OVERTON HOLDINGS LTD v APN NEW ZEALAND LTD [2014] NZHC 1966

OVERTON HOLDINGS LTD v APN NEW ZEALAND LTD [2014] NZHC 1966 [20 August 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2012-485-2702[2014] NZHC 1966BETWEEN OVERTON HOLDINGS LIMITEDPlaintiffAND APN NEW ZEALAND LIMITEDDefendantHearing: 21-24 July 2014Counsel: G J Harley for PlaintiffK M Quinn and S M Thompson for DefendantJudgment: 20 August 2014JUDGMENT OF BROWN JThis judgment was delivered by me on 20 August 2014at 3 pm, pursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors: Gilbert Walker, AucklandRutherford Law, AucklandCounsel: G J Harley, WellingtonK M Quinn, Auckland[1] In 2007 APN New Zealand sold its Hastings premises, which it had occupied for many years, to Overton and took a lease back. The sale agreement included clause 18 which stated that Overton relied on its own judgment in purchasing the premises. The lease proceeded satisfactorily until it was discovered in 2011 that parts of the premises are substantially earthquake-prone.[2] APN vacated the premises although it continued to pay the rent and outgoings. Overton sought to cancel both the lease and the sale on the grounds of an implied representation by APN that the premises were fit for their business use. It also claimed damages alleging a breach of clause 49.1 of the lease by APN in failing to remediate the premises.[3] Counsel considered that the following issues arose for determination:Contractual Remedies Act 1979(a) Did APN make an implied representation as alleged?(b) If so, was it false (such that it was a misrepresentation)?(c) If APN did make an implied misrepresentation, was Overton induced by that misrepresentation to enter into the Agreement?(d) Does clause 18 of the Agreement (the "purchaser's judgment"clause) preclude Overton from bringing a misrepresentation claim in any event?(e) If the answers to (a), (b) and (c) are yes, and the answer to (d) no, then to what relief is Overton entitled?Fair Trading Act 1986(f) Did APN "make a false or misleading representation concerning[] the characteristics of the land, [or] the use to which the land iscapable of being put or may lawfully be put" in breach of s 14?(g) If yes, does clause 18 defeat Overton's claim?(h) If no, was the "false or misleading representation" an effectivecause of Overton's loss?(i) If yes, to what relief is Overton entitled?Clause 49.1(j) Has APN refused to carry out the remedial work necessary for the buildings not to be categorised as Earthquake-prone?(k) If so, is such refusal a breach of clause 49.1(a) and (d) of the Lease?(l) If so, what is Overton's loss?Other(m) Was APN aware of the 2004 Vero Report at the time of the alleged representation?(n) If so, what is the significance (if any) of such knowledge for the statutory claims (CRA and FTA)?[4] In the event it has not proved necessary to address these issues in their entirety or in that precise sequence.Material factsThe sale and lease back[5] For many years prior to 2007 APN (or its predecessor Wilson & Horton) owned and occupied the commercial premises at 113 Karamu Road North, Hastings("Karamu Road"). Karamu Road comprised six buildings in four certificates of title and was occupied solely by APN for the conduct of its newspaper business. In 2007 a decision was made by APN to divest a number of properties throughout New Zealand including Karamu Road. It was APN's perception that a sale and lease backof property with APN as the tenant would generally yield a significantly better return in the medium term than a straight sale with vacant possession.[6] In conjunction with Bayleys, an information memorandum ("IM") was prepared in May 2007 giving notice of a sale by international tender with a closing date of Monday 25 June 2007. The IM stated that the property would be sold subject to a lease to APN. The term of the lease was to be five years with one right of renewal of five years and an annual net rental of $340,000. The form of the proposed lease was an appendix to the IM.[7] The IM contained a "General Policies Disclaimer" which included the following paragraphs:3. No structural survey has been made and no undertaking is given about such matters.5. Building Act 1991, Health and Safety Act 1992, Evacuation Buildings Regulations 1992 and Disabled Persons Community Welfare Act 1975.No undertaking is made that the property complies with this legislation.[8] An agreement for sale and purchase was signed between APN and a third party dated 26 July 2007 which provided for a due diligence process for a period of 15 working days from the date of the agreement.[9] On 24 August 2007 APN and Overton entered into an agreement for sale and purchase ("the Agreement") which at that point had the status of a backup agreement. The Agreement became unconditional on 27 August 2007, consequent upon the third party notifying APN that it was unable to satisfy the due diligence conditions in the first contract.[10] The Agreement stated that Karamu Road was sold subject to the grant of a lease to APN in the form and on the terms attached. The only material differences from the draft lease attached to the IM was the period of the initial term which was eight years.[11] The Further Terms of Sale in the Agreement included the following:18. Purchaser's Judgment18.1 Notwithstanding any other provision of this agreement, the vendor does not warrant the accuracy of any matter or fact in this agreement or in any particulars of sale or in any advertisement or other marketing material or of any statement made by or on behalf of the vendor, and the purchaser must verify all matters to its own satisfaction and the purchaser enters into this agreement and purchases the property in reliance solely upon its own investigations and judgment and not in reliance upon any statement or representation made by or on behalf of the vendor.