Watene v Wiki
[2017] NZHC 1908
•11 August 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2016-485-768 [2017] NZHC 1908
UNDER Section 72 District Courts Act 1947 BETWEEN
SHARYN HEENI WATENE First Appellant
ZAPA TRUST LIMITED Second Appellant
AND
PAMELA CHARLOTTE WIKI Respondent
Hearing: 27 March 2017 Counsel:
J R Grace for Appellants
D D Vincent for RespondentJudgment:
11 August 2017
JUDGMENT OF CLIFFORD J
Introduction
[1] In early March 2009 Pamela Wiki, the respondent, agreed to purchase an apartment from Zapa Trust Ltd, the second appellant, for $535,000. On 24 March she paid a deposit of $35,000 to Sharyn Watene, the first appellant, as stakeholder for Zapa Trust.1 That purchase was never completed and in August 2016, in the District Court at Wellington, Judge Harrop found that Ms Watene and Zapa Trust were liable to return that deposit to Ms Wiki.2
[2] Ms Watene and Zapa Trust now appeal that decision. They do so saying the
Judge wrongly applied the relevant legal principles — particularly those relating to the cancellation of conditional contracts — in reaching his decision.
1 Ms Watene is the sole shareholder and director of Zapa Trust.
2 Wiki v Watene [2016] NZDC 15322.
WATENE v WIKI [2017] NZHC 1908 [11 August 2017]
[3] As to the facts, Judge Harrop recorded in his decision that, whilst there were a number of factual disputes before him, he did not need to resolve those to determine the case, and that he understood counsel to agree.3 That was as confirmed to me by counsel. Moreover, there are no relevant factual disputes in terms of the issues on appeal.
Facts
[4] In these circumstances, the facts can be stated briefly.
[5] Ms Wiki and Ms Watene were friends. In February 2009 Ms Wiki and her daughter moved into apartment 6A in a block of apartments owned by Zapa Trust at
8 Lipman Street, Wellington. Ms Watene was in the process of having those apartments renovated. Shortly thereafter Ms Wiki and Raewyn Perfect, a mutual friend, agreed to purchase apartment 6B in that block (the Apartment).
[6] A written contract was signed, but subsequently lost. It is agreed, however, that the contract provided for a purchase price of $535,000, that a deposit of $35,000 was subsequently paid and that the purchasers’ obligations were subject to finance. Finance was to be confirmed within seven working days of the date of the agreement and, reflecting the work being done on the Apartment, settlement was to take place five working days after title to the Apartment was issued and notice to that effect had been given.
[7] Ms Wiki and Ms Perfect were unable to confirm finance within the specified time. A second agreement was signed on 5 May 2009. That agreement was not lost. The parties used the Eighth Edition of the REINZ/ADLS standard form agreement for sale and purchase of real estate. The essential terms of that agreement were the same as the first save that, reflecting the payment of the deposit, the purchase price was $500,000. Ms Wiki and Ms Perfect were again unable to confirm finance.
Some time passed.
3 At [6].
[8] On 1 November 2009 a further agreement (the November agreement) was signed, again on the REINZ/ADLS standard form, on identical terms as the second agreement, save that no date was specified by which the finance condition was to be satisfied. Before entering into the November agreement, Ms Wiki and Ms Perfect had obtained pre-approved mortgage finance. It is unclear whether that pre-approval was given in writing. Certainly, any such document was not exhibited. The Judge clarified the status of that pre-approval in the following exchange with Mr Lala (the mortgage broker involved):
Q. So I need to just clarify that too. So you did get a pre-approval from
AMP subject to the code of compliance issues being resolved?
A. And title. Q. And title. A. Yes.
Q. Right. So you actually did proceed that here? A. Yes.
Q. So it’s clearly then the only impediment to the loan being granted, was the vendor’s performance, not the purchaser’s?
A. Correct? Q. Right.
[9] In other words, it would appear no finance date was provided because Ms Wiki and Ms Perfect had, by the time the November agreement was signed, done all they could at that point to obtain finance. Confirmation of the availability of finance would only come once title and a code compliance certificate had been provided to and approved by, the financier. Settlement was to take place once title was available and notice given to the purchasers to settle.
