BIRDWOOD RODNEY TRUSTEE LTD v BLUE MOON LTD [2022] NZHC 23

BIRDWOOD RODNEY TRUSTEE LTD v BLUE MOON LTD [2022] NZHC 23 [18 January 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-001172[2022] NZHC 23UNDER Section 143 of the Land Transfer Act 2017BETWEEN BIRDWOOD RODNEY TRUSTEE LIMITED as the trustee of THE BIRDWOOD RODNEY TRUSTApplicantAND BLUE MOON LIMITEDRespondentHearing: 31 August 2021Appearances: R B Hucker and M W Swan for the Applicant D R Bigio QC and Y Mortimer-Wang for the RespondentJudgment: 18 January 2022JUDGMENT OF ASSOCIATE JUDGE GARDINERThis judgment was delivered by me on 18 January 2022 at 3.30 p.m.pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDate.......................................Solicitors:Pidgeon Judd, AucklandHucker Law, AucklandD R Bigio QC, AucklandIntroduction[1] On 9 June 2021, Birdwood Rodney Trustee Limited (Birdwood) declared unconditional an agreement it had with Blue Moon Limited (Blue Moon) to buy a development property in Wellsford. It said it was ready to pay the deposit. This came as a surprise to Blue Moon, who considered that the agreement had come to an end many months earlier. It had moved on.[2] Birdwood maintains that the agreement was still on foot when it declared it unconditional. It remains ready, willing and able to settle the transaction. To protect its claimed equitable interest, it has lodged a caveat against the title of the property.1Blue Moon has applied to the Registrar for the caveat to lapse. Birdwood has applied to this Court for an order that the caveat not lapse. 2[3] In this decision, I find that Blue Moon became entitled to avoid the agreement when Birdwood did not fulfil a due diligence condition (the DD Condition) by the agreed date of 30 October 2020. I find that to avoid the agreement, Blue Moon needed to serve written notice under cl 1.3 of the agreement for sale and purchase. I reject Blue Moon's submission that the agreement automatically terminated after the expiry of the DD Condition on 30 October 2020.[4] I further find that Blue Moon did not serve written notice avoiding the agreement on Birdwood. I conclude that Birdwood's email in February 2021 to say that "there is no current land purchase contract" did not meet the requirements of |a notice under cl 1.3 of the agreement. Nor did a subsequent text message in March 2021.[5] I conclude that separately, Blue Moon became entitled to cancel the agreement when Birdwood breached a term of the agreement requiring it to pay Auckland Council rates for the property.1 Caveat 12150203.1 registered against records of title 854205, 854206 and 854207 on 10 June 2021.2 Without notice application filed 28 June 2021.[6] I find that because the agreement does not expressly provide how Blue Moon was to cancel for breach of the term requiring Birdwood to pay Council rates, this situation is governed by s 41 of the Contract and Commercial Law Act 2017 (the CCLA). Cancellation takes effect when it is "made known" to the other party, by words or conduct showing an intention to cancel, or both.[7] I find that Birdwood has a tenable argument that the February 2021 email and March 2021 text message did not evince an intention to cancel the contract as required by the CCLA. As I am required to sustain the caveat unless it is patently clear that it cannot be maintained, I order that the caveat not lapse. I require Birdwood to prosecute a claim for specific performance without delay.Issues[8] The main issue is whether the agreement for sale and purchase dated 19 September 2019 was terminated before Birdwood purported to declare it unconditional and take steps to pay the deposit on 9 June 2021.[9] Within the main issue are these issues:(a) Did Blue Moon have the right to avoid or cancel the agreement after 30 October 2020?(b) If so, how was it to exercise that right?(c) Did Blue Moon affirm the contract by its conduct over November and December 2020?(d) Did Blue Moon have the right to cancel the agreement because Birdwood had not paid rates invoices according to the agreement?(e) Did Blue Moon avoid or cancel the agreement by its 10 February 2021 email and subsequent text message?(f) Did Mr Chevin have authority to receive notices from Blue Moon for Birdwood?Facts[10] The facts are set out in affidavits of Peter Chevin and Alexander Constable for Birdwood and Nigel Muir and Peter Inger for Blue Moon. Mr Chevin's affidavit in support of the application is remarkably brief. Mr Muir's is more fulsome, and exhibits correspondence between himself, Mr Inger, Mr Chevin and their lawyers. Mr Chevin has filed an affidavit in reply. The parties' respective lawyers have not filed affidavits.[11] Because so much turns on the precise words of some of these communications, I set them out in detail in the following paragraphs.The Agreement[12] Birdwood and Blue Moon entered into a conditional Agreement for Sale and Purchase dated 19 September 2019 on the standard ADLS/REINZ form of Agreement for Sale and Purchase 3 relating to three lots of land running from 259 Rodney Street, along past 3 El Hama Road, to 33 Totara View in Wellsford (the Property). The purchase price was $6,500,000. The agreement was conditional on the purchaser completing due diligence to its satisfaction. A deposit was to be paid when the agreement was declared unconditional by the purchaser. The settlement date was to be 90 calendar days after that.[13] The standard terms of the ADLS form include the following:1.3 NoticesThe following apply to all notices between the parties relevant to this agreement, whether authorised by this agreement or by the general law:(1) All notices must be served in writing.(2) Any notice under section 28 of the Property Law Act 2007, where the purchaser is in possession of the property, must be served in accordance with section 353 of the Act.3 Ninth Edition (2012).(3) All other notices, unless otherwise required by the Property Law Act 2007, must be served by one of the following means:(a) on the party as authorised by sections 354 to 361 of the Property Law Act 2007, or(b) on the party or the party's lawyer:(i) by personal delivery; or(ii) by posting by ordinary mail; or(iii) by facsimile; or(iv) by email; or(v) in the case of the party's lawyer only, by sending by document exchange or, if both parties' lawyers have agreed to subscribe to the same secure web document exchange for this agreement, by secure web document exchange.(4) In respect of the means of service specified in subclause 1.3(3)(b), a notice is deemed to have been served:(a) in the case of personal delivery, when received by the party or at the lawyer's office;(b) in the case of posting by ordinary mail, on the third working day following the date of posting to the address for service notified in writing by the party or to the postal address of the lawyer's office;(c) in the case of facsimile transmission, when sent to the facsimile number notified in writing by the party or to the facsimile number of the lawyer's office;(d) in the case of email, when acknowledged by the party or by the lawyer orally or by return email or otherwise in writing, except that return emails generated automatically shall not constitute an acknowledgement.2.0 Deposit2.1 The purchaser shall pay the deposit to the vendor or the vendor's agent immediately upon execution of this agreement by both parties and/or at such other time as is specified in this agreement.2.2 If the deposit is not paid on the due date for payment, the vendor may at any time thereafter serve on the purchaser notice requiring payment. If the purchaser fails to pay the deposit on or before the third working day after service of the notice, time being of the essence, the vendormay cancel this agreement by serving notice of cancellation on the purchaser. No notice of cancellation shall be effective if the deposit has been paid before the notice of cancellation is served.2.3 The deposit shall be in part payment of the purchase price.10.0 Conditions and mortgage terms Operation of Conditions10.8 If this agreement is expressed to be subject either to the above or to any other condition(s), then in relation to each such condition the following shall apply unless otherwise expressly provided:(1) The condition shall be a condition subsequent.(2) The party or parties for whose benefit the condition has been included shall do all things which may reasonably be necessary to enable the condition to be fulfilled by the date for fulfilment.(3) Time for fulfilment of any condition and any extended time for fulfilment to a fixed date shall be of the essence.(4) The condition shall be deemed to be not fulfilled until notice of fulfilment has been served by one party on the other party.