KS GARDENS LIMITED v HER MAJESTY THE QUEEN IN RIGHT OF THE GOVERNMENT OF NEW ZEALAND [2021] NZHC 453

KS GARDENS LIMITED v HER MAJESTY THE QUEEN IN RIGHT OF THE GOVERNMENT OFNEW ZEALAND [2021] NZHC 453 [10 March 2021]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2020-409-352[2021] NZHC 453BETWEEN KS GARDENS LIMITEDPlaintiffAND HER MAJESTY THE QUEEN IN RIGHTOF THE GOVERNMENT OFNEW ZEALANDDefendantHearing: 4 February 2021Appearances: A Riches and J Manson for plaintiff/respondentH Ebersohn and K Gaskell for defendant/applicantJudgment: 10 March 2021JUDGMENT OF ASSOCIATE JUDGE JOHNSTONThis judgment was delivered by me on 10 March 2021 at 4.00 pm,pursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:TABLE OF CONTENTSIntroduction [1]The interlocutory application [3]Background [5]Summary judgment principles [19]The plaintiff's case [21]Express contractual terms [27]Implied contractual terms [33]Estoppel [65]The Crown's actions [69]Loss [75]Conclusion [81]Costs [83]Introduction[1] This case concerns the proper interpretation of an agreement between theplaintiff, KS Gardens Ltd (KSG), and the Crown, through the Department ofLand Information, whereby KSG sold and the Crown purchased land in Christchurchdamaged by the Christchurch earthquakes.[2] In the agreement KSG assigned to the Crown its claim against the EarthquakeCommission (EQC). The central issue is whether the Crown had any obligation topursue that claim. KSG says that it did. The Crown denies this.The interlocutory application[3] Before the Court for immediate determination is an application by the Crownfor summary judgment pursuant to pt 12 of the High Court Rules 2016.[4] The Crown has also applied for an order striking out the claim pursuant tor 15.1(1)(a). However, during the course of the hearing Mr Ebersohn made it clearthat the primary application was one for summary judgment. I deal with the case onthat basis.Background[5] The factual background is not controversial and can be summarised briefly.[6] KSG operated a retirement village. It owned 123 residential titles acrossapproximately 10 acres of land in Christchurch. Both the land and the improvementsthereon were seriously damaged in the Christchurch earthquakes in late 2010 and early2011.[7] The property was zoned red, meaning that it was not suitable for rebuilding inthe foreseeable future.[8] The Crown offered to buy land so zoned. Owners had various options. Thedocumentation describing the offers made by the Crown to KSG is before the Courtbut it is unnecessary to refer to this as neither party places any emphasis onpre-contractual exchanges.[9] In due course, KSG agreed to sell its property to the Crown.[10] This was a major transaction, and KSG and the Crown were both in receipt ofwhatever advice and assistance they needed.[11] The agreement for sale and purchase was dated 15 January 2013 and settledshortly thereafter. It was in the Real Estate Institute standard form (8th ed, 2006),ubiquitous throughout the country and with which all property lawyers are familiar.[12] Essentially, KSG agreed to sell and the Crown agreed to purchase the former'sproperty for the pre-earthquake, unimproved, rateable land value of $10,897,000.KSG retained its claim against its insurers in respect of damage to improvements butassigned to the Crown its claim against EQC in respect of damage to the land.[13] A small number of special conditions featured in argument.[14] Special Condition 18 is a definitions provision. There are definitions of theterms "Benefits", "Claim" and "Further Claim". They are as follows:"Benefits" means all of the rights and remedies of the Vendor in respect of:(a) To the extent allowed by law, the Claims or Further Claims, asapplicable, including without limitation:(i) the right to pursue any Claim or Further Claim against EQC;(ii) the proceeds of any Claim or Further Claim and, where theProperty is in a unit title development, the right to receive theVendor's share of such proceeds from the Body Corporate;(iii) the power to give good discharge in respect of the Claim orFurther Claim; and(b) any other actual or potential claim in respect of loss or damage to theProperty (land or fixtures) arising from any Event which is not subjectto a right of subrogation of EQC under the EQC Cover of the PrivateInsurer under a Policy."Claim" means claims described in Schedule 5 (to the extent of the Vendor'sinterest in those claims), to the extent that such claims relate to damage and/orloss to the Land in respect of any Event."Further claim" means any other claim made (including any claim made inaccordance with clause 25.1 or 25.2, as applicable under the EQC Cover, tothe extent that such claims relate to damage and/or loss to the Land.