Moncrieff Pastoral Limited v Sim HC Auckland CIV 2004-404-5603

[2007] NZHC 2086

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2004-404-5603

BETWEEN  MONCRIEFF PASTORAL LIMITED Plaintiff

ANDSHIRLEEN CHIA LING SIM Defendant

Hearing:         25, 26, 27 June 2007

Appearances: P J Reardon for Plaintiff

D Singh for Respondent

Judgment:      31 August 2007

JUDGMENT OF KEANE J

This judgment was delivered by Justice Keane on 31 August 2007 at 9.30 am pursuant to Rule540(4) of the High Court Rules.

Registrar/ Deputy Registrar

Date:

Solicitors:

Cooper Rapley, Palmerston North for Plaintiff

Sehean Singh, Balmoral, Auckland for Defendant

MONCRIEFF PASTORAL  V SIM HC AK CIV 2004-404-5603  31 August 2007

[1]      In  an  agreement  for  sale  and  purchase  dated  18  March  2003  Moncrieff Pastoral sold to Shirleen Sim a 202 hectare property on the outskirts of Christchurch for $2.9M. Settlement was not to occur until 18 months later on 22 September 2004 but Ms Sim, in reality her husband, Augustine Lau, who had been active in the purchase on behalf of investors in China, wanted as well and obtained access as from

1 September 2003.

[2]      Settlement did not occur as anticipated. Ostensibly, Moncrieff and Ms Sim could not agree on the effect of a term of the agreement, cl 20, relating to three wells on the property being drilled when the agreement was entered into. Moncrieff’s stance was that cl 20 assured Ms Sim of their minimum total productive capacity. Ms Sim contended that cl 20 also assured her of an immediate right to draw water.

[3]      On  7  September  2004,  and  again  on  13  December,  Moncrieff  served settlement notices on Ms Sim making time of the essence. On 26 January 2005

Moncrieff cancelled on the basis that it remained willing and able to settle and gave notice that it would pursue a claim for damages. On 4 February 2005 Ms Sim cancelled on the basis that Moncrieff had made a material misrepresentation and was in breach of cl 20, an essential term. Moncrieff has since sold the property.

[4]      On 28 April 2005 Moncrieff failed in its application for summary judgment. The Associate Judge assumed, without deciding, that Moncrieff’s interpretation of cl

20 was correct. Ms Sim had, the Judge found tenable causes of action in misrepresentation and unilateral mistake.

[5]      On  28  September  2005  the  Court  of  Appeal  also  dismissed  Moncrieff’s appeal, but deprived Ms Sim of her primary point of defence. The Court  held that, as Moncrieff said, cl 20 affirmed no more than the productive capacity of the three wells; not any right to draw water. The Court left open, as it had to on the then state of the evidence, whether Moncrieff might still be in breach of cl 20. And again, while sceptical as to any misrepresentation or unilateral mistake, was not prepared to rule out either.

[6]      Ms Sim has since counterclaimed for the return of her deposit, $303,750 inclusive of GST and, responding to the Court of Appeal’s decision, reframed her case in four causes of action contending that Moncrieff: (i) breached the agreement, principally cl 20; (ii) made material misrepresentations to induce her to enter the agreement;  (iii)  was  aware that  she had  entered  the agreement  influenced  by a material  mistake  going  to  the  worth  of  the  bargain  to  her;  and  (iv)  invalidly cancelled.

[7]      In these four causes of action as to which Ms Sim carries the onus, she holds in essence to the position she took when she declined to settle. The wells, she contends, never complied with cl 20.  And while the Court of Appeal has held that this clause gave her no right to draw water, Moncrieff induced her, she says, in reality Mr Lau, to enter the agreement by assuring her, if only implicitly, she had that right.  Also that the wells were spread evenly across the property.  Or, if Moncrieff did not do that, she says, it knew that Mr Lau had mistakenly assumed that she would enjoy both those benefits from the agreement and yet stood by. Thus, she says, Moncrieff was never in a position to settle and never had the right to cancel.

[8]      Moncrieff, equally, adheres to its stance from the outset. Ms Sim, in truth Mr Lau, it says, elected not to settle or was not in a position to when she found herself unable to on-sell the property before settlement. Only then did any issue arise as to the right to take water and that was a pretext. Clause 20, which guaranteed no more than the productive capacity of the three wells, Moncrieff says, encompassed the full extent of their bargain. It made no independent representation nor was it aware of any unilateral mistake. It was always in a position to settle. Ms Sim was not. The contract was validly cancelled.

