FUTURE SUSTAINABLE DEVELOPMENT LIMITED v WENJING LIU [2022] NZCA 249

FUTURE SUSTAINABLE DEVELOPMENT LIMITED v WENJING LIU [2022] NZCA 249 [14 June 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA685/2021[2022] NZCA 249BETWEEN FUTURE SUSTAINABLEDEVELOPMENT LIMITEDAppellantAND WENJING LIURespondentHearing: 9 May 2022Court: Miller, Goddard and Duffy JJCounsel: R J Hollyman QC and N G Lawrence for AppellantD K Wilson for RespondentJudgment: 14 June 2022 at 3.00 pmJUDGMENT OF THE COURTA The appeal is allowed.B The order removing the appellant's caveat is set aside.C The respondent must pay the appellant costs for a standard appeal on aband A basis with provision for two counsel.____________________________________________________________________REASONS OF THE COURT(Given by Miller J)[1] The short question on which this appeal turns is whether the purchaser mightunilaterally waive a clause in an agreement for sale and purchase of sensitive landmaking the agreement conditional on the purchaser or its nominee obtainingregulatory consent to purchase the property under the Overseas Investment Act 2005(OIA).[2] The purchaser, Future Sustainable Development Ltd (FSD), waived thecondition before 1 October 2020, the final date for its fulfilment. The vendor,Wenjing Liu, took the stance that FSD could not waive the condition without heragreement. On 2 October she avoided the agreement for non-fulfilment of thecondition and immediately agreed to sell the property to another buyer for a higherprice.[3] The trial Judge, Jagose J, found that the OIA condition was inserted for thebenefit of both parties, so could not be waived by the purchaser alone.1 He heldaccordingly that Ms Liu was entitled to cancel the agreement when she did, and heordered removal of a caveat lodged to protect FSD's interest.2 The caveat survivespending this appeal.Narrative[4] The facts are simple and not relevantly controversial. Ms Liu acquired theproperty, at 45 Woodford Avenue, Henderson, on 9 April 2020, as nominee for acompany named Xinda International Group Ltd. Xinda is controlled by her husband,Wangliang Li, who acted on her behalf in subsequent negotiations with FSD.[5] Monica (Yue) Hou is the sole director and shareholder of FSD. Her husbandLuban (Xiaojiang) Chen, who is the company's Chief Executive, conducted theparties' negotiations.[6] Mr Li and Mr Chen knew one another through a previous employer, and therehad been discussions between them about financing the purchase of the Hendersonproperty.1 Liu v Future Sustainable Development Ltd [2021] NZHC 2909, (2021) 22 NZCPR 767[High Court judgment] at [29].2 At [31].[7] The agreement with which we are concerned was entered after Mr Chen toldMr Li around June 2020 that he was looking for a property to develop. Mr Li offeredthe Henderson property. During negotiations Mr Chen advised that an overseas personmight acquire it and asked that the agreement be conditional on OIA consent.The agreement was also to be conditional on the issue of a resource consent for adevelopment which would replace the existing dwelling with eight townhouses.[8] There was some dispute in evidence about the terms of Mr Chen's advice aboutthe overseas investor. Mr Li deposed that Mr Chen had made it clear that FSD itselfwould not complete the purchase and the purchaser would be an overseas investor.Mr Chen's account was that while there was a very high chance of onsale, it wasalways clear that FSD itself might complete the purchase. For reasons given at [19]below nothing turns on this difference of view.[9] The agreement was made conditional on FSD, its unnamed "investor" and/orits nominee obtaining an OIA consent to purchase the land. In the event the conditionwas not fulfilled by 1 October either party might cancel the agreement.[10] The agreement was executed on 18 June 2020, for a purchase price of$1,180,000. Mr Li signed the agreement in Ms Liu's name; no issue is taken with that.The due date for compliance with the OIA condition was 1 October 2020.[11] During July FSD negotiated an agreement to onsell the property for $1,600,000to a company, Hou Ching and Hou Lun Group Ltd (HCG), whose shareholder is saidto have been an overseas person. It appears from Mr Chen's evidence that HCG'sshareholder was the "investor" contemplated by the agreement. Although the evidenceis unclear, it is possible that had this transaction proceeded FSD would have nominatedHCG as purchaser under the agreement with the result that on settlement Ms Liu wouldhave transferred the property to HCG. There is no suggestion that HCG would acquirean interest in FSD itself; this was to be an onsale from FSD to HCG. An agreementwas concluded between FSD and HCG. It was subject to conditions including OIAconsent. The evidence is that it was cancelled by agreement between HCG and FSDbecause of Ms Liu's refusal to settle.