Miharo Farm Limited v Allen
[2015] NZHC 1987
•21 August 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-1926 [2015] NZHC 1987
UNDER The Declaratory Judgments Act 1908 BETWEEN
MIHARO FARM LIMITED Plaintiff
AND
WAYNE ALLEN Defendant
Hearing: 2-4 June 2015 Appearances:
N S Gedye QC for the Plaintiff
N R Campbell QC and A J Sinclair for the DefendantJudgment:
21 August 2015
JUDGMENT OF ELLIS J
This judgment was delivered by me on 21 August 2015 at 11 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Counsel:
N S Gedye QC, Barrister, Auckland
N R Campbell QC, Barrister, Auckland
A J Sinclair, Barrister, Auckland
Solicitors:
Graham & Co, Auckland
Alexander Dorrington, Auckland
MIHARO FARM LIMITED v ALLEN [2015] NZHC 1987 [21 August 2015]
Table of contents
The original sale and purchase agreement [5] The pleadings and the issues [60] Was agreement to amend the boundaries reached? [68] Does s 24 of the PLA apply? [75] Was s 24 complied with? [79] Does the doctrine of part performance mean that the agreed variation is
enforceable? [84]
Summary [92]
[1] Miharo Farm Ltd (MFL) owned an 81 hectare farm property at Brownhill Road, Whitford, which it planned to subdivide into two lots. Lot 1 was to be retained by MFL and, in March 2013, MFL entered into an agreement to sell what was to be Lot 2, comprising some 78 hectares, to the defendant, Mr Wayne Allen. A resource consent for the proposed subdivision had already been obtained.
[2] Clause 20 of the sale and purchase agreement provided that the subdivision would be generally in accordance with a Scheme Plan that was attached to the agreement. But MFL says that, at Mr Allen’s request, the parties later agreed to change this original Scheme Plan, and that the amended Scheme Plan (known by the parties as the Candor3 Plan) was then used to set the boundaries for the subdivision and for the subsequent certificates of title.
[3] Mr Allen subsequently refused to settle the sale. He asserts that agreement to change the boundaries was not reached and that he is entitled to stand on his rights under the original agreement. MFL maintains that Mr Allen was required to settle on the basis of the new boundaries and that his failure to do so entitled it to cancel the contract and retain the deposit.
[4] Thus the central issue is whether an enforceable agreement was reached between MFL and Mr Allen as to the new boundary lines.
The original sale and purchase agreement
[5] The agreement for sale and purchase was signed on 16 March 2013. The deposit was ten per cent of the purchase price of $7.5 million, payable in two parts. The first payment of $50,000 was due on 31 July 2013, with the balance on
18 December 2013. The agreement provided that the settlement date was
1 April 2014, or five working days after the issue of title, whichever was the later. The agreement contained the standard general terms of sale in the Auckland District Law Society standard form, but included a number of further terms.
[6] Clause 18 provided:
18.0 Agreement Conditional on Due Diligence
18.1This Agreement is conditional on the purchaser carrying out a comprehensive due diligence investigation of the property, including without limitation the following:
(a) All legal and title issues relating to the property and any encumbrances or memorials registered on the title;
(b) Resource Management, Code of Compliance and LIM matters relating to the property;
(c) A building report including engineering issues; (d) Valuation advice;
(e) The suitability of the property for the intended use by the purchaser.
18.2The date for satisfaction of this condition is the [40]th working day after the date of the signing of this agreement by both parties. If the condition is not satisfied the purchaser will not be required to state any reason for the condition not being satisfied.1
[7] Clause 20 related to the subdivision which was to give rise to the new titles. That clause materially provided:
20.1The land being sold is part of a subdivision. The subdivision will be generally in accordance with the Scheme Plan attached
20.1.1The purchaser accepts all easements and areas are subject to finalisation on survey and may vary. If upon deposit of the plan the area of any lot has changed by more than 5%, then:
(a) if reduced in area the purchaser, or
(b) if increased in area the vendor
Shall be entitled to compensation in event of any such variation in area, such compensation to be the dollar amount which represents the difference in the value of the property by reference to the purchase price.
20.2The vendor undertakes that it will with all due expedition and at its cost proceed to deposit the plan of subdivision so as to obtain titles to the property.
…
[8] The Scheme Plan attached to the sale and purchase agreement had been prepared by MFL’s surveyors, Harrison Grierson, and showed Lot 1 demarcated by black lines in a vaguely rectangular shape at the north western corner of the property.
[9] It is not disputed that in early July 2013 Mr Allen approached Mr Ross Robertson of MFL seeking a number of variations to the agreement, including an alteration to the boundaries. The reason for this was to permit an additional access way to Lot 2 on the eastern side.
