West Harbour Holdings Ltd v Waipareira Investments Ltd

[2012] NZHC 1645

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-5801 [2012] NZHC 1645

BETWEEN  WEST HARBOUR HOLDINGS LIMITED Plaintiff

ANDWAIPAREIRA INVESTMENTS LIMITED First Defendant

ANDMARINA RESORT LIMITED Second Defendant

Hearing:         27 and 28 June 2012

Counsel:         R E Harrison QC for the Plaintiff

P J Dale for the Defendants

Judgment:      11 July 2012

JUDGMENT OF WOODHOUSE J

This judgment was delivered by me on 11 July 2012 at 4:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.

Registrar/Deputy Registrar

……………………………………

Counsel:

Mr R E Harrison QC, Barrister, Auckland
Mr P J Dale, Barrister, Auckland

Instructing Solicitors:

Mr G Atmore (for the plaintiff), Atmore & Co., Solicitors, Auckland

Mr D Morrison (for the defendants), Grove Darlow & Partners, Solicitors, Auckland

WEST HARBOUR HOLDINGS LTD V WAIPAREIRA INVESTMENTS LTD HC AK CIV-2011-404-5801 [11

July 2012]

Table of Contents

Para No. Introduction  [1] Outline of submissions  [4] The facts  [10]

The townhouses loan and the townhouses mortgage  [11]

The heads of agreement  [13] The shareholders’ agreement  [17] The initial capitalisation  [20] The conveyancing settlement  [26] Other events after the joint venture agreement was made  [36] Other matters  [46]

The law

Summary judgment principles  [51] Mandatory interim injunction principles  [57] Specific performance  [62] Summary judgment compared with interim injunction  [76] Affirmative defences  [78]

Conclusion on specific performance or injunction  [81] Ready, willing and able to settle (reciprocity)  [85] Discretionary and other matters  [97]

Appointment of receiver  [109] Injunction relating to joint venture assets  [113] Injunction in respect of Waipareira’s mortgagee powers  [114] Result and further directions  [115]

Introduction

[1]      In May 2007 the first defendant, Waipareira, lent $2 million to the plaintiff, West Harbour.  This was secured by a mortgage over some townhouses owned by West Harbour at Clearwater Cove (the townhouses loan and the townhouses mortgage).  In May 2008 West Harbour and Waipareira entered into a joint venture agreement for a proposed development in another area of Clearwater Cove.  They incorporated the second defendant, Marina Resort, as the joint venture company. One element of the capitalising of Marina Resort involved Waipareira’s releasing the

$2 million debt owed to it by West Harbour.   This asset of $2 million became Waipareira’s initial investment in Marina Resort in return for West Harbour’s giving Marina Resort a credit of $2 million on transfer of 13 units to Marina Resort.

[2]      The townhouses mortgage has not been discharged; that is to say, it remains registered against title to some of the apartments.  Four years after the joint venture agreement was entered into West Harbour has now applied for an order that the townhouses mortgage be discharged.  The order is sought on a summary judgment application  for  an  order  for  specific  performance  or  a  permanent  mandatory injunction and, in the alternative, on an interlocutory application for a mandatory interim injunction.   There are other applications, which I will come to, but the applications for an order discharging the mortgage are the ones of primary concern.

[3]      The central issue on the application for discharge of the mortgage, stating it in broad terms, is: does release of the debt secured by the mortgage mean that the mortgage must  be discharged;  or  does  the joint  venture agreement  between  the parties, made after the townhouses mortgage was granted, contain provisions which mean that West Harbour is not entitled to an order for discharge at this time, or without itself meeting particular obligations?

Outline of submissions

[4]      In agreements and correspondence between the parties acronyms are used. The pleadings and submissions have also used acronyms and some defined terms.  In

respect of acronyms, I prefer to use shortened versions of the names of parties.  In quotations in this judgment from documents (including submissions and pleadings), where the document has an acronym I have substituted the abbreviated name without indicating the change.

[5]      The primary factual foundation for the plaintiff ’s argument for discharge of the townhouses mortgage, putting this in broad terms, has two main parts.  The first is that the capitalisation of Marina Resort has been effected, so that West Harbour’s debt to Waipareira secured by the townhouses mortgage has been paid.  The second is  that the joint venture is  underway because  of this  capitalisation  and  because Marina Resort has been receiving the rent from the 13 units although title to them has not been transferred to Marina Resort.

[6]      An essential part of the argument of Dr Harrison QC for West Harbour was put as follows in his written submissions:

23.West Harbour’s application does not seek specific performance of the Joint Venture Agreement in its  entirety.   All that it seeks  is specific performance (or a mandatory interim injunction) to compel Waipareira to perfect its agreed initial capital contribution to the JV by discharging the Townhouses Mortgage.  However, much of what Waipareira raises by way of its affidavits in opposition is directed at opposition to specific performance of the Joint Venture Agreement, overall. …

[7]      Dr Harrison advanced three principal arguments in support of the application for  discharge  of  the  mortgage,  and  with  these  arguments  also  constituting  a substantial part of the response to the arguments for Waipareira.  The arguments, as would be expected, were developed carefully and fully.  However, the essence may be conveyed by setting out Dr Harrison’s own summary:

25.1The   concluded   contractual   arrangements   comprising  the   Joint Venture Agreement were sufficiently open-ended to allow West Harbour to embark on pursuit of the JV prior to any conveyancing settlement (including the agreed refinancing of the apartments mortgages and a transfer of title to Marina Resort).  As argued in para 13 above, this step if embarked on necessarily contemplated and indeed in terms of the Joint Venture Agreement required – both in practice and in equity – a simultaneous crediting of the parties’ respective initial contributions to the JV by way of its initial working capital, from the outset.  Both West Harbour and Waipareira together acted on that very basis, by treating the 13 West Harbour apartments

as assets of the JV, owned (in equity) by Marina Resort, prior to formal settlement and refinancing.  Mutuality of contractual and/or equitable obligation (as between fiduciaries) means that Waipareira cannot take the benefit of West Harbour’s agreed contractual contribution (by treating the 13 West Harbour apartments as a JV asset), while at the same time refusing point blank to allow its agreed initial capital contribution to be perfected by providing a discharge of the Townhouses Mortgage.

25.2Alternatively,  West  Harbour  and  Waipareira  having  agreed  to postpone formal settlement and refinancing (including the discharge of the Townhouses Mortgage) because of a belief that a transfer of the West Harbour apartments to Marina Resort would jeopardise the WHT   claim   by   the   Body   Corporate,   ultimately   agreed   that settlement would proceed in any event on 30 June 2011. [Footnote omitted.]   Rather than proceeding with the agreed settlement and refinancing, Waipareira wrongfully repudiate the Joint Venture Agreement and ever since has been in breach of contract as regards the agreed settlement/refinancing transaction.   Being in continuing breach of contract, Waipareira cannot rely on its own wrongdoing as a justification for its continuing refusal and consequent failure to perfect its initial capital contribution by discharging the Townhouses Mortgage, which it continues wrongly to assert should serve as security (for what is unclear) pending an overall settlement of the apartments transactions, which it contends is no longer feasible in any event.

25.3Alternatively, the Townhouses Mortgage in fact and in law currently secures no debt or obligation of West Harbour owed to Waipareira in terms of the contractual and other documentation recording and creating the (former) security interest of Waipareira.

[8]      A primary submission of Mr Dale for Waipareira was that West Harbour is not  entitled  to  a  discharge  of  the  mortgage  unless,  at  the  same  time,  certain obligations of West Harbour and Marina Resort are met.  These obligations include in particular, but are not limited to, refinancing of existing mortgages granted by West Harbour over the 13 units followed by transfer of title of the 13 units to Marina Resort.

[9]      A further substantial part of Waipareira’s submissions was directed to a range of matters bearing on the Court’s discretion to withhold from West Harbour the relief that it seeks.  Waipareira also advances three affirmative defences.  These are noted later.

The facts

[10]     In the usual way, all of the evidence is contained in affidavits without cross- examination of the deponents.   As a result, some conclusions expressed in this judgment on disputed facts are provisional.  I have not indicated that a conclusion is provisional on every occasion that it is.

The townhouses loan and the townhouses mortgage

[11]     The townhouses loan from Waipareira to West Harbour was advanced on or about 18 May 2007.  It was to be repaid on 18 May 2008.  The loan, inclusive of interest for 12 months and other charges, was $2,492,782 (excluding cents).  Some payments were made before 18 May 2008.  The balance owing at 18 May 2008 was

$2,038,838.     The  loan  agreement  records  that  the  security  is  to  be  an  “all obligations” first mortgage and the townhouses mortgage instrument under s 101 of the Land Transfer Act 1952 is stated to be an “all obligations” mortgage.

[12]     Some time before the repayment date Mr Brent Ivil, the sole director of West Harbour, put a proposal to Mr John Tamihere.  Mr Tamihere is chief executive of Te Whanau O Waipareira Trust (the Waipareira Trust).  Waipareira is an investment arm of the Waipareira Trust.  The proposal was that West Harbour and Waipareira enter into the joint venture mentioned in the introduction to this judgment.   Written agreements for the purposes of the joint venture were signed on or about 18 May

2008.   There is a document described as “Heads of Agreement Relating to the Proposed Waipareira Hotel Development, West Harbour” and a shareholders’ agreement.1

The heads of agreement

[13]     The heads of agreement is between six parties: West Harbour, Waipareira, the joint  venture  company  Marina  Resort,  Mr  Ivil,  and  two  other  parties  closely

associated  with  Mr  Ivil  and  West  Harbour.    It  recites  that  West  Harbour  and

1 The shareholders’ agreement is a schedule to the heads of agreement, but it was separately signed by the parties and will be discussed under a separate heading.

Waipareira had “formed” Marina Resort “with a view to … acquiring the entire Clearwater Cove development”.   The “Clearwater Cove development” is separate from the townhouses at Clearwater Cove over which the townhouses mortgage was granted.

