GRP Holdings Ltd v VP Nominees Ltd

[2021] NZHC 545

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1403

[2021] NZHC 545

IN THE MATTER OF

an application to sustain Caveat 11816775.1 against Record of Title NZ12C/168

BETWEEN

GRP HOLDINGS LIMITED

Applicant

AND

IN THE MATTER OF BETWEEN

AND

VP NOMINEES LIMITED

Respondent

CIV-2020-404-1994

an application to sustain Caveat 11816775.1 lodged against Record of Title NZ12C/168

GRP MANAGEMENT LIMITED
Applicant

VP NOMINEES LIMITED

Respondent

Hearing:	23 October 2020
Appearances:	G Blanchard QC, C Jiang and GSA Morrison for the Applicants MD O’Brien QC and KL Chiu for the Respondent
Judgment:	17 March 2021

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 17 March 2021 at 4.30pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Glaister Ennor, Auckland

Forest Harrison Lawyers, Auckland

GRP HOLDINGS LIMITED v VP NOMINEES LIMITED [2021] NZHC 545 [17 March 2021]

Introduction

[1]  GRP Holdings Limited (“GRP Holdings”), applies for an order to sustain a caveat over 14 Sinton Road, Hobsonville (“Property”). The Property is currently owned by the respondent, VP Nominees Limited (“VP Nominees”).

[2]                  GRP Management Ltd (“GRP Management”) “and/or nominee” and VP Nominees entered into a sale and purchase agreement on 10 October 2018 (“Agreement”). The purchase price agreed following an early variation, was

$8,750,000, $1,500,000 of which was paid as a deposit, and with a settlement date of 31 March 2020.

[3]                  GRP Holdings was nominated as the purchaser by Deed of Nomination dated 19 December 2018.

[4]                  Settlement did not take place and VP Nominees purported to cancel the Agreement on 14 May 2020.

[5]                  GRP Holdings says VP Nominees wrongfully and invalidly cancelled because the Agreement included a right to a pre-settlement inspection which was not honoured, and because the main dwelling on the Property was found to be contaminated with methamphetamine prior to settlement and possession by GRP Holdings.

[6]                  If the Agreement has been wrongfully or invalidly cancelled, then GRP Holdings maintains a caveatable interest as nominated purchaser. If the cancellation was lawful, however, then GRP Holdings has no such interest.

[7]                  The issue I need to resolve is whether GRP Holdings has a reasonably arguable case that the cancellation by VP Nominees was wrongful or invalid or whether VP Nominees has validly cancelled the Agreement ending GRP Holdings’ interest as purchaser.

[8]                  GRP Holdings and GRP Management have filed substantive proceedings against VP Nominees seeking specific performance of the Agreement.

[9]                  VP Nominees accepts that there are several disputed factual issues but submits that the case turns on legal issues, whether the claimed right of pre-settlement inspection and the alleged contamination of the property, displaced GRP Management’s obligation to settle or VP Nominees’ right of cancellation.

[10]              VP Nominees submits that these legal questions can be determined in these caveat proceedings finally determining the parties’ rights.

[11]              A significant volume of affidavit evidence has been filed from both of the key individuals associated with the parties, Ms Liu (of GRP Holdings and Management) and Mr Ma (of VP Nominees) as well as from experts in methamphetamine contamination and decontamination. Prior to the hearing, VP Nominees objected to the admissibility of some of the reply evidence filed for GRP Holdings, on the basis that it was late, contained hearsay, submission and scandalous allegation, was from experts who had not filed affidavits in support of the application (so was not in reply), and that much of Ms Liu’s reply affidavit was repetitive or expansive of the evidence contained in her first affidavit.

[12]              VP Nominees then filed further evidence in reply to the reply evidence. GRP Holdings objected to this evidence on the basis that it was repetitive, irrelevant, new evidence not in reply, or of purely subjective intent, thought or hearsay.

[13]              The objections were heard at the beginning of the caveat hearing. As caveat proceedings do not usually determine the parties’ final rights, a strict approach to the admissibility of evidence is not usually taken. Here, however, where VP Nominees submits that the question of valid cancellation can be finally determined, I have taken a more conservative approach.

[14]              Before considering admissibility, I consider GRP Management’s application for leave to lodge a second caveat and set out a brief summary of the factual background and relevant legal principles to provide context.

Second Application

[15]              Just prior to the hearing, GRP Management filed a separate application seeking leave to lodge a second caveat.

[16]              The application was heard together with the application by GRP Holdings by consent as GRP Management’s application was filed in response to the ground of opposition raised by VP Nominees in its amended notice of opposition, that the caveat lodged by GRP Holdings was in respect of the same interest as claimed in the caveat lodged by GRP Management which had lapsed. The lodging of second caveats is prohibited except with leave.1

[17]              The first caveat lodged by GRP Management lapsed automatically, pursuant to s 142 of the Land Transfer Act 2017 (“LTA”), as 10 working days passed from confirmed delivery of the notice without GRP Management filing a notice to sustain.

[18]              In calculating the 10 working day period, LINZ relied on courier tracking records which showed actual delivery to GRP’s Management’s solicitors’ postal address on 9 July 2020. GRP Management filed an application to sustain the caveat on the same day as the caveat lapsed, but too late.

[19]              GRP Management, in its calculation of the deadline, relied on the guidelines on the LINZ website that provided for a deemed delivery period of two working days by post. If that deemed delivery period had applied, the application by GRP Management would have been within time.

[20]              To avoid needing to seek leave to lodge a second caveat as required by s 146 of the LTA, GRP Holdings, the nominated purchaser and assignee, filed the second caveat. VP Nominees submits that this caveat is in respect of the same interest and that leave should not be granted.

1      Land Transfer Act 2017, s 146.

[21]              The prohibition against lodging second caveats in s 146 applies where it is being lodged “by or on behalf of the same person”. Here, the second caveat was lodged by GRP Holdings, which had been nominated as purchaser prior to the lapsing of the caveat lodged by GRP Management. GRP Holdings is a different entity to GRP Management and lodged the caveat on its own behalf, not on behalf of GRP Management. As a result, it did not need leave to lodge the caveat. It does not fall within the prohibition set out in s 146.

[22]              As I have found that GRP Holdings did not need leave to lodge its caveat, it is not necessary to determine whether GRP Management should be granted leave. I record, however, that I would have granted leave to GRP Management to register a second caveat, as no prejudice has been suffered by anyone acting in reliance on the register in the belief that the GRP Management was not pursuing its claim.2

[23]              For the remainder of the judgment I refer to GRP Holdings and GRP Management as GRP, unless it is necessary to distinguish between them.

Preliminary factual background

[24]              GRP Management and GRP Holdings are property development companies. Ms Lian (Lillian) Liu is the sole director of both. She is the sole shareholder of GRP Holdings, and the majority shareholder of GRP Management.

[25]              GRP Holdings purchased 12 Sinton Road, the neighbouring property to the property in dispute, in November 2018 with the intention of developing it if zoning changes occurred. Ms Liu confirms in her evidence that GRP Holdings rented out the two dwellings on 12 Sinton Road to cover holding costs in the interim.

[26]              The property at the centre of this dispute, 14 Sinton Road, is owned by the family trust of Mr Ming Ma and Ms Danqiong Zhang.

2      Lowther v Kim [2003] 1 NZLR 327 at [18]-[19].

[27]              Ms Liu and Mr Ma first met around the time of the purchase of 12 Sinton Road to discuss issues in relation to a boundary creek between 12 and 14 Sinton Road. Ms Liu deposes that at that meeting Mr Ma advised her that his family trust owned 14 Sinton Road and that Mr Guan (Bruce) Wang was the family trust’s accountant, trustee and authorised representative. Ms Liu says that she later discovered that VP Nominees was the sole trustee of the family trust and Mr Wang was the sole director of VP Nominees.

[28]              Ms Liu saw potential in developing 12 and 14 Sinton Road together and so told Mr Ma and Mr Wang to contact her if they were ever interested in selling 14 Sinton Road.

[29]              Mr Wang first approached Ms Liu in July 2018 to sell 14 Sinton Road but agreement was not reached. In September 2018 Mr Wang again advised that 14 Sinton Road was for sale. Ms Liu and Mr Wang reached agreement on a purchase price of

$8,600,000 million with an extended settlement date of 28 November 2019, conditional on receiving a satisfactory geotechnical report.

[30]              On 5 November 2018 GRP confirmed the geotechnical report condition had been satisfied and that the Agreement was unconditional. It was also agreed that settlement would be deferred to 31 March 2020, with an increase to the purchase price to $8,750,000 million (including GST if any).

[31]              I set out further details of the Agreement and its purported cancellation below, after determining the parties’ objections to the admissibility of reply evidence filed.

Legal principles in Applications to Sustain Caveats

[32]              Pursuant to s 138 of the LTA, any person with a legal or equitable interest in land may lodge a caveat over that land.

