Whitford Village Holdings Limited v Coumat Limited
[2015] NZHC 1787
•31 July 2015
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-001471 [2015] NZHC 1787
IN THE MATTER of section 145 of the Land Transfer Act
1952
BETWEEN
WHITFORD VILLAGE HOLDINGS LIMITED
Applicant
AND
COUMAT LIMITED Respondent
Hearing: 23 July 2015 Appearances:
T Allan and S Powrie for Applicant
S Barter for RespondentJudgment:
31 July 2015
JUDGMENT OF VENNING J
This judgment was delivered by me on 31 July 2015 at 11.00 am, pursuant to Rule 11.5 of the High
Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Grove Darlow & Partners, Auckland
Barter & Co, Auckland
WHITFORD VILLAGE HOLDINGS LTD v COUMAT LTD [2015] NZHC 1787 [31 July 2015]
Introduction
[1] Coumat Limited owns approximately 10 ha of land known as Whitford Village Green at Whitford, Auckland. By an agreement dated 5 September 2014 (the ASP) Coumat agreed to sell the land to Whitford Village Holdings Limited (Whitford Village). The agreement was in substitution for an earlier agreement between Whitford Village as purchaser and Whitford Property Developments Limited as vendor.
[2] To protect its interest under the agreement for sale and purchase Whitford
Village lodged a caveat claiming an interest as the purchaser under the ASP.
[3] On 9 June 2015 Coumat’s solicitors gave notice of cancellation of the ASP on the grounds Whitford Village had failed to settle in accordance with a settlement notice which required settlement by 8 June 2015.
[4] Whitford Village subsequently received a notice requiring it to sustain the caveat. It then issued these proceedings for an order that the caveat not lapse.
Principles
[5] The principles to apply on an application such as this have been settled by
Court of Appeal authority. In Sims v Lowe the Court of Appeal stated:1
It is clear that this summary procedure for the removal of a caveat against dealings is wholly unsuitable for the determination of disputed questions of fact. From this it follows, and has been consistently held, that an order for the removal of such a caveat will not be made under s 143 unless it is patently clear that the caveat cannot be maintained either because there was no valid ground for lodging it or that such valid ground as then existed no longer does so.
The onus is on the caveator to justify the existence of the caveat.
[6] Although Sims v Lowe involved an application to remove a caveat the same principles apply to an application to sustain a caveat. The onus is on the applicant to
show it has a reasonably arguable case for the interest claimed.
1 Sims v Lowe [1988] 1 NZLR 656 (CA), at 659–660.
[7] Although during the course of submissions counsel referred to the balance of convenience and authorities discussing the residual discretion test, where the caveat is based on an agreement for sale and purchase, the balance of convenience and residual discretion will rarely be relevant considerations. The concepts do not arise in this case.
[8] Under the conditional agreement for sale and purchase Whitford Village obtained an equitable interest in the property which would support the caveat.2 The question in the present case is whether that interest has been terminated by Coumat’s cancellation of the ASP. Put another way, the issue is whether the plaintiff can satisfy the Court it is reasonably arguable Coumat was not entitled to cancel so that the matter must be resolved at a full hearing.
Whitford Village’s case
[9] Whitford Village claims Coumat was not entitled to cancel the agreement for sale and purchase for the following reasons:
(a) Coumat had caused delay in the progress of the application for resource consent;
(b) the settlement notice was invalid because:
(i)Coumat was not in a position to provide easements at settlement which it was required to do;
(ii) the parties had agreed the settlement date was to be 8 June
2015. Coumat’s cancellation relied on a settlement notice
issued prior to the agreed settlement date of 8 June 2015;
(iii)if the settlement notice was otherwise effective Coumat wrongly purported to cancel the agreement prior to the time it
would have been entitled to cancel; and
2 Bevin v Smith [1994] 3 NZLR 648 (CA); and McDonald v Isaac Construction Co Ltd [1995] 3
NZLR 612 (CA), 619.
