BURRELL DEMOLITION V WELLINGTON CITY COUNCIL HC WN CIV-2006-485-1274

BURRELL DEMOLITION V WELLINGTON CITY COUNCIL HC WN CIV-2006-485-1274 12 March 2008IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV-2006-485-1274BETWEEN BURRELL DEMOLITION LIMITED Plaintiff AND THE WELLINGTON CITY COUNCIL Defendant Hearing: 24-26 September 2007 Appearances: P A Morten for Plaintiff S F Quinn and A Roberts for Defendant Judgment: 12 March 2008JUDGMENT OF CLIFFORD JSolicitors: Harkness & Peterson, P O Box 342, Wellington Fax: (04) 473-8845 – J R Harkness Phillips Fox, P O Box 2791, Wellington Fax: (04) 472-7429 – S F QuinnCounsel: P A Morten, pmorten@mulgravechambers.co.nz Fax: (04) 473-9833Introduction[1] Burrell Demolition Limited, the plaintiff, ("Burrell Demolition") has, since 1978, occupied some 48 hectares of land in South Wellington ("the Land") as the lessee of the defendant, the Wellington City Council ("the City Council") [2] Burrell Demolition operates a demolition and construction landfill ("the Landfill") on the Land. [3] On 14 December 2005, and following prolonged dealings between Burrell Demolition, the City Council and the Wellington Regional Council ("the Regional Council") on resource management issues associated with Burrell Demolition's use of the Land, the City Council gave Burrell Demolition notice to quit. [4] In these proceedings Burrell Demolition contests that notice to quit. It says it remains entitled to occupy the Land as a lessee and, on a variety of grounds, seeks orders from this Court to that effect.Background[5] Mr Alexander Burrell ("Mr Burrell") is, and was at all relevant times, the managing director of Burrell Demolition. [6] On 6 October 1971 Mr Burrell contracted, as agent for Burrell Demolition, to buy some 2,124 acres of land in South Wellington ("the Original Land") from its then owner, Mr Boswell. Mr Burrell's intention was to use the Original Land, or parts of it, to dump demolition materials generated by the Burrell Demolition business. [7] On 7 October 1971 the City Council commenced procedures to take the Original Land under the Public Works Act 1928 for the disposal of refuse. Mr Burrell contested that action. Mr Burrell and the City Council negotiated unsuccessfully to resolve an outcome satisfactory to them both. In 1973 Mr Burrellissued proceedings against the City Council. He challenged a formal proclamation, of 6 April 1972, taking the Original Land. [8] Those proceedings were settled in April 1974. Mr Burrell withdrew his challenge to the taking of the Original Land, agreed to convey the Original Land to the City Council, and the City Council agreed to pay Mr Burrell $58,000. That money was designed to enable Mr Burrell to settle his purchase of the Original Land from Mr Boswell, and to meet all his costs, without further expense to him. [9] In addition, the City Council agreed to grant Mr Burrell – or his nominee – a 21 year lease of some 48 hectares of the Original Land comprising the Land. This land was to be used to meet the dumping needs of the Burrell Demolition business. Whilst there was to be no right of renewal, if at the end of the 21 year term the City Council decided to re-lease the Land, Mr Burrell or his nominee was to have an option to a further lease. [10] It would appear to have been agreed that the City Council would lease the Land to Mr Burrell, rather than sell it to him as was his initial preference, to avoid legal difficulties that would have been associated with such a sale. The arrangements as regards the possible further lease, as opposed to an express right of renewal, addressed restrictions on the City Council's right to lease the Land for a period greater than 21 years then contained in s 39 of the Public Works Act 1928, and are the focus of this case. [11] Burrell Demolition alleged that, in addition to including in the settlement terms the agreement as to the possible further lease, the City Council, through its servant and agent the Town Clerk Mr McCutcheon, orally agreed ("the Oral Agreement") that at the expiration of the 21 year term Burrell Demolition would be granted a further 21 year lease. The City Council denied that allegation. [12] It was some time before Burrell Demolition – as Mr Burrell's nominee – was able to take possession of the Land, due to access issues and other matters. This finally occurred on 9 January 1978.[13] The terms of the lease of the Land were not settled for some time. [14] On 16 November 1979 Burrell Demolition and the City Council executed a lease of the Land ("the Original Lease"). As agreed, the Original Lease was for a term of 21 years. It incorporated the following express covenant ("the Option Clause") by the City Council as lessor:That if at the expiration of the term hereby created the Council decides to lease the land for a further term the lessee shall have the first option to lease the land provided that the lessee has paid the rent hereby reserved and observed and performed the several covenants and stipulations herein on its part contained. (Agreed Bundle of Documents, volume 1, at p 131 – "ABD 1/131").[15] The Original Lease was due to expire on 8 January 1999. Prior to that date, Burrell Demolition had written to the City Council on a number of occasions seeking a renewal of the Original Lease when it expired. [16] On 19 May 1999 (letter incorrectly dated 19 May 1998), the City Council wrote to Burrell Demolition on the question of the Original Lease. As the terms of this letter very much reflect the City Council's position in this litigation, I set them out below:Please note that the lease dated 16 November 1979 between Wellington City Council and Burrell Demolition Limited has expired as at 8 January 1999. The lease allows for no right of renewal, but provides first option to lease the land. The option is conditional upon Council being satisfied that the terms and conditions of the lease were observed. This process will take a period of time, therefore Council proposes that the lease be varied to allow an extension of the lease on a monthly basis. All other terms and conditions will remain as per the lease. (ABD 1/278).[17] As requested, on 26 May Mr Burrell countersigned that letter to acknowledge that the Original Lease had been extended beyond 8 January 1999 "on a monthly basis with all other terms and conditions being as per the said lease". (ibid) [18] In the period that followed, the City Council, and the Regional Council, raised various issues with Burrell Demolition regarding Burrell Demolition's compliance with the terms of its resource management consent to operate the Landfill on the Land.[19] By December 1999, both the City Council and the Regional Council were taking formal legal action against Burrell Demolition. At the same time, Burrell Demolition and the City Council were discussing possible new lease terms. [20] On 16 December 1999, Burrell Demolition signed up to a Council proposal that a new 15-year lease ("the New Lease") be entered into. The City Council formally executed the New Lease on 13 January 2000, and Burrell Demolition did so on 16 January 2000. [21] The New Lease was on different terms to the Original Lease. Most notably it required the payment of $5,000 per annum rent, in contrast to the 10 cents per annum of the Original Lease. In addition, the New Lease contained the following provision ("the Condition Precedent"):Condition precedentThis lease is subject to, and conditional upon, satisfaction of the following condition precedent:• the lessee providing to the lessor, at the lessee's cost in all things, a management plan (the management plan) for the premises, prepared by Connell Wagner. The management plan must identify the works necessary in order to make the premises fully compliant with the Resource Management Act, and must meet the reasonable requirements of the lessor's Environment Control Business Unit and the Wellington Regional Council. This condition precedent must be satisfied on or before 29 February 2000 (time being strictly of the essence), failing which this lease will not come into existence and the lessee will continue to occupy the premises as a monthly tenant only. (ABD 2/394).[22] The City Council did not enforce the requirement for the management plan to be provided by 29 February 2000. On 2 June 2000 Philips Fox, the City Council's legal advisers, advised Burrell Demolition in the following terms:You will be aware that the condition precedent was to be satisfied on or before 29 February 2000 (time being strictly of the essence). In the event, ECBU received a first draft sometime in April, and since received (sic) a second draft sometime in May. Despite the original timetable not being observed, and given progress to date, Council is prepared to extend the time for satisfying the condition precedent up to 30 June 2000, time, once again, being strictly of the essence. (ABD 2/558).[23] Burrell Demolition provided a draft management plan in May 2000 and – it would appear - a further draft in December 2000. [24] On 24 April 2002 the City Council advised Burrell Demolition that the management plan submitted had "not yet" been approved. Therefore the New Lease had never come into existence. Burrell Demolition was, in terms of the interim arrangements agreed in May 1999, a monthly tenant. In response to a letter from Burrell Demolition enclosing rent and affirming the existence of the New Lease, the City Council wrote to Burrell Demolition in similar terms on 20 September 2004. [25] On 14 December 2005 the City Council, having confirmed its position that the New Lease had never come into existence and that Burrell Demolition had been occupying the Land since 1999 on a monthly tenancy, gave Burrell Demolition formal notice to quit ("the Notice to Quit"). [26] These proceedings are Burrell Demolition's response to the Notice to Quit.Burrell Demolition's case against the City Council[27] On the basis of that, largely agreed, factual background, Burrell Demolition advanced four causes of action.First cause of action[28] In its first cause of action, Burrell Demolition claimed that, by offering it a further lease, the City Council had – in terms of the Option Clause – confirmed that it had decided to lease the Land. The City Council was, therefore, obliged to offer Burrell Demolition the first option to lease the Land for a further 21 years, on the terms and conditions of the Original Lease. In breach of those contractual obligations and of the Oral Agreement, the City Council refused to offer such a lease to Burrell Demolition, required Burrell Demolition to enter the New Lease, imposed the Condition Precedent and issued the Notice to Quit.Second cause of action[29] The second cause of action alleges that Burrell Demolition was unlawfully coerced into signing the New Lease.Third cause of action[30] The third cause of action alleges that, if the New Lease satisfies the City Council's contractual obligations and is not void for duress – both of which are denied – then the Condition Precedent fails for uncertainty.Fourth cause of action[31] The fourth cause of action alleges that if the New Lease is valid, Burrell Demolition has satisfied the Condition Precedent.Relief[32] Under the first to third causes of action Burrell Demolition seeks declaratory and injunctive relief, the effect of which would be to declare the New Lease and the Notice to Quit invalid, to restrain the City Council from re-entering the Land or removing Burrell Demolition from the Land, and to declare that Burrell Demolition was an equitable tenant entitled to a further lease of the Land on the same terms and conditions as the Original Lease. [33] Under the fourth cause of action, the relief sought is a declaration that the Condition Precedent was satisfied, with the effect that Burrell Demolition is entitled to occupy the Land on the basis of the New Lease.The City Council's position[34] As noted, the City Council generally admitted the facts as pleaded by Burrell Demolition. It denied, however, the existence of the Oral Agreement.[35] The City Council said that its agreement was to offer Burrell Demolition a right of first refusal if it decided to re-lease the Land at the expiry of the Original Lease. It did not have an obligation to renew the Original Lease. Burrell Demolition freely accepted the New Lease, but never satisfied the Condition Precedent. The City Council was therefore within its rights to give Burrell Demolition the Notice to Quit, which was effective on its stated terms. The Court should not make any of the orders sought by Burrell Demolition.Issues[36] The issues in this case are, at least in terms of their identification if not their resolution, reasonably straightforward. They relate to the claimed right of renewal, and the status of the New Lease. In my view they can be summarised as follows:Right of renewal or right of first refusal• Did the City Council in effect – including by reference to the Oral Agreement – give Burrell Demolition a right of renewal of the Original Lease, or was Burrell Demolition only granted an option, in effect a right of first refusal, if the City Council decided to re-lease the Land at the expiry of the Original Lease?Status of the New Lease• Did the City Council breach its obligations to Burrell Demolition when it offered Burrell Demolition the New Lease instead of a renewal of the Original Lease? Should the New Lease be set aside for duress?