Peacocke South Limited v Shum
[2025] NZHC 341
•7 March 2025
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2024-419-71
[2025] NZHC 341
BETWEEN PEACOCKE SOUTH LIMITED
Plaintiff
AND
ROBERT JOSEPH SHUM, JANICE WRIGHT-ST CLAIR and GEORGINA LEIGH YEE
Defendants
Hearing: 9 October 2024 with further submissions filed on 24 and 31
October 2024
Counsel:
MJ Fisher and K Blockley for the Plaintiff RP Lewis for the Defendants
Judgment:
7 March 2025
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 7 March 2025 at 4 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
PEACOCKE SOUTH LIMITED v SHUM [2025] NZHC 341 [7 March 2025]
Introduction
[1] The plaintiff applies for summary judgment on liability only for breach by the defendants of their obligations as vendor under an agreement for sale and purchase dated 16 April 2021 (Agreement).
[2] The Agreement relates to two blocks of land in Hamilton that were to be settled on separate dates, 24 and 36 months from satisfaction of the due diligence condition. When the Agreement was entered into the land was subject to a grazing lease. Clause
25.2 of the Agreement provided:
The vendor undertakes that they will not make any changes, provide any consents, or make any arrangements or agreement with the tenant or to the lease from the date of this agreement without first obtaining the written approval of the purchaser.
[3] The lease contained two rights of renewal. The tenant was required to provide notice of its wish to exercise the first right of renewal prior to 30 April 2023. It is not in dispute that the tenant did not give notice by the required date.
[4] The plaintiff says that in breach of the undertaking in cl 25.2, despite the tenant not giving the required notice, the defendants agreed with the tenant, without the plaintiff’s approval, to renew the lease and to fix the rental price.
[5] The plaintiff claims, as alleged assignee of the purchaser, that as a result of the defendants’ breaches of the Agreement it has suffered loss and damages. The plaintiff says the damages suffered, at this stage, relate substantially to the increased cost of earthworks operations associated with the plaintiff’s inability to obtain possession of any part of the land prior to 31 July 2026 as a result of renewal of the lease.
[6] In the plaintiff’s submission, the defendants have no reasonably arguable defence to the claimed breaches of clause 25.2 of the Agreement and so the plaintiff seeks summary judgment on liability and directions on the steps to be taken to determine the quantum of the defendants’ liability in damages.
[7] The defendants oppose summary judgment on a wide range of grounds including that the plaintiff has no standing to sue. The challenge to standing is made
on the basis that the original purchaser, Jones Group Limited, first nominated Jones Lands Limited as nominee and that Jones Lands then purported to nominate the plaintiff as nominee but had no such power. The defendants say the nomination of the plaintiff was therefore invalid and of no effect.
[8] Following the filing of the notice of opposition, the plaintiff attempted to address the issue of its standing by seeking leave to amend its statement of claim. It had originally pleaded that Jones Group nominated Jones Lands and that Jones Lands subsequently nominated the plaintiff as nominee of the purchaser under the Agreement. The plaintiff sought to add to that pleading that, alongside the nomination, Jones Group and then Jones Lands had assigned the rights of the purchaser under the Agreement. At the same time, the plaintiff filed a further affidavit in support and sought leave for this to be read.
[9] The defendants opposed the late amendment and further affidavit. After discussion at the hearing, I granted leave to amend the pleading and for the late affidavit to be read. However, I allowed further submissions to be filed to ensure that the defendants were not prejudiced.
[10]In their supplementary submissions, the defendants submit:
(a)the Agreement on its proper construction does not give a nominee of the purchaser a right or power to nominate another person to be purchaser;
(b)that although Jones Lands is described as “the purchaser” in the Second Deed of Nomination, the defendants only accept that this is a result of being nominated as purchaser and not that Jones Lands can be described as “the purchaser” in terms of the Agreement, its standing as purchaser solely deriving from being nominated by Jones Group; and
(c)that a nominee of a purchaser does not have a right to assign rights under the Agreement.
[11] The defendants submit that “on the above analysis it matters not whether a legitimately exercised nomination also amounted to an assignment.”
[12] The defendants therefore say that they have an arguable defence that the plaintiff has no right to enforce the Agreement.
[13] The plaintiff, in reply, continues to submit that the Deeds of Nomination in their terms together effect successive assignments of the Agreement. So, while the plaintiff still asserts that the first nominee, Jones Lands, had the power to nominate the plaintiff as purchaser, the plaintiff submits it is not necessary for the plaintiff to satisfy the Court that the documents have that effect. The plaintiff relies instead on the proposition that the plaintiff is entitled to enforce the Agreement as assignee of Jones Lands or as assignee of the right of Jones Lands as nominee to enforce the Agreement.