[12] A Deed of Lease ("the Lease") was executed between Overton as landlord and APN as tenant dated 2 November 2007 in the same terms as that annexed to the Agreement. Clause 16.1 provided that the tenant would not, without the prior consent of the landlord, use or permit the whole or any part of the premises to beused for any use other than the business use. The business use was defined in the First Schedule to mean:Commercial offices (including newspaper and media administration) and anyother uses necessary to carry on the Tenant's business, and any usespermitted under the relevant District Plan and ordinances.[13] Additional clauses in the Second Schedule included clause 49.1 which provided in material part:Health and Safety in Employment Act 199249.1 The Tenant will comply with the Health and Safety in EmploymentAct 1992 (" the HSEA") in respect of the premises and its fit-out, fixtures and fittings, equipment and any alterations made by the Tenant in or to the premises and their use in the premises as part of a place of work including without limitation:(a) Ensuring that all significant hazards in respect of the same are identified and eliminated where practical, or isolated where elimination is impractical, or minimised where elimination or isolation is impractical.(c) Identifying possible hazards for its employees or other persons attending or in the vicinity of the premises.(d) Taking all practicable steps to eliminate, isolate or minimise hazards and ensure that people working in the vicinity of the premises are not harmed.The earthquake assessment in 2011[14] The Building Act 2004 requires all Councils to assess public buildings forearthquake resistance. Hawke's Bay is well-known for its regular earthquakes and, apparently in light of the Christchurch earthquakes, the Hastings District Council("the Council") made earthquake assessments a priority.[15] The Lease proceeded without incident until 2011 when the Council wrote to Overton on 9 May 2011 concerning the status of the buildings at Karamu Road. The Council informed Overton that its buildings had been identified as ones that required an assessment because they were constructed prior to 1976. It advised that the Council had instructed Strata Group Consulting Engineers Ltd ("Strata Group") tocarry out the assessment and prepare a report on the earthquake resistance of the buildings at Karamu Road.1[16] A further letter dated 11 May 2011 advised that the buildings had beenclassified as "Potentially Earthquake-Prone", a classification which automaticallyapplied to any building built before 1976 because the structural design codes changed significantly at that time.[17] Strata Group proceeded to carry out an Initial Evaluation Procedure ofOverton's buildings at Karamu Road. In a letter dated 11 August 2011 the Council advised Overton of the results of that initial evaluation as follows:Unfortunately the buildings listed below did not pass the threshold of 33% of new building standards (%NBS) and therefore your buildings is (sic) deemedEarthquake-prone and will be listed on Council's Earthquake-prone Buildings Register on the website. These buildings will require further investigation to be carried out.Hawke's Bay Today Main Office – 13.56%NBSHawke's Bay Today New Paper Store – 21.34%NBSHawke's Bay Today Advertising – 26.56%NBSHawke's Bay Today Old Circulation Building – 24.79%NBSThe other buildings on the site have passed the 33%NBS threshold.[18] On 27 September 2011 the solicitors for APN wrote to Overton enclosing a copy of an initial evaluation procedure which APN had commissioned. That reportassessed the building's seismic performance at 8 per cent of New Building Standardand having the lowest seismic grade "E".[19] APN requested that Overton take what it described as appropriate actions to address the risks which the buildings posed to persons and property including:Engaging an earthquake engineering specialist to provide a further and detailed seismic assessment;Undertaking all required, recommended or prudent strengthening, upgrading and other remediation work; andMonitoring.1 The letter referred to the address as 201 Queen Street East, Hastings which was another frontage of the buildings at Karamu Road.[20] The letter also made observations about Overton's alleged legal liabilityunder the Lease, the Building Act 2004 and the Health and Safety in Employment Act 1992.[21] Correspondence was exchanged between the solicitors for the parties throughout 2012. Each party took the position that it was the obligation of the other to remediate the earthquake-prone buildings at Karamu Road. APN advised that if Overton did not remediate then APN would have no choice but to relocate. For its part, Overton asserted that APN had misrepresented the property as fit for APN's usewhen APN sold Karamu Road to Overton.[22] APN vacated the property in two stages. The publishing division moved out on 31 August 2012 and the print division vacated the property on 14 February 2014. However APN has continued to pay in full the rental and outgoings under the Lease.Overton's pleaded case[23] Overton's causes of action for breach of contract and contravention of the Fair Trading Act 1986 are both based upon alleged erroneous representations by APN. The key allegations relating to both causes of action refer back to various particulars in paragraph 8 of the amended statement of claim so it is convenient to set that out in full:8. Overton and APN agreed the deed of lease (the "Lease") termssubsequently, and entered into the Lease dated 2 November 2007.Particulars:(a) the IM p 8 "property description", materially as follows:"The building is solely occupied by APN New ZealandLimited. The ground floor provides an open plan customer service and telemarketing area, General Manager's office,total of 12 perimeter offices, open plan advertising and typesetting offices, a computer room and a publishing/collating room. Also on the ground floor is a store room, a press hall, a plate making room and a paper store. The ground floor has staff amenities.The first floor provides open plan circulation offices, open plan reporter offices and four perimeter offices. Also included on the first floor are a staff cafeteria and staffamenities. The second floor provides six offices with staff amenities and the third floor provides two offices, a boardroom plus staff amenities.The main press hall, which includes room for printing, publishing and collating, was erected in 1999, while the five other smaller buildings on the site were built at variousstages prior to this."