[14]     The  development  proposed  in  the  joint  venture  relates  to  16  existing residential units.   The future development plan, for which the joint venture was formed, requires Marina Resort to acquire title to the 16 units.  The proposed development is to proceed in two stages.  Stage one is to add a third floor to the 16 unit block by building a further 19 units to be utilised as hotel suites.  Stage two is the construction and operation (or licensing the operation of) a 15 to 20 storey hotel and apartment block.   Resource consent was required for the hotel and apartment block but, apparently, not for the 19 units on the third floor.  The recitals record that stage one – the additional 19 units – is to proceed “regardless of whether resource consent is granted for the larger development”.

[15]     Of the 16 units to be acquired by Marina Resort, seven are owned by West Harbour, six by Mr Ivil and the other parties to the agreement closely associated with Mr Ivil and West Harbour, and three by third parties.   The last named are third parties in two senses; they were not parties to the heads of agreement, and there appears to be no evidence of any relevant association with West Harbour or Mr Ivil.

[16]     Operative provisions of the agreement include the following:

(a)      West Harbour is to enter into agreements to purchase the units owned by Mr Ivil and the associated parties.  This is one of three provisions under a heading “Preliminary Matters”.   The agreement states that those agreements are to be entered into “after this agreement is executed”.    Immediately upon West  Harbour’s  entering into  those agreements, West Harbour and Marina Resort are to enter into agreements for sale and  purchase of the 13 units owned by West Harbour  and  the  associated  parties.    The  terms  of  the  sale  and purchase agreements are specified in schedule D to the agreement.

Schedule D states that the 8th  edition of the REINZ/ADLS standard

form agreement for sale and purchase for real estate is to be used, subject to inclusion of particular terms specified in schedule D.  The purchase price of the 13 units is $7,810,000 to be paid by Marina Resort.  Marina Resort is to pay West Harbour a deposit of $2 million.

(b)Clause 5 provides that Marina Resort “shall attempt to purchase the remaining three” units.   It further provides that, if the three units cannot be purchased for a total of $1.2 million, West Harbour will pay the difference between $1.2 million and the actual cost “whatever that difference may be”.    It is further provided that “under no circumstances shall Waipareira’s contribution to the purchase price of the last three units exceed $600,000”.   This means Waipareira’s contribution through Marina Resort.  There is no provision as to what is to happen if one or more of the owners refuses to sell, or if for some other reason those three units cannot be acquired by Marina Resort – for example, if West Harbour or Waipareira is unable for some reason to meet its share of the cost.

(c)      A further  provision  under  the  “Preliminary Matters”  heading  is  a requirement that West Harbour “attend  to the agreed painting and maintenance works” up to a maximum cost of $50,000.  This has not been done.

(d)A specific date is not stated for the making of the agreements for sale and purchase between West Harbour and Mr Ivil and the associated parties, noted at sub-paragraph (a) above.  This is modified, but not made any more precise, by a provision in schedule D.  The settlement date for purchase by Marina Resort of the 13 units is expressed as follows:

The settlement date is to be set by negotiations of the parties but at the latest, shall be 10 working days after completion of the painting and maintenance works by West Harbour which is [sic] referred to in the agreement dated 18th  May

2008.

(e)      There is a due diligence provision.  It records that Marina Resort “has already carried out its due diligence investigation of the properties”. Particulars of sums borrowed by West Harbour are set out in a schedule.  This schedule records a total of “current indebtedness” of

$3,720,000 secured by mortgages over the 13 units.  The mortgages are to six different lenders, being major banks and other entities independent of the parties.

(f)       The due diligence clause then provides:

(b)       The  due  diligence  investigation  revealed  certain issues with the cladding and window extrusions on the properties, however both cladding and windows will be removed as part of the Waipareira Hotel Development.

(c)       West  Harbour  warrants  to  make  good  any  issues with the harditex cladding or any leaky building issues (if any) as follows:

(i)        West Harbour’s obligation (if any) to make good any issues with the harditex cladding or any leaky building issues is limited to the extent that West Harbour shall be obliged to make   good   those   defects   which   it   is necessary to remedy in order for the third floor development to proceed in accordance with the elevations and layout plans supplied by Ian Kohler and the 2008 MSC Consulting Group Limited Report; and

(ii)       West Harbour’s obligation (if any) to make good as set out herein shall be deferred until construction of the third floor development has commenced.

(g)      Clause 10 is headed “Obligations to Each Other”.  It provides that the

parties agree:

(i)        To carry out the respective obligations created by this Agreement and created by the agreements for sale and purchase (where relevant) in good faith and in a spirit of co-operation;

(ii)      To  each  use  its  best  endeavours  to  carry  out  its respective obligations and to work together to find a solution  should  matters  beyond  a  party’s  control arise;

(iii)     To   respect   each   other   in   the   course   of   the engagement.

(h)      Clause 11 sets out a reasonably detailed dispute resolution process.

So far as relevant it provides that, if there is a dispute which the parties are unable to resolve, they “shall select  a senior company director  well respected in the Auckland commercial community to advise in respect of” the dispute.  There is provision for independent appointment  if  they  cannot  agree  on  the  person  to  be  appointed. There are then detailed provisions relating to the role of the adviser and further obligations on the parties in respect of this part of the process.   The adviser is not given any power to make directions or orders.   If this process does not lead to agreement to resolve the dispute, the adviser is to write a report outlining his enquiries and his recommendations.   The report may be used by the parties in court proceedings and “shall be viable [sic] as evidence in those court proceedings and as a guide to the court as to the view that the adviser as an experienced and independent commercial person took as to the dispute and its best commercial resolution”.

The shareholders’ agreement

[17]     The  shareholders’  agreement  is  between  West  Harbour,  Waipareira  and Marina Resort.  It is dated 18 May 2008.  It contains fairly conventional provisions in   agreements   between   shareholders   relating   to,   amongst   other   things,   the governance of Marina Resort, the relationship between West Harbour and Waipareira as the two shareholders, general conduct of the company affairs, disposal of shares and termination.

[18]     Clause 5.1 provides that the “initial capital and funding” of Marina Resort is to be as set out in schedule A to the shareholders’ agreement.  Schedule A is blank. However, at least for the purpose of these applications, the manner in which the parties intended the initial capitalisation to occur, and how it in fact occurred, is sufficiently clear. This is explained in the next section of this judgment.

[19]     The  shareholders’  agreement  contains  provisions  for  further  funding  of Marina Resort.   Clause 5.5(c) provides that if Marina Resort is unable to meet commitments from specified sources then Marina Resort “can require the shareholders to advance further sums necessary to conduct the business”.  There are provisions, in this regard and generally, to the essential effect that West Harbour and Waipareira are to contribute equally.

The initial capitalisation

[20] The way in which West Harbour and Waipareira provided the initial capital for Marina Resort is central to West Harbour’s application for discharge of the townhouses mortgage. At least for the purposes of these applications, there appears to be agreement between counsel as to the way in which payments, or notional payments, were made. The process resulted in West Harbour’s and Waipareira’s each being credited with an investment in Marina Resort of (in round figures) $2 million. The central issue arising from this, and as noted in outline at [3] above, is whether a consequence of the capitalisation is that West Harbour is entitled to discharge of the mortgage.

[21]     The  initial  capitalisation  of  Marina  Resort  was  achieved  by  transactions which may be characterised as release of debt, acknowledgement of debt and set-off. These involved West Harbour, Waipareira and Marina Resort in different ways, and the process required the co-operation of all three.   It was a tripartite agreement in respect of capitalisation.   An important feature of the joint venture agreement is tripartite arrangements – interdependent obligations involving all three companies.

[22]     The capitalisation, by the various means just noted, resulted in a series of notional “payments” capable of being recorded in the financial accounts of the three companies by appropriate journal entries. The process may be described as follows:

(a)       Waipareira agreed to release West Harbour from the townhouses loan

– the debt of $2,038,838 secured under the townhouses mortgage.

(b)In  respect  of  this  release  of  debt,  West  Harbour  agreed  to  credit Marina Resort with the equivalent sum, as outlined in sub-paragraph (d) below.

(c)      Marina Resort acknowledged a debt to Waipareira for the same sum of $2,038,838. This constituted Waipareira’s initial capital payment to Marina Resort.

(d)The equal capitalising sum required from West Harbour was the net value to Marina Resort arising from Marina Resort’s acquisition of the

13 units on the following financial terms:

$ Marina Resort to pay West Harbour for 13 units  7,810,000

Less deposit (release of West Harbour debt to Waipareira for the townhouses loan and Marina Resort’s acknowledgement of debt to Waipareira

for the same amount)  (2,038,838) Less total of mortgage debt to third parties secured

over the units: to be refinanced by Marina Resort

(as discussed at [30] below) (3,720,000) Capital to Marina Resort from West Harbour 2,051,162

[23]     The capitalisation has been recorded in a balance sheet for Marina Resort. This balance sheet was prepared by, or at the request of, Waipareira.  It appears to have been accepted by the parties, subject to some possible issues as to precise sums. The relevant point is that the balance sheet records capital contributions from West Harbour and Waipareira in excess of $2 million each.

[24]     The setting-up of the joint venture in a practical sense has also proceeded to the extent that Marina Resort has received the rental income from the 13 units and applied this to meet interest payments on the existing mortgages over the 13 units, although the units and the mortgages are still in West Harbour’s name.  There have

been  some  disputes  over  management  of  the  units.    However,  the  differences between the parties over this are of peripheral relevance to the present applications.

[25]     Another element of the setting-up of the joint venture is that, at least since 18

May 2008, no interest has been paid to Waipareira by West Harbour on the $2 million debt originally secured by the townhouses mortgage.  Like a lot of the detail, this is not recorded in the heads of agreement, but it does appear reasonably clearly to have been agreed.  There is also an email from Mr Tamihere dated 2 September

2010 to the accountant for Waipareira Trust, copied to Mr Ivil, expressly recording that interest cannot be charged on the $2 million debt.  Under the townhouses loan the ordinary interest rate is 11% per annum and the default rate 16% per annum.  The annual interest payment at the ordinary rate would therefore be $220,000 and at the default rate $320,000.