• If the New Lease is valid, what is the status of the City Council's decision that the Condition Precedent had not been met, and of the Notice to Quit? [37] This judgment is structured around those issues, and I will consider the facts and the law, and record my findings, sequentially in respect of each of those issues.Before doing so, however, I set out a brief overview of the evidence presented at trial.Overview of evidence[38] The principal witnesses for Burrell Demolition were Mr Burrell himself and his litigation adviser at the time, Mr Rennie QC. Evidence was also provided by a partner of Mr Rennie's, Mr Black and by Mr Christianson, of Mr Burrell's engineering advisers from August 1999 onwards, Connell Wagner. [39] Mr Burrell's evidence traversed the history of the various dealings between him, on behalf of Burrell Demolition, and the City and Regional Councils from 1972 through to the commencement of these proceedings. [40] Mr Rennie gave evidence based on his representation of Mr Burrell and Burrell Demolition between 1972 and 1974, particularly relating to the terms of the settlement negotiated, Burrell Demolition's rights on the expiry of the terms of the Original Lease and Mr Rennie's understanding of the factual background to those agreements. [41] Mr Rennie was a careful and thoughtful witness. I found his evidence to be of particular assistance in determining the nature of the agreement reached between Mr Burrell and the City Council, as recorded in the Option Clause. [42] Mr Black gave evidence with respect to preliminary dealings with the City Council in 1971. Mr Black's evidence was that his recollection, based on what relevant Council officers said at the time, was that the Original Lease would be renewed just as was the case with other Council leases and therefore it would be as good as having freehold title. [43] Mr Christianson gave evidence of his view of the extent to which Burrell Demolition had or had not substantively complied with its resource consent throughout the relevant period. He also gave evidence as to the preparation of the management plan called for by the Condition Precedent and of the response of theCity Council and Regional Council to the plans submitted by Connell Wagner on behalf of Burrell Demolition, and associated resource consent issues. [44] For the City Council, evidence as to the events between 1972 and 1974 was provided by Mr McCutcheon, the Town Clerk at the time, and Mr Coyle, the then City Valuer and Property Manager. Messrs McCutcheon and Coyle's evidence related principally to dealings with Mr Burrell and Mr Rennie at the time of the original dispute, and focused on the claim the City Council had entered into an oral agreement, committing the City Council to offer Burrell Demolition a renewal of the Original Lease when it expired. Mr McCutcheon's evidence was that he had not committed the City Council to any oral agreement beyond the terms initially recorded in the settlement papers considered by the City Council and, ultimately, the Original Lease itself. Moreover, that was not an agreement he would have entered into in the circumstances. [45] Mr Coyle's evidence was, essentially, supportive of the views expressed by Mr McCutcheon. He said he had no recollection of any oral agreement or assurance regarding occupation of the Original Land beyond the term of the Original Lease. [46] Neither Mr McCutcheon nor Mr Coyle were able, however, to recall in any detail the discussions which had taken place. [47] The third Council officer to give evidence was Mr Tacon. Mr Tacon had no personal knowledge of most of the matters under dispute. He had only become the City Council's Property and Parking Services Manager – in which capacity he gave his evidence – in July 2005. The majority of his evidence was therefore given on the basis of various City Council records. Mr Morten, for Burrell Demolition, objected to most of Mr Tacon's evidence on the basis that it constituted inadmissible hearsay. I deal with that objection (on which I received written submissions from both parties after the trial) during the course of this judgment. Mr Tacon had been personally involved in the decision to issue the Notice to Quit, and also gave evidence as to that. [48] The final witness for the City Council was Mr Forlong, an employee of the Regional Council. Mr Forlong's evidence addressed the Regional Council'sperspective on compliance issues, and the Regional Council's involvement with the management plan called for by the Condition Precedent.A right of renewal or a right of first refusal?[49] At the hearing, Mr Morten argued this part of the Burrell Demolition's case on the basis that Burrell Demolition had a right of renewal, and not a right of first refusal as, in effect, had been admitted by the City Council. [50] When Mr Rennie first wrote to the City Council on 8 March 1974, outlining what was to become the agreed basis of settlement, he described the provision to be incorporated into the lease addressing Burrell Demolition's rights at the expiry of the 21 year term of the Original Lease using the following words:(vii) No right of renewal, but first refusal of a new letting to Burrell if Council does decide to re-let (ABD 1/102).[51] This wording was used, in virtually identical terms, in an internal memorandum from Mr Kerr, the City Solicitor, to the Town Clerk on 22 March 1974:No right of renewal but the right of first refusal if the Corporation decides to re-lease at the end of the term (ABD 1/105).[52] On 10 April 1974 Mr Kerr confirmed that the City Council had agreed to various settlement terms, including the following: a) The City Council would grant Mr Burrell, or a company nominated by him, a lease of part of the land at a peppercorn rental for a period of 21 years, pursuant to s 39 of the Public Works Act 1928. b) The term of the lease would commence from the date on which the City Council could provide truck access to the area to be leased.c) No right of renewal of the lease was to be given but the right of first refusal would be given if the City Council decided to re-lease the Land at the end of the 21 year period. [53] That is the origin of the Option Clause in the Original Lease. The City Council did not dispute it was bound by the Option Clause. [54] In its statement of claim Burrell Demolition further asserted that, pursuant to the Oral Agreement, the City Council had agreed it would offer Burrell Demolition a further lease at the expiration of the Original Lease. It did so in the following terms:Because section 39 of the Public Works Act 1928 prevented the defendant letting any land not required for immediate use for longer than 21 years, Burrell and the defendant (through its servant and agent Mr McCutcheon, the Town Clerk) orally agreed on a date in 1974 no longer precisely known to the plaintiff, but before April, that at the expiration of the 21 year term of the lease, Burrell would be granted a further 21 year lease.[55] Mr Morten, on the basis of the Oral Agreement, argued therefore that Burrell Demolition had, in effect, a right of renewal. His further argument, as I understood it, was that: a) As the terms and conditions of the lease in respect of which Burrell Demolition was entitled to the right of renewal were not stipulated, those terms were to be the same as those of the Original Lease. b) As Burrell Demolition had, in effect, exercised that right of renewal – in letters confirming its interest in a new lease sent to the City Council prior to the expiry of the Original Lease – it was now an equitable tenant of the Land on the terms of the Original Lease. [56] Mr Morten relied on various authorities, including Hinde McMorland & Sim:Land Law in New Zealand 11.111, Lewis & Stephenson (1898) 67 LJQB 296 and Hill & Redman Law of Landlord and Tenant [7701] at 2165, in support of those propositions.[57] In asserting the existence of the Oral Agreement, Mr Morten sought to rely on evidence provided by Messrs Burrell, Rennie and Black. [58] Mr Burrell's evidence was that he had made it clear when he agreed to the lease proposal that he required rights of renewal. It was his understanding that, although there was to be no right of renewal, he was to be granted a right of first refusal if the City Council decided to re-lease the Land at the end of the 21 year period. Whilst Mr Rennie had told him that he could not be guaranteed anything more than a 21 year lease, because of the problem with the legislation, it was clear from what he was told by Council officers (particularly Mr Coyle) that that limitation did not matter. The City Council would renew the lease at the end of the 21 year period. The right of first refusal would be exercised in his favour. He would miss out on a further lease only if something occurred which made it impossible for the City Council to grant him one. [59] Mr Black's evidence was that he met Council officers on several occasions. Whilst the legislation limited the term of any lease, Council officers had said that the Original Lease would be renewed just as was the case with other Council leases. Therefore it would be as good as having freehold title. Mr Black acknowledged the difference between his recollection on that point, and the wording of the Option Clause. His explanation of that difference was that, bearing in mind that any commitment to a renewal would likely run foul of the legislative restrictions faced by the City Council, the Option Clause was probably the best that could be done to point to the understanding that the Land was intended for Mr Burrell's continuing use in future terms (at least until such time as the City Council could show a legitimate need of its own). [60] Explaining his understanding of the origin of the proposal that the City Council lease the Land to Mr Burrell, rather than transferring it to him outright as Mr Burrell would have preferred, Mr Rennie commented: there were two obvious difficulties, which Mr McCutcheon set out. The first was that the Council could not transfer title in the land to Mr Burrell. It could however commit to a lease. The further difficulty with the lease would be that it could only be for a maximum term of 21 years without a right of renewal. The Council could not deal solely with Mr Burrell on aprivate basis on terms more favourable than that, but there would be a "clear understanding" that he would be able to obtain a further lease term at the end of the 21 years (on the same basis) if he were still in occupation and there had been no development which made it impossible for the Council to grant such a lease. (Brief, paragraph 37).[61] Commenting on his discussions at a subsequent meeting, which occurred after Mr Rennie had sent the City Council his letter of 8 March 1974, Mr Rennie said: I am certain that each of myself, Mr McCutcheon and Mr Kerr were clear that the only reason that Mr Burrell was to receive a lease as opposed to title was because of the legal obstacles to a settlement based on transfer of title, that the only reason that the lease was limited to 21 years without a formal right of renewal was because of the statutory position, that the Council assured him of a renewal if he was still in possession and seeking it, ... (Brief, para 40).