(b) Lease clause 16.1 provides that the Tenant's use of the Hastings Property as its premises is the "business use". The "business use" is defined in the First Schedule:"Commercial offices (including newspaper and media administration) and any other uses necessary to carry on theTenant's business "(c) Lease clause 47.1 provides for the Tenant's fixtures, fittingsand chattels, as listed in the Third Schedule:" the following fixtures, fittings and chattels are Printing press and all ancillary equipment (including, but not limited to, air compressors).Any other items which are identified as, or which are,the property of the Tenant."Breach of contract causes of action[24] Although collected under a single heading in the amended statement of claim, the breach of contract cause of action involves two distinct allegations. The first concerns an implied representation made by APN at the time when the Agreementwas entered into in 2007. The second concerns APN's alleged repudiation of the transaction by its conduct in 2012 in refusing to undertake remediation work allegedly required in compliance with clause 49.1.[25] Overton first alleges that by virtue of the IM, the terms of the Agreement and the draft lease, APN offered Karamu Road for sale as premises occupied by APN for the conduct of its publishing business as its business use: paragraph 23.[26] The key allegations relating to the alleged representation are contained in the following paragraphs:24. By virtue of the offered Sale and Leaseback with an initial lease term of 5 years (and renewable) (which term was made 8 years under theDeed of Lease) APN represented to Overton that the Hastings Property was suitable for its purposes as the Tenant in the conduct of its publishing business:IM p 8 describes APN's occupation and use. See firstparticular to paragraph 8.IM p 10 describes APN's Hawkes Bay Today as the regionaldaily as the "Tenant Profile".First Schedule of the Lease, description of "business use".See Second particular to paragraph 8 above.Third Schedule of the Lease, description of "tenant's fixtures, fittings and chattels". See third particular toparagraph 8 above.27. By its solicitors' advice in the correspondence referred to in thisstatement of claim, APN has confirmed that the Hastings Property is in fact now considered not fit for its business use as defined in the Lease, contradicting the representations made pursuant to the Sale and Leaseback transaction, the terms of lease, and evidencing misrepresentation to Overton, thereby being in breach of contract under the Sale and Leaseback.28. Overton was induced to enter into the Sale and Leaseback by APN'srepresentations that the Hastings Property was fit for its business use.[27] As a second and distinct allegation it is claimed that APN repudiated the sale2and the lease by refusing to carry out any remedial works sufficient to eliminate, asfar as possible, potential hazards for the safety of APN's employees in breach ofclause 49.1(a) and (d) of the Lease: paragraph 32.[28] Overton claims that it is uneconomic to repair Karamu Road to make it fit forAPN's business use or to make the affected buildings no longer earthquake-prone: paragraph 33. Overton pleads it has suffered loss in the sum of $2,400,000 by reason of those two alleged breaches of contract by APN: paragraph 34. The effect ofAPN's alleged misrepresentation and breaches of contract is said to be substantiallyto reduce the benefit of the sale and lease to Overton and to make the benefit of the sale and lease substantially different from that represented or contracted for: paragraph 35.2 In the course of the hearing Overton confined that allegation to the Lease: see [30] below.[29] The relief sought in relation to the breach of contract cause of action is:(a) Declarations that:(i) Overton is entitled to cancel the sale and leaseback;(ii) Upon Overton's cancellation of the sale and leaseback, APN isobliged to refund the purchase price to Overton;(b) Alternatively damages in the sum of $2,400,000.[30] However in the course of opening Mr Harley accepted that damages could be the only available remedy in respect of the second alleged breach which concerned only the Lease. For that breach the damages sought are $1,600,000 (plus GST)being the estimated cost of remediation as assessed by Overton's engineering expert, Mr Thompson. The damages sought in respect of the first alleged breach are calculated as follows:Purchase price of Karamu Road 4,000,000Plus cost of demolition of buildings 362,0004,362,000Less value of land post demolition 1,950,0002,412,000Fair Trading Act cause of action[31] Overton alleges that APN represented to Overton that the property was fit for its business use, citing the particulars to paragraph 8 at [23] above. In making that representation it is alleged that APN acted in a misleading or deceptive manner in contravention of s 14 of the Fair Trading Act 1986. Orders are sought equivalent to the declarations above with damages in the alternative.APN's defence[32] While there is little difference between the parties concerning the primary facts, APN denies that it made any representation to