[10] Mr Allen gave Mr Robertson a plan on which he had marked the proposed change. Although not opposed to facilitating the additional access way Mr Robertson saw that there were some practical difficulties with where Mr Allen had drawn the new boundary in his sketch because it would cut through buildings, across a pond and did not generally follow the fence lines. Mr Robertson took Mr Allen’s sketch away and reworked it. Again, there is no real dispute that Mr Robertson’s proposed boundary change was well received by Mr Allen.
[11] It is at this point that matters become more contentious. Accordingly in the narrative which follows, I rely as much as I am able on the documentary record.
[12] On 15 July Mr Allen sent an email to Ms Bonnie Warburton, a legal executive employed by his solicitors (Alexander Dorrington). In the email (which he copied to Mr Robertson) he said:
The purchaser and vendor will also work together to allow for a change in boundaries for the Vendor’s present two lot subdivision as per new plan attached.
[13] The “new plan attached” was the sketch of the proposed boundary change.
[14] On 16 July 2013, Mr Robertson emailed Mr Allen in response to matters that had been raised by Mr Allen a few days earlier, including the amount of the initial deposit and the timing for the payment of the remainder. He also said:
6.We believe the Trustees2 will agree your request for a change in settlement date; they would also agree to a change in boundaries on Lot 1 and Lot 2 provided that this change is agreed and incorporated in the revised agreement.
…
8.You already have a copy of my schematic for my proposed sub- division of the property and I would be pleased to discuss with you any aspects of this proposal.
[15] Mr Allen’s response, on 19 July, made further proposals about the payment of the deposit and said:
If you are happy to continue on this basis, I will ask Bonnie [Warburton] to draw up amendments early next week. With 4 month time constraint on lodging R/C would also like to get Urban Designer to look at your plan and meet up on site to firm up on lot layout.
[16] On the same day Ms Warburton emailed Mr Bilkie, (MFL’s solicitor)
advising:
I have been cc.d on emails between our respective clients who are emailing each other now to finalise the negotiations and we will be instructed to prepare formal variation next week.
[17] On 26 July 2013 Ms Warburton emailed Mr Allen a draft variation agreement and copied it to MFL’s solicitor, Mr Bilkie. The draft dealt with the changes in relation to the payment of the deposit and other matters, but also included an additional and new clause 23 in the principal agreement in the following terms:
The Vendor will change the boundaries for the Vendor’s 2 lot subdivision from those shown in the scheme plan attached to the Agreement to those shown on the plan attached to this variation.
[18] On receipt of this email Mr Bilkie emailed Ms Warburton, asking whether she had a copy of the plan detailing the change to the boundary line. A little later that same day Ms Warburton emailed Mr Bilkie saying “plan attached”.3 The email also attached a copy of the variation to Mr Bilkie which had been signed by Mr Allen. Clause 23 in this version of the variation agreement had been changed so it read:
The Vendor shall consult with the purchaser regarding the change to the boundaries for the Vendor’s 2 lot subdivision from those shown in the scheme plan attached to the Agreement to those shown on the plan attached to this variation.
[19] Mr Robertson said that he saw this amendment as simply reflecting the fact that, although agreement had been reached in principle to the amended boundaries, a more formal scheme plan still needed to be drawn up.
[20] Consistent with that position, on 28 July Mr Robertson emailed Mr Allen saying:
I suspect that we will need to be more specific in our proposed alteration of boundaries of Lot 1 and Lot 2. Is your engineer not able to draw a revised boundary using my penned overlay as a guide.
[21] Mr Allen responded the following day. He said:
Yes I agree. Let’s get Agreement locked down conditional on 2 weeks agreement as to boundary realignment.
I will then formally engage engineer to do the necessary calculations to ensure new Road will meet council requirements.
[22] On 31 July 2013 (which was the date on which payment of the first part of the deposit was due and also by which due diligence had to be completed) Ms Warburton emailed Mr Bilkie saying:
Please advise if the variation of agreement sent to you on 26 July has been agreed yet and signed by the vendor?
My understanding was that a more detailed plan of the boundary change was all that was still to be agreed.
The DD condition is due today so we will need confirmation regarding the variation.
[23] It seems that Ms Warburton’s understanding was therefore also in accordance with Mr Robertson’s.
[24] Two hours later Mr Allen emailed Mr Robertson stating:
Can I confirm that we are unconditional apart from sorting out boundary lots 1 and 2.
To this end I have spoken with Candor3. The earliest they can meet is
9.30 am tomorrow at Nourish Café, Ormiston Rd (private Hospital building).
Some minor concerns about Road placement. Should be able to sort out at this meeting.
[25] Candor3 were Mr Allen’s engineers.
[26] On 31 July, shortly after that email was sent, Mr Bilkie emailed
Ms Warburton advising:
The terms of the variation are agreed.
Our client will meet with yours on site tomorrow morning to discuss the boundary adjustment.