[15] Special Condition 23 is headed "RISK AND INSURANCE". Clauses 23.2and 23.3 are in the following terms:23.2 Assignment of Benefits: In consideration of the Purchaser enteringinto this Agreement, the Vendor absolutely assigns to the Purchaserunder section 50 of the Property Law 2007:(a) with effect on the date this Agreement becomesunconditional, all of the Vendor's interest in the Benefits inrespect of Claims; and(b) with effect on the latter of the date on which any FurtherClaim is lodged (including in accordance with clause 25.1 and25.2, if applicable), and the date this Agreement becomesunconditional, all of the Vendor's interest in the Benefits inrespect of that Further Claim,and, for the avoidance of doubt, the Vendor shall have no further rightsto, or interest in, the Benefits of Claims and Further Claims.23.3 Vendor assistance: The Vendor shall, within any reasonabletimeframe required by the Purchaser, do all things reasonablyrequested by the Purchaser to allow the Purchaser:(a) to receive the full benefit of this Agreement; and(b) to receive the full benefit and enjoyment of the Benefits,including by providing such further assignments of claimsand/or the proceeds of claims as the Purchaser mayreasonably require.[16] Special Condition 26 is headed "EQC PURCHASE PRICE TOP-UP".Clauses 26.1 and 26.2 provide:26.1 Top up: If, following the Settlement date, EQC pays to the Purchaseran amount in settlement of the Claims and/or Further Claims that isgreater than the Purchase price, the Purchaser shall, within areasonable period following EQC's payment of that amount, pay tothe Vendor, as an additional purchase price, the difference between thePurchase price and that amount. All amounts referred to in this clause26.1 are inclusive of GST.26.2 No duty imposed: Nothing in clause 26.1 shall have the effect ofimposing on the Purchaser any duty whatsoever to seek, or anexpectation that the Purchaser will seek, to recover any particularamount from the EQC and, for the avoidance of doubt, the partiesacknowledge that the Purchaser has an unfettered discretion as to howit will pursue the Claims and/or Further Claims and may settle Claimsand Further Claims with EQC at its sole and unfettered discretion.[17] Special Conditions 29 is headed "GENERAL". Clause 29.3 provides:29.3 Further Assistance: Each party shall make all applications, executeall documents and do or procure all other acts and things reasonablyrequired to implement and to carry out its obligations under, and theintention of, this Agreement.[18] It will be necessary to return to these provisions.Summary judgment principles[19] Counsel were on common ground as to the principles that apply to summaryjudgment applications under pt 12 of the High Court Rules. The leading case isKruikziener v Hanover Finance Ltd where the Court of Appeal said:1The principles are well settled. The question on a summary judgmentapplication is whether the defendant has no defence to the claim; that is, thatthere is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1at 3 (CA). The Court must be left without any real doubt or uncertainty. Theonus is on the plaintiff, but where its evidence is sufficient to show there is nodefence, the defendant will have to respond if the application is to be defeated:MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normallyresolve material conflicts of evidence or assess the credibility of deponents.But it need not accept uncritically evidence that is inherently lacking incredibility, as for example where the evidence is not consistent withundisputed contemporary documents or other statements by the samedeponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980]AC 331 at 341 (PC). In the end the Court's assessment of the evidence is amatter of judgment. The Court may take a robust and realistic approach wherethe facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).Under r 141A the defendant need not file a statement of defence. The onusremains on the plaintiff, and summary judgment will be denied if on thehearing of the application it appears that there is an issue worthy of trial.