered at that time.

[27]     Thereafter frequent communication was made between the parties’ solicitors

and on 19 July 2016 a settlement statement was sent for settlement to occur on

29 July 2016.

[28]     On 28 July Mr Ford’s solicitors wrote to Coumat’s solicitors stating Mr Ford had to purchase debts owed by Coumat i.e. that Mr Ford was entitled to a set off in respect of these unpaid debts of Coumats.

[29]     The contract did not settle on 29 July because claims of a set off were not accepted, but also because a caveat had been lodged by the previous prospective purchaser.

[30]     Issues arose whether previous debts had indeed been paid by Mr Ford as he claimed.

[31]     On 22 August 2016 Coumat’s lawyers sent another notice to settle.  By that

time some caveats had been removed.

[32]     In reply Mr Ford’s solicitors wrote on 25 August 2016 acknowledging that the set off debts remained unpaid but claimed that they should still be the subject of a set off.   Coumat’s lawyer’s response that same day asked for evidence of an assignment of the debts from Coumat to Mr Ford.

[33]     Further  and  on  28  August  there  was  an  engagement  of  correspondence between lawyers regarding the giving of vacant possession.  Although on that same day a settlement notice issued, settlement did not proceed.  Later, a letter from Mr Ford’s solicitors referred to there being a charging order on the title.   Coumat’s solicitor’s response was that the charging order would be released on settlement.

[34]     By letter from Coumat’s solicitors settlement was required on 13 September.

Mr Ford’s solicitor’s response was to seek an extension to settle in a month because

there  was  difficulty  in  obtaining  finance  and,  that  immediate  legal  proceedings would be filed unless the extension was agreed to.  Also reference was made about the lack of honesty of Coumat’s Mr Hayhow.

[35]     Coumat’s solicitor’s response was to offer that settlement take place on 30

September provided six conditions were met.  Mr Ford’s solicitor’s response was to have  settlement  occur  on  21  October,  but  subject  to  conditions  about  resource consent  matters  being  resolved  and,  if  not  resolved,  for  settlement  to  occur on

21 December.

[36]     Coumat’s solicitors response by letter dated 22 September 2016 was to cancel

the contract.

[37]     Soon after Coumat sought to have Mr Ford’s caveat lapse.

Mr Ford’s claims of Coumat’s attempts to undermine the development

[38]     As earlier noted it is claimed Coumat through Mr Hayhow acted dishonestly for the deliberate purpose of undermining the contractual bargain, so that settlement would not proceed.

[39]     Mr Mabbett for Mr Ford submits there is a clear evidential foundation for these claims and about how developments such as the one undertaken by Mr Ford, occur.    It  is  that  following  entry into  the  agreement  for  purchase  and  prior  to settlement, the purchaser is given access to the land to undertake earthwork, drainage and roading.  Unlimited access was in the case preserved by the parties’ contract.

[40]     As to the funding of the development Mr Ford deposed that in order to obtain that funding and to enable settlement of the purchase a developer needs to be able to demonstrate  substantial  progress  and  unless  development  progress  was demonstrated, funding would not be available and settlement could not occur.  That, Mr Ford alleged was Mr Hayhow’s motive in impeding the development.  Further in the event the transaction did not settle, Coumat would keep the deposit and the value of any improvements on the land.

[41]     Particulars of Mr Ford’s allegations include:

(a)      That Mr Hayhow actively sought to prevent Mr Ford securing a lease from  the  Whitford  Park  Golf  Club,  required  under  the  relevant resource consent.

(b)Mr Hayhow contacted  news outlets seeking to  have  them publish articles that misrepresented the development as uneconomical.

(c)      Coumat refused to pay a judgment debt owed to third party real estate agents, a judgment debt that was secured by an interim charging order registered  against  the  property.     Mr  Ford’s  affidavit  details  the demands made by Coumat that payments be made direct to it in clear breach of the charging order, coupled with threats to cancel the agreement if payment direct to Coumat was not forthcoming.  As it happens, following cancellation of Mr Ford’s agreement Coumat entered into another sale and purchase agreement for the land.