[12] On 8 September Mr Li sought to negotiate an increase in price, saying that aneighbouring property had sold for more. Mr Chen refused to pay more.[13] On 21 September, Ms Hou wrote to Ms Liu by email waiving conditions of theagreement requiring a resource consent and OIA approval. She declared the agreementunconditional. The email stated relevantly:Congrats! The investor's OIA application has been approved in principle. Weare instructed to confirm that the purchaser condition (Clause 20.3) under theagreement is [waived]. Currently the purchaser side is unconditional.We understood that the Vendor has the obligation to satisfy Condition Clause20.1 and Clause 20.2. As the OIA application has been approved in principle,the Clause 20.1 and Clause 20.2 condition is not critical for the Purchaser.The purchaser is happy if Clause 20.1 and Clause 20.2 to be [waived].Based on the Clause 21, the sunset settlement date is Oct.1st 2020. This emailis the formal notice in [writing] that the condition in Clause 20.1, Clause 20.2,Clause 20.3 is [waived]. As the purchaser side is unconditional, we can makethe settlement on any date before Oct.1st 2020. If you want to extend thesunset date after Oct.1st 2020, please note us as soon as possible.[14] Jagose J noted that the claim that the OIA application had been approved inprinciple was said to be a mistake; it was intended to state that the investor's —meaning HCG's shareholder — New Zealand residence visa had been approved inprinciple. Nothing turns on that. What matters is that the parties agree the finalparagraph of this email was effective to waive the OIA condition, if it were open toFSD to do so in law.[15] Since giving this notice FSD has sought to complete the purchase itself.Mr Chen deposed that FSD would purchase the property itself, using its own funds.It appears that, having completed the transaction, FSD still intends to onsell to anoverseas investor subject to OIA consent.[16] On 22 September Mr Li advised Mr Chen that his own "investors" wereunhappy that FSD had not obtained OIA approval or resource consent to develop theland. At the same meeting it was suggested that the purchase price would remain thesame but Mr Chen would pay Mr Li an additional $50,000. The parties discussed whatlosses FSD might suffer if the agreement were cancelled. No agreement to increasethe price was reached.[17] On 2 October Ms Liu's solicitors gave notice cancelling the agreement fornon-fulfilment of the OIA condition. On the same day she entered an agreement tosell to another party for $1,536,000.[18] Caveats were lodged by both purchasers. Ms Liu brought proceedings seekinga declaration that she had lawfully cancelled the agreement. FSD counterclaimed,seeking specific performance.The agreement for sale and purchase[19] The agreement was in the standard ADLS/REINZ form (10th edition). It namedMs Liu as the vendor and FSD "and/or nominee" as the purchaser. Accordingly, FSDmight give effect to the transaction and take title itself, or it might nominate anotherperson to take title under the transfer.3 Under cl 1.5(2) FSD remained liable for all thepurchaser's obligations notwithstanding that it might nominate another person astransferee.4 For these reasons Ms Liu could not, and does not, contend that FSD wasa mere agent for an overseas principal.[20] Special conditions were inserted. Relevantly, cl 20 provided that:20 Conditions[20.1] The agreement is conditional upon the issue of resource consent forthe lot(s) as per the attached plan in Annexure A.20.2 The vendor shall forward a copy of the draft resource consentconditions to the purchaser for the purchaser's approval.20.3 This agreement is conditional upon the Purchaser, the Purchaser'sinvestor and/or its nominee obtaining an OIA consent to purchase the landunder the Overseas Investment Act 2005(OIA).[21] Clause 21.1 provided for the consequences of failure to satisfy any of thespecified conditions by 1 October:21 Sunset clause21.1 If any of the conditions above are not satisfied by 15 October (1stOctober) 2020, either party may, at any time before such condition is waived3 DW McMorland Sale of Land (3rd ed, Cathcart Trust, Auckland) at [3.03].4 Clause 1.5(2) applied where the purchaser executed the agreement with provision for a nomineeor acted as agent for an undisclosed or unidentified principal.or satisfied by either party, cancel this agreement by giving written notice tothe other, or extend the sunset date by mutual agreement.