[9]      Ms Sim’s counterclaim, which turns in the main on what transpired over the less than 24 hours in which the agreement was negotiated by telephone and fax on

17-18 March 2003, and in part as well afterwards, is all that I need to resolve. Moncrieff’s claim for damages raises quite distinct issues and depends on the outcome.  It is for another day.

Evolution of agreement

[10]     On  17  March  2003  Mr  Lau  then  in  Auckland,  telephoned  Hunter  Doig, Bayleys Realty, Christchurch, the agency that had acted when Moncrieff attempted to auction the property in June 2002. Mr Lau says the property was then still on the market. Mr Doig and Moncrieff deny that. Mr Doig says that he told Mr Lau that Moncrieff might entertain an offer of $2.5M plus GST. Mr Lau, using the standard agreement that Mr Doig faxed to him, offered Moncrieff $2.48M, inclusive of GST. He nominated as the settlement date 24 September 2004, nearly 18 months later.

[11]     Mr Lau did not then stipulate for any earlier possession date. What he did stipulate for, amongst the three further terms that he added to the agreement, was a right to investigate the property once the agreement became unconditional as it almost immediately did. That clause, which became cl 18 of the agreement, gave Ms Sim  a  right  to  investigate  the  property  that  she  never,  formally  at  least,  ever exercised:

The Purchaser has the right to investigate the property with the professional team i.e. surveyor, well driller etc for further development with two working days notice to the Vendor after the agreement is unconditional.

[12]     Moncrieff counter-offered $2.8M. Mr Doig advised Mr Lau that Moncrieff had spent $260,000 drilling three wells on the property, which he wished to recoup. Mr Lau says that Mr Doig assured him that the three wells were spread evenly across the property and were of equal capacity; and, critically, implied if he did not say so expressly, that there was an immediate right to take water. Mr Doig denies this. Coincidentally, Mr Lau decided that his investors needed possession in excess of a year before settlement. To reflect both considerations and, as Moncrieff says also, an increase in the property’s value since June 2002, the ultimate purchase price became

$2.9M and two further related terms were added.

[13]     One of those terms, cl 21, which secured to Ms Sim as from 1 September

2003 full access to and use of the property, was never exercised. Ms Sim leased the property back to Moncrieff for a term ending on the date of settlement. On 16

October 2003 Ms Sim and Moncrieff entered into a lease enabling Moncrieff to hold

and use the land between 1 October 2003 and September 2004 for a rental just short of $30,000. The other term introduced, cl 20, the term critical to this case, said this:

The Vendor has established three 12" wells (70 – 200 metres) static water level approximately 20 metres, and guarantees production of at least 800 gallons per minute, as at 1st November 2003.

First cause of action: breach of clause 20

[14]     In her first cause of action, Ms Sim contends, Moncrieff was in breach of the agreement, cl 20 principally, as at the date of the agreement, and indeed when it cancelled.  Moncrieff  had  not  at  the  date  of  the  agreement,  as  it  warranted,

‘established’ the three wells and it never did. The wells lacked characteristics warranted and the productive capacity guaranteed. Also, when drilling the wells, Moncrieff did not comply with its resource consent and so the wells never attained in law any established status.

Well features and capacity

[15]     As at the date of the agreement, there is no issue, the three wells then drilled or about to be did comply with cl 20 to this extent. They were 12 inch wells and to a depth lying between 70 – 200 metres. Well one, drilled on 7 December 2002 and completed on 18 February 2003, was 198 metres deep. Well two, drilled in the last days of February 2003, and well three completed in March, soon after the agreement was entered into, were each 78 metres deep.

[16]     Then, however, and indeed later, Ms Sim contends, the three wells were deficient in three respects, the first two of which are intimately related. The wells were not ‘established’ in the sense identified by the Court of Appeal. They were not all ‘wet’, or capable of producing water over the long term. Two wells, well one and well three, did comply. But well two had been deemed dry and that resulted in the second deficiency that Ms Sim complains of. The three wells together could not supply, as at 1 November 2003, 800 gallons per minute.

[17]     There is no issue that, when tested, well one supplied 470 gallons per minute. Or that the well driller, Smith’s Well Drilling Limited, had recommended that it be drawn down at 450 gallons per minute. Or that well three supplied 349 gallons per minute. Or that if one took literally the well driller’s decision to deem well two dry the two remaining wells yielded 799 gallons per minute.