[62] For the City Council, Messrs McCutcheon and Quinn were adamant that they had no recollection of any such "clear understanding" or agreement, and that they would not have bound the City Council to any such oral agreement in the circumstances. [63] In my view, the evidence taken as a whole does not support Burrell Demolition's claim as to the existence of the Oral Agreement through which it was entitled to a right of renewal. In reaching this conclusion, I have paid particular regard to certain evidence provided by Mr Rennie. [64] During his evidence in chief, and in response to a question from Mr Morten asking him to comment on the "clear understanding" he referred to at paragraph 37 of his written brief (see [59]), Mr Rennie commented: The objective was to get as close to the position Mr Burrell would have been in as owner as could be achieved but recognising that if the Council took title it had to go through a land disposal process. The concept of taking a lease was constrained by the fact that the longest lease that the Council could grant under the legislation on a privately negotiated basis such as this was strictly a 21 year lease. Beyond that it had to go through a public bid and tender process. It was transparently clear that the economic value of the lease would be well above a peppercorn and so approaching it on a renewable lease basis was not going to achieve the settlement objective. So the position we discussed at this meeting was that there would be a right of first refusal if the Council let the property again at the end of the 21 years. That being otherwise on exactly on the same terms as in the first 21 yearsand the proposition was that we would simply have to trust the Council that it would conduct itself in that way." (Notes of Evidence, p 27)[65] In Mr Rennie's words, Burrell Demolition's right was one of first refusal if the City Council decided to re-lease the Land at the expiry of the term of the Original Lease. Burrell Demolition could not have a right of renewal, as that was the very thing that the then s 39 of the Public Works Act prohibited. [66] Burrell Demolition would, as Mr Rennie put it, have to trust the City Council to do what its officers had indicated it intended to do, namely re-lease the Land to Burrell Demolition unless circumstances at the time prevented it from so doing. [67] Mr Rennie gave similar evidence in answer to a question I put to him at the close of his evidence. I put it to Mr Rennie that a fair description of the position was that Burrell Demolition did not have a legally enforceable right of renewal, but a right of first refusal combined with a non-legally binding assurance from the City Council that, all other things being equal, the City Council would offer to re-lease the Land upon the expiry of the Original Term of the Lease. Mr Rennie generally agreed with that proposition. He agreed that a legally binding right of renewal would breach the s 39 Public Works Act restriction, and hence it could not be legally enforceable, for example by way of specific performance. At the time, however, he had not been of a mind that the arrangement would have no legal consequences, referring in his evidence to some possibility of an application for compensation, or perhaps to Ombudsman-type complaint procedures. [68] That evidence does not support Mr Morten's argument as to the existence of the Oral Agreement. Rather, it supports the interpretation of the Option Clause accepted by the City Council. [69] Taken overall, on the basis of Mr Rennie's evidence I accept that some form of non-legally binding indication of likely attitude – to that extent an "assurance" – on the question of a further lease, after the initial 21 year term, was most probably expressed by the City Council officers involved. I also consider, however, that the City Council officers would have been well aware that to commit the City Council legally to grant a new lease to Burrell Demolition would have breached theprovisions of s 39 of the Public Works Act, the source of difficulty as regards a right of renewal in the first place. Therefore, I accept Mr McCutcheon's and Mr Coyle's evidence that no such agreement was entered into. As Mr Rennie acknowledged, Burrell Demolition would have to trust the City Council to do what the City Council had indicated it would – all other things being equal – do, namely look favourably upon the grant of a new lease upon the expiry of the Original Lease. [70] On this point, I think Mr Quinn for the City Council put the matter appropriately when he acknowledged, in closing, that there may well have been discussions with Council officers about the future likelihood of the City Council looking favourably upon a further term. As he said, it would be surprising indeed if the future beyond the 21 year term was never mentioned in such settlement discussions. [71] He went on to submit, however, that that was not the same as Burrell Demolition having established that a binding oral contract existed whereby the City Council committed to offering a renewed term. I agree with that proposition. [72] I therefore find against Burrell Demolition as to its claim for the existence of the Oral Agreement. [73] It follows, therefore, that to the extent Burrell Demolition based its claim against the City Council on it having a right of renewal, which it had effectively exercised and as a result of which it was, therefore, an equitable tenant entitled to occupy the land for a further 21 years on the terms of the Original Lease, that claim fails. [74] As the Original Lease recorded, the position was that if the City Council at the expiry of the term of the Original Lease decided to re-lease the Land, Burrell Demolition would have a first option to take such a lease, in other words, Burrell Demolition would have a right of first refusal as regards such a lease. [75] Mr Quinn, for the City Council, in response to Mr Morten's argument in support of the existence of the Oral Agreement and its legal effect, drew myattention to a number of authorities on the proper interpretation of contractual documents including the parole evidence rule (Edwards v O'Connor [1991] 2 NZLR 542), the admissibility of extraneous evidence (Potter v Potter [2003] 3 NZLR 145,Australian Provincial Assurance Association Ltd v E T Taylor & Co Ltd [1947] NZLR 793 (PC), and Wholesale Distributors Ltd v Gibbons Holdings Ltd [2007] NZSC 37) and part written and part oral agreements (Newmans Tours Ltd v Ranier Investments [1992] 2 NZLR 68). The general thrust of Mr Quinn's submissions was that those cases were authority for the proposition that the Court should not embark on an inquiry, on the basis of the evidence provided by Burrell Demolition, into the existence of the Oral Agreement. As I understood Mr Morten's argument, however, what was here asserted was an oral agreement which supplemented the written contract. Of the authorities I was referred to by Mr Quinn, the Newman Toursdecision was of particular relevance, indicating that such an inquiry may be appropriate. As I have indicated, Burrell Demolition's claim as to the existence of the Oral Agreement fails on the evidence.Status of the New Lease[76] I now consider the various issues identified at [36], raised by Burrell Demolition's challenges to the New Lease and, ultimately, the Notice to Quit.Did the City Council breach its obligations to Burrell Demolition when it offered Burrell Demolition the New Lease instead of a renewal of the Original Lease?[77] As I understood Mr Morten's arguments on this point, even if Burrell Demolition did not – because the existence of the Oral Agreement was not upheld – have a right to call for a renewal, the City Council had, by May 1999, in any event decided to re-lease the Land. On that basis the City Council was then obliged to offer Burrell Demolition a right of first refusal to a new lease, the terms and conditions of which were to be – in the absence of express stipulation to the contrary – the same as those of the Original Lease. [78] In its letter of 19 May 1999 the City Council advised Burrell Demolition that "the first option to lease the land" provided by the Original Lease was "conditionalupon Council being satisfied that the terms and conditions of the lease were observed". [79] This is a clear reference to the proviso to that effect in the Option Clause. [80] The City Council went on to note the process of it being so satisfied – a reference, it is now clear, to various resource management compliance issues as regards the operation of the Landfill that were of concern to the City Council at that time – would take some time. [81] Putting aside the substantive question of the merits of the City Council's concerns as regards those compliance issues – to which I shall return – Mr Morten's argument was that the City Council was simply not entitled to impose that condition. The provisions of the Original Lease which made the right of first refusal subject to Burrell Demolition having observed and performed the terms of the Lease, including its obligation to comply with all regulatory consents, were inconsistent with the terms of settlement, and therefore unenforceable. [82] Given that the City Council accepted it was bound by the term of the Option Clause, the first issue is whether it could make its decision as to whether it offered a new lease to Burrell Demolition conditional upon it being satisfied as to Burrell Demolition's compliance with the conditions of its resource consent. [83] In my judgment, the answer to that question is yes. The City Council was entitled to satisfy itself that Burrell Demolition was in compliance with the conditions of its resource consent before granting Burrell Demolition such a lease. [84] The terms of the Original Lease were clear. Clause 9 of Part I provided:That the Lessee shall comply with all laws bylaws and regulations relating to the land and to the activities carried on thereon by the Lessee. (ABD 1/129)[85] There can be little doubt that this applies to the requirements of any consent issued under the Resource Management Act.[86] In turn, and as already noted, the Option Clause includes a proviso as to compliance with the terms of the Original Lease. [87] Burrell Demolition's argument was that, to the extent the requirements of the Original Lease went beyond matters explicitly agreed to in 1974, they were not enforceable. [88] I was not persuaded by that submission. [89] The Original Lease was based, in addition to matters agreed in 1974, on a letter dated 1 February 1978 sent by the City Solicitor to Mr Burrell's solicitors, Macalister Mazengarb. That letter stated, by way of introduction:The lease for the above land is now in the process of being drawn up. The terms of the lease are basically as set down in the City Solicitor's letter dated the 9 th of May 1974. There have however been some points of detail clarification to a number of the basic terms and before Council lets your client use the land as a demolition tip I would like an acknowledgement that he will comply with the following conditions which will also be incorporated in the lease. (ABD 1/118-120)[90] The letter then referred to a number of conditions, including that Mr Burrell was "to be solely responsible for complying with zoning, water rights, and other legal requirements for the establishment of a private demolition tip". Although not expressed in identical terms, this would appear to be the origin of clause 9. [91] Although neither Mr Black nor Mr Rennie was involved with the finalisation of the Original Lease, the letter of 1 February 1978 to their firm was signed on behalf of Mr Burrell by one R Burton in acceptance of the City Council's conditions. It was not suggested that that acknowledgement was unauthorised. [92] There was no evidence for Burrell Demolition that the Original Lease was not a contract it had voluntarily entered into. [93] Expressing rights provided by the Option Clause as being subject to compliance with the terms of the Original Lease is hardly unusual. In the bundle of authorities provided to me by Burrell Demolition, the learned author of Woodfall's Law of Landlord and Tenant – in the general context of covenants and options torenew – comments that "it is also common that the right to a new lease is dependent on performance by the tenant of the covenants in the lease". (Woodfall et al, 2005 at 18.001). [94] Mr Burrell's evidence-in-chief as regards the Original Lease was to the following effect:34. The lease was not signed until 16 November 1979. The lease is defendant's document ABD 1/127-134. 35. The term of the lease was backdated to 9 January 1978. That was the date, 3.5 years after the proceedings were discontinued, when I was finally able to get access to the site. 36 The lease was for an annual rent of $.10, payable if and when demanded. 