SAMPSON PROPERTY DEVELOPMENTS LIMITED AND DMST INTERNATIONALS LIMITED
[2024] NZHC 3652
•4 December 2024
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-483
[2024] NZHC 3652
BETWEEN SAMPSON PROPERTY DEVELOPMENTS LIMITED
Plaintiff
AND
DMST INTERNATIONALS LIMITED
Defendant
Hearing: 7 October 2024 Appearances:
M Wolff for Plaintiff
P Morten for Defendant
Judgment:
4 December 2024
JUDGMENT OF ASSOCIATE JUDGE SKELTON
[Leave to appeal]
[1] In this proceeding, the plaintiff claims breach of contract and seeks an order for specific performance of an agreement for sale and purchase of a property at Wigan Street, Te Aro, Wellington, or alternatively damages. The defendant denies any breach of contract and has also counterclaimed against the plaintiff seeking judgment for the amount of the deposit together with interest.
[2] In my judgment dated 25 June 2024 (the Judgment), I dismissed the defendant’s application for summary judgment in respect of the plaintiff’s claim.1 The defendant now seeks leave to appeal the dismissal of summary judgment under s 56(3) of the Senior Courts Act 2016.
1 Sampson Property Investments Ltd v DMST Internationals Ltd [2024] NZHC 1699 [the Judgment].
SAMPSON PROPERTY DEVELOPMENTS LIMITED v DMST INTERNATIONALS LIMITED [2024] NZHC 3652 [4 December 2024]
[3] A summary of the claim is set out at [1]–[3] of the Judgment and a summary of the background is set out at [4]–[8] of the Judgment.
[4] The defendant’s case for summary judgment is summarised at [16] of the Judgment. The defendant contends that the plaintiff’s claim cannot succeed because the defendant validly cancelled the agreement for sale and purchase on the basis that the plaintiff failed to comply with the obligation to consult in cl 23.8 of the agreement, which the defendant says was essential. The defendant contends that as a result of this breach it was entitled to cancel the agreement under either s 37 of the Contract and Commercial Law Act 2017 or cls 23.12 or 11.4(5) of the Agreement.2
Legal principles for leave to appeal
[5] The principles are well settled. The leading case is the Court of Appeal’s judgment in Greendrake v The District Court of New Zealand, where, citing Finewood Upholstery Ltd v Vaughan,3 Brown and Gilbert JJ articulated the principles as follows:4
(a)a high threshold exists;
(b)the applicant must identify an arguable error of law or fact;
(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d)the circumstances must warrant incurring further delay; and
2 At the summary judgment hearing and the hearing of the application for leave to appeal, the defendant also raised the issue of breach of the warranty in cl 9.3(7) of the agreement. This warranty provides that “[s]ince the date of the agreement, the vendor has not given any consent or waiver which directly or indirectly affects the property”. The defendant contends that the plaintiff breached this warranty because, during the resource consent process, the plaintiff’s consultant Spencer Holmes Ltd (SHL) proposed a change to the draft consent conditions put forward by Wellington City Council (WCC) which was not necessary to enable the new title to issue and resulted in the consent notice on the title for Lot 1. Mr Morten, for the defendant, submitted during the summary judgment hearing that the breach of warranty issue is not advanced as the basis for summary judgment. Mr Morten confirmed this position at the hearing of the application for leave to appeal,but submitted that the alleged breach of warranty is “essential background to clause 23.8”. Further, as submitted by Mr Wolff, for the plaintiff, the issue of whether the consent notice was “necessary” to enable the new title to issue is a disputed factual issue which would require further evidence to be adduced from SHL and WCC.
3 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].
4 Greendrake v The District Court of New Zealand [2020] NZCA 122 at [6]; and Stockman v Health and Disability Commissioner [2022] NZCA 511 at [13].
(e)the ultimate question is whether the interests of justice are served by granting leave.
[6] In Ngai Te Hapu Inc v Bay of Plenty Regional Council, the Court of Appeal observed that:5
[17] … leave to appeal [an interlocutory decision] should only be granted where the significance or implications of an arguable error of fact or law, either for the particular case or for the applicant or as a matter of precedent, warrants the further delay which the appeal process would involve.