It is our expectation that a plan will be available for approval of the proposed boundary by midday on Friday. At that time the contract should be confirmed and the initial deposit paid.
[27] On 1 August 2013 Mr Bilkie emailed Mr Robertson asking:
Did your meeting with Allen this morning satisfactorily sort out where the boundary will be? Please let me know.
[28] Mr Robertson’s brother, Alistair Robertson replied later that day saying:
Yes, I went to the meeting and Allen’s engineer will email the boundaries to
you and Bonnie by mid-day tomorrow.
[29] At 10.59 am on Friday 2 August 2013 Mr Allen emailed the Robertson brothers saying:
Apologies Ross and Alistair,
I have not received anything from Clayton [from Candor3] and he is not answering mobile.
I know he is extremely busy but normally very reliable. Has he been in communication with Ross?
I am just about to go into a mediation with lawyers and will not be available on phone.
I will check again when out.
[30] At 1.12 pm on 2 August 2013 Mr Bilkie sent through to Ms Warburton a copy of the signed variation and a deposit slip providing details of the solicitor’s trust account into which the payment of the initial deposit of $50,000 was to be made. Mr Ross Robertson had handwritten on the signed variation agreement “Change in boundaries defined by pen overlay on attached map to be surveyed by the vendor”.
[31] Approximately half an hour later, Mr Allen emailed through to the Robertsons the Scheme Plan which had been prepared by Candor3 based on Mr Robertson’s hand-drawn lines. The email simply said:
Ross. Are you happy with attached plan?
[32] Although the email recorded that the sender was Mr Allen, the message had no form of electronic signature attached.
[33] At the close of play on the following Monday (5 August 2013) Mr Bilkie emailed Ms Warburton asking her to advise when she anticipated paying the deposit. He said:
I would also appreciate confirmation that condition 18.0 [the due diligence condition] is satisfied.
[34] The following day, Tuesday 6 August 2013, Ms Warburton emailed Mr Bilkie saying:
The DD is satisfied and our client will be paying the $50K into our trust account tomorrow.
[35] Under cross-examination Mr Allen appeared to accept that satisfaction in terms of cl 18 necessarily imported satisfaction with the proposed boundaries.
[36] Mr Robertson says that at 6.25 that evening he telephoned Mr Allen and confirmed that he was happy with the boundary adjustments as represented on the Candor3 plan. His telephone records confirm that a two minute telephone call was made to Mr Allen at that time. Although Mr Allen does not dispute that the call was made, he does dispute that Mr Robertson advised him of his agreement to the variation.
[37] In any event, later that evening, Mr Robertson sent an email to his surveyors, Harrison Grierson, in which he said:
I look to meet with you next week to discuss a new resource consent application for the two lot subdivision at Miharo Farm. Both lots are subject to sale and purchase agreements and the boundary has been changes (sic) and the area of Lot 1 increased from 2.76 to 2.98 hectares.
…
Please find attached a plan outlining the boundary changes.
[38] The plan attached was the Candor3 Scheme Plan, which Harrison Grierson then used to draw up a survey plan. It was that survey plan that was ultimately reflected in the new titles.
[39] Mr Allen nonetheless says that sometime in September 2013 he advised Mr Robertson that he wished to revert to the original boundaries due to advice he had received about the problems with road access to the east. The timing of this is disputed by MFL and, in my view, it is not borne out by subsequent events.
[40] The documentary record is then silent until December 2013 when there is evidence about Mr Allen having discussions with his proposed joint venture partners. Mr Allen accepts that it was and had always been his plan to purchase the lot and to subdivide it as part of a joint venture. He also frankly accepted that he himself did not have the funds either to complete the payment of the deposit later that month or to settle the sale in 2014; he was reliant on his partners for the necessary money.
[41] On 6 December 2013, Ms Warburton wrote to Mr Bilkie saying that she understood that MFL had applied for a new resource consent for the subdivision. She asked for a copy of the consent and the relevant plan. She also said:
We also understand that the vendor has agreed that the deposit payment due on 18 December may be held in our trust account until the agreement becomes unconditional (ie, titles issue).
[42] On 9 December Mr Bilkie replied, attaching a copy of the Harrison Grierson survey plan and advising that Harrison Grierson had advised that they expected to have the resource consent by the following week. He said that he would provide a copy once it became available. He also advised that it was his expectation that the deposit would be paid to his firm as provided for in the agreement.
[43] On 17 December 2013 (the day before the rest of the deposit was due), Mr Allen communicated with his solicitors about a sale and purchase agreement for the Brownhill property between entities named the Miharo Farm Development Trust and Ormiston Investment Trustees Limited which, as I understand it, was to be the joint venture vehicle. The completed agreement provided for the sale and purchase of
77.98 hectares, described as being Lot 2 on a plan to be deposited being a subdivision of CT NA181/2885 Title to issue. The purchase price was stated as
$10 million. An initial deposit of five per cent of the purchase price ($50,000) is recorded as having been paid with the balance payable on 18 December 2013. Settlement date was 1 April 2014. The plan attached to the sale and purchase agreement (and initialled by the parties) was the Harrison Grierson survey plan showing the boundaries that had previously been recorded in the Candor3 plan.
