LONG CAPITAL HOLDINGS NZ LIMITED v JACKS POINT VILLAGE HOLDINGS NO 2 LIMITED [2020] NZCA 102

LONG CAPITAL HOLDINGS NZ LIMITED v JACKS POINT VILLAGE HOLDINGS NO 2 LIMITED[2020] NZCA 102 [20 April 2020]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA331/2019[2020] NZCA 102BETWEEN LONG CAPITAL HOLDINGS NZLIMITEDAppellantAND JACKS POINT VILLAGE HOLDINGSNO 2 LIMITEDRespondentHearing: 12 November 2019 (further submissions received 3 December2019)Court: Goddard, Brewer and Gendall JJCounsel: J D McBride and D A Cowan for AppellantN R Campbell QC and M J Hammer for RespondentJudgment: 20 April 2020 at 3.00 pmJUDGMENT OF THE COURTA The appeal is dismissed.B The appellant must pay the respondent costs for a standard appeal ona band A basis, with an allowance for an additional half day ofpreparation, and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Gendall J)Introduction[1] The appellant, Long Capital Holdings NZ Ltd (LCH), is an experiencedproperty development company. It entered into two agreements (the Agreements) forthe purchase of blocks of development land from the respondent, Jacks Point VillageHoldings No 2 Ltd (JPVH), in the wider Queenstown area. The Agreements wereconditional on LCH providing a "Development Plan" (as defined in the Agreements)to JPVH for its approval by a certain date. LCH did not provide the Development Planby the required date (which had been extended by agreement several times). LCH thenpurported to cancel the Agreements due to its non-satisfaction of the condition andsought a return of the substantial deposits it had paid.[2] JPVH, as vendor under the Agreements, sought summary judgment againstLCH in the High Court for forfeiture of the deposits. The Court granted summaryjudgment, concluding that LCH had not fulfilled its obligations and JPVH was entitledto the deposits.1 LCH appeals that decision.BackgroundThe Agreements[3] The Agreements for the two development blocks (referred to as Area 1 andArea 2 in the Agreements) were entered into on 2 June 2017. The total land area ofthe blocks was around five hectares and was to be utilised for a proposed residentialsubdivision. The prices under the Agreements were $14,200,000 for Area 1 and$11,950,000 for Area 2. For all practical purposes the Agreements were in identicalterms. As we have noted, both Agreements were conditional on LCH by a certain dateproviding to JPVH the "Development Plan" for its approval. Effectively, what washappening here was that JPVH was selling to LCH the opportunity to carry out thedevelopment of Areas 1 and 2 in the Jacks Point Village development, subject tovarious obligations designed to ensure compliance with requirements applicable to theoverall village development. JPVH had residual obligations to ensure these twoproperties were developed within those parameters.[4] The Agreements were on a standard form approved by the Real Estate Instituteof New Zealand and the Auckland District Law Society. A number of general termshad been deleted and 19 pages of bespoke further terms had been added.1 Jacks Point Village Holdings No 2 Ltd v Long Capital Holdings NZ Ltd [2019] NZHC 1405[High Court judgment].[5] Clause 10.8(2) of the general terms required that the party or parties for whosebenefit a condition had been included "do all things which may reasonably benecessary to enable the condition to be fulfilled by the date for fulfilment".Clause 10.8(5) set out further that:If the condition is not fulfilled by the date for fulfilment, either party may atany time before the condition is fulfilled or waived avoid this agreement bygiving notice to the other. Upon avoidance of this agreement, the purchasershall be entitled to the immediate return of the deposit and any other moneyspaid by the purchaser under this agreement and neither party shall have anyright or claim against the other arising from this agreement or its termination.[6] The Agreements contained a number of special conditions in the further terms.Clauses 1.4(3) and 37.1 provided that in the event of any conflict between a generalterm and a further term, the further term would prevail.[7] Clauses 20.3(b)(iii) and (iv) in the further terms of the Area 1 Agreement(the Development Plan condition) concerned the submission of LCH's DevelopmentPlan to JPVH for approval:20.3 This agreement is further subject to and conditional upon:(b) for the purposes of clause 32.2:(iii) the purchaser providing a Development Plan for all of the propertyand for the area shown as Area 1 on the attached plan within40 Working Days of the date of execution of this agreement; and(iv) the vendor approving the Development Plan within10 Working Days of the date the Development Plan has been providedin accordance with clause 20.3b.iii.[8] The same condition appears in cls 20.3(c)(i) and (ii) of the Area 2 Agreement.2[9] Clause 32.2, which is referred to in cl 20.3 as set out above, imposed anobligation on LCH to provide a Development Plan for LCH's development ofthe property to JPVH for approval. The Plan had to include various matters including,amongst other things, a suite of designs and plans from various consultants, addressing2 'Area 2' is referred to instead of 'Area 1' to describe the relevant area on the attached plan.matters such as the design of roads and footpaths, landscaping, waste water andpotable water infrastructure, and the number, location and dimensions of the sectionsto be developed.[10] The Area 1 Agreement was also conditional on LCH first providing a Stage 1Development Plan (Stage 1 Plan) for part of the Area 1 property within20 working days.3 This condition was also incorporated by reference intothe Area 2 Agreement.4 Both Agreements, as we have noted, were also subject tothe Development Plan condition.[11] Clauses 20.5 and 20.4 of the Area 1 and Area 2 Agreements respectivelyprovided for cancellation if a condition was not satisfied:If any of the conditions set out in this clause 20 are not satisfied by thespecified time for satisfaction (or such extended time for satisfaction as maybe mutually agreed in writing between the parties) the purchaser or the vendormay cancel this agreement at any time before the condition has been satisfiedby giving written notice of cancellation to the other.[12] Several other clauses in the further terms are relevant:(a) Clause 24.1(d) provided that the purchaser acknowledged that it: has inspected the property and purchases the property solely inreliance upon the purchaser's own judgement and not upon anyrepresentation or warranty made by the vendor other than ascontained in this agreement.