[18]     Well two, however, was never literally dry. It had yielded when tested less water per minute than Moncrieff was then looking for, so Smiths had deemed it dry when wells one and three yielded all the water that Moncrieff required. In October

2004, however, Smiths confirmed that well two did yield clear accessible water. The static water level was 7.6 metres below the ground surface. The yield was 54 gallons per minute. Hamish Lowe, an environmental scientist, experienced in this field, whose evidence for Moncrieff was uncontradicted and I accept, says moreover that well two could have been improved still further.

[19]     Be that as it may, as at 1 November 2003, the combined potential yield of the three wells was in excess of 800 gallons per minute, the minimum guaranteed. Even if well one were drawn down at 450, not 470, gallons per minute, it would have been

853 gallons per minute. I am equally unconvinced by Ms Sim’s third reason for asserting that two of the three wells were deficient: that only well one had a static water level of 20 metres, and that as at 13 December 2004 that of well two was 7.6 metres and that of well three 8.7 metres.

[20]     In contending that the static water level in the three wells had to be quite literally 20 metres, or thereabouts, Ms Sim, in reality Mr Lau, misunderstood and continues to misunderstand completely, and I consider symptomatically, why the static water level figured in cl 20 and the nature of the benefit that Moncrieff was seeking to confer.

[21]     Moncrieff’s intent was, when it had the wells drilled, to draw water from them using pumps set down the well shafts, as is now usual, at a level below that to which the water level would have descended when the pumps were operating. That lower water level would have been determined in part by the pump rate.   But it

would first have been determined by the level at which water lay naturally below the ground surface before pumping began, the static water level.

[22]    When Moncrieff assured Ms Sim that this latter natural level would be approximately 20 metres it intended, I accept, to assure her that it would lie no deeper; and that is because the static water level is critical to cost. The lower that natural level, the lower the drawn down level, the lower the pump then needed to be and the greater the cost of extraction.

[23]     The result under the agreement is then the precise opposite of what Ms Sim contends for. The static water levels in wells two and three were less than half the 20 metre maximum depth that cl 20 specified and complied by a generous margin. That for well one,  the deepest  well,  just  complied.  In  this  as  in  every other  respect Moncrieff complied with cl 20 literally understood.

Resource consent conditions

[24]     Ms Sim next contends that the wells were never ‘established’ in law because Moncrieff failed to comply with the duty imposed by ss 9(1) and 87(a) of the Resource Management Act 1991, to drill the wells complying with each of the conditions that Environment Canterbury imposed. In this too, I find, she fares no better.

[25]     To begin with, she seeks more from cl 20 than it says. Clause 20 gave no assurance that the three wells were drilled in compliance with any resource consent. The only assurance it gave, as the Court of Appeal held, was that the three wells were at the date of the agreement capable of yielding water immediately and over time, eventually, on 1 November 2003, at the assured volume.

[26]     Ms  Sim  contends  also,  however,  that  Moncrieff  failed  to  comply  with cl 6.1(1)(b) by failing to disclose to her that it, or its proxies, the well driller or Glasson Potts Fowler, the consultancy that had supervised drilling, had failed to comply with one or more conditions of Moncrieff’s resource consent.

[27]     Of the four conditions Environment Canterbury imposed two cannot begin to be in issue. When the wells were drilled the well driller, as the consent required, capped the tops of the bores to prevent any contaminants entering. Equally, it is undisputed, no koiwi tangata or taonga were discovered which would have called for drilling to stop. Ms Sim’s point derives from a failure to comply with the two remaining conditions, one in particular.

[28]     Moncrieff’s  proxies  did  not,  as  required,  once  the  wells  were  complete, surround the bore head with a concrete pad of at least 0.3 metres radius and 0.1 metres thickness, to prevent leakage. That work could not be done,  however,  I accept, until a pump had been installed and headworks constructed, work contingent on a further resource consent to abstract water then only anticipated. Nor did any requisition from Environment Canterbury result. Understandably, Ms Sim does not fix on that omission with any vigour.

[29]     The omission that Ms Sim does fasten on is of a different character.  It is that Moncrieff, or rather its proxies, did not file with the Canterbury Regional Council bore completion reports within three weeks of the completion of drilling. These reports, however, were largely a formality. Environment Canterbury obtained the information it wanted from the bore logs that were supplied. The only sanction Moncrieff ever faced was perhaps the liability to meet Environment Canterbury’s expenses.