[10] Title to the Apartment was, in fact, issued on 11 March 2010. That title included a carpark. Ms Watene said that had not been intended, that she had discussed the problem with Ms Wiki and Ms Wiki had agreed that Ms Watene should sort things out with the Land Transfer Office. Ms Wiki denies she was spoken to at that time by Ms Watene. Ms Wiki also would appear to have given conflicting
evidence as to whether or not she understood that a carpark was attached to the title of the apartment she was buying. In her brief she said:
22.I have now seen the title documents for the second apartment, which shows that title was issued on 11 March 2010, about 4 months before I moved out. Sharyn didn’t tell me title had been issued. If she had, I would have kept my side of the bargain provided of course finance was approved.
23.I have also seen how the title documents on 11 March 2010 included a carpark attached to the title. When we signed the sale and purchase agreement, Sharyn didn’t say the apartment had a carpark. When I asked Sharyn whether there was somewhere I could park my car, she referred me to someone else who she said owned a carpark in the block. I paid them $150 per month to park my car there.
[11] In her evidence in chief, however, she said she had expected a carpark as part of the purchase of the apartment. In cross-examination, she said the confusion had arisen because the apartment she was renting pending the completion of the apartment she was to buy did not have a carpark, and that is what she had been referring to in her brief. I am not able to take these matters any further.
[12] In any event, Ms Wiki continued to reside at apartment 6A until July 2010, when she moved out to live with her boyfriend.
[13] In October 2010 Ms Wiki telephoned Ms Watene. Ms Wiki told Ms Watene she intended to buy another house, in place of the Apartment, and asked for her deposit back. That did not happen. On 8 November 2011 Ms Wiki wrote to Ms Watene. Ms Wiki again asked for the return of the deposit. She said as title to the Apartment had never been provided, settlement could not be completed. She had, she said, performed her contractual obligations. She was entitled to the return of her deposit. Ms Wiki would not appear to have received a reply from Ms Watene.
[14] On 1 June 2012 Ms Wiki’s lawyers wrote to Ms Watene. As relevant, that letter recorded:
Ms Wiki instructs that in March 2009, she agreed to purchase an apartment from you personally for the sum of $535,000. The sale of the property was to proceed later that year after the apartment underwent work for consent purposes.
…
As it transpired, the sale did not proceed. Accordingly, our client is entitled to a refund of the $35,000 advanced to you on 24 March 2009.
[15] Ms Watene’s lawyers replied on 6 July 2012, asserting that Ms Wiki had:
[U]nilaterally cancelled that contract in circumstances in which she was not entitled. As a consequence, [Ms Wiki] forfeits the deposit and is subject to a claim for damages.
[16] Then, on 13 November 2014, Ms Watene, in her capacity as the director of Zapa Trust, wrote to Ms Wiki. She said that since 2010 Ms Wiki had “been repudiating” the November agreement. On that basis, Zapa Trust gave notice of cancellation of that agreement and forfeiture of the deposit, if that had “not happened already”.
[17] The matter was not resolved, and Ms Wiki commenced proceedings in the District Court for the return of the deposit. The facts as pleaded by Ms Wiki largely accorded with the material facts as found by the Judge. In addition, Ms Wiki said:
(a) It was an implied term of the November agreement that Ms Watene and Zapa Trust would use their reasonable endeavours to complete the Apartment and obtain title within a reasonable period.
(b)When Ms Wiki moved out of the Apartment in July 2010, she did so believing the November agreement had been repudiated by Zapa Trust. On that basis, she had subsequently cancelled the November agreement and asked for the return of the deposit to her.
[18] Based on those pleaded facts, Ms Wiki advanced four causes of action, one against Ms Watene personally and three against Zapa Trust. It is only the last of those causes of action, against Zapa Trust for breach of contract by failing to return the deposit, that is now relevant.