[44] On 19 December Mr Bilkie wrote to Mr Allen’s solicitor noting that the remainder of the deposit ($325,000) was overdue. There was then a dispute as to whether or not there had been an agreement that that amount could be retained in Alexander Dorrington’s trust account. The matter was left unresolved until the New Year. When payment was chased up by MFL’s solicitors on 13 January 2014, Mr Allen’s solicitor replied that Mr Allen sought an amendment to the agreement. This amendment was unrelated to the boundary issue. There were further discussions between the lawyers about geotech work and Council requirements.
[45] On 14 January 2014 Mr Allen’s solicitor inquired whether a new resource consent had been issued. Mr Bilkie’s response again advised that an application for a new resource consent had been made and noted that:
… the only change to the original application related to a boundary adjustment at your client’s request which was previously discussed and agreed.
[46] Mr Allen’s solicitor did not respond to that statement but, on 17 January, confirmed that the balance of the deposit had been paid into Mr Bilkie’s trust account.
[47] On 29 January a copy of the resource consent approval was sent to Mr Allen’s solicitors. The plans attached to it reflected the amended boundaries as sketched by Mr Robertson and recorded on the Candor3 and Harrison Grierson Plans. Although there were further communications about a bridge on the property during February and March 2014, no issue was raised about the boundaries at this time.
[48] There was a meeting between Mr Allen and Mr Robertson on 14 February. Mr Allen says that the boundary issue (inter alia) was discussed and that he voiced his concern that Mr Robertson had ignored his wish to go with the original scheme plan. Mr Robertson said that there was no such discussion.
[49] I accept Mr Robertson’s evidence on this point. His evidence is consistent with his diary notes for that day which list the matters discussed (the list reads: Input (1) Geotech (2) Bridge (3) Resource Consent (4) 133 planting (5) lease – stable shed nursery (6) Balance Block). But, more significantly, Mr Allen’s account seems to me to be inconsistent with the sale and purchase agreement that had been signed for the purposes of the joint venture in December; that document, and the Harrison Grierson Plan attached to it, is quite at odds with Mr Allen’s assertion that he had expressed a wish to return to the original boundaries in August or September 2013.
[50] I do, however, accept that by that time wider concerns about the project were being expressed by Mr Allen’s joint venture partners and that he may have raised these at the February meeting.4
[51] At some point it appears that Mr Allen was advised by his engineers that there were problems with building a road on the eastern side of the property and that, as a consequence, he reverted to use the northern access way as had been originally proposed (and which remained possible under the amended plan).
[52] On 14 April 2014 Mr Allen sent Mr Robertson an email saying (amongst other things) that he wished to move the north western corner boundary back by eight metres because they could not build a Council road outside the riparian margin.
[53] Mr Robertson’s evidence, which I accept, was that while this would involve an adjustment to the boundaries that had been agreed, he was not necessarily opposed to the request. But because of the difficulties he had experienced over the payment of the deposit he advised Mr Allen (in writing) that:
If you are proposing a variation to the sale and purchase agreement you will need to handle this thru the legal channels.
[54] On 23 April 2014 MFL’s solicitors sent a copy of the title plan to Mr Allen’s solicitors. The title plan had Harrison Grierson’s title boundaries attached. The plan was a copy of what had been lodged with LINZ and was what was expected to result, and be reflected, in the new certificates of title.
[55] There was no immediate response and on 19 May Mr Bilkie advised that he was applying for new titles and that these were anticipated within 10 working days. On 21 May, Mr Allen’s lawyers wrote asserting that the property was:
… significantly different to what was represented the buyer would receive.
4 In his evidence, Mr Allen linked his partners’ concerns with the new resource consent and this occupied some time at the hearing before me. In my view the resource consent issue is a diversion. It was not suggested that there was anything about the new consent that was prejudicial to Mr Allen’s position or in any way meant that MFL was in breach of its contractual obligations. It was not the resource consent that set the boundaries and even if it had, the boundaries were (in my view) as had been agreed in August 2013.
[56] Mr Bilkie’s response on 22 May expressed surprise that the boundary issue had been raised given the agreement that had been reached but offered MFL’s cooperation in making an adjustment after titles were issued. That offer was never taken up.
[57] Titles were issued on 23 May and a copy was sent to Mr Allen’s solicitors on
9 June. Settlement was therefore due on 16 June. Mr Allen’s solicitors disputed that the title for Lot 2 was correct, and said that it was “significantly” different from what Mr Allen had contracted to buy. They then proceeded to requisition the title.
