Studio New Zealand Ltd v Wallace and Others
| Jurisdiction | New Zealand |
| Judge | P J Andrew |
| Judgment Date | 03 May 2021 |
| Neutral Citation | [2021] NZHC 959 |
| Court | High Court |
| Docket Number | CIV-2020-404-002265 |
| Date | 03 May 2021 |
IN THE MATTER OF An application under s 143 of the Land Transfer Act 2017
[2021] NZHC 959
JUDGE P J Andrew
CIV-2020-404-002265
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA
TĀMAKI MAKAURAU ROHE
Contract, property — application to sustain a caveat — whether a series of emails constituted an agreement to sell property — elements for the formation of a legally binding contract — intention to be immediately bound — requirement under the Property Law Act 2007 for contracts for the sale of land to be in writing — only two trustees signed the agreement — ostensible authority — Contract and Commercial Law Act 2017 — Land Transfer Act 2017
K M Massey and L H Mau for Applicant
D J Chisholm QC for Resondents
This judgment was delivered by Associate Judge Andrew
on 3 May 2021 at 3.00 pm
pursuant to r 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date
Studio New Zealand Ltd (SNZ) seeks an order pursuant to s 143 of the Land Transfer Act 2017 (LTA) that a caveat be sustained over a substantial property at Porchester Road, Takanini (the Property). The four respondent trustees (the Trustees) are the registered proprietors of the Property.
SNZ contends, on the basis of an exchange of emails and a letter, that there is a binding conditional agreement for sale and purchase of the property. The conditional agreement is said to entitle SNZ, as purchaser, to a beneficial interest in the land and despite there being no formal signed contract. The agreed purchase price was $53,500,000 (plus GST if any).
The Trustees say that there was no legally binding agreement for sale and purchase. They contend that a formal agreement for sale and purchase executed by all parties (including all the Trustees) was objectively contemplated before any binding agreement could come into existence and consistent (so they say) with the normal presumption existing in New Zealand. The Trustees further say that neither Bruce nor Robert Wallace (the authors of the emails) had actual or ostensible authority for the purposes of s 24 of the Property Law Act 2007 (PLA) to bind all the Trustees to an agreement.
SNZ was incorporated in 2009 to develop purpose-built screen infrastructure in Auckland.
The four respondents are:
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(a) As trustees of the B J Wallace Trust, the registered proprietors as to a half-share of the Property; and
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(b) As trustees of the S J Wallace Trust, the registered proprietors as to the remaining half-share of the property.
SNZ says that in 2016 it identified the Property as an attractive site for the development of a screen production complex. Around that time, SNZ approached the Trustees to explore options to purchase or lease the Property.
On 7 October 2016, SNZ and the Trustees entered into a conditional agreement for the sale and purchase of the Property (the original agreement). It was conditional on due diligence by 28 February 2017 and was signed by all the parties (an ADLS 9th edition 2012(5) version). SNZ says the original agreement was never formally terminated.
Instead, SNZ contends it entered into, at the Trustees' suggestion, a joint venture arrangement for the purposes of jointly undertaking the project from or around May 2017 (the Joint Venture).
SNZ submits that between that time and August 2020 the parties “in their capacity as joint venture partners, undertook extensive work in the furtherance of that joint venture purposes …”. This included obtaining resource consents and seeking government funding for the project.
Funding of $40m from Crown Infrastructure Partners was granted to the parties' project as a “shovel ready” infrastructure project on 10 July 2020, subject to due diligence and terms and conditions.
SNZ says that on or around 27 August 2020, Bruce and Robert Wallace, on behalf of the Trustees, purported to terminate the Joint Venture and offered SNZ an opportunity to purchase the property for $53,500,000 (plus GST) conditional on the completion of a due diligence investigation by 20 December 2020. That contended offer was initially made verbally but was repeated in a letter dated 27 August 2020 from Robert Wallace. The letter said:
As I explained at the meeting the trustees have come to the conclusion that they are not willing to commit their land to a project to be undertaken by a joint venture or partnership …
It is therefore time to bring our negotiations to a conclusion.
The trustees have, however, asked me to confirm that they are willing to allow you one final opportunity (perhaps with other investors) to undertake the project. They would be prepared to enter into a conditional sale of the property at the agreed price of $53,500,000 (plus GST if any). The sale would be conditional on your understanding due diligence and the trustees would allow you until 20 December 2020 to put your arrangements in place and complete your due diligence.