[22] Clause 9.10 dealt generally with the operation of conditions, providing thateither party might avoid the agreement for non-fulfilment of a condition and that atany time before the agreement was avoided either party might by notice waive anycondition which was for the "sole benefit" of that party:9.10 Operation of conditionsIf this agreement is expressed to be subject either to the above or toany other condition(s), then in relation to each such condition thefollowing shall apply unless otherwise expressly provided:(1) The condition shall be a condition subsequent.(2) The party or parties for whose benefit the condition has beenincluded shall do all things which may reasonably benecessary to enable the condition to be fulfilled by the datefor fulfilment.(3) Time for fulfilment of any condition and any extended timefor fulfilment to a fixed date shall be of the essence.(4) The condition shall be deemed to be not fulfilled until noticeof fulfilment has been served by one party on the other party.(5) If the condition is not fulfilled by the date for fulfilment, eitherparty may at any time before the condition is fulfilled orwaived avoid this agreement by giving notice to the other.Upon avoidance of this agreement, the purchaser shall beentitled to the immediate return of the deposit and any othermoneys paid by the purchaser under this agreement andneither party shall have any right or claim against the otherarising from this agreement or its termination.(6) At any time before this agreement is avoided, the purchasermay waive any finance condition and either party may waiveany other condition which is for the sole benefit of that party.Any waiver shall be by notice.[23] Clause 24.1 provided that the special conditions applied if there was anyconflict between them and the general conditions.[24] The box on the front page of the standard form listing certain conditions andallowing for them to be marked "Yes/No" was not completed; that is to say, theagreement did not specify on that page whether OIA consent was required or notrequired. Clause 9.6 of the general conditions provided for OIA consent or thepurchaser's decision to not require it, or failure to say anything about it, whencompleting the front page:9.6 OIA consent condition(1) If the purchaser has indicated on the front page of thisagreement that OIA consent is required, this agreement isconditional upon OIA consent being obtained on or before theOIA date shown on the front page of this agreement on termsand conditions that are satisfactory to the purchaser, actingreasonably, the purchaser being responsible for payment ofthe application fee.(2) If the purchaser has indicated on the front page of thisagreement that OIA consent is not required, or has failed toindicate whether it is required, then the purchaser warrantsthat the purchaser does not require OIA consent.[25] It is not in dispute that when the contract was entered cl 20.3 supplanted cl 9.6,by providing that the agreement was conditional on OIA consent. This might bedebated; cl 20.3 was not in conflict with cl 9.6(1) to the extent that the latter requiredthat consent be on terms satisfactory to the purchaser, acting reasonably. But cl 20.3clearly left no room for the operation of cl 9.6(2).[26] Counsel joined issue on whether cl 9.6(2) was "reinstated" or "resurrected" ifFSD lawfully waived cl 20.3. For the appellants, Mr Hollyman QC argued that thepurchaser's warranty in cl 9.6(2) was revived because following waiver there was nolonger a conflict between cl 9.6 and the special conditions, and that the warrantyadequately protected the vendor. It seems to us that the better view is that on waiverthe agreement ceased to provide at all for OIA consent. The prerequisites to thewarranty — an affirmative indication on the front page that consent is not required, orsilence as to whether it is — would not be met. To waive OIA consent is not to assertthat it is unnecessary. Nothing turns on the point, since on the view we take of thiscase no question of loss to the vendor arises. The only significance of the warranty isthat, as we discuss below, it envisages there may be circumstances in which failure toobtain a necessary OIA consent causes a vendor loss.The High Court judgment[27] Jagose J observed that the question whether FSD might waive cl 20.3 was oneof construction.5 He cited the leading authorities on the point — this Court'sjudgments in Globe Holdings Ltd v Floratos6 and Hawker v Vickers7 — and, as tocontract interpretation generally, the Supreme Court decision in Bathurst ResourcesLtd v L & M Coal Holdings Ltd.8 He gained little assistance from the parties' oralevidence, which tended to confirm only that this was an arm's-length transaction.9[28] The Judge reasoned that cl 20.3 was not expressed as being for the sole benefitof any party,10 while cls 20.1 and 20.2 arguably were for the purchaser's sole benefit.11He rejected an