[20] Whilst that case was focussed on plaintiffs' applications for summaryjudgment, the same principles apply when it comes to defendants' applications, so thatthe defendant, as the applicant, has the burden of establishing that the plaintiff's casecannot succeed on any pleaded cause of action. In the end, the Court must be left withno serious doubt that the plaintiff's case is unsound. On a summary judgmentapplication the Court may determine even complex legal issues. If however there aredisputes of fact which are incapable of being resolved, or cannot fairly be resolved, onaffidavit evidence, then summary judgment will not be appropriate.2 However, evenin a summary judgment application the Court is not obliged to accept evidence that isinherently incredible, and is entitled to take a robust approach to such issues.31 Kruikziener v Hanover Finance [2008] NZCA 187 at [26]–[27].2 See Westpac Banking Corp v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA) at [62].3 Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 at 14 citing Eng Mee Yong vLetchumanan [1980] AC 331 at 341.The plaintiff's case[21] The plaintiff's first cause of action alleges breach of contract.[22] The plaintiff pleads that cl 29.3 of the contract expressly obliged the Crown to:132.1 Pursue the existing EQC claims on behalf of the vendor withreasonable diligence.132.2 Provide to EQC any available documentation required to advance thedefendants [sic] EQC claim and obtain the best settlement reasonablyobtainable price [sic].[23] Separately, the plaintiff pleads that the contract also contained certain impliedterms:133.1 The purchaser shall pursue the existing EQC claims on behalf of thevendor with reasonable diligence.133.2 While the purchaser has no duty to recover any particular amountfrom the EQC it will obtain from the EQC its best reasonablyobtainable price.133.3 In considering any settlement, course of action or decision to abandonits EQC claim it shall have regard to the interests of the vendor and itsentitlement to a top-up payment pursuant to clause 26.1.133.4 The purchaser shall not simply discontinue the EQC claim.[24] The plaintiff's second cause of action seeks to raise an estoppel. Essentiallythe plaintiff says that by entering into the contract the Crown is estopped from denyingthe same obligations as are alleged to be express or implied terms of the same.[25] The plaintiff alleges that, in breach of its obligations, the Crown has failed topursue the claim, and indeed has abandoned it.[26] This, the plaintiff says, has caused it loss which it calculates at over $7m,effectively the difference between the sale and purchase price under the contract andthe alleged value of its claim against EQC.Express contractual terms[27] The first limb of the plaintiff's first (contractual) cause of action appears to meto be misconceived.[28] It is based on the premise that:131. The intention of the agreement was that the Crown would advance theplaintiff's EQC claim and pay any surplus pursuant to clause 26.1.[29] The first component of that pleading begs the essential issue in the case. Thesecond component (from the word "and") adds nothing. It appears to me to be less apleading as to the express terms of the contract than an assertion as to the parties'intentions directed at laying a foundation for an argument as to its interpretation.[30] In any event, the pleadings continue with an assertion that cl 29.3: required the defendant to:132.1 Pursue the existing EQC claims on behalf of the vendor withreasonable diligence.132.2 Provide EQC any available documentation required toadvance the [defendant's] EQC claim and obtain the best reasonably obtainable price.[31] Clause 29.3 says nothing of the sort. It is a standard clause commonly foundin commercial contracts so as to provide the parties with a basis for insisting that otherparties take whatever formal steps are necessary to give effect to the agreement. It isentirely silent as to substantive rights and obligations.[32] In my view, this limb of KSG's claim cannot succeed.Implied contractual terms[33] That brings me to the second limb of KSG's first cause of action, based on theimplied terms propounded by it.[34] The law concerning when terms will be implied into contractual arrangementshas been in a state of flux over recent years. The correct approach in New Zealand iscurrently uncertain.4 Much – if not all – of this uncertainty stems from whether thesame principles that apply to the interpretation of express contractual terms shouldapply to the implication of terms.5 Essentially, the relationship between interpretationand implication is at play.[35] The classic authority is BP Refinery (Westernport) Proprietary Ltd v Shire ofHastings in which the Privy Council said:6For a term to be implied, the following conditions (which may overlap) mustbe satisfied: (1) it must be reasonable and equitable; (2) it must be necessaryto give business efficacy to the contract so that no term will be implied if thecontract is effective without it; (3) it must be so obvious that "it goes withoutsaying"; (4) it must be capable of clear expression; (5) It must not contradictany express term of the contract.