[19] Given the issues raised on appeal, it is helpful to set out the pleading of that cause of action in full:
28.The deposit was a deposit for the purchase of the property and governed by the provisions of the November agreement.
29.Under the terms of the November agreement, the [Zapa Trust] (as vendor) was only entitled to pursue forfeiture and retention of a deposit paid under that agreement when:
29.1The vendor has received written notice from the purchaser that any conditions of the contract have been satisfied (pursuant to cl. 8.7(4)); and,
29.2The purchaser has failed to settle the purchase by an agreed settlement date; and,
29.3The vendor has issued a settlement notice to the purchaser pursuant to cl. 9.1(1); and,
29.4 The purchaser has not complied with the settlement notice;
and
29.5The vendor has cancelled the agreement by giving written notice of cancellation to the purchaser (pursuant to cl 9.4(1)(b)).
30.By refusing to return the deposit on 8 November 2011 when the November agreement was cancelled, [Zapa Trust] is in breach of the November agreement because:
30.1[Ms Wiki] did not give notice to [Zapa Trust] that the November agreement's conditions had been either waived or fulfilled (as required by cl. 8.7(4)); and,
30.2 [Zapa Trust] did not issue [Ms Wiki] with a settlement notice
(as required by cl. 9.1(1)); and
30.3[Zapa Trust] did not give notice to [Ms Wiki] that it was cancelling the contract for non-compliance with a settlement notice (as required by cl. 9.4(1)(b)).
31.[Zapa Trust] breached clause 8.7(5) of the November agreement by failing to require the return of the deposit after [Ms Wiki] cancelled the agreement and demanded return of the deposit on 8 November
2011, 1 June 2012, 11 July 2014, and again on 13 August 2014.
32. [Ms Wiki] was entitled to the immediate return of the deposit from
8 November 2011.
[20] That is, Zapa Trust:
(a) Had not issued Ms Wiki a settlement notice, a necessary precondition to its entitlement to forfeit and retain the deposit (paragraphs [29] and [30]).
(b) Had not returned the deposit when obliged to do so (paragraphs [31]
and [32]).
[21] In their substantially identical statements of defence Ms Watene and
Zapa Trust:
(a) Denied the pleaded implied term.
(b)Said Ms Wiki had wrongfully repudiated the November agreement when she telephoned Ms Watene, saying that she no longer intended to purchase the Apartment.
(c) Said the letters from Ms Wiki and her solicitors of
8 November 2011, 1 June 2012, 11 July 2012 and 13 August 2014 were further wrongful repudiations.
(d) Said Zapa Trust had, by its letter of 13 November 2014, accepted
Ms Wiki’s repudiation and cancelled the November agreement. [22] Zapa Trust was therefore entitled to retain the deposit.
The decision under appeal
[23] In the introduction to his judgment, Judge Harrop summarised the parties’
competing positions in the following terms:4
[3] Ms Watene says that [Zapa Trust], a company of which she is the sole director and shareholder, was entitled to keep or forfeit the deposit because Ms Wiki wrongfully repudiated the agreement and unjustifiably asked for it back in October 2010. She submits that if Ms Wiki wanted to bring matters to a head because of delay in provision of title by [Zapa Trust], she had an obligation to give notice of her intention to avoid the agreement. She failed to do so before she avoided or repudiated it, through her conduct and statement of intention to look for another property using the deposit.
[4] Ms Wiki says the finance condition was never fulfilled because [Zapa Trust] did not provide title or a code compliance certificate (CCC) and that she was entitled to avoid the contract under clause 8.7(5), which then required the immediate refund of the deposit.