[33]              A purchaser under a sale and purchase agreement for land has a beneficial and, therefore, caveatable interest in that land.3

[34]              Where the purchaser is described in an agreement for sale and purchase as “and/or nominee” there is privity of contract enabling the purchaser’s nominee to take the benefits of and enforce that agreement.4 That nominee, as a consequence, also has a sufficient interest in the land to sustain a caveat.5

[35]              In this case, the deed of nomination also assigned the purchaser’s rights to the nominee. A purchaser’s assignee acquires a sufficient interest in the land to sustain a caveat.6

[36]              Under s 143 of the LTA, upon application by the caveator, the Court may make orders sustaining or lapsing a caveat. The principles are well settled and were recently confirmed in Lu Trustee Limited & Ho No.2 Trustees Limited v Parklane Infrastructure Limited 7 where the Court of Appeal referred to the summary in the earlier decision of the Court of Appeal, Philpott v Noble Investments Ltd:8

(a)The onus is on the applicants to demonstrate that they hold an interest in the land that is sufficient to support the caveat, but they need not establish that definitively;

(b)It is enough if the applicants put forward a reasonably arguable case to support the interest they claim;

(c)The summary procedures involved in applications of this nature are not suited to the determination of disputed questions of fact. An order for the removal of a caveat will only be made if it is patently clear that the caveat cannot be maintained – either because there is no valid ground for lodging it in the first place, or because such a ground no longer exists; and

3      Mortre Holdings Ltd v ANCL Investments Ltd [2016] NZCA 494, (2016) 18 NZCPR 268 at [9]- [15]; Foreman v Hazard [1984] 1 NZLR 586 (CA); Holt v Anchorage Management Ltd [1987] 1 NZLR 108 (CA).

4      Laidlaw v Parsonage [2009] NZSC 98, [2010] 1 NZLR 286 at 296.

5      Aston Investments Ltd v Kervus MC Ltd [2015] NZHC 92, (2015) 15 NZCPR 718.

6      D W McMorland Sale of Land (3rd ed, Cathcart Trust, Auckland, 2011) at [10.07(b)], citing

Avondale Printers & Stationers Ltd v Haggie [1979] 2 NZLR 124 (SC) at 142.

7      Lu Trustee Ltd and Ho No.2 Trustees Ltd v Parklane Infrastruct Ltd [2020] NZCA 682.

8      Philpott v Noble Investments Ltd [2015] NZCA 342 at [26].

(d)When an applicant has discharged the burden upon it, the Court retains discretion to remove the caveat which it exercises on a cautious basis. Before it does so the Court must be satisfied that the caveator’s legitimate interest would not be prejudiced by removal.

[37]              The respondent submitted that, contrary to the usual approach in caveat applications, the Court in this case should finally determine the parties’ rights as the operative facts were not in dispute and the law had been fully argued. It is clear that in caveat applications, the Court may finally determine the parties’ rights:9

It has been said in some cases that the proceeding before the court under s 145 is not suited to a final determination of the validity of the caveator’s claim…However, the facts in this case are fully before the Court and not in dispute. The law has been fully argued. The issue whether or not the caveators have an arguable case can be reduced to one question, namely, whether the cancellation of the contract between the appellants and the second respondent put an end to the rights of the first respondents under that contract whether as nominees or assignees of the named purchaser or as beneficiaries as that word is defined in the Contracts (Privity) Act 1982. If it did, the first respondents no longer have a right to maintain their caveat.

[38]Cooper J expanded on this in Taylor v Rebel Gasoline Ltd 10 when applying

Field v Fitton:11

If the matter in dispute is not central to an important issue or if the evidence adduced by one of the parties is not apparently credible the Court may well proceed to resolve the factual issue. (See Pemberton v Chappell [1987] 1 NZLR 1 at 4 per Somers J referring to the need to scrutinise affidavits, to see if they pass the “threshold of credibility”.)

[39]              In this case, the issue is whether the sale and purchase agreement has been validly cancelled. Relevant to this, Venning J held in Cosmo Properties Ltd v O A V Ltd:12

…it is clear that in appropriate cases the Court will determine whether or not an agreement for sale and purchase has been properly cancelled on an application such as the present”.

(citations omitted)

9      Field v Fitton [1988] 1 NZLR 482 (CA) at 490-491.

10     Taylor v Rebel Gasoline Ltd HC Auckland CIV-2005-404-003988, 9 September 2005.

11 At [46].

12     Cosmo Properties Ltd v O A V Ltd (2000) 4 NZ ConvC 193, 234 at [16].

[40]              The Agreement in this case was purportedly cancelled following the expiry of the settlement notice. Clause 11.1(2) of the Agreement provides for the circumstances in which a settlement notice will be effective:

The settlement notice shall be effective only if the party serving it is at the time of service either in all material respects ready, able and willing to proceed to settle in accordance with this agreement or is not so ready, able and willing to settle only by reason of the default or omission of the other party.

[41]              Furthermore, at the time of cancellation, even if there was an effective settlement notice, VP Nominees must still have been ready, willing and able to proceed to completion for its cancellation to be valid.13 In Noble Investments Ltd v Keenan the Court held:14

A party could be seen as benefiting from its own wrong if it seeks by cancellation to deprive the other party of the benefit of the contract in circumstances where the other party’s breach is a direct result of breach committed by the party seeking to cancel the contract…A party could also be seen as benefiting from its own wrong where it is unable or unwilling to perform its obligations under the contract and seeks to avoid liability for its own breach by cancelling the contract on the basis of the other party’s breach.

Admissibility

[42]              Both parties raised objections to the admissibility of the reply evidence filed. VP Nominees objected to the three reply affidavits filed by GRP on the basis that they were:

(a)filed late;

(b)“replete with inadmissible hearsay, submissions and scandalous allegation”;

(c)neither Mr MacDonald nor Mr Holt (both experts) filed affidavits in support of the application so their evidence is not in reply;

13     Property Ventures Investments Ltd v Regalwood Holdings Ltd [2010] NZSC 47, [2010] 3 NZLR 231 at [3].

14     Noble Investments Ltd v Keenan (2005) 6 NZCPR 433 (CA) at [47] as approved by the Supreme Court in Ingram v Patcroft Properties Ltd [2011] NZSC 49, [2011] 3 NZLR 433 at [40].

(d)much of Ms Liu’s reply affidavit is repetitive or expansive of the evidence contained in her first affidavit sworn on 26 August 2020.

[43]              Following its objection, VP Nominees filed two further “reply to the reply” affidavits by Mr Ma and Mr Williams (a building expert), both dated 21 October 2020.

[44]              GRP challenged the admissibility of Mr Ma’s affidavit on the grounds it was repetitive, irrelevant, new evidence not in reply, and that the evidence was of purely subjective intent, thought or hearsay.

Legal principles as to admissibility

[45]              The rules relating to affidavits in interlocutory applications in Part 7 of the High Court Rules 2016 apply to originating applications, including applications to sustain caveats.15 Rule 7.29 provides that Rules 9.75 to 9.88 apply, with all necessary modifications, to affidavits filed for interlocutory applications. Rule 9.76 provides for the form and content of affidavits and states they must be confined:

(a)to matters that would be admissible if given in evidence at trial by the deponent;

(b)if in reply, to matters strictly in reply.16

[46]              Rule 9.76 further provides that the Court may refuse to read an affidavit that unnecessarily sets forth any argumentative matter.

Hearsay

[47]The key admissibility objections by VP Nominees were to the annexing of:

(a)a statement by Mr Wang, a previous employee of Mr Ma; and

15     High Court Rules 2016, r 19.10.

16     Rule 7.26(2).

(b)a brief of evidence of Ms McPherson, the tenant occupying the dwelling that is allegedly contaminated by methamphetamine.

VP Nominees submitted these statements were hearsay and should not be admitted.

[48]Section 18 of the Evidence Act 2006 provides:

18 General admissibility of hearsay

(1)A hearsay statement is admissible in any proceeding if—

(a)the circumstances relating to the statement provide reasonable assurance that the statement is reliable; and

(b)either—

(i)the maker of the statement is unavailable as a witness; or

(ii)the Judge considers that undue expense or delay would be caused if the maker of the statement were required to be a witness.

…

[49]              Section 20 then relevantly provides (s 22 only being relevant to criminal proceedings):

20 Admissibility in civil proceedings of hearsay statements in  documents related to applications, discovery, or interrogatories

(1)In a civil proceeding, a hearsay statement in an affidavit made to  support or oppose an application is admissible for the purposes of that application if, and to the extent that, the applicable rules of court require or permit a statement of that kind to be made in the affidavit.

…

[50]              Ms Liu has deposed that Mr Wang would not agree to give an affidavit for this proceeding. Mr Ma’s second affidavit, in reply to the reply evidence, confirms this, stating that Mr Wang was not prepared to discuss matters beyond providing the statement now attached to Ms Liu’s affidavit in reply.

[51]              The Court has the power under r 9.75 of the High Court Rules to order a person who has information relevant to a proceeding to appear and be examined on oath. However, McGechan on Procedure notes:17

17     McGechan on Procedure (LexisNexis, loose-leaf) at [HR9.75.05].

… such orders are generally inappropriate in summary judgment because they are likely to give rise to contentious evidence, not readily resolved at a summary judgment hearing: Host Catering Ltd v Air NZ Ltd (1989) 2 PRNZ 126.

[52]Caveat proceedings are similarly summary proceedings.

[53]              Furthermore, Mr Ma does not challenge the reliability of the document itself, in fact he confirms its authenticity.

[54]              In my view, as Mr Wang would not agree to give an affidavit and Mr Ma has confirmed its authenticity, it is appropriate for the statement of Mr Wang to be admitted in the circumstances of this caveat proceeding.

[55]              The brief of evidence of Ms MacPherson is from the tenancy proceedings brought by Ms MacPherson and her husband, Mr Ian Fraser, against Mr Ma, a copy of which will have been served on Mr Ma.