(d)Coumat  refused  to  pay  debts  incurred  by  it  in  relation  to  the development.   Mr Ford says this was done with the intention and consequence that contractors previously engaged by Coumat declined to engage in further necessary work in relation to the development. Mr Hayhow has in response deposed that there were disputes in relation to those amounts but that he would pay those contractors when the new contract settled.

(e)      Mr  Ford  claims  Mr  Hayhow  contracted  a  potential  financier  and advised him not to finance Mr Ford’s development of the property. As Mr Ford acknowledges the contents of that discussion would need to be the subject of evidence, whether by subpoena or otherwise, and cross-examination.   Mr Ford queries how Mr Hayhow obtained particulars of his finance proposal.

(f)       It is claimed Coumat forcibly stopped a truck leaving the site with a load of topsoil in order to prevent site works being completed.

[42]     Mr Mabbett submits that all these elements of conduct would not likely separately constitute dishonesty.   However he submits Mr Hayhow’s behaviour in relation to the golf club can only have been intended to prevent the development proceeding.   Counsel submits the rest of the conduct is certainly inconsistent with the understanding that underpinned the agreement which was that Mr Ford would be developing the land.

[43]     Mr Hayhow’s response has been to put in evidence text messages from Mr Ford using profanity.  For Mr Ford it is submitted that profanity was a consequence of the deliberate cause of conduct by which Mr Hayhow set out to frustrate and anger Mr Ford.   Mr Ford’s evidence is that except for Mr Hayhow’s conduct he would likely have settled the transaction.  In this regard he has provided evidence of funding committed to his development objectives.

The response to claims of misconduct and unlawful purpose

Misconduct claims

[44]     Mr Dalkie committed a significant portion of his submissions to claims of a lack of factual substance to support claims of implied terms and misconduct.   Mr Dalkie’s submissions comment upon particular paragraphs of Mr Ford’s affidavit. Referring to each of those in turn:

Para 8:  Mr  Ford  deposed  he believed  Mr  Hayhow’s  actions  (including in serving a settlement notice and notice of cancellation) were deliberately intended to delay his ability to finance the transaction, so the  property  transaction  could  not  be  settled.    Mr  Ford  said  he believed Mr Hayhow’s motive was to keep the deposit and either on sell the property, with its improvements, of develop it himself.   Mr Dalkie’s response is that these statements express opinion only when what Mr Hayhow was doing was exercising the contractual rights he

had, and further that there is no evidence that Mr Hayhow has acted for the purpose of on selling the property or developing it himself.

Para 9:  Mr Ford said it was clear to him Mr Hayhow behaved dishonestly and that Mr Ford was aware of examples where Mr Hayhow lied to him in relation to his conduct concerning the development including having deliberately and repeatedly tried to undermine the ability to develop the land – something he now suspects was Mr Hayhow’s intention from the beginning.   Mr Dalkie’s response is that claims that Mr Hayhow has behaved dishonestly were pure opinion and scandalous; and give no detail about how he was aware Mr Hayhow had lied.

Para 10: Mr Ford deposes having little time to collect affidavit evidence in support of his application to sustain the caveat – due to statutory requirements.  Mr Dalkie questions Mr Ford’s apparent reliance upon facts and material he cannot be sure exists.

Para 11: That Mr Ford deposes to having been comfortable with the overall nature of his allegations against Mr Hayhow and Coumat.  Mr Dalkie complains this is a “qualitative statement” and is devoid of fact and is a testimonial to himself where Mr Ford is saying that because he claims to know certain things directly then he is “comfortable with the overall nature of the allegations” he makes.

[45]     Regarding  claims  that  Mr  Hayhow  was  motivated  to  undermine  the development Mr Dalkie submits it should not be overlooked that the present application is about a caveat on a vacant block of land; and that, inter alia, references to there being a “development” are vague.  Further it is clear Mr Ford did not have the finance to enter into an unconditional contract.