If that opportunity is of any interest to you could you please present a purchase proposal by the end of next week.
On 4 September 2020, SNZ says that it presented a counter-offer proposing a three-year option to purchase the property for $53,500,000. The email sent by Richard Glenn to Robert Wallace on that date stated:
We are disappointed that the partnership has to end, but understand the Trustees' position …
Please consider our attached offer in the context of the following variables:
• …
• The price of $53.5 million when your own proposal committed the land for a three-year period interest free, is also not justified in the situation of a short-term option …
By email sent on 7 September 2020, Mr Bruce Wallace (whose email was addressed to Mr Coldicutt and Mr Glenn) rejected SNZ's proposal/counter-offer and stated as follows:
Our correspondence of the 27 August 2020 detailed a simple offer which affords you both one final opportunity to undertake the project independently of us for the purchase of 296 Porchester Road. The terms and price which the trustees would accept were detailed within the correspondence, that is our offer.
If you avail yourselves of the opportunity as presented, then the property and project will be yours …
If you wish to present your offer, we will give you until close of business (5 pm) Wednesday, 9 September 2020, failing which the offer will be withdrawn.
On 9 September 2020 at 2.50 pm, SNZ wrote to Robert and Bruce Wallace by email and stated:
1. We refer to your letter dated 27 August 2020. Studio New Zealand Ltd accepts the offer made by the trustees of the B J Wallace Trust and S J Wallace Trust for Studio New Zealand Ltd to purchase the property at a purchase price of $53,500,000 plus GST (if any) conditional on due diligence by 20 December 2020.
2. We enclose a signed sale and purchase agreement which formally documents the sale. We have included provisions dealing with the transfer and use of the resource consents and associated materials and tailored the due diligence clause to reflect the current circumstances.
No formal written agreement for the sale and purchase of the Property (whether a standard ADLS agreement or otherwise) has ever been signed by the parties.
The parties have since had without prejudice discussions.
On 15 October 2020, SNZ lodged the caveat against the Property. The Trustees subsequently applied for orders lapsing the caveat.
Then, on 18 November 2020, Hornabrook Macdonald, solicitors for the Trustees, sent a sale and purchase agreement to Russell McVeagh, solicitors for SNZ, for execution. It set a deadline for the return of the executed document of 26 November 2020 and included the due diligence date of 20 December 2020. That document has never been signed or executed.
SNZ applied to the Court for orders sustaining the caveat on 19 November 2020.
On 21 December 2020, Hornabrook Macdonald, for the Trustees, wrote to Russell McVeagh confirming the Trustees' position that there was no binding agreement but noted “without prejudice to that position” that if the correspondence at issue is found to constitute a conditional purchase agreement, the agreement was cancelled for non-fulfilment of the due diligence condition.
Russell McVeagh responded on 22 December 2020, acknowledging that SNZ did not confirm due diligence by 20 December 2020, but claiming the responsibility for that failure rested entirely with the Trustees.
On 23 December 2020, SNZ filed separate proceedings against the Trustees in this Court (CIV-2020-404-2544) (the Substantive Proceeding) in which SNZ pleads four causes of action, including:
Breach of fiduciary duty
(a) SNZ alleges that:
(i) pursuant to the Joint Venture the Trustees owed fiduciary duties to it, including the duty of loyalty;
(ii) the Trustees have breached their duty of loyalty in failing to act reasonably and with fair dealing with purporting to terminate the Joint Venture and in making the Offer, in particular the Trustees have made the Offer on unreasonable terms and now assert that the Offer was never one that was capable of acceptance (which is denied); and
(b) SNZ seeks a mandatory injunction requiring the Trustees to provide a signed sale and purchase agreement reflecting the Agreement and to extend the period for fulfilment of the due diligence condition to a date that is (at least) 80 working days after the Trustees provide a signed sale and purchase agreement.
Breach of implied term
(c) SNZ alleges that the Trustees have breached an implied term in the Agreement requiring them to do everything reasonably necessary to allow SNZ to meet the due...
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Studio New Zealand Ltd v Wallace & ORS
...HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE CIV-2020-404-002265 [2021] NZHC 959 IN THE MATTER OF An application under s 143 of the Land Transfer Act 2017 BETWEEN STUDIO NEW ZEALAND LIMITED Applicant AND BRUCE JOHN WALLACE First Respondent SARA......