4 Wiki v Watene, above n 2.
[24] The question for the Judge was, he said, which of those contentions was correct, and accordingly “whether the deposit was justifiably or wrongly retained by [Zapa Trust]”.5
[25] The Judge found Ms Wiki was entitled to the return of the deposit because:
(a) The finance condition was, as the November agreement provided, a condition subsequent.6
(b)The fact that no date was provided by which the finance condition was to be satisfied did not disentitle Ms Wiki from avoiding the November agreement by reference to that condition. Rather, it meant that she was entitled to do so if the finance condition was not fulfilled within a reasonable time.7
(c) When Ms Wiki wrote to Ms Watene on 8 November 2011 a reasonable time had passed for the fulfilment of the finance condition, and accordingly that letter constituted a lawful avoidance of the November agreement.8
[26] In reaching those conclusions, the Judge:
(a) Rejected Ms Watene’s argument that a reasonable time for fulfilment of the finance condition was to be determined by reference to the time for settlement.9
(b)Concluded, based on the Supreme Court’s decision in Steele v Serepisos,10 that Ms Wiki was not required to give Ms Watene/Zapa Trust notice of her intention to avoid the
November agreement before doing so.11
5 At [5].
6 At [35].
7 At [40].
8 At [68]
9 At [44].
10 Steele v Serepisos [2006] NZSC 67, [2007] 1 NZLR 1.
11 Wiki v Watene, above n 2, at [62].
Appeal
[27] For Ms Watene, Mr Grace advanced three basic propositions:
(a) First, it was only in closing argument for Ms Wiki that the assertion was made that she had cancelled the November agreement because the finance condition had not been satisfied. The issue was therefore not addressed in cross-examination and there was proper basis for the Judge to reach his findings on the matter.
(b)Second, and as he had argued at trial, the Judge had been wrong to conclude that the finance condition had not been satisfied within a reasonable time: a reasonable time for the satisfaction of the finance condition would have been coextensive with a reasonable time for the completion of the work and obtaining title and the code compliance certificate. That approach was consistent with good
authority.12 Mr Grace placed particular reliance on the following
extract from Professor McMorland’s Sale of Land:13
5.11 In absence of both condition and settlement dates, time for fulfilment not of essence. Should the contract lack both a fixed settlement date and a condition date, the condition must be satisfied within the reasonable time implied for the settlement of the contract.
(Footnote omitted.)
That time had not passed by 8 November 2011, when Ms Wiki gave written notice of termination of contract.
(c) Third, in any event, applying the decision of the Supreme Court in Steele v Serepisos did – contrary to the Judge’s finding — require Ms Wiki to give written notice of her intention to cancel. Such a
notice was to give Ms Watene and Zapa Trust a chance to provide
12 Aberfoyle Plantations Ltd v Cheng [1960] AC 115 (PC) at 124; Hunt v Wilson [1978]
2 NZLR 261 (CA); Stirling Pastoral Co Ltd v Downley Properties Ltd CA313/90, 6 July 1992;
and Rawson v Hobbs (1961) 107 CLR 466 (HCA) at 487.
13 DW McMorland Sale of Land (3rd ed, Centurion Print, Auckland, 2011) at 272.
title and code compliance certification in response. She had not done so.
[28] Ms Wiki’s letter of 8 November 2011 therefore constituted an unlawful repudiation of the November agreement entitling Ms Watene and Zapa Trust to cancel the agreement and retain the deposit.
[29] For Ms Wiki, Mr Vincent supported the Judge’s reasoning.
Analysis and outcome
Was the non-fulfilment of the finance condition properly before the Judge?
[30] When Ms Wiki wrote to Ms Watene on 8 November 2011 she made no reference to the finance condition. In fact, the words she used indicate that she did not have the finance condition in mind. Rather, she referred explicitly to the time that had passed without title having been made available to her. The same can be said for the terms of the letter from Ms Wiki’s solicitors on 1 June 2012.
[31] Put very simply, what Ms Wiki appears to be saying is that things had dragged on long enough. In effect, she wanted her money back so she could ‘move on’. Neither, as seen above, did Ms Wiki refer to the finance condition in her pleadings. So, why did the Judge frame his analysis by reference to the finance condition?
[32] The answer to that question can be found in two documents on the District Court file that, as best as I can recall, were not referred to at the hearing of this appeal and that, definitely, were not included in the case on appeal. Those documents are the opening written submissions that Mr Vincent (for Ms Wiki) filed on 4 August, some five days before the hearing, and the minute the Judge prepared, provided to counsel at the outset of the hearing and then discussed at some length with Mr Grace.