(c) In early June Mr Hayhow, the director of Coumat, represented to Mr Stephens, the director of Whitford Village, that if Whitford Village paid $36,566.28 Coumat would provide a further one month extension for settlement.
The delayed application for resource consent
[10] Whitford Village first argues that the delay by Coumat in applying for resource consent affected Coumat’s right to cancel. To deal with the issues raised by Whitford Village it is necessary to refer to the background in a little more detail.
[11] The agreement between Whitford Property Developments Ltd and Whitford Village of 11 June 2014 was for the sale of the Whitford Village Green land for $21 million. Clause 20 provided the agreement was subject to and conditional upon a resource consent being obtained to undertake the subdivision. The resource consent was to be obtained by 19 December 2014 with time being of the essence but, in the event consent was not obtained by that date, the parties could extend the date for obtaining the consent to 19 June 2015. The agreement contemplated the resource consent would include a wastewater disposal condition which was an integral part of the agreement.
[12] Around 11 August 2015 Coumat, Whitford Property Developments Ltd and Whitford Village entered a deed of novation in relation to the agreement and subsequently, at Mr Hayhow’s request, Whitford Village agreed to enter the ASP directly with Coumat.
[13] The ASP provided for the sale of two lots, of 6.3075 ha and 2.3978 ha respectively. Whitford Village intended to develop the land into a 105 lot subdivision. But any development needed an acceptable wastewater treatment solution because wastewater from the village of Whitford and surrounding areas could not adequately be treated by the existing Auckland Council infrastructure.
[14] Clause 20 provided for the resource consent as follows:
20.0 Resource Consent
20.1 This agreement is conditional on the Vendor obtaining on or before
4th February 2015 a resource consent from Auckland Council for the subdivision of the property into 105 lots in accord in a with the attached
plan.
20.2 It is anticipated by the parties that Auckland Council will require as a condition of any resource consent that provision is made for the disposal of wastewater (the “Wastewater Solution”). In such an event the Vendor will deliver to the Purchaser at settlement the legal right to implement the Wastewater Solution (in the nature of easements in respect of survient land required to convey and dispose of the wastewater).
20.3 In the event the Vendor has not obtained a resource consent by 4th February 2015 then at the option of the Vendor this agreement may be cancelled or extended by agreement for a further period within which such consent might be obtained.
[15] When it became apparent that the resource consent would not issue by 4
February 2015 Mr Stephens contacted Mr Hayhow and requested an extension of time. Mr Hayhow informed Mr Stephens there were potential backup offers for the properties. He would not commit to granting any extension of the condition. Further he told Mr Stephens that Coumat’s mortgagee, Spinnaker Capital Ltd (Spinnaker) would not agree to any extension of the condition.
[16] Mr Stephens felt he had no option but to waive the requirement that the resource consent be obtained by 4 February. On 4 February he sent a letter to Coumat’s solicitors recording:
The resource consent has been lodged with Auckland Council. The resource consent has not yet issued. The purchaser has requested an extension to the resource consent condition but Mr [Hayhow] has indicated the vendor is not willing to grant the extension and that he requires the deposit released.
The purchaser waives the condition in clause 20. I understand after talking with Mr [Hayhow] that the vendor also waives the condition in clause 20. Please confirm.
[17] As it turns out, it appears the resource consent may not have been lodged until after 4 February. The parties have obtained a letter from Auckland Council which confirms that the application was lodged on 11 February.
[18] In his written submissions Mr Allan took the matter of delay no further than submitting that Coumat’s actions in failing to pay its consultants in a timely manner caused Whitford Village to agree to settle earlier than it otherwise would have
expected to. Whitford Village had agreed to the insertion of the 4 February 2015 date in the ASP on the basis of a representation that Coumat would obtain the consent by that date. It did not bargain on Coumat causing its consultants to cease working on the resource consent because they were unpaid. Mr Stephens says he had heard rumours from third parties that Coumat had not been paying its consultants. When he raised the matter with Mr Hayhow, he was told the consultants had been paid and the delay was as a result of the consultant not performing.