37. I note that Part II, paragraph 2 of the lease (ABD 1/131) recorded: That if at the expiration of the term hereby created the Council decides to lease the land for a further term the Lessee shall have the first option to lease the land provided that the Lessee has paid the rent hereby reserved and observed and performed the several covenants and stipulations herein on its part contained. (Brief)[95] Mr Burrell therefore referred explicitly to the proviso in the Option Clause, without in any way challenging its validity. [96] In my view, the clauses in the Original Lease requiring Burrell Demolition, as part of its lease obligations, to observe relevant regulatory obligations, and making its right of refusal subject to having complied with that obligation, were not controversial. That they were not is evidenced by Burrell Demolition's acceptance of them without protest at the time and subsequently, in terms of Mr Burrell's evidence, during the trial before me. [97] I therefore find that the City Council was not in breach of its obligations to Burrell Demolition when, in May 1999, it advised Burrell Demolition in the terms that it did, and offered Burrell Demolition a monthly extension of the Original Lease. [98] Similarly, and again without considering the question of the substantive merits of the City Council's concerns as to resource management issues, it followsthat I consider that it was open for the City Council and Burrell Demolition to agree contractually that, in place of the City Council requiring satisfaction of the proviso in the Option Clause, the arrangement provided by the terms of the New Lease – including as recorded in the Condition Precedent – would be agreed to instead. [99] Mr Morten at the close of his case applied for leave to amend Burrell Demolition's statement of claim to include pleadings first, that the Original Lease should be rectified by the omission of those provisions, and second, that those provisions had been included by mistake and that they should therefore be deleted pursuant to s 7 of the Contractual Mistakes Act 1977. [100] I record that I did not allow that application, essentially on the basis that in my judgment – as outlined above - there was no evidential basis provided by Burrell Demolition for either of those causes of action and that therefore to allow the statement of claim to be amended in that way would serve little or no purpose. Furthermore, I considered that the substantive dispute between the parties could be resolved without reference to those alternative pleadings. [101] It is helpful, at this point, to have regard to the terms of the Condition Precedent. [102] What those terms required was not that the New Lease be conditional upon Burrell Demolition achieving compliance with the conditions of its resource consent, but rather of it presenting to the City Council a management plan, reasonably acceptable to the City Council's Environmental Control Business Unit (ECBU), and to the Regional Council, which provided a basis for it achieving such compliance. In other words, Burrell Demolition would not be required to remedy any breaches of its resource consents. Rather, it had to produce a plan which provided for it to do that over time. In my view it was open to Burrell Demolition, and the City Council, to agree to deal with lease renewal issues on this basis, rather than that provided by the Original Lease and the Option Clause. That is what they did, including providing for a new form of lease with a 15 year term and one right of renewal, albeit subject to the Condition Precedent .Duress – and associated issuesIntroduction[103] For Burrell Demolition, Mr Morten also challenged these arrangements, and in particular the New Lease, on the basis that Burrell Demolition had only agreed to them under duress. [104] To consider this contention, and Mr Morten's further argument that in any event Burrell Demolition had satisfied the Condition Precedent, it is necessary to have an appreciation of the various issues that arose between Burrell Demolition, the City Council and the Regional Council as regards Burrell Demolition's compliance, over time, with the terms of its consent under the Resource Management Act 1991 for the operation of the Landfill on the Land. [105] Burrell Demolition and the City Council took opposite views on the relevance of those matters. [106] Mr Morten's position was that the issue of compliance with the Resource Management Act conditions was critical to the interpretation of the Condition Precedent. It was also at the heart of the City Council's reliance on Burrell Demolition's alleged failure to satisfy the Condition Precedent, and therefore the City Council's decision ultimately to terminate Burrell Demolition's lease rights. [107] By contrast, it was Mr Quinn's submission that this Court did not have determinative evidence as to, and was not in a position to determine, Resource Management Act compliance issues, except for one purpose. That was to take account of relevant documentation from the agreed bundle which formed the basis of the negotiation of the New Lease, and informed issues in relation to the Condition Precedent, as those matters were relevant to the third and fourth causes of action.Burrell Demolition's hearsay objection[108] It was in this context that Mr Morten objected at trial, when both Mr Tacon and Mr Furlong were called as witnesses, to what he said was hearsay evidence onthe issue of alleged breaches of resource management consents. Mr Tacon's evidence in particular, and to a lesser extent Mr Furlong's, was hearsay evidence because it relied on the introduction, for the purpose of proving the truth of their contents, of various documents in the agreed bundle. The documents contained assertions and comments by the City Council, the Regional Council and their respective officers and advisers as to instances where Burrell Demolition had allegedly not complied with the terms and conditions of its resource consent. Mr Morten said those documents were not admissible as proof of the truth of those statements (i.e. as hearsay). The City Council therefore lacked evidence on that issue of compliance. In contrast, Burrell Demolition could rely on the direct evidence of Messrs Burrell and Christianson to show that Burrell Demolition was compliant. [109] The starting point, from Mr Morten's perspective, was s 17 of the, then very recently enacted, Evidence Act 2006. Section 17 provides that hearsay statements are inadmissible, except as provided by that Act. [110] In my view, and I do not think this was contested by Mr Quinn, to the extent that statements in documents included in the agreed, or common, bundle, authored by persons who are not witnesses at trial, are introduced as evidence of the truth of those statements, then they are hearsay statements. The admissibility of those statements for that purpose is therefore subject to the hearsay rules of the Evidence Act. [111] Mr Morten argued – in summary – that the City Council had not and could not comply with the requirements of ss 18 and 19 of the Evidence Act (general admissibility and admissibility of hearsay contained in business records) , and that s 132 of the Act (admissibility of documents in the common bundle) did not assist. [112] Mr Quinn's principal argument in response was that all of the documents in question were included in the agreed bundle and, accordingly, those documents were admissible. In any event, a hearsay breach did not arise. This Court was not in a position to make any determination regarding such a broad issue as the compliance of the Landfill with resource consents. The documents incorporated by referenceinto the Council's evidence were there to illustrate the content of communication between the parties at the time. If the Court considered that a late objection, not having been made as provided in the High Court Rules relating to common bundles, could be made, the Council could nevertheless rely on those documents as business records. Furthermore, the plaintiff itself had relied on many of the documents it now objected to as being evidence of the truth of their contents, for example as background evidence to prove that Mr Burrell had signed the Lease Agreement under duress. [113] For reasons which I will set out in more detail later in this judgment, I have come to the conclusion that Mr Quinn's second response to Mr Morten's objection is the appropriate way of addressing the issues raised by this aspect of the case. That is, I do not consider I am in a position to determine, nor need I determine, the substantive issue of whether Burrell Demolition did or did not, and of necessity in what ways, breach the terms and conditions of its resource management consent. Rather, I think the facts of the differing views that parties had on those issues, and the course of their interactions with each other, inform my consideration of the remaining issues, namely those relating to the claim of duress, the efficacy of the Condition Precedent and the validity, based on Burrell Demolition's asserted non- compliance with the Condition Precedent, of the Notice to Quit. On that basis, I do not consider it strictly necessary to rule on Mr Morten's objection. [114] Given, however, the careful submissions I received from both counsel, and – at least as far as I can discern – the absence of any specific discussion of the inter- relationship between s 17 of the Evidence Act, the relevant High Court Rules concerning common bundles and s 132 of the Evidence Act, it may be helpful if I express a somewhat tentative view of these issues. [115] As noted, s 17 contains the general rule as to the admissibility of hearsay statements. It provides as follows:A hearsay statement is not admissible except – (a) As provided by this subpart or by the provisions of any other Act; or (b) In cases where –(i) this Act provides that this subpart does not apply; and (ii) the hearsay statement is relevant and not otherwise inadmissible under this Act.[116] Mr Quinn relied on the provisions of s 132 of the Evidence Act, relating to documents included in common bundles, to argue that the hearsay statements contained in relevant documents were, notwithstanding s 17, admissible. [117] The first, somewhat technical, point to note is that s 132, upon which Mr Quinn relied, is not found in "this subpart", nor is it a "provision of any other Act", as referred to in s 17(a). Furthermore, s 132 itself does not provide that subpart 2, as to hearsay evidence, is not to apply as regards documents included in a common bundle, as envisaged by s 17(b)(i). It is at least arguable, therefore, that s 132 does not provide a potential exemption to s 17 at all. [118] Putting those points to one side, Mr Quinn's argument relied on a combination of s 132, and High Court Rule 441O. [119] Rule 441O(1)(a) provides that each document contained in a common bundle is considered to be admissible, unless the Court otherwise directs. Furthermore, if a party objects to the admissibility of a document included in the common bundle, the objection must be recorded in the common bundle and determined by the Court at the hearing or at any prior time that the Court directs. As Burrell Demolition had not objected as provided by r 441O, Mr Morten could not at trial raise his hearsay objection. [120] Whilst acknowledging that he had not objected as required by Rule 441O, Mr Morten's argument was that r 441O did not, in and of itself, address hearsay issues. Therefore, neither r 441O, nor s 132, could be relied on by the City Council. In support of this proposition Mr Morten referred, amongst other arguments, to the Court of Appeal decision of Harris v Davies and anor [2007] NZCA 358, where Chambers J, giving the judgment of the Court, referred to an argument which relied on a document included in a common bundle, in effect as evidence of its truth. Chambers J commented (at [15]):This argument has no chance of success. The fact that a document may be in a common bundle is not evidence of the truth of its contents: High Court Rules, r 441O.[121] Rule 441O does not, itself, deal with the issue of hearsay. Rather, as far as is relevant, it provides as follows:(1) Each document contained in the common bundle is, unless the Courtotherwise directs, to be considered – (a) to be admissible; and (b) to be accurately described in the index to the bundle; and (c) to be what it appears to be; and (d) to have been signed by any apparent signatory; and (e) to have been sent by any apparent author and to have been received by any apparent addressee; and (f) to have been produced by the party indicated in the index to the common bundle.[122] It can be noted that the consequences of the admissibility of a document under r 441O go to what might be called the authenticity of the document, rather than to its truth. [123] Furthermore, r 441O(2) provides as follows:(2) If a party objects to the admissibility of a document included in the common bundle or to the application of any of paragraphs (b) to (f) of subclause (1) to a document, the objection must be (a) recorded in the common bundle; and (b) determined by the Court at the hearing or at any prior time that the Court directs.[124] In my judgment, therefore, these rules made it clear that a document will be admissible, without proof of its authenticity, by inclusion without objection in the common bundle. At the same time, however, subparagraphs (b) through (f) of r 441O(1), by exclusion, indicate that admissibility as to the truth of contents is not a consequence of admissibility as an authentic document.