[56]              In Mr Ma’s second affidavit in reply he does not refer to the tenancy proceedings, nor does he challenge the authenticity of the brief of evidence. He instead says that it was agreed with the tenants in 2019 that the tenants would attend to the maintenance issues at the property themselves in exchange for a reduction in rent. Mr Ma goes on to say that despite that agreement, VP Nominees has recently arranged to address maintenance issues and undertake other repair work.

[57]              I consider that in the context of these caveat proceedings, the statement of Ms MacPherson ought to be admissible.

Expert evidence

[58]              VP Nominees objected to GRP’s experts’ evidence in reply on the basis it was not in the nature of reply, was irrelevant, speculative or submission.

[59]              GRP does not consent to deleting any passages from its expert evidence, referring to VP Nominees’ submission that the Court should not, and cannot, resolve the conflict in the expert evidence, rendering VP Nominees’ objections unnecessary.

[60]              There is no real merit in the objection to the reply evidence of GRP’s experts, Mr Holt and Mr MacDonald, on the basis that it cannot have been in reply because neither provided expert evidence with the application. The reports of both Mr Holt and Mr MacDonald were annexed to GRP’s original expert report filed in support of the application. No objection was taken to the annexing of those reports when filed and both reports were separately referred to by VP Nominees’ expert in response.

[61]              For the purposes of this caveat hearing, the applicant needs to show that it has a reasonably arguable claim to an interest in the Property. I am not required to resolve the differences between the expert evidence and therefore it is not necessary to determine the admissibility or otherwise of Mr Holt or Mr MacDonald’s evidence.

Statements of belief

[62]              Further objections were raised by VP Nominees on the basis that the evidence included statements of belief. A judge may accept statements of belief in affidavits in which the grounds for belief are given, if it is in the interests of justice (among other grounds) to do so.18

[63]Working through each of the paragraphs which are objected to:

(a)	Paragraph 13:	The first two sentences are accepted because they are statements of Ms Liu’s understanding at the time. The final sentence is not admissible as no grounds for Ms Liu’s belief as to Mr Wang’s state of mind were given.
(b)	Paragraph 14:	This paragraph contains statements of Ms Liu’s experience and so are statements of fact, not opinion, and are accepted.
(c)	Paragraphs 24 to 30:	VP Nominees submits these paragraphs are not properly in reply. I agree, however, with GRP’s submission that they are in reply to paragraph 42 of Mr Ma’s affidavit.
(d)	Paragraph 26 final sentence	VP Nominees submits this is a submission. There are no grounds set out for this statement and so it is not accepted as an admissible statement of belief.

18 High Court Rules 2016, r 7.30.

(e)	Paragraph 37:	The first sentence is not accepted as an admissible statement as grounds for this statement are not set out. The remainder of the paragraph sets out statements of fact or personal opinion given previous events and is acceptable.
(f)	Paragraphs 38 to 39:	These paragraphs are accepted as admissible as they are in reply to Mr Ma and the respondent’s expert, Mr William’s, evidence as to the quantum of compensation.

GRP’s objections to VP Nominees’ evidence in reply

[64]              GRP challenged the admissibility of Mr Ma’s affidavit in reply, including on the basis that paragraph two was evidence of purely subjective intent.

[65]              GRP relies on the Court of Appeal’s decision in Electricity Corporation of New Zealand Limited v Fletcher Challenge Energy Limited19. In that case, the Court held there was no need to revisit the rule that statements of subjective intent must be disregarded when interpreting contracts, but treated the evidence as admissible for the purposes of determining whether a contract had been formed or was rectifiable.20

[66]              I accept the evidence as admissible but only on the basis that it may be relevant to a rectification claim, not when interpreting the Agreement. The weight to be afforded to the statement needs, however, to be considered carefully.

[67]              I am prepared to admit the remainder of the affidavit evidence, including the reply to the reply evidence on behalf of the respondent. The delay in providing the expert briefs by GRP and the repetition is excusable considering the respondent was late providing its expert evidence in opposition and the timetable for the filing of evidence was truncated to allow for a swift hearing. There will not have been the usual opportunity to ensure the evidence was not objectionable. Many of the passages to which VP Nominees objected have been voluntarily retracted by GRP, as referred to above. VP Nominees has also filed reply evidence and so has had an opportunity to respond to GRP’s evidence.

19     Electricity Corporation of New Zealand Ltd v Fletcher Challenge Energy Ltd [2002] 2 NZLR 433.

20 At [55].

Admissibility Summary

[68]              Summarising, the following passages are deleted from Ms Liu’s affidavit in reply dated 16 October 2020, either as a result of voluntary retraction by GRP or on my ruling they are inadmissible:

(a)paragraphs 7 and 8;

(b)final sentence, paragraph 13;

(c)paragraphs 18-20;

(d)final sentence, paragraph 21;

(e)final sentence, paragraph 22;

(f)final sentence, paragraph 26;

(g)paragraph 34;

(h)first sentence, paragraph 37; and

(i)paragraphs 40-44.

Was VP Nominees ready, willing and able to settle?

[69]              If GRP has an arguable claim that VP Nominees was not in all material respects ready, willing and able to settle, either at the time it issued the settlement notice or at the time it purported to cancel the Agreement, then there is a basis for the caveat to be sustained.

[70]              GRP submits that there are three alternative grounds on which VP Nominees was not ready, willing and able to settle. These are that VP Nominees was:

(a)in breach of the agreed pre-settlement inspection term by its refusal to allow GRP to inspect 14 Sinton Road prior to settlement;21 or

(b)in breach of cls 5.2(2) and 8 of the Agreement, as the property was damaged prior to the time of taking possession, had not been remedied and the amount to be deducted could not be agreed; or

(c)in breach of ss 9 and 14 of the Fair Trading Act 1986 (“FTA”) and s 35 of the Contract and Commercial Law Act 2017 (“CCLA”) including by misrepresenting the tenantability of 14 Sinton Road.

[71]              I discuss each of the three possible grounds below following a more detailed summary of the background to the Agreement and the correspondence leading up to settlement and cancellation.

Detailed Factual Background

Agreement

[72]              Ms Liu deposed that the negotiations before entering into the Agreement proceeded as follows:

[14]      However, in September 2018, Mr Wang contacted me and told me 14 Sinton Road was for sale again. My negotiations were again with Mr Wang. The main discussions between us related to price, settlement date and rental income. We discussed a price in the mid-$8 million mark and agreed on a price of $8.6 million. As the property was zoned for “future urban” and I would have to wait several years before being able to develop it (if and when the Auckland Council rezoned), I asked for an extended settlement date of until 28 November 2019, which Mr Wang agreed.

[15]      Importantly, I told Mr Wang that I would need to rent out the two dwellings on 14 Sinton to cover some of my holding costs for several years until I could develop it. Mr Wang told me that:

(a)Both the Main House and the Minor Dwelling were in good tenantable condition and had been tenanted for a number of years;

21 Originally the applicant submitted the settlement notice and cancellation were invalid because settlement could not reasonably or practically occur during the Alert Level 4 lockdown but GRP did not continue with this as a separate argument – if the right to inspection was an essential term, then cancellation was invalid, Covid-19 lockdown or not.

(b)Both the Main House and the Minor Dwelling were currently tenanted and both had fixed term leases; and

(c)The rent for the Main House and the Minor Dwelling totalled over

$1,000 per week.

[16]      As the Main House and the Minor Dwelling were tenanted, it was not convenient to view them. Mr Wang told me that the Main House and the Minor Dwelling were of good condition inside. He said the Main House and Main (sic?) Dwelling had been tenanted for several years previously with no issues. He told me there had been no problems with the Main House and Minor Dwelling.

[17]      I was satisfied with what Mr Wang told me. I told Mr Wang that I wanted the dwellings to be tenanted at the settlement date on 28 November 2019. Because of the long settlement period and because I did not get to view the dwellings, Mr Wang agreed that I would have the right of final inspection before the settlement date of 28 November 2019.

[73]              Mr Ma deposes in his first affidavit that he asked Mr Wang to approach the owners of the adjoining properties when he wanted to sell, had no direct involvement in any of the negotiations and that his communications with Mr Wang were limited to matters concerning the purchase price, the settlement date, the deposit, the further terms relating to the geotechnical assessment and the option for the purchaser to elect to have vacant possession at settlement. He says that at no point did Mr Wang discuss with him any request by the purchaser to carry out any inspection of the Property other than in relation to the geotechnical report that GRP required.

[74]              Ms Liu said in reply that she agreed that all her negotiations were with Mr Wang and that the value of the property was mostly in the land and its development potential. Ms Liu went on to depose that there was value in having the two dwellings on the Property because there would be a wait of several years for Auckland Council to rezone the land before being able to develop it. Ms Liu further deposed that the clause in relation to either tenanted or vacant possession at settlement was added by VP Nominees, that she presumed this was in case the tenants left before the settlement date and that she was “okay with that” but she preferred it to be tenanted.

[75]              Ms Liu’s affidavit in reply annexes a statement from Mr Wang (as discussed above when considering admissibility) that confirms that he agreed with Ms Liu not to do a building inspection at the time of the Agreement. Mr Wang’s statement says:

“Due to the long settlement date, we agreed it is not necessary to disturb the new tenants and not to do a building inspection at the time of sale, but agreed to do a final inspection nearer the settlement date”.