[30]     Finally,  Ms  Sim  complains,  Moncrieff  elected  after  the  agreement  was entered into to waive its right to drill wells at the two other sites the subject of the Environment Canterbury consent without seeking her agreement or disclosing that to her. In these respects, she says, Moncrieff is in breach of cls 6.1(2) and 6.3(1). I am unconvinced, however, that there was any such breach. Moncrieff’s ability to drill wells at two further sites lay beyond the scope of the agreement the ambit of which was determined by cl 20. Moreover, Moncrieff’s waiver cannot have been decisive so far as Ms Sim was concerned. Had she wished, she could have sought from Environment Canterbury a right to drill at any other points that interested her.

[31]     In the result,  I conclude, neither Moncrieff nor its proxies breached  any warranty or undertaking that might either have disentitled it from cancelling and seeking damages or, conversely, might have entitled Ms Sim to cancel the agreement under cl 6.5, or on any other basis, and seek damages herself.

Material misrepresentation

[32]     The principal issue is whether Ms Sim, acting through Mr Lau, was induced to enter the agreement relying on a representation from Mr Doig, on behalf of Moncrieff, that Moncrieff enjoyed an existing right to take water from at least the three existing wells; a misrepresentation entitling Ms Sim under s 6(1)(a) of the Contractual Remedies Act to the return of her deposit by way of damages.

[33]     On the evidence the question is not whether Mr Doig held out to Mr Lau expressly on 17 – 18 March 2003 that Moncrieff then enjoyed such a right. Mr Lau accepts that Mr Doig did not. But in holding out that the three wells were then

‘established’ and could in time supply water to a minimum level, Ms Sim says, Mr

Doig necessarily implied that.

[34]     The question resulting is not, or not only, whether Ms Sim was induced to enter the agreement because that is what Mr Lau understood Mr Doig did imply. It is whether, to induce Ms Sim to enter the contract, that is what Mr Doig intended to imply. Or, if Mr Doig did not have that intent, whether he deliberately used words transparently carrying that implication. ‘At general law’ Hardie Boys J said in Savill v NZI Finance Ltd [1990] 3 NZLR 135, 145, ‘inducement involves purpose as well as result’. And he went on to say, speaking of s 6:

… it remains the law that it is not enough for a party to say that a representation caused him to act in a particular way. He must also show either that the representor intended him to do so, or that he ‘wilfully used language calculated, or of a nature to induce a normal person in the circumstances of the case to act as the representee did’.

[35]     Such an intent, or such a deliberate choice of words, cannot be ascribed objectively to a representor, so described, who is unaware of the fact as to which he or she is said to have been silent: Ladstone Holdings Ltd v Leonora Holdings Ltd

[2006] 1 NZLR 211, 223, Potter J. That is clear enough. Where, as here, the representor, so described, is an agent as Mr Doig was, what his or her principal knows is equally relevant. There are then in this case two questions.

[36]     The first of those questions is this. In holding out, as he did, on behalf of Moncrieff, that the wells had been ‘established’ and were to supply to a minimum level, was Mr Doig misleading unless he also told Mr Lau that a further resource consent was required? Must he have been implying that no such resource consent was required?

[37]     Then the question becomes this. If Mr Doig was misleading was that apparent to him or to Moncrieff? Was he deliberately misleading to induce Ms Sim to enter the contract? Or if not that, must he have understood that, if he spoke as he chose to speak, anyone in Ms Lau’s position would have understood him to say that there was an immediate right to take water?

[38]     These issues, which can also be looked at from the perspective whether Mr Doig or Moncrieff were under any duty to disclose the need for a further resource consent, cannot be answered abstractly. Everything depends on how the agreement was negotiated and what can be taken from the way in which it came to an end as a number of instances illustrate.

[39]     Where the fact unstated is peculiarly within the knowledge of the vendor, as for instance that turnover was inflated by a short term demand, that can make what is actually said a misrepresentation: Gloken Holdings Ltd v The CDE Company Ltd & Spark (HC Hamilton CP 28/95 24 June 1997, Hammond J). Or where a statement, taken literally has to be misleading unless corrected, as for instance that a 24 unit motel complex could function in law, when there was planning permission only as to half the units, that too can be a misrepresentation: Thompson v Vincent [2001] 3

NZLR 355, CA. But where what is omitted is any reference to the general law - how the ordinary machinery of the law applies - that can be different. What is said positively and without the qualification of the law can still be deemed accurate: Rhone-Poulenc Agro Chemi SA v UIM Chemical Services Pty Ltd (1986) 12 FCR

477.