Overton that Karamu Road was suitable for APN's purposes as a tenant in the conduct of its publishing business. Itrelies on both clause 18 in the Agreement3 and clause 3 of the General Policies Disclaimer in the IM.4[33] With reference to clause 49.15 APN's position is that that clause merelyconfirms APN's obligations under the Health and Safety in Employment Act 1992("the HSEA") and does not relieve Overton of its own HSE Act obligations. Itadmits that it refuses to carry out earthquake strengthening work on Karamu Road but says that neither the Agreement nor the Lease oblige it to remediate Karamu Road so that the buildings are no longer earthquake-prone. Hence it states that its refusal to remediate does not constitute a repudiation of the Agreement or the Lease.Affirmative defence - limitation[34] While denying the alleged contravention of s 14 of the Fair Trading Act, APN also raises an affirmative limitation defence on the grounds that the Agreement and the Lease were entered into in 2007 more than five years prior to the commencement of the proceeding.[35] It contends that it was standard practice in the market for intended purchasers of commercial property to undertake due diligence on the condition of any building included in the property, which due diligence would include a structural survey. It states that, if Overton had commissioned a structural survey of Karamu Road, that would have revealed the structural problems with the buildings and hence the loss or damage complained of by Overton ought reasonably to have been discovered at or around the time of the purchase. Hence it is pleaded that the claim is statute-barred by reason of s 43(5) of the Fair Trading Act.Overton's reply[36] Overton filed a reply in which it alleged that APN was aware from at least June 2004 from a report from its insurer, Vero, that the buildings at Karamu Road were considered by Vero to have an earthquake risk assessment with a probability"high" and a consequence "high". In response to APN's limitation defence, Overton3 At [11] above.4 At [7] above.5 At [13] above.stated that it did not know whether a structural survey would have necessarily revealed structural problems but alleged that APN was itself aware of the structural problems from at least June 2004 by way of the Vero report, the contents of which were said to have been affirmed by Vero in a subsequent report dated 30 August 2007.Did APN make an implied representation?[37] It was common ground that APN did not made any express misrepresentation. Rather it was Overton's case that there was an implied representation that Karamu Road was fit for APN's business use, being the use stated in the draft lease annexed to the Agreement.6Overton's argument[38] Overton acknowledged as the starting point that, subject to any express provisions in a contract for the sale and purchase of land, the buyer takes the risk of any defects in the property, citing the following passage from McMorland's Sale of Land:7The basic rule is caveat emptor; the onus lies on the purchaser to ensure that the property being bought meets their requirements. There is no duty of disclosure in respect of matters of quality or use of land. Unless the property is being bought from the builder while the building is in the course of construction, there is no implied warranty that the building has any particular quality or fitness for any particular purpose. In the absence of any actual misrepresentation or express or implied warranty, the vendor incurs no contractual liability for failure to disclose defects of quality, whether patent or latent, whether rendering the property dangerous or unfit for occupation, or even if the vendor has created the defect or is aware of its existence, though the vendor may not deliberately conceal a defect.[39] However Overton contended that the general rule did not apply in the context of the composite sale and lease back transaction. The thrust of its case is captured in the following paragraph from its opening submissions:29. Overton's case depends on establishing that APN representedpursuant to the Sale and Leaseback transaction – that it was implicit6 At [12] above.7 Don McMorland Sale of Land (3rd ed, Cathcart Trust, Auckland, 2011) at [8.16(1)]; Reference was also made to Bottomley v Bannister [1932] 1 KB 458 (CA) at 468, McKey v Rorison [1953] NZLR 498 (CA) at 514 and several subsequent New Zealand decisions.within the terms of that composite – that the Hastings Property wassuitable for and was in fact used for, APN's purposes as tenant in theconduct of its publishing business and that such was inherent or implicit in the subject matter of the transaction. Overton would not have entered into the transaction had it known that the Hastings Property was not so suitable and APN could not have sold on any other basis. The continuity of business use in the leased premiseswas a fundamental part of the parties' commercial purpose. That,generally, is the very nature of Sale and Leaseback transactions (theleaseback reflecting the vendor's current use of the premises).[40] Particular reliance was placed on Gabolinscy v Hamilton City Corporation8where the plaintiff had purchased bare land from the Council and was obliged under the sale and purchase agreement to erect a dwellinghouse within two years. The Court held that in those circumstances the Council implicitly warranted that the landwas suitable for the erection of a dwellinghouse. It was submitted that Overton'sclaim in contract against APN similarly rested on the nature of what was implicit in the IM, the Agreement and the Lease.[41] It was said that "properly understood, Gabolinscy is on "all fours" in principle with Overton's contractual claim". In Gabolinscy the implied warranty was required to facilitate the use to which the purchaser was obliged to put the property as part of the transaction. In the present case the "implicit term" of the sale and lease back was as to APN's (as vendor/tenant) continuity of "business use" ofthe property. Hence the two cases were said to be "not factually distinguishable in principle".