[76]              Mr Ma does not dispute this in his evidence but says in his second affidavit that Mr Wang did not discuss with him any request for GRP to carry out an inspection. He goes on to say that if Mr Wang had advised him that GRP wanted an unqualified right of inspection at the time of settlement in circumstances where the Property may have remained tenanted before settlement, he would have refused as he would not have been prepared to accept the risk that the tenants might have obstructed an inspection.

[77]              On the face of the Agreement there is no right to a pre-settlement inspection where the Property is tenanted. The Agreement is on the standard ADLS form (9th edition) and records at cl 3.2:

3.2If the property is sold with vacant possession, then subject to the rights of any tenants of the property, the vendor shall permit the purchaser or any person authorised by the purchaser in writing, upon reasonable notice:

(1)to enter the property on one occasion prior to the settlement date for the purposes of examining the property, chattels and fixtures which are included in the sale; and

(2)to re-enter the property on or before the settlement date to confirm compliance by the vendor with any agreement made by the vendor on the property and the chattels and the fixtures.

[78]Further terms were added to the Agreement making express provision:

(a)for access to the property to undertake geotechnical inspection for the purposes of preparation of a report;

(b)to allow access for surveyors and engineers for the preparation of relevant consents for subdivision.

[79]              There was also a term added by VP Nominees in relation to the tenancy providing:

22.Termination of tenancy

22.1The parties acknowledge that the two dwellings located on the property are, as at the date of the agreement, both subject to fixed- term tenancies until January 2019.

22.2The Purchaser agrees to accept Either vacant or tenanted possession at settlement date.

22.3If Purchaser intends to have vacant possession at settlement date, the purchaser shall notify the Vendor at least 90 days before the settlement dates so that the vendor can give notice to the tenants to terminate any existing periodic tenancies at that time.

[80]              VP Nominees’ solicitors, Forest Harrison, prepared the Agreement. All further terms were inserted by VP Nominees, not GRP. Ms Liu provided some handwritten changes to the further terms after being provided with a draft on 10 October 2018. But no pre-settlement inspection term was inserted, nor was cl 3.2 of the Agreement amended.

[81]              Ms Liu says in her evidence that she was of the understanding that the default position under the Agreement was that there was a right of pre-settlement inspection. Mr Wang’s statement, however, does not explain why a pre-settlement inspection term was not included in the Agreement despite confirming that it was agreed with Ms Liu.

Settlement

[82]              On 10 March 2020, as settlement drew near, VP Nominees’ solicitors, Forest Harrison (“FH”), sent a settlement statement to GRP’s solicitors at the time, DT Lawyers Limited (“DT”).

[83]              On 23 March 2020, a week prior to the settlement date of 31 March 2020, the government announced that New Zealand was going into Level 4 lockdown in response to the Covid-19 pandemic.

[84]              DT wrote to FH on 25 March 2020 asking for a deferral of settlement due to the Covid-19 lockdown starting the following day and being “unable to attend as to inspection, signing loan documents etc”.

[85]              FH responded on the same day but did not agree to defer settlement, recording that “nothing impedes the settlement”. No reference was made to inspection in their email but the email noted that “the property is currently tenanted”.

[86]              On 30 March 2020 FH sent through an amended settlement statement together with a copy of a draft letter to the tenants regarding the change of ownership.

[87]              On the morning of 31 March 2020, settlement day, DT wrote to FH saying VP Nominees had “no right to unilaterally deprive [GRP’s] right for pre-settlement inspection”.

[88]FH responded, saying in respect of possible inspection:

Inability to undertake a pre-settlement inspection without fault of either party does not give rise to a right of the purchaser to defer the settlement under the agreement. Let alone, the property has been always tenanted which is self- evident that the property is in a tenantable state of repair and the inspection could be done earlier as the lockdown only commenced at 11.59am on 25 March 2020 and the agreement was entered more than a year ago.

[89]              At 1.27pm FH provided the undertaking required for settlement, that the transfer documents had been certified and signed.

[90]              At 5.09pm on 31 March 2020, FH sent an email noting that settlement had not yet occurred, confirming that VP Nominees was ready, willing and able to settle, and reserving their client’s rights.

[91]              DT responded at 5.38pm saying that settlement had to be deferred due to difficulties caused by the lockdown and that VP Nominees’ position was “not accepted”.

[92]              FH responded at 6.30pm on 31 March 2020 making a number of points, including that a right of final inspection does not give rise to a right to refuse settlement and that GRP at no stage had provided evidence it was ready, willing and able to settle or that it has sufficient funds ready.

[93]There was then no communication for several weeks.

[94]              On 21 April 2020, whilst the Covid-19 Level 4 lockdown was still in place, FH issued a settlement notice requiring settlement within 12 working days.

[95]              DT sent an email on 28 April 2020 saying GRP was shocked to receive the settlement notice. The email recorded that a move to Alert Level 3 had been announced and, as the inspection and any necessary work in response could be completed in Level 3, proposed a settlement date on the 10th working day of the Level 3 period, 11 May 2020. A date was sought for a pre-settlement inspection together with confirmation that VP Nominees was not aware of any methamphetamine contamination of the property.

[96]              The email referred to VP Nominees’ offer of vendor finance but said specific terms had not been provided and, in any event, GRP had “… already arranged sufficient finance to complete settlement. It is only these delays caused by the unexpected lockdown”.

[97]              The email also referred to VP Nominees’ proposal that $10,000 be retained in exchange for GRP waiving the right to a pre-settlement inspection but said GRP was unable to accept that offer in case there was methamphetamine contamination as the retention amount may be insufficient and “it is not only a matter of money”. The email finished by saying the settlement was delayed due to the Alert Level 4 lockdown which constitutes a force majeure event and that it was in the best interests of both parties to agree to defer the settlement date to 11 May 2020.

[98]              FH responded on the same day saying the grounds for GRP’s failure to settle “are completely fallacious and absurd” and had already been responded to. FH went on to say that GRP had “never engaged in the conversation as to the retention of funds or raised an issue for a toxicology test which has never been part of the Agreement, let alone that the property is tenanted …”. FH said they would be surprised if a force majeure claim could be made out and that VP Nominees’ position remained unchanged. FH said, however, that VP Nominees would agree not to exercise the right of cancellation under the settlement notice until 11 May 2020 but that penalty interest would be charged.

[99]              DT responded on the same day, 28 April 2020, saying that GRP maintained that settlement should be deferred to 11 May 2020 without penalty to either party. DT asked for confirmation:

(a)whether GRP could carry out a pre-settlement inspection at 11am on 4 May 2020 (or that VP Nominees suggest another suitable time); and

(b)whether    the    property    had    previously    been    contaminated    by methamphetamine as far as VP Nominees was aware.

[100]           There was no response to this email. DT followed up on 1 May 2020, asking for a response to avoid any delay to “the agreed settlement on 11 May 2020”.

[101]           On Monday, 4 May 2020, FH emailed at 9.20am to say they did not have updated instructions but that their “client’s position remains”, and that the property is tenanted and managed by a property manager to maintain it in the same state of repair as at the time of the Agreement, other than fair wear and tear.

[102]DT responded at 9.40am asking FH to clarify whether VP Nominees was:

(a)refusing GRP’s right to a pre-settlement inspection; and

(b)refusing to provide information as to methamphetamine contamination.

[103]           DT said such refusals were a blatant breach of the Agreement and again sought a time for a pre-settlement inspection and for confirmation that VP Nominees was not aware of any contamination.

[104]           On 6 May 2020 FH emailed saying that under the terms of the Agreement the settlement is not subject to or conditional upon a final inspection unless vacant possession is to be given on settlement. The email went on to say despite the terms as outlined, FH had offered a $100,000 retention which was fair and reasonable in the circumstances. The email did not respond to the question of possible methamphetamine contamination.

[105]           Correspondence continued between the lawyers on 6 May 2020 with FH confirming that VP Nominees now denied that there was a right to pre-settlement inspection. FH continued to say they had no instructions on the contamination issue and questioned its relevancy.

[106]           DT followed up again on the contamination issue on 8 May 2020 and asked for the settlement statement to be forwarded for 11 May 2020 together with a copy of the tenancy agreements.

[107]           FH finally responded in relation to possible contamination on Friday 8 May 2020, recording that the current property manager was not aware of any contamination during his management but that the former property manager had advised that methamphetamine contamination had been discovered in 2016 but that it had been professionally decontaminated and she was not aware of any further issue. FH’s email concluded by saying a settlement statement would follow shortly.

[108]           DT responded on the same day that a toxicology test had been carried out with the consent of the tenants which showed that the methamphetamine contamination levels were well above safe levels in the main dwelling. DT’s email asked FH to urgently engage professionals to “clean up” the contamination before settlement and also to settle any claims the tenants may have against the landlord for contamination.

[109]           DT provided a copy of the toxicology report to FH on Monday 11 May 2020 at 10.22am and asserted that the property was untenantable under cl 5.2 of the Agreement.

[110]           FH responded at 1.10pm on 11 May 2020. FH said they had now obtained copies of the contamination reports from the former property manager and attached copies. The email said there were inconsistencies between the reports of the two parties and that it was crucial for the parties to ascertain the circumstances of the current contamination to determine where liability lies. FH’s email asserted that the alleged contamination did not affect the obligation to settle. Without admitting liability, VP Nominees proposed that $100,000 be retained from the settlement funds in FH’s trust account until liability for contamination was determined and, if the

contamination was VP Nominees’ responsibility, clean up undertaken. The retention proposal was made on condition that settlement was completed that day, 11 May 2020.