[7] These principles invite a brief judgment dealing with any application for leave. As stated in Finewood Upholstery Ltd v Vaughan, the leave process is intended to operate as a filter to ensure that only matters that are properly the subject of appeal proceed.6 The objective is to avoid wasting scarce resources, without compromising the interests of justice.7
[8] The context for assessment of any arguable error in this case is r 12.2(2) of the High Court Rules 2016 (HCR) and the general principles applying to defendant applications for summary judgment.
[9]Rule 12.2(2) provides:
(2)The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff’s statement of claim can succeed.
[10] The general principles and authorities are referred to at [9] to [15] of the Judgment. Essentially, the defendant bears the onus of establishing on the balance of probabilities that the plaintiff’s claim cannot succeed in that “it is quite clearly hopeless”.8
Issues
[11] The defendant contends that I have erred in law or in fact in every section of the Judgment as follows:
5 Ngai Te Hapu Inc v Bay of Plenty Regional Council [2018] NZCA 291 at [17].
6 Finewood Upholstery Ltd v Vaughn, above n 3, at [13].
7 Swanwick v Bostock [2023] NZHC 2863 at [7].
8 Jones v Attorney-General [2003] UKPC 48, [2004] 1 NZLR 433 at [10].
(a)The scope of consultation required under cl 23.8.
(b)Whether the plaintiff complied with the obligation to consult.
(c)Whether the performance of the obligation to consult, in and of itself, is essential to the cancelling party and/or what was required to satisfy cl 23.
[12] I now turn to consider whether the defendant has identified arguable errors in respect of any of these sections of the Judgment.
[13] I will then consider the other relevant principles regarding leave to appeal identified at [5] above.
Scope of consultation required
[14] In the application for leave to appeal, the defendant refers to the following aspects of the judgment in respect of which it contends that I erred in law or fact:
1.paragraph [24]: that if the parties had intended that consultation required provision of the draft resource consent or proposed conditions in cl 23.8 of the sale and purchase agreement that could easily have been stated;
2.paragraph [26]: the only reference to the word “process” is to a process that occurs after the resource consent has been obtained;
3.paragraph [27]: the parties were clearly aware the plaintiff would be applying for resource consent, but did not refer to the resource consent process or providing the defendant with the draft resource consent or proposed conditions; and consultation after the issue of the resource consent could still have allowed the defendant to raise issues or concerns with any conditions;
4.paragraph [30]:
4.1there was no common mutual understanding as to whether consultation was required during the resource consent process;
4.2the parties’ agreement that consultation would include providing the defendant “with the resource consent and draft survey plan” meant that there could not be consultation during the resource consent process;
4.3that evidence will be required from the lawyers involved in negotiations so the court can properly determine whether there was a common mutual understanding with regard to the scope of the consultation obligation;
5.paragraph [31]: the plaintiff has a tenable argument the consultation obligation in cl 23.8 did not encompass consultation during the resource consent process.
[15] The defendant has referred to some of the steps or findings in my reasoning leading to my conclusion at [31] of the Judgment that the plaintiff has a tenable argument that the consultation obligation in cl 23.8 did not encompass consultation during the resource consent process.
[16] Although it is apparent that the defendant disagrees with my reasoning and interpretation of cl 23.8, the defendant has not specifically identified any alleged arguable error of law or fact. For example, whether I have wrongly stated the law with regard to the approach to contractual interpretation or made a mistake in the application of the law, or a mistake as to the facts.
[17] I am not satisfied that the defendant has identified any arguable error of law or fact in relation to this section of the Judgment.
Whether the plaintiff complied with the obligation to consult
[18] This section of the judgment appears to be the focus of the defendant’s application for leave to appeal. Counsel for the defendant identified alleged arguable errors in his written and oral submissions.
[19] The first alleged error is that I gave “some weight” to the evidence of Ari Chait, sole director of the plaintiff, that he “understood” that the plaintiff’s agent (Mark Walker) was relaying information to the defendant during the relevant period, and an email from the plaintiff’s solicitors to the defendant’s solicitors dated 19 April 2023 stating that the plaintiff’s solicitors “understand that our clients have been liaising regarding progress of the unit plan via the agent”.
[20] Mr Morten submits that I made an error in accepting and giving “some weight” to this evidence in the interests of justice under r 7.30 of the High Court Rules 2016
(HCR). He submits that I should not have done so because there were no grounds for the understandings put forward.