(5) If the condition is not fulfilled by the date for fulfilment, either party may at any time before the condition is fulfilled or waived avoid this agreement by giving notice to the other. Upon avoidance of this agreement, the purchaser shall be entitled to the immediate return of the deposit and any other moneys paid by the purchaser under this agreement and neither party shall have any right or claim against the other arising from this agreement or its termination.(6) At any time before this agreement is avoided, the purchaser may waive any finance condition and either party may waive any other condition which is for the sole benefit of that party. Any waiver shall be by notice.[14] In addition to the standard terms, the parties inserted several further terms and conditions, including:(a) Clause 19, the DD Condition. The original due diligence date under cl 19, being seven months from the date of the Agreement (19 September 2019), was 19 April 2020. There was a right undercl 19.3 for the purchaser to request an extension of five months to complete the DD Condition, and the vendor must grant it.19.0 Purchaser's due diligence condition19.1 This Agreement is conditional upon the Purchaser being entirely satisfied in its absolute discretion with the outcome of an investigation of the Property, including (but not limited to) an investigation of the following:19.1.1 The title to the Property and any encumbrances on the Property;19.1.2 The overall financial suitability and commercial viability of the purchaser's proposed investment in the Property;19.1.3 Any outstanding requirements or requisitions relating to the Property;19.1.4 The zoning of the Property;19.1.5 The independent Registered Valuer's advice as to the real value of the subject property in today's market;19.1.6 Statutory and regulatory requirements affecting the Property, and current compliance with such statutory and regulatory requirements;19.1.7 The identification of the position of any buildings in relation to the boundaries of the Property;19.1.8 Architectural and engineering aspects of the Property.19.2 The date for satisfaction of condition 19.1 is the date 7 (seven) Months after the date of this Agreement being signed by both parties with no further amendments.19.3 The Purchaser and Vendor agree that the Purchaser may request from the Vendor and the Vendor must grant if requested an extension to the date of satisfaction as outlined in clause 19.2 for further term of 5 (five) Months from the date of written request by the Purchaser to the Vendor.19.4 The condition in clause 19.1 is for the benefit of, and may be waived by, the Purchaser. If for any reason this Agreement is cancelled for non-satisfaction of special condition 19.1, the Purchaser shall upon request by the Vendor disclose the contents of any report, valuation, plans, drawings, or resourceconsents obtained by the Purchaser in relation to the Property.(b) Clause 26, further terms relating to the deposit:26.1 Should the Purchaser request the due diligence period extension as per clause 19.3 then a non-refundable deposit of $200,000 + GST shall be payable to the Vendor at the time of the extension period being granted by the Vendor.26.2 At the date of the contract being declared unconditional in all respects, the Purchaser shall pay to the Vendor a further deposit of $300,000 + GST.(c) Clause 29.1, concerning Plans and Reports:Should the Purchaser not go unconditional or n[o]t settle on the settlement date, and the agreement is lawfully terminated, the parties agree that any consents, plans and reports relating to the property including the copy of any resource consent application, resource consent issued by Council, civil engineering infrastructure reports, geotechnical reports, evaluation of economic effects, ecological and environmental reports covering bush wetlands etc, traffic reports, surveyors plans, any intellectual property either in soft or hard copy, any contributions or levies paid to Council credit to be transferred to the vendor, and any neighbouring property approvals that the Purchaser has gained ("Subdivision Plans and Reports") shall be transferred to the Vendor, and the Purchaser and any nominee or assignee hereby appoints the vendor its attorney to transfer any carried resource consent to the vendor. The Purchaser grants the Vendor a specific security agreement to the Vendor over the Subdivision Plans and Reports to secure the Vendor's interest pending settlement of the agreement at which time it will be discharged.(d) Clause 31, the requirement that Birdwood pay Auckland Council rates on the Properties:The Purchaser shall pay Auckland Council rates on the Property apportioned from the date of execution of the agreement. The Vendor shall issue an invoice for rates when invoiced by Council, which shall be payable within 10 working days of date of the invoice. Payment of rates invoices is an essential condition of the contract and failure to comply shall be a breach entitling the Vendor to cancel the agreement.First Extension[15] On 16 April 2020, the date for the fulfilment of the DD Condition was extended by agreement by a period of five months to 19 September 2020 (First Extension). The deposit terms under cl 26 were also varied on the same day.[16] At 2.25 pm on 16 April 2020, Mr Chevin emailed Mr Muir (copying in Ms Maureen Burton, a legal executive employed at Vodanovich Law, the solicitor for Birdwood) and noted:Nigel,[F]urther to your telephone conversation of this morning. We confirm that our respective Directors have agreed to vary the terms of the current agreement for sale and purchase of the above referenced property as follows.1. Delete clause 26.12. Clause 26.2 is amended so that at the date of declaring the contract unconditional a total deposit of $500,000 is due and payable, note that this changes the amount as stated in this clause increasing it from $300,000 to $500,000.3. The extension to the due diligence period under clause 19.3 is requested and granted.Maureen, to keep costs down there is nothing for you to do on this matter at the moment.[17] The footer of Mr Chevin's email contains a disclaimer that he is only "the messenger in this matter" and "is not empowered or authorised to bind any company / business / partnership into any financial or credit commitment".[18] Mr Muir replied at 5.06 pm (copying in Ms Burton and Ms Joanna Pidgeon, the solicitor for Blue Moon) and noted:Hi Peter,I confirm we agree to vary the Sale & Purchase Agreement as you have stated below but subject to the recharged of [sic] rates (May & August) being paid upon request & that the rates for February are paid immediately.I have attached a copy of the invoice sent in February & a copy of the rates notice so that this will be easier to organise.Please confirm that your directors agree to the payment of the rates even thou[gh] this was an existing condition of our S & P Agreement.As noted at this time we have agreed to amend the conditions by way of email at this stage to minimise costs.Peter if you could also send me a copy of the Resource Consent application & a copy of all correspondence from council for our records.[19] There was no reply from Mr Chevin to this email. There was no other direct communication between the solicitors or between the directors of Birdwood and Blue Moon.Second Extension[20] Between 15 and 17 September 2020, there was email correspondence between Mr Chevin, Mr Muir and Mr Inger, a director of Blue Moon, concerning the satisfaction of the DD Condition (and therefore payment of the $500,000 deposit) by 19 September 2020, as agreed between the parties under the First Extension.[21] On 17 September 2020, Mr Chevin emailed Mr Muir and Mr Inger and proposed that the period for the payment of the deposit be extended to 30 October 2020 (Second Extension):Hello.I [met] with the Director earlier than we thought.So here is what we are able to offer in terms of the current land contract.1. Declaring the land contract Unconditional as of this Friday 18th September 2020.2. Deposit is paid no later than 30th October 2020.3. Settlement being agreed to be brought forward to 13th November 2020.4. If the deposit is not paid on or before the 30th October 2020, then the contract between the parties is cancelled and that is the end of the matter.5. We acknowledge that the plans and work to date are to be provided to the Vendor asap.Can you please confirm acceptance of this[?](Emphasis added).[22] On 18 September 2020, Mr Muir emailed Ms Pidgeon:Glen & I have just spoken with Peter Chevin & have agreed to give them an extension until the 30th October.Can you please organise to confirm this to them in writing please[?][23] Accordingly, Ms Pidgeon sent an email to Ms Burton: 4The Due diligence clause has been extended until 30 October 2020.We look forward to receiving your advice, and please confirm receipt of this email.