[14] The defendants do not expressly address possible assignment because of their position as outlined above. However, the defendants’ submission that they do not accept that Jones Lands can be described as “the Purchaser” in terms of the Agreement, as opposed to its rights deriving from the purported nomination, essentially is a denial that the first Deed of Nomination operated as an assignment.
[15] In addition, the defendants raise a number of technical defences to the application including that the plaintiff has not pleaded a cause of action so there is no claim on which to grant summary judgment. The defendants say further that this is not an appropriate case for summary judgment to be entered on liability only including because the losses are purely speculative.
[16] The plaintiff disputes that there are any technical issues with the pleadings but says that if there are they can be readily corrected under r 1.9 of the High Court Rules 2016. Furthermore they say that this is a paradigm case for summary judgment on liability to be entered because the defendants’ liability for breach is clear whereas quantum requires assessment and determination.
[17] As this is a summary judgment application, the plaintiff has to establish that the defendants have no reasonably arguable defence. The issues are therefore:
(a)Is it reasonably arguable that the plaintiff does not have standing to sue for breach?
(i)Did Jones Lands as nominee have the power to nominate the plaintiff as purchaser?
(ii)Can the plaintiff instead establish Jones Group nominated the plaintiff?
(iii)If not, did Jones Group assign its rights to Jones Lands to enable Jones Lands either to assign its rights to or nominate the plaintiff as purchaser?
(b)If the plaintiff has standing, has the plaintiff established that the defendants have no defence to liability?
(c)Should summary judgment on liability only under r 12.3 of the High Court Rules be granted in the circumstances of this case?
(d)What further directions are necessary?
[18] I set out the principles applying to summary judgment on liability before considering the issues above.
Summary judgment principles
[19]Rule 12.2(1) of the High Court Rules 2016 provides:
The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[20] The principles applying to a plaintiff’s application for summary judgment were set out by the Court of Appeal in Krukziener v Hanover Finance Ltd and are well established:1
(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried.2
(b)The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.3
(c)The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. However, it need not accept uncritically evidence that is inherently lacking in credibility — for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable.4
(d)In the end, the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it.5
[21] A defendant is under an obligation to lay a proper foundation for their defence in the affidavits filed in support of the notice of opposition.6
[22] Rule 12.3 of the High Court Rules expressly provides that the Court may give summary judgment on the issue of liability only if the party applying “satisfies the Court that the only issue to be tried is one about the amount claimed.”
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26]–[27].
2 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
3 MacLean v Stewart (1997) 11 PRNZ 66 (CA).
4 Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.
5 Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
6 Middleditch v New Zealand Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.
[23]As Fitzgerald J held in Fullarton v Arowana International Limited:7
For the Court to be satisfied that the only issue to be tried is one about the amount claimed is a reasonably high threshold. There must a “clear dichotomy” between issues affecting liability and damages. The rationale for this is self-evident. Like applications for split trials (between liability and damages), the Court is alive to the risk of inefficiency where there is overlap between the issues and evidence that will need to be considered for the purposes of liability and quantum/damages. …
Is it reasonably arguable that the plaintiff does not have standing to sue for breach?
Background to plaintiff ’s involvement
[24] I begin the consideration of standing to sue by setting out the background to the plaintiff’s involvement.
[25] The Agreement was entered into between the defendants as vendor and “Jones Group Ltd and/or nominee” as purchaser on 16 April 2021. It was on the standard ADLS/REINZ form for sale and purchase of real estate (Tenth Edition 2019 (2)).
[26] On 15 June 2021 Jones Group entered into a “Deed of Nomination” with Jones Lands in which Jones Group is defined as the “Nominator” and Jones Lands as the “Purchaser” (First Deed of Nomination).
[27] On 23 February 2022, Jones Group, Jones Lands and the plaintiff entered into a further “Deed of Nomination” (Second Deed of Nomination). In this Second Deed, Jones Group is referred to as the “Original Purchaser”, Jones Lands as the “Nominator” and Peacocke South as the “Nominee.”
[28] The plaintiff settled the purchase of the first block on 10 July 2023 without prejudice to its right to seek damages from the defendants for their alleged breaches of clause 25.2 of the Agreement. No issue was raised at this stage as to the plaintiff’s entitlement to settle the purchase.
7 Fullarton v Arowana International Limited [2021] NZHC 931 at [80] (footnotes omitted).
[29] Prior to settling the second block, the issue of whether the plaintiff had been validly nominated as the purchaser arose. Correspondence was exchanged between solicitors resulting in the parties settling the purchase of the second block on 23 July 2024:
(a)without prejudice to the plaintiff’s right to seek damages from the defendants for breaches of clause 25.2 of the Agreement; and
(b)without prejudice to the defendants’ stance that the correct transferee was Jones Lands.
Did Jones Lands as nominee have the power to nominate the plaintiff as purchaser?