[46]     Regarding Mr Ford’s affidavit evidence relating to golf club issues, Mr Ford deposed to his belief of there having been secret discussions with the club’s general manager.  Mr Dalkie says that Mr Ford’s claims that Mr Hayhow is a liar provide insufficient details of facts by which he draws that assessment.   Mr Dalkie also

disputes  the  reliability  or  relevance  of  a  statutory  declaration  provided  by  the previous developer of the property regarding alleged attempts by Mr Hayhow to influence the golf club’s decision to lease land to assist with the development purposes.

[47]     Mr  Dalkie  submits  Mr  Ford’s  claim  that  the  golf  club  president  Mr Carajannis told him Mr Hayhow had tried to persuade the club not to do business with Mr Ford was without foundation; because Mr Carajannis’ own affidavit does not support those claims.

[48]     Mr Dalkie submits that claims of a “reasonably arguable” case assume no relevance because the contract was not subject to finance and the responsibility for that is with Mr Ford, who with all his claims of expertise in development, could have avoided those issues by making the contract subject to finance and other conditions.

[49]     Likewise regarding Mr Ford’s claims of lack of good faith providing an obligation not to deliberately undermine the contractual bargain or to engage in dishonest standards of behaviour in relation to the development, Mr Dalkie submits those claims are irrelevant “and discursive”.   Mr Dalkie submits the contract had nothing to do with an unrelated debt or claims that that debt affected Mr Ford’s obligations to make payments; that those payments related to accounts which were unpaid since long before Mr Ford assumed development responsibilities, and did not run with the land being sold.

[50]     Mr Dalkie submits that there is no evidence of dishonesty, merely accusations of dishonesty, and regarding Mr Carajannis’ evidence it is clear that any agreement reached with the golf club occurred long before the first failed settlement date on

29 July 2016.

[51]     It  is  Coumat’s  position  that  Mr  Ford  did  not  have  the  money  to  settle regardless of any reason he offers to suggest otherwise and by reference to the blame he attributes to the actions of Coumat/Mr Hayhow.

[52]   Regarding claims that the contract was about Mr Ford’s development expectations, Mr Dalkie says that may be so but the parties were not joint venturers and were not in partnership or in any other form of common business venture to develop the bare land.   There was Mr Dalkie submits, no fiduciary relationship between them.

[53]     Likewise regarding claims of dishonest assistance, Mr Dalkie submits neither claims nor material provided in support of those, amounts to anything more than “scuttlebutt and scandal”.

Implied term of good faith

[54]     Regarding claims of an implied term of good faith in the contract, Mr Dalkie submits it is important to focus on the contract which was unconditional and not subject to finance.  It was for the sale and purchase of bare land.  It was not about a development or some joint venture.  In that regard Mr Dalkie passes doubt upon the usefulness of the authority of Vero Insurance NZ Limited v Fleet Insurance and Risk Management Limited2.   That case Mr Dalkie submits was about a joint venture – which the present case is not.  In that case there existed a clause requiring that at all times  the parties  must  “act  in  good  faith  towards each  other in  relation  to  the

company”.   There is no such clause in the present case.   This is not, Mr Dalkie submits,  a  ‘relational  type’ agreement  such  as  a  joint  venture,  an  employment contract or a franchise agreement. There is no clause that requires good faith.

[55]     Likewise Mr Dalkie rejects any reliance placed upon the Court’s decision in Yam  Seng  Pte  Ltd  v  international  Trade  Corp  Ltd3.    That  case  concerned  a distribution agreement for Manchester United branded fragrances deodorants and other toiletries by which the defendant granted certain distribution rights to the plaintiff.   The relationship broke down and the plaintiff terminated the agreement and brought claims for breach of contract and misrepresentation.   In that case the

Court held that a contractual duty of good faith could be implied.  The judge noted

that relational contracts may require a high degree of communication, cooperation

2 HC Auckland CIV 2007-404-1438, 21 May 2007.

3 [2013] EWHC 111(QB).

and predictable performance based on mutual trust and confidence and may involve expectations of loyalty which are not legislated for in the express terms of the contract, but which are implicit in the parties understanding and are necessary to give business efficiency to the arrangements.