[24] Ms Burton acknowledged receipt. 5[25] On 25 September 2020, Mr Muir asked Mr Chevin when Birdwood would be "sending us copies of all the finalised reports, council application & response from council on application." Mr Inger then replied on top of Mr Muir's email, reiterating that the provision of documents "was part of the deal I agreed to. To be supplied this week in return for us agreeing to the extension until the end of October." Following this, Mr Chevin sent three emails on the same day, annexing plans and reports.[26] On 28 September 2020, Mr Muir emailed Mr Chevin to say that what had come through so far was mainly emails and draft plans. He asked when Mr Chevin would be able to send through finalised engineer plans and reports, finalised town planning reports and applications, finalised master plans of the site and so on. Mr Chevin responded that he had asked for all of that and it was coming.[27] On 2 October 2020 Mr Muir followed up, asking Mr Chevin for an update on payment of the two outstanding rates payments and the final plan and reports. On 7 October Mr Chevin responded, sending more information.4 At 4.32 pm.5 At 5.04 pm.DD condition not fulfilled or waived[28] On the morning of Friday 30 October 2020, Ms Burton emailed Mr Chevin and Mr Muir:We note the due diligence condition on the above purchase is due to be satisfied today, and await your advice on the same[29] On Monday 2 November 2020 at 11.35 am Ms Burton forward the same email to Mr Chevin and Mr Muir.[30] At 1.27 pm Mr Muir responded:I spoke with [P]eter on Friday & he planned to get back to me later in the day but this didn't happen.I did try calling but the call wasn't pick[ed] up.[31] At 1.29 pm Mr Chevin responded:I am just waiting to hear back from the second of the two directors on this.Should be coming back to you before 4.00pm.[32] At 6.14 pm Mr Muir asks:Hi Peter,Are you able to update me?[33] On 4 November 2020, Ms Burton emailed Mr Muir and Mr Chevin: "Any update on satisfaction of the due diligence condition for this one?"[34] On 9 November 2020, Ms Burton again emailed Mr Chevin/Mr Muir: "Could I have an update on the status of the due diligence condition for this transaction please?"[35] Mr Chevin responded, referring to a term sheet and saying that a "solid" lawyer update would be provided the next day.[36] On 17 November 2020, Ms Burton sent an email to Mr Chevin, copying Mr Muir, "Is there an update on this transaction?". Mr Muir responded: "Still waiting."[37] On 20 November 2020, Mr Muir emailed Ms Burton (copying in Mr Chevin and Ms Pidgeon):Hi Maureen,As part of the Sale & [P]urchase agreement the rates were to be paid by your clients, unfortunately not all of the invoices for the recharging of the rates have been paid.The two invoices attached are still outstanding, can you organise for your client to pay these by the 27th November 202[0].We had also agreed to a 1 month extension (1st to 31st Oct) as your clients had indicated they were very close to finalising their funding on the basis that full files as requested including plans, engineering plans & reports, town planning & all relevant documents, reports both internal & external, master plan for stages, correspondence & approvals be sent to us.We have only received a few draft reports to date, we require all final reports & plans as listed above to be sent to us by 27th November 2020.Please confirm that these matters will be resolved by 27th November 2020.(Emphasis added).[38] On 25 November 2020, Mr Muir emailed Ms Burton, copying Mr Chevin and Ms Pidgeon:6Are you able to give me an update on progress with resolving this situation?[39] Ms Burton responded 7 saying that she had "pressed [her] client for a response."[40] Birdwood did not pay the overdue rates invoices by 27 November 2020.A new proposal from Birdwood[41] Mr Muir deposes that on 30 November 2020, Mr Chevin again approached him and said that Birdwood wished to discuss plans for a joint venture with Blue Moon.6 At 1.03 pm.7 At 1.37 pm.They met the following day. Mr Muir says the proposal discussed was new and different to what was previously agreed between the parties under the agreement, which only provided for the sale of the properties. Curiously, Mr Chevin and Mr Constable do not address this proposal, and the relevant documentation has been put in evidence by Mr Muir.[42] Then on 3 December 2020, Mr Chevin emailed Mr Muir the "first lot of information" and forwarded an email (with attachment) from a Stephen Rankin with the heading "13/934 – 259 Rodney Street, Wellsford – progress". Mr Rankin is a civil environmental engineer. The original email, forwarded by Mr Rankin to Mr Chevin, is from an A Jull, and appears to be a cost breakdown for resource consent work undertaken.[43] On 7 December 2020, Mr Chevin emailed Mr Muir a "proposal that [had] finally been signed off by the various stakeholders". He said he was "keen to discuss this with [Mr Muir] when [he] was freehappy to throw around ideas." The attachment included a "Project Briefing Paper" dated 2 December 2020, which recorded an offer to Blue Moon "for a hybrid Joint Venture of the development of the subject site". The Project Briefing Paper refers at various points to "the land under contract" and that "[c]urrently the total purchase price of the entire land parcel is $6.5 million." The proposed land price in the offer to Blue Moon is $6.6 million.[44] Mr Muir deposes that he did not follow up on the 7 December 2020 email "because Blue Moon was not interested in the new joint venture proposal".Contact in the New Year[45] On 9 February 2021, Mr Chevin emailed Mr Muir, expressing, among other things, that "[t]here is a strong desire at this end to complete this project and settle with Blue Moon Limited as soon as possible." He proposed:1 Current land purchase contract has a formal extension of the DD period until 12/04/2021.2 Land settlement is amended to be 3 months from the date of U/C contract.[46] The next day (10 February 2021) at 3.19 pm, Mr Muir emailed Mr Chevin, saying:Hi Peter,Thanks for the email, I will discuss with Glen next week as he is away this week.I just need to point out a couple of points, you talk of a current land purchase contract, there is no current land purchase contract as the conditions in the previous S & P Agreement were not met by the purchaser, that being the paying of the rates or going unconditional & paying the deposit. That S & P Agreement was entered into in 2019, as you are aware the market has moved considerably since then.We are also looking at other options which include progressing this development ourselves.(Emphasis added).[47] There was no response to Mr Muir's email contradicting this position from Mr Chevin or anyone else acting on behalf of Birdwood.[48] On 16 February 2021, Mr Chevin sent a text message to Mr Inger, saying that he had "a concept/idea that I would like to run by you."[49] Mr Muir deposes that he repeated that there was no current contract on foot in a telephone conversation with Mr Chevin on 17 February 2021. He has provided his phone records as evidence of the call. Mr Chevin disputes that.[50] Mr Chevin texted Mr Inger again on 20 March 2021, referring to making $79.6 million on another project. Mr Inger responded by saying:Hi Peter. Good effort so are you cashed up to buy our Wellsford goldmine waiting to be opened up at our now bargain $10 million price. Probably too cheap but what an opportunity for you to do it all again. But this time needs to be cash up front, no time or no deposit so if you can't do this then no need calling. Go well Glen.[51] Mr Chevin did not respond.Birdwood purports to declare the Agreement unconditional and pays the deposit[52] On 9 June 2021, Ms Burton emailed Ms Pidgeon:We have received instructions to declare the above Agreement unconditional.Please provide your trust account deposit slip for payment of the deposit.[53] Ms Pidgeon responded less than an hour later:My client advises this was cancelled some time ago.