Lendlease Capital Services Pty Ltd v Arena Living Holdings Ltd

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA358/2020
[2020] NZCA 471

BETWEEN	LENDLEASE CAPITAL SERVICES PTY LIMITED Appellant
AND	ARENA LIVING HOLDINGS LIMITED Respondent

Court:	Kós P and Clifford J
Counsel:	J F Anderson QC, M R Crotty and M Eastwick-Field for Appellant S J P Ladd and B J Ward for Respondent
Judgment: (On the papers)	5 October 2020 at 9 am

JUDGMENT OF THE COURT

ALeave to appeal is granted.

BThe approved questions on appeal are those stated at [5].

____________________________________________________________________

REASONS OF THE COURT

(Given by Kós P)

The applicant, Lendlease Capital Services Pty Ltd, seeks leave to appeal a decision of the High Court declining its interlocutory application for orders striking out the second cause of action, an allegation of breach of a maintenance warranty, in the statement of claim of the respondent, Arena Living Holdings Ltd.[1] Lendlease sought leave to appeal in the High Court which was declined.[2]
[1]Arena Living Holdings Ltd v Lendlease Capital Services Pty Ltd [2020] NZHC 587.
[2]Arena Living Holdings Ltd v Lendlease Capital Services Pty Ltd [2020] NZHC 1308.
The underlying claim concerns a sale of shares in a company that ran five retirement villages in New Zealand, by Lendlease, to Arena. Three of the five retirement villages suffer from watertightness issues. Arena claims against Lendlease for breach of warranties in the sale and purchase agreement.
Lendlease’s application for strike out relates to the second cause of action, an allegation of breach of cl 14.1 of the agreement warranting that the buildings were appropriately maintained. Clause 10.4 of the agreement relevantly provides that Arena may only claim for a breach of warranty if it gave Lendlease written notice of the claim, setting out reasonable particulars, before a specified date. Lendlease’s strike-out application alleges Arena did not give notice of breach of cl 14.1 in time.
This Court may grant leave under s 56(5) of the Senior Courts Act 2016. Leave should not be granted unless:[3]
(a)the proposed appeal raises some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the appeal; and
(b)the proposed appeal has some reasonable prospect of success.
[3]Moir v IHC New Zealand Inc [2018] NZCA 130, (2018) 24 PRNZ 45 at [6]; and Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].
We are satisfied the following questions posed by Lendlease meet those criteria, namely whether the High Court erred in:
(a)distinguishing between contractual notices requiring the person notified to do or refrain from doing something and contractual notices that convey information, and finding that there is a heightened need for clarity and certainty in relation to the former but not the latter;
(b)finding looseness in the references to breaches of other warranties in Arena’s notices was not fatal to their compliance with cl 10.4;
(c)finding cl 10.4 permitted Arena to leave its way open to make claims under other warranties without expressly identifying those other warranties in the notices;
(d)departing from English authority on the interpretation of notice provisions such as cl 10.4;
(e)finding a vendor notified of a claim for watertightness defects was thereby fairly notified of a claim under a maintenance warranty;
(f)finding the cl 10.4 requirement to provide reasonable particulars of the grounds on which Arena’s claims for breach of the maintenance warranty is based was satisfied by reference to the watertightness warranty and/or watertightness defects and did not require Arena to refer to the maintenance warranty; and
(g)finding, in the context of a leaky building claim, it would be unduly oppressive to require the purchaser to give greater specificity at the notification stage by identifying the warranties under which it intended to claim.

Result

Leave to appeal is granted.
The approved questions on appeal are those stated at [5].

Solicitors:
Russell McVeagh, Auckland for Appellant
Bell Gully, Auckland for Respondent

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard an appeal from Lendlease Capital Services Pty Ltd against Arena Living Holdings Ltd. The central issue in the appeal concerns the interpretation and application of a maintenance warranty in a sale and purchase agreement for shares in a company operating retirement villages in New Zealand. The respondent, Arena Living Holdings Ltd, alleged that the appellant, Lendlease Capital Services Pty Ltd, breached a maintenance warranty in the sale agreement, which covered the condition of buildings sold to Arena. The appellant sought to strike out this second cause of action on the basis that Arena failed to provide the required notice of the breach within the specified timeframe as outlined in the agreement. The High Court had previously declined the appellant's application to strike out the second cause of action, leading to this appeal.

The Court of Appeal was required to decide whether the High Court correctly interpreted the notice provisions in the sale and purchase agreement. Specifically, the Court had to determine whether the High Court's decision to distinguish between different types of contractual notices was appropriate and whether it correctly interpreted the requirement for Arena to provide specific details about the breach of the maintenance warranty in its notice to Lendlease. The Court also needed to assess if the High Court properly applied relevant English authority in interpreting similar notice provisions and whether it was correct in its interpretation of the notice requirements in the context of a leaky building claim.

The Court of Appeal found that the proposed appeal raised questions of law that had a reasonable prospect of success and were of sufficient importance to warrant an appeal. The Court granted leave to appeal and approved the questions posed by Lendlease, which included whether the High Court erred in its interpretation of the notice provisions, its departure from English authority, and its application of those provisions in the specific context of the case. The Court determined that these issues warranted further examination by the Court of Appeal, leading to the grant of leave to appeal.

The final orders of the Court of Appeal were that leave to appeal was granted, and the approved questions on appeal were those stated at [5]. The appeal would now proceed to be heard on the merits, focusing on the specific legal issues identified by the Court of Appeal.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established