[36] Both in the United Kingdom and in New Zealand the courts have expressedreservations relating to the application of the BP Refinery test.7[37] However, the United Kingdom Supreme Court recently revisitedAttorney-General of Belize v Belize Telecom Ltd in Marks & Spencer Plc v BNPParibas Securities Services Trust Co (Jersey) Ltd.8 There, the Court suggested thatthe BP Refinery test — that is the orthodox approach — is still an appropriate one.Certainly, the BP Refinery test has been the most commonly cited in New Zealand.9[38] In any event, and as Kós P said in Ward Equipment Ltd v Preston:10In New Zealand for the foreseeable future the conditions nominated in BPRefinery — best viewed as guidelines — will remain a prominent part ofanalysis where the construction advanced by a litigant involves a sufficientlysubstantial change to the express contractual words as to trigger theimplication of a term.4 See Ward Equipment Ltd v Preston [2017] NZCA 444, [2018] NZCCLR 15 at [46]-[47].5 At [36].6 BP Refinery (Westernport) Proprietary Ltd v Shire of Hastings (1977) 180 CLR 266 (PC).7 See Attorney-General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1WLR 1988 at[20]–[27] per Lord Hoftman and Hickman v Turn and Wave Ltd [2011] NZCA 100, [2011] 3NZLR318 at [247]–[248].8 Marks & Spencer Plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UK SC 72,[2016] AC 742 at [3] per Lord Neuberger, [59] per Lord Carnwath and [77] per Lord Clarke.9 Jeremy Finn, Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contractin New Zealand (6th ed, LexisNexis, Wellington, 2018) at [6.4.4].10 Ward Equipment Ltd v Preston, above n 4, at [94].[39] Mr Riches' starting point was that unless the Court is prepared to imply intothe contract the terms pleaded in the statement of claim at paragraph 133 (and quotedat [23] above), clause 26.1 would be of no value. In other words, the plaintiff saysthat unless it can insist on the Crown pursuing the chose in action against EQC, theright it has to a top-up in the event that the sale and purchase price is exceeded by theamount recovered is entirely undermined.[40] As Mr Ebersohn submitted, there is an equally respectable argument that whatwas happening in this contractual arrangement was that KSG was divesting itself of arisk — the Crown would contend an inevitability — that the pre-earthquake,unimproved, rating value of the land was higher than the value of the claim againstEQC. In consideration of that KSG was foregoing the right itself to pursue recoveryagainst EQC over and above the sale and purchase price. Seen in that lightMr Ebersohn submitted cl 26.1 was included in the contractual arrangements by theCrown with landowners to meet the very unlikely situation in which the value of thelandowner vendor's claim against EQC turned out to be higher than thepre-earthquake, unimproved, rateable land value.[41] That, Mr Ebersohn submitted, was evident from the terms of cl 26.2 in whichhe submitted the parties clearly agreed that KSG was relinquishing all rights in relationto its claim and conferring on the Crown an absolute discretion in relation to the same.[42] Against the background of those competing submissions as to the objectiveintention of the parties it is necessary to look at the key provisions in the contract.[43] In cl 23 KSG assigned to the Crown "absolutely" its interest in the "Benefits"in respect of "Claims" and "Further Claims". The terms "Claim" and "Further Claim"are defined so as to include any existing or future claim in respect of damage to theland against EQC. The term "Benefits" is defined so as to include all rights in respectof "Claims" or "Future Claims". On its face, then, in cl 23, KSG bargained away anyinterest at all in the claim against EQC.[44] As Mr Riches contends, cl 23 must be read in the light of cl 26. Clause 26.1provides that in the event of the Crown receiving from EQC, in relation to damage tothe land, an amount in excess of the purchase price under the contract, the Crown mustaccount to KSG in respect of that amount. Clause 26.1 is in turn subject to 26.2. Thisprovides that cl 26.1 is not to be interpreted as having the effect of imposing on theCrown any duty to seek, or an expectation that the Crown will seek, to recover anyparticular amount from the EQC and, for the avoidance of doubt, the partiesacknowledge that the Crown has an unfettered discretion as to how it will pursue theClaims or Further Claims and may settle Claims or Further Claims with EQC at itssole and unfettered discretion.