argument that waiver of cl 20.3 reinstated cl 9.6 and with it thepurchaser's warranty that OIA consent was not required.12 He found it arguable,though doubtful, that the OIA may treat the vendor as an associate of the purchaserand so at risk of prosecution for noncompliance.13 Ultimately he rested his decisionon the view that OIA consent may have implications for parties other than thepurchaser.14 That being so, cl 20.3 was not for the sole benefit of FSD and could notbe waived unilaterally. It followed that Ms Liu lawfully avoided the agreement on2 October 2020.15The appeal[29] For FSD, Mr Hollyman argued that, having regard to cl 20.3 itself, its insertionby the purchaser and the agreement as a whole, it is clear that the condition wasinserted for the purchaser's benefit. Clause 21.1 contemplated unilateral waiver; andonce it was waived cl 9.6 came into operation, importing a warranty that OIA approvalwas not needed. The vendor's only interest was in receiving payment. The propositionthat the OIA created a benefit to the vendors was novel. There is no reason to think5 High Court judgment, above n 1, at [15]–[16].6 Globe Holdings Ltd v Floratos [1998] 3 NZLR 331 (CA) at 334.7 Hawker v Vickers [1991] 1 NZLR 399 (CA) at 402–403.8 Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696.9 High Court judgment, above n 1, at [25].10 At [22].11 At [24].12 At [29].13 At [28].14 At [29].15 At [30].the legislation captures a vendor. In any event, the question is one of contractualsubstance. It is not enough to find a minor benefit to the other party as a matter offact; it is necessary rather to decide whether the parties intended that the conditionexist for the sole benefit of one of them. So, for example, a finance condition isgenerally considered to be for the sole benefit of the purchaser, notwithstanding thatit may provide a vendor with some comfort that finance has been arranged and theopportunity to cancel once the time for fulfilment elapses. Counsel submitted that onthe evidence, the vendor was selling to a New Zealand entity controlled byNew Zealand residents.[30] For Ms Liu, Mr Wilson submitted that waiver of cl 20.3 did not reinstate cl 9.6;that being so, the agreement did not specify for whose benefit the condition wasinserted. The agreement identified the purchaser as FSD or nominee, and of coursethe nominee might be a person who required OIA consent. It is clear that the partieshad in mind an overseas investor. The condition works in part for the benefit of thevendor, because non-fulfilment was a future contingency that might affect the vendor.The condition also protected the vendor, who might be an associate of the purchaser,or a party to a criminal offence, against non-compliance with the Act.Waiver of a condition inserted for a party's sole benefit[31] As noted, the agreement provided that either party might waive any conditionwhich was for its "sole benefit". That reflects the rule at common law. As this Courtexplained in Hawker v Vickers, still the leading authority:16A party may waive a condition or provision in a contract which is solely forthat party's own benefit and is severable.It is not in dispute that the OIA condition in this agreement is severable; that is to say,it is independent of any other condition affecting the agreement.1716 Hawker v Vickers, above n 7, at 402.17 See Marima Valley Farm Ltd v Bartholomew [2010] NZCA 441 at [19] n 12.[32] The fact that the agreement provides that either party may avoid the agreementin the event a condition is not satisfied by its fulfilment date does not establish that thecondition exists for the benefit of both parties, as the Court went on to explain:18 there is nothing inconsistent in providing expressly or by necessaryimplication for unilateral waiver of a condition up to a certain date andthereafter for allowing either party to avoid the contract for nonfulfilment ofthe condition. Such a provision simply recognises the commercial reality thatthe nature and significance to the parties of a condition in a contract maychange over time or at a point in time. If the contract is fulfilled or waived,the parties then have the certainty of an unconditional contract. If not fulfilledor waived by the nominated date, each is free to end the contract byappropriate notice to the other.[33] The question whether a condition is for a party's sole benefit is one ofconstruction of the agreement, turning on whether the stipulation is in terms or bynecessary implication for the exclusive benefit of that party.19[34] In Hawker v Vickers and Globe Holdings Ltd v Floratos the Court went on tohold that oral evidence of the parties' intentions and of the course of negotiations isinadmissible.20 That statement is no longer good law in New Zealand followingBathurst Resources, in which the Supreme Court rejected the exclusionary rule andheld that prior negotiations may be admissible background where relevant to thesearch for objective shared meaning.21 As will be seen, the decision in this case doesnot turn on the parties' negotiations. Their subsequent conduct does not bear oninterpretation either, but is relevant because it concerns the exercise of rights conferredunder the agreement.