[30] The question of whether there can be a double nomination or nomination by a nominee does not appear to have been definitively addressed in any previous case law. However, from the brief discussion in the cases, I consider that it is reasonably arguable that a simple nominee does not have the power itself to nominate a party to perform the contract.
[31] Where a party is nominated by the purchaser as nominee under a sale and purchase agreement, the nomination does not substitute the nominee as the purchaser. The parties to the contract remain the vendor and the named purchaser under the agreement. This is expressly provided for in cl 1.5(2) of the Agreement. If the nominee breaches the contract, it is to the purchaser that the vendor must look to for recourse and not the nominee.8
[32] Where a purchaser is described by name followed by the words “and/or nominee” sections 12 and 17 of the Contract and Commercial Law Act 2017 (CCLA) enable the person nominated by the purchaser to enforce the rights of the purchaser as a nominee has been held to be a party on whom a benefit has been conferred under a contract. These sections do not however make the nominee a party to the agreement.9 What the statutory provisions do is allow a nominee to enforce the contract.
8 Cowan v Martin [2014] NZCA 593 at [28].
9 Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (7th ed, Lexis Nexis, Wellington, 2022) [Burrows, Finn and Todd] at [15.23(e)(i)].
[33] So, but for ss 12 and 17 of the CCLA, a nominee would not be entitled to enforce the rights of the purchaser. The contract does not therefore by itself entitle a nominee to enforce it. Rather, it is the statutory provisions together with the nomination which combine to do that.
[34] While ss 12 and 17 of the CCLA can be relied upon by a nominee to enable it to enforce the rights of the purchaser under a contract, it does not necessarily follow that the parties can be taken to have intended the contract to confer on a nominee a right or power to nominate a purchaser. The issue will be whether on a proper construction of the contract the parties can be taken to have intended that the vendor would be obligated to perform the contract at the suit of a purported nominee of the nominee.
[35] In Rattrays Wholesale v Meredyth-Young & A’Court, Tipping J held, when discussing whether a nominee was a party sufficiently designated by description to rely on the equivalent provisions to ss 12 and 17 of the CCLA:10
On that basis the question is whether “X’s nominee” or “the lessor’s nominee” is a person designated by description. In my judgment a person so “described” is a person designated by description for the purposes of s 4. Conceptually, there can be no doubt whether a person claiming to qualify does in fact answer to the description. [The purchaser] has the power to nominate only one person to take the benefit of the contract. That person, once nominated, is identifiable with certainty. The fact that until nominated the person could be anyone at all does not, in my view, alter the fact that the nominee is designated as the person intended to benefit from the contract. Such designation is by description.”
(emphasis added)
[36] In Laidlaw v Parsonage, the Court of Appeal agreed with the reasoning of Tipping J in Rattrays without commenting on whether the purchaser has a power to nominate one person only to take the benefit of the contract.11 The Court did not consider however that anything turned on the fact that the nomination remains revocable up until the time of the contract. That observation is consistent with the view of Mason J in Meehan v Jones, a decision of the High Court of Australia, where Mason J said in obiter:12
10 Rattrays Wholesale v Meredyth-Young & A’Court [1997] 2 NZCR 363 at 382-383.
11 Laidlaw v Parsonage [2010] 1 NZLR 286 (CA) at [39] and [40].
12 Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571.
I incline to the view that the [purchaser] was at liberty to substitute a second nominee for one already appointed provided that that substitution did not prejudice the vendors.
[37] The plaintiff accepts that the scenario that the above cases are contemplating is not the same as the one here as this is not a case where the purchaser has purported to make two different parties its nominee under successive nominations. Rather, it is a case about whether a nominee of the purchaser can itself nominate a purchaser. I agree with counsel for the plaintiff that one cannot necessarily infer that Mason J would have been equally inclined to the view that a nominee can itself nominate a purchaser as that is not the same as the purchaser, who remains a party to the contract, substituting one nominee for another.
[38] As counsel for the plaintiff further acknowledges in its supplementary submissions in reply, there is a difference in the risk profile of a nominee nominating a further nominee and the purchaser under a contract doing so. A nominee who nominates a purchaser is not a party to the contract and therefore has no obligation to the vendor to perform the contract. If it nominates someone incapable of performing the contract, it will not be liable to the vendor to perform the contract in the event of default by their nominee.
[39] The plaintiff goes on to submit however that while there is a slight change in the risk profile, as agreements are ordinarily assignable and therefore also assignable by assignees, a vendor would be in the same position in the case of a nomination by a nominee as it would be in the case of an assignment by an assignee. So, in the absence of a clause restricting the assignability of a contract or otherwise restricting the rights or powers of nomination, there could be no basis to suggest that the parties intended that only the original purchaser would have the right or power to nominate a purchaser under an agreement. The plaintiff says the critical point is that at the time of settlement there will be one party and one party only who is entitled to enforce the agreement and that party can be ascertained at that time with certainty. The plaintiff goes on to say that this party will be the purchaser, an assignee of the purchaser, a nominee of the purchaser, or a party who is able to demonstrate that it then possesses the legal right derived directly or indirectly from the named purchaser to enforce an agreement as assignee and/or nominee.