[58] On 18 June 2014 MFL served a settlement notice on Mr Allen. Mr Allen said he was requisitioning the title.
[59] It appears that there were then some further discussions about the possibility of resolving matters (which included the possibility that settlement would still occur) but they bore no fruit. At some point Mr Allen’s joint venture partners withdrew their support and settlement was then not a realistic option for him.
The pleadings and the issues
[60] Initially, MHL’s statement of claim simply sought a declaration that it had a right to cancel the sale and purchase agreement as a result of Mr Allen’s failure to comply with the settlement notice served on him on 18 June 2014.
[61] MFL’s application for summary judgment on this claim was declined by Wylie J on 24 October 2014 on the grounds that there was a bona fide factual dispute as to whether agreement was reached in relation to the boundaries and whether or not MHL did “consult” as required by the amended cl 23.5
[62] The claim was then amended. As before, the first cause of action seeks a declaration that MFL had the right to cancel the agreement and forfeit the deposit as before. The second cause of action pleads that Mr Allen is estopped by his words and conduct from asserting that the cl 23 requirement for consultation was not
satisfied.
5 Miharo Farm Ltd v Allen [2014] NZHC 2623.
[63] In a reply to Mr Allen’s defence there was a more detailed pleading of the agreement that was said to have been reached as to the boundary adjustment. Then, on 22 April 2015 a “response” to the plaintiff’s reply was filed, raising for the first time the issue of s 24 of the Property Law Act 2007 (the PLA). In other words, that any agreement that might have been reached as to the changed boundaries was not enforceable because it was not in writing.
[64] Although not the subject of any formal pleading (a response to the response to the reply?), MFL denied that s 24 applied but said that if it did, there had been part performance. That issue was fully argued before me. Indeed, in my view it is this that is at the heart of the matter. Put simply, I consider that the questions that fall to be determined are:
(a) was agreement reached about the amended boundaries? (b) if so, does s 24 of the PLA apply?
(c) if so, was s 24 complied with?
(d)if not, does the doctrine of part performance nonetheless mean that the agreed variation is enforceable?
[65] On that analysis, compliance (or not) with the cl 23 consultation requirement is largely a red herring. If agreement was reached, it would be nonsensical to hold that it could be vitiated by inadequate consultation. If agreement was not reached, compliance with cl 23 will not save the plaintiff’s case. Accordingly I do not propose to consider that issue further.
[66] Similarly, the separate pleading of estoppel becomes unnecessary. That is because estoppel (or the equities arising from the existence of an oral agreement) is one of the twin pillars underpinning the doctrine of part performance. As
Lord Hoffmann said in Actionstrength Ltd v International Glass Engineering
IN.GL.EN SpA said:6
22. Very soon after the statute of 1677, the courts introduced the doctrine of part performance to restrict its application to sales of land. It was held that a contract, initially unenforceable because of the statute, could become enforceable by virtue of acts which the plaintiff did afterwards. The doctrine was justified by a combination to two reasons. The first was a form of estoppel: as Lord Reid said in Steadman v Steadman [1976] AC 536,540:
"If one party to an agreement stands by and lets the other party incur expense or prejudice his position on the faith of the agreement being valid he will not then be allowed to turn round and assert that the agreement is unenforceable."
23. The second reason was that the acts done by the plaintiff could in themselves prove the existence of the contract in a way which could be an acceptable substitute for the note or memorandum required by the statute. These two reasons did not cover the same ground: acts which satisfied the first might fail to satisfy the second. In Steadman's case the House of Lords gave priority to the first reason and relaxed the need for the acts of part performance to be probative of the contract. It was however still possible to adhere to the reconciliation of the statute and the part performance doctrine which the Earl of Selborne LC gave in Maddison v Alderson (1883) 8 App Cas 467, 475-476:
"In a suit founded on…part performance, the defendant is really
'charged' upon the equities resulting from the acts done in execution of the contract, and not (within the meaning of the statute) upon the contract itself…The matter has advanced beyond the stage of contract; and the equities which arise out of the stage which it has reached cannot be administered unless the contract is regarded."
24. The reconciliation thus draws a distinction between the executory contract, not performed on either side, and the effect of subsequent acts of performance by the plaintiff. The former attracted the full force of the statute while the latter could create an equitable rather than purely contractual right to performance. The statute and the doctrine of part performance could co- exist in this way because contracts for the sale of land almost always start by being executory on both sides and usually remain executory until completed by mutual performance.
[67] I therefore proceed to consider the issues I have articulated at [64] above, in turn.
6 Actionstrength Ltd v International Glass Engineering IN.GL.EN SpA [2003] 2 All ER 615 (HL)
at 622-623.
Was agreement to amend the boundaries reached?