[35] When deciding whether a condition is by necessary implication for the benefitof one party it is usually appropriate to enquire what is the other party's interest inperformance of the condition, as Blackburne J held in Irwin v Wilson.22 The conditionin that case related to provision of a plan showing the correct location and floor layoutof premises the lease of which was being sold. The Court held that, if the condition18 Hawker v Vickers, above n 7, at 403; followed in Globe Holdings Ltd v Floratos, above n 6, at339; and Marima Valley Farm Ltd v Bartholomew, above n 17.19 Hawker v Vickers, above n 7, at 402–403; and Heron Garage Properties Ltd v Moss [1974] 1WLR 148 (Ch).20 Hawker v Vickers, above n 7, at 403; and Globe Holdings Ltd v Floratos, above n 6, at 334.21 Bathurst Resources, above n 8, at [44], [48], [70] and [76].22 Irwin v Wilson [2011] EWHC 326 (Ch) at [25]–[26].was performed, and if the transaction settled, the vendor no longer had any interest inthe property of which he was no longer the owner; defects in his former title ceased tobe of concern to him. That being so, the condition was for the exclusive benefit of thepurchaser.23[36] In Erceg v Balenia Ltd this Court suggested that one tests whether a clause orcondition is for the benefit of a particular party by asking whether, if that clause wereremoved, the other party would complain.24 The cases we have cited show that inpractice other parties may sometimes complain about the loss of an advantage, suchas the right to cancel for non-fulfilment. However, the Court's rhetorical question wasclearly addressed to the other party's alleged interest in performance of the condition.The case concerned a condition that the vendor was to provide the purchaser's agentwith evidence of its clear title to the movable property being sold. The Court held thatthe vendor manifestly would not have complained if the obligation to satisfy thepurchaser as to its title had been removed.25[37] Consistent with these authorities, a finance condition has traditionally beenregarded as for the sole benefit of the purchaser notwithstanding that a vendor maytake comfort from the knowledge that finance has been arranged, and notwithstandingthat in the event of failure to arrange it by the fulfilment date the vendor may avoidthe agreement.26 The cases adopt the stance that the vendor's interest lies in beingpaid, not in the source of funding; and this is so notwithstanding that the purchaser'scapacity to settle may in fact depend on third party financing.27 And as the Courtexplained in Hawker v Vickers, the vendor is obliged to complete notwithstanding theloss of the advantage conferred by the right to avoid the agreement if the condition isunfulfilled by due date.2823 At [26].24 Erceg v Balenia Ltd [2009] NZCA 48, [2009] NZCCLR 32 at [46].25 At [46].26 Globe Holdings Ltd v Floratos, above n 6, at 338; and Graham v Pitkin [1992] 1 WLR 403 (PC)at 405. The agreement in this case expressly provided that the purchaser might waive a financecondition.27 Globe Holdings Ltd v Floratos, above n 6, at 338; and Graham v Pitkin, above n 25, at 405.28 Hawker v Vickers, above n 7, at 402–403[38] A condition that the agreement is subject to resource consent for thepurchaser's intended use is often, but not invariably, for the sole benefit of thepurchaser.29 In this case, it is not now in dispute that special conditions 20.1 and 20.2,making the agreement conditional on a resource consent for development of theproperty and the purchaser's approval of draft resource consent conditions, were forthe sole benefit of the purchaser and were waived in Ms Hou's email of 21 September.[39] However, it appears that the question whether an OIA consent condition is forthe purchaser's sole benefit has not previously been answered. As noted, the Judgetentatively answered it by reasoning that a vendor may be deemed an associate of thepurchaser for purposes of the OIA. We turn to that issue.Vendor not an associate of the purchaser for OIA purposes[40] The Act's purpose is to regulate investment by overseas persons in sensitiveNew Zealand assets by requiring that overseas investments in those assets meet criteriafor consent and by imposing conditions on such investments.30 A transaction resultingin an overseas investment in sensitive land, which includes residential land,31 requiresconsent under the Act, and consent must be obtained before the investment is giveneffect under the transaction.32 For residential land, the criteria for consent include, byway of illustration, a commitment to reside in New Zealand and the provision ofincreased housing.33 The decision is made by a delegate of the Minister responsiblefor the administration of the Act.34 In practice decisions are delegated to theChief Executive of Land Information New Zealand, which contains the OverseasInvestment Office (OIO) and is also the regulator under the Act.