[56]     Mr Dalkie submits:

(a)      The law does not imply a term of good faith in an agreement for sale and purchase of bare land;

(b)That claims of implied terms must be referenced by the stated terms of the agreement  and  that  in  this  case  and  in  the terms  they are expressed those implied terms all “overwhelmingly conflate” the agreement  with  what  Mr Ford calls  “the  development” as  though together there is “one amorphous mass of a single contract”.

(c)      Ours is not a case about a relationship between the contracting parties such as  in  franchise  agreements  or  employment  contracts  or joint venture agreements where there is a close working relationship between the parties, but about a contract that is not subject to finance and in regard to which a court would never impose a term or make it so implying a term relating to the obtaining of finance when such was not a term of the agreement for sale and purchase.

[57]     Regarding the other claims of an implied term of good faith, Mr Dalkie submits those are not concerned with the contract in issue but are about a “development”.  Those relate to complaints including preventing a truck removing soil, speaking to a news outlet, speaking to the golf club financiers, and not paying related debts about which there are no actual facts deposed to regarding these particular aspects.  Relying upon the judgment of the Privy Council in BP Refinery (Westernport) Pituwai Limited v President, Councillors and Ratepayers of the Shire

of Hastings4, Mr Dalkie submits, inter alia that:

4 [1977] UKPC 13.

(a)      One should approach claims of an implied term by reference to what notional reasonable people in the position of the parties at the time would have agreed when they were contracting;

(b)A term  should  not  be  implied  merely  because  it  appears  fair  or because one considers the parties would agree to it had it been suggested;

(c)       Considerations of reasonableness and equitableness will add little if a

term satisfies the other requirements of the parties’ agreement;

(d)While  business  necessity  and  obviousness  can  be  alternatives  in practice it would be a rare case where only one of those two requirements would be satisfied;

(e)      In the case of an officious bystander it is vital to entertain claims with the upmost of care; and

(f)      Considerations of business efficacy involve a valued judgment and a term can only be implied if, without the term, the contract would lack commercial or practical coherence.

[58]     It is the case for Coumat that claims of implied terms do not satisfy these tests and that the present contract does not warrant consideration of an implied term of good faith.  Mr Dalkie submits there is little or no actual fact content in Mr Ford’s affidavit.  Although there are a number of allegations of dishonesty there is, he says no evidence to support any of them and therefore they are scandalous, improper and derogatory comments.

[59]     Coumat’s case is quite straightforward.  There are no disputed facts and there is no reason not to deal with these issues immediately and therefore Mr Ford’s application should be dismissed.

Considerations

[60]     There are three factors for the Court’s consideration of these issues which are:

(a)       Claims of implied contract terms.

(b)The value of the evidence provided in support of claims of a breach of implied terms.

(c)       Principles in issue upon applications to sustain caveats.

[61]     A  review  has  already  been  undertaken  of  Coumat’s  position  regarding implied terms and available evidence.  Concerning principles for sustaining a caveat, this judgment provides reasons why ultimately those principles determine the outcome of Mr Ford’s application.

Implied terms

[62]     Mr Dalkie submitted the sale and purchase agreement was without condition and without any obligation at all upon Mr Hayhow/Coumat.   However the clear purpose of the agreement was to provide Mr Ford access to the land to develop it for the sale ultimately of residential lots.   It does not seem there can be any misunderstanding regarding that explanation of matters.  The evidence is Mr Ford would have to secure a lease of adjacent land owned by the Whitford Golf Club. Development works were undertaken.

[63]     Issues  arose  between  the  parties.    It  was  Mr  Ford’s  perception  that  Mr Hayhow was endeavouring to influence a negative outcome for Mr Ford.  Hence the claim that the contract relied on an implied term that Mr Hayhow/Coumat would refrain  from  any  conduct  that  was  ‘commercially’  dishonest  and  deliberately intended to undermine the parties’ agreement.

[64]     It is submitted for Mr Ford that in that regard the parties’ contract required

some kind of inter-dependency between them.

[65]     Mr Mabbett argues that Mr Ford’s position does not rely upon claims of reasonable standards for it is clear from the decision of the High Court in Todd Papakura Limited v Shell Exploration NZ Limited5  that the present case would not survive scrutiny upon this basis.