[54] At 3.01 pm Ms Pidgeon followed up:Dear Maureen [Burton]Your client never paid the deposits required to enable an extension under clause 26 of the agreement. You were copied into Nigel Muir's email below requiring copies of the plans and reports as required by clause 29 when the agreement did not go unconditional and the contract was lawfully terminated. There was no contradiction or response to that point, and some of the requested reports were provided in acceptance of the agreement being at an end.Your client had been told that the contract was at an end, rates and deposits were not paid, and my client had been tired of no delivery.I also enclose a screenshot of Glen Inger's text of 20 March 2021 when Peter Chevin approached my client about buying the land again earlier this year. He was clearly told there would need to be a new agreement and that the sale price would be $10 million. Your client accepted that the agreement was at an end and did not raise any issues with this point.It is too late to resuscitate the agreement more than half a year later.Legal principles concerning caveats[55] An application to sustain a caveat is determined on a summary basis in which the Court has regard to the following principles: 8(a) The applicant caveator bears the onus of presenting a reasonably arguable case that they have an interest in the land sufficient to support a caveat. However, they need not establish that definitively.8 Botany Land Development Ltd v Auckland Council [2014] NZCA 61, (2014) 14 NZCPR 813. See also Philpott v Noble Investments Ltd [2015] NZCA 342.(b) An order for a caveat's lapse will only be made if it is "patently clear" it cannot be maintained — either because there was no valid ground for lodging it in the first place or, alternatively, because such ground has now ceased to exist. A conflict between affidavits will generally be resolved in the caveator's favour. 9 The process by which these applications are determined is ill-suited to resolving disputed questions of fact. However, the Court is not bound to accept uncritically statements in an affidavit that are equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable. 10(c) Where the applicant has discharged its burden, the Court retains a residual discretion to remove the caveat. The Court will exercise this discretion cautiously and must be satisfied removal would not prejudice the caveator's legitimate interest .11Did Blue Moon have the right to avoid or cancel the agreement after 30 OctoberOctober 2020?[56] It is not disputed that the parties agreed to extend the DD Condition to 30 October 2020. Further, it is not disputed that Birdwood did not declare the DD Condition fulfilled or waived, thus declaring the agreement unconditional, by 30 October 2020. With what consequence?[57] Counsel for both parties submitted that this entitled Birdwood to cancel the agreement. I find that this event entitled Blue Moon to avoid the agreement under cl 10.8. The distinction is important because it determines, in my view, how Blue Moon needed to exercise that right.[58] The DD Condition is what is known as a "contingent condition". The ultimate obligation to perform the contract is contingent upon fulfilment (or waiver) of the9 Bethell v Rickard [2013] NZCA 68 at [22]. See also MacRae v Rapana HC Auckland M633/94, 17 June 1994.10 Barrett v IBC International Ltd [1995] 3 NZLR 170 (CA) at 175, citing Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331 (PC) at 341; Xie v 126 Waimumu Ltd [2020] NZHC 1109 at [8].11 Pacific Homes Limited (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.condition.12 Common contingent conditions in agreements for the sale and purchase of land are mortgage finance conditions and solicitor's approval conditions. Non-fulfilment of a contingent condition by the agreed date entitles the parties to avoid the contract. Alternatively, the party for whom the condition benefits can waive the condition by the fulfilment date.[59] An exercise of the right to avoid a contract for failure of a contingent condition must be distinguished from cancellation for breach.13 The cancellation provisions of the CCLA apply only where there has been breach, repudiation or misrepresentation. They do not apply when a condition has not been fulfilled without breach by either party.14[60] If a contract is avoided, it is as if the contract never existed. No party has any claim against the other under the contract. A purchaser who has paid the deposit or any other money under the contract is entitled to its immediate return and can, if necessary, enforce such recovery by proceedings for money had and received. 15[61] In the standard ADLS / REINZ form of agreement, Clause 10.8 of the general terms of sale governs the operation of contingent conditions. This clause states that where the agreement is stated to be subject to conditions, these provisions apply "unless otherwise expressly agreed". Thus, in relation to the DD Condition inserted at cl 19 of the agreement:(a) the party for whose benefit the condition was inserted (Birdwood) needed to do everything reasonably necessary to enable the condition to be fulfilled by the date of fulfilment;(b) time for fulfilment of the condition and any extended time for fulfilment was of the essence;12 D W McMorland Sale of Land (3rd ed, Cathcart Trust, Auckland, 2011) at [5.01].13 McMorland, above n 12.14 Jeremy Finn, Stephen Todd and Matthew Barber (eds) Burrows, Finn and Todd on the Law of Contract in New Zealand (6th ed, Lexis Nexis, Wellington, 2018) at [18.6].15 McMorland, above n 12.(c) the condition would not be deemed fulfilled until notice of fulfilment was served by one party on the other;(d) if the condition was not fulfilled by the date of fulfilment, either party could at any time before the condition was fulfilled or waived avoid the agreement by giving notice to the other;(e) upon avoidance, Birdwood was entitled to immediate return of any deposit paid and any other money paid under the agreement and neither party had any right or claim against the other arising out of the agreement or its termination;(f) at any time before the agreement was avoided, Birdwood could waive the condition, by notice.[62] I find therefore that when Birdwood did not declare the DD Condition fulfilled or waived by 30 October 2020, Blue Moon acquired the right to avoid the contract under cl 10.8.[63] Mr Bigio for Blue Moon submitted that Birdwood was also obliged to pay the deposit on 30 October 2020. He submitted that fulfilment of the DD Condition and payment of the deposit went hand in hand from the beginning, and it can be inferred that when the parties agreed the Second Extension, they also agreed that the deposit would be paid by 30 October 2020. He submitted that Birdwood breached the agreement by failing to pay the deposit.[64] I accept that submission in part only. In my view, the deposit was only payablewhen Birdwood declared the agreement unconditional (on fulfilment or waiver of the DD Condition). As this did not happen until June 2021, the deposit was not payable until then. I will give my reasons.[65] On the front page of the agreement, beside the heading "Deposit", the parties have inserted "See clause 26." Clause 26 states:26.1 Should the Purchaser request the due diligence period extension as per clause 19.3 then a non-refundable deposit of $200,000 + GST shall be payable to the Vendor at the time of the extension period being granted by the Vendor.26.2 At the date of the contract being declared unconditional in all respects, the Purchaser shall pay to the Vendor a further deposit of $300,000 + GST.(emphasis added)[66] This was varied in writing in the First Extension. There is no dispute that Birdwood and Blue Moon agreed that cl 26.1, requiring payment of a deposit on the extension, was deleted. Further, that cl 26.2 was amended so that "at the date of declaring the contract unconditional a total deposit of $500,000 is due and payable". This variation to the agreement was recorded in writing.[67] When it came to the Second Extension, Mr Chevin offered, in his email dated 17 September 2020, that Birdwood would immediately declare the agreement unconditional, pay the deposit by 30 October, and that if the deposit was not paid by 30 October the contract was to be considered cancelled. In his email to Blue Moon's lawyer, Ms Pidgeon, the next day, Mr Muir stated that he and Mr Inger had verbally agreed with Mr Chevin to give Mr Birdwood an "extension until 30 October." As requested, Ms Pidgeon confirmed that agreement in writing to Birdwood's legal executive, Ms Burton, saying that "the due diligence clause has been extended until 30 October 2020." She asked for confirmation of receipt, which Ms Burton gave.[68] Thus, the contemporaneous record indicates that, whatever Mr Chevin originally proposed, what was agreed (and confirmed in writing) was that the date for fulfilment of the DD Condition was extended to 30 October 2020. There is no record of any agreement to vary cl 26.2 (as varied at the time of the First Extension). Thus, the position remained that the deposit became due and payable when Birdwood declared the agreement unconditional.[69] As Birdwood did not declare the agreement unconditional by 30 October 2020, it was not obliged to pay the deposit. There was no breach entitling Blue Moon to deploy the process prescribed in cl 2.2 of the agreement to acquire the right to cancel for failure to pay the deposit.