[41] An overseas person is relevantly an individual who is neither a New Zealandcitizen nor ordinarily resident in New Zealand.35 The definition includes a bodycorporate if an overseas person or persons have more than 25 per cent of any class of29 Globe Holdings Ltd v Floratos, above n 6; and Heron Garage Properties Ltd v Moss, above n 19.30 Overseas Investment Act 2005 (OIA), s 3.31 Schedule 1.32 Sections 10–12.33 Section 16 and sch 2 cl 11.34 Sections 30 and 32.35 Section 7(2)(a).its securities.36 We understand it to be common ground that Ms Hou and Mr Chen arenot overseas persons; that being so, FSD was at all material times not an overseasperson. We record that we did not hear argument on the question whether the regulatormay reject an application which does not require consent. We express no view aboutthat.37[42] Each overseas person or associate making the overseas investment must applyfor consent to an overseas investment transaction.38 "Associate" receives an extendeddefinition aimed at an overseas person's control, direction or influence over theassociate.39 One person may be an associate of another if they act jointly or in concertin relation to the overseas investment, or if they participate in the investment as aconsequence of any arrangement or understanding with the overseas person.40As noted earlier, the Judge drew attention to these provisions, but doubted whetherthey are intended to capture an arm's-length vendor selling to an overseas person.41[43] We do not exclude the possibility that there may be circumstances in which avendor makes an investment in sensitive land as an associate of the purchaser. But onthe evidence Ms Liu's role was that of a vendor only. She was not making an overseasinvestment as an associate of FSD; and that being so, she did not attract an obligationto seek consent under s 22.The vendor's interest in the purchaser's OIA compliance[44] Section 29 of the Act provides for the consequences of the transaction forwhich consent is required being given effect to without that consent:29 Transaction may be cancelled(1) A transaction for which consent is required under this Act and underwhich the overseas investment has been given effect without thatconsent—36 Section 7(2)(d).37 As a matter of practice, the Overseas Investment Office website appears to contemplate that anapplication may result in a decision that no application was necessary.38 Section 22.39 Section 8(a)–(b).40 Section 8(c)–(d).41 High Court judgment, above n 1, at [28].(a) is not an illegal contract for the purposes of subpart 5 of Part2 of the Contract and Commercial Law Act 2017; and(b) is not void only because the overseas investment has beengiven effect to without the requisite consent or because givingeffect to the overseas investment without the requisite consentis an offence; but(c) may be cancelled by—(i) a party to the transaction who was not required toobtain consent to the transaction under this Act, bygiving notice in writing to all the other parties; or(ii) the court, on the application of the regulator.(2) On cancellation under this section,—(a) the court has the same powers as it has under sections 43 to48 of the Contract and Commercial Law Act 2017; and(b) if the court orders the cancellation on the regulator'sapplication, the court may also make any other ordernecessary to give effect to the cancellation.[45] It will be seen that such transaction is not by definition an illegal contract, andit is not void merely because it has been given effect to without the requisite consent,or because giving effect to the overseas investment without consent is an offence.Rather, the transaction may be cancelled by a party to it who was not required to obtainconsent, or by a court on the application of the regulator.