[111]           DT responded at 1.50pm requesting further information as a result of the reports provided:

(a)how many samples were taken in the course of the methamphetamine testing, noting only one to two samples appeared to have been taken each time which looked “abnormal”;

(b)provision of the three full reports to show where the samples were taken;

(c)which house/s the reports were in relation to as the reports did not include a property address;

(d)a statement from either the landlord or property manager as to when and how methamphetamine contamination was found;

(e)which parts of the house were contaminated, and to what extent;

(f)which parts of the house were treated, and how;

(g)whether contamination was disclosed to the current tenants prior to the tenancy agreements being signed;

(h)confirmation the decontamination was carried out, as the evidence of decontamination was in quote form.

[112]The email concluded by saying:

The above questions must be answered so that the parties may ascertain the risks and costs involved, before a solution can be found. Your client being the party who is in breach of the agreement shall not threaten to cancel the agreement. Your client tried all means to cover up the meth contamination until nearly the last minute when your client realised that they were no longer able to. Our client is still not receiving full information about the meth contamination found by your client in 2016.

[113]           DT emailed again at 2.58pm saying that GRP was examining the reports provided and taking advice from respective advisors, and that it appeared VP Nominees needed more time to provide the information requested in DT’s email of 1.50pm. The email sought agreement to defer settlement until the following day. DT said GRP had made arrangements to settle that day but had taken advice and the proposed $100,000 retention was not sufficient.

[114]           At 3.56pm, FH sent a further email reiterating that the contamination issue was not relevant to settlement but, without admitting liabilities, and on the basis settlement was completed that day, offered to increase the retention to $500,000 on the terms set out in their earlier email.

[115]           DT responded at 4.14pm saying they had real difficulties with how VP Nominees could possibly assert that methamphetamine contamination was irrelevant to settlement, that decontamination may involve huge costs and is sometimes very hard to achieve. They asked for VP Nominees to fully disclose the information requested and take full responsibility for remedying the issue. As it was already past 4pm, “due to [FH’s] late reply”, DT advised GRP was unable to draw down funds that day, and suggested that settlement occur the following day. The email finished by asking that the information previously requested, and set out above at [109], was forwarded urgently.

[116]           FH responded at 5.27pm confirming that VP Nominees was ready, willing and able to settle, asserting that GRP was not, and alleging that all of the issues raised including the Covid-19 lockdown, the pre-settlement inspection and the methamphetamine contamination, were tactics to delay settlement. FH confirmed that VP Nominees’ agreement to delay exercising its right of cancellation was in reliance on settlement occurring that day and said the proposed retention must be on their terms, which were not open to negotiation.

[117]           The following morning DT responded, urgently seeking the information previously requested and seeking confirmation that FH would agree to settle on the terms proposed by DT in its 10.22am email on 11 May 2020:

(a)$500,000 retained in DT’s trust account pending VP Nominees sufficiently remedying the methamphetamine contamination by 30 May 2020 (including written confirmation from the tenants that any claims they may have against the landlord have been settled);

(b)forfeiture of the retention amount if the issue was not addressed as required by 30 May 2020 (GRP being willing to extend this date) with GRP then engaging its own contractors to address the issue;

(c)any tenancy issue still resting with VP Nominees; and

(d)GRP reserving the right to recover from VP Nominees if the remedial costs exceed $500,000.

[118]           FH responded by continuing to assert the contamination issue was not relevant to settlement, saying they would only deal with it in a separate email. Alternative settlement terms were proposed that FH said were not open for negotiation. These included retention of the original $100,000 in FH’s trust account for three months to allow the circumstances of the contamination to be determined, and if VP Nominees was liable, decontamination at VP Nominees’ cost with a post decontamination report provided.

[119] GRP did not accept those terms but confirmed through its lawyers’ email at 12.31pm that settlement could still proceed if VP Nominees accepted GRP’s 11 May proposal (detailed at [117] above). The importance of a $500,000 retention was reiterated, saying that any retention less than that would not afford sufficient protection.

[120]           FH responded at 12.53pm saying the settlement terms set out that morning were not negotiable and that “the contamination raised, leave alone its validity, does not entitle your client to defer or to refuse to settle, particularly, it was raised when your client has never been in position to settle”.

[121]           At 3.54pm DT responded, questioning again how contamination was not relevant to settlement and saying that as the property has been contaminated while

owned by Mr Ma, responsibility for eliminating the contamination lay with him. DT’s response further recorded that a full copy of the 2016 toxicology report had still not been provided by VP Nominees and they were still refusing to provide any further details about the 2016 contamination. The email went on “[i]t is impossible your client did not know about the 2016 meth contamination as the owner of the property”. The email concluded by maintaining GRP’s earlier settlement proposal but advising settlement would have to take place the following day given it was nearly 4pm.

[122]           Further emails followed the next day with neither party altering its position on settlement and DT recording that VP Nominees was continuing to avoid providing the further information requested in relation to the 2016 contamination.

[123]           At 11.12am on 14 May 2020, FH sent an email attaching various documents from 2016 but saying that the contamination appeared highly likely to be a new and separate incident from the one in 2016. The email also included an excerpt from a statement by VP Nominees’ former property manager:

The issue with methamphetamine contamination was removed as full remedial action was taken by the owner of the property.

[124]           Two emails from DT followed, the first saying finally VP Nominees was providing the details requested more than two weeks ago and the second, at 3.38pm on 14 May 2020, suggesting that settlement was deferred until the following day and again proposing terms (essentially the same as previously; $500,000 retention subject to forfeiture if issue not resolved within a month).

[125]           At 4.13pm, FH responded confirming VP Nominees’ position remained the same, saying that it had been acting reasonably at all times and requiring settlement to be completed by 4.30pm that day.

[126]           At 4.38pm, FH sent an email stating GRP had failed to settle in accordance with the settlement notice and “pursuant to clause 11.4(b)” VP Nominees was cancelling the Agreement. The email recorded that the deposit was forfeited, and that VP Nominees reserved the right to sue for damages.

Pre-settlement inspection term

[127]           The first basis on which GRP submits it has a reasonably arguable claim is that VP Nominees acted in breach of the agreed pre-settlement inspection term when issuing its settlement notice and when cancelling the Agreement. GRP submits that on the true construction of the bargain between the parties a pre-settlement inspection term formed part of the Agreement, either by implication, rectification, by way of contractual mistake or estoppel.

[128]           VP Nominees, however, submits that if the parties reduce their agreement to a comprehensive written form, evidence of an oral term that is at odds with the Agreement is excluded under the parol evidence rule.

[129]           VP Nominees relies on a number of authorities22 but each of these authorities refer to exceptions where it can be shown that the parties intended the unwritten term to apply.

[130]VP Nominees also relied on the UK text, The Interpretation of Contracts.23

The extract referred to includes the following in relation to the parol evidence rule:

Although the rule may be clearly stated there are numerous exceptions to it. Indeed, there are so many exceptions that some scholars assert that there is no such rule at all. In their final report on the topic the Law Commission stated:

‘We have now concluded that although a proposition of law can be stated which can be described as the ‘parol evidence rule’ it is not a rule of law which, correctly applied, could lead to evidence being unjustly excluded. Rather, it is a proposition of law which is no more than a circular statement: when it is proved or admitted that the parties to a contract intended that all the express terms of their agreement should be as recorded in a particular document or documents, evidence will be inadmissible (because irrelevant) as it is intended only for the purpose of adding to, varying, subcontracting from or contradicting the express terms of that contract.’

22 Hoyt’s Pty Ltd v Spencer (1919) 27 CLR 133 (HCA) at 143; Newmans Tours Ltd v Ranier Investments Ltd [1992] 2 NZLR 68 (HC) at 81, per Fisher J; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 (HCA).

23 Sir Kim Lewison The Interpretation of Contracts (6th ed, Sweet & Maxwell Ltd, United Kingdom, 2015) at [3.11].

[131]           I accept VP Nominees’ submission that in the context of the sale and purchase of land it is important for parties to have the certainty afforded by a written instrument. Section 24 of the Property Law Act 2007 (“PLA”) in fact requires this:

24       Contracts for disposition of land not enforceable unless in writing

(1)A contract for the disposition of land is not enforceable by action unless—

(a)the contract is in writing or its terms are recorded in writing; and

(b)the contract or written record is signed by the party against whom the contract is sought to be enforced.

(2)In this section, disposition does not include—

(a)a short-term lease; or

(b)a sale of land by order of a court or through the Registrar.

[132]           GRP submits that it is reasonably arguable that the pre-settlement inspection term was accepted in email correspondence from VP Nominees’ solicitors and was, therefore, incorporated into the Agreement in writing, so complying with s 24.

[133]           There are several difficulties with GRP’s submission. The email correspondence relied on is not at the time of the Agreement but instead leading up to settlement. Further, the correspondence does not expressly state that a pre-settlement inspection was agreed, although it does not resist inspection by saying it was not a term of the Agreement.

[134]           In my view, the email correspondence is evidence of subsequent conduct consistent with the Agreement, potentially supporting a claim for rectification, rather than written evidence of the Agreement as required by s 24 of the PLA.

[135]In Sale of Land, this approach is supported:24

In certain circumstances, where a written instrument does not accurately state the intention or agreement of the parties, and so fails as a written record under s 24, the equitable remedy of rectification may be available to bring the writing into accord with the intention. When rectification is ordered, it takes effect

24     D W McMorland, above n 6, at 4.13.

retrospectively and automatically, without any need for the execution of an amending instrument. It can, therefore, bring about compliance with s 24 by an instrument that was formally not adequate either as a written contract or as a written record.