[125] Section 132 of the Evidence Act, which provides for a document in a common bundle to be received in evidence when the relevant conditions set out in Court rules have been complied with, reflects that approach. At subsection (4) it provides as follows:(4) Each document contained in the common bundle is subject to presumptions as to nature and origin that – (a) are specified in Rules of Court ; and (b) are rebuttable in circumstances and in the manner set out in those rules.[126] In my judgment, these are essentially presumptions as to the authenticity of the document, and do not go to the admissibility of its contents as a hearsay statement, or in other words, as to the admissibility of the document as evidence of the truth of the contents of that document. Admissibility for that purpose would therefore appear to depend on the availability of the admissibility pathways provided by either of ss 18 or 19 of the Evidence Act. [127] On that basis, it was open to Mr Morten to object, in the manner that he did, and that his objection cannot be ruled out either on the basis that it was late, or that s 132 provides an answer to it. [128] Mr Quinn's further argument was that these hearsay statements were admissible pursuant to s 19. That section, so far as is relevant, provides as follows:19 Admissibility of hearsay statements contained in business records (1) A hearsay statement contained in a business record is admissible if— (a) the person who supplied the information used for the composition of the record is unavailable as a witness; or (b) the Judge considers no useful purpose would be served by requiring that person to be a witness as that person cannot reasonably be expected (having regard to the time that has elapsed since he or she supplied the information and to all the other circumstances of the case) to recollect the matters dealt with in the information he or she supplied; or (c) the Judge considers that undue expense or delay would be caused if that person were required to be a witness.[129] I was not, on the basis of Mr Quinn's submissions, satisfied that, in terms of subparagraph (a) of s 19(1), the "persons who supplied the information" for the composition of the business record – if that is what it was – comprised by these documents were unavailable as witnesses. Mr Quinn submitted that it would cause undue expense or delay to require all past City Council employees involved in this matter to attend Court to produce the City Council's business records. There was no evidence in support of that submission, and given that there were a relatively small number of City Council officers principally responsible for the exchange of correspondence over the relevant time, I am simply not persuaded that those persons were unavailable. Further, given the matter in controversy, I am not persuaded that having them attend as witnesses would serve no useful purpose. Moreover, whilst the Council's internal and external documentation was prepared in the course of the conduct of its regulatory activities, I would require further submissions before accepting that this correspondence constituted a "business record", particularly as provided by subparagraph (b) of the definition of that term contained in s 16. [130] Taken overall, therefore, I tend to the view that Mr Morten's objection was well founded. If this Court had been required, in order to decide this case, to reach a final view on the question of whether or not, and to what extent, Burrell Demolition was in breach of its resource consents, I would have to have considered very carefully the question of which evidence I could properly rely on for that purpose. As I have already indicated, however, and for reasons which I hope will become clearer as I consider the remaining issues, I do not think it is necessary for me to reach that view. [131] In my view, therefore, and as regards s 17, r 441O and s 132, a party wishing to rely on statements contained and documents produced in a common bundle, and therefore to introduce those documents as hearsay statements, cannot rely on the silence of another party and assume that no objection will be made, at trial, to that course of action. Rather, I am of the view that a hearsay objection remains available at trial. A party in that position would be well advised to clarify the matter with other parties to the proceedings before assuming it will be in a position to introduce documents in the common bundle in evidence for that purpose.Resource Management issues[132] Before considering Burrell Demolition's argument as to duress, and also to provide a basis for considering questions relating to the Condition Precedent, I now record my understanding of the course of the interactions between Burrell Demolition, the City Council and the Regional Council on resource management compliance issues. [133] Burrell Demolition first occupied the Land prior to the enactment of the Resource Management Act in 1991. In the early years it operated the Landfill with the express consent of the City Council as landowner, subject to any relevant zoning requirements. [134] It was not until April 1994, and therefore after Burrell Demolition had operated the Landfill for some 16 years, that it accepted it should apply for resource management consent. It did so, and in June 1995 consents were issued as thought necessary under the, then, new legislation. The consents allowed Burrell Demolition:• To divert an existing stream which flowed over the Land through a culvert under the Landfill site into another nearby stream;• To place a culvert in the stream for that purpose; and• To discharge contaminants on to the Land. [135] The consents issued were for a period of 31 years, that is until 14 June 2026, and were subject to a number of standard conditions. Various specific conditions were also imposed. I refer to a number of those conditions, as they became the focus of compliance issues:6. The location, design, implementation and operation of the C and D Landfill (Burrell's Cleanfill Landfill) shall be as generally described in the "Burrell Demolition Ltd Resource Consent Application for a Cleanfill and Fourth Schedule Assessment" (Assessment of Environmental Effects), as prepared for the consent holder by David Smith, Civil and Environmental Engineer, dated April 1994,together with its associated reports and appendices and evidencepresented by the Consent Holder at the hearing. 12. All material disposed of at the landfill shall be cleanfill with no potential to produce harmful effects on the environment and shall be restricted to a natural material such as clay, soil, and rock, and other inert material such as concrete, brick or non-combustible demolition products (with no more than 5 percent timber or other non- hazardous construction materials). 18. All care will be taken with design and construction of the cleanfill batters to ensure their stability. Upon any slope or batter failure, all practicable means to minimise any resulting detrimental effects on the unnamed tributary to Careys Stream shall be immediately undertaken. Appropriate remedial action must be undertaken to ensure that any slide material does not impede or have potential to impede the flow of that stream. (ABD 1/232-235).[136] Condition 18, requiring "all care" with the design and construction of the cleanfill batters, was complemented by the following terms of Burrell Demolition's application, compliance with which was a requirement of Condition 12:Batter slopes on the fill will be 1:2 or approximately 30° for the extension's western face to 140m RL and for all faces of the 150m RL extension. These values should be reduced to 1:3 or 20° if the cleanfill consists solely of soil, clay or other fine grained material. (ABD 1/187)[137] What is not clear is whether these batter slope criteria applied during the operational phase of the Landfill's life, or when it was completed. That issue arises because, immediately prior to the extract referred to above, Burrell Demolition's application contains the words "On completion of the first phase ". It would therefore appear at least arguable that these stipulations were for the final angles of the batter slopes. [138] Although the City Council had raised concerns with Burrell Demolition as early as 1996 as to its compliance with those conditions, the question of compliance became a particular issue in the period from early 1999 onwards, around the time of the expiry of the Original Lease. During that period both the City Council and the Regional Council asserted that Burrell Demolition was failing to comply with the conditions of its consents in a variety of ways. [139] Within the City Council, officers responsible for the City Council's own nearby Southern Landfill asserted that Burrell Demolition was breaching the termsof its consent in a number of ways, including by depositing fill outside the consented area, by breaching the "cleanfill" requirement (condition 12), by depositing material in a way that left unstable slopes, or batters, at the edges of those deposits (condition 18) and by placing too much fill over the culvert that had been installed. These issues were first raised, in terms of the documentation provided in the Common Bundle, by a Mr Adrian Mitchell in December 1998. There would appear to have been some sensitivity related to Mr Mitchell's involvement (perhaps due to his association with the City Council's own nearby landfill operation) as he also commented at that time: "I would appreciate your keeping my name out of any discussion with Burrells in the meantime". (ABD 1/257) [140] Mr Mitchell raised the issue again with a Mr Mulholland, then the City Council's Solid Waste Manager, in an internal "Citioperation's Memorandum" of 26 February 1999. Mr Mitchell repeated, in some detail, the views he had earlier expressed, commented that Citioperations believed that it was in a unique position to offer the City Council a solution which would be of benefit to both parties (presumably Citioperations, as I understand a City Council entity, and the City Council), and stated:I ask that Council DO NOT extend the lease of the site to Burrells until all issues regarding this site have been addressed. (ABD 1/258).[141] On 4 March 1999, Mr Mulholland emailed a Mr Spring from the Council's Property Services Unit. Mr Mulholland passed on the compliance issues raised by Mr Mitchell, and requested that the Original Lease not be renewed until remedial works had been undertaken to the Regional Council's satisfaction. He proposed a course of action designed to achieve that outcome, including advising Burrell Demolition that the lease could be renewed after compliance issues had been resolved, and sought confirmation of that course of action from Mr Spring so he could initiate matters with the Regional Council. [142] Mr Spring replied on 5 March, effectively concurring with Mr Mulholland's proposal and leaving it to him to take responsibility for it including, I take it, contacting the Regional Council . He did, however, sound a note of caution,advising against confirming the Original Lease would be renewed if compliance issues were satisfactorily addressed. He said:It may be preferable to tell them that these issues need to be resolved to Council's satisfaction, and within a 12 month timeframe, before Council can make any decision on whether or not to renew the lease. This approach may encourage Burrells to undertake some action in the hope that they will be able to renew the lease, but will not oblige Council to grant them one if we decide not to for any reason. (ABD 1/267)[143] It is not clear whether this, not entirely straight forward, approach was adopted by City Council officers. [144] Those exchanges are, however, significant. They are, in my assessment, an important part of the context within which the City Council dealt with issues relating to the Original Lease and the Option Clause, and ultimately the New Lease and the Condition Precedent. [145] The Regional Council first raised compliance issues with Burrell Demolition, in terms of the documentation provided to the Court, in March 1999. On 31 March 1999, and following a compliance inspection, the Regional Council advised that "the landfill was operating in a tidy manner and generally in compliance with the operational conditions of WGN 940057(01), except for Condition 12". (ABD 1/268) [146] The letter went on to assert that Condition 12 was being breached due to the presence of more than 5% of wood and plastic in a load on an incoming truck. The letter raised various other issues, but not in terms alleging a breach of any condition. I draw the, almost inevitable, inference that there had by then been discussions between the City Council and the Regional Council. [147] Mr Burrell replied on 13 April. On the question of Condition 12 he denied there had been any breach, asserting Burrell Demolition's position that the 5% condition applied to the average of the total fill, and not each truck load. There was, therefore, no breach of the condition. [148] There would appear to have been a meeting between Burrell Demolition, the City Council and the Regional Council on 5 May 1999. A City Councilmemorandum (ABD 276/277) records a range of issues as having been discussed. These included (again) concerns that the Landfill operation was outside the boundary area of the Original Lease, and was extending too high (above the 150m contour), and involved dumping other than cleanfill. A letter from the City Council to Burrell Demolition of 27 May confirmed those concerns, requiring Burrell Demolition to stop filling above the 150m contour. [149] On 19 May, the City Council sent Burrell Demolition the letter referred to at [16], extending the Original Lease on a monthly basis . [150] The Regional Council sent Burrell Demolition a further notice of non- compliance as regards conditions 12 and 13 (unauthorised green waste) on 1 June 1999. Other issues were raised. [151] On 3 August 1999 the Regional Council issued an abatement notice under s 322 of the Resource Management Act. The issue was the steepness of the batter slopes on the faces of the Landfill. The Regional Council alleged breaches of conditions 6 and 12, and pointed to provisions of the application requiring batter slopes of 30°, or in some circumstances 20°. [152] The action required to be taken included:3.1 To cease or not commence, or both, construction of landfill batters at C and D Landfill whose slopes are steeper than 30°. 