The conveyancing settlement

[26]     The agreement for establishment of the joint venture may be seen for present purposes to have two main parts.  The first is the capitalisation of Marina Resort just described.   The second is legal completion of the transactions associated with the capitalisation. This second part I will refer to as the “conveyancing settlement”. The capitalisation is largely complete.  It is necessary to add the qualification “largely” because the refinancing by Marina Resort of the mortgages over the 13 units, as outlined below at [30], has not happened.  Aspects of the refinancing may also be seen as coming within the second main part – the conveyancing settlement between all three parties. The conveyancing settlement has not happened.

[27]     I am satisfied that, in respect of the conveyancing settlement, a number of relevant things are required to happen simultaneously, but have not happened to date. As with much of the joint venture, the circumstances in which these things were to happen  are  not  defined  in  the  joint  venture  agreement  or  the  shareholders’ agreement.

[28]     One of the conveyancing settlement transactions is what West Harbour seeks

– formal discharge of the townhouses mortgage.  The other things of relevance are

refinancing by Marina Resort of the existing mortgages from West Harbour over the

13 units, and transfer of title to the 13 units from West Harbour to Marina Resort. None of these things – discharge of the mortgage, refinancing and transfer of title to the 13 units – has occurred.

[29]     The parties agreed to defer the conveyancing settlement. The main reason for this, appearing from the present evidence, is a request from Mr Ivil that title to the 13 units be deferred until a claim before the Weathertight Homes Tribunal by the body corporate for the 16 unit owners had been determined.2

[30]     I  have  described  the  refinancing  as  an  element  of  the  conveyancing settlement, although the refinancing involves more than conveyancing.   This is another aspect of the joint venture agreement which is not documented in any formal way.   However, it is sufficiently clear that Marina Resort is required to find the money to repay West Harbour’s debt secured by the existing mortgages over the 13 units; the total recorded in the heads of agreement of $3.72 million.  A requirement that this refinancing occur prior to, or contemporaneously with, transfer of title to the units from West Harbour to Marina Resort, is also sufficiently established by the present evidence.  The formal documents (the heads of agreement and schedules, and in particular schedule D containing the provisions for the agreement for sale and purchase) contain no provision requiring Marina Resort to take title subject to the existing mortgages.  Clause 7 of the heads of agreement does provide that the units are sold by West Harbour to Marina Resort “subject to existing easements, consent notices, restrictions and encumbrances affecting the property as at the date of” the heads of agreement.  The relevance of this is that the express provision relating to existing interests does not include the existing mortgages.   In accordance with conventional legal principles, in the absence of express agreement between vendor

and purchaser, the purchaser is entitled to title free of mortgages.3   In addition, it is

unclear whether, even if Waipareira and Marina Resort consented, title could be transferred subject to some or all of the existing mortgages without the consent of

the existing mortgagees.

2 The outcome of this claim is noted below at [37].

3 See D W McMorland Sale of Land (3rd ed, Centurion Print Ld, Auckland, 2011) at 9.01(a).

[31]     There is a document dated 26 May 2008, just after the date of the agreement,4 which records Waipareira’s understanding of the position in relation to refinancing. This is an email from Mr Tamihere to a mortgage broker, with a copy to Mr Ivil. After reference to the proposed transfer of title to the units to Marina Resort, Mr Tamihere said:

Once these transfers are in place, we will be utilising our bank connections to take out one comprehensive mortgage over assets once held by West Harbour …, but now transferred to our new joint venture company.

It is anticipated that all legal documentation between both parties will be completed no later than 30th August 2008.  To this end, we would be grateful if you could advise any mortgagors that we will be moving to settle all mortgages as at 29th August 2008 and transferring all properties into our new company simultaneously.

There does not appear to have been any query from Mr Ivil in relation to this.

[32]     This has a degree of ambiguity, arising from the opening words of the first paragraph, but the anticipated process is clear enough from the second paragraph.  In referring to this I recognise that it simply records one party’s record of that party’s understanding of what had in fact been agreed (or was about to be agreed).5    It is relevant to the extent that it confirms a conclusion open from the documents themselves.   And  it  also  appears  to  be  the  basis  upon  which  the  parties  have proceeded down to the present time; that is to say, the existing mortgage debts owed by  West  Harbour  are  to  be  refinanced  by  Marina  Resort  and  that  is  to  occur

contemporaneously with transfer of title, if not before.

[33]     On the question as to when the townhouses mortgage could be discharged, there is an email from Mr Ivil to Mr Tamihere of 19 November 2009.   This may reasonably be read as an effective acknowledgement by Mr Ivil that Waipareira was entitled to maintain registration of the townhouses mortgage until all formalities of the overall conveyancing settlement for the joint venture were completed.  Mr Ivil said:

I have had a meeting with Lisa Roberts from Corban Revell Lawyers who as you know has done all our documentation for the purchase and company

4 Although possibly before the agreement was signed in fact. It may have been backdated.

5 See the preceding n 4.

agreements for Marina Resort Ltd.  I have asked her for advice in regards to changing securities for the Clearwater Cove development transaction from the houses at 7 Clearwater [the townhouses mortgage] to the development block at 15 Clearwater Cove [the joint venture units].

The security offered would be more relevant and would give more equity by means of taking a first debenture over Westharbour Holdings Ltd which owns 7 units and further owns the balance by agreement.

The first debenture would enable Waipareira Investments Ltd further control over the land and buildings until new title is issued.

Mr Tamihere replied by email dated 20 November 2009.  He said:

In principle we have no problem in security exchange subject to our interests being protected.

[34]    There was a later email recording West Harbour’s acknowledgement of Waipareira’s entitlement to retain the townhouses security pending transfer of title of the 13 units to Marina Resort.  This is an email from Mr Ivil to Mr Tamihere dated

20 June 2011 which includes the following:

There is currently mortgage security over other property of West Harbour until title for the 13 apartments into Marina Resort’s hotel development project  was  available,  there  is  [sic]  also  registered  caveats  over  each property.

Now that title is available there is no longer any requirement for the other mortgages to be held as additional security.

[35]     In its amended statement of claim, filed with the present applications, West Harbour pleads that there was to be a contemporaneous conveyancing settlement, covering refinancing and transfer of titles as well as discharge of the townhouses mortgage:

16The  30  June  2011  date  for  repayment  of  [another  loan  from Waipareira to West Harbour]6 was chosen because West Harbour and Waipareira as participants in the Joint Venture had earlier agreed (both verbally as between Mr Ivil and Mr Tamihere and as recorded in email exchanges between West Harbour and Waipareira) by way of further variation of the Joint Venture Agreement in substitution for clause (d) of Schedule D to the Heads of Agreement, that they and Marina Resort would on 30 June 2011 complete an overall refinancing and purchase settlement of the Apartments and at the same time complete the discharge of mortgage and transfers of title

6 This separate loan is described below at [39].

referred to in paragraphs 11 -13 above (“the agreement to complete settlement”)

…

18As at 30 June 2011, West Harbour was ready, willing and able for its part to perform the agreement to complete settlement.  Moreover, the agreement to complete settlement including the associated overall refinancing of the Apartments could, had Waipareira co-operated and played  its  part  as  a  party  to  the  Joint  Venture,  have  been implemented at that time.

Other events after the joint venture agreement was made

[36]     The parties have referred to a number of issues that arose after the joint venture agreement was entered into, in addition to the matters discussed to this point. I consider that much of this is fairly peripheral; or at least not at the heart of the matters before me.  This is not to say that these matters are to be ignored, but they do not in my judgment require an extensive survey.   I will therefore note some other events after the joint venture agreement was made without going into much detail.

[37]     As earlier noted, the parties agreed to defer the conveyancing settlement of the joint venture because of a claim to the Weathertight Homes Tribunal by the body corporate of the units subject to the joint venture agreement.  The claim related to 12 of the 16 units; all seven of the units owned by West Harbour, three of the units owned by associated parties, and two units owned by third parties.  The claim was for approximately $1.5 million.   In a decision dated 18 August 2011 the Tribunal dismissed all claims save for a claim by one of the third party owners.   This was allowed in a sum of $14,547.50.

[38]     On the present applications both parties have presented evidence of the cost of carrying out the required remedial work on the units.  There is a document dated

15 December 2011 produced for West Harbour putting the cost at $836,500, plus GST.  An estimate obtained by Waipareira puts the cost at about $2.1 million plus GST.  Another estimate obtained by Waipareira puts the cost at a sum in excess of

$1.7 million plus GST.  As earlier noted, the claim before the Weathertight Homes Tribunal was for a sum of approximately $1.5 million.  And one of the experts who provided an opinion for Waipareira said that his understanding was that the $1.5

million claim was based on the estimate of an assessor, but it did not include fees and for that reason he considered it was “generally consistent with” his estimate of $2.1 million  plus  GST.     It  is  not  possible  in  this  proceeding  to  make  any  firm determination as to what the actual cost might be.  It is sufficient to record that the evidence as a whole indicates that the cost is likely to be in excess of $1 million, and possibly well in excess of $1 million.

[39]     Two  of  the  existing  mortgages  from West  Harbour  over  the  units  to  be transferred to Marina Resort were refinanced in November 2010.   West Harbour borrowed the required sum of $640,000 from Waipareira, repaid the existing mortgagee, and granted a new mortgage to Waipareira.   This mortgage has been referred to as “the apartments mortgage”.   This is the other loan from Waipareira

referred to in paragraph 16 of West Harbour’s statement of claim recorded above.7

In its statement of defence, Waipareira admits that this loan was made pursuant to joint venture obligations and that West Harbour entered into the term loan and the mortgage on behalf of Marina Resort as “equitable owner of the two apartments”. The date for repayment of this loan was 30 June 2011.  The apartments mortgage has not been repaid. Waipareira says the amount now owing is around $830,000.