[136]McMorland goes on:25

The most frequent situation in which rectification is sought is where all the parties share a common mistake, that is the same mistake that the instrument accurately states their intention or agreement, whereas in fact it omits a term, includes an unintended term, or mis-states a term.

Rectification

[137]           The legal principles applying to rectification based on common intention are settled. The party seeking rectification must show:26

(a)that the parties had a common continuing intention, whether or not amounting to an agreement in respect of the particular matter in the agreement sought to be rectified;

(b)the common continuing intention must be objectively apparent, sometimes described as an outward expression of accord;

(c)that intention must continue up to the time of execution of the agreement sought to be rectified; and

(d)that, by mistake, the agreement does not reflect the parties’ common continuing intention.

[138]           The evidence of Ms Liu and Mr Wang confirms that Ms Liu and Mr Wang discussed and orally agreed a pre-settlement inspection term. The requirements set out at (a) and (b) above will, therefore, have been satisfied if Mr Wang was the agent for VP Nominees. There appears to be no question that he was an agent initially as Mr Ma confirms he asked Mr Wang to contact the neighbouring owners when he decided to sell, and that Mr Ma was not involved in the negotiations.

25     At 4.13.

26     See a summary of principles in Davey v Baker [2016] NZCA 313, [2016] 3 NZLR 774 at [37];

Green Growth No.2 Ltd v Queen Elizabeth II National Trust [2016] NZCA 308 at [48].

[139]           Mr Ma says in his second affidavit that he ended his business relationship with Mr Wang on or around 13 September 2018, almost a month prior to entry into the Agreement. But the documents show that Mr Wang was instructing the solicitors for VP Nominees on the terms that had been agreed with GRP until 9 October 2018.

[140]           There appears, at least, to be an arguable claim that Mr Wang was an agent for VP Nominees throughout and that the intention to include a pre-settlement inspection term continued up to the time of execution of the Agreement.

[141]           The final factor necessary for rectification, that by mistake the Agreement does not reflect the parties’ common continuing intention, is a matter on which there is disputed evidence. If it is a matter that requires determination, it needs to be determined in full substantive proceedings, not summary caveat proceedings.

[142]           VP Nominees’ primary position on rectification is that it is not open to GRP to raise this as an argument as it was not referred to in GRP’s applications and nor is such relief sought in the statement of claim filed by GRP in the substantive proceedings.

[143]           GRP’s caveat applications do not refer to rectification. The applications allege, however, that the Agreement included a pre-settlement inspection term and that VP Nominees was not ready, willing and able to perform its obligations under the Agreement at the time it issued its settlement notice and purported to cancel the Agreement because it was acting in breach of that term. GRP’s submissions filed in advance of the hearing referred to rectification as a possible basis and so any prejudice to VP Nominees through lack of notice could only be minor.

[144]           In these circumstances, I am not prepared to prevent GRP relying on rectification as a possible basis for establishing that it has an arguable claim against VP Nominees because it was not expressly referred to in the applications.

[145]           VP Nominees further submitted that it is clear from Mr Ma’s evidence that there was no common intention on VP Nominees part, either at, or subsisting through to, execution of the Agreement as required.

[146]           GRP disputes this on the facts and relies on both Ms Liu’s affidavits and Mr Wang’s statement in support of this. VP Nominees solicitors’ initial apparent acceptance that there may be a right to inspect lends further support to there having been a common intention between the parties.

[147]           Caveat proceedings are not the appropriate forum for determining such disputed factual issues. I consider that there is at least an arguable claim that the Agreement should be rectified to include a pre-settlement inspection term.

Contractual mistake

[148]           GRP also relies on contractual mistake as a possible basis for incorporating a pre-settlement inspection term. Section 24 of the CCLA provides that a court may grant relief where a party to a contract was influenced in their decision to enter into that contract by mistake, provided that mistake was either:

(a)known to the other party (a unilateral mistake);

(b)common to both parties (a common mistake), and the mistake resulted in a substantially unequal exchange of values.

[149]           Section 23(1) provides that the mistake may be a mistake of fact or law. But s 25(1) provides that a mistake in relation to a contract does not include a mistake in its interpretation.

[150]           Counsel for VP Nominees submits that GRP cannot, therefore, rely on contractual mistake to include the pre-settlement inspection term because the only possible operative mistake was Ms Liu’s interpretation of the rights of inspection conferred by the Agreement.

[151]           There may be an argument that the mistake made by Ms Liu was not a mistake in the interpretation of the Agreement but rather a mistake as to the terms included in the Agreement. In the context of caveat proceedings, where the evidence has not yet been fully tested, I am not able to reach a view on this. This also, therefore, provides a reasonably arguable basis for the claim by GRP.

Implication

[152]           GRP further relies on possible implication of an inspection term. VP Nominees, however, submits that the proposed inspection term does not meet the well- known test in BP Refinery (Western Port) Pty Ltd v Shire of Hastings27 as it is:

(a)unnecessary;

(b)far from obvious; and

(c)would contradict the express term providing for pre-settlement inspection in cl 3.2.

[153]           A pre-settlement inspection term that applies when the property is tenanted as well as when the property is vacant, does not contradict the inspection term in the Agreement in the sense that it provides the opposite to that term, but it would be unusual for both terms to be included in one agreement. If the pre-settlement term was agreed, one would have expected cl 3.2 to be amended to apply whether tenanted or not.

[154]           A pre-settlement inspection term is not necessary or obvious, as is required before a term will be implied, so this does not provide a reasonably arguable basis for such a term in the contract.

Estoppel

[155]           The final basis relied on by GRP is that it would be unconscionable for VP Nominees to resile from the parties’ common understanding that there would be a pre- settlement inspection and VP Nominees should be estopped from doing so.28

[156]           Given the disputed facts in relation to the pre-contractual negotiations, estoppel is also a matter that needs to be considered in the context of a full hearing.

27     BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 (UKPC).

28     Relying on Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at

[69] per McGrath J and [124] per Wilson J.

If the pre-settlement inspection term was agreed, was VP Nominees in breach?

[157]           VP Nominees submits that even if there were a right to a pre-settlement inspection, it is not an essential term. Failure to allow inspection did not, therefore, prevent VP Nominees being ready, willing and able to settle.

[158]           GRP submits in response that the pre-settlement inspection term was an essential term of the contract due to the lengthy settlement period, the importance of being able to rent the dwellings out, and GRP having been denied the opportunity to inspect the dwellings at the time of the Agreement.

[159]           In Yu v Bradley 29 Palmer J found that a breach of the right of inspection under cl 3.2 would have been material, holding:30

But Mr Bradley had not discharged his obligation to allow Mr Yu to inspect the property under cl 3.2, as I found above, and was in default under cl 1.1(33)(b). Mr Yu had raised a significant and genuine question about whether he was getting what he had agreed to pay for. In those circumstances, the breach of his right of inspection was material. Mr Yu was not required to settle on 15 February 2017 because he had not the opportunity to inspect the property. He was not ready, able and willing to settle at that point, only because of the default by Mr Bradley.

[160]           Clause 1.1(33)(b) of the agreement in Yu v Bradley, as also included in the Agreement in this case, provided:

1.1(33).Unless a contrary intention appears on the front page or elsewhere in this Agreement:

…

(b)a party is in default if it did not do what it has contracted to   do to enable settlement to occur regardless of the cause of such failure.

[161]           In Yu v Bradley, Palmer J held that failure to allow a pre-settlement inspection would mean that the vendor was in default under cl 1.1(33)(b). If that is the case, then it would be difficult for VP Nominees to argue that it was in all material respects ready,

29     Yu v Bradley [2020] NZHC 1822, (2020) 21 NZCPC 220.

30     At [72] (although this only applied initially as Palmer J found there was inspection at a later point).

able and willing to proceed to settlement as required by 11.1(2) for the settlement notice to be effective.31

[162]           If pre-settlement inspection is not one of the matters considered necessary for settlement in terms of cl 1.1(33)(b), whether VP Nominees was ready, willing and able (despite not allowing inspection) will depend on the materiality of the pre-settlement inspection condition.

[163]           Counsel for VP Nominees submitted that, unlike in Yu v Bradley, pre- settlement inspection here could not be regarded as part of VP Nominees’ material settlement obligations for the following reasons:

(a)the property was not being acquired for the purposes of residential occupation by the purchaser but rather for development;

(b)the dwellings were a relatively incidental part of the property representing only around 4.1 per cent of the property’s overall capital value (CV of $7,820,000 with only $320,000 allocated to improvements);

(c)the purchaser had not bothered to inspect prior to contracting nor did it insist upon any written inspection term, other than cl 3.2;

(d)it is unclear what GRP would have been assessing in the course of a final inspection, having not carried out an inspection of the property prior to entry into the Agreement;

(e)an inspection was, in effect, carried out as Ms Liu personally visited the tenants on 6 May 2020 suggesting they might carry out testing for methamphetamine and testing was carried out on 7 May 2020 with findings advised to VP Nominees on 8 May 2020;

31     Clause 11.1(2).

(f)any defects in the dwellings that might have entitled the purchaser to compensation could be pursued by way of abatement under cl 8 of the Agreement or a claim following settlement so the claims alleged would at most have constituted claims for monetary compensation.