[19] Mr Allan noted that the date for the resource consent condition had been brought forward from June 2015 in the first agreement to April 2015 in the draft ASP, between Whitford Village and Coumat, then to 4 February 2015 in the final form of the ASP.
[20] I note that it is not strictly correct to say that the first agreement provided for the resource consent by June 2015. The initial date for the resource consent was 19
December 2014 with the ability to extend the date until 19 June 2015.
[21] However, nothing turns on the earlier agreement. The ASP provided 4
February as the date by which the resource consent was to be obtained. As at 4
February 2015 Whitford Village and Mr Stephens had a choice. In reliance on cl
20.1 they could have avoided the agreement, demanded the repayment of their deposit or they could, as they did, waive the requirement that the resource consent be obtained by 4 February, thereby making the contract unconditional, and taking the risk the resource consent might not be issued before settlement.
[22] The issue is the effect of that waiver. Mr Allan suggested that all Whitford Village waived was the time for obtaining the resource consent by 4 February but it did not waive Coumat’s obligation to provide the resource consent.
[23] In reply Mr Barter submitted that by its letter of 4 February, Whitford Village waived cl 20 in its entirety.
[24] Clause 20 is not well drafted. There is potential conflict between cls 20.1 and
20.3. Clause 20.1 is for the benefit of both parties. It enables either to terminate the
agreement if the condition was not met by 4 February 2015. However, cl 20.3 suggests that if the consent was not obtained by that date cancellation was at the vendor’s option or ultimately the date for obtaining the resource consent could be extended “by agreement”. But an extension “by agreement” was always a possibility under cl 20.1 in any event.
[25] While I accept there may be a difference between cl 20.1 which provided the date by which the resource consent was initially to be obtained and the obligation on the vendor contained in the second sentence of cl 20.2 to deliver the “legal rights” (presumably easements) to implement the wastewater solution, subclause 20.2 and the obligation under it presupposes that by settlement there would be a resource consent with a condition attaching to it relating to the wastewater solution. The short point is that in this case, as at both the original agreed settlement date of 2 April and the extended settlement date of 8 June, no resource consent had issued.
[26] The strongest point for Whitford Village is perhaps an argument that Coumat was in breach of its obligation to take all reasonable steps to comply with cl 20.1 and to have the resource consent issued by 4 February so that it would not have been entitled to terminate the contract on that basis on 4 February.
[27] The difficulty for Whitford Village, however, is that while Mr Hayhow may have threatened to take that step, Coumat was not required to do so because Whitford Village through Mr Stephens waived the requirement that the resource consent be obtained by 4 February.
[28] I have considered whether it would be arguable that the waiver was ineffective, as Mr Stephens and Whitford Village mistakenly believed Coumat had taken all reasonable steps to obtain the resource consent, when in fact that was not the case. Generally for an effective waiver Whitford Village must have had knowledge of all material circumstances when it waived its rights to rely on cl 20.1. In this case the material circumstances were the state of the application for the resource consent. It could be argued for Whitford Village that Coumat was in breach of its obligation to take all reasonable steps to advance the resource consent and
Whitford Village was unaware of that then Whitford Village could revisit its waiver of cl 20.1.
[29] There are a number of difficulties with that argument. The first is that Mr Stephens was involved in the development of the resource consent process and in fact seems to have full knowledge of the wastewater solution. His solicitors’ correspondence talks about Whitford Village’s “solution” for the treatment of wastewater. Next, to the extent there is a suggestion matters were delayed by Coumat’s failure to pay its consultants it appears that before 4 February Mr Stephens was at least aware of that possibility. Further, while there was an issue between Coumat and its consultants, it appears the consultants still carried on with their work, at least prior to February 2015. The invoices from the consultants show work was carried out in November and December 2014 and in January 2015.
[30] However perhaps the most fundamental difficulty for Whitford Village is that subsequently, and with full knowledge of the issue, Whitford Village effectively affirmed the agreement by agreeing to an extension of the date for settlement.