(b) Clause 26.1 obliged LCH to pay deposits totalling $2,615,000 to beheld by JPVH's solicitors as stakeholder. Clause 26.1(b) went on toprovide that:(b) in the event that this agreement is cancelled:(i) as a result of a default by the purchaser, the Net Depositwill be released to the vendor; and(ii) for any other reason save the default of the purchaser,the Net Deposit will be refunded to the purchaser.3 Agreement for Sale and Purchase of Real Estate, 2 June 2017 [Area 1 Agreement], cl 20.3(b)(i).4 Agreement for Sale and Purchase of Real Estate, 2 June 2017 [Area 2 Agreement], cl 20.3(b).(c) Clause 32.7 provided that, once LCH's Development Plan had beenapproved, JPVH would use reasonable endeavours to vary the localCouncil's Outline Development Plan (ODP) to reflect the approvedDevelopment Plan. LCH acknowledged that this was not a conditionof settlement and did not allow LCH to seek any compensation fromJPVH if a variation of the ODP had not been obtained prior tosettlement.(d) Clause 42.l required each party to make all applications, execute alldocuments and do or procure all other acts and things reasonable andnecessary to implement and carry out its obligations under, and theintention of, the Agreements.The cancellation[13] On 9 June 2017, the deposits under the Agreements were paid to JPVH'ssolicitors as stakeholder. LCH then provided the Stage 1 Plan to JPVH.JPVH approved that plan, satisfying the Stage 1 Plan condition.[14] LCH then requested several extensions to the original conditional date for thefull Development Plan condition. The first request was made on 31 July 2017.The parties agreed to extend the date to 3 August 2017. LCH's next request was on3 August 2017. JPVH agreed to a one day extension while it considered the request.Subsequently it agreed an extension to 18 August 2017. On the morning of18 August 2017 LCH's solicitors emailed JPVH's solicitors, advising that theyunderstood LCH would submit the Development Plan that day. In the same emailLCH requested a variation to the Agreements. Later that day LCH requested a furtherextension to 25 August 2017. JPVH agreed to the request.[15] LCH did not provide the Development Plan to JPVH by close of business on25 August 2017. Instead, at 5.05 pm that day, LCH purported to cancelthe Agreements on the basis that the Development Plan condition had not beensatisfied. LCH did not explain why it had not provided the full Development Plan.In cancelling the Agreements, it sought return of the deposits.[16] JPVH did not accept the purported cancellation. By letter dated30 August 2017 JPVH advised LCH that LCH could not cancel for non-fulfilment ofthe Development Plan condition through its own default. LCH was obliged to do allthings reasonable and necessary to fulfil the condition. LCH had provided no evidencethat it had complied with that obligation. JPVH treated LCH's purported cancellationas a repudiation or as a breach of an essential term and cancelled the Agreements.JPVH requested release of the deposits under cl 26 of the Agreements.[17] JPVH brought proceedings seeking release of the deposits. It soughtsummary judgment on the basis that LCH had no arguable defence.LCH counterclaimed for return of the deposits.The High Court decision[18] Associate Judge Johnston granted summary judgment to JPVH, concludingthat LCH had not met its obligation to take reasonably necessary steps to submitthe Development Plan to JPVH for approval. LCH was therefore in breach ofthe Agreements and had repudiated them. JPVH was entitled to cancel in response tothat repudiation.[19] Addressing this aspect, the Associate Judge referred to this Court's expressionof principle in Scott v Rania:5Notwithstanding that a condition, such as "subject to my being able toarrange mortgage finance", has not been fulfilled, a party through whosedefault that non-fulfilment has occurred, if that is the case, may not assertnon-fulfilment, for it is a settled principle of law of great antiquity andauthority that in these matters no one can take advantage of the existence of astate of things which his default has produced: ...[20] The Associate Judge went on to address JPVH's argument that, if LCH'spurported cancellation was invalid as it was a result of its own default, JPVH wouldbe entitled to the deposits. Special condition 26.1(b)(i) in the Agreements noted aboveat [12] said as much.5 High Court judgment, above n 1, at [16], citing Scott v Rania [1966] NZLR 527 (CA) at 534 perMcCarthy J.[21] LCH, however, had pleaded in defence that it was not in default here as it wasnot obliged to submit a Development Plan to JPVH if "it formed the view that nofeasible development of the land was possible". LCH claimed that, after investigation,it had concluded that no feasible development of the land was possible, and inparticular that it "would not be economically viable".[22] Addressing the competing arguments, the Associate Judge concluded:6In any event, this issue resolves itself into whether Jacks Point Village canestablish that Long Capital Holdings [did not take] all reasonably necessarysteps to submit a development plan.[23] The Associate Judge then noted that LCH had gone well down the path towardspreparation of a Development Plan and appeared on the evidence to have actuallyprepared one. However, he found the Agreements obliged LCH to take the final stepof actually submitting the Development Plan to JPVH, irrespective of its economicfeasibility. LCH had not done so.7 Therefore, LCH was in default underthe Agreements. Accordingly, JPVH was entitled to the deposits.[24] In reaching this conclusion, the Associate Judge drew a distinction betweena Development Plan that was "technically" not feasible and which would have enabledLCH to cancel, giving the example of a situation where there was an adversegeotechnical report on the property, and a Development Plan that was economicallynot feasible and which did not entitle cancellation.8 Here, the Associate Judge heldthat:9... the reason why Long Capital Holdings declined to present a developmentplan for approval was that, having reached the point where it was in a positionto do so (and it seems having prepared one), it concluded that the return itwould receive on the development was not satisfactory.6 At [20]. The quoted passage has been corrected to read "did not take" rather than "took". It isclear from the context that this is what the Associate Judge meant.7 At [24].8 At [34].9 At [35].