[33] In those written submissions Mr Vincent explicitly linked Ms Wiki’s
entitlement to avoid the November agreement to the finance condition, and to the
fact that finance had not been confirmed. Naturally, the Judge had considered those submissions before the trial started. Mr Grace had not filed written submissions, notwithstanding a pre-trial direction to that effect. The Judge’s minute reflected both those matters.
[34] Further, in his minute the Judge explained the preliminary view he had formed, based on Mr Vincent’s written submissions and the pleadings: notwithstanding the various factual disputes, and even if they were resolved in favour of Ms Watene and Zapa Trust, Ms Wiki was entitled to have her deposit back because, as was her right, she had avoided the contract on 8 November 2011 as no notice of fulfilment had at that point been given in respect of the finance condition.
[35] Mr Grace — for reasons which prefigured his subsequent arguments in closing and in this appeal — endeavoured to persuade the Judge that he was wrong on that point. In particular Mr Grace emphasised that, where — in an agreement for the sale and purchase of land — there is no fixed date for settlement and a condition is included that does not have a fixed date for satisfaction, the general approach is that the date for the satisfaction of the condition will be the date when the (conditional) obligation to settle has arisen.
[36] At the end of the exchange the Judge very properly recorded that it was obvious that Mr Grace did not accept his preliminary view, and that he would therefore put that preliminary view to one side and deal with the various arguments between the parties as the trial proceeded.
[37] That is what, in fact, happened.
[38] In his closing submissions, Mr Grace accepted the November agreement was at an end, but said that Ms Wiki had not been entitled to avoid that agreement because the finance condition had not been satisfied. Rather, her phone call in October 2010 was a repudiation of her legal obligations: she wanted out of the November agreement simply because she had changed her mind, and now wanted to buy another property. Mr Vincent argued that the sole question before the Judge was whether the condition as to finance had not been fulfilled by the “date for
fulfilment”, in this case within a reasonable time. The two years that had passed when the contract was avoided on 8 November 2011 could not be less than a reasonable time. The fact that title had in fact been issued in March 2010 demonstrated what a reasonable time was, and evidenced the likely contemplation of the parties as to that matter when the November agreement was executed.
[39] Therefore, I do not accept Mr Grace’s argument that in some way the Judge was not entitled to reference his decision in the way he did to the finance condition. I now turn to the other grounds on which Ms Watene and Zapa Trust appeal the Judge’s decision, and to my consideration of whether the Judge made the errors of law Ms Watene and Zapa Trust claim he did.
Did Ms Wiki have a right to cancel because the finance condition was not satisfied?
[40] As noted, under the November agreement there was no fixed date for the satisfaction of the finance condition, nor for settlement. As Professor McMorland explains, the general principle is that where a contract lacks both a fixed settlement date and a condition date, the condition must be satisfied within the reasonable time implied for the settlement of the contract.14 On that basis, and as Mr Grace agreed, Ms Wiki could not cancel the November agreement because the finance condition had not been satisfied before the reasonable time provided for settlement had passed. The reason here is plain. Ms Wiki had agreed to purchase the Apartment on terms
which allowed Zapa Trust a reasonable time to obtain title. Ms Wiki would be held to her obligation to purchase until that reasonable time had passed. Assuming Zapa Trust obtained title within that time, and gave notice to settle, Ms Wiki’s obligations would then be subject to her having obtained finance. Prior to that time, she could not unilaterally withdraw from that obligation by reference to the finance condition. To do so would, in effect, turn the November agreement into an option. Did the terms of the November agreement, nevertheless, provide for such an outcome?
[41] Clause 8 deals with conditions. As relevant, it provides:
14 McMorland Sale of Land, above n 13, at 272.
Particular conditions
8.1If particulars of any finance condition(s) are inserted on the front page of this agreement, this agreement is conditional upon the purchaser arrange finance in terms of those particulars on or before the finance date.
Operation of conditions
8.7If this agreement is expressed to be subject either to the above or to any other condition(s), then in relation to each such condition the following shall apply unless otherwise expressly provided:
(1) The condition shall be a condition subsequent.