[31] On 21 April Whitford Village’s solicitors Grove Darlow forwarded a proposed draft deed to deal with an extension of the settlement to 8 June. Importantly the background to that deed recorded Whitford Village’s argument that Coumat had not taken all reasonable steps to obtain the consent:
D. Whitford Village alleges the Resource Consent Condition cannot be waived and that Coumat did not take steps to expeditiously obtain the Resource Consent, and in particular failed to pay the consultant’s invoices with corresponding effect that certain consultants suspended work in relation to the Resource Consent (“the Allegation”). Coumat denies the Allegation (“the Denial”) and maintains Whitford Village was obliged to settle on 2 April 2015.
[32] In response to that proposed deed Coumat’s lawyers replied by letter of 21
April in which they recorded at the outset:
Further to your earlier correspondence, we advise that the Deed that you have prepared is completely unacceptable to our client.
As it was made clear at our meeting on Thursday the 16th of April, our client is only prepared to vary the terms of the agreement on the basis that [Whitford Village] acknowledges that there is an unconditional agreement
for sale and purchase and that they failed to settle on the agreed settlement date of 2nd of April 2015. …
[33] Whitford Village confirmed their acceptance by signing a copy of the letter on 22 April 2015. By this time the parties had received notice from Mr Budd, a senior resource consent project manager at the Auckland Council confirming that the application by Whitford Village had been lodged on 11 February 2015, that all information requested by the Council had been provided, and that he anticipated to be able to make a determination on the resource consent on or around Friday, 8 May
2015. It is also apparent from the draft deed that Whitford Village was aware of the issue with the consultants. Despite that it affirmed the contract and agreed to the terms proposed by Coumat to extend settlement to 8 June.
[34] In short I conclude that any delay there may have been by Coumat in progressing the resource consent application did not affect the validity of the waiver of the resource consent condition by Whitford Village on 4 February. If I am wrong in that, Whitford Village’s subsequent affirmation of the agreement on 22 April with full knowledge of the allegation that Coumat had failed to advance the resource consent application means it is not open for Whitford Village to raise the issue now. The issue of any delay by Coumat in obtaining the resource consent does not assist Whitford Village and does not affect Coumat’s right to cancel the ASP.
The settlement notice issue
[35] Mr Allan submitted that cl 20, which was drafted by Coumat, does not treat the wastewater solution and the obligation to provide the legal right(s) (easements) as one and the same thing. He submitted that Coumat was not entitled to issue the settlement notice because it was not in a position to settle itself when it did. He referred to cl 10.1(2) of the ASP:
(2) The settlement notice shall be effective only if the party serving it is at the time of service either in all material respects ready able and willing to proceed to settle in accordance with this agreement or is not so ready able and willing to settle only by reason of the default or omission of the other party.
[36] While Whitford Village acknowledged it assumed the obligation to provide
the wastewater solution Mr Allan submitted it had not assumed Coumat’s express
obligation to deliver the necessary legal rights (easements) in order to implement the wastewater solution. As Coumat was not in a position to provide the legal rights as at 2 April, it was not in a position to issue the settlement notice.
[37] Mr Barter submitted that Whitford Village had assumed the responsibility for provision of the wastewater treatment plant which included all aspects of it. He noted that in Whitford Village’s solicitor’s letter of 1 April it was stated:
(d) The current consent will be specific in respect of treated waste water.
Whitford Village has been able to obtain a solution for the treatment of waste water which is exclusive to Whitford Village. If that
solution (being the treatment of waste water and the reticulation of
waste water around the adjoining Whitford Park Golf Course) is not available then any subsequent land owner of the property will need to obtain a variation to the resource consent …
[38] Mr Barter also submitted, in the alternative, that Mr Budd’s letter of 20 April made it clear there was no evidence that the Council had required the provision of the wastewater disposal system prior to settlement on 2 April. Further and in any event cl 20.2 only existed as an extension of cl 20.1. If cl 20.1 was waived, as it was, then cl 20.2 was of no effect. It was not logical to suggest that one could waive the requirement for a resource consent but still insist on the fulfilment of a condition dependent on such resource consent.