[70] But, as discussed, Blue Moon acquired the right to avoid the agreement under cl 10.8, because the DD Condition was not fulfilled or waived by the agreed date.How was Blue Moon to exercise that right?[71] The starting position is that to exercise the right under cl 10.8(5) to avoid the agreement, Blue Moon needed to "give notice" to Birdwood. This needed to be written notice served according to cl 1.3 of the agreement. 16[72] Blue Moon concedes that it did not give Birdwood notice under cl 10.8(5), consistent with cl 1.3, that the agreement was terminated for non-fulfilment of the DD Condition on 30 October 2020. It argues that it was not required to, advancing two propositions.[73] First, it submits that the agreement was varied by Mr Chevin, Mr Muir and Mr Inger via the email exchange between them on 17 September to 25 September to introduce an automatic termination clause.17 It submits that this mode of varying the contract informally by email directly between themselves was consistent with how earlier variations were made.[74] Second, it advances the alternative submission that Birdwood unilaterally waived the requirement for notice. Again, it relies on Mr Chevin's statement in his 17 September 2020 email that "If the deposit is not paid on or before the 30th October 2020, then the contract between the parties is cancelled and that is the end of the matter." It argues that this was a unilateral statement by Birdwood that it would forbear compliance of the contract in terms of a notice of termination from Blue Moon, if Blue Moon granted it the extension it sought. Blue Moon contends that this statement by Birdwood did not require acceptance by Blue Moon. As such, Birdwood is now estopped from denying this forbearance and relying on an absence of formal notice under the agreement to deny termination.[75] I do not accept the submission that the agreement was varied to introduce an automatic termination clause. I have two reasons.16 McMorland, above n 12, at [5.15].17 Item 4 of Mr Chevin's email dated 17 September, quoted above at [21].[76] First, where a contract for the sale and purchase of land has been made, and there is sufficient written record of it complying with s 24 of the Property Law Act 2007, any variation of the contract's terms must also comply with s 24 to be enforceable. 18 If a variation does not comply, it will be disregarded and the original contract enforced, though the oral representation may give rise to an estoppel if it is a representation made by one party and relied on by another.[77] There is no written record of a variation to the agreement to the effect that the agreement would terminate automatically if Birdwood did not fulfil or waive the DD Condition, and declare the agreement unconditional, by 30 October 2020. The only agreed variation recorded in writing is for the DD Condition to be extended to 30 October 2020. This is recorded in Mr Muir's email to Ms Pidgeon, Ms Pidgeon's email to Ms Burton, and Ms Burton's reply. None of the emails between Mr Chevin, Mr Muir and Mr Inger, or between Mr Muir, Ms Pidgeon and Ms Burton between 17 to 25 September 2020 record them agreeing that the agreement would immediately and automatically terminate if the DD Condition was not fulfilled or waived by 30 October 2020.[78] Second, and even without the legal requirement that a variation be recorded in writing, there is no evidence that Mr Chevin, Mr Muir and Mr Inger agreed such a variation between themselves. In their evidence filed for this hearing, neither Mr Muir nor Mr Inger depose that they agreed such a variation with Mr Chevin when they spoke on 18 September. Their evidence is silent on this conversation, as is Mr Chevin's. Plainly, what they agreed differed from what was set out in Mr Chevin's 17 September email in at least one respect, as the DD Condition was extended to 30 October rather than the contract being immediately declared unconditional on 18 September as Mr Chevin had offered.[79] I conclude that, based on the affidavit evidence before me, there is no basis for concluding that Messrs Chevin, Muir and Inger agreed to vary the agreement to the effect that the agreement would terminate automatically if Birdwood did not fulfil or waive the DD condition, and declare the agreement unconditional by 30 October 2020.18 McMorland, above n 12, at [4.12].Further, even if they agreed that orally, to be effective the variation needed to be recorded in writing.[80] I consider Blue Moon's submission that Birdwood unilaterally waived the notice requirement more compelling. But ultimately, I find that Birdwood has a reasonable argument, that should be tested at trial, that it could not and did not waive the notice requirement.[81] Unlike a variation, a waiver of a term generally need not comply with s 24 of the Property Law Act and can be proved by oral evidence. 19 As in promissory estoppel, a waiver requires a clear, unequivocal representation. 20 Further, a person relying on waiver must show that he or she has relied on the representation made.21The waiver must take place before the departure from the strict terms. Finally, the condition being waived must be exclusively for the benefit of the party waiving it.22This principle is reflected in cl 10.8(6) of the standard terms of the agreement concerning waiver of conditions.[82] In my view there are two difficulties with Blue Moon's submission that Birdwood waived the contractual requirement for notice of avoidance. First, the alleged waiver was made in the context of Birdwood's proposal for a second extension, contained in Mr Chevin email of 17 September. That proposal was not adopted in its entirety. The agreement reached the following day between Messrs Chevin, Muir and Inger over the telephone, and confirmed in writing, differed from that proposal. Other than extending the DD Condition to 30 October, it is unknown what was discussed between them over the telephone and whether Birdwood's alleged waiver of notice was repeated, or the notice requirement was otherwise discussed. In my view, it is not sufficiently clear that this alleged waiver survived the subsequent discussion between the parties and the different arrangement ultimately agreed. The position would be different if there was a clear written statement from Mr Chevin following the telephone call, to the effect that the agreement would be considered terminated, with no19 McMorland, above n 12, at [4.12]; Morris v Baron & Co [1918] AC 1 (HL); Boviard v Brown[1975] 2 NZLR 694 (SC) at 699; and Kartini Export Ltd v Ponsonby's Shopping Village Ltd (2007) 8 NZCPR 69 (HC) at [66].20 Burrows, Finn and Todd on the Law of Contract in New Zealand, above n 14, at [19.3].21 Burrows, Finn and Todd on the Law of Contract in New Zealand, above n 14, at [19.3].22 Burrows, Finn and Todd on the Law of Contract in New Zealand, above n 14, at [8.3].requirement for notice, if the DD Condition was not met by 30 October. Or, if there was evidence from Mr Muir or Mr Inger that Mr Chevin verbally made such a statement to them and they relied on that statement. But neither of those features are present here.[83] Second, applying the concept of unliteral waiver to the requirement for notice of avoidance is inherently problematic. It does not automatically follow that a contract is avoided on one party not fulfilling a condition of the contract by the agreed date. That is an election that either party may make, before the condition is fulfilled or waived. They may not elect to avoid the contract, instead choosing to affirm the contract or to simply do nothing and allow the other party more time to fulfil the condition. If the parties have not agreed that a notice of avoidance is not required, and therefore that the agreement is automatically avoided on the expiry date for fulfilment of the condition, how will they know if the other has elected to avoid the agreement? Putting it another way, how will the party who has represented that they will forgo notice of avoidance know that the other party has relied on that representation and has avoided the agreement without informing them? So, in the present situation, if Mr Chevin and Mr Muir/Inger did not explicitly agree that the agreement would automatically terminate without notice if Birdwood did not declare the agreement unconditional by 30 October, how would Birdwood know that Blue Moon had chosen to avoid it? In this sense, it could be said that the requirement to give notice of avoidance benefits both parties.[84] For these reasons, I conclude that Birdwood has a reasonable argument that the agreement was not automatically terminated when Birdwood did not declare that the DD Condition was fulfilled on 30 October 2020.