Millbrook Country Club Limited v Van Brandenburg HC Invercargill CIV 2009 425 276
[2011] NZHC 702
•6 July 2011
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
CIV 2009 425 276
BETWEEN MILLBROOK COUNTRY CLUB LIMITED
Plaintiff
ANDFPM VAN BRANDENBURG Defendant
Hearing: 15 April 2010
(Heard at Invercargill)
Counsel: C M Heaton for Plaintiff
J M Kirkland for Defendant
Judgment: 6 July 2011 at 4:45 PM
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
on a summary judgment application
Introduction
[1] The plaintiff (which I will refer to as Millbrook) seeks by summary judgment specific performance of a contract by which Mr van Brandenburg agreed to purchase for $1,400,000.00 a section in Millbrook West. Mr van Brandenburg purported to cancel the agreement when the settlement date passed.
[2] In opposition, Mr van Brandenburg asserts that he has an arguable defence, namely that he has cancelled the agreement.
[3] Mr van Brandenburg says that Special Condition 6.1 of the agreement was key to his entitlement to cancel. It reads –
MILLBROOK COUNTRY CLUB LIMITED V VAN BRANDENBURG HC INV CIV 2009 425 276 6 July 2011
6. Detailed Design Documentation
6.1The Vendor shall cause the design of the Vendor’s Works to be completed in conformity with the content, quality and intent shown and described in the Plans.
[4] Mr van Brandenburg says that the parties failed to agree on the design referred to in Special Condition 6.1 and this led to his right to cancel.
The issues for determination
[5] In relation to this application for summary judgment, the Court must determine whether it was an implied term of the agreement that if the parties did not reach agreement on the final design of the Vendor’s Works, as referred to in Special Condition 6.1, then Mr van Brandenburg would have a right of cancellation. Mr Kirkland’s alternative formulation for the Court to consider is whether Special Condition 6.1 required, when properly construed, that parties were both to agree on the final design, whether such provision was impliedly agreed by the parties to be essential, and whether Millbrook repudiated the agreement by its failure to obtain Mr van Brandenburg’s agreement on the design.
Background
[6] The Millbrook Resort was developed in the 1990’s. Mr van Brandenburg, who is an architect, had an association with the architectural design in the early period of the development of the resort.
[7] In 2004 Millbrook undertook planning for a new development to the west. Initially there was a high level master-planning process in which designers from different disciplines were brought together in several design workshops. Mr van Brandenburg was one of the designers.
[8] Detailed master-planning began in 2006. In February 2006
Mr van Brandenburg was engaged for architectural input into the master planning, in a consulting or supporting role to the Baxter Design Group.
[9] At the end of the master planning phase Mr van Brandenburg’s involvement
with the project was tapered off as Millbrook entered into a detailed design phase.
[10] Millbrook commenced the marketing of Stage 1A of Millbrook West in November 2006. The property which is the subject of this proceeding (Lot 341, “the lot”) is within Stage 1A. The lots were initially offered to existing members of Millbrook Country Club, which Mr van Brandenburg joined to make himself eligible. Purchasers were to make their offers through a standard form (the seventh edition (2) of the REINZ/ADLS Agreement for Sale and Purchase of Real Estate, incorporating the General Terms of Sale and also Special Conditions of Sale).
[11] Mr van Brandenburg submitted an offer on the standard form contract unaltered for the purchase of the lot for $1,400,000.00. Millbrook accepted the offer and the Agreement for Sale and Purchase was signed and dated 18 December 2006.
[12] Preliminary plans for the development and the Vendor’s Works, including the subdivision plan, were attached as a schedule to the agreement. Provisions in the agreement anticipated the completion of detailed design documentation.
[13] Baxter Design Group proceeded with the detailed design phase.
[14] Millbrook’s Property & Development Manager, Ben O’Malley, showed
Mr van Brandenburg the design plans at the point they had reached on 4 September
2007. Mr O’Malley and Mr van Brandenburg had an email exchange immediately following that meeting.
[15] On 3 July 2008, Mr O’Malley and Mr van Brandenburg had a site meeting at the lot. Mr O’Malley also showed Mr van Brandenburg the plans of the lot, including plans that showed pond positions. A discussion occurred as to the ponds to the east of the lot. Mr O’Malley then also emailed to Mr van Brandenburg an electronic file showing the lot boundaries and building platform.
[16] On 5 July 2008, Mr van Brandenburg by email sought the latest landscape plan concerning the ponds. Mr van Brandenburg commented on some of his earlier
sketches and the earlier master plan, saying that the pond had extended quite far past the lot and into the golf course as a separation device. Mr O’Malley passed those comments onto the design team. In further email exchanges that day, Mr van Brandenburg commented also on the mounding. Mr O’Malley emailed back his comments.
[17] On 8 July 2008, Mr O’Malley provided Mr van Brandenburg with detailed plans of the pond, showing water levels.
[18] In August 2008, Mr van Brandenburg had further discussions with Mr O’Malley, both by meeting and by email. The discussions focussed on the mounds. Mr O’Malley during this period provided further plans to Mr van Brandenburg (on
14 and 27 August).
[19] By August, the mounds were being taken towards their final shaping. Mr O’Malley gave Mr van Brandenburg a Baxter Design Group drawing which showed the mounds. Mr van Brandenburg was pursuing mounding which would be “wrapped around the site”.
[20] On 14 August 2008, Mr O'Malley emailed Mr van Brandenburg another (coloured) extract of the Baxter Design Group plan which showed the proposed mounding together with a marked up version showing the rough footprint of the mound as at present. He indicated the mound would be taken up another metre.
[21] Further email discussions occurred and Mr van Brandenburg requested detailed design plans. On 27 August 2008, Mr O'Malley emailed again the Baxter Design Group plan showing mounding along the road, together with earthworks drawings showing an old mounding plan. Mr O'Malley indicated that Millbrook wanted to get in that day to bulk up the van Brandenburg mound and to reshape it because of the need for the s 224 (c) (Resource Management Act) certificate to issue and the need for the shaping equipment and personnel on the golf course part of the project.
[22] On 22 November 2008, Mr van Brandenburg indicated to Mr O'Malley that he had some ideas as to how to interface his design (for his property) with the golf course. Following that, discussions took place with the golf course designers and Millbrook agreed to some mounding between lot 341 and the golf course.
[23] On 27 November 2008, Millbrook received confirmation from Lakes Environment Limited (for the Queenstown Lakes District Council) that the Millbrook West ponds were outside the provisions of the Fencing of Swimming Pools Act 1987 and did not require exemption.
[24] On 5 December 2008, Mr van Brandenburg emailed Mr O'Malley with comments as to the golf course/lot mounding. He also raised concerns as to the apparently low level of the ponds and their design. He expressed a concern that the Millbrook ponds may require fencing.