[42] The same key point was expressed in a number of different ways: referencewas made to the parties' common assumption as to the factual continuity of business use; it was said that the principle of "buyer beware" does not relieve APN of itsobligation to convey the property contracted for as defined in the Lease;9 there was said to be mutuality of consideration between the parties in that Overton would never have purchased Karamu Road but for APN's continued "business use".8 Gabolinscy v Hamilton City Corporation [1975] 1 NZLR 150.9 Reliance was placed on Lord Wilberforce's speech in Suisse Atlantique Société d'ArmementMaritime SA v NV Rotterdamsche Kolen Centrale [1969] 1 AC 361 (HL) at 429.[43] Indeed the submission was made that the implicit term of the sale and leaseback as to APN's continuity of business use of Karamu Road was obvious asreflected in the following paragraph in the opening:35. It was inherent in the Sale and Leaseback that APN would lease the Property for the initial term of 8 years, subject to the terms and conditions of the Lease. That did not require APN as vendor to make any explicit representation to Overton as purchaser about thefitness of the Hastings Property for the purposes of APN's business.Rather, the IM description as relevant background and Leaseback,embodied in the composite transaction, said everything as APN'sown documents clearly record. In contract, some aspects are obvious because they are implicit. It is not necessary to say that a"car" is a motor vehicle, that has doors or wheels or an engine, and is used to carry people.APN's response[44] APN's defence rested squarely on the general rule,10 relying in particular on the statements of principle in Edler v Auerbach,11 Hills v Harris12 and Southwark London Borough Council v Mills.13 It argued that Gabolinscy, which it noted primarily concerned a negligence claim, was not on point for two reasons. First, it involved an implied warranty, not an implied representation. Secondly, it was the Corporation which had filled and subdivided the land thereby itself creating the problem. The extent of any exception to the general rule established by Gabolinscywas said to be that, where a ground lease specified that a lessee must undertake building works, there is an implied term that the land is fit for building purposes.[45] APN analysed Overton's case as turning on two special circumstances: firstthat APN had owned and occupied Karamu Road for many decades and had used it for its business purposes; secondly, that APN had agreed to take a lease for the purpose of continuing to operate its newspaper business.[46] If that first factor was sufficient, then in APN's submission every sale by avendor who had used a property for a particular purpose would give rise to a representation that the property was fit for that purpose. So far as the second factor10 At [38] above.11 Edler v Auerbach [1950] 1 KB 359 at 374 per Devlin J.12 Hills v Harris [1965] 2 QB 601 (CA) at 614-615 per Diplock LJ.13 Southwark London Borough Council v Mills [2001] 1 AC 1 (HL) at 12 per Lord Hoffmann.was concerned, it submitted that virtually all leases contain a description of theintended business use from which the tenant cannot depart without the landlord'sconsent. However that does not justify a derogation from the general rule of caveat lessee.[47] APN argued that since Gabolinscy, New Zealand courts have been extremely reluctant to find special circumstances justifying a departure from caveat emptor. It drew attention to decisions of the High Court finding that there was no implied term as to fitness for purpose or structural soundness even where the vendors constructed the building themselves14 and knew of the defects.15[48] Mr Quinn placed particular reliance on Balcairn Guest House Ltd v Weir,16submitting that it was squarely at odds with, and was not cited in, Gabolinscy. Mr Weir had run his premises as a guest house and made alterations which did not conform to the stipulations laid down by the Wellington City Corporation. Mr Weir leased the premises to Mr McConville for a term of five years to be used in the business of a guest house. Balcairn Guest House Ltd purchased Mr McConville'sinterest in the lease and went into occupation of the premises for the purposes of carrying on the guest house business. Shortly afterwards the Wellington City engineer issued a requisition in respect of the premises.[49] In finding for Mr Weir Leicester J followed the general rule in Edler v Auerbach17 in concluding that, where premises are leased to a lessee expressly for use as a guest house and the lease contains covenants forbidding the use for any other purpose without the consent of the lessor, there is not to be implied against the lessor a covenant or warranty that such premises are fit for the purpose for which they are required to be used.[50] The point was also made that the proposition, that an agreement to take a lease should somehow imply a representation as to fitness for purpose, could not survive the express wording of the draft lease in clause 40.1:14 Morton v Douglas Homes Ltd [1984] 2 NZLR 548 (HC).15 Watkin v Wilson [1985] 1 NZLR 666 (HC).16 Balcairn Guest House Ltd v Weir [1963] NZLR 301 (SC).17 Edler v Auerbach, above n 11.Suitability40.1 NO warranty or representation expressed or implied has been or is made by the Landlord that the premises are now suitable or will remain suitable or adequate for use by the Tenant or that any use of the premises by the Tenant will comply with the by-laws or ordinances or other requirements of any authority having jurisdiction.Overton's riposte[51] In Overton's submission APN failed to confront the fact that the transactionwas not simply a sale of land with buildings, nor was it simply a lease of land with buildings: it was both. The owner/vendor became the lessee/tenant and it had prescribed its own terms of sale and of continued occupancy.