[40] In my view this last submission underscores why it is at least arguable that a nominee may not have the power to nominate a further nominee because it may not then be possible to ascertain with certainty who is entitled to enforce the contract, a risk that the vendor may not have been prepared to agree to.
[41] Furthermore, counsel for the plaintiff emphasised that the plaintiff does not rely on the nomination by Jones Lands, instead submitting that the rights as purchaser have been assigned. This in my view supports the conclusion that it is reasonably arguable that Jones Lands did not have the power to nominate the plaintiff as purchaser as counsel for the plaintiff appears to accept the position is not clear.
Can the plaintiff instead establish Jones Group nominated the plaintiff?
[42] The plaintiff did not seek to rely on nomination by Jones Group directly but I address it briefly because cl 3.3(d) of the Second Deed of Nomination is a warranty by both the original purchaser, Jones Group, and “the Nominator”, Jones Lands, that:
The Nominator’s solicitor will immediately after execution of this Deed by all parties, notify each Vendor’s solicitor in writing that they have nominated the purchaser under the Agreements and that all rights, interests and benefits of the purchaser pursuant to the Agreements have passed to the Nominee from the Nomination Date.
[43] The plaintiff submits that this reads as a warranty that both Jones Group and Jones Lands have together nominated the plaintiff. Counsel for the plaintiff continues that there is a possible conflict between clause 3.1, by which Jones Lands in its capacity as “Nominator” nominates the plaintiff as “Nominee”, and clause 3.3(d), as to whether the nominator of the plaintiff under the Deed is Jones Lands or both Jones Group and Jones Lands.
[44] Counsel for the plaintiff however submits that the two clauses are reconcilable if clause 3.3(d) is treated as serving its literal function as a warranty by both Jones Group and Jones Lands to the plaintiff that the nomination has been made rather than as an operative clause effecting the nomination of the plaintiff. Counsel says that the fact this construction ought to be preferred is reinforced by there being a separate operative clause purporting to effect the appointment of the nominee, being “plainly and unequivocally” clause 3.1.
[45] So, based on the above interpretation of cl 3.3(d), counsel for the plaintiff submits that as between Jones Group, Jones Lands and the plaintiff:
(a)It is Jones Lands which purported to nominate the plaintiff as purchaser.
(b)It is not a case of Jones Group purporting to exercise a right of nomination on two occasions. Rather, it is a case of Jones Group exercising a right or power to nominate Jones Lands as purchaser and then Jones Lands subsequently purporting to exercise a right or power to nominate the plaintiff as purchaser.
[46] For the purposes of this summary judgment application, I do not therefore consider the plaintiff has established (and nor does the plaintiff appear to submit) that Jones Group nominated the plaintiff.
Did Jones Group assign its rights to Jones Lands to enable Jones Lands either to assign its rights to or nominate the plaintiff as purchaser?
[47] The plaintiff submits that, on its proper construction, the First Deed of Nomination operated as an absolute assignment in writing to Jones Lands of all of the rights and remedies of Jones Group as purchaser under the Agreement, complying with the requirements of s 50(1) of the of the Property Law Act 2007 (PLA).
[48] If a right under a contract (referred to as a legal chose (or thing) in action) is assigned in accordance with the requirements of s 50(1) of the PLA, the assignee may bring an action to enforce the thing in action in their own name without joining the assignor (subject to ss 50(3) and 51). The requirements of s 50(1) are that there be:
(a)an absolute assignment of the thing in action;
(b)in writing; and
(c)signed by the assignor.
[49] “Absolute” is defined in s 48 of the PLA as meaning in relation to an assignment, not conditional or not by way of charge only. An absolute assignment is
therefore one by which the interests of the assignor in the thing in action are for the time being transferred unconditionally to the assignee and placed completely under their control.13 The document creating the assignment need not purport to be an assignment nor use the language of an assignment.14 The only essential element is that there be an intention to assign.15
[50] Notice is no longer required for a statutory assignment, although it is usually necessary to ensure that the assignee’s position is fully protected.16 It is also important in order to impose an obligation upon the vendor to transfer the property to the assignee.17
[51] If the s 50(1) requirements are satisfied, the assignment passes to the assignee all of the rights and remedies of the assignor in relation to the thing in action and the power to give a good discharge to the debtor.