[39] I am not so sure that the position is quite as clear as Mr Barter submitted. Clauses 20.1 and 20.2 have different effects. Clause 20.1 provides for the time by which the resource consent is to be obtained. If it is not obtained by that date, either party could cancel the agreement. By waiving that clause Whitford Village waived their right to cancel the agreement and took the risk that by the agreed settlement date of 2 April a resource consent would not have been obtained. However, equally by that date, 2 April, a resource consent might have been obtained. If a resource consent had been obtained by settlement containing a condition for a wastewater solution, I consider Mr Allan’s point may have some merit. The obligation on Coumat under cl 20.2 arguably remained.
[40] However, as at 2 April when the settlement was due, the resource consent had not issued. In the absence of any resource consent with appropriate wastewater
solution conditions there could be no obligation on Coumat to supply easements. At the time it was speculative whether a consent might issue and, if it did, what the condition might be. Clause 10.1(2) of the ASP does not apply. Coumat was not in breach of any condition as at 2 April 2015.
[41] So even accepting Mr Allan’s argument that cl 20.2 created an obligation which survived the waiver of cl 20.1 the obligation was not engaged because no resource consent (with or without a wastewater solution condition) had issued by the agreed date for settlement on 2 April. The position had not changed by 8 June.
Invalid cancellation due to new settlement date
[42] Next Mr Allan submitted that, by the written variation of the sale agreement agreed to by Whitford Village on 22 April 2015 Whitford Village and Coumat agreed that the settlement date was to be extended to 8 June 2015. He submitted that Coumat’s later reliance on the settlement notice issued prior to 8 June was invalid. Having agreed to a new settlement date of 8 June, Coumat had to wait until 8 June, then if settlement had not occurred at that date, was required to issue a fresh settlement notice at that time. He submitted that was the effect of the definition of settlement date in the contract and the reference to settlement date in the letter of 21
April.
[43] I am not able to accept that submission. The reference to the settlement date being extended to 8 June 2015 must be read in the context of the entire agreement confirmed by Whitford Village’s acceptance of the solicitor’s letter of 21 April. The letter of 21 April provided inter alia:
The terms of the variation of the agreement are as follows:
1. The settlement date is extended to the 8th June 2015;
2.The expiry date of the settlement notice issued following the failure of your client to settle on the 2nd April is extended to 5pm on the 8th June 2015; …
[44] Mr Allan accepted that on his argument point 2 of the agreement had no purpose.
[45] However, points 1 and 2 of the letter make complete sense if the reference to the settlement date in paragraph 1 is taken as a reference to the ability of Whitford Village to comply with the settlement notice by 8 June. Such an interpretation is consistent with the context of the letter as a whole and particularly points 1 and 2. The reference to the settlement date being extended to 8 June in point 2 is not otiose as submitted by Mr Allan.
[46] Further, cl 10.2 of the ASP which provides for the notice to complete and remedies on default provides for the extension of the settlement date on the issue of a settlement notice:
10.2Subject to clause 10.1(3), upon service of the settlement notice the party on whom the notice is served shall settle:
(1) on or before the twelfth working day after the date of service
of the notice …
[47] The effect of cl 10.2 is to practically extend the settlement date to a date after service of the notice. That is what points 1 and 2 of the letter of 21 April provided for (and achieved) in this case.
Timing of the settlement notice
[48] Next Mr Allan submitted that the settlement notice was itself invalid because it was issued at 5.00 pm on 2 April before Coumat was entitled to issue a settlement notice. He noted that cl 1.1(29) of the ASP provided that a working day:
… [shall] be deemed to commence at 9.00 am and to terminate at 5.00 pm.