[68] The starting point is that it is not and cannot be disputed that in July 2013
Mr Allen was actively seeking an amendment to the boundaries in order to enable him to gain access from the eastern side of the proposed lot. Nor can it be disputed that MFL through Mr Robertson was quite willing to facilitate that, and did so.
[69] By the time of the email exchange on 28 and 29 July 2013, agreement had in fact been reached, subject only to the completion and approval of a more formal plan. Mr Allen’s email of 31 July makes that clear (“Can I confirm we are unconditional apart from sorting out boundary”). The proposed meeting with Candor3 the following day was expressly for the purpose of resolving that issue. Moreover, the connection made in Mr Allen’s email between agreeing that change to the boundary and Mr Allen going unconditional was then expressly repeated back to Mr Allen’s solicitor by MFL’s solicitor: “It is our expectation that a plan will be available for approval of the proposed boundary by midday on Friday. At that time
the contract should be confirmed and the initial deposit paid”.7
[70] Due to a slight delay in getting the scheme plan from Candor3 and Mr Allen’s other commitments that Friday morning, the midday deadline was also not met. In any event, the focus on that deadline appears to have resulted in a slight muddying of the evidentiary waters. Nonetheless, I consider that the conclusion that an agreement was reached at some point in the hours and days that followed can quite clearly be discerned from the following:
(a) by his handwritten annotation on the signed variation agreement that Mr Robertson returned to Ms Warburton on 2 August he recorded his agreement in principle to amended boundaries as drawn by him in pen on the map that he attached to the variation document;
(b)the Candor3 Plan that was forwarded to him by Mr Allen later that day exactly reflected the boundaries he had drawn;
7 This linkage is, I think, critically important and, to the extent that my view in that regard is at odds with the provisional view expressed by Wylie J in the summary judgment context, I can only say that Wylie J did not have the benefit of hearing all the evidence.
(c) although Mr Robertson did not immediately respond to Mr Allen’s question whether he was “happy” with the Candor3 Plan, the matters to which I have just referred, together with the steps taken by Mr Robertson’s solicitor the next working day to have Mr Allen sign off on the due diligence and pay the deposit necessarily imply that he was;
(d)equally, Mr Allen’s agreement can be inferred from the confirmation from his solicitor that the due diligence was satisfied and that the first instalment of the deposit would be paid, and (indeed) the subsequent payment of the deposit.
[71] In light of the email exchange only a few days earlier it is, in my view, inconceivable that Mr Allen would have confirmed the contract and paid $50,000 had resolution of the boundary issue not been achieved.
[72] The above analysis suggests that whether or not Mr Robertson expressly confirmed the new boundaries in his telephone conversation with Mr Allen in the evening of Tuesday 7 August is probably neither here nor there. If it were necessary to do so, however, I would hold that Mr Robertson either did so confirm or (more likely) that the conversation merely proceeded on the basis that the amended boundaries had been agreed.
[73] I also reject any suggestion that Mr Allen changed his mind (and wished to revert to the original boundary) a few weeks or even months later. It seems highly improbable that there would not have been some written communication about this had he done so. Moreover, that suggestion only confirms that agreement had earlier been reached about the changed boundaries. It defies common sense to suggest that MFL would have instructed Harrison Grierson to prepare a new survey plan and to obtain a new resource consent had it been aware that Mr Allen did not wish that to occur; it was never suggested that MFL itself had a particular interest in changing the boundaries or that it was a matter that MFL would have pursued on its own, regardless.
[74] Accordingly, even though it may not be possible to identify exactly when agreement to the changed boundary (and to the substitution of the Candor3 Plan for the Scheme Plan annexed to the original agreement) was reached, I am in no doubt that there was a meeting of the minds about that in early August 2013. The question therefore becomes whether that agreement is enforceable.
Does s 24 of the PLA apply?
[75] Section 24 of the Property Law Act 2007 provides:
(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.
[76] In general terms, I accept Mr Campbell’s submission that s 24 applies just as much to a variation as it does to the original agreement itself.8 Although there are cases where, due to the particular nature of the variation, the writing requirement does not apply, the present is not one of those. Changing the boundaries of the land itself seems to me to go to the heart of the contract; it would undermine the legislative policy if s 24 were found not to apply in the present circumstances.
[77] And while Mr Gedye also submitted that the present claim does not involve enforcement “by action” I am unable to agree. It seems to me that the reality of the claim is that the plaintiff does wish to “enforce” the agreement. Even if MFL seeks only a declaration that it is entitled to cancel the contract, it is relying on its contractual rights (and the failure by Mr Allen to perform his contractual obligations) to do so.
[78] Accordingly I consider that the agreement to vary the boundaries/substitute the Plan was required to be in writing.