[25] In support of that, he noted that cl 32.2 was expressed in mandatory terms, andthen went on to identify what cl 32.2 said the Development Plan would cover.10The difficulty for LCH was that its obligation to take all reasonably necessary steps tosubmit the Development Plan as articulated in cl 32.2 did include the obligation oftaking the final step of providing JPVH with the Development Plan for approval.On its own evidence, LCH had elected not to do so.[26] The Associate Judge declined to imply a term into the Agreements to the effectthat any Development Plan would need to be economically justified.The Associate Judge said neither of the two different circumstances in whichthe courts would imply a term into a contract (being first, where the term representedthe obvious but unexpressed intention of the parties, and secondly, where the term wasnecessary to give business efficacy to the contract) applied in this case.11[27] The Associate Judge went on to summarise the argument advanced for LCH tothe effect that, in the absence of a term along the lines propounded by it, a conditionalpurchaser under the Agreements would effectively be forced to present a DevelopmentPlan and then go ahead with the development even if it were uneconomic. LCH hadargued that this simply defied commercial sense. The Associate Judge rejected thisargument. These were agreements between two sophisticated commercial parties,reached with the assistance of experienced lawyers. He concluded that the partiesmust be held to the Agreements.12 In short, he was satisfied that JPVH had establishedthat the defence LCH wished to run could not succeed.[28] In relation to the counterclaim, the Associate Judge determined that cl 10.8(5)conflicted with special condition 26.1(b)(i) in the Agreements, and the latter shouldprevail. Accordingly, he found that cl 26.1(b)(i) governed the way in which depositswere to be dealt with.13 In the event the Agreements were cancelled as a result ofdefault by LCH as purchaser, the deposits were to be released to JPVH as vendor.10 At [37]. The Judge noted that the exclusive focus of cl 32.2 was on the physical characteristics ofthe development and nowhere was there any reference to economic feasibility.11 At [41] and [49].12 At [49]–[50].13 At [54].The Associate Judge therefore granted summary judgment and rejected thecounterclaim.Summary judgment principles[29] The summary judgment principles that apply are not in dispute. As this Courtsaid in Krukzeiner v Hanover Finance Ltd:14(a) The question is whether the defendant has no defence to the claim andthe court must be left without any real doubt or uncertainty.(b) The onus is on the plaintiff, but where the plaintiff's evidencesufficiently shows there is no defence, the defendant must respond ifthe application is to be defeated.(c) Conflicts of evidence ought generally not to be resolved in a summaryjudgment application, but the court may take a robust approach andneed not accept uncritically evidence that inherently lacks credibility.[30] Where a central issue is the proper construction of a contract (which is theposition here), the focus must be on the meaning the relevant provisions would conveyto a reasonable person with all the background knowledge reasonably available tothe parties at the time they entered into it.15 The factual matrix in which the contractis situated is therefore relevant. That raises the question of whether it will beappropriate on a summary judgment application for the court to reach a concludedview on the meaning of the contract when the facts have not been fully tested.[31] The existence of a factual dispute about the context in which the contract wasentered into does not preclude the court from entering summary judgment in a contractclaim, but caution is required. The court must be satisfied that resolution of the factualdispute is "not necessary to provide the court with such contextual background as isnecessary to resolve the claim".16 Summary judgment may be appropriate, therefore,14 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].15 Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60].16 Jowada Holdings Ltd v Cullen Investments Ltd CA248/02, 5 June 2003 at [29].where, on an objective assessment, the interpretation contended for is plainly thecorrect one regardless of the factual dispute.[32] On appeal in summary judgment proceedings, this Court is at no particulardisadvantage in comparison to the High Court. This Court may assess the evidenceand documentation for itself and come to its own conclusion.The appeal[33] Initially, LCH advanced this appeal on three grounds:(a) the High Court wrongly interpreted the Agreements to mean that LCH"had" to provide a Development Plan;(b) the High Court was wrong to find that cl 10.8(5) conflicted with specialcondition 26.1(b)(i); and(c) the High Court wrongly rejected a defence based on an implied termthat the Development Plan must be viable for LCH.[34] At the hearing of the appeal LCH advanced an additional argument that hadnot been pleaded, or raised before the High Court, or included in the Notice of Appeal.A wastewater condition in cl 20.3(a) of the Agreements had not been satisfied at thedate that JPVH purported to cancel the agreements. LCH submitted that it is arguablethat a contract cannot be cancelled if it is still conditional, and the relevant conditionmay never be satisfied. In this case, it was arguable that the wastewater conditionwould not have been satisfied so the Agreements "would have fallen over anyway".LCH submitted that this argument can only be determined at a trial, so summaryjudgment should be refused.Whether LCH "had" to provide a Development PlanLCH's submissions[35] It was common ground that the Development Plan condition is a conditionsubsequent. A failure to fulfil a condition subsequent may either bring the contract toan end at that point or may give one or both parties the option to do so.17[36] In the present case, cls 20.5 and 20.4 of the Area 1 and Area 2 Agreementsrespectively expressly permitted either party to cancel if any of the conditions in cl 20(which included provision of the Development Plan to JPVH) were not met. The onlyexception to this express ability to cancel for non-satisfaction of a condition was wherea party had brought about the failure to meet the condition by its own default.Clauses 20.4 and 20.3(d) of the Area 1 and Area 2 Agreements respectively expresslyidentified certain conditions that were inserted for the sole benefit of the purchaser andcould be waived only by the purchaser. There was no provision for waiver of anyconditions by the vendor. So JPVH could not waive compliance with the DevelopmentPlan condition. Counsel for LCH, Mr McBride, complained that the Associate Judgedid not properly address the implications of these clauses.