[85] To summarise, in my assessment, the position on Monday 2 November 2020 was that Blue Moon had the right to avoid the contract under cl 10.8 because Birdwood had failed to declare the DD Condition fulfilled by 30 October 2020. However, to avoid the contract, Birdwood needed to give notice under cl 1.3. It did not immediately do so. The agreement continued to run, with Blue Moon remaining able to avoid the contract, by notice, at any time before Birdwood fulfilled or waived the condition.Did Blue Moon affirm the contract by its conduct in November and December2020?[86] As discussed, where a party has a right of avoidance for failure of a condition, they are faced with an election between avoiding or affirming the contract. 23 Once an election is made it is final and precludes the exercise of the alternative right. 24[87] This court will not recognise an election unless satisfied that "matters have reached the stage of choice and that the words or conduct are unequivocal." 25 This is determined by an objective assessment of the party's actions.26 There need not necessarily be communication of an election to affirm, although obviously there must be overt evidence of it.27[88] A party may postpone their election to keep their options open, however they must not do so for an unreasonably long period. They must also be careful that their conduct during the period of postponement does not cumulatively amount to affirmation. 28 Note the comments in Jolly v Palmer that: 29The representee has in fact an election, which he may exercise but once. He is not however required to elect at once. He may suspend judgment, and anything said or done once that is the situation will not be regarded as the exercise of his election. For unequivocal acts or conduct are needed, "inconsistent with any attitude of mind except that of affirmation, or at all events more consistent with an intention to affirm, than with an intention to repudiate" Mere delay is not enough, unless it is such as itself to amount to evidence of an election to affirm, and then the effect on others, representor and third parties, may be relevant.[89] Birdwood submits that Blue Moon's conduct, and specifically the email correspondence between Mr Muir, Ms Burton and Mr Chevin throughout November 2020, constituted an election to affirm the contract under s 38 of the CCLA.23 McMorland, above n 12, at 572; Teihotua v Morning Star (St Lukes Garden Apartments) Ltd[2007] 8 NZCPR 311 (HC) at [25]–[32].24 Moeke v South Waikato District Council [2019] NZHC 2282, (2019) 20 NZCPR 385 at [29].25 McMorland, above n 12, at 572. See also McGuigan v Cullinane HC Christchurch AP 28/98, 14 April 1999; Harlow v Sherman Ltd [2010] NZCA 627 at [41].26 Burrows, Finn and Todd on the Law of Contract in New Zealand, above n 14, at 724.27 McMorland, above n 12, at 575.28 McMorland , above n 12, at 575. See AAM Ltd v Exotica Enterprise Ltd [2019] NZHC 1482 at [105]; Gayhurst Properties Ltd v Wong (2006) 7 NZCPR 611 (HC) at [104]–[110]; Ford v Ryan(2007) 8 NZCPR 945 (HC) at [42]–[43]; Tropical Traders Ltd Goonan (1964) 111 CLR 41; andPrisk v McKenzie (1985) 2 NZCPR 334 (HC).29 Jolly v Palmer [1985] 1 NZLR 658 (HC) at 663–664.[90] I do not consider that Birdwood has a reasonable argument that Blue Moon affirmed the contract by its conduct through November and December 2020. Mr Muir's conduct, objectively assessed, does not demonstrate an unequivocal choice to affirm the contract. The DD Condition was due for completion on Friday 30 October. On Monday 2 October Mr Muir followed up with Mr Chevin for an update. I do not think this follow-up, one working day after the date of expiry of the DD Condition, demonstrates a positive election to affirm the contract. Rather, as Mr Muir deposes, it was an enquiry to ascertain the status from Mr Chevin. The enquiry is consistent with Blue Moon keeping its options open in case Birdwood was able to pay the deposit imminently.[91] From then, there was no proactive contact by Mr Muir chasing fulfilment of the DD Condition and payment of the deposit. Ms Burton emailed for updates on 4 and 9 November but Mr Muir did not reply. Sitting passively by does not amount to a clear and unequivocal affirmation of the contract.[92] Mr Muir's response to Ms Burton's email of 17 November 2020 that he was "still waiting" is ambiguous. Following on from his earlier enquiries, the most logical interpretation is that he was still waiting for an update from Mr Chevin. That does not amount to a clear and unambiguous confirmation of an intention to proceed with the transaction.[93] Mr Hucker for Birdwood submits that Mr Muir's 20 November 2020 email, in which he asked for the two outstanding rates invoices to be paid (for May and August) and final reports and plans procured by Birdwood, was Blue Moon seeking to enforce the agreement. As such, this email is evidence of the fact that Blue Moon still considered the agreement to be on foot on 20 November 2020.[94] I do not accept that submission. All that this email shows is that Mr Muir considered that Blue Moon was entitled to pursue Birdwood for the unpaid rates invoices, after expiry of the DD Condition date. As for the request for final plans and reports, he states that he requests these documents pursuant to the agreed terms of the Second Extension from 1 to 30 October. He and Mr Inger had earlier requested these documents in emails on 25 September. Repeating that request at this point does notnecessarily indicate that Mr Muir considered that the contract was still on foot. If anything, demanding the information could indicate that Mr Muir considered that the agreement was at an end and Blue Moon was exercising its rights under cl 29.1 to have all consents, plans and reports transferred to it.[95] But in any case, the issue is not whether Mr Muir thought the agreement had come to an end or not, because I have found that there is a reasonable argument that legally, it had not. The issue is whether, having acquired the right to avoid the agreement, Blue Moon made a deliberate election to affirm it. The 20 November email is a long way from demonstrating an unambiguous election to proceed with the sale to Birdwood. Indeed, if Blue Moon was electing to affirm the contract and proceed, one would expect Mr Muir to have commenced a negotiation about what the new DD date was to be.[96] Mr Muir's email to Ms Burton on 25 November 2020 was a follow-up to the 20 November 2020 email and the reference to "resolving this situation" is plainly a reference to the matters outlined in the earlier email, namely the unpaid rates invoices and failure to provide final reports and plans.[97] With respect to the December joint venture proposal, Blue Moon highlights that the Project Briefing Paper contains references to "the land under contract" at different parts of the document and refers to the current purchase price being $6.5 million. Blue Moon says that these statements, and the fact that Mr Muir did not dispute or reject those statements, amounts to evidence of Blue Moon's affirmation of the contract. Mr Muir has deposed that he simply did not notice the references.[98] The fact that Mr Muir did not dispute or correct these statements in a lengthy document sent to him by Mr Chevin is a far from clear and unequivocal conduct showing an election to proceed with the agreement with Birdwood.[99] I conclude, therefore, that Birdwood does not have a reasonably arguable case that Blue Moon elected to affirm the agreement through its conduct in November and/or December 2020. It follows that Blue Moon continued to have the right to avoid for non-fulfilment of the DD condition.Did Blue Moon have the right to cancel the agreement because Birdwood had not paid rates invoices according to the agreement?[100] Blue Moon contends that there was also a breach by Birdwood which entitled Blue Moon to cancel the agreement. This was Birdwood's failure to pay outstanding rates invoices it had agreed to pay under cl 31 of the agreement.[101] Blue Moon contends that it was entitled to cancel the agreement for this breach after notice was given on 20 November 2020 that the invoices were due for payment on 27 November 2020. Blue Moon relies on Mr Muir's 20 November 2020 email to Ms Burton (copied to Mr Chevin and Ms Pidgeon) where he stated that the invoices attached to the email were outstanding and asked that Birdwood pay the invoices by 27 November 2021. Blue Moon contends that Mr Muir's reference to 27 November 2021 is a typo in the context of the email. It was intended to demand that the overdue rates (from May / August 2020) would be paid by 27 November 2020. I accept that.