[45] It appears to me that the drafter of cl 26.2 has attempted to make it very clearthat the Crown is not, by entering into an agreement including cl 26.1, assuming anyresponsibility to pursue a claim and to put beyond any doubt that the Crown is notundertaking any responsibility to do so.[46] Mr Riches submitted that properly interpreted 26.2 reserved to the Crown anabsolute entitlement to determine how but not whether to pursue the claim againstEQC. As I understood his argument it picked up on the fact that the clause refers tothe Crown having no obligation to recover any particular amount and having anunfettered discretion as to how it will pursue any claims that may exist.[47] Standing back from the matter it seems to me to be clear that the objectiveintention of these parties as it emerges from the agreement as a whole and the clausesto which I have referred was that in consideration of the Crown acquiring the propertyand assuming the risk in relation to what recovery could be obtained in relation todamage to the land, KSG was prepared to settle for the purchase price in order to atleast secure the most recent rating valuation for the property. Of course it may wellhave hoped that a payment greater than the purchase price might have been securedfrom EQC, but, whatever KSG's hopes may have been in that regard, I am satisfiedthat the contract did not impose upon the Crown an obligation to pursue the claimagainst EQC. On the contrary, the contract expressly entitled it not to do so.[48] It is also necessary to stand back from the agreement itself and have regard tothe context that lead to the parties entering into their agreement in the first place.11[49] KSG's land and improvements had been seriously damaged by theearthquakes. As a result, the company's business, like that of many others, wasthreatened. It faced real uncertainty as to whether it would be able to sell the propertyand if so its value. There must also have been some level of uncertainty surroundingthe likely recovery in respect of damage to the land. To an extent at least, those issueswere brought about by the zoning imposed on the land. In that environment, theCrown offered to acquire the land at the most recent (2007) rating valuation. Whilstthat may not have been the value that KSG would have put on the land immediatelyprior to the earthquakes, and would certainly come nowhere near the value that it mighthave expected to generate from its sale as part of its business as a going concern, itwould at least provide it with a secure return and shift the risk that it was facing on tothe Crown. It is not entirely irrelevant in considering this to observe that cl 23 pursuantto which KSG assigned its chose in action followed the heading "Risk and Insurance".[50] As Mr Ebersohn submitted, what was happening here was that KSG wasaccepting a certain price pegged to a pre-earthquake valuation which was accepted byboth parties as being something less than the pre-earthquake fair market value in orderto avoid the risk it was facing.[51] Seen in that light it is by no means surprising that the Crown was not preparedto assume any obligation to pursue the claim (and the costs associated with pursuingperhaps thousands of such claims).[52] Viewed against that background it appears to me that whilst cl 26.1 wasintended to address the situation where the Crown, exercising its discretion as towhether or not, and if so how, to pursue the claim against EQC, managed to recovermore than the purchase price, Clause 26.2 was clearly inserted to make it as clear aspossible that the Crown was not obliged to pursue that claim.11 See for example Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444at [23] per Tipping J; Firm PI 1 Ltd v Zurich Australian Insurance Ltd T/A Zurich New Zealand[2014] NZSC 147 at [60]-[61].[53] I see no incongruity with that interpretation of the contract and accordingly Ido not accept that on that basis alone it is necessary to imply terms of the typepropounded by KSG to give the contract business efficacy, or that an objectivebystander would regard such terms as going without saying.[54] In any event, it is elementary that the law will not imply a term into a contractif it is inconsistent with the express terms of the contract,12 and on my interpretationof the contract as a whole I cannot see that a clause imposing an obligation on theCrown to pursue a claim could be implied into this contract without doing seriousviolence to the language of that clause.