[37] Mr McBride went on to note the Associate Judge had accepted that LCH hadcarried out much of the preparation for the Development Plan, and indeed it appearedto have a completed plan.18 The Associate Judge also accepted that the requirementto submit the Development Plan was not absolute, noting that, for example, an adversegeotechnical report indicating the land was unstable would justify non-completion ofthe Plan.19 In such a situation, LCH as purchaser would be entitled to a refund of itsdeposits. The Associate Judge nevertheless concluded that, in the circumstances ofthis case, LCH had to submit a Development Plan, and economic feasibility was not avalid consideration.[38] On these aspects, Mr McBride contended, the Associate Judge's conclusionmisapprehended LCH's evidence. He said it was not just the cost of the development17 Moreton v Montrose Ltd [1986] 2 NZLR 496 (CA) at 503–504 per Cooke J.18 High Court judgment, above n 1, at [23].19 At [34].that was an issue; it was also the fact that LCH's proposed Development Plan did notalign with the local Council's ODP which would need to be varied.[39] LCH's position is that the Associate Judge ignored this evidence and focusedon the economic feasibility of the development for LCH, which he had said was not avalid consideration, unlike a technical issue such as soil stability. That dichotomy,according to Mr McBride, is a false one. Most "technical" issues, he contended, areonly issues because of the cost required to remedy them.[40] LCH was critical of the Associate Judge's conclusion that, in all thecircumstances, LCH had a firm obligation to take the final step of submitting itsDevelopment Plan to JPVH. LCH submitted that the Associate Judge focused only onLCH's concern about the economic feasibility of the development and ignored whatLCH said was evidence that there were also possible planning or other issues that gaverise to uncertainties and risk. LCH's overall submission on this was that its obligationto take reasonable steps to provide the Plan did not extend to requiring submission ofa Development Plan to JPVH, no matter how onerous, expensive, or risky thedevelopment would be.[41] We were then referred at some length to the Supreme Court decision inSteele v Serepisos.20 We will address that decision later. Mr McBride suggestedthis decision gave support to LCH's contention that it is arguable LCH assumed anobligation only to take reasonable steps to submit the Development Plan.Arguably, the obligation did not extend to requiring submission of aDevelopment Plan to JPVH, no matter how onerous, expensive, or riskythe development would be for LCH. And, in the context of a summary judgmentapplication, LCH maintained the Court could not safely conclude that LCH had failedto take reasonable steps to submit the Plan. That would require evidence at trial,including evidence from experts as to the reasonableness of LCH's efforts.20 Steele v Serepisos [2006] NZSC 67, [2007] 1 NZLR 1.JPVH's submissions[42] Mr Campbell QC for JPVH noted it was common ground that LCH was notentitled to cancel the Agreements if the failure of the Development Plan condition wasbrought about by LCH's default. Under the Agreements LCH was under an obligationto do all things reasonably necessary to enable that condition to be fulfilled.[43] LCH had prepared a Development Plan. The only further thing that needed tooccur for the condition to be fulfilled was for LCH to take the final step of providingthe Plan to JPVH for its approval. There was no impediment here that reasonablyprevented LCH from doing that. LCH's defence was not directed at any realimpediment. Rather, it chose not to provide it (for economic reasons because ofperceived costs and risks in carrying out the development).[44] In those circumstances, JPVH maintained the Judge was correct to find thatLCH's obligation to do all things reasonably necessary to enable the condition to befulfilled surely included "the obligation to take the final step of submitting the same"21and LCH failed to do that.[45] LCH was therefore in breach (and not entitled to cancel), unless there was someother basis upon which it was justified in choosing not to provide its DevelopmentPlan to JPVH. Mr Campbell suggested the only real basis that LCH had put forwardfor this relied on an implied term. We turn to consider that later but generally, he saidthat LCH's implied term argument amounted to the introduction of a due diligencecondition heavily in LCH's favour and this would have made the Agreementseffectively bare options to purchase. Mr Campbell maintained it was not reasonablyarguable that such a term would be implied into any sale and purchase agreement ofthis nature (involving experienced commercial parties and valuable property),let alone into agreements such as these ones, which had been carefully negotiated bysophisticated parties with professional assistance, and which contained the manybespoke terms that the parties required. Among other things, those bespoke termsincluded (in cl 34) an unqualified obligation for LCH to complete its development inaccordance with the approved Development Plan.21 High Court judgment, above n 1, at [24].[46] In response to LCH's criticism of the Associate Judge's conclusion that LCHhad a firm obligation to take the final step of submitting its Development Plan, as setout at [40] above, JPVH submitted that LCH's argument conflated two distinctmatters: (i) the provision of a Development Plan and (ii) the carrying out ofa development in accordance with that Plan. Fulfilment of the Development Plancondition merely depended on LCH providing a plan to JPVH by the conditional date.Fulfilment of that condition did not depend on LCH carrying out the DevelopmentPlan. The relevant enquiry was whether LCH took reasonable steps to provide thePlan — not whether the cost and economic returns of carrying out the developmentitself were reasonable or feasible.[47] Mr Campbell argued that LCH's defence is about the feasibility ofthe development, not about the feasibility or reasonableness of providingthe Development Plan to JPVH. He said LCH chose not to provide the Plan forexpected cost and return reasons. This was irrelevant to whether it took reasonablesteps to provide the Plan to JPVH.