[21] However, as recorded at [48] of the Judgment, Mr Chait put forward grounds for his understanding and belief in his evidence, being that the agent, Mr Walker, was having in-person meetings with Mr Zhang (director of the defendant) during the relevant period. This is confirmed by Mr Zhang in his affidavit evidence. Further, Mr Zhang acknowledges in his evidence that at one of these meetings Mr Walker raised the issue of an extension of the sunset clause for the completion of the subdivision process. With regard to the understanding expressed in the email from the plaintiff’s solicitors dated 19 April 2023, it is implicit that this understanding is based on instructions from the plaintiff (Mr Chait).
[22] Mr Morten also submits that I made an error in accepting and giving some weight to this evidence in the context of a summary judgment application.9 However, where it is the respondent in a summary judgment application relying on statements of belief, this is usually for the purpose of establishing a reasonably arguable defence (or in this case responding to the contention that the claim cannot succeed) rather than the truth of the statements made. Therefore, the usual approach to statements of belief in interlocutory applications under r 7.30 of the HCR ought to apply.10 Ultimately, I needed to be satisfied that the plaintiff’s claim “cannot succeed” and is “quite clearly hopeless”. In this context, I considered it was in the interests of justice to give some weight to the statements rather than no weight at all.
[23] Mr Morten also submits that I made an error in finding that the factual issue as to what, if any, consultation occurred in the relevant period cannot be resolved summarily, and that full discovery is required, and the evidence of all relevant witnesses, including Mr Walker, needs to be tested by cross-examination at trial. Mr Morten contends that as the defendant put forward evidence in this regard which
9 Mr Morten referred to Ports of Auckland Ltd v The Ship “Raumanga” (1988) 12 PRNZ 84 (HC) at 86.
10 See Nguyen v MacKenzie [2023] NZHC 2365 at [34].
would satisfy the Court that the plaintiff’s claim cannot succeed, the plaintiff should have responded with credible evidence of its own, but failed to do so.11
[24] However, the first point in this regard is that I was not satisfied on the basis of the defendant’s evidence that the plaintiff’s claim “cannot succeed” and “is quite clearly hopeless”. Mr Zhang deposed that Mr Walker did not relay any information about the cancellation of unit title and subdivision process to him. However, as noted at [39] of the Judgment, Mr Zhang also acknowledged in his evidence that he met with Mr Walker a number of times during the relevant period and that Mr Walker mentioned during one of the meetings that the plaintiff was looking for an extension of the sunset clause under the agreement. Further, as noted at [47] and [50] of the Judgment, the evidence of Mr Zhang and Mr Varuhas as to what Mr Walker told them about the allegation that he orally updated the defendant in the relevant period is not adduced as evidence of the truth of what Mr Walker told them. These matters indicated to me that there is a need for full discovery of documents and testing of the evidence as to the meetings between Mr Walker and Mr Zhang during the relevant period and what was discussed at those meetings. The defendant seems to have shared this view when it applied for an order under r 9.75 of the HCR that Mr Walker appear and be examined on oath, and specifically sought orders that Mr Walker be cross-examined and produce relevant documents.12
[25] Second, even where evidence is put forward which would satisfy the Court that the plaintiff’s claim cannot succeed, the Court of Appeal in Westpac Banking Corp held that the plaintiff will “usually have to respond with credible evidence of its own” and “[e]ven then, it is perhaps unhelpful to describe the effect as one where an onus is transferred”, and “[at] the end of the day, the Court must be satisfied that none of the claims can succeed”.13 In the present case, as discussed above, the plaintiff did respond to the defendant’s evidence with regard to whether Mr Walker updated the
11 Mr Morten relies on the decision of the Court of Appeal in Westpac Banking Corp v MM Kembla New Zealand Ltd [2001] 2 NZLR 298 at [64]. Mr Morten also referred to Johnson and Johnson v Watson CA 294/01, 5 December 2012 at [31], but this passage is dealing with a plaintiff being required to put up its “best pleaded case” in a strike out or summary judgment case. In the present case, the plaintiff has pleaded that its agent, Mr Walker, orally updated the defendant during the relevant period.