3.3 To undertake either of the following actions (actions 3.3.1 or 3.3.2) so as to comply with conditions 6 and 18 of resource consent WGN 940057(01): 3.3.1 Reduce the slope of the batter which has been recently constructed above and about the inlet of the main culvert under the landfill, to an angle of 30° or less; or 3.3.2 Obtain a land use consent from Wellington Regional Council to authorise placement of a culvert that would extend upstream from the inlet of the existing main culvert under the landfill. Then construct the aforesaid culvert extension and place sufficient overfill against the batter that has been recently constructed above and about the inlet of the main culvert under the landfill so that the resultant new batter slopes are formed at angles of 30° or less. (ABD 1/297)[153] Burrell Demolition was required to cease the allegedly offending construction by 4 August and, if it elected to reduce the slope of the batter (action 3.3.1), to do so by 15 September. On the other hand, if it elected to proceed with action 3.3.2, it was to obtain the Regional Council land use consent by 1 September and undertake the work by 6 October. [154] Before the Regional Council took this action, it would appear the City Council was aware that it was likely. An internal email of 29 July 1999 recorded:1. WRC are in the process of serving an abatement notice because the contractor is filling in an unstable area near the open stream. WRC will also take a prosecution and apply for an enforcement order to stop work which contravenes resource consents. 2. C&D are applying for consents to extend the piped culvert. We do not want the consent to be granted because if the Council approves the consent it implies tacit approval for C&D to continue occupying the site. Any requests by C&D Landfills for sign-off of their consent application should be declined. (ABD 1/293)[155] The difficulty for Burrell Demolition is immediately apparent. How could it achieve compliance with the Regional Council's abatement notice, and also address the City Council's apparent concerns as lessor with consent compliance issues, if the City Council as landowner was unwilling to consent to the grant of resource consents necessary for that purpose? [156] In August and September the Regional Council and the City Council laid a large number of informations against Burrell Demolition and Mr Burrell alleging breaches of Conditions 12 and 13. On 17 September, an ex parte interim enforcement order was obtained, preventing tipping above the culvert. [157] Mr Burrell wrote to both Councils on 24 September 1999. In that letter, he proposed an amended management plan for the Landfill to address various compliance issues and, in particular, the question of the extension to the culvert so that, in turn, work could be done on the existing batter slopes. Responding, as I read it, to the abatement notice, Mr Burrell commented as follows:THE PRESENT IMPASSE: This landfill is unfinished business. We have not exceeded the heights in the consent – not until we have handed the site over as finished works. We have not exceeded the finished batter angles – we have not finished: and have been prevented from finishing these stages by WCC, who have not given us the security of tenure needed by a business enterprise for making decisions, by confirming the lease extension – or notifying termination. We have not in nearly four years been given the consent needed for extension of the pipeline, which would allow the batter angles to be quickly resolved once we can fill around the present pipe entry point and upstream alignment. (ABD 1/305)[158] The logic of Burrell Demolition's position is apparent. If the City Council terminated the Original Lease (as renewed on a monthly basis), without granting Burrell Demolition a renewal, Burrell Demolition would have been required (subject to contesting that decision) to vacate the site. It could then have had its dispute with the City Council about its alleged liability for remediation issues. In that dispute, its position would no doubt have been that it had no such liability. If, on the other hand, Burrell Demolition – from its point of view voluntarily – undertook remediation works (including incurring the expense of applying for and obtaining the relevant resource consents), it wanted some assurance of tenure before undertaking that course of action. [159] The City Council followed up the Regional Council's abatement notice with its own letter, requiring compliance with the abatement notice. Within the City Council, Erin Palmer – from Property Services, prepared a 5 October memorandum (ABD 1/310) recommending termination of the Original Lease as extended on a month by month basis. That recommendation was not adopted. [160] Through October and November 1999, Burrell Demolition and the City Council continued to discuss a possible new lease. Various meetings were held. Connell Wagner was engaged by Burrell Demolition. By 30 November a 6 month extension was proposed by the City Council. In early December 1999 a 10 year lease was offered. [161] On 16 December Mr Burrell signed a proposal agreeing, in principle, to a new 15 year lease subject to the Condition Precedent. The New Lease was executedin January 2000. The parties' attention turned to satisfaction of the Condition Precedent. I will return to that issue, but will first address Mr Morten's argument that the New Lease had only been accepted by Burrell Demolition under duress.The duress argument[162] Mr Morten's argument here was essentially that, given the intense pressure placed on Burrell Demolition by the two Councils through their enforcement action, together with the financial impact on Burrell Demolition of it no longer being able to use (because of the combination of the abatement notice and its inability to obtain a resource consent to undertake remedial action) the Landfill, Burrell Demolition was in effect left with no choice but to accept the offer of the New Lease, subject to the Condition Precedent. [163] Both Mr Morten and Mr Quinn referred to the decision of the Court of Appeal in Pharmacy Care Systems v Attorney-General (2004) 2 NZCCLR 187 (CA). In that decision, the elements of duress in New Zealand were summarised, including that: a) There must be a threat or pressure; b) That threat or pressure must be improper; and c) The victim's will must have been overborne by the improper pressure so that his or her free will and judgment had been displaced; [164] Burrell Demolition was throughout this process represented by Mr Burrell. Mr Burrell as a witness in person, and as reflected in the documents introduced in evidence, did not strike me as a person whose will would easily be overborne. On the contrary, Mr Burrell struck me as an extremely strong willed and independently minded person, well able to express himself forcefully and colourfully on all aspects of his dealings with the City and Regional Councils. He had, after all, doggedly pursued his disagreements with the City Council regarding the whole question of the taking of the Land, notwithstanding the 1974 settlement, for over 30 years. Itherefore find it difficult to conclude that his will had been overborne in the manner required for a finding of duress. [165] I do accept that in December 1999 Mr Burrell and Burrell Demolition were under considerable legal and commercial pressure. [166] The extent of the financial implications of the latter was never explained in any detail by Mr Burrell. That pressure was, in my judgment, the almost inevitable consequence of the dispute existing between the two Councils and Burrell Demolition on compliance issues. [167] Burrell Demolition was at this time subject to a range of enforcement action. Whilst, as noted above, I am not in a position to conclude one way or the other as to whether Burrell Demolition had in fact breached its resource consents, there would appear to be at least some basis for the concerns expressed by the Councils over time. Take, for example, the question of filling above the 150 metre line and outside the consented area. In subsequently applying in June 2000 for a resource consent to undertake remediation works as regards those alleged breaches, Burrell Demolition itself included the following explanation by way of background to its application:The 1995 consent does not permit removal of slopes or the discharge of material outside of the footprint, or above the 150m RL level within that footprint. Notwithstanding the conditions of consent, a significant volume of material has been placed outside of the consented area. A near vertical cut face was formed at approximately 160-170m RL in a section of hillside that lies north of the haul road. Material was subsequently placed against that cut in series of platforms and slopes down towards the haul road. The remediation of this area of land has been identified by the consent authorities and the consent holder as necessary for a number of reasons. One reason is to ensure the stability of material. Another reason is the desire for a more natural landform to be created. A third reason is the need to seek retrospective consent for the discharge of material. This application therefore seeks resource consents from both the Wellington City and Regional councils for works that will achieve these ends. (ABD 2/574)[168] This passage would appear to speak for itself.