[25] In the meantime, Millbrook was proceeding with the formalities of the subdivision and in December 2008 lodged the Millbrook West subdivisional plans for registration at Land Information New Zealand, with the expectation that titles would issue in mid-January 2009. Mr van Brandenburg’s solicitors were advised of this by letter dated 18 December 2008.
[26] On 18 December 2008, Mr van Brandenburg emailed Mr O’Malley seeking more certainty as to the (pool/fencing) dispensation and seeking a letter from the Queenstown Lakes District Council on letterhead or a code compliance certificate. Mr O’Malley responded that the legal position had been confirmed by Lakes Environmental as per the email previously shown to Mr van Brandenburg. Mr O’Malley expressed a concern not to be drawn into issues which Mr van Brandenburg was having with Lakes Environmental over a subdivision (Hawthorn).
[27] Titles (including for lot 341) had in fact issued on 17 December 2008.
[28] On 9 February 2009, Mr van Brandenburg’s solicitors were notified in
writing that title for lot 341 had issued. The settlement date was nominated as 16
February 2009.
[29] On 13 February 2009, Millbrook’s solicitors gave Mr van Brandenburg’s solicitors their undertakings as to settlement documents and confirmed that they were ready, willing and able to settle.
[30] Mr van Brandenburg failed to settle on 16 February 2009.
[31] Millbrook caused a settlement notice dated 17 February 2009 to be served upon Mr van Brandenburg.
[32] On 26 February 2009, Mr O'Malley sent an email to Mr van Brandenburg following up on a site meeting that had taken place a week earlier. Mr O'Malley dealt with what he saw as the four issues raised (the compliance of the pool with the Fencing of Swimming Pools Act; the interfacing of mounds between the lot and the golf course; the placement of golf tees and fairway on the golf course; and the privacy mounding). Mr O'Malley referred to the pending expiry of the settlement notice on 5 March 2009 and advised that Millbrook would be taking the next steps to effect a settlement if Mr van Brandenburg did not settle.
[33] Discussions occurred between Millbrook and Mr van Brandenburg including in a without prejudice conference call on 2 March 2009. Mr van Brandenburg, having been asked to put his position in writing did so in a memorandum dated 3
March 2009 (the relevant email was produced as an exhibit by Mr O'Malley and both counsel proceeded on the basis that I should treat it as admissible evidence). The email addressed issues as to the ponds and the weirs within the ponds and as to the mounds.
[34] On 4 March 2009, Anderson Lloyd Lawyers advised Millbrook’s solicitors
that Anderson Lloyd no longer acted for the van Brandenburgs.
[35] On 5 March 2009, Anderson Lloyd Lawyers by letter to Millbrook’s solicitors advised that they now had additional instructions and gave notice of cancellation of the agreement. They stated that the agreement was cancelled because Millbrook was in breach of clause 6 (this clearly being a reference to Special Condition 6). One which provided –
The Vendor shall cause the design of the Vendor’s Works to be completed in conformity with the content, quality and intent shown and described in the Plans.
[36] In March/April 2009, Millbrook made a number of alterations to the pond beside the lot, raising the water level in the bottom pond and the pond bed profile and grading the pond to reduce its steepness; and carrying out additional planting.
Summary Judgment – the principles
[37] The starting point for a plaintiff’s summary judgment application is r 12.2
High Court Rules, which requires that the plaintiff satisfy the Court that the defendant has no defence to any cause of action in the statement of claim or to a particular cause of action.
[38] I summarise the general principles which I adopt in relation to this application:
1. Commonsense, flexibility and a sense of justice are required (Haines v
Carter [2001] 2 NZLR 167 at 187).
2.The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.
3.The Court will not hesitate to decide questions of law where appropriate.
4.The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements and affidavits.
5.In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, or inherently improbable.
6.In assessing a defence the Court will look for appropriate particulars and a reasonable level of detailed substantiation.
7.In weighing these matters, the Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.
8.Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required for the protection of the integrity of the summary judgment process.
9.Once the Court is satisfied that there is no defence, the Court retains a discretion to refuse summary judgment but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.
The issues
[39] Millbrook says that the contract remains on foot and therefore seeks specific performance. Mr van Brandenburg says that the contract has been cancelled.
[40] When we turn to the basis of Mr van Brandenburg’s purported cancellation, there is a degree of confusion. As noted (above [35]) the 5 March 2009 letter from Mr van Brandenburg’s lawyers cancelling the agreement stated that the cancellation was for breach of Special Condition 6.1.
[41] Mr van Brandenburg’s notice of opposition in this proceeding did not articulate the particular grounds on which it was asserted that the cancellation was lawful. Put another way, it did not articulate particular breaches of the contract by Millbrook which would justify Mr van Brandenburg’s cancellation. Instead the notice of opposition referred to the contents of Mr van Brandenburg’s (162 paragraph) affidavit in opposition.
[42] In Mr Kirkland’s written submissions filed before the hearing, there was no initial statement as to the basis of cancellation. Instead, this appeared as the concluding statement –
Cancellation
67.In the circumstances, the Defendant, in my respectful submission, has an arguable case, that he has validly cancelled the Agreement.
68. The analysis of cancellation is straightforward:
68.1If no accord could be achieved as to the landscape design, then the Agreement could be cancelled by Mr van Brandenburg.
OR, in the alternate (sic)
68.2Millbrook has repudiated its part of the bargain, that is, its refusal to be bound by the essential term, that both parties had to mutually agree on the landscaping plan.
68.3In particular, following the Mana case, the issue of a mutually agreed landscaping plan, was essential to Mr van Brandenburg.
[43] Against this background, I asked Mr Kirkland at the start of the hearing to identify precisely the steps in his argument.
[44] Mr Kirkland said that there were two fundamental aspects –
1.As a matter of construction of the contract, there was an implied condition that the contract would become binding only if the parties agreed on a final landscape (including ponding and mounding) design.
2.In relation to Special Condition 6.1 it was expressly or impliedly agreed that the design of the vendor’s work to the “quality and intent shown and described in the Plans” was essential to Mr van Brandenburg (as that concept arises under s 7(4)(a) Contractual Remedies Act 1979).
[45] Mr Kirkland did not pursue an argument that Mr van Brandenburg had been entitled to exercise the right to cancel under s 7(4)(b) Contractual Remedies Act (which deals with substantial changes to benefit or burden of a contract). Mr Kirkland also confirmed that there was no allegation of misrepresentation relied upon.
An implied term?
Mr Kirkland’s formulation
[46] Before focussing on Special Condition 6.1 as an express term relied on by Mr van Brandenburg, it is necessary to examine Mr Kirkland’s first proposition as to an implied condition requiring the agreement of both parties on a final design.