8 Don McMorland Sale of Land (3rd ed, Cathcart Trust, Auckland, 2011) at [4.12].
Was s 24 complied with?
[79] Compliance with s 24 requires that there be some written manifestation of the variation agreement that was signed by Mr Allen (the party against whom the contract is sought to be enforced). Mr Gedye’s submission that an adequate written record can be found in Mr Allen’s 2 August email in which he asked Mr Robertson whether the Candor3 plan was “OK with you?”.
[80] There are, I think, two difficulties with this. The first is that in order to regard those few words as a firm indication of Mr Allen’s consent to the new boundaries it is necessary to interpret them as meaning “Here is the Candor3 Plan. I agree with boundaries shown on it, do you?” In my view that involves stretching the words too far. Moreover it is inconsistent with my own analysis as to how the agreement was reached; as I have said, it seems to me that Mr Allen’s consent to proceeding on the basis of the Candor3 boundaries was signified by his going unconditional and paying the deposit, not by this email.
[81] Even if I am wrong in this (and the wording of the email can be viewed as sufficient “writing” for s 24 purposes) there remains the problem of the absence of any signature. The issue of the sufficiency of electronic signatures for Statute of Frauds purposes was thoroughly canvassed by this Court in Welsh v Gatchell where
Miller J said:9
[51] … A signature is a distinct and personal act that identifies the party to be charged and evidences his or her intention to be bound by the contents of the document. For that reason, a name need not be interpreted as a signature where it serves some other purpose, as in the case where it appears as part of the substantive content. A signature may appear in any position, but it must govern the whole. A name, initials, or other mark that identifies the party to be charged may suffice as a signature. It need not be hand- written; in particular, it may be stamped or typed.
[52] It is the signature that signifies the intention to be bound in law, and not the sending of the document to the other party. That distinction must be borne in mind when considering electronic communications, in which the question may be whether a mechanism designed to identify the sender also serves as a signature. The point is illustrated by two cases concerning email headers. The first is J Pereira Fernandes SA v Mehta (above), in which Judge Pelling QC held that an electronic signature is capable of serving as a signature for purposes of the Statute of Frauds, although it did not do so on
9 Welsh v Gatchell [2009] 1 NZLR 241 (HC).
the facts. The alleged signature was an e-mail address in the document header at the top of an e-mail. The address included the defendant's surname and part of his first name. It had been inserted automatically by the computer when an employee of the defendant sent the e-mail to the plaintiff.
[53] Judge Pelling QC took judicial notice of the fact that the sender of an e-mail does not insert an e-mail header “in any active sense”. For that reason, the header did not evidence the necessary intention to be bound and so the e-mail had not been signed for the purposes of s 4 of the Statute of Frauds. He held at [29]:
“In my judgment the inclusion of an e-mail address in such circumstances is a clear example of the inclusion of a name which is incidental in the sense identified by Lord Westbury [in Caton v Caton] in the absence of evidence of a contrary intention. Its appearance divorced from the main body of the text of the message emphasises this to be so. Absent evidence to the contrary, in my view it is not possible to hold that the automatic insertion of an e- mail address is, to use Cave J's language [in Evans v Hoare],
‘intended for a signature’. To conclude that the automatic insertion of an e-mail address in the circumstances I have described
constituted a signature for the purposes of s 4 would I think undermine or potentially undermine what I understand to be the
Statute's purpose, would be contrary to the underlying principle to be derived from the cases to which I have referred and would have widespread and wholly unintended legal and commercial effects. In
those circumstances, I conclude that the e-mail … . did not bear a
signature sufficient to satisfy the requirements of s 4.”
[54] Judith Prakash J reached a contrary conclusion in the Singaporean High Court in SM Integrated Transware Pte Limited v Schenker Singapore (Pte) Limited [2005] SGHC 58. The facts were similar to Mehta. The party charged, a Mr Tan, did not append his name at the bottom of any of his e- mail messages, but they included an address line naming him and giving his e-mail address. The Judge held that the emails were writing for purposes of the Interpretation Act (Cap 1, 2002 Rev Ed), which is in similar terms to the definition in the Interpretation Act 1999. The question was whether Mr Tan had signed the emails for the purposes of s 6(b) of the Civil Law Act (Cap 43 1994 Rev Ed), which is the Singaporean equivalent of the Statute of Frauds. It stipulates that for a lease of land to be enforceable there must exist some written memorandum or note evidencing its terms and signed by the person against who it is to be enforced.
[55] Prakash J held that the emails had been signed. She acknowledged the “minor difficulty” that Mr Tan had not appended his name at the bottom of any of his messages, but inferred at [92] that he omitted to do so because he knew it appeared at the head of every message next to his e-mail address, and then concluded that there could be no doubt that he was identified as the sender. The difficulty with this reasoning, in my respectful view, is that it addresses the identification of the person signing, and not his intention to be bound by marking the document. It also focuses on his state of mind rather than the objective indicia of intent.