[169] Whilst some aspects of the City Council's approach to issues, and in particular the way it appears to have responded as landowner to the consent applications, does cause me concern, I am not able to conclude that illegitimate pressure was placed on Burrell Demolition by the City Council as regards compliance issues. [170] The option of entering into the New Lease was not the only course of action open to Burrell Demolition, nor, furthermore, was it without advantage to Burrell Demolition. [171] It would appear that in November and December four options were in fact considered by Burrell Demolition and the City Council. These involved: a) Option 1: A negotiated termination of the lease. The Council gave Burrell Demolition one month's notice to quit, the Regional Council and the Council ceased prosecution activity, Burrell Demolition paid the Councils a total of $50,000 and quit the Land without further liability. b) Option 2 – Continuation of the lease on a monthly basis: If Burrell Demolition was able to negotiate a satisfactory settlement of the proceedings against it, the Council would negotiate in good faith for a new lease. If the proceedings were not settled, or were successfully prosecuted against Burrell Demolition, then the Council "may terminate the monthly tenancy". c) Option 3: A six month extension. If the Landfill did not comply at the termination of that extension, the Councils could continue their prosecutions. The implication here would appear to be that prosecution activity would be suspended for that period. d) Option 4 – A new lease for the site was the option ultimately agreed to between the Council and Burrell Demolition. Lease negotiations were to be completed by 29 February 2000. Burrell Demolition toindependently resolve compliance issues with the Regional Council and the City Council's ECBU. [172] In addition to those "formal" options, Burrell Demolition could, if it considered that the City Council's enforcement action was illegitimate, have taken its own legal action. It did not. [173] Prior to the signing of the New Lease, the general approach of the City Council had been to look for satisfactory remediation of alleged breaches prior to finalising the question of the renewal of the Original Lease. Burrell Demolition would have been able to form a view of how likely that was whilst enforcement action was underway. The point of the Condition Precedent is that it enabled the parties, as far as the renewal of the Original Lease was concerned, to move on from that position. Actual remediation was not required, but rather a plan setting out how that was to be achieved. There would appear to be a clear advantage for Burrell Demolition in that approach, as the New Lease finally committed the City Council to renewing Burrell Demolition's lease of the Land. [174] In agreeing to sign the New Lease, Burrell Demolition, through Mr Burrell, took legal advice, provided detailed comments on the terms of the New Lease, and negotiated changes to it. [175] Having regard to all these considerations, I am unable to find that duress has been established. I note Mr Burrell's comment, in his letter of 31 December to the City Council, that he had signed the New Lease "under duress". In my view, that comment is perhaps best understood as confirmation of his opinion that the City Council's concerns as to non-compliance were fundamentally flawed, and that his agreement to the New Lease was without prejudice to that view. [176] In my view, therefore, the New Lease was a valid agreement and created binding legal obligations between the City Council and Burrell Demolition. I therefore turn now to Burrell Demolition's efforts to satisfy the Condition Precedent, and to the Council's subsequent notification to Burrell Demolition that it had failedto satisfy the Condition Precedent so that the New Lease could not come into existence.The Condition Precedent[177] The New Lease only allowed until 29 February 2000 for the satisfaction of the Condition Precedent, time being of the essence. [178] A meeting between representatives of Burrell Demolition, and the Regional Council and their engineering and legal advisers, was held on site on 9 February. [179] That meeting focussed on consent compliance issues, relating principally to drainage, stability and landscaping issues. In a report to the Council's legal adviser, Mr Quinn, on the outcome of that meeting, and in a letter of 1 March to Phillips Fox, Connell Wagner advised that it hoped an outline structure of the plan could be agreed by 17 March, with a draft plan put to Council officers by 21 April, and finalised by 12 May. Phillips Fox responded to that letter on 9 March, by which time the deadline of 29 February had passed. Phillips Fox noted that there had already been some delays, and the Council wished to ensure no further delays occurred. Mr Quinn, for Phillips Fox, commented further:Finally, I note the reference in your letter that the lease issues are now resolved. Unless further discussions have been held, my understanding is that the situation has reverted to a monthly tenancy due to failure by your client to comply with the environmental management plan condition by the end of February 2000. This is not however a matter that I intend to pursue any further as my client's interest in this matter relates only to the regulatory issues rather than land ownership issues associated with this site. (ABD2/440)[180] Mr Quinn said he looked forward to receiving Connell Wagner's assessment as soon as possible. [181] Mr Quinn's reference in this letter to "his client" is apparently a reference to the Council's Environmental Control Business Unit – or ECBU - as opposed to the Council's Property Division, which was then responsible for lease renewal issues. This distinction reflects an unhelpful uncertainty that affected issues relating to thesatisfaction of the Condition Precedent, namely whether it was a regulatory or contractual requirement. [182] Connell Wagner held further meetings with the Council (16 March 2000) and the Regional Council (21 March 2000) (ABD 2/444), to discuss the content of the new management plan. A draft, outline only, plan was prepared and submitted to the Council in April. [183] The Council acknowledged receipt on 28 April, noting disappointment "about the lack of progress on the management plan". [184] Connell Wagner submitted a further – and far more detailed – report in May. The Council's evidence was that it was received on 19 May. [185] On 2 June, Phillips Fox faxed Burrell Demolition, extending the date for compliance with the Condition Precedent until 30 June 2000, time again to be strictly of the essence. The fax also noted that Connell Wagner and ECBU were continuing to liaise, with a view to finalising the plan so it would meet the reasonable requirements of ECBU and the Regional Council. ECBU and the Regional Council were jointly considering the current draft, and would write to Connell Wagner detailing what needed to be changed so as to meet their reasonable requirements. [186] On 8 June the Regional Council wrote to Connell Wagner, setting out its own comments on the draft plan, and comments from the Council and Mr Quinn. That letter raised a variety of issues. [187] Issues were again raised by the Council and Phillips Fox as to the relationship between the plan and the existing consents. As best as I understand matters, the Council was concerned that in accepting the revised management plan it could not agree to provisions contrary to, or not provided for by, existing consents without a formal process under the Resource Management Act to vary those consents.[188] The Regional Council raised a large number of issues. Drainage and stability issues featured prominently. The Regional Council's letter concluded:I hope these comments are of use to you. I wish to stress again that it is not a requirement of either Wellington Regional Council, or the regulatory arm of Wellington City Council that such an EMP (environmental management plan) is prepared. However, if BDL feel that an EMP will help them to comply with their resource consents in future, we are happy to assist in any way we can. I look forward to our meeting next week to further discuss these issues (ABD 2/567-568).[189] Given that the only reason the Regional Council was commenting on those matters was because of the term of the Condition Precedent, this was not – from Burrell Demolition's perspective – a particularly useful approach. The Condition Precedent was a contractual provision, and the City Council had proposed its particular terms, which required Regional Council involvement. What is clear, however, is that at this time the Regional Council, and the City Council itself, regarded the process of approval of the draft management plan, and therefore for satisfaction of the Condition Precedent, as an ongoing one. [190] An internal City Council memorandum of 25 October 2000 noted that, shortly after the presentation of the draft plan in May 2000, the two Councils had met with Connell Wagner to discuss recommended changes to the Management Plan, but that "as yet the final version has not been provided". Mr Faulkner, of ECBU, the author of the memorandum, noted that:I have spoken to Alex Burrell today about the Management Plan and the further information required for the resource consent application. Alex told me he would "get straight on to it".[191] That memorandum also recorded ECBU's understanding that, as at that date, Burrell Demolition was operating the Landfill in compliance with the City Council's land use consent, with the exception of the unauthorised fill area outside the boundary of the Land. Mr Forlong noted that the Regional Council also considered that the Landfill was complying with all Regional Council consents, subject to the question of unauthorised fill. The issue of the Environment Court proceedings for a declaration regarding the 5% condition was also referred to.[192] Again, the implication is that as at 25 October 2000 the process of approval of the draft plan – and satisfaction of the Condition Precedent – was an ongoing one, and that some progress may have been made with compliance issues. I note that, in his evidence, Mr Forlong considered that this memorandum of 25 October must have been erroneous, in recording the views expressed as to compliance. [193] Those views may, however, have been influenced to some extent by progress that had been made by Burrell Demolition with applications for resource consents to address compliance issues, and associated legal issues. For example, on 1 March 2000 Burrell Demolition had applied for a resource consent to extend the culvert, thus enabling it to also address batter slope issues. On 28 April 2000 the City Council had consented to the discharge of the Environment Court ex parte interim enforcement order. On 14 June, Burrell Demolition had also applied for retrospective consent as regards the dumping of fill outside the originally consented lease area, and also above the 150m level. It is at least possible, in my view, that the views expressed in the 25 October memorandum reflected those developments [194] Be that as it may, a City Council memorandum of 30 November, prepared by a Mr Hosegood, records matters discussed at a further meeting requested by Mr Burrell, apparently to discuss the relationship between legal action by the two Councils. This included the Regional Council's application to the Environment Court for a declaration regarding Condition 12, in respect of which there was to be a hearing on 8 December 2000, and the finalisation of the plan. The memorandum notes:Council advised that Burrell Demolition were in serious default of their lease, and that the management plan was a significant issue for Council as it wanted to be sure that continuing the Lease would address issued [sic] associated with the site. Mr Burrell advised that he would review the management plan draft over the weekend and forward it to Council next week (around 3 rd December). He also indicated that his company was prepared to comply with the management plan and invited Mark and John to visit the site if they would like to. (ABD 2/602)[195] On 8 December 2000, the Environment Court declined the Regional Council's application for a declaration as regards Condition 12. Mr Burrell wrote to the Council, following that hearing, on 9 December. Mr Burrell felt sufficientlyencouraged by the outcome of that hearing to, it would seem, submit a further draft of the plan. [196] Again, it seems clear that as at December 2000 both the City Council and Burrell Demolition regarded the process of approval of that plan, and the Condition Precedent as ongoing. [197] An internal Council email of 14 February 2001 from the Council's Property Manager Mr Spring, sought comments from various officers on the draft plan, and an earlier Tonkin & Taylor report. In that email Mr Spring commented (reflecting something of a change of heart within Council):We all agreed that it would be preferable from Council's perspective that Burrell were given a new lease (subject to the condition precedent relating to an approved management plan) so that they met the cost of complying with the existing resource consents and any necessary rectification work, rather than Council. Therefore, I am about to formally request that both WRC & ECBU review the proposed plan and advise whether it fully addresses all matters to make the premises fully compliant with the RMA. However, before I do so, I would like any comments that you may have. I realise that we are all under a little pressure at the moment regarding DAP.