[49] Mr Allan noted that the facsimile receipt of the settlement notice at Grove Darlow recorded receipt of the settlement notice at 5.00 pm on 2 April. He submitted that the notice was issued prematurely, and was thus invalid. He submitted that the Supreme Court decision in Rick Dees Ltd v Larsen confirmed that the timing of notices and advice under the standard form agreement for sale and
purchase could be crucial.3
3 Rick Dees Ltd v Larsen [2007] NZSC 39, [2007] 3 NZLR 577.
[50] Mr Barter submitted that as the working day expired at 5.00 o’clock when
5.00 o’clock came and Whitford Village had not tendered settlement Coumat was entitled to issue the notice. Next, even if Whitford Village had until 5:00:00 to settle, the fax receipt disclosed it was received at 5.00 pm. There were 58 out of 59 chances of being received at 5:00:01 or later rather than it being received at 5:00:00.
[51] Finally Mr Barter submitted that there could be no suggestion that settlement had occurred at 5.00 pm or that Whitford Village was in a position to settle. The notice was valid.
[52] I agree with Mr Barter’s submissions on this point. The position in this case is quite different to that before the Supreme Court in Rick Dees. In that case the settlement notice expired 5.00 pm on 5 March 2004. The funds were deposited in the vendor’s solicitors’ trust account by 4.54 pm but the purchaser’s solicitors were not able to communicate that fact to the vendor’s solicitors until 5.07 pm. The vendor’s solicitors had, in the meantime, communicated notice of cancellation at
5.03 pm. The issues in that case were whether the purchaser was obliged to provide the vendor’s solicitors with advice of the payment and whether, until he did, the vendor was entitled to cancel.
[53] In the present case there can be no suggestion that Whitford Village was able to settle by 5.00 pm on 2 April 2015. As at 5.00 pm on that date Coumat was therefore entitled to issue a settlement notice. The issue in Rick Dees would only arise in this case if Whitford Village had purported to settle at 5.00 pm on 2 April
2015.
[54] Furthermore, and in any event, to the extent that there was any merit in this point, Whitford Village’s clear affirmation of the extension of the time for settlement to 8 June and its acknowledgement that “the expiry date of the settlement notice issued following the failure … to settle on the 2nd April is extended to 5 pm on 8th June 2015” on 22 April is again a complete answer.
Extension of settlement date by one month
[55] Finally Mr Allan argued that on behalf of Whitford Village that Mr Stephens negotiated an extension for settlement for a further period of a month with Mr Hayhow on behalf of Coumat so that Coumat was not entitled to cancel on 8 June.
[56] Pursuant to the agreement negotiated on 22 April Whitford Village had agreed to pay several sums to Coumat to keep the ASP alive and to provide for the extension of settlement to 8 June. Those payments included:
(a) penalty interest at the rate of 12 per cent from 2 April to settlement date monthly in arrears on the $14,097,320.74 being the difference between the balance of the purchase price and Coumat’s borrowing from Spinnaker;
(b)any rollover fee charged by Coumat’s mortgagee Spinnaker plus interest on the loan to the date of rollover and interest payments on the new loan from the rollover date; and
(c) Coumat’s reasonable legal costs.
[57] Various payments were made in accordance with that agreement. However, as at 31 May 2015 there was a shortfall of $35,676.80.
[58] Mr Stephens’ evidence about the shortfall amount is:
56.Whitford Village had been in discussions with Coumat regarding the Shortfall Amount. I had informed Mr Hayhow that additional funds were required over and above the Fund as the Fund had been exhausted.
57.I sent Mr Hayhow a text on Sunday 31 May, 7.30am telling him that Whitford Village would pay a month’s interest in advance. This was on top of the Shortfall Amount.
58.Mr Hayhow told me that he would not grant an extension of the contractual settlement date unless all amounts claimed by Coumat were paid. Mr Hayhow told me that if all amounts were paid (the only amount then unpaid was the Shortfall Amount) then Coumat would grant a one month extension (“Extension Agreement”) in
order to put in place arrangements to pay Coumat’s ongoing holding
costs.
