Hickman and Others v Turn and Wave Ltd

JurisdictionNew Zealand
JudgeRanderson J
Judgment Date29 March 2011
Neutral Citation[2011] NZCA 100
Docket NumberCA796/200 CA798/2009
CourtCourt of Appeal
Date29 March 2011
Hickman & ORS
Turn And Wave Limited
Lester & Ors
Greenstone Barclay Trustees Ltd
Collingwood & Ors
Icon Central Ltd

[2011] NZCA 100


O'Regan P, Hammond and Randerson JJ





Appeal against a High Court decision dismissing the appellants' claim that they had validly cancelled sale and purchase agreements with Blue Chip — application to amend pleadings — appellants sought to cancel agreements based on breaches of the Securities Act 1978 and promissory estoppel — whether sales agents were agents of developers — whether sale and purchase agreements constituted securities offers and if yes, whether they were exempt under s5(1)(b) Securities Act 1978 (exemptions — interests in land).


P J Dale D W Grove and N R Campbell for Appellant

D J Chisholm and G P Blanchard for Respondent Turn & Wave Ltd

R B Stewart QC and D J Neutze for Respondent Greenstone Barclay Trustees Ltd

B O'Callahan and J Puah for Respondent Icon Central Ltd

  • A The application by the appellants to amend the pleadings in each case is dismissed.

  • B The appeals relating to the five appellants named at [19] are dismissed.

  • C Counsel for the remaining appellants are to confer with counsel for the other parties and inform the Court by memorandum within one month from the date of this judgment how the appeals by the other appellants are proposed to be dealt with.

  • D Costs are reserved. Counsel are to confer and file a memorandum within the same period on that subject.


(Given by Randerson J)

Para No



The parties


The proceedings


The Judge's findings


Issues on appeal


The Blue Chip companies


The Blue Chip investment products


The mainstream product


The joint venture product


Premium Income Product (PIP)


Put and Call agreement (PAC)


The Sale and Purchase Agreements (SPAs) and associated lease documents








The relationship between the developers and Blue Chip


The Barclay


The profit share agreement


The Westpac funding


The underwrite agreement


The Bianco


The Icon


The underwrite agreement


The Blue Chip marketing methods


The extent to which the developers were aware of the Blue Chip investment products and the ability of the purchasers to settle








The scope of the authority of the Blue Chip sales agents to act on behalf of the developers and the issue of imputed knowledge


The Judge's findings


The scope of agency — Greenstone and TWL


The scope of agency — Icon


Imputed knowledge


Imputed knowledge — Greenstone and TWL


Imputed knowledge — Icon


Summary on the issue of knowledge by the developers


The application to amend the pleadings


Promissory estoppel


The ability of the investors to settle without Blue Chip's support


Implied term


Interdependent agreements


The effect of the entire agreement clauses


Issues under the Securities Act



The purpose and scheme of the Securities Act


The definitions of “security”, “debt security” and “equity security”


The Culverden case


Are the Blue Chip investment agreements debt securities?


The JVAs


The PIP agreement


The PAC agreement


Lease arrangements


Does the exemption under s 5(1)(b) of the Securities Act apply in respect of Blue Chip investment agreements?

The JVAs


The PIP agreements


The PAC agreements


The lease


The consequences of any illegality under the Act; severability and tainting issues


Were the SPAs tainted by any illegality in relation to the Blue Chip agreements?







The Barclay development

Mr and Mrs Lester


Ms Janes


Mr and Mrs Hickman


Mrs Dick


Ms Andrews


Mrs Whyte


Mrs Crockett


Mr van Beek


Mr and Mrs Johnson


Mr and Mrs Bogardus


Mr Crawford-Greene


Mr Stewart


The Bianco Development

Mrs Hunt and Mr Dwight


Mr and Mrs Hickman


Mr and Mrs Britton


Mrs Bruerton


Mr and Mrs Busch


Mr Houkamau


Mr Hutchinson


Mr and Mrs Jacobsen


Mr Leach and Ms Holder


Mr Stewart


Mrs Whyte


The Icon Development

Mr and Mrs McFarlane


Mr Collingwood and Ms Scanlen


Mr and Mrs Ashby


Mr and Mrs Bagley


Mr and Mrs Cosgrove


Mr and Mrs Dragicevich


Mr and Mrs Herrick


Mr and Mrs Moore


Mr Stewart


Mr and Mrs Webber


Ms Aitkenhead



When the Blue Chip group of companies collapsed in February 2008, hundreds of investors suffered substantial losses. Many also found they were facing liabilities they had not counted upon having to meet. These appeals are concerned with investors who, as part of their investments with Blue Chip, signed agreements to buy apartments in three separate developments in Auckland City.


They bought “off the plans” on the basis that the apartments would be constructed with settlement to take place usually 18 to 24 months later. The respondent developers were not part of the Blue Chip group and when the construction of the apartments was complete they called upon the investors to settle the purchases. The investors declined to do so and purported to cancel the sale and purchase agreements (which we will refer to as “SPAs”).


Selected investors then sought declarations to the effect that they were entitled to cancel the agreements on a variety of grounds we discuss below. The High Court ordered under r 10.15 of the High Court Rules that it would determine, prior to trial, whether the selected investors were obliged to settle or whether they had validly cancelled their agreements.


In three judgments issued on the same day, Venning J found that the investors had not validly cancelled the SPAs. 1 The investors now appeal against those decisions.

The parties

It is convenient to refer first to the respondent developers and to the developments for which they were responsible:

  • (a) Greenstone Barclay Trustees Limited (Greenstone) undertook a development known as the Barclay.

  • (b) Turn and Wave Limited (TWL) was responsible for a development known as the Bianco.

  • (c) Icon Central Limited (Icon) undertook a development known as the Icon.


We will refer to the three separate sets of proceedings as the Greenstone, TWL and Icon proceedings respectively.


In the Greenstone proceeding there were more than 90 plaintiffs of whom 12 were selected for the purpose of determining the preliminary question. In the TWL

proceeding, there were more than 50 plaintiffs from whom 12 investors were selected. And in the Icon proceeding 11 were selected from some 30 investors. The investors were plaintiffs in the Greenstone and TWL proceedings but were defendants in the Icon proceeding. The cancellation issue was raised as part of their defence in that proceeding
The proceedings

Venning J was careful to clarify the limited nature of the proceedings:

  • •The judgment could only formally bind the parties selected as plaintiffs who participated in the hearing.

  • •Separate causes of action against lenders, mortgage brokers, valuers, Blue Chip entities and solicitors were left for another day.

  • •The judgments were concerned solely with the cancellation issue; they did not address whether the court should order specific performance of the SPAs against the individual plaintiffs.


The grounds on which the investors asserted they were not obliged to settle were:


The causes of action for misrepresentation and breach of the Fair Trading Act relied on misrepresentations made by Blue Chip sales agents. In order to give rise to the claimed right of cancellation, it was essential for the investors to establish that, in making the alleged misrepresentations, the Blue Chip agents were also acting as agents for the developers such that their statements should be attributed to the developers as principals.


Strictly speaking, a breach of the Securities Act is not a ground entitling the investors to cancel the SPAs. However, if the separate arrangements between Blue Chip and the investors could be shown to have breached the Act, they would be invalid and of no effect. 2 The next step would be to attempt to establish that the SPAs were tainted by that illegality and were also invalid and of no effect.


In order to establish this ground, it was necessary for the investors to show that:

  • •The separate arrangements made between Blue Chip and the investors were “debt securities” or “equity securities” under the Securities Act.

  • •The SPAs had as...

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