[47] The precise formulation of the implied term was set out by Mr Kirkland in his submissions as being –
The Vendor shall cause the design of the Vendor’s Works to be completed in conformity with the content, quality and intent shown on the described plans and the Vendor and the Purchaser shall agree on the content of the final design plans in relation to lot 341.
[48] The first clause of that formulation is of course simply a faithful reproduction of Special Condition 6.1. What is not already contained in the contract is the second clause which would require agreement between Millbrook and Mr van Brandenburg on the content of the final Design Plans in relation to lot 341.
Implied terms – the test
[49] Mr Kirkland and Ms Heaton agreed that the appropriate approach in this case is the five point test laid down by the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 16 ALR 363:
1.It must be reasonable and equitable; the Courts will not imply an term that is unfairly advantageous to one or the other party.
2.It must be necessary to give business efficacy to the contract. If the contract cannot work without a term being implied as to some matter, then this test is met. If it can work without the implied term, although perhaps less fairly, the term is not to be implied.
3.The term must be “obvious”. This requires the Court to be certain of what the parties would have provided had the matter been drawn to their attention at the time of the formation of the contract.
4. The term must be capable of clear expression.
5.The implied term must not contradict any express term of the contract.
Millbrook submissions
[50] Ms Heaton submitted that the implied term advanced by Mr Kirkland failed under all five points of the BP Refinery test for the following reasons (adopting the same sub-paragraphs as immediately above –
1.The implied term contended for by Mr van Brandenburg would be neither reasonable nor equitable. It would unfairly advantage him because it would in effect give him the power to veto the agreed transaction when he unilaterally or subjectively decided that he did not like the Millbrook landscaping works.
2.The implied term is not necessary to give business efficacy to the agreement as the scheme and intent of the agreement is objectively clear with no obvious gaps or difficulties inherent in the way it is intended to operate.
3.The implied term is not obvious in the sense that it goes without saying. The notion that a purchaser would have a unilateral veto after the property had been held for the purchaser through the subdivision process would be extremely surprising. The Court cannot be certain that the parties would have agreed on the implied term if it had been proposed at the time of the contract – to the contrary, it is improbable that Millbrook would have agreed to such a term.
4.Even Mr Kirkland’s formulation of the proposed implied term (offered after the plaintiff’s written submissions were filed in this proceeding) does not meet the test of certainty in meaning and effect.
For example –
It does not specify when the defendant would have the right to
agree or not agree;
It does not identify whether the parties should mediate or arbitrate first or whether the defendant would simply have the
right to cancel (on his subjective assessment);
It does not identify whether the requirement to obtain Mr van Brandenburg’s agreement was limited to the boundaries of the lot, or extended to the pond and mounding
on adjacent land or even further.
5.The implied term would have the effect of contradicting express terms of the agreement. Beyond Special Condition 6.1 (which requires the design of the Vendor’s Works to be completed in conformity with the content, quality and intent shown and described in the Plans) (my emphasis), the other terms of the agreement (and, in particular, Special Conditions 7.1(a), 8.1(a)(b)(c)(d) and 9.1) describe the degree of flexibility which Millbrook would have in delivering its development.
(The full wording of Special Conditions 7.1, 8.1 and 9.1 is set out in
Schedule 1 to this judgment).
[51] Ms Heaton submitted that the application of the BP Refinery tests is particularly appropriate in this case because the agreement between the parties is contained in a detailed written document which creates an initial presumption that the parties have recorded the whole of the agreement – see J Burrows, J Finn & S Todd, Law of Contract in New Zealand (3rd ed, LexisNexis, 2007 at 6.6.3.
[52] Ms Heaton submitted that the initial presumption that the written contract records the whole of the parties’ agreement is reinforced in this case by Special Condition 19 which reads –
19. Entire Agreement
19.1 As at the date of this Agreement, the terms specified herein constitute the whole agreement between the parties. Any subsequent variation to the Agreement shall only be valid if in writing and if signed by both parties.
[53] It was implicit within Ms Heaton’s submissions that Mr van Brandenburg could not point to any statements made during the negotiations for the contract which by reason of s 4 Contractual Remedies Act 1979 (or otherwise) would allow the Court to go behind the “entire agreement” provision. Indeed, Mr Kirkland had confirmed at the start of the hearing (in response to what he had seen in Ms Heaton’s submissions) that no allegation of misrepresentation was made against Millbrook.
Submissions for Mr van Brandenburg
[54] Mr Kirkland submitted that the implied term for which he contended (being the second clause of the formulation (above at [47]) met the principles of the BP Refinery case. Dealing with each of those in turn, he submitted:
1.The issue of advantage is neutral, there is no windfall to Mr van Brandenburg, and it would appear there is not substantial cost to Millbrook.
2.The clause has no meaning, if there is no obligation to consult with Mr van Brandenburg and, in the circumstances, reach an accord. This is not a clause that can be objectively measured because
everyone’s view of content and quality are different. It is necessary
for business efficacy.
3.If the rhetorical question was put to both parties – would we need to both agree on final design? – the answer would be “yes”. In particular, this is reinforced by the trust and confidence in Mr van Brandenburg leading the Design Team.
The further rhetorical question – what would be the position, if the parties could not reach an agreement? – would be, in all probability, answered by Mr van Brandenburg and Millbrook that there would be no contract, because the landscaping issues were essential. The evidence is unequivocal on that point.
4. The term is clearly capable of “clear expression”.
The implied term could be “the vendor shall cause the design of the vendor’s works to be completed in conformity with the content, quality, and intent shown on the described plans and the vendor and the purchaser shall agree on the content of the final design plans in relation to lot 341.”
5. Such implied term does not contradict any express term of the
Agreement.
Discussion
[55] The proposition that the proposed implied term can be found in the agreement between the parties is without merit.
[56] The evidence discloses that lot 341 was one of 18 or more lots marketed contemporaneously. The form of Agreement for Sale and Purchase was standard to all intending purchasers who, in a marketing brochure which included an overview from Mr van Brandenburg himself, were advised to familiarise themselves with the terms of sale on the Millbrook West website.
[57] Any implication of terms into the agreement would have to be justified by reference to the background and surrounding facts as known to the parties at the date of the agreement. The existing plans and intended plans and the plans still intended at that date become relevant. Those plans affected not only all the residential sites covered by the initial release at Millbrook West but also an additional 20. (Millbrook’s indicative pricing of lots in the first release put them between
$875,000.00 and $1,450,000.00.)
[58] Where the agreement referred to “Plans” those were defined as meaning the preliminary plans for the Development and Vendor’s Works including the Subdivision Plan attached as the First Schedule.
[59] The documents in the First Schedule comprised -
The Stage 1 Masterplan for Millbrook West of October 2006
(annotated as being a plan for “illustrative purposes and ... indicative
only and ... not intended to be a true representation.)
An enlargement of part of the first plan, bearing the same notation.
The Neighbourhood Design Plan for Millbrook West drawn 10
October 2006.