[55] I am also mindful of a recent observation of Sir Andrew Tipping where, in thecourse of advocating for a "blended test" for the implication of terms, he noted:13Parties seek the implication of a term when its implication is to theircontractual advantage. It will almost always be to their counterparty'sdisadvantage. The strategy is often to seek an implied term as an alternativeto interpretation. Without the term the contract does not work as the proponentof the term would like. But to imply the proposed term the court has to be surethe counter party must also have intended the proposed term to govern thesituation that has arisen.[56] It cannot sensibly be said that the Crown intended the plaintiff's proposed termto govern the situation that has arisen.[57] In short, I do not accept the submission advanced on behalf of KSG that a termrequiring the Crown to pursue a claim arises expressly from the language of thiscontract or can be implied into it.[58] A related issue is the nature of the Crown's discretion under cl 26.2. Theplaintiff submitted that in exercising this discretion the Crown must act within limitsimposed by the common law. Those limits have been discussed at length both in and12 BP Refinery (Western Port) Proprietary Ltd v Shire of Hastings, above n 6, at 283.13 Rt Hon. Sir Andrew Tipping "Implication of contractual terms: a single blended test of "obviousnecessity"" [2021] NZLJ 2 at 6.out of the courts, notably in Abu Dhabi National Tanker Co v Product Star ShippingCo Ltd where Leggatt LJ said:14Where A and B contract with one another to confer a discretion on A, that doesnot render B subject to A's uninhibited whim.[59] The common law has developed a default position relating to the exercise ofunilateral contractual powers that holds:15Where a contract confers a discretionary power on one party, that party mustnot exercise the discretion arbitrarily, capriciously, or in bad faith, orunreasonably in the sense that no reasonable contracting party could have soacted.[60] The well known public law formula for assessing unreasonableness fromAssociated Provincial Picture Houses Ltd v Wednesbury Corporation has become thestandard by which contractual discretions are assessed.16 It has become part ofcontract law doctrine. The United Kingdom Supreme Court's decision in Braganza vBP Shipping Limited essentially confirmed the role "Wednesbury unreasonableness"now plays in contract law.17[61] Although it is not necessary in this context to address the appropriateness of apublic law principle such as Wednesbury unreasonableness informing contractualdoctrine, I would question the utility of importing a principle that, in the context inwhich it was originally developed, was probably on its last legs. However, in anyevent, I am not convinced the discretion here was exercised unreasonably, arbitrarily,capriciously or in bad faith. The steps taken by the Crown (discussed below) toadvance the claim against EQC point rather to the discretion being exercisedreasonably, and the plaintiff put in no evidence that goes to establishingunreasonableness.14 Abu Dhabi National Tanker Co v Product Star Shipping Co Ltd (No 2) [1993] 1 Lloyd's Rep 397(CA) at 404 per Leggatt LJ. See also Stephen Kós "Constraints on the Exercise of ContractualPowers" (2011) 42 VUWLR 17 and the cases referred.15 Stephen Kós "Constraints on the Exercise of Contractual Powers", above n 14, at 20.16 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 (CA).17 Braganza v BP Shipping Limited [2015] UKSC 17.[62] Nor can I see how the nature of the discretion, and what the plaintiff says is the"effective abandonment" of the claim amounts to an ouster of the bargain containedin cl 26.1.[63] The conferral of a broad discretionary power in a contract does notautomatically render the contract illusory. How that power is used and the context inwhich it is used may render a contract illusory, but its mere presence does not. TheCourt should not ignore, indeed it should focus on, what has occurred — in this contextsteps taken to advance the claim by the Crown — rather than focus purely on the natureof the promise or clause in isolation.[64] Further, there will usually be implied constraints controlling the extent towhich the power may be exercised,18 meaning there will rarely be such a thing as atruly unfettered discretion. Parties can of course expressly negate the application ofthe default rule in clear language,19 which arguably the parties have done by agreeingthat "the Purchaser has an unfettered discretion as to how it will pursue the Claims";although I doubt the Crown has intentionally negated a rule that requires it to exerciseits discretion reasonably.Estoppel[65] KSG's second cause of action based on estoppel appears to me to be foundedon a logical fallacy.