[52] Overton emphasised that none of the cases cited by APN approximated the particular circumstances of the present case. As Overton put it in closing:32. There is a basic difference here, on these facts. APN was the owner/occupier, and its sale was conditional on the leaseback – the terms of which it defined. The transaction was effected to provide for a seamless continuity of business, at the Hastings Property –already fitted out and used for that business purpose. The IM as background provided an historical narrative as to the business being conducted at the point of sale. The transaction is therefore not thesame as a "sale of commercial property", "entry into a lease" or the "sale of property subject to an existing lease".[53] Overton eschewed the proposition that Gabolinscy is an exception to the general rule. Whereas a sale of a house property involves no reciprocal obligation imposed on the new owner to take any step, Gabolinscy is different because of the obligation on the purchaser to erect a dwellinghouse. While the obligations inGabolinscy and the present case were different in detail and specificity, it wasOverton's contention that they were not different in principle.Analysis[54] One can understand why Overton would make the assumption that APN had no concerns about Karamu Road in view of the fact that APN was prepared to commit to an eight year lease. That assumption was apparent from the evidence of Mrs Stirling:Q. If you think in terms of earthquake resistance of the buildings at the Hastings property, what do you say APN was impliedly representing to Overton back in 2007?A. Sorry, could you repeat that to my understanding.Q. Sure. If you think in terms of earthquake resistance of the buildings on the property, what do you say that APN was impliedly representing to Overton back in 2007?A. Well I would assume they're saying they're okay.Q. Well in terms of percentage of NBS, where would you put "Okay?"A. But you're talking about in 2007 when nobody was thinking of NBS.If you're talking about it now I would look at it differently but 2007 I don't – I'm assuming they're thinking it's okay. They're preparedto stay in the building, take a lease back.[55] That was followed a short time later by the following exchange:Q. You understand that it's a key element of Overton's case that therewas an implied representation made by APN to Overton that induced Overton to buy the property?A. Mmm.Q. Right?A. Yes.Q. Do you say that that implied representation had a structural element to it?A. Well ultimately yes because why would APN stay on in the building unless they thought it was safe.Q. So what was the implied representation that they were making as to structure?A. That they were prepared to do a lease back.[56] Plainly Overton made an assumption about the state of the premises from the fact that APN was prepared to take a lease. But there is a critical distinction between the making of an assumption on the one hand and being the recipient of arepresentation on the other. Overton's case is that in offering to sell the property and to take a lease back, the terms of which contained a clause specifying the business use, APN made an implicit representation about the state of the premises.[57] Mr Harley is indeed correct that none of the authorities cited for APN concern the particular scenario of a composite sale and lease back. Balcairn is plainly not the same as the present case because there was no transfer of the property. Mr Weir ceased to operate the guest house business himself and became the landlord of the premises from which the lessee (initially Mr McConville and subsequently Balcairn Guest House Ltd) operated the business. It was in his capacity as lessor that it was contended that Mr Weir made the representation.[58] The present case is different. The implied representation is said to have been made by the vendor/lessee-to-be. It does not involve a representation made by the lessor. So while APN relies on the general rule of caveat lessee, it is actually mounting an argument to the effect of caveat lessor. Hence Hill v Harris18 is not on point. Similarly I do not consider that clause 40.1 relied upon by APN has relevanceeither. That clause is for Overton's protection.[59] However I do not accept Overton's submission that Gabolinscy governs this case. It was there held that the totality of the circumstances warranted a departure from the general rule that warranties as to the quality of land sold or leased are not to be implied. That totality of circumstances was described by Moller J in this way:Not only was it clearly known to the council that the plaintiffs were purchasing the land for housing purposes, but also the council, both by thecontents of the "particulars and conditions of lease by public application"and by cl 4 of the lease itself, specifically required the plaintiffs to use it for that purpose and to build upon it a house of certain standard within a specified time. Consequently I hold that a warranty of the type pleaded is to be implied in the present case and that there was a breach of it. The defect was of a nature which the plaintiffs could not have been expected to discover by reasonable examination.[60] I do not consider that there is a close parallel between the totality of circumstances in Gabolinscy and the scenario in the present case. Indeed, as Mr Harley acknowledged in the course of argument, nothing turns on someparticular set of circumstances specific to this sale and lease back. Rather, Overton'scontention rests on the general factual scenario of a composite sale and lease back where the lease contains a provision specifying a business use of the nature which the vendor/lessee-to-be has conducted for several years.18 At n 12 above.