12 Sampson Property Investments Ltd v DMST Internationals Ltd [2024] NZHC 555 at [28] and [46].
13 Westpac Banking Corp v MM Kembla New Zealand Ltd, above n 11, at [64].
defendant during the relevant period, and I determined that it was in the interests of justice that the evidence be given some weight in the circumstances.14
[26] Mr Morten also submits that I erred in not drawing an adverse inference from the absence of an affidavit from Mr Walker put forward by the plaintiff. However, as I found at [53] of the Judgment this is not a case where the absence of an affidavit from Mr Walker is entirely unexplained. There is evidence that, after efforts by the defendant’s solicitors to obtain an affidavit from Mr Walker, he advised that he had been given advice (from within his company, Bayleys), not to provide an affidavit. The Court then declined an application by the defendant under r 9.75 for Mr Walker to appear and be examined. While there was no evidence before me that the plaintiff also requested Mr Walker to give an affidavit, I did not consider that it could properly be assumed that Mr Walker’s response to any request by the plaintiff would have been any different, or that it was necessarily within the power of the plaintiff to produce an affidavit from Mr Walker.15 In the circumstances, it did not seem to me that it was appropriate to summarily determine the factual issue of whether consultation occurred in the relevant period on the basis of an adverse inference without hearing and testing all relevant evidence.16
[27] I am not satisfied that the defendant has identified an arguable error of law or fact in relation to this section of the Judgment.
Essentiality of the consultation provision
[28] The defendant also appears to contend that there is arguable error of law or fact in relation to my conclusion that: the plaintiff has a tenable argument that performance by the plaintiff of the consultation obligation, in and of itself, was not essential to the defendant, and/or satisfaction of cl 23 as a condition subsequent was not dependent on compliance with the consultation obligation.
[29] Mr Morten submits that cl 23 as a whole (not just sub-cls within clause 23) was an essential term. However, that submission does not identify the alleged error in my
14 See the Judgment, above n 1, at [36]–[37], [48]–[49].
15 At [53].
16 At [55]–[56].
conclusion that the plaintiff has a tenable argument that performance of the consultation obligation in cl 23.8 was not in itself essential to the defendant. It is clear that clause 23.10 of the original agreement provided cl 23 was an essential term. However, cl 23.8 was subsequently amended as discussed at [62]–[64] of the Judgment to include the defendant’s right of approval of the title and also the consultation provision. As discussed at [65]–[68] of the Judgment, it seems to me that the plaintiff has a tenable argument that any failure to consult would not, in and of itself, give rise to a right to cancel the agreement given the defendant had, notwithstanding the consultation requirement, insisted on including a right of cancellation through the right to approve the title.
[30] The defendant also appears to contend that I made an error in referring to the fact that the notice of cancellation did not seek to cancel the contract for breach of the consultation obligation as an essential term, but on the basis that the defendant did not approve the new title under cl 23.8 because the defendant’s “proposed project on the land is severely impacted by the Consent Notice”.17 The plaintiff submits this was an error because it fails to recognise that this does not preclude cancellation under cl 37 of the CCLA which was the basis for the defendant’s summary judgment application.18 However, I referred to the 23 May 2023 notice at [67] of the Judgment because the notice is arguably subsequent conduct by the defendant reflecting the interpretation of cl 23.8 put forward by the plaintiff. I made it clear at n 28 of the Judgment that the 23 May 2023 notice does not preclude the defendant from now contending that it was entitled to cancel the contract under s 37 of the CCLA.
[31] The defendant also appears to contend that I made an error at [69] of the Judgment in finding that the plaintiff has a tenable argument that cl 23, as a condition subsequent, was satisfied on cancellation of the unit plan and issue of the new title provided that no rights or interests were registered against the new title for Lot 1 which would affect the defendant’s proposed project. The defendant submits that my finding was an error because “the very fact that the plaintiff requested the WCC to impose a condition which led to the issue of an interest against the title was at the heart of what the parties wanted to avoid when they entered into cl 23.8”. However, this does not
17 At [67].
18 Kumar v Station Properties Ltd [2015] NZSC 34, [2016] 1 NZLR 99 at [66].
identify why my finding was an error; rather it seems to put forward the defendant’s interpretation of cl 23.8. My finding recognises that there is a tenable argument that the purpose of the amended cl 23.8 was to give the defendant the right of approval of the new title and the right to cancel the agreement if any interest was registered against the new title which affected the defendant’s proposed project.