[52] If the requirements of s 50(1) are not met, there is no statutory assignment. The assignment may then be an equitable assignment and an assignee would need to join the assignor to any proceeding in order to enforce its rights. 18
[53] The plaintiff refers to several cases in which a document in the form of a deed of nomination has been interpreted in substance to operate as an assignment of the rights of the purchaser to a nominee.
[54] The cases referred to, Field v Fitton19, Broughton v Wyatt Family Trust Holdings Ltd20, Glenvar Property Holdings Ltd (in liq) v 153 Holdings Ltd21 and Glenvar Vault Capital v Foster Crescent Limited,22 all make it clear that the true nature
13 Burrows, Finn & Todd, above n 9, at [17.1.2].
14 Elders Pastoral Limited v Bank of New Zealand [1991] 1 NZLR 385 at 387, lines 25 to 27.
15 Nicham Branett’s Sons & Co v Dunlop Rubber Company Ltd [1905] AC 454 at 462 and Elders Pastoral Limited v Bank of New Zealand, above n 12.
16 Property Law Act 2007, s 50(3)(b).
17 Section 51 and see R Fenton “Assignments – Abolition of the Requirement of Written Notice in New Zealand” (2010) 126 LQR 183 at 183.
18 Burrows, Finn & Todd, above n 9, at [17.1.2].
19 Field v Fitton [1988] 1 NZLR 482 (CA).
20 Broughton v Wyatt Family Trust Holdings Ltd [2010] 12 NZCPR 368.
21 Glenvar Property Holdings Ltd (in liq) v 153 Holdings Ltd [2016] NZHC 2272.
22 Glenvar Vault Capital v Foster Crescent Limited [2020] NZHC 2432.
of the agreement between the parties and whether it was an assignment must be ascertained by consideration of the arrangement between the parties.
[55] In Field v Fitton, the Court of Appeal referred to its earlier decision in Castle Hill Run Ltd v NZI Finance Ltd where Richardson J held:23
The nomenclature and forms adopted are not decisive. It is a matter of ascertaining the substance of the bargain as disclosed in the contract itself.
[56] The Court of Appeal in Field v Fitton then noted certain factors, including that the nominee paid the original purchaser $15,000 for his rights as purchaser concluding that the true nature of the transaction was what has been called an “on-sale”.
[57] In Broughton v Wyatt Family Trust Holdings Limited, the deed of nomination went further than the First Deed in this case, adding the following words after the nomination as purchaser under the Agreement:24
… to the intent that the Broughtons shall complete the purchase in place of JACK in accordance with the terms of the Agreement as fully and effectively as if the Broughtons were the contracting party on their own behalf.
[58] In Glenvar Property Holdings, Downs J commented that to determine the legal obligations arising under the deed of nomination in that case a contractual interpretation exercise was required, saying it was “far from clear what a reasonable person would take from the deed having regard to its language and background, about which little is known.”25
[59] The plaintiff submits that the particular parts of the First Deed that manifest an intention to assign in this case are:
(a)the nomination of the plaintiff to be the purchaser under cl 3.1; and
(b)the content of the purchaser warranties under cl 3.4.
23 Castle Hill Run Ltd v NZI Finance Ltd [1985] 2 NZLR 104 at [108].
24 Broughton v Wyatt Family Trust Holdings Ltd, above n 20, at [46].
25 Glenvar Property Holdings Ltd (in liq) v 153 Holdings Ltd, above n 21, at [16].
[60] Considering the relevant clauses of the First Deed in more detail, cl 1.1 designates Jones Group as the “Nominator” and cl 1.2, Jones Lands as the “Purchaser”. Under the heading “Matters Agreed”, the First Deed provides:
3.1The Nominator nominates the Purchaser to be the purchaser under the Agreement.
3.2The Purchaser accepts the Nomination.
3.3The Nominator warrants that:
athere have been no changes to the Agreement.
ball purchaser obligations and warranties have been complied with up until the date of this nomination and as at the date of this nomination are able to be complied with in accordance with the Agreement; and
cit will indemnify the Purchaser in respect of any claims or losses the Purchaser may suffer as a result of a breach of the warranties in clauses 3.3(a) and (b).
3.4The Purchaser warrants that:
ait will comply with all purchaser obligations and warranties under the Agreement from the date of this nomination; and
bit will indemnify the Nominator in respect of any claims or losses the Nominator will suffer as a result of a breach of the warranty in cl 3.4(a).
[61] I do not consider the plaintiff can establish an intention to unconditionally assign all the rights of the purchaser under the Agreement on the basis of the wording of the First Deed on its own. I accept cl 1.1 says that Jones Group nominates Jones Lands “to be the purchaser” but the warranties exchanged do not evidence a clear assignment of rights as there is no reference to transfer of rights or further clarification as there was in Broughton. I therefore consider it is reasonably arguable that the First Deed simply nominates Jones Lands, rather than assigns all of Jones Group’s rights.