[48] JPVH also submitted that LCH's position is inconsistent with other terms inthe Agreements. First, LCH had obligations under cl 32.2 to provide a DevelopmentPlan to JPVH, and under cl 34 to complete its development in accordance with theapproved Development Plan. Neither obligation, Mr Campbell maintained,was subject to "reasonable steps" or "feasibility" qualifications. He contended itwould be inconsistent with those terms for LCH to be entitled to choose to refrain fromproviding a Development Plan, and then to cancel the Agreements, as it has purportedto do here, simply because it says it has formed the view that the development was noteconomically feasible. Secondly, in response to LCH's argument that its DevelopmentPlan did not align with the Council's ODP which would need to be varied,Mr Campbell noted that the fact the Development Plan might not align with the ODPwas actually contemplated by cl 32.7, in which LCH acknowledged that obtaining avariation to the ODP was not a condition of settlement.Analysis[49] Given this is an appeal against summary judgment, the question is whetherJPVH has met the onus upon it to show that LCH has no arguable defence to the claimagainst it.[50] Clauses 10.8(2) and 42.1 required LCH to do all things reasonably necessaryto provide a Development Plan to JPVH for its approval, as contemplated by cl 20.3.LCH elected not to provide the Development Plan which it had prepared to JPVH.It made that choice for commercial reasons. Those reasons, according to itsNational Manager, Mr Ye, were that, given the risks of the development, the returnwas simply insufficient.[51] It was plainly within the reasonable ability of LCH to sendthe (already prepared) Development Plan to JPVH. There was no practical difficultyor material cost associated with simply providing the Development Plan to JPVH,as distinct from costs and risks associated with implementing the plan. On theface of it, LCH simply failed to take a simple but essential step required bythe Agreements, with the result that it was in default and was not entitled to rely onthe failure to satisfy the Development Plan condition which resulted from that default.[52] LCH sought to rely on the decision of the Supreme Court in Steele v Serepisosto support the argument that it was not required to submit a Development Plan thatwould be unreasonably onerous for it to implement. That case was concerned withan agreement for sale and purchase of a section to be subdivided from the vendor'sexisting title. Section 225(1) of the Resource Management Act 1991 (RMA) deemedthe agreement to be subject to a condition that the survey plan for the subdivisionwould be deposited under the Land Transfer Act 1952. The Council imposeda condition on its approval of the survey plan relating to drainage that was itselfreasonable, but which it transpired would be significantly more onerous forthe vendors to comply with than the method by which the parties had originallyenvisaged that drainage requirements would be met. Where s 225 applies, the vendorhas an implied obligation to take all reasonable steps to deposit the plan, so is obligedto take all reasonable steps to fulfil conditions that are imposed by a council onthe plan's approval, provided those conditions are reasonable ones.22 The majority ofthe Supreme Court held that in the circumstances of that case it would not bereasonable to require the vendors to take the steps required to comply withthe Council's drainage condition. So the vendor was able to cancel the agreement fornon-satisfaction of the statutory implied condition relating to deposit of the surveyplan.[53] We do not consider that Steele v Serepisos assists LCH in this case.That decision was concerned with the statutory condition implied by s 225 ofthe RMA, not with a condition included in the parties' contract. The reasoning ofthe majority in Steele v Serepisos about the condition implied by s 225 cannot betransposed uncritically to cases about contractual conditions. The context is different.In particular, the ability of the courts to imply terms is constrained by the expressprovisions of the parties' contract in relation to the relevant condition. In this case,the Agreements expressly provided that LCH was required to do all things reasonablynecessary to enable the Development Plan condition to be fulfilled. The focus shouldbe on interpreting that requirement, having regard to the scheme of the Agreementsand other relevant provisions.[54] We see real force in Mr Campbell's submission that as the Agreements makeseparate provision for LCH's obligation to provide the Development Plan to JPVH,and LCH's obligations to implement the Development Plan, any anticipateddifficulties in implementing the Plan are not relevant when assessing whetherreasonable steps were taken in relation to the initial step of providing the Plan to JPVH.On that approach, the issues raised by LCH about the costs and risks of implementingthe Development Plan are simply irrelevant, and do not excuse the failure to providethe plan to JPVH.[55] Nor is this a case like Steele v Serepisos where the parties anticipated thata condition would be satisfied in a particular manner which proved impossible forunanticipated reasons outside the control of the parties. In that case there was evidencethat the parties envisaged complying with the Council's anticipated drainage condition22 Steele v Serepisos, above n 20, at [23]–[25].in a particular manner. As a result of an unanticipated difficulty in dealing with a thirdparty (a neighbour), that proved impossible. The existence of a comparator based onthe parties' shared expectation about how drainage would be provided played animportant part in the analysis of the majority.23 LCH did not suggest thatit encountered any unforeseen difficulty in preparing a Development Plan as the resultof actions taken by third parties, or requirements imposed by third parties, which wereoutside the contemplation of the parties to the Agreements. This was not a case wherethe parties had shared expectations about how the Development Plan would be framedand implemented which proved unachievable.