[40]     Over a reasonably extended period through to February 2011, Waipareira expressed concern about the lack of progress with the joint venture.  In an email to Mr Ivil dated 22 October 2010, Mr Tamihere recorded matters of concern, stated that Waipareira  wanted  matters  resolved  by 30  June  2011,  and  stated  that  the  joint venture agreement would be cancelled “for serious breach on your part in the event that the matters mentioned … have not been brought to a satisfactory conclusion by

30 June 2011”.   By email from Mr Tamihere to Mr Ivil dated 24 February 2011, Waipareira gave purported notice of termination of the joint venture agreement.

[41]     West Harbour did not accept that Waipareira had any grounds for termination and treated the February notice as wrongful repudiation.  It is sufficiently clear from the evidence that, if it amounted to repudiation, it has never been accepted by West Harbour.  West Harbour has positively maintained that the joint venture agreement

remains in force and binding on all three parties.  This includes advice from or on

7 Above at [35].

behalf of West Harbour to Waipareira that West Harbour is in a position to transfer title to the 13 units to Marina Resort at any time.

[42]     Lawyers for West Harbour wrote to Waipareira on 18 July 2011 formally requesting  discharge  of  the  townhouses  mortgage.     Lawyers  for  Waipareira responded seven days later, broadly maintaining Waipareira’s position and saying that Marina Resort and the joint venture should be wound up.   There was no agreement to discharge the townhouses mortgage.

[43]     On 2 August 2011 Waipareira issued notices under the Property Law Act

2007 in respect of the townhouses mortgage and the apartments mortgage.   In response West Harbour commenced these proceedings, on 20 September 2011.  West Harbour applied for interim injunctions restraining Waipareira from exercising any powers under the two mortgages.  The applications were resolved by Waipareira’s providing appropriate undertakings.   The parties then agreed to mediation.   This occurred on 5 December 2011. As will be apparent, the mediation was unsuccessful.

[44]     By  letter  dated  26  January  2012,  Waipareira’s  lawyers  wrote  to  West Harbour’s lawyers.  The letter records that West Harbour had not accepted what it regarded as repudiation by Waipareira and that, in consequence, Waipareira was entitled to and did withdraw the purported notice of cancellation.  West Harbour’s lawyers responded and there were further letters on both sides.

[45]     On 29 May 2012 West Harbour filed an amended statement of claim and the current application for summary judgment and other orders.

Other matters

[46]     On the basis of the evidence presently available it appears that West Harbour is insolvent.  I earlier recorded that some findings of fact are necessarily provisional. The conclusion about insolvency is in that category; I am not making a formal determination that West Harbour is insolvent.  This provisional conclusion is based on a statement of West Harbour’s financial position as at 31 March 2011.   This records an excess of liabilities over assets of $20,283.  The statement does not record

any liability for the sum of approximately $3.72 million which is still undoubtedly owed, as a matter of law, by West Harbour for the loan secured by the mortgages over the 13 units.  And this includes the debt of some $830,000 owed to Waipareira under the apartments mortgage.  One of the assets in the statement is a launch with a recorded value of $600,000.   The Waipareira Trust accountant, Ms Christine Wu, gave evidence on West Harbour’s financial position.  This included a statement that she  understood  that  the  launch  had  been  sold  but  she  did  not  know  what  had happened to the proceeds.  Mr Ivil responded to this as follows:

Christine is in error in claiming that the motor launch in question has been sold.  It continues to be owned by the Livi Trust.

This is an unusual statement about an asset that had been in the books of West Harbour.   The Livi Trust, through its trustees, is a legal entity distinct from West Harbour.  The trustees are Mr Nicolass Van Dijk and Mr Norman Palmer.  On the basis of this evidence, the launch is not an asset of West Harbour and there is no evidence as to the consequential effect on West Harbour’s balance sheet.

[47]     It is also at least reasonably arguable on the evidence that Marina Resort is insolvent.   There is a balance sheet as at 30 June 2011 recording (using round figures) total assets of $7.2 million and total liabilities of $3.7 million.  This suggests there are net assets of $3.5 million.  However, the assets figure includes the 13 units at a value of $7 million. There are major conflicts of evidence as to the current value of the units, but on the evidence for Waipareira it is at the least reasonably arguable that the value of the units may be less than the total owing to mortgagees.  There is one valuation in evidence of $2.86 million for the units.   On that value there is a deficit of over $600,000.

[48]     West Harbour has given security over two of the units to its solicitors for outstanding legal fees of around $110,000.   This was done without the consent of Waipareira and Marina Resort. The solicitors have caveated the titles to the units.

[49]     There are rates owing on the units.  Some of the arrears are said to pre-date the joint venture agreement.

[50]     There is  evidence that Waipareira has  paid  substantially more to  Marina

Resort than West Harbour.  Some evidence indicates a $500,000 difference.

The law

Summary judgment principles

[51]     The principles applying to a plaintiff ’s application for summary judgment are well established. As would be expected, there was no difference between counsel as to the broad principles.  To the extent that there were differences, they were ones of emphasis.

[52]     Although the principles are well established, it may assist the parties to set these out.  Rule 12.2(1) of the High Court Rules provides:

12.2     Judgment when there is no defence …

(1)       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.

[53]     Dr Harrison cited a recent Court of Appeal summary of the principles in

Krukziener v Hanover Finance Ltd,8 as follows:

... 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: Pemberton v Chappell.9  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: MacLean v Stewart.10 The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan.11  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: Bilbie Dymock Corp Ltd v Patel.12

8 Krukziener v Hanover Finance Ltd [2010] NZAR 307; (2008) 19 PRNZ 162 (CA) at [26].

9 Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA).
10 MacLean v Stewart (1997) 11 PRNZ 66 (CA).
11 Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC).

12 Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

[54]     Both counsel referred to the principle that the court should be prepared to determine, after adequate argument, even difficult legal questions.13  That proposition contains within it a necessary premise that the facts are clear.   There may be no dispute about the general area of law applicable in a particular case, but unless the facts to which this law is to be applied have been clearly established, the legal principles cannot be applied whether they give rise to difficult legal questions or not.

In  other  cases  it  may  not  be  possible  to  determine  what  legal  principles  are applicable at all until reasonably arguable issues of fact have been removed from the equation.  And this uncertainty may apply to the extent that it is unclear as to the broad category of law that will be applicable; for example, it may be unclear as to whether  the principles  of contract  are  to  be  applied,  or  equitable principles,  or principles from some other area of the law, or whether two or more categories of law are to be applied as alternatives.

[55]     Rule  12.2  of  the  High  Court  Rules  gives  the  court  a  discretion  to  give judgment on a summary judgment application.  It is a discretion of a residual kind; it is to be restrictively applied so that, if the plaintiff has established that the defendant has no defence, in most cases summary judgment should be entered.14   Nevertheless, there is a discretion, and Mr Dale invoked it.  In McGechan on Procedure it is said that the residual discretion may be invoked to avoid oppression or injustice to the defendant in the following circumstances:15

(i)        The proceeding involves the actions or possible liability of a third party which is not before the Court;

(ii)       The proceedings are such that the opportunity should be given to allow discovery or other interlocutory applications to be concluded;

(iii)      The circumstances of the case disclose very unusual features, the presence of which leads the Court to conclude that the entry of summary judgment would be oppressive or unjust; or

(iv)      The  combination  of  complex  issues  of  fact  and  law  justify  the dismissal  of  the  application  for  summary  judgment,  either  as  a matter of discretion or because the Court cannot be satisfied that the defendant has no defence.

13 See International Ore and Fertiliser Corp v East Coast Fertiliser Co Ltd [1987] 1 NZLR 9 (CA)

at 16.

14 Pemberton v Chappell, n 9 above, at 5. And see the general discussion of other authorities in

McGechan on Procedure (online looseleaf ed, Brookers) at HR12.2.11.

15 McGechan on Procedure (online looseleaf ed, Brookers) at HR12.2.11(b).

[56]     Mr Dale emphasised circumstance (iv) although, if the second alternative in (iv) arises, this would not require exercise of the discretion; the Court would be bound not to enter summary judgment if it is not satisfied that the defendant has no defence.  Although counsel did invoke the discretion, and it requires consideration, for reasons I will come to there is a much wider discretion arising from the fact that the relief sought by West Harbour is specific performance.

Mandatory interim injunction principles

[57]     The broad principles applying on an interlocutory application for an interim injunction are also well established.  In broad terms, the Court is generally required to determine whether there is a serious question to be tried and where the “balance of convenience” lies.  The “balance of convenience”, also described as the “balance of the risk of doing an injustice”,16 requires a weighing of all relevant factors arising in the case. These are factors bearing on the question as to whether granting or refusing an interim injunction is the course which, after the substantive claim has been determined, would fairly allow the adjustment of the rights of the parties in a way that accords with fairness and justice.17

[58]     Whether there is a serious question to be tried, and where the balance of convenience lies, are not necessarily determinative.18   In the end the Court is bound to exercise a discretion.   On applications for interim injunctions this also is not a residual discretion. As the Court of Appeal said in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd:19

Whether  there  is  a  serious  question  to  be  tried  and  the  balance  of convenience are two broad questions providing an accepted framework for approaching these applications. … [T]he balance of convenience can have a very wide ambit. In any event the two heads are not exhaustive. Marshalling considerations under them is an aid to determining, as regards the grant or refusal of an interim injunction, where overall justice lies. In every case the Judge has finally to stand back and ask himself that question.

16 Cayne v Global Natural Resources plc [1984] 1 All ER 225 (CA) at 237.

17 Congoleum Corp Ltd v Poly-Flor Products (NZ) Ltd [1979] 2 NZLR 560 (CA) at 571.

18 See generally the discussion of the principles in McGechan on Procedure in the commentary to r 7.53.

19 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA) at 142.

[59]     The general approach just noted is the approach required on all interlocutory applications for interim injunctions.   In this case, what West Harbour seeks is a mandatory injunction – an order directing Waipareira to discharge the mortgage – rather  than  a  prohibitory  injunction  to  refrain  from  an  act.    In  addition,  the mandatory order  sought  by West  Harbour  is  not  in  substance  an  interim  order, although on this application it is described as such.  If an order is made for discharge of the mortgage that order is likely to be final in its effect.   This is because it is unlikely that the mortgaged property will remain available for a new mortgage to Waipareira if the Court ultimately finds that the townhouses mortgage should not have been discharged.   Where there is an application for an interim mandatory injunction more is required than on an application for an interim prohibitory injunction.  And with orders having, or likely to have, final effect, the principles are different.  In this case the hurdle is particularly high for West Harbour because both aspects apply.