[40]     Ms Sim’s claim founded in unilateral mistake under s 6(1) of the Contractual Mistakes Act is intimately related. In entering the agreement, she contends, she was influenced by a mistake material to her, in reality Mr Lau, and known to Moncrieff, the result of which was she got very much less than she paid for. She does not now claim any mistake as to the meaning of cl 20. That is excluded by s 6(2). She founds her mistake on what was represented to Mr Lau by Mr Doig.

Opposed versions

[41]     On 17 – 18 March, Mr Lau’s evidence is, he questioned Mr Doig closely about the wells on the property. Mr Doig, according to Mr Lau, said that Moncrieff had secured resource consent to drill five wells spread across the property for the purpose of irrigation, that three were complete, that the static water level in each was

20 metres, and that they were of broadly equal capacity and capable of supplying

800 gallons per minute. According to Mr Lau, Mr Doig went further. He at least implied that water could be taken from them immediately.

[42]     Mr Doig’s evidence is quite different. All that he then knew, he says, was that Moncrieff had spent $260,000 on well development and wanted to recoup the cost. He did not, he says, know what Moncrieff’s drilling program was. He denies saying that the wells were spaced equally or that they contributed equally. He did not know how they were spaced. He did know that they were still being test pumped. He did not say that water could be taken from them immediately. That was completely premature. That called for a further consent.

[43]     Mr Tremewan’s evidence is consistent. He drafted cl 20, he says, to justify recouping Moncrieff’s expenditure on well development. His intent was to assure Ms Sim that the wells did have a minimum productive capacity, 800 gallons per minute, but because drilling and test pumping were incomplete he set the  date  for  that assurance at 1 November 2003, some seven or more months later.

Agreement inconclusive

[44]     Ms Sim’s claim has this substance. The sum she ultimately agreed to pay,

$2.9M plus GST, stands well above her first offer the day before, $2.48M inclusive of GST, and though three factors played their part, the market value of the property and Ms Sim’s wish for a delayed settlement date but earlier possession, one increment, $260,000 at least, is attributable, if only as a cost recouped, to the ability to draw water from the three wells.

[45]     At the same time cl 20 sets out what Moncrieff undertook as to the wells and, as the Court of Appeal held, that was confined to their essential features and their productive capacity. Clause 20 gave no right to take water. And so one comes full circle. The agreement is not definitive either way. One must look to the context beginning with the negotiation and when one does, I find, everything points to the agreement constituting the complete bargain.

Six contextual factors

[46]     First, this purchase was one of three that Mr Lau made on behalf of Chinese investors at about this time. Farm properties were also purchased at Spray Point, Marlborough, and Mt Whitnow, Hawarden, and in all three cases the prime feature was a deferred settlement date. The two other properties sold before settlement, I understand, and Mr Lau accepted that to have been the intent in this case as well. His principals had no interest in farming the property. They were looking for a capital gain.

[47]     Secondly, the margin between Mr Lau’s opening bid, $2.48M inclusive of GST, and Moncrieff’s counter offer as it related principally to the investment in drilling, $2.8M plus GST, is not an accurate gauge of the significance of this issue in the negotiation. Before Mr Lau made any offer Mr Doig told him that he thought Moncrieff would only be interested if the bid were at least $2.5M plus GST. The value of the property, independent of Moncrieff’s drilling investment, was just as significant. The truer measure is the cost that Moncrieff was seeking to recoup,

$260,000.

[48]     Thirdly, I find, it was Mr Lau that took the initiative and was more anxious to purchase than Moncrieff was to sell. In March 2003 the property was not on the market. It had been passed in at auction in June 2002. Moncrieff was transforming it from a dry stock to a dairy unit by increasing the level of irrigation. It had obtained resource consent to drill exploratory wells in November 2002 and was part-way through that program. I do not accept, then, Mr Lau’s evidence that he saw the property on the internet in March 2003 or any date remotely close. I accept Mr Doig’s evidence that Mr Lau had heard about it through an agent, who had acted on one of the other two property purchases, to whom Bayleys paid a finder’s fee.

[49]     Fourthly, I find, the negotiation occurred at a high level of abstraction and did not descend to whether there was an immediate right in law to take water from the wells. The negotiation, extraordinarily, took less than 24 hours and without either Mr Lau or Mr Doig having, at that time, any first-hand knowledge of the property. Mr Doig, I accept, had not been near the property since the auction and knew nothing of the drilling program. He acted on Mr Tremewan’s instructions.