Conclusion as to arguable error of law or fact
[32] Overall, for the reasons set out above, I am not persuaded that the defendant has identified any arguable error of law or fact in the Judgment. The defendant’s focus in this regard is on the section of the Judgment dealing with whether the plaintiff complied with the obligation to consult in the period October 2022 to April 2023. Even if there was an arguable error in respect of this section of the Judgment, and it is accepted that the plaintiff did not comply with the obligation to consult, I would still have concluded that the defendant is not entitled to summary judgment because I have found that the plaintiff has a tenable argument that performance of the consultation obligation was not essential to the defendant.
General or public importance
[33] Mr Morten submits that the proposed appeal raises three important questions of law or general principle:
(a)in a summary judgment application, to what extent can a respondent rely on statements of belief?
(b)does a statement of belief outweigh a respondent’s obligation to put their best case forward by leading admissible evidence, where credible evidence has been adduced by the applicant?
(c)what inference should the Court draw from a respondent’s failure to lead credible evidence (untarnished by inadmissible hearsay evidence) in a defendant’s summary judgment application?
[34] These questions all relate to the section of the Judgment dealing with whether the plaintiff complied with the obligation to consult. I have found above that the plaintiff has not identified any arguable error of law or fact in the Judgment. However, even if I am wrong in this regard, I do not consider that the issues raised by the plaintiff raise issues of general or precedential value warranting leave to appeal. It seems to me that the issues raised are issues which ultimately turn on the facts of the particular case and assessment of weight in each particular case.
[35] There does not seem to be any appellate authority on the issue of whether a respondent in a summary judgment application may rely on statements of belief in affidavits under r 7.30 of the HCR.19 However, I do not consider that this warrants leave to appeal being granted in this case. That is because, as noted above at [32], the issue of whether the plaintiff complied with the consultation obligation is not a dispositive issue in terms of the defendant’s application for summary judgment, and because of the delay involved in granting leave to appeal as discussed below.
Importance to defendant
[36] Mr Morten submits that the case is of sufficient importance to the applicant to outweigh any lack of general or precedential value. He submits that the purchase price was $2.2m and the plaintiff is seeking specific performance of the agreement and significant late settlement interest is accruing. He also submits that the defendant paid a $100,000 deposit which has been retained by the plaintiff.
[37] I note that the issue is not simply a question of importance of the matter to the defendant. The question is whether it is of such importance as to outweigh the lack of any general or precedential value.
[38] Overall, I do not consider that the matter is of sufficient importance to the defendant to outweigh the lack of general or precedential value. While the amounts involved in terms of the sale price, the deposit and accruing interest are significant, the outcome of the summary judgment application does not preclude the defendant
19 See Nguyen v MacKenzie, above n 10, at [34]; Ports of Auckland Ltd v The Ship “Raumanga”,
above n 9, at 86.
from defending the plaintiff’s claim and pursuing its counterclaim. The matter should be promptly progressed to trial.
Delay
[39] In my view this is an important factor in this case. The application for leave to appeal has already caused delay, and the proposed appeal will cause further significant delay to the ultimate determination of the matter. Given the amounts involved and the interest accruing, the delay in resolution of this matter is significant for both parties.
[40] It seems to me that it is in the best interests of the parties for the discovery process to be promptly completed and for the matter to be scheduled for trial as soon as possible so that the evidence can be properly tested and a determination made on the competing claims.
Interests of justice
[41] Overall, for the reasons set out above, I do not consider that it is in the interests of justice that leave to appeal is granted.
Result
[42] The defendant’s application for leave to appeal the Judgment under s 56(3) of the Senior Courts Act 2016 is dismissed.
[43] With regard to costs, my preliminary view is that the plaintiff has been successful in opposing the defendant’s application for leave to appeal and is therefore entitled to costs on a 2B basis and reasonable disbursements. The parties should endeavour to agree on costs. However, if agreement cannot be reached then memoranda may be filed (not exceeding three pages – excluding costs schedules) and costs will be determined on the papers.
[44]The matter is to be listed for call in the Associate Judge’s chambers list on
11 February 2025 at 9.00 am. The parties are to file a joint memorandum or separate memoranda by two working days in advance of the call of addressing all outstanding
matters in sch 5 to the High Court Rules and seeking appropriate directions.
Associate Judge Skelton
Solicitors:
JB Morrison, Wellington for Plaintiff
Costa Varuhas & Co, Wellington for Defendant
NOTICE REQUIREMENT
The solicitors on the record for the parties are to promptly provide a copy of this minute to their clients (r 5.43).
7
0