[62] Counsel for the plaintiff further submits that the email of 15 June 2021 giving notice of the nomination plainly manifests an intention to transfer the rights of the purchaser to Jones Lands which is sufficient to operate itself as an assignment. The plaintiff says that this may be the case even where the email does not refer to an
assignment being made, relying on William Brandt’s Sons and Co v Dunlop Rubber Company Limited.26
[63]The relevant wording of the email is as follows:
We refer to the above named agreements between the trustees of the A & M Shum Family Trust and Jones Group Limited.
We confirm that our client has nominated the agreements to Jones Lands Limited. Their GST number is … .
We act on behalf of Jones Lands Limited and refer to the conditions in the agreements that are due today.
We refer to the $1,500,000 contract and confirm that the purchaser’s due diligence condition in clause 20.1 on the agreement is now satisfied. We note the deposit of $800,000 is now payable. Please provide us with your trust account deposit slip for payment. We note that the further deposit of
$100,000.00 is payable on 15 June 2022.
We note that settlement of the above contract will be as follows: …
[64] In my view, although arguable, the email does not clearly record that all rights as purchaser have been assigned to Jones Lands because the email is equally consistent with nomination only and because the solicitors sending the email act for both Jones Group and Jones Lands.
[65] The plaintiff has not therefore established sufficiently for the purposes of summary judgment that all Jones Group’s rights as purchaser were assigned in the First Deed of Nomination or in the email of 15 June 2021.
[66] For the summary judgment application to succeed, the plaintiff would have to establish that either the Second Deed of Nomination or the separate email giving notice of the second nomination somehow clearly assigned Jones Groups’ rights, rather than Jones Lands’, as Jones Lands may only have rights as nominee (and not assignee).
[67] The Second Deed of Nomination relates to three agreements, including the Agreement in issue in this case and defines Jones Group as the “Original Purchaser,” Jones Lands as the “Nominator” and the plaintiff as the “Nominee”.
26 William Brandt’s Sons and Co v Dunlop Rubber Company Limited [1905] AC 454 (HC).
[68]The background relevantly records:
2.1The Original Purchaser and Nominator are the purchasers pursuant to Deeds of Nomination dated 15 June 2021 and agreements for sale and purchase with the following details:
…
2.2As a term of the agreements and the deeds of nomination, the Nominator has a right of nomination.
2.3Pursuant to that right the Nominator wishes to nominate the Nominee as the purchaser under the Agreement.
[69] The operative clauses of the Second Deed include that Jones Lands “nominates” Peacocke South to be the purchaser and that Peacocke South accepts the “nomination”.
[70] The warranty and indemnity clauses go further than the warranty and indemnity clauses in the First Deed of Nomination, with the plaintiff to pay a Nomination Fee as nominee (although the amount is redacted) and agreeing to reimburse Jones Lands as Nominator for not only the deposit paid since the First Deed of Nomination but also “any other costs incurred in relation to the Agreements, purchase and developments of the properties to date”.
[71] As discussed above in relation to possible nomination, cl 3.3(d) of the Second Deed includes a warranty by both Jones Group and Jones Lands that Jones Lands’ solicitor will notify the vendors’ solicitor in writing both that Jones Group and Jones Lands have nominated the plaintiff and that “all rights, interests and benefits of the purchaser under the Agreements have passed to [the plaintiff] from the Nomination Date.” From this it is arguable that there has been an assignment but the email that is then sent on 11 March 2022 only refers to nomination and not the transfer of all rights.
[72] Again, the plaintiff relies on that email as independently operating as an assignment. However it does not clearly do so. The email simply says:
We advise that our clients have nominated the purchase under the A & M Shum Family Trust Agreement (x 2) and the Robert Shum agreement to “Peacocke South Limited”. We will advise you of their GST number once known. We have also lodged a caveat in under that entity to protect their interest.
[73] The plaintiff submits that the only reasonable inference that can be drawn from the lodging of a caveat by the plaintiff is that as between Jones Group, Jones Lands and the plaintiff, it was the plaintiff that was entitled to the equitable interest in the property and to enforce the rights of the purchaser under the Agreement. Whilst that is again arguable, I do not consider that it is sufficiently established for the purposes of granting summary judgment especially where there is no copy of the caveat in evidence and no other evidence of the interest claimed.
[74] In all the circumstances, although Jones Group is a party to the Second Deed and it appears to be arguable that the rights have been assigned, I do not consider that the plaintiff has sufficiently established that it has standing to sue for the purposes of summary judgment.
[75]In case I have erred in this conclusion, I go on to consider the remaining issues.
Has the plaintiff established that the defendants have no arguable defence to liability?
[76] The plaintiff submits that the defendants have no arguable defence to there being a breach of cl 25.2 of the Agreement.