59.Mr Hayhow told me that I would not be getting any further extensions and that Whitford Village needed to show him how it was going to settle at the end of the month. I really needed two months to complete settlement. Mr Hayhow was aware that my financiers required a one month extension and this was recorded in the finance offers. I believed it was possible to settle within one month at a push but I was more comfortable with a two month period. However I did not really have a choice as Mr Hayhow was only prepared to extend the settlement date by one month in terms of the Extension Agreement.
60.I took this to mean that once Whitford Village paid the Shortfall Amount the contractual settlement date was extended by one month and during that period Whitford Village would:
a) deposit funds to Grove Darlow to pay Coumat’s holding
costs as it had done previously with the Fund; and
b)would show Mr Hayhow Whitford Village’s finance offers and presale schedule which I believed would give Mr Hayhow the comfort he was seeking in terms of the ability to settle at the end of the month. We had not reached any agreement as to what Whitford Village needed to provide to Mr Hayhow in order to give him the comfort he needed but had discussed supplying loan offers and presale schedules.
I sent Mr Hayhow a text on 2 June 2015, 4.55pm stating that I had deposited the Shortfall Amount to Grove Darlow and that it will be paid to Inder Lynch on the following day, which was the 3rd of June.
61.Subsequent to the Extension Agreement, Whitford Village deposited into Grove Darlow’s trust account the Shortfall Amount and that Shortfall Amount was subsequently paid to Inder Lynch.
62.I sent Mr Hayhow a further text on 3 June, 6.24pm stating that I was now in a position to sign the two loan offers given the Extension Agreement.
63.The unsigned loan offers had previously been provided to Mr Hayhow at a meeting on the 29th of May between the two of us and Mr Shore of Global Pacific Limited. Global Pacific Limited are finance brokers who had arranged the second mezzanine loan offer.
64.I did not tell Grove Darlow of the Extension Agreement as I was limiting Whitford Village’s contact with Grove Darlow as Whitford Village was behind in payment of Grove Darlow’s fees.
[59] Mr Allan submitted that at some stage between Sunday 31 May at 7.30 am and 4.55 pm on Tuesday 2 June an agreement had been concluded to extend settlement for a further month. Mr Allan was constrained to suggest the agreement
was between those dates and times bearing in mind the content of the texts at that time between Mr Stephens and Mr Hayhow.
[60] So in short, Mr Stephens says Mr Hayhow agreed that if the shortfall amount was paid, the settlement date would be extended one further month to 8 July.
[61] There are a number of difficulties with Mr Stephens’ evidence. His evidence of the oral agreement he relies on is general in the extreme. There are no particulars of when, where or how it was concluded.
[62] His affidavit evidence is also inconsistent with and is contradicted by the text messages passing between the parties, the parties’ actions and even his own solicitor’s correspondence prior to the issue of this proceeding.
[63] In the text on 7.30 am on 31 May Mr Stephens said:
If I get your interest payments paid to you up front on Thursday of this week for a full month.… Are you able to give me another month on the settlement. I know you would be doing me a favour and I would appreciate it. But going back I did you a huge favour and changed the agreement for you because of Wayne Allen…. The original contract said settlement was 60 days after resource consent and the only one paying for that decision now is me big time. You have seen my offers and with a little more time ..which I am happy to pay you for I can settle with you and we can have a beer together and get on with our lives… Thanks [M]ike
[64] That can only represent a request by Whitford Village for an extension of a further month. There is no suggestion of an agreement.
[65] On 2 June at 4.55 pm Mr Stephens sent a further text:
Due to the long weekend the balance of funds will be in Grove [D]arlow
account 12 am tonight… So it will be to your lawyer tomorrow.