[66]     Mr Mabbett submits Mr Ford does not suggest that there were any implied positive obligations required of Coumat, but only obligations to refrain from the kind of conduct it is claimed he undertook.   Therefore, it is submitted Coumat had an obligation not to deliberately undermine the contractual bargain or to engage in dishonest standards of behaviour towards Mr Ford in relation to the development. The existence of such a duty is to be found, Mr Mabbett submits, in Vero Insurance

New Zealand Limited v Fleet Insurance and Risk Management Limited.6

[67]     Mr Mabbett submits that even a limited implied term against Wednesbury7 unreasonableness would be sufficient in this case; that the conduct complained of is perverse i.e. how could a party sell a block of land to another for a particular purpose and then deliberately undermine that purpose.  It is Mr Ford’s case that the standard of honesty implied into the contract is one which is “so generally accepted that the contracting parties would reasonably be understood to take them as read without implicitly stating them in their contractual documents”.

Claims of bad faith and misconduct by Mr Hayhow/Coumat

[68]     Mr Dalkie’s  submissions  rejecting  these  claims  were very critical  of  Mr Ford’s attempts to attribute responsibility for certain outcomes when those relied only on suspicion and submissions and not upon reliable assessment of all the facts. Mr Dalkie submits there was a lack of any evidence at all from which reasonable conclusions could be drawn and therefore those should be rejected.  Also it is Mr Dalkie’s primary submission that no obligations of good faith, good conduct or

otherwise were owed by Mr Hayhow/Coumat.

5 HC Wellington, CIV 2006-485-1600, 13 July 2010.

6 HC Auckland, CIV 2007-404-1438, 21 May 2007.

7 Yang Sem Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111(QB) at 138.

[69]     Severe criticism was made of Mr Ford’s claim that Mr Hayhow tried to persuade the golf club not to do business with Mr Ford, when Mr Carajannis did not express that view by his affidavit.

[70]     However what Mr Carajannis did say was that when he was telephoned by Mr Hayhow and asked whether the club had entered into an agreement to lease with Mr Ford, that he confirmed to Mr Hayhow that there was an agreement and that he was not at liberty to discuss it except to say the club was happy with its terms.

[71]     Also, it is to be recorded that Mr Carajannis then stated:

Mr Hayhow continued on to say that he did not believe that Kerry could settle the transaction, and that he was already behind on certain payments.  I got the impression he did not want the deal to go through.  I responded to Mr Hayhow that I was not prepared to engage in such discussions as I was not in the position to validate or comment on Kerry’s financial position.  I repeated that the golf club was happy with its position and we await the outcome of the sale and purchase of the Sale Yard Road property i.e. Kerry’s development.

[72]     It is not necessary at this time to provide further review of competing claims about what Mr Hayhow did/did not do.  It is however clear from the evidence that over the course of time the original April 2016 settlement date was by agreement extended until 29 July 2016.   A week before then Mr Ford’s solicitors advised Coumat’s solicitors that Mr Ford had received firm offers from credible financiers to assist with settlement.

[73]     Issues were then raised regarding Coumat’s unpaid debts in connection with the property and that fact that one of those were subject to a registered charge. Further correspondence between solicitors indicated that some land caveats had been removed.   Then that correspondence focussed upon requiring Mr Ford to provide proof of the assignment to him of debts owing to previous contractors of Coumat.  A settlement attempt on 25 August 2016 failed.   Coumat’s solicitors then required settlement on 13 September 2016.  A letter of same date from Mr Ford’s solicitor sought an extension of one month and threatened immediate legal proceedings unless that extension was agreed to.  The letter also made remarks about the honesty of Mr Hayhow.

[74]     Coumat’s solicitor’s response on 15 September was to offer to grant time until 30 September on six conditions, acceptance of which was to be indicated by

4:00pm the following day.

[75]     Coumat’s solicitors wrote on 22 September cancelling the contract.