[66] KSG pleads:138. The top-up payment entitlement contained within clause 26.1 was forthe benefit of the plaintiff.139. In entering clause 26.1 of the agreement, the defendant represented tothe plaintiff that it would continue to advance the EQC claim.[67] If, as I have concluded, the agreement does not contain an express obligationon the Crown to pursue the EQC claim, and such an obligation cannot be implied intothe agreement, then it appears to me to be profoundly illogical to contend that by18 See Stephen Kós "Constraints on the Exercise of Contractual Powers", above n 14, at 19.19 At 34.entering into the contract — more particularly by entering into the contract whichincluded cl 26.1 — it represented to KSG that it was assuming such an obligation.That contention does not make sense and cannot be right.[68] Although that is enough to dispose of the case, there is a further pointconcerning KSG's allegation of breach.The Crown's actions[69] As already said, KSG's case is that the Crown assumed a contractual obligationto pursue the claim against EQC, and that the Crown breached that obligation by notpursuing the claim and abandoning it.[70] In response to the alleged breach, the Crown has put in affidavit evidence fromMr Gerome Sheppard who is the Deputy Chief Executive of Crown Property at LINZ.Mr Sheppard gives a very detailed account of the steps taken by LINZ to advance theclaim against EQC commencing immediately after the execution of the sale andpurchase agreement and concluding in the first half of 2019. The purpose of thisevidence is of course to demonstrate that the Crown has in fact pursued the claim.[71] Whilst Mr Riches' submissions criticised the Crown's actions, suggesting thatmore could have been done to pursue the claim, he did not take the argument so far asto attempt identify what further steps KSG says the Crown should have but has nottaken.[72] Given that the Crown can undoubtedly demonstrate that it has taken steps overapproximately six years to pursue the claim, it is not immediately obvious to me thatit is open to KSG to argue that those steps are inadequate.[73] KSG alleges that the Crown has abandoned the claim and identifies as thefoundation for that allegation the agreement between the Crown and the local authorityfor the sale of the land entered into in September 2019. Mr Sheppard's evidencedemonstrates conclusively that in that agreement the Crown did not abandon the claim.[74] It seems to me that KSG's allegation of breach in the end goes no further thansuggesting that the Crown might have pursued the claim with greater vigour. Thatmay be so. But it does not take KSG's claim very far.Loss[75] There is a final dimension to the case which goes to the issue of whether KSGcan — or could ever — establish any loss.[76] It will be recalled that KSG's pleaded loss is effectively the difference betweenthe sale and purchase price of the land and the alleged value of the claim against EQC.[77] Mr Ebersohn submitted that there is a fundamental flaw with that approachbecause the EQC Act limits liability. He made a careful analysis of the legislation andthe scope of potential recovery, essentially demonstrating that KSG's loss would beproperly calculated at a figure several factors below the value of the claim that KSGitself puts on it.[78] In further support of this argument Mr Ebersohn refers to Mr Sheppard'sevidence which is that for 98 per cent of parties who have sold their land to the Crownon the same terms as KSG the payments received from EQC are below 50 per cent ofthe purchase price paid by the Crown for the land and that for the 123 titles that makeup the plaintiff's former land, the average payment received from EQC isapproximately 35.3 per cent of the purchase price paid by the defendant.[79] Mr Ebersohn's analysis of the EQC Act and its proper application here is notaccepted by Mr Riches and accordingly KSG does not accept the relevance ofMr Sheppard's evidence on this point.[80] Whilst I would not have been prepared to enter summary judgment in this caseon the strength of this analysis alone, it appears to me that the prospect of KSGrecovering more than the sale and purchase price would in any event be vanishinglysmall.Conclusion[81] For those reasons, I am left in no doubt that the plaintiff cannot succeed oneither of its two causes of actions.[82] The proper course is therefore to enter summary judgment for the defendantand I do so.Costs[83] I reserve costs, not having heard from counsel in relation to these.[84] If counsel are unable to agree on costs, as I would expect them to do, they mayfile memoranda in the usual way.Associate Judge JohnstonSolicitors:Saunders & Co, Christchurch for plaintiffCrown Law, Wellington for defendant