[56] More generally, LCH's approach to what would constitute a justification forfailure to deliver the Development Plan is inconsistent with the scheme ofthe Agreements. LCH had agreed that it was purchasing the property solely in relianceupon its own judgment (cl 24.1(d)). LCH now says it could unilaterally decide thatproceeding with the development in accordance with any Development Plan that waslikely to be approved by JPVH was not commercially attractive, for reasons of cost orother risks. That would effectively convert the condition in cl 20.3 into a form of duediligence clause, giving LCH an option to investigate the development and choosenot to proceed with it if LCH was not satisfied with the outcome of that investigation.We do not consider that it is arguable that cl 20.3 has that effect. If these commerciallyexperienced parties had intended to contract for an extended due diligence period ofthis kind, they would have done so expressly. Nor is it plausible that LCH wouldobtain the benefit of a due diligence period of this kind — effectively giving it anoption over the properties at no cost — as it claims was the position here.[57] Mr McBride also argued that the present case involves conditions which,in essence, are similar to finance conditions in purchase contracts requiring apurchaser to take reasonable steps to obtain finance. In such cases there is noobligation on a purchaser in undertaking those steps to accept loan conditions whichare entirely unreasonable or uneconomic. However, in our view the case before us isa very different one from the finance condition cases. LCH does not argue that itencountered unexpected difficulties in providing a Development Plan as a result of a23 See, for example, at [29]–[32] per Tipping J and [13] per Blanchard J.third party's decision analogous to the imposition by a lender of unexpected andunreasonable finance conditions. There is no baseline of standard finance terms andconditions, or finance terms and conditions contemplated by the parties, by referenceto which LCH says that the development has proved to be unexpectedly onerous.Rather, LCH's argument amounts to a claim that until it submittedthe Development Plan it retained the right to decide that the development was notcommercially feasible, and that in those circumstances it was free to elect not toprovide a Development Plan. For the reasons explained above, we do not acceptthat submission.[58] In summary, it is not arguable that LCH encountered a difficulty in providinga Development Plan to JPVH that was outside the range of commercial risks that LCHagreed to assume under the Agreements. LCH was able to provide a DevelopmentPlan to JPVH. LCH breached its obligations under cls 10.8(2) and 42.1 by failing todo so. LCH could not cancel for non-fulfilment of the Development Plan condition,as that was the result of its own default. Its purported cancellation was a repudiationof the Agreements. JPVH was entitled to cancel and did cancel.[59] The cancellation was the result of a default by LCH. So cl 26.1(b)(i) applies,and JPVH is entitled to release of the deposit.Whether cl 10.8(5) conflicted with special condition 26.1(b)(i)LCH's submissions[60] The Associate Judge concluded that cl 10.8(5), enabling recovery of thedeposits by LCH, conflicted directly with special condition in cl 26.1(b)(i) and so thelatter prevailed. LCH submits that conclusion was wrong.[61] Clause 10.8(5) is the no fault cancellation provision. It is set out at [5] above.In summary, it provides that if a condition is not met the contract is may be avoidedby either party, and the purchaser is entitled to return of the deposit.[62] Clause 26.1(b)(i) is outlined above. It provides that if the Agreements arecancelled as a result of a default by the purchaser, the deposits are released to thevendor. Clause 26.1(b)(ii) provides that if the Agreements are cancelled for any reasonother than default of the purchaser, the deposits are refunded to the purchaser.[63] A cancellation for non-fulfilment of a condition is not a cancellation as a resultof default by the purchaser default. Rather, it is "no fault cancellation", entitling thepurchaser to a refund of the deposits as provided for in cl 10.8(5) and cl 26.1(b)(ii).[64] The High Court concluded that, because of its view that there was a conflictbetween cls 10.8.5 and 26.1(b)(i), cl 37.1 was engaged, with the result that the specialcondition prevailed over the general condition.24[65] LCH maintains that this interpretation was wrong. Mr McBride says theCourt's duty, when confronted with two provisions in a contract that seem to beinconsistent with each other, is plain. It must do its best to reconcile them, if that canconscientiously and fairly be done. But it is not enough if one term simply qualifiesor modifies the effect of another. To be "inconsistent", a term must contradict anotherterm or conflict with it such that effect cannot fairly be given to both clauses.[66] LCH's position here is that there was no such inconsistency. Mr McBrideargues the High Court was wrong to ignore cl 10.8(5), which enables a refund of thedeposit to the purchaser if the contract does not become unconditional.JPVH's submissions[67] JPVH says there is no issue here. It maintains that it is not necessary for us toconsider this argument in order to resolve this appeal. If, as we have done, we upholdthe Judge's primary finding (that LCH was in breach in failing to providethe Development Plan to JPVH), JPVH contends that cl 10.8(5) falls by the wayside.This is because, as is common ground, if LCH was in breach, it was not entitled tocancel for non-fulfilment of the Development Plan condition and cl 10.8(5) appliesonly where the Agreements are cancelled for non-fulfilment of a condition.Conversely, if we had not upheld the Judge's primary finding, the matter would have24 High Court judgment, above n 1, at [52]–[54].had to go to a full hearing, regardless of whether the two clauses conflicted. But thatis not the case here.[68] JPVH says that if we do need to decide this issue, then the Associate Judge wasright to find that the two clauses conflict. Clause 10.8(5) provides for the deposit tobe returned to the purchaser, if the vendor chooses to cancel for non-fulfilment of acondition. That result applies even if the purchaser's default has caused the conditionto fail (the purchaser's default will disentitle the purchaser, but not the vendor, fromcancelling). In this same scenario, however, cl 26.1(b)(i) provides to the contrary:if the cancellation is a result of a default by the purchaser, then the deposit will bereleased to the vendor.Analysis[69] We agree with JPVH's submission that the question of whether there is aconflict between cls 10.8(5) and 26.1(b) need not be resolved. Clause 10.8(5)is relevant only where the Agreements are cancelled for non-fulfilment of a condition.We have found that LCH was not entitled to cancel for non-fulfilment ofthe Development Plan condition. The contract was cancelled by JPVH as aconsequence of LCH's repudiation. So cl 10.8(5) is simply inapplicable.