[76]     In   overview   significant   delays   occurred   due   to   issues   beyond   the contemplation of the parties when they made their agreement.   Those included a charging order registered in the outcome of judgment for more than $440,000 being entered against Coumat in favour of a real estate agent in relation to a prior sale agreement of the same land.  Although this judgment in question was later reversed by the Court of Appeal that did not occur until after Coumat had cancelled Mr Ford’s contract.

Should Mr Ford’s caveat remain?

[77]     It is Mr Ford’s position that if the caveat is not lapsed and if Coumat then

refuses to settle Mr Ford will then sue for specific performance.

[78]     It is clear from Sims v Lowe8  that a caveat will not be removed unless it is patently clear it cannot be sustained.  Therefore the summary procedure for removal is wholly unsuitable for the determination of disputed questions of fact.

[79]     This case is about a challenge to Coumat’s action undertaken to cancel its

contract, it having earlier issued notice of its intention to do so.

[80]     The notice of cancellation is challenged by Mr Ford claiming in effect that the vendor intervened or prevented him from being able to complete.

[81]     Coumat’s position is that the contract was without conditions – written or implied and in any event that too much is assumed by the actions complained of.

8 [1988] 1 NZLR 656 (CA).

[82]     The  Land  Transfer Act  ss  145  and  145A requires  a  caveator  to  file  an application to this Court to sustain the caveat within 14 days of the registrar ’s issue of a notice warning of its lapse. This has been done in this case.

[83]     In these cases the applicant has the burden of establishing an arguable case for retaining his caveat.  There is no question but that it was in this case properly lodged.   Issues arise upon the application to sustain due to Coumat’s purported cancellation of the sale offer.  Focus has been upon agreement terms and the actions of the parties since.  Each side takes a very different viewpoint regarding claims of dishonesty and misconduct.   For Coumat it is argued that because it was an unconditional sale those issues have no place for consideration and in any event the evidence offered by the purchaser is speculative, opinionated and unreliable.

[84]     Counsel agree this application does not provide the appropriate forum for determining generally disputed questions of fact or law.  Rather, it is usual that once the caveator has shown an arguable case for the caveatable interest, the caveat must remain until the merits of the whole matter have been tried by substantive proceedings.   Usually in that regard a Court will uphold a caveat provided the caveator complies with the timetable as to the filing of substantive proceedings.

[85]     In our case Mr Ford clearly held an interest in the land.  But if his caveat is no longer a practical advantage, it may be removed.

[86]     Other considerations for the court include whether any urgency attaches to the resolution of contractual issues.  In the present case there is evidence of Coumat having on-sold the property by agreement dated 14 October 2016.  The price was

$22.5M.  A deposit of $500,000 was payable.   The new contract conditions differ from those of Mr Ford’s contract because the agreement was conditional on the purchaser being in all respects satisfied with the purchaser’s due diligence enquiry regarding the merits of the proposed purchase and notifying the vendor of that satisfaction within 40 working days of the date of the agreement.  If the agreement did not proceed then the deposit was refundable to the purchaser.

[87]     It appears clear in the circumstances that no urgency attaches to a disposition

of the parties’ respective claims in this proceeding.

Summary

[88]     Significant  issues  of  claims  of  implied  terms  affecting  an  unconditional contract arise.  There is certainly a degree of novelty affecting these.  In this Court’s view those cannot nor should be resolved in the context of the present application.

[89] Despite forceful objection provided in opposition to claims of misleading/dishonest conduct there appears sufficient in those to permit an opportunity for them to be reviewed further.

[90]     The caveat sustain process is a summary process.   It offers little time to provide affidavits to assist the Court’s purpose.   Little scope is available for the Court to make determinations about facts when referring to conflicting affidavits. Until there is clarity about those facts legal issues about the availability of implied terms cannot properly be assessed.

[91]     Hence the requirement in this kind of case that a caveat should remain unless clearly it cannot be sustained.

Result

[92]     The application to sustain the caveat is granted.

[93]     Leave is reserved to the parties to apply for directions if the filing of another proceeding is contemplated in this outcome.

[94]     Costs are to be paid on a 2B basis by Coumat to Mr Ford.

Associate Judge Christiansen