LONG CAPITAL HOLDINGS NZ LIMITED v JACKS POINT VILLAGE HOLDINGS NO 2 LIMITED [2020] NZSC 78

LONG CAPITAL HOLDINGS NZ LIMITED v JACKS POINT VILLAGE HOLDINGS NO 2 LIMITED[2020] NZSC 78 [6 August 2020]IN THE SUPREME COURT OF NEW ZEALANDI TE KŌTI MANA NUISC 34/2020[2020] NZSC 78BETWEEN LONG CAPITAL HOLDINGS NZLIMITEDApplicantAND JACKS POINT VILLAGE HOLDINGSNO 2 LIMITEDRespondentCourt: Glazebrook, O'Regan and Ellen France JJCounsel: D J Chisholm QC and J P Nolen for ApplicantN R Campbell QC and M J Hammer for RespondentJudgment: 6 August 2020JUDGMENT OF THE COURTA The application for leave to appeal is dismissed.B The applicant must pay the respondent costs of $2,500.____________________________________________________________________REASONSForfeiture of deposits[1] The applicant and the respondent entered into two agreements under which theapplicant agreed to buy blocks of land near Queenstown from the respondent. Theagreements were materially in the same form. The applicant purported to cancel theagreements because of the non-fulfilment of a condition. The respondent rejected thispurported cancellation and itself cancelled the agreements on the basis of theapplicant's repudiation. The respondent then sued for release of the deposits paid bythe applicant. It sought summary judgment and was successful in the High Court.1The applicant appealed to the Court of Appeal, which dismissed the appeal.2Leave sought[2] The applicant now seeks leave to appeal to this Court against the decision ofthe Court of Appeal. It argues that both the High Court and the Court of Appeal erredin their interpretation of the contracts and also argues that both Courts proceeded onthe basis of a mistaken assumption of fact.Agreements[3] The blocks of land were within the Jacks Point Village development. TheCourt of Appeal said the effect of the agreement was that the respondent was sellingto the applicant the opportunity to carry out the development of two areas of the JacksPoint Village development, subject to various obligations designed to ensurecompliance with requirements applicable to the overall village development (therespondent was required to ensure that the blocks were developed within thoseparameters).3[4] The relevant provisions of both agreements were:(a) cl 20.3, which said that the agreement was conditional upon theapplicant providing the respondent with a development plan within aspecified timeframe and the respondent approving the developmentplan within a shorter specified timeframe;(b) cl 32.2, under which the applicant was obliged to provide adevelopment plan to the respondent for approval;1 Jacks Point Village Holdings No 2 Ltd v Long Capital Holdings NZ Ltd [2019] NZHC 1405(Associate Judge Johnston).2 Long Capital Holdings NZ Ltd v Jacks Point Village Holdings No 2 Ltd [2020] NZCA 102(Goddard, Brewer and Gendall JJ) [CA judgment].3 At [3].(c) cl 10.8(2), which provided that the party or parties for whose benefit acondition had been included was required to "do all things which mayreasonably be necessary to enable the condition to be fulfilled by thedate for fulfilment";(d) cl 42.1, which required each party to take the necessary steps toimplement and carry out its obligations under the agreement;(e) cl 20.5, which provided that if any of the conditions were not satisfiedby the specified time, either party could cancel the agreement;4 and(f) cl 26.1(b), which provided that if the agreement was cancelled as aresult of a default by the purchaser, the deposit would be released to thevendor. If cancellation occurred for any other reason, the deposit wasto be refunded.Development plan not provided[5] The applicant did not provide a development plan to the respondent forapproval, as required by cl 32.2. The reason for this was that it had come to the viewthat the proposed development of the two blocks was not economically viable.Court of Appeal decision[6] The Court of Appeal drew a distinction between the obligation to provide thedevelopment plan and the separate obligations to implement that plan.5 It consideredthat allowing the applicant as purchaser to decline to deliver the development plan forcommercial reasons and then cancel the agreement without any consequences wouldeffectively convert the condition in cl 20.3 into a form of due diligence clause. Itrejected an interpretation that led to that outcome.64 This was cl 20.5 in one agreement and cl 20.4 in the other.5 CA judgment, above n 2, at [54].6 At [56].[7] The Court of Appeal rejected an argument based on the decision of this Courtin Steele v Serepisos.7 The applicant argued that case supported its submission that itwas not required to submit a development plan that would be unreasonably onerous toimplement. The Court noted that Steele v Serepisos was concerned with a statutorycondition imposed by s 225 of the Resource Management Act 1991, not with acontractual condition.8 It also said the present case was not a case where the partieshad anticipated that a condition would be satisfied in a manner that subsequentlyproved impossible for unanticipated reasons outside the parties' control. There wereno unforeseen difficulties that had not been within the contemplation of the parties.9[8] The Court found that the applicant was in breach of its obligations undercls 10.8(2) and 42.1 by failing to provide a development plan. The applicant couldnot cancel for non-fulfilment of the condition to provide the development plan as thenon-fulfilment of the condition was as a result of its own default. Its purportedcancellation was a repudiation of the agreements and that entitled the respondent tocancel, which it did. The cancellation was as a result of the applicant's default, whichmeant that the respondent was entitled to the release of the deposit.10Proposed grounds of appeal and our evaluation[9] The applicant wishes to raise two arguments on appeal if leave is given.[10] The first is an argument that the Court of Appeal was wrong to conclude thatthe obligation to take all reasonable and necessary steps to submit a development planextended to steps that would have had an unreasonably onerous financial consequencefor the applicant. The obligation to provide the development plan was not an absoluteobligation, but conditional.[11] We see this issue as being simply an issue of interpretation of the bespokeprovisions of the agreement between the parties. We do not see this as raising any7 Steele v Serepisos [2006] NZSC 67, [2007] 1 NZLR 1.8 CA judgment, above n 2, at [53].9 At [55].10 At [58]–[59].issue of general or public importance or of commercial significance.11 Nor do we seeany risk of a miscarriage of justice arising if we decline leave.12[12] The second point the applicant wishes to raise is a factual one. It seeks to arguethat the High Court and Court of Appeal decisions were based on a mistakenassumption of fact. It says the Courts assumed that the applicant had a developmentplan ready to provide to the respondent but resolved not to submit it. It says this wasfactually incorrect.[13] We do not see this as a proper basis for the grant of leave for a second appeal.We do not consider that the decisions of the Courts below depended on the propositionthat the applicant had prepared the development plan but resolved not to submit it.The evidence given by the principal of the applicant, Mr Ye, was that the developmentwas not viable and no amount of refinement of the development plan could overcomethis. That was the basis on which the applicant decided not to provide the developmentplan. Whether the plan was actually completed at the time that decision was made isnot a matter that is of great significance to the outcome.Result[14] The application for leave to appeal is dismissed.[15] The applicant must pay the respondent costs of $2,500.Solicitors:K3 Legal Ltd, Auckland for ApplicantAnderson Lloyd, Queenstown for Respondent11 Senior Courts Act 2016, s 74(2)(a) and (c).12 Section 74(2)(b); Junior Farms Ltd v Hampton Securities Ltd (in liq) [2006] NZSC 60, (2006)18 PRNZ 369; and Shell (Petroleum Mining) Company Ltd v Todd Petroleum Mining CompanyLtd [2008] NZSC 26, (2008) 18 PRNZ 855 at [4]