A sales plan dated 9 October 2006 identifying the sites being initially
released.
[60] The Neighbourhood Design Plan is attached as Schedule 2 to this judgment. As a Schedule to the Agreement it had colours reflecting features shown in the Key. Also marked on the Plan (without specific notation) were areas of proposed mounding – in the case of lot 341, areas of roadside mounding to the South but no mounding shown to the North, East or West.
[61] In terms of the agreement, those were collectively the Plans referred to in Special Condition 6.1, requiring Millbrook to cause the design of its works to be completed in conformity with the content, quality, and intent shown and described in those Plans.
[62] By Special Condition 14.1 of the agreement, Mr van Brandenburg acknowledged and agreed that the Memorandum of Encumbrance set out in the Second Schedule to the Agreement was to be registered against his title. Mr van Brandenburg agreed and acknowledged that he was bound by the terms of the Encumbrance from the date of the agreement.
[63] The Memorandum of Encumbrance itself identified a body known as the “Millbrook Design Review Panel” established by Millbrook for the purposes of promulgating and formulating from time to time the Design Guidelines and approving plans and specifications for dwellings, buildings, landscaping and other improvements on any lot. Mr van Brandenburg, as Encumbrancer, acknowledged that the current Design Guidelines were published on the Millbrook website and that he agreed and understood them. By cl 2.1(d) Mr van Brandenburg acknowledged that Millbrook reserved the right to make reasonable changes to Design Guidelines and to determine the placing of buildings and codes of practices from time to time as Millbrook considered practical and necessary, having regard to the overall objectives of Millbrook’s design controls. The sub-clause went on to provide that where a lot may be affected by any proposed decision, Millbrook would consult with the proprietor so affected but Millbrook’s decision would be final.
[64] The Design Guidelines of December 2006 were detailed and ran to 26 pages of text, then incorporating as Appendix A a site Masterplan, a Stage 1 Masterplan and the Neighbourhood Design Plan.
[65] The Design Guidelines provide (cl 5) for design review through a Design Review Panel, consisting initially of an architect, a landscape architect, and two Millbrook representatives. The function of the Design Review Panel is to consider and act upon proposals or plans from time to time submitted, to amend Design Guidelines as deemed necessary, and to perform any duties assigned to it by Millbrook. It is provided that the Design Review Panel recognises that each lot has its own characteristics and that each owner has their own individual needs and desires. The panel has the authority to approve deviations from any Design Guidelines or Regulations contained within the Design Guidelines. It is stated that any request to deviate from Design Guidelines will be evaluated at the sole discretion of the Design Review Panel and that the approval of the deviations will be limited to only the most creative design solutions to unique situations. The interpretation of the standards within the Design Guidelines is left up to the discretion of the Design Review Panel.
[66] Under cl 1.3, the Design Guidelines identified as one of three specific elements of the theme of the Masterplan design philosophy –
A relationship with the golf course that celebrates the open rolling character of the landscape and produces a residential/golf course interface that is uncluttered and consistent in appearance, avoiding an “urban” appearance.
[67] Against the background of these contractual documents, it is improbable, objectively speaking, that one or both parties to this contract could have anticipated that Mr van Brandenburg would have a right to agree or disagree on the content of the final design plans in relation to lot 341. This is a case where, when one looks at all the documents, it seems self-evident that the parties did not impliedly agree to Mr van Brandenburg’s having a right later to agree or disagree. The circumstances
which point clearly to this conclusion include –
Millbrook West was to involve some 45 lots.
Throughout the pre-marketing planning, there had been an emphasis upon consistency of approach and uniformity as between future
residents.
Purchasers were required to submit their offers through a standard form agreement which comprised detailed Special Conditions, commitment to a detailed Memorandum of Encumbrance, and thereby
the recognition of a Design Review Panel.
The Agreement for Sale and Purchase itself spelt out the design obligations of Millbrook as vendor (Special Condition 6.1 and 7.1) and through “purchaser’s acknowledgments” gave Millbrook specific tolerances. Through the Design Guidelines, purchasers committed to a regime whereby a purchaser’s ability to deviate from the Design
Guidelines would be evaluated at the sole discretion of the panel.
The parties had agreed (through Special Condition 19.1 – (above [52]) that the express terms of the agreement constituted the whole agreement between the parties.
[68] In my judgment, the implied term contended for by Mr Kirkland fails on all limbs of the BP Refinery test for the reasons advanced by Ms Heaton.
Did Millbrook repudiate the contract and in particular the terms of Special
Condition 6.1?
Mr Kirkland’s formulation
[69] The alternative analysis of cancellation proffered by Mr Kirkland was that Millbrook in relation to Special Condition 6.1 had repudiated its part of the bargain in that it had refused to be bound by the provisions of Special Condition 6.1 as correctly interpreted to require that both parties mutually agree on the landscaping Plan. The performance of Special Condition 6.1, so interpreted had been expressly impliedly agreed by the parties to be essential to Mr van Brandenburg.
[70] Mr Kirkland submitted that the Court, in construing Special Condition 6.1 should have particular regard to two other matters –
1. Special Condition 7.1(a) which immediately follows Special
Condition 6.1 in the agreement; and
2.The unique involvement of Mr van Brandenburg in relation to Millbrook West and, in particular, as part of the Millbrook’s Design Team, and therefore to the contemporaneous correspondence between the parties.
[71] It was Mr Kirkland’s submission that if one stands back and has regard to Special Condition 6.1 (and the agreement generally) in its context or setting, then the only conclusion is that the final landscape design would be arrived at by mutual agreement. He submitted that that conclusion could be reached either by implying a term (which I have rejected) or by applying the usual principles of interpretation, including those set out by the Supreme Court in Gibbons Holdings Ltd v Wholesale Distributors Ltd [2008] 1 NZLR 277.
Interpretation of contracts – the principles
[72] Mr Kirkland invited the Court to adopt as the principles governing the modern approach to interpretation of contract those set out by Lord Hoffman in the House of Lords in Investors Compensation Scheme v West Bromich Building Society [1988] 1 WLR 896 as adopted by the New Zealand Court of Appeal in Boatpark Limited v Hutchinson [1999] 2 NZLR 74.
[73] Mr Kirkland referred also to the judgments of the Supreme Court in Gibbons Holdings. He cited specially the judgment of Tipping J at [52] – [60] where his Honour dealt with the admissibility or weight to be attached to extrinsic material as shedding light on the shared intention of the parties. His Honour recognised that the extrinsic material might be either pre-contract or post-contract but in each case directed to the meaning of the contract at the time it was signed, with the focus on objective conduct rather than expressions of subjective intention or understanding.