[82] The same is the case here. Mr Allen’s email contains only an automatically generated sender’s name and address; he did not “sign off” either by using his name or otherwise. And indeed it is my view that, properly interpreted, the email cannot by itself be read as an objective index of his consent.
[83] Accordingly I consider that there is a s 24 problem here. The question then is whether it can be resolved by the doctrine of part performance.
Does the doctrine of part performance mean that the agreed variation is enforceable?
[84] The leading indigenous authority on part performance remains TA Dellaca Limited v PDL Industries Limited.10 There, Tipping J identified a conflict in the authorities about whether acts of part performance must have been done in performance of the contract or merely in reliance on it. After reviewing those authorities, he concluded that the narrower view is correct, and framed the test (at 109) as follows:
1.Was there a sufficient oral agreement such as would have been enforceable but for the Act?
2.Has there been part performance of that oral agreement by the doing of something which:
(a) clearly amounts to a step in the performance of a contractual obligation or the exercise of a contractual right under the oral contract; and
(b) when viewed independently of the oral contract was, on the probabilities, done on the footing that a contract relating to the land and such as that alleged was in existence.
3.Do the circumstances in which that part performance took place make it unconscionable (fraudulent in equity) for the defendant to rely on the Act?
[85] I consider those prerequisites in turn.
[86] As to the first, it follows inexorably from my conclusions at [74] above that I
do consider that there was an oral agreement that would be enforceable but for the s
24 writing requirement. The terms and effect of that oral agreement was that the
10 TA Dellaca Limited v PDL Industries Limited [1992] 3 NZLR 88 (HC).
written agreement dated 18 June 2013 was varied by the substitution of the Candor3 plan as the relevant scheme plan referred to in cl 20.
[87] As to whether there has been part performance of that oral agreement, it is necessary only to refer to cl 20.2 in which MFL undertook “with all due expedition and at its cost [to] proceed to deposit the plan of the subdivision so as to obtain titles to the property”. It is not disputed that MFL took steps to complete the subdivision on the basis of the Candor3 Plan and did in fact obtain titles on that basis. I consider that its actions in that regard clearly amounted to a step in the performance of its cl 20.2 obligation. Equally, I consider that, when viewed independently of the oral agreement, that action was, on the probabilities, taken on the basis that a contract relating to the land such as that which is alleged was in existence. As I have said, MFL’s actions are really inexplicable absent such an agreement.
[88] In all the circumstances I have set out above I consider it would be unconscionable for Mr Allen to be permitted to rely on s 24. In particular, Mr Allen knew throughout that MFL were proceeding on the basis of the agreed variation. This is evidenced, inter alia, by:
(a) the fact that the variation was reflected in the sale and purchase agreement that he himself drew up in December 2013;
(b) his subsequent receipt of the resource consent; and
(c) his request in April 2014 for a further variation as a result of the difficulties he had encountered with the road (such a variation would not have been necessary had he thought that the agreement had not been amended).
[89] At no time (until, it seems, he was getting grief from his joint venture partners and would be unable to settle) did he suggest to MFL that they had got it wrong or that he was expecting subdivision to be based on the original scheme plan. His lack of response to MFL’s offer to make further adjustments to the boundaries
further suggests that, by that time, his principal motivation was to escape from the contract all together, if he could.
[90] It follows that MFL’s acts of part performance suffice both:
(a) to evidence the existence of the oral agreement; and
(b)to estop Mr Allen from relying on s 24 to deny the existence of that agreement.
[91] It also follows that Mr Allen was required to settle on the basis of the new title and did not. His failure to do so entitles MFL to cancel the contract and to retain the deposit.
Summary
[92] In short, and in terms of the issues I have identified at [64] above, I have found that:
(a) in early August 2013 the parties agreed that the subdivision should proceed, and titles would issue, on the basis of the amended boundaries as shown in the Candor3 Plan (effectively this meant that they agreed that the sale and purchase agreement should be varied by substituting the Candor3 Plan for the Scheme Plan referred to in cl 20);
(b)section 24 of the PLA required that any such agreement be in writing and be signed by Mr Allen;
(c) the variation agreement was neither evidenced in writing and nor was it signed by Mr Allen;
(d)MFL’s pursuit of the subdivision on the basis of the variation agreement and its obtaining of titles on that basis means that the agreement was partly performed by MFL;
(e) in all the circumstances it would be unconscionable to permit Mr Allen to rely on s 24 to prevent MFL from enforcing the agreement;
(f) Mr Allen’s failure to settle when required entitles MFL to cancel the
contract and to retain the deposit.
[93] MFL is, accordingly, entitled to its costs on a 2B basis. Memoranda may be submitted if agreement cannot be reached.
“Rebecca Ellis J”