Mr Allan submitted that text evidenced the agreement which had been concluded that, on payment of the shortfall amount, the further month to 8 July would be granted. However, there is no reference in the text to that effect. As noted, the shortfall amount was payable anyway as consideration for the extension to 8 June
2015. The shortfall amount was overdue as at 31 May 2015 and was payable. Whitford Village was anxious to try and obtain a further extension to 8 July. If it had
any chance of achieving that it had to pay the shortfall. At best, Mr Stephens’ text of
2 June is silent on the issue or is perhaps ambiguous.
[66] Mr Hayhow’s text response to Mr Stephens on Wednesday 3 June is completely inconsistent with the suggestion there was any agreement for a further extension of one month past 8 June:
The only thing holding up resource consent approval is you. I have given sign off approval. Also will you be settling on [M]onday?
[67] There was no reason for Mr Hayhow to be asking if Whitford Village was going to settle on Monday (8 June) if, as according to Mr Stephens, agreement had been reached that another month had been negotiated. Further and importantly on Wednesday 3 June at 6.24 pm Mr Stephens wrote:
I can sign the loan offers and meet [their] conditions but I need a month. I can you pay up front for that month straight away. You will be 8 million richer in a month that is a guarantee from me…. These other offers will take time and need conditions meet… I only need a month and [your] over the line. Hope we can still work something out... But if we can’t all the best and I hope it works out for you Greg. We’ll still have that beer sometime cheers [M]ike
[68] That text is a clear concession there was no agreement for a further extension. Mr Stephens was still requesting the extension for a month (past 8 June) even though, on Mr Allan’s submission an agreement had been concluded for that extension by 4.55 pm Tuesday, the day before.
[69] There was then the further communication on Sunday 7 June at 9.00 am from
Mr Stephens:
So what’s going on are you going to give me another month or not… If so I need to get money put into lawyers account today so it’s cleared funds for tomorrow. Thanks
[70] Mr Stephens was apparently still seeking an extension for a further month pats 8 June on the basis Whitford Village would pay Coumat’s holding costs. Again the text does not suggest there was any agreement, rather the reverse, Mr Stephens was still asking for an extension.
[71] None of those text messages suggest in any way that a binding agreement for an extension of another month past 8 June had been concluded. Mr Allan suggested that there had been agreement as to one month and what was being requested was another month, in other words a two month extension. Given the background to the dealings between the parties I reject that submission as entirely implausible.
[72] Next, I note that in a letter of 16 June 2015 from Whitford Village’s lawyers to Coumat’s lawyers shortly after Coumat had cancelled the agreement the solicitors wrote:
There will now be an issue as to who said what and to whom in terms of whether or not Mr Hayhow agreed to extend the contractual settlement date. This will require a trial and a Court will not be able to decide such matters in the context of an application to sustain a caveat. … Mr Stephens informed the writer that the discussion was on 3 June 2015, which is of course after the April Letter. Please let me have your comments in respect of same as it seems sensible that the parties agree at this early stage that a substantive hearing will be a necessity.
[73] The suggestion that the agreement was concluded on 3 June is contrary to the case advanced before the Court.
[74] This is a case for the application of the principles established by the Privy Council in Eng Mee Yong v Letchumanan.4 Mr Stephens’ evidence of an agreement to an extension is inherently improbable, contrary to the contemporaneous text messages and is also contrary to the logic of the case. The background to the dealings between the parties prior to late May/early June, and the terms of the text messages passing between the parties are consistent with Coumat insisting on settlement by the extended date of 8 June 2015. Further Mr Stephens’ evidence as to the agreement is vague, general and imprecise. There is no reasonably arguable case
for an extension agreement in this case.
Summary/result
[75] For the above reasons I conclude that Coumat was entitled to cancel the ASP
in this case. The cancellation was valid.
4 Eng Mee Yong v Letchumanan [1980] AC 331 (PC).
[76] As a result of the cancellation the equitable interest that Whitford Village had in the property under the ASP was terminated and came to an end. There is no basis for the caveat to be sustained.
[77] The application to maintain the caveat is dismissed. The interim order sustaining the caveat is set aside.
Costs
[78] Coumat is entitled to costs. It would seem that costs on a 2B basis would be appropriate. However if counsel are unable to agree costs can be dealt with by way
of memoranda.
Venning J
2