[60]     The principles applying to mandatory interim injunctions are summarised in

McGechan as follows:20

A mandatory injunction ought to be granted on an interlocutory application only in special circumstances, and then only in clear cases either where the Court thinks that the matter ought to be decided immediately or where the injunction is directed at a simple and summary act, which could be easily remedied or where the defendant has attempted to steal a march on the plaintiff. Moreover, before granting a mandatory interlocutory injunction the Court has to feel a high degree of assurance that at the trial it would appear that the injunction had rightly been granted, that being a different and higher standard than is required for a prohibitory injunction: Locabail International Finance Ltd v Agroexport.21

[61]     The grant of an interim injunction which will have the effect of a final judgment means that the defendant will have been deprived of its right to have the issue tested by pursuing a substantive proceeding to its conclusion.  The substantive proceeding would include discovery of all relevant documents, the right to seek other

interlocutory orders, obtaining the opinions of experts and briefing expert witnesses,

20 McGechan on Procedure, above n 15, at HR7.53.23(2).

21 Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657; [1986] 1 All ER 901; [1986]

1 Lloyd’s Rep 517 (CA).

a full hearing with cross-examination of witnesses, and the Court’s final judgment. As stated in the commentary in McGechan:22

Accordingly, the established guidelines requiring the Court to look at the balance of convenience when deciding whether to grant or refuse an interlocutory injunction do not apply in such a case, since, whatever the strengths of either side, the defendant should not be precluded by the grant of an interlocutory injunction from disputing the plaintiff’s claim at a trial.23

Specific performance

[62]     The remedy of specific performance is outlined in broad terms in Butler,

Equity and Trusts in New Zealand as follows:24

Specific  performance  is  a  discretionary  remedy.25    [The]  discretion  is exercised on well-established but not rigid principles.26   As Gresson J put it in Gurney v Gurney (No 2), “the Court acts on equitable principles with an eye  to  the  substantial justice  of the case”.27      The result  is  that specific performance will not normally be available if:

(a)       Damages are an adequate remedy; or

(b)       The plaintiff is in  substantial  breach  of  contract  or  is unable or unwilling to perform his or her obligations under the contract; or

(c)      The  plaintiff  has  acquiesced  or  been  guilty  of  laches, misrepresentation, or unfair conduct; or

(d)       The decree would cause the defendant great hardship; or

(e)       The contract was procured by means which, although not amounting to grounds of invalidity like duress or undue influence, are nevertheless regarded by equity as unfair; or

(f)       The contract is supported by consideration which is sufficient in law but which is materially inadequate in the eyes of equity; or

(g)       There is a lack of mutuality of remedy.

22 McGechan on Procedure, above n 15, at para HR7.53.14(1).

23 The references in the commentary are to: Cayne v Global Natural Resources plc [1984] 1 All ER

225 (CA); NWL Ltd v Woods [1979] 3 All ER 614 (HL) at 625; Interlocutory Injunctions Having

Final Effect (1987) 61 ALJ 341.

24 A Butler Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at 736-

737.

25 Stewart v Kennedy (1890) 15 App Cas 75 at 102 per Lord Watson; Harnett v Yielding (1805) 2 Sch

& Lef 553; [1803-13] All ER Rep 704; In re Hallett’s Estate (1879) 13 Ch D 696 at 710; Loan

Investment Corp of Australasia v Bonner [1970] NZLR 724 (PC) at 735.

26 Baker v McLaughlin [1967] NZLR 405 at 414; Co-op Insurance Soc Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1; [1997] 3 All ER 297 (HL); A-G for England and Wales v R [2002] 2 NZLR 91

(CA).

27 Gurney v Gurney (No 2) [1967] NZLR 922 (CA) at p 97.

[63]     In respect of these principles, the one of central importance in this case is in (b): the plaintiff is not entitled to specific performance unless it is ready, willing and able to perform its obligations that are required to be performed in return for the obligation the plaintiff requires the defendant to perform.  The principle was stated by the Privy Council in Australian Hardwoods Pty Ltd v Commissioner for Railways

as follows:28

[W]here the agreement is one which involves continuing or future acts to be performed by the plaintiff, he must fail unless he can show that he is ready and willing on his part to carry out those obligations, which are in fact part of the consideration for the undertaking of the defendant that the plaintiff seeks to have enforced.

[64]     This  principle  was  at  the  forefront  of  Mr  Dale’s  submissions,  although expressed  in  slightly  different  terms.    I  was  not  referred  by  either  counsel  to authority directly on the point, such as the Privy Council statement just cited.  It may be that the principle is so familiar and well settled that counsel did not see need to cite authority.  However, it is appropriate to do so in this case.

[65]     The principle has been applied many times in New Zealand.  For example, in Gurney v Gurney (No 2)29 the Court of Appeal cited the Privy Council’s statement in the Australian Hardwoods case and relevantly continued:

It is also well settled that the plaintiff’s “readiness and eagerness to perform his contract must be judged at the time that he brings his action”.30  The plaintiff’s ‘readiness and willingness’ to carry out the contract in my opinion also connote, and include, the requisite “ability” to do so.31

[66]     The question whether the plaintiff is ready, willing and able to settle is a question  of  substance.    This  was  noted  by  the  Court  of  Appeal  in  Hurrell  v

Townsend:32

28 Australian Hardwoods Pty Ltd v Commissioner for Railways [1961] 1 WLR 425 at 432-433; [1961]

1 All ER 737 at 742.

29 Gurney v Gurney (No 2), above n 27, at 925.

30 Evans v Norris (1912) 8 DLR 652, at 667 per Walsh J

31 See Alam v Preston (1938) 38 SR (NSW) 475, 480; Corcoran v O'Rourke (1888) 14 VLR 889, 894;

Measures Bros Ltd v Measures [1910] 2 Ch 248, at p 254; Cort v Ambergate etc Railway Co (1851)

20 LJR (NS) 460; 117 ER 1229, per Lord Campbell C.J.

32 Hurrell v Townsend [1982] 1 NZLR 536 (CA) at 550.

Whether or not a plaintiff is so ready and willing is a question of substance and one not to be determined in any technical or narrow sense: Mehmet v Benson; Gurney v Gurney (No 2).33   What is necessary by way of proof will depend upon the circumstances of the case.

In Gurney, in the passage referred to in Hurrell v Townsend, the Court of Appeal discussed older authorities on the question of substance.  This includes the financial substance of the party seeking specific performance.

[67]     I  will  refer  to  the  principle  now  being  discussed  as  the  principle  of “reciprocity”.   I do so to distinguish it from the principle of “mutuality” which is noted in the passage from Butler cited above and which is discussed below.

[68]     On the facts of the present case there is a further principle of importance bearing on a defendant’s entitlement to reciprocity.  A defendant may be entitled to reciprocity although the defendant has been in breach of contract.  The principle is discussed in Specific Performance34 as follows:

A party which has previously been in default of its obligations under the contract may enforce it, even if the default involved an essential term, provided  that  the  other  party  did  not  exercise  its right  to  terminate  the contract while the default subsisted and that the party previously in default is now ready and willing to complete it.   In Mehmet v Benson35  the plaintiff purchaser  had  defaulted  in  his  obligation  to  pay  an  instalment  of  the purchase price, time being of the essence.  The High Court of Australia held that the vendor had waived the breach, and the purchaser obtained a decree of specific performance.

At the date when the suit is commenced the plaintiff must then be in a position to say that he is ready and willing to do at the proper time in future whatever in the events that have happened the contract requires that he do … But if, notwithstanding any earlier breaches, the contract remained on foot, then it seems to me a plaintiff is not necessarily barred from having a decree for specific performance if those breaches, not having resulted in a valid rescission, can be made good by the payment of interest.36

33 Mehmet v Benson (1965) 113 CLR 295, 307-308; Gurney v Gurney (No 2) [1967] NZLR 922 (CA)

at 927.

34 Jones and Goodheart Specific Performance (2nd ed, Butterworths, 1996) at 68.
35 Mehmet v Benson, above n 33. See also Legione v Hateley (1983) 152 CLR 406.

36 Mehmet v Benson, above n 33, at 314-315 per Windeyer J. In Sport Internationaal Bussum BV v

Inter-Footwear Ltd [1984] 1 All ER 376 at 385 Oliver LJ, delivering the judgment of the Court of Appeal, said that ‘it is, in general, the case that the plaintiff in a specific performance action must aver that he is, and has at all material times been, ready, able and willing to perform his part of the contract’. But in that case the plaintiffs had elected to terminate the contract because of the defendants’ breach, and it is not likely that Oliver LJ was intending to reject the proposition discussed in the text.

[69]     Dr  Harrison  referred  to  two  defences  to  an  application  for  specific performance, for the purpose of seeking to demonstrate that they are not applicable. He did so, in part, by reference to the discussion of the defences in Butler.37

[70]     The first defence is discussed under the heading “Remedy sought is specific

performance of part of contract”.38  The relevant part of the text is as follows:

There is a general rule of equity that, when the court cannot compel specific performance  of  the  contract  as  a  whole,  it  will  not  interfere  to  compel specific performance of part of the contract.39 …

The principle does not apply if the agreement, by its express terms, contemplated successive performance of successive parts independently of one another.40

[71]     The other defence is in the text under the heading “Mutuality lacking”, part of which is as follows:41

Generally, a defendant will not be compelled to perform contractual obligations if the court cannot guarantee the same of the plaintiff, unless damages would be an adequate remedy to the defendant for any default on the plaintiff’s part.