[61] I do not consider that the fact that the lease contains a description of the particular permitted business use, or that such use is the same as that previously pursued by the vendor, is a material element. What has impressed Overton, and caused it to make the assumption referred to above, is the willingness of APN to continue in occupation; what was described as the continuity of business use of the property.19 The utility for Overton of the business use provision in the Lease is really no more than a convenient coat hook to assist in framing the allegation as to the content of the representation.[62] As I see it, the issue may be distilled in this manner: does the conduct of a vendor, in taking a lease back, warrant a departure from the basic rule of caveat emptor acknowledged by Overton to be the starting point?20 In my view the answer is no. I do not consider that there is anything in that scenario to warrant a different outcome from a situation when a vendor transfers a property absolutely or where an owner of property grants a lease in respect of that property.[63] Consequently, in my view the fact that APN was prepared to take a lease for a significant period for a specified business use, which was of the same nature as that previously conducted at the premises, does not, without more, amount to an implied representation that the premises are fit for that business use. There is nothing in that generic set of circumstances which suffices to oust the general rule.[64] However there is a further feature of this case which is fatal to the misrepresentation claim. The misrepresentation which APN is alleged to have made is that Karamu Road was fit for its business use. As noted above it is plain that Overton frames the alleged misrepresentation in that way because of the business use definition21 in the Lease, a draft of which was annexed to both the IM and the Agreement.[65] Yet, as Mr Harley properly acknowledged, Overton's complaint is not simplythat the premises are not suitable for the particular business use of APN specified in the Lease. Rather its complaint is that the premises are unsuitable for any business19 At [39] and [41].20 At [38].21 At [12] above.purpose by reason of the buildings not being structurally sound. Hence the true tenor of the alleged misrepresentation is that Karamu Road was structurally sound and to that extent fit for any business purpose.[66] Once the true nature of the alleged misrepresentation is discerned, Overton encounters the difficulty that the IM contained a specific disclaimer making clear that no undertaking was given as to the structural soundness of the premises.22 Any inference to be drawn from the business use definition in the Lease must be read in that light.[67] Whatever else Overton may have considered could reasonably be inferred from the fact of APN being prepared to take a lease incorporating that business use definition, in the light of clause 3 in the disclaimer Overton could not fairly proceed on the basis that that business use definition extended to a representation concerning the general structural soundness of the premises. Whatever else Overton may haveassumed, it was not justified in making an assumption as to APN's view of thestructural soundness of the premises.[68] Consequently I find that APN did not make the implied representation alleged. However even if, contrary to my view, APN made an implied representation in the manner pleaded, that is that Karamu Road was fit for the particular specified business use, in view of clause 3 any such representation could not extend to the structural soundness of the premises.Did the implied representation induce Overton to enter the Agreement?[69] Assuming that a misrepresentation was made, Overton cannot succeed unless it is shown that the misrepresentation induced it to enter the Agreement. It was a common law principle that the representation should be understood in the sense in which the representee reasonably understood it. The authors of Law of Contract in New Zealand23 note that that has been held to apply under the Fair Trading Act24 and they suggest that, in accordance with the usual objective approach of the law of22 At [7] above.23 John Burrows, Jeremy Finn and Stephen Todd Law of Contract in New Zealand (4th ed LexisNexis, Wellington, 2012) at 400.24 Lawton v Norcross (2009) 9 TCLR 338 (HC).contract, presumably it would also apply under s 6 of the Contractual Remedies Act 1979.[70] In my view clause 3 provides the answer to this question. It is clear that Mr Rockefeller received a copy of the IM.25 It is plain from clause 3 that APN gave no undertaking as to the structural sufficiency of the buildings. In view of thatdisclaimer, the term of the draft lease relating to APN's business use could not reasonably have been understood by Mr Rockefeller as a representation that the buildings were structurally sound or at least not earthquake-prone. Consequently, the alleged misrepresentation cannot have induced Mr Rockefeller to purchase Karamu Road.Is the 2004 Vero Report significant?[71] Consistent with the position taken in its Reply,26 Overton opened on the footing that at the date of the Agreement APN had corporate knowledge that some of the buildings at Karamu Road were earthquake-prone. That knowledge was said to derive from the 2004 Vero Report. That document was an insurer's reportcomprising 13 pages with three pages of floor layouts. The purpose of the report appears to have been to identify hazards at Karamu Road, make risk assessments and recommend risk improvements.