[77] The defendants do not directly address this question in their submissions because they instead submit the plaintiff has not pleaded a cause of action so summary judgment is not available as well as raising a number of other technical issues with the pleading.
[78] In their evidence, the defendants accept that notice was not given by the tenant of a wish to renew their lease by the date required under the lease but say that the demands made by the plaintiff’s lawyers in respect of this failure, not to communicate with or make enquiries of the tenant in relation to the lease or any renewal until after settlement, went well beyond what was agreed in cl 25.2.
[79] How cl 25.2 is to be interpreted requires the application of the principles of contractual interpretation. The process is objective with the aim being to:27
[ascertain] the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.
[80] The above reflects the fact that "contractual language, like all language, must be interpreted within its overall context, broadly viewed."28 Factual matrix evidence is relevant (and sometimes critical) to contractual interpretation and so it may not be possible for questions of contractual interpretation to be adequately addressed in a summary judgment context.29
[81] The Court must commence any exercise in contractual interpretation having regard to the plain meaning of the words in the context of the document as a whole — this accords with the policy reasoning of providing commercial certainty.30
[82] Relevant evidence of pre‑contractual negotiations will be admissible where they have been communicated between the parties and tend to show a common mutual understanding as to the meaning of the contents of the contract.31
[83]Mr Jones’ evidence for the plaintiff is that:
11.Under clause 25.2 of the Agreement, I understood that the purchaser had the right to withhold its approval to any response by the lessor to a lessee's notice to renew the lease given prior to 30 April 2023 other than responses as follows:
11.1the giving of a Lessor's notice under clause 9.2 of the Deed of Lease fixing the current market rent at the amount specified by the purchaser; and
11.2in the event that the amount specified in the Lessor's notice should not be accepted by the lessee:
27 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (HL) at 912 cited with approval in Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60].
28 Firm PI 1 Ltd v Zurich Australian Insurance Ltd, above n 27, at [61].
29 Ferrer-Aza v NZONE Race Management Ltd [2016] NZHC 885 at [44].
30 Bathurst Resources Ltd v L&M Coal Holdings Ltd [2021] NZSC 85; [2021] 1 NZLR 696 at [46].
31 Kemp v Kemp-Upton [2024] NZHC 398 at [31].
(a)by the lessor following the procedure prescribed by clause 9.5 of the Deed of Lease;
(b)by the lessor conducting any negotiations with the lessee in accordance with the directions of the purchaser.
[84] Mr Shum for the defendants says in response that he cannot comment on what is stated there as it records Mr Jones’ “thought process to which I was not privy”. After referring to the fact the defendants did not agree that the tenant should not be informed of what the plaintiff wished to happen until after settlement had occurred, Mr Shum says:32
15.The defendants found themselves to be in a quandary by owing two diametrically opposed obligations each in conflict with the other:
a.By clause 8.1 of the lease the tenant had the right to renew the lease for three years from 1st August 2023 if the tenant was not in breach of its obligations.
b.But the defendants had agreed in clause 25.2 of the agreement for sale and purchase to obtain the purchaser's written approval to renew the lease. It was in that difficult context that RLL suggested to NB that "common sense dictates that enquiries made of the tenant to confirm renewal" - see email from RLL to NB of 9th June 2023 at 11.24am (paragraph 16 exhibit "G" of Mr Jones' affidavit). The defendants were aware that the tenant had not provided notice of its wish to renew the lease prior to the deadline of 30th April 2023 for doing this. However, they were informed by RLL of court decisions favouring a tenant which failed to give notice of its wish to renew a lease prior to the stipulated deadline, so long as the notice was given before the expiry of the term of the lease, the term of the lease in this case expiring on 31st July 2023. The legal position as advised to the defendants was set out in an email RLL sent to NB on 15th June 2023 at 11.11 am (paragraph 1 7 exhibit "H" of Mr Jones' affidavit").
c.It was in the context just described the defendants entered into the deed of renewal of lease constituting part of exhibit "H", paragraph 17 of Mr Jones' affidavit.
[85] The defendants’ lawyers wrote to the lawyers for the plaintiff on 15 June 2023 referring to the fact that the plaintiff purchased the property subject to the lease and that both the plaintiff and its lawyers were aware of the terms of the lease because the
32 “RLL” being Rodney Lewis Law acting for the defendants and “NB” being Neverman Bennett, acting for Jones Group, Jones Lands and the plaintiff.
lease formed part of the Agreement. The defendants’ lawyers acknowledged cl 25.2 of the Agreement but continued:
…But the obligation on the vendor to consult with your client and obtain your client’s consent, cannot override the contractual provisions of the lease, the most significant at this point is the right of the tenant to exercise the renewal.
[86] In my view, without a proper exercise in contractual interpretation, it is not appropriate to find a breach of cl 25.2. Such an exercise is not possible in the context of this summary judgment application as the Court cannot be satisfied that all relevant evidence is before it.