[72]     In respect of this defence, Dr Harrison referred to Butler v Countrywide Finance Ltd.42   In that case Hammond J suggested that the requirement of mutuality referred to in older cases may be less significant today, with the proper enquiry being whether in all the circumstances specific performance is an appropriate remedy. However, the Court of Appeal in  Attorney-General for England and Wales v R expressly confirmed that a lack of mutuality of remedy is a circumstance which may justify the Court’s withholding specific performance.43

[73]     Both  of  these  defences  have  some  affinity  to  the  general  principle  that specific performance will not normally be available if the plaintiff is  not ready,

willing  and  able  to  perform  its  obligations  under  the  contract.    The  particular

37 A Butler Equity and Trusts in New Zealand, above n 24, at 750-755.

38 Ibid, at p 753.

39 Ryan v Mutual Tontine Westminster Chambers Assn [1893] 1 Ch 116 (CA) at 123 per Lord Esher

MR.

40 Wilkinson v Clements (1872) LR 8 Ch 96.
41 A Butler Equity and Trusts in New Zealand, above n 24, at 755.
42 Butler v Countrywide Finance Ltd [1993] 3 NZLR 623 (HC).

43 Attorney-General for England and Wales v R [2002] 2 NZLR 91 (CA) at 121.

defences  referred  to  by  Dr  Harrison,  and  which  he  submitted  did  not  have application, in my judgment can properly be left to one side.  The central questions are whether West Harbour has what have I call reciprocal obligations and whether, if so, West Harbour is ready, willing and able to meet them.

[74]    Dr Harrison also referred to two equitable maxims which he said were fundamental to West Harbour’s case.   The first is that “equity will never allow a wrongdoer to profit from its own wrongdoing”.  He cited ALF No 9 Pty Ltd v Ellis44 and Telecom NZ Ltd v Sintel-Com Ltd.45   The second is that “equity regards as done that which ought to have been done”.  Reference was made here to the discussion in Butler.46    Mr Dale referred to and relied on another maxim: “he who comes into

equity must come with clean hands” and also referred to the discussion in Butler.47

[75]     Appropriate weight must be given to relevant maxims.  However, the general discussion of equitable maxims in the introduction to this subject in Butler is instructive.  It is as follows:48

It is common to find reference in equity textbooks, lectures at law school and in the case law to the so-called “equitable maxims”.  They are regarded as representing a distillation of a number of the more fundamental ethical and jurisprudential principles which lie at the core of the exercise of equitable jurisdiction.   Most should not in themselves be regarded as self-standing rules of law which decide cases.   Rather, they are a summary of a broad theme that underlies numerous equitable concepts and principles.  In many cases,   their   precise   scope   is   necessarily   ill-defined   and   somewhat uncertain.49   They are best used as a point of orientation, a type of equitable compass.  Indeed, it has been noted by many authors that reference is made to the maxims by judges in order to confirm in a rhetorical manner decisions which have already been reached through the detailed application of rules and decided cases.50   At the same time, however, it must be appreciated that a number of the maxims are regarded as having more substance and concrete applicability than others.   For example, the maxim that ‘he who comes to equity must come with clean hands’ is frequently cited and applied by the courts.  The important point, however, as Spry has demonstrated, is that in determining how that principle should be applied on the facts of a particular case, further rules have been developed to guide the law.51

44 ALF No 9 Pty Ltd v Ellis [2010] NZCA 529 at [41].

45 Telecom NZ Ltd v Sintel-Com Ltd [2007] NZCA 499; [2008] 1 NZLR 780 (CA) at [38].
46 A Butler Equity and Trusts in New Zealand, above n 24, at 33.

47 Ibid, at p 32.
48 Ibid, at p 29-30.
49 Corin v Patton (1990) 169 CLR 540 at 557 per Mason CJ and McHugh J.
50 I C F Spry Equitable Remedies (7th ed, Pyrmont, NSW, LawBook Co, 2007) at 6.

51 Ibid.

Summary judgment compared with interim injunction

[76]     West Harbour has sought an order for discharge of the townhouses mortgage by the alternative applications.   This has presumably been done because there are differences in some of the applicable principles.   Sims’ Court Practice contains a convenient discussion of some differences between a mandatory interim injunction and summary judgment.52

If there is clearly no defence then summary judgment is more appropriate; the court does not have to consider the balance of convenience, the worth of an undertaking as to damages, or equitable discretionary matters.

A mandatory injunction may be granted although there may be some defence to the principal claim. The court must consider the balance of convenience including the consequences to the defendant if it were to turn out that an injunction ought not to have been granted. If the injunction has the effect of a final order the consequences may include an irreversible change to the position of the defendant. The consequences to the defendant of inflicting an irreversible change of circumstances in error must be assessed and weighed in the light of the effectiveness of a remedy under the undertaking as to damages. It may be necessary to make a mandatory injunction conditional on the plaintiff preserving specific property for the benefit of the defendant until trial or on the plaintiff taking some step to protect the defendant.

[77]     That passage records differences in general terms.  In this case, however, and as I have already indicated, the substance of the relief sought by West Harbour, albeit by alternative procedures, is an order for specific performance.  As observed in one case, “it is a considerable step to take to effectively give specific performance of” an

agreement  by way of  an  interlocutory  application  for  a  mandatory injunction.53

Furthermore, because the substance, whatever route is taken, is an order for specific performance, I am satisfied that the principles bearing on the exercise of the ultimate discretion  applying  on  an  application  for  specific  performance,  should  also  be applied to the alternative applications.

Affirmative defences

[78]     Waipareira advances three affirmative defences.   The first is that the joint venture contract has been frustrated.  Mr Dale referred to BP Exploration Co (Libya)

52 Sims’ Court Practice, (Butterworths, Wellington, 2012) at 104,108.

53 Weddell NZ Ltd v Taylor Preston [1993] 2 NZLR 104 at 110.

Ltd v Hunt.54    He placed some emphasis on the first instance observance of Robert Goff J that “the fundamental principle underlying” the United Kingdom Law Reform (Frustrated Contracts) Act 1943 (on which the New Zealand Frustrated Contracts Act

1944 is modelled), “is prevention of the unjust enrichment of either party to the contract at the other’s expense”.55     Mr Dale also cited A Worker v A Farmer,56 referring to observations of Bingham LJ in J Lauritzen AS v Wijsmuller BV;57 Nielsen v Dysart Timbers Ltd;58  and Waterfront Capital Trustee 1 Ltd v Hanover Finance Ltd.59   If a contract is found to have been frustrated, the consequences are determined in accordance with the provisions of the Frustrated Contracts Act 1944.

[79]     The second affirmative defence is that the joint venture agreement is void because of uncertainty as to material terms.  Mr Dale referred to the discussion in Burrows Finn and Todd Law of Contract in New Zealand60  and Wellington City

Council v Body Corporate 51702 (Wellington).61

[80]     The third affirmative defence is that the joint venture agreement is subject to implied terms in at least two important respects and substantive orders should not be made until all the terms have been determined.  The first implied term is that West Harbour is not entitled to a discharge of the townhouses mortgage unless and until the existing mortgages over the 13 units have been refinanced followed by transfer of title to Marina Resort.  This relates to what I have called reciprocity.  The second contention is that a term is to be implied, if it is not express, to the effect that West Harbour is bound to meet the entire cost of all necessary remedial work to the units.

Mr  Dale  referred  to  Rod  Milner  Motors  Ltd  v  Attorney-General;62   Devonport

Borough  Council  v  Robins;63    BP  Refinery  (Westernport)  Pty  Ltd  v  Shire  of

54 BP Exploration Co (Libya) Ltd v Hunt (No 2) [1982] 1 All ER 925 (EWHC, EWCA, HL).

55 Ibid, at 937.

56 A Worker v A Farmer [2010] NZCA 547; (2011) 9 NZELC 93,694; [2010] ERNZ 407; (2010) 8

NZELR 156.

57 J Lauritzen AS v Wijsmuller BV [1991] Lloyds’ Rep 1 at 8.
58 Nielsen v Dysart Timbers Ltd [2009] NZSC 43; [2009] 3 NZLR 160 at [30].

59 Waterfront Capital Trustee 1 Ltd v Hanover Finance Ltd HC Auckland CIV-2009-404-6241, 11

August 2010, Associate Judge Abbott, at [48]-[53].

60 J Burrows, J Finn and S Todd Law of Contract in New Zealand (4th ed, LexisNexis, Wellington,

2012) at 91, 97.

61 Wellington City Council v Body Corporate 51702 (Wellington) [2002] 3 NZLR 486.
62 Rod Milner Motors Ltd v Attorney-General [1999] 2 NZLR 568 at 579.

63 Devonport Borough Council v Robins [1979] 1 NZLR 1.

Hastings;64  and the discussion in Burrows Finn and Todd Law of Contract in New

Zealand.65

Conclusion on specific performance injunction

[81]     In the light of the preceding survey of the facts and the law I am satisfied that West Harbour is not entitled to the order it seeks.   On the summary judgment application, it has not established that Waipareira has no defence.   The essential reason for this is that it is reasonably arguable, at the least, that West Harbour is not ready and able to settle, even though it may express willingness to settle

[82]     The interlocutory application for a mandatory interim injunction must also be dismissed for the same reason because the application is, in substance, no different from the order sought by way of summary judgment.

[83]     There  are  further  or  alternative  reasons  to  dismiss  the  applications  for discharge of the townhouses mortgage.  These include, but are not limited to, matters of discretion for declining the orders sought.

[84]     I will set out my reasons for these conclusions under two headings related to the two broad conclusions just stated.

Ready, willing and able to settle (reciprocity)

[85]     For West Harbour to obtain the relief it seeks it must establish that it is not reasonably open to argument that it is not ready, willing and able to settle.   The proposition is put with that double negative because West Harbour must establish that Waipareira has no defence.  The same requirement arises, in substance, on the application for the interim injunction.  The issue is more conveniently considered by asking whether West Harbour has positively established that it is ready, willing and able to settle.  The broad area of enquiry in this regard concerns what I have called

reciprocity: do the arrangements between the parties mean that West Harbour is not

64 BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 16 ALR 363.

65 Burrows Finn and Todd Law of Contract in New Zealand, above n 60, at 218-219.

entitled to an order for discharge of the townhouses mortgage without obligations owed to Waipareira being met before or at the same time as the granting of the discharge?  There are two parts to this: (1) Are there reciprocal obligations – things that Waipareira is entitled to receive in exchange for discharge of the townhouses mortgage? (2) If so, was and is West Harbour in a position to ensure that Waipareira gets what it is entitled to?