[102] Birdwood does not dispute that non-payment of the rates invoices was a breach of an essential condition entitling Blue Moon to cancel the agreement.[103] Under s 37 of the CCLA, a party to a contract may cancel it if, amongst other things, a term of the contract is breached by another party to the contract, and the parties have expressly or impliedly agreed that performance of the term is essential to the cancelling party.30[104] Clause 31 of the agreement states that the invoices are payable 10 working days after the date of the invoice and that payment of the invoices is "an essential condition of the contract", breach of which entitled Blue Moon to cancel the agreement. 31 Thus, by not paying the rates invoices within 10 working days Birdwood was in breach of cl 31, entitling Blue Moon to cancel.30 Section 37(1)(b) and (2)(a).31 Clause 31. Note that cl 31 described this as a condition rather than a term, but it is not a contingent condition in the sense that the agreement is conditional on its performance, like the DD Condition. It is more correctly described as an essential term.[105] While performance of the term is stated to be essential, time for the performance is not stated to be essential. Therefore, before Blue Moon could cancel for breach of this term, it needed to make time of the essence. 32[106] Blue Moon gave Birdwood notice on 20 November 2020 that it required payment of the invoices by 27 November 2020. This was a reasonable time. Birdwood did not pay. Thus, I find that from 27 November 2020 Blue Moon was entitled to cancel the agreement because of Birdwood's failure to remedy this breach. 33The rates invoices were not paid until 10 June 2021.34Did Blue Moon avoid or cancel the agreement by its 10 February 2021 email and subsequent text message?[107] I have found that Birdwood has a reasonable argument that the agreement was still on foot on 10 February 2021 because Blue Moon had not given notice under cl 1.3 to avoid the agreement. I have also concluded that from 27 November 2020, Blue Moon was entitled to cancel the agreement because of Birdwood's failure to remedy its breach of the agreement to pay rates invoices within 10 working days.[108] Blue Moon contends that, if the agreement was not already terminated, Mr Muir's email to Mr Chevin on 10 February 2021 cancelled the agreement. Blue Moon contends that Mr Muir unequivocally communicated that, from Blue Moon's perspective, the agreement was already at an end, and that the purpose of Mr Muir's email was to "point [this] out" to Mr Chevin and therefore Birdwood. It emphasises that there was no response to Mr Muir's email contradicting this position from Mr Chevin, or anyone else acting on behalf of Birdwood, which one would have expected if Birdwood was taken by surprise by Mr Muir's statement.32 McMorland, above n 12, at [12.02(f)]; commenting on s 7(4)(a) of the Contractual Remedies Act 1979 which in all material respects is the same as s 37(2)(a) of the Contract and Commercial Law Act 2017.33 McMorland, above n 12, at [12.10]: "There is no prescribed form of notice to make time of the essence, but certain substantive requirements must be met. The notice must state with reasonable explicitness what is required to be done, it must give a reasonable time in which to do it, and it must make it clear that, if it is not done in that time, the giver of the notice will have the right to cancel the contract."34 Affidavit of Nigel Barry Muir sworn 26 July 2021 at [51].[109] Blue Moon also relies on Mr Muir's evidence that he repeated that there was no current contract on foot in a telephone conversation with Mr Chevin on 17 February 2021.[110] Blue Moon further points to Mr Inger's text to Mr Chevin on 20 March 2021, which is written in terms that clearly indicated to Mr Chevin that any previous agreement between Birdwood and Blue Moon was already cancelled, and there was no current contract between the parties. Again, Mr Chevin did not respond.[111] Birdwood submits that the email and text message did not purport to cancel the agreement. It says that these communications set out the (incorrect) view of Blue Moon that there had been an automatic termination of the agreement for sale and purchase. The email and/or text message did not represent a fresh notice exercising a right of cancellation said to have accrued at the date they were made.[112] Furthermore, and fundamentally, Birdwood contends that the email and text message suffer from non-compliance with cl 1.3 of the agreement.[113] Mr Chevin denies that he was ever told by Mr Muir or Mr Inger that the contract was not still on foot.[114] I have found that to avoid the contract under cl 10.8(5) for non-fulfilment of the DD Condition, Blue Moon needed to serve notice on Birdwood according to cl 1.3. Blue Moon's 17 February email does not meet the requirements of a notice under cl 1.3 of the agreement. Clause 1.3(4) states that a notice is deemed to have been served in the case of email when acknowledged by the party or by their lawyer orally, or by return email or otherwise in writing.35 Here, Birdwood did not acknowledge the email.[115] The subsequent text message on 20 March 2021 did not comply with the requirements of cl 1.3 either. A text message is not a notice under the agreement.35 Automatically generated acknowledgements excluded.[116] However, I find that because the agreement does not expressly provide how Blue Moon was to cancel for breach of the term requiring Birdwood to pay Council rates, this situation is governed by s 41 of the CCLA. Section 34 of the CCLA states that:If a contract expressly provides for a remedy for misrepresentation, repudiation, or breach of contract, or makes express provision for any of the other mattes to which sections 35 to 49 relate, those sections have effect subject to that provision.(emphasis added)[117] The standard ADLS/REINZ form of Agreement for Sale and Purchase provides for cancellation by service of notice in specific situations: cl 2.2 (failure to comply with a deposit notice ), cl 5.0 (property destroyed or damaged), cl 6.2(3)(c) (objection or requisition to title), or cl 11.4 (failure to comply with a settlement notice). In s 34 terms, the contract makes express provision for cancellation by notice in these situations. Clause 1.3 sets out the requirements for "all notices between the parties relevant to this agreement, whether authorised by this agreement or by the general law."[118] In contrast, cl 31 (requiring Birdwood to pay Auckland Council rates) does not provide that it is to be cancelled "by notice." Further, there is no general provision in the standard terms that states that cancellation for another other kind of breach, beyond those specifically provided for, must be by notice.[119] Therefore, I find that cancellation of the agreement for breach of cl 31 is governed by s 41 of the CCLA. This section provides that cancellation takes effect when it is "made known" to the other party; and that cancellation may be made known by words or conduct showing an intention to cancel, or both. The CCLA does not require cancellation by service of notice.[120] Did Blue Moon "make known" to Birdwood an intention to cancel the agreement by the February 2021 email from Mr Muir to Mr Chevin and/or the March 2021 text message from Mr Inger to Mr Chevin? I do not place any weight on Mr Muir's evidence that he repeated the message to Mr Chevin over the telephone on17 February, as Mr Chevin denies that he did so, and I cannot resolve that factual dispute in this summary procedure.[121] I accept Blue Moon's submission that it is clear from the words of the February email and subsequent text message that Blue Moon thought that the contract had ended. Mr Chevin cannot have been in any doubt about that. But is a statement that a contract is not on foot because it had already terminated some time earlier, a communication that conveys "an intention to cancel", as envisaged by s 41 of the CCLA? A very recent decision of the Court of Appeal, Taylor v Asteron Life Ltd,suggests that it might be. 36 The Court of Appeal found that service of a pleading by an insurer (Asteron) in which it said that it was entitled to cancel an insurance policy and was not obliged to pay any further benefits under it, was sufficient notice of cancellation of the policy for the purposes of s 41 of the CCLA. The Court of Appeal said that it "read this pleading as a clear indication by Asteron that it regarded the contract as at an end. Thus Asteron's pleading was in our view an effective communication of cancellation."37[122] Yet there is a counter-argument advanced by Birdwood that is not without merit. This is that to be effective cancellation, the communication relied on must evince an intention to cancel. Mr Muir did not purport to cancel the agreement in his email; nor did Mr Inger in his text. Rather, they expressed their view that the contract had already come to an end some months before.