[74] Ms Heaton did not disagree on any aspect of the principles advanced by Mr Kirkland but submitted that the most significant judicial pronouncement for the purposes of this proceeding was that of Tipping J in Gibbons Holdings at [52] where his Honour said –
[52] As a matter of principle, the Court should not deprive itself of any material which may be helpful in ascertaining the parties’ jointly intended meaning, unless there are sufficiently strong policy reasons for the Court to limit itself in that way. I say that on the basis that any form of material extrinsic to the document should be admissible only if capable of shedding light on the meaning intended by both parties. Extrinsic material which bears only on the meaning intended or understood by one party should be excluded. The need for the extrinsic material to shed light on the shared intention of the parties applies to both pre-contract and post-contract evidence. Provided this point is kept firmly in mind, I consider the advantages of admitting evidence of post-contract conduct outweigh the disadvantages. The latter comprise primarily the potential for ex post facto subversion of earlier jointly shared intentions and the lengthening of interpretation disputes by encouraging the parties to produce evidence which is often only tenuously relevant at best.
[75] In summarised form, the principles which I adopt in relation to the interpretation of this contract are –
(a) Contracts should be interpreted according to common sense principles by which any serious utterance would be interpreted in ordinary life.
(b) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
(c) The available “matrix of fact” or background includes absolutely anything which a reasonable person would have regarded as relevant and affecting the reasonable understanding of the language in the document.
(d) The previous negotiations of the parties and their declarations of subjective intent are inadmissible background for the purposes of interpretation – they are available only for claims based on such matters as rectification and misrepresentation.
(e) The meaning of a document is to be distinguished from the meaning of its particular words – the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. This may involve a conclusion that the parties, for whatever reason, have used the wrong words or syntax.
(f) If the background indicates that something has gone wrong with the language of the document – if the detailed analysis of words in a commercial contract leads to a flouting of business common sense or absurd consequences - such construction must be made to yield to business common sense.
Millbrook’s submissions
[76] Ms Heaton referred to the agreement itself as “the starting point”.
[77] She referred to Special Condition 6.1 as containing an acknowledgement that the design of Millbrook West was not completed at the time of the sale. Hence the provision for the design of the Vendor’s Works to be completed in conformity with the content, quality, and intent shown and described in the Plans.
[78] Ms Heaton submitted that Special Condition 6.1 and, indeed, the agreement as a whole, was drafted to allow Millbrook as developer some flexibility in respect of the final design detail. She instanced the flexibility by reference to the following:
1.Special Condition 8.1(a) in which the Purchaser acknowledges that during the design and development process, minor changes to the Plans may occur as the design detail evolves;
2.Special Condition 8.1(b) in which the Purchaser acknowledges that the dimensions, areas and heights shown on the Plans are approximate only and that the Purchaser enters into the Agreement on the basis that such dimensions and areas may alter in the course of construction and/or final survey;
3.Special Condition 8.1(e) in which the Purchaser acknowledges that the location of the roading and other communal facilities shown within the plans are preliminary only and may change and that the Purchaser shall have no right of objection or requisition or ability to claim compensation by reason of any alteration to the roading and location of facilities so long as there is no material derogation from the value or amenity of the property.
4.Special Condition 9.1 which provides that the Vendor retains absolute flexibility in terms of the use of materials in respect of the construction of the Development and of the Vendor’s Works so long as the development and the Vendor’s Works comply with all Authority Approvals and good civil engineering and construction practice.
[79] Against the background of these provisions, Ms Heaton submitted that the scheme of the agreement is clear. It is as follows –
1.The purchaser buys off the plans. The Vendor promises to deliver its “works” as defined. The Vendor must then, in terms of the time limits imposed by both s 225 Resource Management Act and Special Condition 4, obtain resource consent, carry out the Works with all reasonable speed, submit the Survey Plan to the Queenstown Lakes District Council for approval under s 223 Resource Management Act, obtain the s 224(c) Resource Management Act certificate from the Council, deposit the plan with Land Information New Zealand, and ensure that the Title issues.
2.Once Title issued, and provided the Vendor had designed and constructed the Works in accordance with the Plans, and within the permitted tolerances, then Millbrook had delivered what it promised to deliver and Mr van Brandenburg was bound to complete his part of the bargain.
[80] Approaching the provisions of the agreement in that way, Ms Heaton submitted, there is no need to put a gloss on the provisions of Special Condition 6.1.
[81] Ms Heaton then turned to the matters of extrinsic evidence upon which Mr
Kirkland relied. At this point it is convenient to examine Mr Kirkland’s submissions.
Mr van Brandenburg’s submissions
[82] In terms of the Agreement, Mr Kirkland submitted that the most important provision to read alongside Special Condition 6.1 was Special Condition 7.1 with its requirement for the Vendor’s Works to be completed substantially in accordance with the Plans.
[83] Mr Kirkland then invited the Court to move beyond the agreement itself to the “two-fold matrix” of Mr van Brandenburg’s involvement in the project and the contemporaneous correspondence between Millbrook and Mr van Brandenburg.
[84] I now turn to summarise the evidence in relation to each of those before considering any impact on the correct interpretation of the contract.
Mr van Brandenburg’s involvement in the project
[85] Mr Kirkland, in his written submissions, characterised Mr van Brandenburg as having a leading role in the Design Team. In his oral submissions he submitted that the absolutely unique feature of this case was Mr van Brandenburg’s involvement. He described Mr van Brandenburg “as being part of the team” from the outset. He was a person who had shown trust and confidence in Millbrook from the outset. His involvement in other projects – Hawthorn, Reflections, and Threepwood – meant that he brought to the table much expertise and knowledge relevant to the landscape design decisions and the political issues which can arise. He had a continuing engagement through an evolving process. Millbrook knew what Mr van Brandenburg wanted for the project. The ponds and mounds arose from his thinking. His experience at his Reflections Development particularly influenced the approach to mounding.
[86] Ms Heaton, understandably in this summary judgment context, did not in her submissions take any great issue with Mr Kirkland’s overview as to Mr van Brandenburg’s involvement. On the basis of the extensive narrative provided in Mr van Brandenburg’s affidavit, each of the summarised propositions advanced by Mr Kirkland was either established on the evidence or at least arguable. This is not to say that Mr van Brandenburg’s self-assessment of the centrality of his role would necessarily be vindicated at trial. There were many players in the development of Millbrook and later Millbrook West. Mr van Brandenburg had joined the original architects engaged at Millbrook in the early 1990’s to work on the early buildings there. There was then the hiatus before the development of the lands to the West. Mr van Brandenburg was one of a number of designers from different disciplines who came together for several design workshops for the master planning process in
2004. When Millbrook decided to proceed with Millbrook West the project was under the management of Mr O’Malley of Millbrook who retained the Baxter Design Group. It was at that point that Mr van Brandenburg was engaged for architectural input into the master planning. As Millbrook West entered the detailed design phase, Mr van Brandenburg’s design involvement tapered off. In October 2006, Mr van Brandenburg again assisted with a generic format of Design Guidelines, which he had somewhat amended to fit Millbrook West (and which served as the substantial basis of the Design Guidelines of the Millbrook West Design Guidelines which were in place on 1 December 2006 when Mr van Brandenburg signed his Agreement of Sale and Purchase). Mr van Brandenburg was also retained to assist Millbrook with the masterplanning of a cluster of houses within the development to be known as Coronet Square.