[86]     The answer to both questions falls firmly in favour of Waipareira.

[87]     The reasons why there are reciprocal obligations, as a matter of fact, are in large measure found in my findings of fact above at [26]-[35], with these findings in turn  based  upon  or  clarified  in  the  discussion  of  the  evidence  in  the  earlier paragraphs.    The  primary things  that Waipareira  is  entitled  to,  in  exchange  for discharge of the townhouses mortgage, are refinancing of the mortgages over the 13 units, before or contemporaneously with transfer of title to those units to Marina Resort, and transfer of title to the units from West Harbour to Marina Resort.  This includes things that need to be done by Marina Resort.  This, in my judgment, does not  modify  West  Harbour’s  reciprocal  obligations;  it  does  not  modify  West Harbour’s obligation to be ready, willing and able to settle.  In this case, in terms of the agreements the parties entered into, West Harbour’s ability to settle, and probably its readiness to settle, happens not only to require transfer of title to the units, but also the refinancing to be done in a direct sense by Marina Resort.

[88]     I am further satisfied that West Harbour is not ready and it is not able to secure to Waipareira a refinancing of the mortgages and transfer to Marina Resort of the title to the 13 units subject to new mortgages.   These obligations are quite possibly incapable of being performed at this date, and the position appears to have been no different when this proceeding was commenced.   This is because Marina Resort does not appear to have, directly, or indirectly through its shareholders, the financial capacity to refinance the mortgages over the 13 units.  West Harbour has referred to the possibility of transferring title to the units subject to the existing mortgages.  This does not demonstrate that West Harbour is ready, willing and able to settle, because it is not what the parties agreed.  Moreover, even if both Waipareira and Marina Resort were willing to take title subject to the existing mortgages, this

may not be possible without the consent of the existing mortgagees.   There is no evidence from the mortgagees that such consent would be forthcoming.   On the evidence as it stands, there is a strong case that West Harbour is not ready and able to settle.  I have not further considered the question of willingness.  It is unnecessary to do so.

[89]     It is appropriate to make some further observations under this heading and

firstly in respect of some of Dr Harrison’s submissions.

[90]     Dr Harrison placed emphasis on the fact that West Harbour was not seeking specific performance of the joint venture in its entirety.66    This point would assist West Harbour only if Waipareira’s obligation to discharge the townhouses mortgage was independent of any other unsatisfied obligation of West Harbour  arising in respect of the establishment of the joint venture.  A plaintiff cannot seek to avoid the obligation to be ready, willing and able to settle by bringing an application which simply leaves those obligations to one side.

[91]    Dr Harrison submitted that Waipareira “cannot take the benefit of West Harbour’s agreed contractual contribution (by treating the 13 West Harbour apartments as a JV assets), while at the same time refusing” to provide a discharge of the townhouses mortgage. 67    This submission was expanded by reference to what was described as “a massively unfair triple bind” for West Harbour said to arise from the following: (1) West Harbour has not been able to deal with the three townhouses

subject to the townhouses mortgage, by raising new finance or selling the townhouses; (2) West Harbour has “relinquished ownership and control of the 13 apartments” to Marina Resort; and (3) West Harbour still has liability under the mortgages over the 13 units.   In my judgment the comparisons drawn are not the relevant ones.  The matters to be brought into account in relation to discharge of the townhouses mortgage are the reciprocal obligations.   In addition, in respect of the matters Dr Harrison referred to, the suggested “triple bind” is not the one-sided state of affairs that is suggested.   The rents from the units that West Harbour would

otherwise have received have gone to Marina Resort, but at the same time the

66 At para 23 of the written submissions, recorded above at [6].

67 At para 25.1 of the written submissions recorded above at [7]

interest that Waipareira would otherwise have received from West Harbour under the townhouses mortgage has not been paid.  What is more, the financial consequence for  West  Harbour  is  probably  neutral,  but  for  Waipareira  it  is  at  this  point  a significant negative figure.  The consequence for West Harbour is probably neutral because all of the rents, in West Harbour’s hands, would have had to go to payment of the interest on the mortgages, and that is how it has in fact been applied through Marina Resort.  The consequence for Waipareira, assessed on these terms (and being

terms raised by West Harbour) is the loss of interest on the loan of $2 million.68

Non-payment of interest to Waipareira may be part of the joint venture agreement, but that is the very point; at the very least it is not one-sided detriment to West Harbour.

[92] At paragraph 25.2 of his submissions, Dr Harrison referred to West Harbour’s contention that there has been continuing breach of contract by Waipareira. That contention is answered, as a matter of law, by the principle discussed above at [68].

[93]     At paragraph 25.3 Dr Harrison summarised the submission that West Harbour is entitled to a discharge because the townhouses mortgage does not secure a debt.  If there had been no further dealings between West Harbour and Waipareira after the townhouses loan was made, other than repayments by West Harbour, West Harbour would have been entitled to a discharge when the loan had been repaid in full.  It is also likely, as a matter of conventional practice, that West Harbour would have required a discharge instrument on tendering the final payment.   But a great deal changed after the loan was first advanced and the townhouses mortgage was granted. It is those events which mean that it does not necessarily follow that, because the debt has been released, the mortgage must be discharged.  Dr Harrison referred to s 102 of the Land Transfer Act 1952 which has mandatory provisions for variation of the terms of mortgages registered under the Act.  The facts establish that the parties made substantial changes to their contractual relationships, including those arising under the mortgage.  A failure to comply with the formalities relating to a variation of the terms of a registered mortgage does not mean that the agreement between the

parties to the mortgage is unenforceable by one against the other.   If that was the

68 As to which see above at [25].

case it might be arguable that the mortgage could not be discharged because the money lent to West Harbour has not been repaid to Waipareira.

[94]     Some further matters may be noted.  A practical rationale for reciprocity may readily be seen from the present facts in relation to risk. An obligation on Waipareira to discharge the mortgage at the same time it receives the reciprocal obligations owed to it may readily be implied from the joint venture agreement as a whole.  But Waipareira cannot be required to bear all of its share of risk in the joint venture, which will arise when the townhouses mortgage is formally discharged, unless at the same time West Harbour takes on all of its share of the risk in the joint venture.  On the present evidence the parties appear to be some considerable distance from that state of affairs.

[95]   It is an express pre-condition of the conveyancing settlement, including discharge of the mortgage, that West Harbour attend to the painting and maintenance works stipulated in the heads of agreement.69   There may have been some agreement to defer this, but this seemingly modest obligation on West Harbour has still not been met.  This alone might not have been determinative, but in the light of the evidence as to West Harbour’s solvency, it is not insignificant.  In referring to this particular

item I have not overlooked Dr Harrison’s advice that West Harbour would now be willing to pay Marina Resort a sum of $50,000.  Perhaps that sum can be found, but that offer then needs to be put against the fact that West Harbour apparently has had to effectively borrow $110,000 from its lawyers in respect of fees.  And tendering a sum of money does not constitute compliance with the express contractual obligation to do the work before the transfers.  If nothing else, matters of this nature go to the Court’s ultimate discretion and in support of a conclusion that the relief sought should not be granted.

[96]     I am satisfied for these reasons that West Harbour is not entitled to an order that the mortgage be discharged.

69 As noted above at [16](c).

Discretionary and other matters

[97]     As the heading indicates, not all of the factors noted under this heading bear on discretion.  For example, I note an argument reasonably available to Waipareira that the townhouses mortgage, as an all obligations security, remains available as collateral security for the sum owing under the apartments mortgage.  This goes to a matter of defence rather than discretion.  However, it is convenient to note under one heading some of the considerations justifying refusing the order for discharge in addition to West Harbour’s failure to establish that it is ready, willing and able to settle.

[98]     On an  application  for specific performance,  the order may  be refused  if damages  would  be an  adequate remedy.70      In  relation  to  that  general  principle, damages, rather than discharge of the mortgage, would be unlikely to be an adequate remedy for West Harbour.71     This point, however, is not presently relevant.   The relevant consideration in respect of the adequacy of damages, is the adequacy of that form of relief compared with the granting or the refusing of the order on these applications (and whether the order is a summary judgment for specific performance or an injunction).  This consideration firmly favours declining the orders sought at this stage.  If in the end – that it to say, following a substantive hearing into all issues

– West Harbour is held to be entitled to discharge of the townhouses mortgage without having to meet reciprocal obligations earlier referred to, it is not clear as to what loss, or what significant loss, West Harbour might suffer apart from, perhaps, damages for loss of use of the asset.  However, if there is an order for discharge now, and the Court concludes after a substantive hearing that West Harbour was not entitled to discharge without meeting reciprocal obligations, the position for Waipareira is likely to be quite different.   The evidence presently indicates a reasonable degree of likelihood that Waipareira would lose all of the $2 million that, on the present premise, it should still have had secured under the townhouses mortgage.    This is because, if the mortgage is discharged, West Harbour will be free

to deal with the formerly mortgaged townhouses in whatever way it wishes.  There is

70 This is noted in the introduction to the discussion of specific performance in Butler Equity and

Trusts in New Zealand, above n 24, reproduced above at [62].

71 Unless the damages were for a sum equal to West Harbour’s total equity in the mortgaged properties excluding the amount of the townhouses loan; not a realistic alternative.

a reasonable degree of probability that, at the conclusion of a substantive hearing, West Harbour will not be able to provide Waipareira with the same, or equivalent, security for a debt of $2 million.