[46] It follows that if we assume FSD, or a nominee to whom it directed that Ms Liushould transfer the property, did require consent under the Act, then the consequenceis that the transaction might be completed and Ms Liu would not act unlawfully merelyby doing so. However, under s 29 she might cancel at her election after the transactionhad been given effect. The transaction would have been given effect at the point wherethe OIA consent was waived; that is so because the purchaser would have acquired anequitable interest in the land, and the express exclusion from the definition of "giveeffect to an overseas investment" of acquisitions that are conditional on consent wouldno longer apply.4242 Section 6; and Nopera Log House Ltd v Godsiff [2014] NZHC 639, (2014) 15 NZCPR 144 at[40].[47] If a party is entitled to cancel under s 29, and does so, the court may exercisethe same powers as it has under ss 43 to 48 of the Contract and Commercial Law Act2017. These include directing a party to transfer property to any other party, or to payto any other party such sum as the court thinks just.43[48] These powers might also be exercised on the regulator's application forcancellation. The regulator might also invite the transferee by notice under s 41F todispose of the property, which may meet the regulator's objective with respect toforeign ownership of sensitive land. Disposal relieves the transferee of liability forsome breaches of the Act.44[49] Any person required to apply for consent commits an offence under s 42 if thatperson gives effect to the transaction without consent. And under s 43 any person alsocommits an offence who knowingly or recklessly enters a transaction, executes aninstrument, or takes any other step for the purpose, or with the effect, of in any waydefeating, evading or circumventing the Act. Mr Wilson focused on this latterprovision, arguing that Ms Liu was potentially at risk of prosecution, directly or as aparty under s 66 of the Crimes Act 1961, should she transfer the property to a personwho required OIA consent but had not obtained it.[50] This survey of the legislation suggests that there are several circumstances inwhich a vendor may have an interest in a purchaser obtaining OIA consent where thepurchaser requires it under the Act. First, the purchaser, having failed to obtainconsent, may decline to settle, leaving the vendor to its remedies under the contract.The vendor would likely have to cancel and sue for damages. This is analogous to theposition of a vendor whose purchaser has waived a finance condition but then failedto settle. Because it reduces the risk that the purchaser will default, consent is anadvantage to the vendor, but it does not follow that the OIA condition was for thevendor's benefit. That remains the case notwithstanding that the vendor's remediesmight not include specific performance, which a court would refuse if it resulted in anoverseas person giving effect to the transaction by making an investment in sensitiveland contrary to the Act.43 Contract and Commercial Law Act 2017, s 43(3).44 OIA, s 41G.[51] Second, the regulator might take action under s 29 to cancel the contract aftersettlement, with the result that subject to the court's remedial discretion under theContract and Commercial Law Act the vendor might have to refund the purchase price,less any damages awarded, in return for getting the property back. Third, the vendormight be prosecuted under s 43 if it knowingly or recklessly did anything with theintent or effect of circumventing the Act.[52] On the record before us, which does not include any evidence as to theregulator's publicly notified enforcement policy when this contract was entered, thelatter possibilities must be considered unlikely in this case. We have explained thatthe Act does not treat the vendor as a wrongdoer merely by reason of being party tothe transaction. On the contrary, the agreement is not illegal and may be completedunless the vendor chooses to cancel or the regulator intervenes under s 29.The regulator can achieve the object of the legislation by requiring that the purchaserresell to someone else. For these reasons, an arm's-length vendor would seem to beat low risk of being required to disgorge the purchase price and resume ownership.[53] We noted earlier that cl 9.6(2) of the standard form agreement was excluded inthis case by special condition 20.3 but remains of interest because it contemplates thata vendor may suffer loss from the breach of a purchaser's warranty that the purchaserdoes not require OIA consent. For the reasons we have just given, the clause may betaken to envisage that such loss might arise if the purchaser declines to settle becauseit would breach the Act by doing so, or in the event of regulatory intervention affectingthe vendor after settlement. We accordingly agree with Jagose J that there arecircumstances in which a purchaser's OIA non-compliance may have implications fora vendor.OIA consent for the purchaser's sole benefit[54] That brings us to the question whether cl 20.3 was for the sole benefit of FSD.The question is one of construction of the agreement, as we have explained. The factthat a condition confers an advantage on the other party is not conclusive. The partiesmay assign risk as they see fit.