(2) The party or parties for whose benefit the condition has been included shall do all things which may reasonably be necessary to enable the condition to be fulfilled by the date for fulfilment.
(3) Time for fulfilment of any condition and any extended time for fulfilment to a fixed date shall be of the essence.
(4) The condition shall be deemed to be not fulfilled until notice of fulfilment has been served by one party on the other party.
(5) If the condition is not fulfilled by the date for fulfilment, either party may at any time before the condition is fulfilled or waived avoid this agreement by giving notice to the other. Upon avoidance of this agreement the purchaser shall be entitled to the immediate return of the deposit and any other moneys paid by the purchaser under this agreement and neither party shall have any right of claim against the other arising from this agreement or its termination.
(6) At any time before this agreement is avoided the purchaser may waive any finance condition and either party may waive any other condition which is for the sole benefit of that party. Any waiver shall be by notice.
[42] On their face, cls 8.7(4) and (5) provide for the approach Mr Vincent took in his pleadings, and the Judge took in his reasons. That is:
(a) A reasonable time to fulfil the finance condition had passed.
(b)The finance condition had not been fulfilled because no notice of fulfilment had been given (cl 8.7(4)).
(c) Ms Wiki avoided the November agreement when she wrote to
Ms Watene on 8 November 2011.
(d)Upon that avoidance, Ms Wiki was entitled to the immediate return of the deposit (cl 8.7(5)).
[43] But, as can be seen, that depends on the “reasonable time” for the satisfaction
of the finance condition having passed.
[44] There is, in my view, nothing in the November agreement that displaces the general rule that, in these circumstances, the reasonable time question can only be determined by reference to the reasonable time allowed for Ms Watene/Zapa Trust to obtain title and give notice of that fact.
[45] It is in that factual context that the legal effect of Ms Wiki’s communications
to Ms Watene and Zapa Trust needs to be assessed.
[46] In October 2010, some three months after she had moved out of the apartment, Ms Wiki telephoned Ms Watene, telling her she intended to buy another house and asking for her deposit back. Not being in writing, that communication could not constitute a cancellation under the term of the November agreement. Considered as conduct evidencing repudiation, Ms Watene’s silence is to be taken as affirming that contract.
[47] Ms Wiki’s letter to Ms Watene of 8 November 2011 can only be understood as cancellation in writing. The question therefore becomes whether, by that time, a reasonable time had passed for Ms Watene/Zapa Trust to have obtained title.
[48] I am satisfied that it had.
[49] It is to be remembered that the parties first committed to the sale and purchase of the Apartment in February 2009 with settlement deferred to allow for title to be obtained. Title, in fact, was issued on 11 March 2010. Subject to the difficulty over the carpark, that suggests, as Mr Vincent argued, the type of period the parties may well have anticipated when deferred settlement was agreed to. If the contract had all along not included the carpark, then the error which resulted in a “wrong” title being issued would, almost inevitably, have to be caused by an error by
Ms Watene or someone acting on her behalf. By November 2011 it was over two and a half years since the first agreement had been signed, and two years since the signing of the November agreement.
[50] If a reasonable time had not passed by 8 November 2011, in my view it certainly had passed by 1 June 2012, some three years from when a conditional contract was first entered into, when Ms Wiki’s solicitors wrote asking for the refund of the deposit and, thereby, cancelling the contract.
[51] On that basis, in my view Ms Wiki was entitled on either of
8 November 2011 or, at the latest, 1 June 2012, to cancel the November agreement because title had not been obtained, without there being any allegation of default on the part of Ms Watene and Zapa Trust. Ms Wiki could no longer be held to her conditional obligation to purchase.
[52] I note that, during the hearing of the appeal, references were made by counsel to various evidential matters in the District Court, particularly as to reasons for the delay of obtaining title (said to have been caused by changes to the building code) and as to whether the carpark was or was not a part of the property Ms Wiki had agreed to purchase. Some additional materials were filed after the hearing of the appeal. When I asked for those materials, I was not aware of the basis upon which factual issues had been dealt with in the District Court. In light of the way they were, there was little I could do with that factual material.