[87] On the issue of the primacy of Mr van Brandenburg’s involvement in certain aspects of design of Millbrook West there is a significant difference in at least the tenor of the evidence of Mr van Brandenburg on the one hand and Mr O'Malley on the other.
[88] Mr O'Malley describes Mr van Brandenburg’s role through 2006 in the
following terms –
Millbrook held back on advancing to more detailed master-planning until
2006. Management of the project was my responsibility. In February 2006 the defendant was engaged for architectural input to the master-planning.
This was to have been a supporting role to Baxter Design Group.
[89] The difference of perception of role is reflected in Mr van Brandenburg’s evidence, where he refers to that passage in Mr O'Malley’s evidence and says –
... my input was meant to have been a supporting role to Baxter Design Group. But he knew it didn’t happen that way. The fact is: I took a leading role. He saw my contribution as an investment as per his email to me dated
27 March 2006 ...
Contrary to his paragraph ... which appears to down grade my effort as a supporting role to BDG, if anything, BDG played a supporting role to me.
[90] In his reply affidavit, Mr O'Malley asserts that the defendant is downplaying the involvement of Paddy Baxter, who is the principal of the Baxter Design Group. He says –
Frankly, I believe there is a lot of irrelevant and ego-driven comment by the defendant about who was leading the design and when he was removed from the design team... . The Master Plan was collaboration between several consultants (golf, planning, landscape, architect, engineering) and me. No single consultant was more important than any other. After many months of work a Master Plan and Neighbourhood Design Plan were finalised and used as part of the Sale and Purchase Agreement in respect of Lot 341.
[91] The difference of perception as to the primacy of Mr van Brandenburg’s involvement in the design is not capable of resolution in a summary judgment context before the Court. While it is clear that in the way Millbrook structured its planning, Baxter Design Group was to have the leading role, Mr van Brandenburg is entitled to be treated in the summary judgment context as having an arguable case that he “took a leading role” (my emphasis), to use his own words.
Contemporaneous correspondence
[92] Mr Kirkland’s written submissions on interpretation had contained the submission that the second aspect of the matrix which should influence the interpretation of Special Condition 6.1 was the contemporaneous correspondence between the parties.
[93] The agreement was entered into on 18 December 2006.
[94] In his written submissions, Mr Kirkland set out in some detail references to the affidavit evidence of Messrs O'Malley and van Brandenburg. In terms of correspondence between the parties contemporaneous with (or indeed prior to) the signing of the contract in December 2006, Mr Kirkland pointed to two specific communications. First, in an email dated 29 March 2006 sent by Mr van Brandenburg to Stuart Anderson of the Signal Group (one of the other consultants involved) and copied to Mr O'Malley, Mr van Brandenburg was dealing with the allocation of fees for his involvement. After stating his position as to the value of his involvement, Mr van Brandenburg stated this –
Millbrook should also remember, that the design process is a moving feast.
(He went on to make further comments as to the need for budget allocation).
[95] Secondly, an email sent by Mr O'Malley to Mr van Brandenburg (and copied to other consultants) on 17 July 2006. Mr van Brandenburg had two days earlier sent an email to the other consultants in response to a suggestion that further houses could be fitted into the development, suggesting that they fight off the temptation to squeeze houses up. Mr O'Malley’s email response to Mr van Brandenburg began –
Thanks, you’ve confirmed what my conscience was telling me. It shows that
we must have a good plan if this was the only areas Austin queried me on.
[96] Those are the only pre-contract items of correspondence referred to by Mr Kirkland in either his written or oral submissions. (Mr Kirkland did refer to post- contract correspondence to which I will return).
[97] Mr Kirkland essentially referred to these items of correspondence in the mix of background relating to Mr van Brandenburg’s involvement in the design. The entire surrounding circumstances must be looked at. But it is appropriate to first focus on whether these items of correspondence of themselves appear to assist interpretation.
[98] In interpreting the agreement of December 2006, the Court must ask itself whether the items of correspondence as part of the surrounding circumstances assist the Court in objectively assessing the intention of the parties. In particular, do they suggest that a contract which does not expressly give the purchaser a right to agree or disagree with the final design and construction of the works should be interpreted so as to give such right to the purchaser? The items of correspondence relied on by Mr Kirkland on their own clearly do not.
[99] The effect of the emails, summarised, is to recognise between a group of consultants designing Millbrook West that there needs to be good designing and planning and that the design process is a moving feast. The discussions in no way touch upon the involvement of purchasers in the design process. There is no contemplation of purchaser involvement. The involvement, one would expect – of
owner and consultants – was all that was being discussed and contemplated. If, at the time, the hypothesis had been raised that one of the consultants would himself become a purchaser, and the question raised as to his rights as purchaser of involvement in the design process, then the answer would clearly have been that a purchaser would acquire no such rights unless the rights were expressly acquired in the contract of purchase.
Post-contract correspondence
[100] Mr Kirkland’s written submissions expressly invited the Court to consider the matrix of contemporaneous correspondence. However, he also addressed the Court, with reference to the judgment of Tipping J in Gibbons Holdings Ltd v Wholesale Distributors Ltd (above [73]), on the entitlement of the Court to consider post- contract evidence as shedding light on shared intention. Many of the items of correspondence to which Mr Kirkland referred in his submissions were post- contract. I therefore consider those also.
[101] Items of correspondence to which Mr Kirkland specifically referred were –
1.A planting plan dated March 2007 given by Mr O'Malley to Mr van Brandenburg on 1 July 2008. The plan shows mounds to the south of the lot and the pond (hand-drawn) to the east.
2.An email dated 3 September 2007 from Mr O'Malley to Mr van Brandenburg. Mr van Brandenburg had asked for correspondence and drawings on the gate-house design. Mr O'Malley emailed –
With regards any drawings I can show you some tomorrow but these are not being released to anybody outside of the consultant team working on the detailed design I am afraid.
3. An email dated 4 September 2007 from Mr O'Malley to Mr van
Brandenburg -
As I said to you the plan had always been to have architectural input into the masterplan during the early period of masterplanning (this was my plan prior to Signal’s engagement and in fact I only had a
budget of $37k for the architect input). Once we got into the masterplanning and all the consultants were engaged, this budget was extended to close to $100k to allow for more of your input. There was always going to come a time when the input from the architect was not required as we moved into detailed design and then consultation.
Mr Kirkland described this email as indicating that Mr van
Brandenburg, putting it plainly, got the sack.