[70] Rather, cl 26.1(b)(i) applies and JPVH is entitled to the deposits.Whether the Court wrongly rejected a defence based on an implied termLCH's submissions[71] LCH submitted that it was arguable that cl 32.2 was subject to an implied termto the effect that the purchaser needed to be satisfied that its Development Plan wasviable, not just in economic terms but also in terms of planning and otherrequirements.[72] LCH argued that the Associate Judge focused purely on the "economicallyfeasible" argument and did not appear to recognise that LCH's evidence went beyondthat, to include consideration of other requirements.[73] The situation, Mr McBride maintained, was analogous to that which prevailedin Gilbert v Manninen.25 There, the purchaser argued it was entitled to cancel acontract which was conditional upon obtaining a resource consent if the consent hadbeen given subject to onerous or unsatisfactory conditions. The Court appliedSteele v Serepisos and concluded that:[44] While the decision in Steele v Serepisos relates to the interpretation ofa particular statutory condition, in my view it may well be that a similarapproach applies in cases such as the present in the context of a purelycontractual condition. [74] The Court went on to hold that a detailed assessment of the purchaser'sargument at trial was desirable.26[75] Plainly, Mr McBride said, that approach is the right one. He complainedthat, without discussing either Gilbert v Manninen or Steele v Serepisos,the Associate Judge in the present case concluded that an implied term defence wasnot arguable. In reaching this conclusion he noted that the Associate Judge hadconcluded:(a) the parties could have included this term if they wanted to;(b) it was not necessary to make the contract work; and(c) LCH could always have declined to proceed, but this would have meantforfeiting its deposits.[76] Mr McBride suggested to us, however, that those conclusions are at odds withauthority and, in any event, are not available on a summary judgment application.He noted that whether LCH did enough to try to provide a Development Plan issquarely a trial issue and claimed that this should not have been resolved summarily.25 Gilbert v Manninen (2009) 10 NZCPR 209 (HC).26 At [44].JPVH's submissions[77] In response, Mr Campbell began by clarifying that the implied term LCHargued for here was that "the purchaser needed to be satisfied that its DevelopmentPlan was somehow viable, not just in economic terms but also in terms of planningand other requirements."[78] Mr Campbell contended LCH did not explain the basis upon which such a termcould be implied, nor engage with the recognised tests for implying terms.[79] JPVH's position is that this term is not so obvious that "it goes without saying",nor is it a term that is needed to give effect to business efficacy or to make theAgreements work. It is the sort of term that is often seen in due diligence clauses.LCH is a sophisticated commercial party, and it had every opportunity to contract forsuch a clause. It did not. Instead, LCH acknowledged, in cl 24.1(d), that it purchasedthe properties in reliance upon its own judgment.[80] Mr Campbell also maintained that the implied term suggested by LCH wouldconflict with other agreed terms. In cl 32.7, LCH acknowledged that it was nota condition of settlement that the Development Plan reflect the Council's ODP —so LCH could hardly be justified in declining to provide a Development Plan on theground that it did not align with the ODP. Also, under cl 34.1, LCH undertook tocomplete its development in accordance with the approved Development Plan.That clause was not qualified by any "feasibility" criterion. Mr Campbell said therewere many other constraints and limitations on how LCH could develop the properties.In light of all these bespoke terms, JPVH's position is that there is no room forimplying an overarching term conferring on LCH an option to exit the Agreements ifit thought a development was not economically feasible.[81] For these reasons, JPVH maintained the Associate Judge was right to hold thatit was not arguable that such a term could be implied. The circumstances were verydifferent from those in Gilbert v Manninen.Analysis[82] It is elementary that a term will not be implied into a contract if the suggestedterm is inconsistent with the express provisions of that contract. The implied termcontended for by LCH is inconsistent with the scheme of the Agreements, and withtheir express terms, as explained above when addressing LCH's first argument.Under cls 10.8(2) and 42.1 LCH was required to do all things reasonably necessary toprovide a Development Plan to JPVH. The Agreements then went on to deal with anumber of matters relating to the Development Plan, including potential inconsistencywith the Council's ODP, and implementation of the plan. An implied term whichconferred on LCH a broad discretion to decide not to provide such a plan, dependingon whether or not it was satisfied that the development would be viable, would beinconsistent with LCH's obligations under cls 10.8(2) and 42.1, and under the otherprovisions of the Agreements concerning preparation and implementation ofthe Development Plan. And it would be inconsistent with the other features ofthe Agreements outlined at [56] above.[83] The Associate Judge was correct to reject LCH's defence based on an impliedterm.Wastewater condition argument[84] As noted above, on this appeal LCH put forward a further argument based onthe fact the wastewater condition in cl 20.3(a) had not been satisfied at the time thatJPVH cancelled the Agreements. This argument had not been raised beforethe High Court and was not included in the Notice of Appeal.[85] Clause 20.3(a) provided that the Agreements were conditional on:[T]he parties agreeing the solution for the waste water disposal from theproperty, either by connection to the existing Society sewage disposal systemor to a new Council sewage disposal system, and the purchaser being entirelysatisfied (at its absolute discretion) with the cost to be connected to the agreedwaste water disposal solution within 20 Working Days of the date of executionof this agreement [86] The evidence is that, as at 3 July 2017, the parties were "close to resolving thewastewater solution" and had agreed to extend the date for satisfaction of thatcondition to 3 September 2017 "to allow sufficient time to get all approvals needed"and that, shortly before LCH's alleged repudiation, the parties were continuing to worktogether on the solution.