[87] Because of the conclusions I have reached in relation to standing and breach, I do not consider the further issues with the form of the statement of claim raised by the defendants but expect these to be addressed as necessary in the amended statement of claim directed to be filed below.
Should summary judgment for liability only under r 12.3 of the High Court Rules be granted in the circumstances of this case?
[88] As set out above, for summary judgment to be entered for liability and not quantum, there must be a clear dichotomy between issues affecting liability and damages.33
[89] The plaintiff pleads as a result of the alleged breaches of clause 25.2 that the plaintiff lost realistic opportunities to either settle the purchase of the land without a lease and with vacant possession, or to procure a surrender or variation of the terms of the lease to enable the plaintiff to obtain either vacant possession or possession of parts of the land at a time that would align with its planned staged construction activities on the land. In the alternative the plaintiff pleads it lost the opportunity to fix the annual rental at an increased amount.
[90] The plaintiff pleads that, as a result, it has suffered loss and damages, including the additional costs that the plaintiff will be required to incur as a result of needing to
33 Fullarton v Arowana International Limited, above n 7.
undertake two earthworks operations instead of one. The plaintiff estimates the additional costs of undertaking the two earthworks operations and associated with stockpiling and managing the clean fill material on the plaintiff's adjoining property to be $535,000. Additional damages are also sought.
[91] The plaintiff says that the assessment of damages will be advanced on two alternative bases; either:
(a)on the balance of probabilities that the tenant would not have litigated the renewal or rent review and would instead have either vacated the land or negotiated and entered into a fresh tenancy on terms that would have enabled the plaintiff to take possession of parts of the land at a time that would align with its planned earthworks operations; or
(b)alternatively, the plaintiff lost a very high chance of taking possession of the land or parts of the land at a time that would align with its planned earthworks operations.
[92] The defendants dispute that the plaintiff will suffer the loss asserted, referring in particular to an email from Mr Jones on behalf of the plaintiff during the negotiations leading up to entry into the sale and purchase agreement, which records that:
We were not proposing any earthworks or development on your land, ‘development’ as the land is not able to be developed for over 10 years until it has Wastewater, Water, Stormwater and Urban Loading services and connections.
[93] Mr Jones, in his affidavit in reply, records that Mr Shum appears to have inferred from that email that the interests that he represents had no intention of progressing a subdivisional development on the Shum land for at least 10 years, but that Mr Shum has taken the email out of context.
[94] Mr Jones goes on to explain that the email was simply to make clear that the proposed subdivision into separate titles for the purposes of a staged settlement would not have involved, and could not have involved, any development and construction
works as such subdivisional works were not realistically permissible under the existing district plan for 10 years or more. However, the parties did not proceed on the basis of such a subdivision, as they could achieve their objective of settling the purchase in stages using the existing titles.
[95] This dispute between the parties, and particularly the reference to matters being taken out of context, underscores why it is important that this matter proceeds to a full hearing and is not determined on a summary basis. Examining the question of what exactly was the bargain struck between the parties will inform both the interpretation of cl 25.2 and the damages available.
[96] I do not therefore consider that there is the required dichotomy between liability and loss as referred to by Fitzgerald J in Fullarton v Arowana International Limited.34
What further directions are necessary?
[97] As I am declining summary judgment, I simply make directions to progress the substantive proceeding. The plaintiff has amended paragraph 18 of the statement of claim and there are a number of technical issues raised with the current statement of claim, including that the pages are not consecutively numbered as required by r 5.7(3) and there is a typographical error in the heading of the documents that needs corrected. I therefore direct the plaintiff to file an amended statement of claim before the defendants are required to file their statement of defence.
Costs
[98] The usual position on unsuccessful summary judgment applications is to reserve costs until determination of the substantive proceedings as set out in NZI Bank v Philpott.35
[99] If the parties consider that costs ought to be awarded now, I ask them to confer to see whether agreement can be reached. If agreement is not possible, memoranda of
34 Fullarton v Arowana International Limited, above n 7.
35 NZI Bank v Philpott [1990] 2 NZLR 403 (CA).
no more than 3 pages excluding schedules may be filed, on behalf of the plaintiff by
28 March 2025 and the defendants by 4 April 2025.
Orders and directions
[100]I order and direct:
(a)the plaintiff’s application for summary judgment on liability is declined.
(b)the plaintiff is to file and serve an amended statement of claim by 21 March 2025;
(c)the defendants are to file and serve their statement of defence by 30 April 2025;
(d)the parties are to file a joint memorandum addressing the matters required by r 7.3 by 16 May 2025; and
(e)further directions will then be made on the papers including for discovery and the allocation of a case management conference to allocate a trial date.
Associate Judge Sussock
0