4.Plans of the pond showing water levels relevant to the platform level of lot 341 were given by Mr O'Malley to Mr van Brandenburg on 8
July 2008.
5.An email dated 5 December 2008 from Mr van Brandenburg to Mr O'Malley in which Mr van Brandenburg refers to a model of the project which he is building to advance the concept of having the house nestle into the golf course tucked in behind some mounds, which he hopes Mr O'Malley will approve. Mr van Brandenburg adds
I mentioned that the pond adjacent to our lot seems too low (it looks like the tide’s out) and you said it was not the final height and controlled by the outflow...
6.By a letter dated 18 December 2008 from Millbrook’s solicitors to Mr van Brandenburg’s solicitors, Mr van Brandenburg was advised that the subdivision dealing had been lodged with Land Information New Zealand.
7.By email dated 5 January 2009 to Mr O'Malley, Mr van Brandenburg discussed the integration of the residential golf front sites with the golf course and said –
The use of mounds as an interface between golf course and residential lots is in step with using mounds for privacy between the lots, which was talked about often during the masterplanning phase.
[102] The correspondence produced by Mr van Brandenburg is voluminous. Necessarily, all has had to be read. Understandably, Mr Kirkland did not highlight or
refer to all in his submissions. There are other examples of communications of a similar nature which could be added to the above list including, for instance –
1.An email dated 4 July 2008 from Mr van Brandenburg to Mr O'Malley referring to the development starting to come together and to its shaping up to be much the same as he had helped conceive it. Referring to a drawing which Mr O'Malley had given him the previous day, Mr van Brandenburg adds –
Returning to our lot, I commented that the mound around our site is too low.
2.An email dated 22 November 2008 in which Mr van Brandenburg suggested to Mr O'Malley a meeting as –
I have some ideas how to interface my design with the golf course.
[103] As Mr Kirkland developed his submissions in relation to these exchanges between the parties, he submitted that they repeatedly demonstrated an evolving process as had been anticipated. Mr Kirkland submitted that collectively the events subsequent to the contract led to the irresistible inference that Special Condition 6.1 of the agreement contemplated the design of Millbrook West to be somewhat dynamic and an evolving process.
Bringing the surrounding circumstances together – conclusion as to interpretation of special condition 6.1
[104] Mr Kirkland submitted that Special Condition 6.1, when interpreted against its surrounding circumstances including subsequent conduct, contains a requirement that the content of the final Design Plans in relation to lot 341 shall be subject to agreement of the purchaser and vendor.
[105] It was, said Mr Kirkland, the combination of Mr van Brandenburg’s unique involvement and the correspondence between the parties that should lead the Court to so interpret Special Condition 6.1.
[106] When the plain wording of Special Condition 6.1 (without reference to any such agreement) is submitted to reconsideration in the light of Mr van Brandenburg’s consultancy involvement and his correspondence with Millbrook, Special Condition
6.1 in my judgment still continues to require simply what it says.
[107] What Mr Kirkland’s submissions effectively invite the Court to do is to confuse the two distinct roles or relationships which Mr van Brandenburg had. The submission invites confusion of his role and involvement as consultant with his capacity as purchaser. Mr van Brandenburg, while he was retained by Millbrook as consultant, had an involvement in design matters. It is clear from the correspondence that he would have been prepared to have a greater and more consistent involvement than Millbrook decided upon. It is clear from the correspondence that tensions arose between Mr van Brandenburg and Mr O’Malley and others as to a tapering off in Mr van Brandenburg’s involvement but Mr Kirkland did not suggest, and it cannot be suggested, that Millbrook was in any way contractually constrained at any point from bringing Mr van Brandenburg’s consultancy arrangements to an end. Indeed, the autonomy which Millbrook reserved to itself in this regard is illustrated by one of the post-contract communications to which Mr Kirkland referred, namely the email of 3 September
2007. In that email, Mr O’Malley had, in response to Mr van Brandenburg’s request for drawings of the gatehouse design, emphasised that those drawings were not being released to anybody outside the consultant team working on the detailed design. Significantly, in the present context, Mr van Brandenburg did not take issue (wearing either his consultant or his purchaser hat) with Mr O’Malley’s response. Rather, he emailed back “OK, I get it...”.
[108] The exchanges in correspondence to which Mr Kirkland referred from the period after 3 September 2007 do not, at least until the time for settlement is nearing, suggest a different understanding of the relationship. While Mr Kirkland referred to exchanges as late as December 2006 and January 2009 as indicating the continuing dynamic process of design involving Mr van Brandenburg, Mr O’Malley had indicated to Mr van Brandenburg in the meantime, how Mr O’Malley approached the matter of agreement on design. As Mr van Brandenburg pursued in August 2008
further discussions about the mounding in particular, responded to a request for a
“catch-up” with the observation.
“Happy to catch-up. As I have said before, the ultimate decision is mine as I
am sure it is with you on your own developments”.
[109] When, as invited by Mr Kirkland, I consider not only the plain wording of Special Condition 6.1 but the surrounding circumstances to which he took the Court, I find nothing in the objectively assessed intention of the parties as evidenced by the words and the surrounding circumstances to justify the conclusion that the parties by their contract, intended Mr van Brandenburg as purchaser to have a right to agree on the final design. It is clear that, as a consultant with varying degrees of involvement in the initial stages of redevelopment of the planning of Millbrook West, Mr van Brandenburg was involved in the planning process and expected to have continuing involvement. Even at that point, there is no suggestion that the consultants had the ultimate say on design – that clearly lay with Millbrook. Accordingly, at most, Mr van Brandenburg (while he was a consultant) might have expected to continue to be consulted.
[110] It is that role as initial and possibly continuing consultant that gave Mr van Brandenburg his expectations. All the material which Mr Kirkland refers to as surrounding circumstance, involving Mr van Brandenburg in discussions as to design, is consistent with his being listened to as a consultant with substantial experience and ideas in the area. Mr O'Malley’s email of 3 September 2007 (to which Mr van Brandenburg took no exception) made it clear that drawings were not going outside the consultant team working on the detailed design. The fact that Mr van Brandenburg had also the capacity of a purchaser at that point did not lead him to suggest that he had already acquired an expectation as purchaser of having the right to receive information and to agree or disagree on final design matters.
[111] Additionally, there are the considerations which had been discussed in relation to the suggested implied term which had overlapping relevance in this area. Those must also be taken into account. Mr van Brandenburg’s very involvement as a consultant setting up the design arrangements works against the interpretation argument he now puts forward. As one involved in the design process, he would
have been well aware of the discretion being reserved to Millbrook. The Design Guidelines which he received in the purchaser’s package in November 2006 and agreed to when signing the Agreement for Sale and Purchase, removed from individual purchasers any control over departure from the Design Guidelines (as any deviation “will be evaluated at the sole discretion of the Design Review Panel”). Mr van Brandenburg’s contention of an effective power of veto over the design as it related to his lot is ultimately inconsistent with the discretions reserved to Millbrook in the Agreement for Sale and Purchase itself and reserved to the Design Review Panel process through the Design Guidelines.