[123] The position has similarities to that faced by the Court of Appeal inB S Developments No.12 Ltd v P B & S F Properties Ltd.38 In that case, the Court was concerned with whether an agreement was avoided under the contract on two alternative dates. Like this case, the second communication from the vendor did not purport to cancel the agreement but stated that the agreement had already been cancelled by the first communication (from the purchaser's agent). The Court considered whether the second communication avoided the agreement, if it was not already avoided by the first communication. It stated: 3936 Taylor v Asteron Life Ltd [2020] NZCA 354.37 At [140].38 B S Developments No.12 Ltd v P B & S F Properties Ltd (2006) 7 NZCPR 603 (CA).39 At [31].We do not think there is anything in that contention. The letter to Mr Horsfall did not purport to be a notice to the appellant, and did not purport to avoid the contract remaining on foot. Rather, it stated that the 11 July fax had cancelled the contract, and expressed the view that if that had not been the case, the contract lapsed for lack of confirmation or waiver of the special conditions. Assuming for present purposes that the 11 July fax did not avoid the agreement, both of those statements would have been legally incorrect. They were expressions of view as to the situation to which they pertained. They were not statements that the letter itself was bringing about any legal consequences. Accordingly, we reject the contention that the 6 August fax may have been sufficient, of itself, to avoid the agreement.[124] I conclude that it is arguable whether the February and March 2021 communications from Blue Moon effectively communicated cancellation of the agreement. Mr Muir did not purport to cancel the agreement in his email and nor did Mr Inger in his text message. Rather, they stated what they considered to be the position – that the agreement had automatically ended some time earlier. In my assessment, the agreement had not automatically terminated. Their view was legally incorrect. I conclude that this issue is arguable and should be tested at trial. That is especially so given that the submissions I received on this point were not comprehensive, as Blue Moon's primary submission was that the agreement automatically terminated after expiry of the DD Condition. Furthermore, counsel have not had the opportunity to make submissions on the two cases I have highlighted.[125] A final point. Mr Hucker for Birdwood submitted that notice of cancellation needed to comply with s 388 of the Companies Act 1993. That section provides that a document, other than a document in any legal proceedings, may be served on a company by certain means. Those means include emailing the document to the company at an email address that is used by the company. I do not see this as adding anything to the requirement under cl 1.3 of the agreement that notices can be served on a party by email. Clause 1.3 contains the additional requirement that the email is acknowledged by the party.[126] In any event, I do not see s 388 as relevant. When a party makes known its intention to cancel a contract according to the general law as encapsulated in s 41 of the CCLA, it is not "serving a document" under s 388 of the Companies Act.Did Mr Chevin have authority to receive notices from Blue Moon for Birdwood?[127] I do not need to decide this issue as I have already concluded that Birdwood has a reasonable argument for an interest to support the caveat. However, it may be helpful to record my conclusions on the submissions made about Mr Chevin's authority.[128] Birdwood contends that notice to Mr Chevin was insufficient to constitute notice to Birdwood as purchaser under the agreement for sale and purchase. It submits that all variations to the agreement were approved through the solicitors acting for the parties to the transaction, and only then in the case of Birdwood with the approval of an instruction of the director of Birdwood. Mr Hucker submits that while Mr Chevin was copied into various emails between the director of Blue Moon and the solicitors acting for the parties, this was in his capacity as RMA consultant only.[129] Mr Hucker relies on the description of the doctrine of ostensible authority by Asher J in Pascoe Properties Ltd v Attorney-General:40Ostensible authority is created, therefore, by the actions of the principal, who by words or conduct represents to the other party that a person has the necessary authority to enter into the transaction on the principal's behalf. The authority may be either express or implied, and may arise by the principal permitting the agent to act in some way in the conduct of the principal's business with other persons. The representation of authority can be effected through a course of dealing that is sufficiently frequent and understood. It may also arise where an agent is vested with a particular office and that office is of the kind that could reasonably be expected to carry the authority. The perception of authority by the other party must be reasonable. Specific limitations on the authority of an agent may not be effective if the actions of the principal have created the representation of authority.[130] Mr Hucker submits that the evidence from Mr Muir and Mr Inger is that they had no communications with the directors of Birdwood. As such, there could be no specific conduct on the part of the directors that constituted a "holding out" of Mr Chevin as having the authority to bind Birdwood.[131] Furthermore, Mr Chevin's evidence is that he advised Mr Muir of his lack of authority. That is consistent with the footer that appeared on his email.40 Pascoe Properties Ltd v Attorney-General [2014] NZCA 616, [2015] NZAR 457 at [21] (citations omitted).[132] As the critical issue in this case is whether Blue Moon informed Birdwood that the agreement was at an end, the issue is whether Mr Chevin was competent to receive notices on behalf of Birdwood, not whether he had authority to bind Birdwood. I do not consider the argument that notice to Mr Chevin was not notice to Birdwood is seriously arguable.[133] As highlighted in the quote above, ostensible authority may arise by the principal permitting the agent to act in some way in the conduct of the principal's business. A principal may put an agent in a position from which it can be inferred that the agent's representation of authority in himself is in fact correct. 41 An agent's authority may emanate from the joint actions of both the principal and the agent where the principal appoints an agent to a position that enables the agent to then bolster its authority in dealings with a third party.42 It is necessary therefore to examine closely the parties' course of dealing, including words or conduct that amounted to a representation of authority.43[134] There can be no doubt that Birdwood permitted Mr Chevin to hold himself out as someone competent to receive and impart communications about the agreement for Birdwood. Mr Muir and Mr Inger only communicated with Birdwood in relation to the agreement through Mr Chevin. They never communicated directly with the Birdwood director(s). All communications between Blue Moon and Birdwood through the entire negotiation, including the First and Second Extensions, were conducted through Mr Chevin. Mr Chevin was permitted to provide instructions to Birdwood's solicitor. Birdwood placed Mr Chevin in a position from which it could be inferred from his words and conduct that he was competent to receive communications from Blue Moon about the agreement on behalf of Birdwood.Result[135] Birdwood has established a reasonably arguable case to support the interest claimed and the caveat it has lodged.41 Cromwell Corp Ltd v Sofrana Immobilier (NZ) Ltd (1992) 6 NZLC 67,997 (CA) at [23].42 Pascoe Properties Ltd v Attorney-General, above n 41, at [22].43 At [23].[136] I order that:(a) caveat 12150203.1 will not lapse;(b) Birdwood is to file proceedings for specific performance of the agreement for sale and purchase within 20 working days;(c) Birdwood is to prosecute the claim with due diligence, and Blue Moon has leave to approach the Court to intervene if Birdwood does not do so.[137] Birdwood should be paid its costs. My preliminary view is that 2B costs are suitable. I expect that counsel will be able to agree costs. If that is not possible, Birdwood is to file submissions within 20 working days and Blue Moon within15 working days of Birdwood._____________________Associate Judge Gardiner