[55] Clause 20.3 was introduced at the purchaser's request. On its face, it wasintended to ensure the transaction could proceed lawfully if FSD introduced anoverseas investor. It did so by making the agreement conditional on FSD, its unnamedinvestor and/or nominee obtaining OIA consent. The agreement accordinglyenvisaged that a person giving effect to the transaction, whether FSD or another party,might require OIA consent. But it also envisaged that FSD might not introduce anoverseas investor; a nominee could be anyone and FSD might complete the transactionusing its own resources.[56] We have explained that FSD was not in fact an overseas person at any materialtime. However, it might require consent if it became an associate of the overseasinvestor or if the investment involved the investor acquiring a qualifying shareholdingin FSD itself. Neither of these things happened in fact — as explained above, theinvestment was to take the form of an onsale to HCG, not a sale of shares in FSD —but the agreement indicates they were in the parties' contemplation when it wasentered.[57] The right to introduce an overseas investor could be exercised unilaterally andthe OIA condition supported that right. That suggests strongly that the partiescontemplated FSD might unilaterally waive compliance with the OIA condition if itelected not to introduce an overseas investor. Should it give effect to the transactionitself, or should it nominate a transferee who did not need consent, an application forconsent would be redundant. (As noted earlier, we did not hear argument on thequestion whether the OIO might decline consent in such circumstances.) Unless FSDcould waive the condition it would nonetheless be contractually obliged to obtainconsent for itself or nominee if it wished to prevent Ms Liu from avoiding theagreement after the fulfilment date.[58] Because there was no commitment to an investment by HCG when thecondition was waived on 21 September 2020, it could not be said at that time that FSDor its nominee needed OIA consent. FSD was neither an overseas person nor anassociate making an overseas investment for purposes of s 22. On the facts as theystood then it would not contravene the Act by taking title itself.[59] The possibility remained at that time, and still remains, that on settlement FSDmight nominate an overseas person as transferee. Ms Hou's email of 21 September2020 did not preclude that. So it is possible that Ms Liu might be required to transferthe property to a person who needed OIA consent but had not obtained it. We observethat these contingencies affect any arm's-length transaction in which an agreement issilent as to OIA consent (or in which the vendor warrants that it is not required).Ms Liu might learn of the transferee's identity when the transfer was tendered onsettlement and she might be told nothing of the transferee's status under the OIA.[60] Benefit is a matter of substance. We have explained that the substance of OIAconsent is that an overseas person needs it to purchase sensitive land. The legislationgives a purchaser who needs consent powerful incentives to obtain it, while a vendor'sinterest in the purchaser's OIA compliance is both less immediate and less powerful.In the factual circumstances we have just outlined, any risk of regulatory action againstMs Liu must be considered slight. We add that given the disparity between the priceat which the property was sold to FSD and the property's market value, it also seemsunlikely that FSD would need or choose to risk cancellation under s 29 by nominatingan overseas person to whom Ms Liu must transfer the property. It would make moresense to arrange back-to-back transactions if FSD still wanted to onsell to an overseasperson who did not have OIA consent at that time.[61] For these reasons we conclude that the OIA condition in this agreement wasfor the sole benefit of the purchaser. FSD was accordingly entitled to, and did, waivethe condition before the fulfilment date.Decision[62] The appeal is allowed. It is not in dispute that, the waiver being effective inlaw, FSD is entitled to an order for specific performance of the agreement. There willbe an order accordingly. The order removing FSD's caveat is set aside. The status ofthe caveat lodged by the person to whom Ms Liu resold the property on2 October 2020 remains to be resolved in other proceedings.[63] FSD having succeeded, Ms Liu must pay costs for a standard appeal on a bandA basis with provision for two counsel.Solicitors:PCW Law, Auckland for AppellantChurton Hart & Divers, Auckland for Respondent