[198] The Council officers to whom that email was addressed did not raise any fundamental issues, two of them effectively stating that they continued to support a new lease for Burrell Demolition. [199] Again, the clear implication is that in February 2001 the process for the approval of the plan, and the satisfaction of the Condition Precedent, was an ongoing one. There is, however, no indication the comments on the management plan were ever communicated to Burrell Demolition. [200] On 21 February 2001 Mr Spring wrote to Mr Forlong at the Regional Council, and to Jay Reddy of the ECBU. He set out the background to the Condition Precedent, and noted that it had not been satisfied to date. Connell Wagner had prepared a draft in May 2000. The Regional Council and the ECBU had sent a joint response (presumably a reference to the Regional Council's letter of 8 June (see [186]). Connell Wagner had updated the document and submitted it to the Council in late December 2000. That was where, Mr Spring noted, "the matter currentlystands". Mr Spring noted the charges filed by ECBU and the Regional Council. He said the City Council wanted to be satisfied that, in light of the unresolved issues reflected by those charges, the Condition Precedent had been fully satisfied, i.e. that the plan "addressed all matters to make the premises fully compliant with the RMA". The City Council therefore requested the ECBU and the Regional Council to review and comment on the draft plan or to advise it of their reasonable requirements. [201] Again, the very clear implication is that the process for the approval of the draft plan submitted in December was an ongoing one. [202] I was not provided with any direct evidence as to any response made by the Regional Council or the ECBU to Mr Spring's letter, or further communication by the City Council to Burrell Demolition . [203] Rather, in a letter of 24 April 2002, apparently prompted by correspondence from Mr Burrell on 13 February that year raising offer back issues in respect of part of the Original Land, a Karen Wallace, the Council's then "Director HR and Projects", recorded that the draft plan received in February 2001 had "not yet been approved". The reasons it had not yet (emphasis added) been approved – which reasons Ms Wallace noted she understood ECBU and WRC had advised to Burrell Demolition – included:• ECBU and WRC were not able to approve the draft EMP until the charges then before the Court were finalised.• Similarly, the EMP could not be finalised until the Court of Appeal had dealt with the question of the meaning of condition [12].• In any event, the draft EMP focused on the future use for the site, beyond that authorised by the existing resource consents. Approval could not therefore be given until those resource consents were obtained. [204] Mrs Wallace concluded:In summary, until the resource consent and management plan issues have been resolved, you continue to occupy the site as a monthly tenant. Given the applications before the Court , there would appear to be little point in meeting until these issues have resolved. (ABD 2/622)[205] Again, the clear implication is that, as at 24 April 2002, the process for the approval of the management plan and the satisfaction of the Condition Precedent was ongoing. Time was not of the essence. In fact, further progress depended on the resolution of the Court processes then underway. [206] I was not provided with evidence of any further interactions as regards the draft plan. [207] Burrell Demolition continued to make progress on the legal front. [208] On 18 March 2002, the Court of Appeal granted Burrell Demolition's appeal in relation to a declaration the High Court had made, on appeal from the Environment Court, regarding Condition 12. As described in the Agreed Chronology, the Court of Appeal endorsed Burrell Demolition's interpretation of the 5% timber content condition. [209] By early September, the City Council and the Regional Council had withdrawn their informations against Mr Burrell and Burrell Demolition. [210] On 7 September 2004, and following withdrawal of the charges against Burrell Demolition and its officers (the details of those charges were never provided to me – it was indicated charges were withdrawn due to prosecution delays), Mr Burrell offered rent under the terms of the New Lease. He said he believed the New Lease was now operative. [211] The City Council replied on 20 September 2004. For the first time it purported to determine, on the basis that the Condition Precedent had not been satisfied, that the New Lease could not now come into existence. It did so on the basis that:a) The Condition Precedent was to have been satisfied by 29 February 2000. If not satisfied by that date, the lease would not come into existence and Burrell Demolition would continue as a monthly tenant only. b) The Condition Precedent had not been satisfied. The draft EMP was not approved either by the City Council or the Regional Council. The Council letter of 18 March 2002 (which I take to be a reference to the letter of 24 April 2002) had confirmed that. The withdrawal of the charges had no impact. The Condition Precedent had not, therefore, been satisfied as required by 29 February 2000, and the New Lease could accordingly not come into existence. (see ABD 2/629 and 3/728-729) c) Any new lease would need to be renegotiated. [212] The Council subsequently relied on that advice when, acting on the basis that Burrell Demolition was only a monthly tenant, Mr Tacon determined it was in the Council's strategic interests (especially given possible alternative uses for the Land) to determine that monthly tenancy. [213] The issue in my judgment therefore becomes the efficacy – as asserted by the City Council, of its decision in September 2004 that the Condition Precedent had not and could not be satisfied, so that the New Lease could not come into existence. [214] On the basis of the facts as I have found them to be, I consider that that determination by the Council was not effective in its terms and therefore that the Notice to Quit was invalid. I reach that conclusion for a number of reasons. a) The Council's letter of 20 September was in error in referring to the need for satisfaction by 29 February 2000. As will be obvious from the foregoing narrative, the Council had itself formally extended the original date for the satisfaction of the Condition Precedent from 29 February to 30 June 2000.b) Subsequent to 30 June 2000, the Council had, both in dealings with Burrell Demolition and in internal documents that reflected interactions with Burrell Demolition, confirmed that the process for the approval of the plan and the satisfaction of the Condition Precedent was ongoing. c) On 24 April 2002, the Council had written directly to Burrell Demolition, recording that the draft plan had "not yet been approved". Explicitly, therefore, as between Burrell Demolition and the Council as at that date, the process for the approval of the plan and the satisfaction of the Condition Precedent was an ongoing one. [215] In my judgment therefore, in purporting in September 2004 to advise finally that the Condition Precedent had not been met by 29 February 2000, the Council proceeded on an erroneous basis. [216] Moreover, the reference to the Council's letter of 18 March 2002 (this would appear to have been a reference to its letter of 24 April 2002) effectively involves the Council relying on the reasons for non-approval set out in that letter. As regards those reasons, the Council had anticipated issues being revisited when the various Court proceedings, which the Council was of a view at that time prevented the plans being finalised, were concluded. By September 2004, those Court proceedings had been resolved largely, as best as I can conclude, in Burrell Demolition's favour. Yet, on the evidence before me, the status of the draft plan as affected by the outcome of those proceedings had not been further considered by the City Council or the Regional Council. [217] As regards the plan focusing on the future use of the site, beyond that authorised by the existing resource consents, Mr Forlong himself noted that that matter could easily have been dealt with by making the draft plan subject to obtaining those consents. In my view, that would have been a reasonable requirement, rather than advising that approval could not be given prior to obtaining the relevant consents.[218] When the Council wrote in September 2004 it referred to the Condition Precedent in an inaccurate matter. It noted that:The lease contained a condition precedent that a management plan (prepared by Connell Wagner) was to be provided to establish that the site was compliant with the Resource Management Act 1991.[219] That was not the requirement of the Condition Precedent. The Condition Precedent was for a management plan to establish compliance over time, a very important distinction. [220] Finally, it is not clear to me that the City Council had reached a final view, one way or the other, on the draft management plan. As Mr Quinn himself noted in his closing submissions, the plan had not been approved, but similarly had not been rejected. In my view, under the Condition Precedent the City Council was required, in order to be able to determine that the Condition Precedent had not been satisfied, to determine that in fact the plan was not acceptable to it, and therefore to reject the plan. [221] The City Council appears to have based its advice to Burrell Demolition on the fact that, whilst it had given indications that the approval process was still underway, it had nevertheless during that process not reached a final view on the plan. In my view that was not sufficient. It is quite clear that, in 2000, both the Regional Council and ECBU submitted comments to Burrell Demolition. Moreover, I find, on the balance of probabilities, that Burrell Demolition did respond to those comments in the plan that was submitted in December 2000. [222] Thereafter, the City Council advised Burrell Demolition that, in effect, it could not yet approve the plan due to Court proceedings, and the fact that the plan called for steps that required resource consent which had not yet been obtained. In my view, this required the City Council, as part of that ongoing process, to consider the plan following termination of the various Court proceedings. It did not. Moreover I find it would have been unreasonable for the City Council to decline to approve the plan simply because it called for actions that required resource consent. Rather, a reasonable requirement, as acknowledged by Mr Forlong, would have been to make the plan subject to those consents being obtained in a timely manner. Ascompliance with the plan would, itself, be a condition of the New Lease, if Burrell Demolition had failed to meet the terms of the plan, its ongoing status as a tenant under the New Lease would have been called into question. [223] In my view, this analysis is consistent with reasonably well established legal principles. The fulfilment of a condition precedent to one party's satisfaction requires approval from that party, acting reasonably. It is not reasonable for that party to take advantage of its own inaction and assert that the condition has not been satisfied because it does not reach a view, one way or the other, on the issue. See, for example, Scott v Rania [1966] NZLR 527, and the cases referred to therein. [224] The result therefore is that, the Notice to Quit not being valid, Burrell Demolition remains the lessee of the Land on the terms of the Original Lease as extended on a monthly basis. I enter judgment for Burrell Demolition in those terms. [225] Burrell Demolition is now to be given a reasonable time (and I suggest that something in the vicinity of six months would be a reasonable time) to satisfy the Condition Precedent. In considering any plans submitted by Burrell Demolition, the Council will need to bear in mind my comments in this judgment as to what is required by the Condition Precedent (namely a plan to establish resource management compliance, not proof that such compliance has been established), together with my comments as to the reasonableness, or otherwise, of declining any such plan because it incorporates actions that may require resource consent. [226] I note finally that, were the New Lease to come into existence, Burrell Demolition would continue to be obliged to comply with its resource management consents. At the time Burrell Demolition accepted the option of the New Lease, it was agreed that complying with those matters remained its obligation. Therefore, this judgment in no way precludes the City Council, if the Condition Precedent is satisfied but issues of resource management consent remain a concern to it, to assert subsequently that Burrell Demolition has breached the terms of the New Lease, and on that basis to challenge Burrell Demolition's continued right to occupy the Land as the City Council's lessee. Burrell Demolition could respond to that action by, forexample, seeking relief against forfeiture. In that way, the substantive issue of whether, and to what extent, Burrell Demolition is not complying with the terms of its resource management consent would be properly before a Court and able to be determined. [227] The question of costs is reserved. Although this judgment has become disappointingly long, this was a relatively short hearing and I trust that the parties will be able to resolve questions of cost between them. If that proves not to be the case, the parties may file written submissions, to be no longer than five pages, by no later than 18 April 2008."Clifford J"