[112] As in relation to the implied term propounded by Mr Kirkland, I must have regard in the context of interpretation also to the “entire agreement” provision in Special Condition 19.1. The proposed requirement for agreement between vendor and purchaser which Mr Kirkland submits can be arrived at through a process of interpreting Special Condition 6.1 is in effect a provision which could have been spelt out as a separate term of the contract. Put simply, it would be another requirement. When the parties have agreed upon an “entire agreement” clause in the context of a substantial commercial contract, it is another factor against introducing what is effectively another term of the agreement.
Conclusion as to both implied term and interpretation
[113] There is no justification in this case through a process of implying a term or of interpretation to add to the requirements or provisions of Special Condition 6.1. In itself, Special Condition 6.1 is plain in its meaning. Nothing in the surrounding circumstances points to the parties having intended through their contract to reserve to Mr van Brandenburg an entitlement to agree or disagree on the final plans.
[114] This case turns on whether or not Mr van Brandenburg lawfully cancelled the agreement. On 5 March 2009, Mr van Brandenburg had through his solicitors, purported to cancel the agreement “because [Millbrook] is in breach of clause 6”. The Notice of Opposition did not explain that position. It was only when Mr Kirkland’s submissions were received that Mr van Brandenburg’s grounds for cancellation were articulated, namely that either through an implied term or an
interpretation of Special Condition 6.1, it was a requirement of the contract that the agreement of both parties to the final design plan was required or that if no agreement could be reached on the final design plan, then the agreement could be cancelled by Mr van Brandenburg.
[115] Accordingly, Mr van Brandenburg’s case has not been put upon the basis that, absent the implied term or the interpretation of Special Condition 6.1 that requires agreement of the parties, that what Millbrook delivered was other than a design of the Vendor’s Works in conformity with the content, quality and intent shown and described in the Plans attached to the agreement. Had it been necessary for me to set out an analysis of the works as finally designed, that analysis would have led to the conclusion that Mr van Brandenburg could not reasonably argue that the works failed to conform. As breach on that basis was not alleged, however, I do not consider that theoretical line of argument any further.
Essentiality of a provision
[116] Given my findings that there is neither an implied term nor an interpretation of Special Condition 6.1 as contended for by Mr van Brandenburg, the further contention that such provision was essential to the contract falls away.
Absence of a settlement notice
[117] The Contractual Remedies Act did not displace the long-established rule by which time for performance, that is, the time for settlement is generally not of the essence in a land sale contract: see the judgment of the Court in Mana Property Trustee Ltd v James Development Ltd [2010] NZSC 90 per Blanchard J at [35]. In this Agreement between Millbrook and Mr van Brandenburg, the parties by the provisions of cl 9.0 (the same standard REINZ/ADLS provision as applied in the Mana Property case) provided for notice to complete and remedies on default.
[118] In the Mana Property case, James Developments Ltd, as the party not in default, purported to cancel without first issuing a settlement notice and awaiting its expiry. In relation to that, the Supreme Court, at [37] found –
It was ... emcumbent on James, if it wished to cancel the contract on the basis of the breach which occurred when Mana failed to settle, to issue a settlement notice, await its expiry and then give a cancellation notice. By that process, it could demonstrate that the failure to settle in accordance with the notice was a repudiation.
[119] The hearing and the judgment of the Supreme Court in the Mana Property case occurred only after I had heard submissions in this case. It happened that Mr Kirkland had made reference to the decision of the Court of Appeal in the Mana Property case ([2009] NZCA 483) but not on this point, which was a point which arose in that litigation for the first time in the arguments before the Supreme Court.
[120] Had I not come to the conclusion in this case that I must find for Millbrook upon the basis of the submissions presented to me, I would have been minded to draw the decision of the Supreme Court in the Mana Property case to the attention of counsel and to invite such further submissions as they might wish to make. In the event, that has become unnecessary by reason of the conclusions I have already reached.
[121] My tentative conclusion is that an application of the judgment of the Supreme Court in the Mana Property case would lead to a further reason why Mr van Brandenburg did not have an arguable defence based on lawful cancellation of the Agreement.
Specific performance
[122] The plaintiff seeks specific performance.
[123] In terms of the REINZ/ADLS form used (sub-clause 9.4(1)(a)) that is
Millbrook’s entitlement.
[124] In his Notice of Opposition, Mr van Brandenburg did not suggest that, in the event the Court found that the agreement was still on foot, that there was any ground on which the Court should refuse specific performance, such as impossibility or otherwise. Mr van Brandenburg’s evidence in opposition did not raise factual material relating to any suggested impossibility.
[125] Surprisingly, Mr Kirkland in his written submissions included authority in relation to the recognition in equity of a defence of impossibility in relation to specific performance. As it was, the authorities to which Mr Kirkland referred included Humphrey v Fairweather [1993] 3 NZLR 91, which is authority for the proposition that in an ordinary proceeding, the pleading of impossibility is in the nature of an affirmative defence and the onus of proof rests upon the defendant as the person taking the point.
[126] At the hearing, Mr Kirkland formally abandoned any issue in relation to impossibility. In the circumstances, I simply record that, quite apart from an absence of proper pleading, there was no evidence adduced in this case which suggested that it would be impossible for Mr van Brandenburg to comply with an order for specific performance.
Order
[127] I order:
1. The defendant shall specifically perform his obligations under the
Agreement for Sale and Purchase dated 18 December 2006.
2.Leave is reserved to the parties, by memorandum or memoranda to be filed within ten working days, to provide terminology and request further definition of the requirements of specific performance if the parties anticipate electronic settlement and if there is any issue between the parties as to the correct quantification of late settlement interest (15 percent per annum) from the possession date to the date of settlement.
Costs
[128] Costs must follow the event. My present view is that they ought to be on a category 2 basis and, having regard to the length of evidence filed in particular by the defendant and requiring reply from the plaintiff, on a “C basis” (meaning that
item 5.1 under schedule 3 will lead to a calculation of $3,760.00 – 2 x $1,880.00). There should also appropriately be a certificate for the reasonable costs of counsel incurred in travel and accommodation.
[129] I anticipate that counsel will be able to agree on such costs. In the event they cannot, then memoranda are to be filed with the counsel for the plaintiff first filing and counsel for the defendant filing within five working days thereafter. Unless a telephone hearing is specifically requested for good reason, I will make costs orders
on the papers.
Associate Judge Osborne
Solicitors: Morrison Kent Lawyers, Wellington
Saunders & Co, PO Box 18, Christchurch 8140
0
3
0