[164]           VP Nominees’ submission that inspection cannot have been material because the purchaser did not bother to inspect prior to entering into the Agreement, may be answered by the evidence that Mr Wang did not want to interrupt the new tenants, and this was why the pre-settlement inspection was agreed to. Again, factual findings following a full substantive hearing are necessary to determine the position.

[165]           Furthermore, unlike Yu v Bradley, where it was clear an inspection did eventually take place, the parties dispute whether an inspection occurred here. Although Ms Liu personally visited the tenants on 6 May 2020, her evidence is that she did not inspect the dwelling. The only inspection that Ms Liu deposes took place was by the methamphetamine experts. Counsel for VP Nominees referred to this as being inspection “in effect”. If pre-settlement inspection is an essential term, an inspection “in effect” will not be sufficient. Again, this will depend on whether a pre- settlement inspection term was agreed and the essentiality of that term. Both matters will turn on factual findings that can only be made after a full substantive hearing.

[166]           From the above, GRP has succeeded in establishing that it has a reasonably arguable claim that a pre-settlement inspection term was agreed and that at the time VP Nominees issued its settlement notice and when purporting to cancel the Agreement, VP Nominees was not ready, willing and able to settle as it was in breach of that term.

Breach of clauses 5.2(2) and 8

[167]           The second basis for GRP submitting that VP Nominees was not ready, able and willing to settle, is that VP Nominees was in breach of cl 5.2(2) and/or cl 8 of the Agreement.

[168]           Clause 5.2 relates to damage to the property prior to settlement. This claim relates to the methamphetamine contamination of the main dwelling. The parties disagree about:

(a)the level of contamination;

(b)what the acceptable level for tenantability is; and

(c)the cost to remediate it.

[169]           VP Nominees, however, submits that it is unnecessary for the Court to resolve the conflicting expert evidence in order to resolve this application. Instead, VP Nominees submits this claim can be determined on the basis that the cost to remedy any contamination is insignificant relative to the value of the property and so could never have entitled cancellation (which GRP does not claim in any event). Nor did GRP invoke the cl 8 procedure as required under the Agreement, so VP Nominees’ cancellation is valid.

Relevant Clauses in the Agreement

[170]           Under cl 5.1 of the Agreement, 14 Sinton Road remains at the risk of VP Nominees until possession is given and taken.

[171]           Clause 5.2(2) of the Agreement provides for the approach to settlement where the property is damaged:

5.2 If, prior to the giving and taking of possession,  the  property  is destroyed or damaged, and such destruction has not been made good by the settlement date, then the following provisions shall apply:

…

(2) If the property is not untenantable on the settlement date the purchaser shall complete the purchase at the purchase price less a sum equal to the amount of the diminution in value of the property which, to the extent that the destruction or damage to the property can be made good, shall be deemed to be equivalent to the reasonable cost of reinstatement or repair.

[172]The test for tenantability/untenantability is:32

… whether the property as a whole has been rendered unfit for the occupation and use of someone assumed to want the property for the same purpose as the purchaser.

[173]           GRP did not submit that the property  was  untenantable, instead relying on  cl 5.2(2) to say, although tenantable, a deduction was required from the purchase price for the diminution in value.

[174]           In Full Circle Real Estate v Piper33 the District Court held there was no specific regulation of the testing and decontamination of methamphetamine damaged surfaces. The Tenancy Tribunal had relied on a report by Professor Sir Peter Gluckman (“Gluckman report”) rather than the New Zealand Standard, NZS 8510: 2017. The District Court held that this was appropriate given the Gluckman Report represented current scientific knowledge at that time.

[175]           Both parties’ experts in this case agreed that the Gluckman report,34 which recommended an acceptable level of 15mg/100cm2, is now considered too lenient.

[176]           GRP’s expert, Dr Wright, says that an acceptable level is no higher than 0.5mg/100cm2.

[177]           VP Nominees’ expert, Mr Bush, says that while Dr Wright’s recently published research is of “interest and may be relevant in reviewing the NZ Standard at a future date, the current industry standard for a residential property is the NZ Standard and this provides an acceptable level post decontamination of 1.5mg/100cm2”.

[178]           VP Nominees’ expert’s careful wording suggest 1.5mg/100cm2 may only be acceptable post decontamination. This means that although the test results of VP Nominees’ expert found levels below 1.5mg/100cm2, decontamination may still be required.

32  D W McMorland Sale of Land (2nd  ed, Cathcart Trust, Auckland 2000) at [10.13(g)] as approved by the Supreme Court in Bahramitash v Kumar [2006] 1 NZLR 577 (SC) at [14].

33 Full Circle Real Estate v Piper [2019] NZDC 4947 at [36].

34 Professor Sir Peter Gluckman Methamphetamine contamination in residential properties: Exposures, risk levels, and interpretation of standards (Office of the Prime Minister’s Chief Science Advisor, 29 May 2018).

[179]           GRP’s expert criticised the testing completed by VP Nominees’ expert in their reply evidence saying there are serious questions about the sample methodology used.

[180]           As both parties agreed, a caveat hearing is not an appropriate forum for resolving disputes in expert evidence.

[181]           VP Nominees submits the disputes between the experts do not need to be resolved because even if the property was damaged, the cost of remedying the potential contamination is insignificant relative to the value of the property.

[182]But there is a dispute between the parties on what the cost of remediation is:

(a)VP Nominees’ evidence is that the cost is between $10,000 to $15,000 plus GST and would take three to four days;

(b)GRP’s evidence is that the impact of the contamination is not just the cost of decontamination, which could be significant (but is unable to be quantified as GRP has not been able to inspect), but also the loss of rent and stigma attached to contaminated properties with GRP’s proposed reduction from the purchase price being $500,000.

[183]           If cl 5.2(2) is engaged, the purchaser is required to complete the purchase at the purchase price less a sum equal to the amount of diminution in value of the property.35 Where the amount of diminution in value is disputed, cl 5.2(4) requires the parties to follow the procedure set out in cl 8.4 of the Agreement.

[184]           Counsel for VP Nominees submitted that if cl 5.2(2) is engaged it is a claim for compensation under cl 8 and, not only cl 8.4, but all of cl 8 needs to be complied with, including the cl 8.1 requirement to issue notice.

[185]           In my view, there is a reasonable argument that only cl 8.4 is required to be followed, with notice under cl 8.1 not required, because:

35     ADLS Agreement for Sale and Purchase (9th ed, 2012 (7)) at cl 5.2(2).

(a)Clause 5.2(2) refers specifically to cl 8.4 rather than cl 8 generally;

(b)Clause 6.4, by contrast, requires notice under cl 8.1 specifically;

(c)The 10th edition of the ADLS form now includes a significantly modified compensation clause, cl 10 replacing the former cl 8, which expressly refers to notice being required for any amounts payable under cl 5.2. If cl 8.1 applied previously there would not have needed to be such express provision.

[186]GRP further submits that notice under cl 8.1 was given in any event.

[187]           Under cl 8.1, the purchaser is required to give notice of its claim to compensation on or before the last working day prior to settlement. The timing can be extended to “the last working day prior to settlement fixed by a valid settlement notice where, by reason of the conduct or omission of the vendor, the purchaser is unable to give notice by the original settlement date”.

[188]           In these proceedings, the date by which notice is required depends on matters which are in dispute between the parties. If the settlement notice issued by VP Nominees is not valid, including either as a result of a breach of the pre-settlement inspection term or a misrepresentation in terms of the methamphetamine contamination, then the date by which notice is required could still be extended by the issue of a valid settlement notice by either party.

[189]           As I consider there is a reasonable argument that a cl 8.1 notice is not required for damage under cl 5.2(2), and the date by which such a notice was required depends on matters which are in dispute between the parties, it is not necessary for the purposes of this hearing to consider whether cl 8.1 was complied with.

[190]           VP Nominees submits further that even if GRP did give notice under cl 8.1, GRP did not invoke the remainder of the cl 8 procedure as required, so VP Nominees was not in breach of its obligations when it cancelled the Agreement, and the cancellation is therefore valid.

[191]           Considering the relevant parts of cl 8, if the parties cannot agree on the amount of compensation (whether cl 8.1 notice is required or not), cl 8.4 sets out the process to be followed to resolve that dispute. Clause 8.4 provides:

8.4If the amount of compensation is disputed:

(1)an interim amount shall be deducted on settlement and paid by the purchaser to a stakeholder until the amount of the compensation is determined;

(2)the interim amount must be a reasonable sum having regard to all of the circumstances;

(3)if the parties cannot agree on the interim amount, the interim amount shall be determined by an experienced property lawyer appointed by the parties. The appointee’s costs shall be met equally by the parties. If the parties cannot agree on the appointee, the appointment shall be made on the application of either party by the president for the time being of the New Zealand Law Society;

(4)the stakeholder shall lodge the interim amount on interest- bearing call deposit with a bank registered under the Reserve Bank of New Zealand Act 1989 in the joint names of the vendor and the purchaser;

(5)the interest earned on the interim amount net of any withholding tax and any bank or legal administration fees and commission charges shall follow the destination of the interim amount;

(6)the amount of compensation determined to be payable shall not be limited by the interim amount; and

(7)if the parties cannot agree on a stakeholder, the interim amount shall be paid to a stakeholder nominated on the application of either party by the president for the time being of the New Zealand Law Society.

[192]           Where the amount to be deducted is disputed, cl 8.4(1) requires an “interim amount” to be deducted by the purchaser and paid to a stakeholder until the amount of compensation is determined. But even this interim amount is required by cl 8.4(3) to be agreed between the parties, with an experienced property lawyer being appointed by the parties to determine the amount if agreement cannot be reached.