[99]     The  townhouses  mortgage  is  an  all  obligations  mortgage.    Dr  Harrison pointed out, the meaning of the expression “all obligations” is not defined in the mortgage itself, or in any other formal agreements between the parties.   However, this does not mean that the provision has no effect, unless it cannot be given meaning by reference to the relevant agreements between the parties as a whole and the factual matrix.   The townhouses loan agreement indicates that the mortgage was intended to secure more than the loan of $2 million and interest.  And the general context makes it reasonably arguable that the townhouses mortgage provides security for at least all financial obligations of West Harbour to Waipareira, whether arising

under the original townhouses loan or otherwise.72   If the provision has the extended

meaning, it would, on the face of it, provide additional security for the amount owing under the apartments mortgage, currently said to be around $830,000.  It may also provide security for West Harbour’s obligations to Waipareira under the joint venture agreement.  Apart from the reciprocal obligations, this may cover any imbalance in the advances of the two parties to Marina Resort.

[100]   The matters discussed to this point are indicative of the extent of factual conflict in this case, with a range of contentions advanced by Waipareira carrying sufficient weight to warrant all matters going to trial.

[101]   On the application for the interim injunction, West Harbour has to meet the particularly high threshold applying to an interim injunction of a mandatory nature and one which will be likely to be determinative. That threshold has not been met.

[102]   The order West  Harbour seeks  arises  out  of the joint  venture agreement between the parties.   Another part of that joint venture is the dispute resolution procedure carefully set out in clause 11 of the heads of agreement.  Waipareira has

said that it wishes to pursue this procedure.   There may not be much utility in

72 See the discussion of extended meanings of “all obligations” provisions in mortgages in Hinde McMorland & Sim Land Law in New Zealand (looseleaf ed, LexisNexis) at para 15.032 and cases there referred to.

pursuing it if the townhouses mortgage is discharged.   Giving Waipareira an opportunity to pursue the procedure formally agreed by the parties, and proceeding with it before the main bridge is burnt, is a further reason to exercise the discretion against West Harbour.

[103]   There are the affirmative defences advanced by Waipareira.  The contention that the joint venture agreement is void for uncertainty does not appear, at this stage, to have much traction.  However, there presently appears to be more substance in the defences of frustration of contract and the implication of terms which, if implied, may mean West Harbour is not entitled to the discharge without other things being done.  In relation to the contractual frustration argument, Dr Harrison submitted that the factors put forward by Waipareira would not amount to frustration in law.  He submitted that they are simply the consequences of the risks associated with the joint venture that was entered into.  There is some force in this in relation to a number of the factors referred to by Mr Dale.  However, I am satisfied that there is sufficient in this defence, in relation to some factors referred to, to warrant this being included in the matters weighing against granting the order for discharge of the mortgage.

[104]   The contractual frustration argument points to a further reason for declining to make the order sought. This is that, if the townhouses mortgage is discharged, this is reasonably likely to prevent relief being granted in the substantive proceeding which might otherwise have been granted.   Granting the order for discharge now may in  fact  mean  that  a  substantive  proceeding  is  not  pursued.    The  evidence presently before  the  Court  indicates  that  it  is  possible that  there  is  no  realistic prospect of the joint venture proceeding.   That may come about because the conveyancing settlement cannot happen because of the insolvency of West Harbour, or Marina Resort.   Insolvency of either company would make the prospect of the conveyancing settlement being completed reasonably remote.   Insolvency of both makes it highly improbable.  I am referring here to practical ability to proceed.  To that needs to be added the legal constraints on directors of a company from allowing the company to continue to operate when it is insolvent.  If the joint venture cannot proceed,  Waipareira  (or  West  Harbour)  may  be  entitled  to  an  order  directing rescission of the joint venture, or a declaration that cancellation of the joint venture agreement by one of the parties is valid, giving rise to consideration of relief under

the Contractual Remedies Act 1979.   The former might require relief in equity to restore the parties to their original positions (restitutio in integrum).73     This may arise, at least in part, because of the acknowledged fiduciary obligations between the parties.  It may arise because of terms to be implied in the joint venture agreement, particularly having regard to the range of matters not covered.   In a contractual context, the Court has power under s 9 of the Contractual Remedies Act 1979 to

grant a wide range of relief.  Under s 9(2)(a) the Court may:

Vest in any party to the proceedings, or direct any such party to transfer or assign to any other such party or to deliver to him the possession of, the whole or any part of any real or personal property that was the subject of the contract or was the whole or part of the consideration for it.

[105]   Also of relevance are the provisions of s 9(4) when considered in the light of the facts of this case.  Section 9(4) is as follows:

In  considering  whether  to  make  an  order  under  this  section,  and  in considering the terms of any order it proposes to make, the Court shall have regard to—

(a)       The terms of the contract; and

(b)       The extent to which any party to the contract was or would have been able to perform it in whole or in part; and

(c)       Any expenditure incurred by a party in or for the purpose of the performance of the contract; and

(d)       The value, in its opinion, of any work or services performed by a party in or for the purpose of the performance of the contract; and

(e)       Any benefit or advantage obtained by a party by reason of anything done by another party in or for the purpose of the performance of the contract; and

(f)       Such other matters as it thinks proper.

[106]   If contractual frustration is established, both parties will be entitled to the range of relief available under the Frustrated Contracts Act 1944.

[107]   Apart  from  the  real  uncertainty  relating  to  the  ability  of  the  parties  to complete  the  conveyancing  settlement,  there  is  a  range  of  other  considerations

indicating that it is reasonably unlikely that the joint venture will proceed.  These are

73 See, for example, A Butler Equity and Trusts in New Zealand, above n 24, at 862, para 28.1.3 and, more generally, chapter 28.

matters that would arise after completion of the conveyancing settlement.  However, if the Court concludes, following a full trial on all matters, that the joint venture is doomed even if the conveyancing settlement can proceed, that may provide grounds for,  in  effect,  unwinding  all  matters  and  restoring  the  parties  to  their  original positions.    Difficulties  which  may  arise,  as  indicated  by  the  evidence,  include inability to obtain all three of the remaining units, inability to meet the cost of the work to make the existing units weathertight, and inability to obtain finance to proceed with stage one of the development.  In the context of this case the sums for each item are large.   As the evidence stands at present, the prospect of this joint venture finding the money for any of them appears remote.

[108]   For all of these further reasons I am satisfied that West Harbour is not entitled to the order it seeks for discharge of the townhouses mortgage.

Appointment of receiver

[109]   West Harbour seeks an order appointing a person to act as a receiver of the joint venture, or of Marina Resort, or both.   This would be for the purposes of winding up and realising the assets of the joint venture and holding the proceeds pending further directions from the Court.

[110]   Waipareira accepts that the Court has jurisdiction to appoint a receiver, but opposes such appointment.   Reasons advanced by Mr Dale for Waipareira’s opposition were said to be “essentially practical” and principally for the following reasons (as stated in his written submissions):

Marina Resort does not have title to the [units] or any resources of its own save for [a marina berth].

Any receiver would undoubtedly want a substantial indemnity before marketing the  apartments for  sale,  particularly given  the  uncertainty about the extent of the remedial works required.

[Appointment of a receiver would trigger] the default provisions in the mortgages.

Mr Dale also referred to Waipareira’s wish to pursue the procedure set out in clause

11 of the heads of agreement.  He submitted that this would make “practical sense, as

well as avoiding the stigma of a receivership.   It also means that the parties are contractually obliged to meet the independent expert’s costs.”

[111]   I apprehend that West Harbour’s application was founded in considerable measure on the premise that there would be an order for discharge of the townhouses mortgage, but this has not eventuated.   Also, a receiver would have considerable difficulty in  proceeding  because  the  rights  and  obligations  of  all  of  the  parties involved are not clearly defined.   I am further in broad agreement with Mr Dale’s submissions.

[112]   For these reasons the application for appointment of a receiver is declined.

Injunction relating to joint venture assets

[113]   This is the application for an order in paragraph 1.4 of the application dated

29 May 2012.  It is an application for an interim injunction restraining Waipareira and its employees or agents from dealing with the management of the joint venture and its assets without West Harbour’s consent or a Court order.  I am unsure whether this application was being pursued.  In case I have overlooked matters in this regard, and West Harbour still seeks this order, the application in that regard is adjourned. West Harbour may bring the matter on for hearing.   Otherwise disposal of this application should be dealt with in case management memoranda referred to below.

Injunction in respect of Waipareira’s mortgagee powers

[114]   West   Harbour   sought   interim   injunctions   restraining  Waipareira   from exercising a power of sale or any other power exercisable under the townhouses mortgage and the apartments mortgage.  Undertakings in that regard had earlier been given by Waipareira.  Mr Dale confirmed that they continue.

Result and further directions

[115]   The orders sought by the plaintiff in paragraphs 1.1, 1.2 and 1.3 of  the

plaintiff’s application dated 29 May 2012 are dismissed.

[116]   The order sought in paragraph 1.4 of the application is adjourned.

[117]   The orders sought in paragraphs 1.5 and 1.6 of the application are dismissed following the further undertakings of the first defendant that it and its employees and agents shall  not,  without  leave of the  Court,  take any steps  or further steps  to exercise a power of sale or any other power exercisable by a mortgagee in the event of default under the mortgages described in paragraphs 5 and 14 of the first amended statement of claim.  The first defendant has leave to seek a variation of the terms of this undertaking in case the terms do not properly reflect what was intended.  The plaintiff has leave to apply further in respect of the undertaking, as recorded, if the plaintiff considers it does not adequately protect the plaintiff’s position.

[118]   Any application  for  costs  should  be made, by memorandum,  within  one month of the date of this judgment, with any response by memorandum within a further month.

[119]   For the purposes of case management, the parties are to file memoranda by Friday, 27 July 2012 setting out proposals for the next steps to be taken in the proceeding, whether the application in paragraph 1.4 is to be pursued, whether the procedure under clause 11 of the heads of agreement is to be pursued, and in respect of any other matters relevant to disposal of the proceeding.  The memoranda, or joint memorandum if matters are agreed, are also to record whether the parties seek a case management conference, in which event that is to be arranged by the Registrar on the next available date after the filing of the memoranda.   If a case management conference is not sought, on receipt of the memoranda the file is to be referred to the

Duty Judge for directions.

Woodhouse J