[50]     Fifthly, I find, the drilling program was too incomplete to give any basis for the assurances Mr Lau claims Mr Doig gave him. Only two of the three wells had been drilled. Pump testing was necessarily incomplete. The capacities of wells one and two were markedly unequal. Whether the right to take water at two other points would ever be exercised was over the horizon. Clause 20, drafted by Mr Tremewan, confined to the three existing wells, says all that could then sensibly be said. The assurance it gives as to productive capacity was pitched well into the future.

[51]     Finally, I find, the question whether there was any right to take water did not surface until shortly before the settlement date, when Mr Lau was attempting to market the property.  The point was raised by a potential purchaser. Until then the only thing standing in the way of settlement had been the concern Chinese investors had about fluctuations in the exchange rate.

[52]     In  April  2004,  because  Chinese  investors  were  so  concerned  about  the exchange rate, Ms Sim’s solicitors asked whether Moncrieff would accept less on settlement  and  a mortgage back.  They asked  later  whether  settlement  might  be

deferred.  Moncrieff  insisted  on  settlement  in  full  on  due  date  and  the  issue evaporated. On 29 July 2004 Ms Sim’s solicitors supplied Moncrieff’s solicitors with a memorandum of transfer and notices of sale and invited them to supply a settlement statement as at 22 September 2004. They anticipated being able to settle by bank cheque. On 16 August 2004 Moncrieff’s solicitors completed a settlement statement calling on Ms Sim to pay $2,958,825.

[53]     On 23 August 2004, however, Ms Sim’s solicitors wrote to Christchurch City Council explaining that she had an unconditional right to purchase the property and was also in the process of accepting tenders for its sale. Then after setting out the gist of cl 20 they said this:

Our client’s prospective purchasers have inquired, in light of current and proposed new restrictive development rules being imposed by Environment Canterbury, as to whether the establishment of the above would have necessarily required a resource consent.

[54]     Everything that then happened springs from this. Mr Lau, I find, had been so intent in March 2003 on securing the purchase within an impossibly short period of time that he dispensed with every usual precaution. His understanding of what he was purchasing for his Chinese investors remained highly abstract.  He  was  not interested in the detail. He only ever turned his mind to whether there was a right to take water from the wells when he tried on behalf of his investors to turn the investment to account. Then a potential purchaser asked the question that he should have asked. By then it was far too late.

[55]     Moncrieff is not to be held accountable for Mr Lau’s want of care. Moncrieff was never in breach of the agreement. It made no representation beyond what was said in the agreement. The agreement was comprehensive. Moncrieff is entitled to the benefit of it. But to be complete, I need to refer finally to Moncrieff’s decision to cancel under cl 9.4(1), relying on its two settlement notices given under cl 9.1(1).

Cancellation valid

[56]     Ms Sim contends that Moncrieff cancelled invalidly, relying on its settlement notices, because they were themselves invalid. When Moncrieff issued those notices,

she says, and when it cancelled, it was not as cl 9.1(2) requires ‘ready able and willing to settle’ in the very terms of the contract and that is fatal: Stewart v Davis (No 2) (1996) 3 NZ ConvC 192, 285 at 192, 288, CA. That contention cannot, however, I consider, begin to be sustained.

[57]     As the correspondence between Moncrieff’s and Ms Sim’s solicitors between late August 2004, when the issue as to the right to take water arose, and early October 2004 when Moncrieff issued the first of its settlement notices, the sole issue was whether cl 20 secured to Ms Sim a right to take water from the wells and thus whether Moncrieff was in breach. Moncrieff’s response, that cl 20 guaranteed only the characteristics of the wells and their productive capacity, was sustained by the Court of Appeal. Moncrieff could then only have been disentitled from cancelling if it had made material misrepresentations or Ms Sim had entered the agreement under a unilateral mistake of which it was aware. I have found no basis for either.

[58]     Moncrieff was, I find, at all material times ready, able and willing to settle in compliance with the contract and its decision to cancel was valid.

Conclusion

[59]   Ms Sim’s counterclaim for the return of her deposit will be dismissed. Moncrieff’s claim for damages must now be set down for hearing and in the first instance is to go to a  case  conference  before  an  Associate  Judge.  Moncrieff  is entitled in this phase of the case to an award of costs, as I should have thought at scale 2B, and disbursements as fixed by the Registrar.

[60]     If costs cannot be agreed Moncrieff is to file its memorandum within ten working days of the date of the issue of this decision and Ms Sim is to file her

memorandum in reply within the succeeding ten working days.

P.J. Keane  J