[193]           VP Nominees submits that GRP never proposed an amount to be deducted without strings attached and so it did not comply with cl 8.4. GRP’s proposal to deduct

$500,000 was made on settlement day at 10.22am. There were strings attached, as the whole of the amount was to be forfeited if the contamination was not sufficiently

remedied by 30 May 2020. However, these terms do not mean the cl 8.4 process was not engaged.

[194]           In Yu v Bradley the deduction proposed by the purchaser was conditional on the neighbour being willing to sell a piece of land to the purchaser. Such a condition would mean parties were not required to follow the cl 8.4 process until and unless it was fulfilled.36 Here, however, the terms attached to the proposed deduction simply went to its reasonableness. If they could not be agreed between the parties, they were a matter that the “experienced property lawyer” required by cl 8.4(3) could determine, unlike with the condition in Yu v Bradley. I do not consider that the fact that the

$500,000 proposed by GRP had terms attached to it means that the cl 8.4 procedure was not invoked.

[195]           Following GRP’s proposal for a deduction on 11 May 2020, VP Nominees rejected it, repeating its offer to retain $100,000. This offer was also subject to terms, including that it would only be used “if the contamination is VP’s responsibility”.

[196]           Briefly at 3.54pm on 11 May 2020, VP Nominees offered to increase the amount retained to $500,000 but still on the same terms, that it would only be utilised “if the contamination is VP Nominees’ responsibility”.

[197]           GRP’s solicitors responded at 4.14pm asking VP Nominees to fully disclose the contamination information previously requested and saying it was too late to draw down funds but asking for settlement to occur the following day.

[198]           As set out above at paragraphs [116] to [118], further correspondence followed with VP Nominees reverting the next morning to the previous sum of $100,000, reiterating that it was not negotiable.

[199]           It would have been clear to both parties on the extended settlement date, 11 May 2020, that the amount to be deducted was in dispute. Clause 8.4 would, therefore, have been engaged requiring the parties to appoint an experienced property lawyer to

36     Yu v Bradley, above n 29, at [76].

determine the amount. This did not happen. Nor was there any reference to cl 8 by the vendor’s solicitors.37

[200]           Prior to inclusion of cl 8 in the standard ADLS contract, the Court of Appeal held:38

That a vendor is unable to compel settlement where the parties do not agree on the amount of compensation, or on some sensible arrangement to protect their respective interests so that settlement can proceed.

[201]           Now that cl 8.4 has been included in the standard terms, both the vendor and the purchaser are obliged to follow that process where the interim amount to be deducted is in dispute. Failure to do so will mean that the party purporting to cancel is in breach and so is not ready, willing and able to settle in accordance with the Agreement. VP Nominees could not, therefore, cancel the Agreement before completing that process.

[202]           During the hearing, there was discussion about whether GRP was obliged to tender for settlement, despite the dispute over the amount to be deducted. GRP relied on the Supreme Court’s decision, Bahramitash v Kumar,39 to say that it was not required to tender where tendering would be futile. It was submitted that, just as in Bahramitash, the vendor’s solicitors had made it clear that they were not negotiable on the deduction to be made and would not settle if a lesser amount was tendered.

[203]           The sale and purchase agreement in Bahramitash did not include an equivalent to cl 8.4. Now that the contract does include a mechanism for resolving any dispute on the amount to be deducted, there may be an argument that there is no obligation to tender until the process in cl 8.4 has been completed.

[204]           Where the damage is only discovered just  prior to or on settlement day, the  cl 8.4 process is difficult to comply with unless the settlement date is extended as the process includes the appointment of an experienced property lawyer and determination

37     Unlike in Yu v Bradley, above n 29, at [31].

38     Lingens v Martin (1994) 2 NZ ConvC 191,940.

39     Bahramitash v Kumar [2005] NZSC 39, [2006] 1 NZLR 577 at [20].

by them of a reasonable interim amount for the deduction. This was the case here and appears largely to have arisen as a result of delay by VP Nominees.

[205]           The Agreement does not specifically make provision for the deferment of the settlement date for these purposes. It does, however, provide at cl 3.16 that where neither party is ready, willing or able to settle, the settlement date shall be deferred to the third working day following the date upon which one of the parties gives notice it has become ready, willing and able to settle.

[206]           The Supreme Court held in Property Ventures Investments Ltd v Regalwood Holdings Ltd40 that even though a settlement notice may have been valid at the time it was issued, a party to a land sale contract may not cancel that contract unless that party is at the time of cancellation in all material respects ready, willing and able to perform its contractual obligations.41

[207]           In Regalwood, at the time the settlement notice was issued, although the purchaser may have been entitled to claim for a deduction on the basis the building did not have a building warrant of fitness, it had not yet done so. The Supreme Court held that because it is incumbent on the purchaser to put forward its claim which it had not yet done, the vendor at the time it issued its settlement notice could not be said to have demonstrated an unwillingness to proceed to settle in accordance with its obligations. So the issuing of the settlement notice may have been valid. The Supreme Court went on to say, however, that once the purchaser did claim a deduction, despite the settlement notice potentially being valid when it was issued, if the vendor continued to insist on payment in full, the vendor was no longer in all material respects ready, willing and able to settle and so could not cancel the contract.42

[208]           There are similarities with the circumstances in these proceedings. Considering only the claims arising from the methamphetamine contamination, at the time the settlement notice was issued, although the contamination may have already justified a deduction, no claim to a deduction had yet been made.

40     Property Ventures Investments Ltd v Regalwood Holdings Ltd, above n 13.

41 At [3].

42     Property Ventures Investments Ltd v Regalwood Holdings Ltd, above n 13, at [13].

[209]           Once a claim to a deduction had been made, however, and it was clear there was a dispute as to the interim amount, then VP Nominees was no longer in a position where it was ready, willing and able to settle, so it could not cancel at that time.

[210]           For the purposes of this caveat proceeding, GRP clearly has an arguable claim based on cl 5.2(2) and cl 8 that VP Nominees was not ready, willing and able to settle when it purported to cancel the contract on 14 May 2020.

Breach of ss 9 and 14 of the FTA and s 35 of the CCLA

[211]           The third reason GRP submits VP Nominees was not ready, able and willing to settle, is that GRP alleges VP Nominees represented that 14 Sinton Road was in good tenantable condition, would continue to be tenantable after settlement and that there had been no issues in the past. GRP alleges that these misrepresentations provide the basis for claims under s 35 of the CCLA and ss 9 and 14 of the FTA.

[212]Section 35 of the CCLA provides:

35 Damages for misrepresentation

(1)If a party to a contract (A) has been induced to enter into the contract by a misrepresentation, whether innocent or fraudulent, made to A by or on behalf of another party to that contract (B),—

(a)A is entitled to damages from B in the same manner and to the same extent as if the representation were a term of the contract that has been breached; and

(b)A is not, in the case of a fraudulent misrepresentation, or of an innocent misrepresentation made negligently, entitled to damages from B for deceit or negligence in respect of the misrepresentation.

(2)Subsection (1) applies to contracts for the sale of goods—

(a)despite sections 197 and 201(2); but

(b)subject to section 34.

[213]           To succeed, GRP will need to establish there was a false representation made by or on behalf of VP Nominees which induced GRP to settle. The courts have also held that it must have been reasonable to rely on the representation and that the representation must have been made with the intention of inducing entry into the contract.

[214]           Clause 6.4 provides that except as provided in ss 36 to 42 of the CCLA, claims for error, omission or misdescription of the property do not enable the purchaser to cancel but compensation shall be given as required if claimed by notice before settlement pursuant to cl 8.1.

[215]           Whether the property was misdescribed is a matter on which there are disputed facts. But if there was a misdescription of the property through failure to refer to the methamphetamine contamination, then notice under cl 8.1 may be required. The issues discussed above as to the date by which such notice was required (the calculation of the date relying on the validity of the settlement notice) would also arise in respect of these claims.

[216]           There is  overlap  between  these claims  and  the claim  for  damage  under  cl 5.2(2), both relying on the methamphetamine contamination.

[217]           It was clear to both parties that the amount of the deduction for damage was in dispute and so cl 8.4 must have been engaged. I do not accept VP Nominees’ submission, therefore, that even if the misrepresentations had been made out, I am able to determine in these caveat proceedings both:

(a)that GRP will not be able to establish that it had invoked the cl 8 procedure; and

(b)that VP Nominees was not in breach of that procedure.

[218]           I find that claims based on misrepresentation are also reasonably arguable, sufficient to sustain a caveat.

Result

[219]           GRP has succeeded in establishing that it has reasonably arguable claims on all three grounds on which it relies. The application to sustain the caveat by GRP Holdings is, therefore, granted.

[220]           The evidence filed for VP Nominees indicated the settlement date for the new sale and purchase agreement entered into by VP Nominees is currently 1 April 2022. The question of whether VP Nominees validly cancelled the Agreement needs to be finally determined before then.

[221]           As referred to above, substantive proceedings have already been filed by GRP Holdings and GRP Management seeking specific performance. There is a case management conference scheduled for 23 March 2021, at which trial directions can be made to ensure that the final position can be determined expeditiously.

Costs

[222]           The applicants have succeeded and so are entitled to costs in the ordinary course. The parties should confer and, if costs are unable to be agreed, file memoranda of no more than five pages.

Associate Judge Sussock