[87] LCH purported to cancel the Agreements on the basis of non-satisfaction ofthe wastewater condition on 4 September 2017. However, this was afterthe Agreements had already been cancelled by JPVH on the basis of LCH'srepudiation.[88] The argument based on the wastewater condition was advanced for the firsttime at the hearing of the appeal. We gave the parties the opportunity to file furtherwritten submissions addressing this new argument.[89] The legal basis of the new argument was not entirely clear. It appeared to bealong the lines that:(a) an agreement cannot be cancelled if it remains conditional,as the cancelling party cannot show that the contract would havebecome unconditional; and/or(b) in order to cancel for LCH's repudiation, JPVH had to show that itcould have proceeded to settlement itself. It could not do so in this caseas it could not show that the wastewater condition would have beensatisfied; and/or(c) because JPVH could not show that it could have proceeded tosettlement, LCH was not in "default" in terms of cl 26.1.[90] The failure to raise these arguments in response to the summary judgmentapplication, and provide an evidential foundation for them, is plainly unsatisfactory.But putting the issues surrounding pleadings to one side, we consider that this newargument lacks merit, and does not justify declining summary judgment.[91] The general argument advanced by LCH that a contract cannot be cancelled inresponse to a repudiation if the contract is conditional, and the conditions have not yetbeen satisfied, is plainly wrong. It is inconsistent with the cancellation provisions ofthe Contract and Commercial Law Act 2017 (CCLA), which are not limited in thatway. It is unsupported by authority. And it is inconsistent with basic principles.If a party to a conditional contract clearly communicates an intention not to performthe contract, the other party should be entitled to bring the contract to an end,rather than wasting time and money attempting to satisfy the outstanding conditionsof the contract to no useful end. If the satisfaction of those conditions requiresthe parties to cooperate, the futility of requiring the innocent party to attempt to satisfythose conditions when the repudiating party has communicated an intention not toperform is even starker.[92] It is well established that where the vendor's and purchaser's promises atsettlement are interdependent, as they usually are, the right of party A to cancel forparty B's failure to settle is dependent on party A being ready, willing and able tosettle.27 But that principle is not relevant here. JPVH did not cancel because ofa failure by LCH to settle. JPVH cancelled because LCH repudiated the Agreements.And LCH's obligation to do all things reasonably necessary to providea Development Plan that satisfied the Development Plan condition was not dependenton any obligation on the part of JPVH. So LCH's argument derives no support fromthis line of cases.[93] LCH submitted that its argument was supported by the decision of this Courtin Noble Investments Ltd v Keenan.28 There, this Court had held that party A,otherwise having a right to cancel, may not be able to exercise that right if doing sowould allow party A to benefit from its own wrong. The Court said this could occurif either (i) the breach by party B, on which party A relies, was caused by party A'sown breach, or (ii) party A was unable or unwilling to perform its obligations underthe contract.29 The purpose of this rule has been expressed as being to ensure thatthe party in question could not benefit from its own wrong.27 Property Ventures Investments Ltd v Regalwood Holdings Ltd [2010] NZSC 47, [2010] 3 NZLR231 at [82].28 Noble Investments Ltd v Keenan (2005) 6 NZCPR 433 (CA).29 At [47]. See also Ingram v Patcroft Properties Ltd [2011] NZSC 49, [2011] 3 NZLR 433 at [40].[94] This line of cases also does not assist LCH. LCH does not suggest that JPVHwas in breach of the Agreements. No question of JPVH benefiting from its own wrongarises here.[95] The new argument advanced by LCH at the hearing of the appeal isnot arguable and does not justify refusal of summary judgment.Section 43 of the Contract and Commercial Law Act 2017One other final matter needs mention. At the hearing of the appeal before us, we askedcounsel whether it was possible for LCH to seek relief from forfeiture of the depositsunder s 43 of the CCLA (previously s 9 of the Contractual Remedies Act 1979 (CRA)),and whether that might provide an arguable defence to LCH. JPVH now says, and weagree, that relief under s 43 is not possible. This is because s 34 of the CCLA(previously s 5 of the CRA) provides that if a contract makes express provision forany of the matters to which sections 35 to 49 relate, those sections have effect subjectto that provision. Clause 26.1(b)(i) of the Agreements makes express provision forwhat is to happen to the deposits in the event that the Agreements are cancelled as aresult of a default by LCH. This prevails over any discretionary power the Court hasunder s 43.[96] And we are satisfied too, as Mr Campbell suggested, that the present case isan even stronger one of an "express provision" prevailing over s 43 than the situationthat prevailed in the decision of this Court in Garratt v Ikeda.30Conclusion[97] For all the reasons we have outlined above, we therefore agree withthe Associate Judge that LCH does not have an arguable defence to JPVH's claimagainst it for the deposits. We dismiss LCH's appeal.30 Garratt v Ikeda [2002] 1 NZLR 577 (CA).Costs[98] Costs should follow the event in the normal way. JPVH seeks an additionalallowance of one day's costs to reflect the post-hearing memoranda filed to addressthe new argument advanced by LCH at the hearing of the appeal. The way in whichthis argument was pursued added to the time involved in responding to this appeal.But the issue was capable of being addressed, and was addressed,briefly and efficiently by counsel for JPVH. We consider that an award of anadditional half day of preparation costs is warranted.Result[99] The appeal is dismissed.[100] LCH must pay JPVH costs for a standard appeal on a band A basis, with anallowance for an additional half day of preparation, and usual disbursements.Solicitors:Doug Cowan Barrister & Solicitor, Auckland for AppellantAnderson Lloyd, Queenstown for Respondent