Written notice required of intention to cancel
[53] The final question then is whether the Judge was correct to find that Ms Wiki was not required to give pre-notification to Ms Watene and Zapa Trust of her intention to cancel. Principally by reference to the judgment of the Supreme Court in Steele v Serepisos,15 the Judge found that Ms Wiki was not subject to such an obligation.16 He did so reasoning that, as the finance condition was for her benefit,
no such notice was required.
15 Steele v Serepisos, above n 10.
16 Wiki v Watene, above n 2, at [64].
[54] As the five judgments in Steele v Serepisos show, determining the relevance today of the approach Lord Cooke took in the Hunt v Wilson case (an approach which was not adopted by Richardson P and Richmond J) is not without difficulty.17
For my part, I proceed on the basis that the majority in Serepisos, (Elias CJ, Blanchard, Tipping and Anderson JJ) all found that, to the extent it may be argued that notice of an intention to cancel must be given, such a notice is only required where the party to whom the notice is to be given is in default.18 Here, Ms Wiki was not saying that Ms Watene or Zapa Trust were in default of their obligations to use reasonable endeavours to obtain title within a reasonable time. Nor was Ms Wiki giving notice of default. She simply said that the time during which she could be held to her conditional obligation had passed.
[55] In those circumstances, there is not even the point identified by Lord Cooke in Hunt v Wilson, and by McGrath J in Serepisos, for such a notice to be given.19
There being no default, there is no need — by reference to equitable principles — for notice to be given for that default to be cured when, previously, time was not of the essence for its performance.
[56] Encouraged by the very insightful consideration of these issues by Sarah Leslie I observe that, in any event, I am not persuaded by Lord Cooke’s reasoning in Hunt v Wilson.20 The proposition is that a notice is desirable to provide an increased degree of certainty as between the parties with respect to the exercise of a right of cancellation. But I doubt it does that. Where, as here, notice of cancellation is given after the party giving the notice thinks a relevant reasonable time has passed, then the validity of that notice will stand or fall on the Court’s determination of whether that is the case. Requiring an additional notice serves no
purpose. First, it begs the question as to whether that pre-cancellation notice has itself been given after the relevant reasonable time. It also begs the question as to whether or not the further time for fulfilment stipulated in that notice is, itself, a
reasonable time. On the face of it, cl 8.7(5) of the REINZ/ADLS standard form
17 Hunt v Wilson, above n 12.
18 Steele v Serepisos, above n 10, at [12] per Elias CJ, at [16] per Blanchard J, at [62] per Tipping J, and at [141] per Anderson J.
19 At [123]–[128].
20 Sarah Leslie “Much Ado About Nothing: Steele v Serepisos and a Notice Requirement for
Contingent Conditions” (2008) 39(2) VUWLR 319.
contract does not require any “pre-notification”. If an agreement recorded on that standard form is open both as to the date for settlement and for the fulfilment of, say, a finance condition, the “reasonable time” will apply. The operative words of cl 8.7(5), annotated below to reflect how that clause is to be interpreted, are clear:
If the condition is not fulfilled by the date for fulfilment [that is after a reasonable time] either party may at any time [after that time] before the condition is [in fact] fulfilled or waived avoid this agreement by giving notice to the other.
[57] From my point of view and with respect, Lord Cooke’s aspiration in Hunt v
Wilson (to render the law relating to “the everyday subject of vendor and purchaser
… as simple as possible”)21 would be better promoted if his suggestion that such a notice may be required in these circumstances was taken no further.
[58] I therefore dismiss Ms Watene and Zapa Trust’s appeal against Judge Harrop’s decision. I see no reason why costs should not follow the event, calculated on the basis of a half day appeal, band 2.
Solicitors:
J R Grace, Porirua for Appellants
Thomas Dewar Sziranyi Letts Lawyers, Wellington for Respondent
“Clifford J”
21 Hunt v Wilson, above n 12, at 273.
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