[72] The only reference to earthquakes was in the single page documenting the risk assessments under seven headings: Fire/explosion, security, earthquake,volcanic, flood, meteorological and "other". Relevantly the report said:EarthquakeThe site is located within in (sic) Cresta Zone 8, which is regarded by seismologists as having a mean average return period of 480 years for earthquakes of intensity MM9 and 2000 years for MM10 (modified Mercalli scale) intensity.Hastings suffered a major earthquake in 1931. We understand that Karamu Road corner first floor collapsed and there was a staff fatality.Earthquake Risk Assessment: Probability (High) – Consequence (High)25 Mr Harley very fairly stated from the Bar that the IM was found in Mr Rockefeller's papers.26 At [36] above.There was no recommendation specific to earthquakes in the subsequent page detailing the recommended risk improvements.[73] I agree with APN's submission that the 2004 Vero Report, which wasprepared by an insurance assessor and not an engineer, makes no relevant statement about the structure of the buildings at Karamu Road which would lead anyone to believe or even suspect that they were earthquake-prone. As Mr Quinn noted, APN continued to use the premises and Vero continued to insure them.[74] Consequently I do not accept that as a consequence of the 2004 Vero Report APN had corporate knowledge that parts of the premises were earthquake-prone. The 2007 Vero Report does not advance the matter for Overton because its date was 30 August 2007, which was six days after the Agreement was executed and three days after the Agreement became unconditional.27 In any event the 2007 Report didnot add significantly to the 2004 Report, stating under the heading "Perils":EarthquakeHastings is located in one of New Zealand's highest risk areas forearthquake. In 1931, New Zealand's deadliest earthquake, magnitude 7.8,devastated the cities of Napier and Hastings. The (sic) resulted in the death of over 250 people in the region and caused substantial property losses.The modern parts of the building have steel frames and would prove more resilient. However there is still likelihood of damage or misalignment to the press. Older sections of the building could be more susceptible to damage. Peril regarded as moderate-high.Does clause 18 preclude Overton from bringing a misrepresentation claim?[75] APN argued that, even if there was a representation regarding structure/business use which amounted to an inducement to Overton to enter the Agreement, Overton was precluded by clause 18 from relying upon that representation.[76] Emphasising that clause 18 is a non-reliance clause rather than an exception clause, it submitted that non-reliance clauses are addressed by s 4(1) of the Contractual Remedies Act 1979 which states:27 At [9] above.If a contract, or any other document, contains a provision purporting to preclude a Court from inquiring into or determining the question—(a) Whether a statement, promise, or undertaking was made or given, either in words or by conduct, in connection with or in the course of negotiations leading to the making of the contract; or(b) Whether, if it was so made or given, it constituted a representation or a term of the contract; or(c) Whether, if it was a representation, it was relied on—the Court shall not, in any proceedings in relation to the contract, be precluded by that provision from inquiring into and determining any such question unless the Court considers that it is fair and reasonable that the provision should be conclusive between the parties, having regard to all the circumstances of the case, including the subject-matter and value of the transaction, the respective bargaining strengths of the parties, and the question whether any party was represented or advised by a solicitor at the time of the negotiations or at any other relevant time.[77] It submitted that non-reliance clauses are common in commercial contracts, drawing attention to the comments of the Court of Appeal in Brownlie v Shotover Mining Ltd:28There can be nothing inherently unfair in such an exclusionary clause. It is highly desirable that written contracts should be so drawn as to state all the terms of the intended contract, and so avoid the uncertainties which can arise from allegations of verbal representations or collateral warranties. If parties have not agreed to include express warranties in their written contract, then it is reasonable for them to state expressly that verbal warranties are excluded.[78] APN contended that in this case all the factors which the Court must consider pointed towards the clause being conclusive. The contract concerned the purchase of a commercial property for $4 million. There was no inequality in the respective bargaining strengths of the parties: the evidence of Mr Bailey, Mr Houlker and Ms Sterling all established that Mr Rockefeller was a well-known, experienced investor in commercial property. While Overton was not represented by an external lawyer at the time of contracting, Mr Rockefeller was legally qualified.[79] The clause was not of a standard form. On the contrary, it was contained in the Further Terms of Sale and was readily visible, being located immediately28 Brownlie v Shotover Mining Ltd CA 181/87, 21 February 1992 at 31-32.following the clause establishing the obligation for the lease back. The misrepresentation (if made) was innocent and not fraudulent or deliberate.[80] In response to APN's reliance on clause 1829 Overton drew attention to the approach to the interpretation of exclusion clauses in DHL International (NZ) Ltd v Richmond Ltd.30 It is argued that the scope of the exclusion could not operate against what was the implicit representation in the contract itself. As Overton put it:Overton's legal proposition, as a matter of contract law principle, is that thescope or meaning of an exclusion clause cannot extend or operate in a way that contradicts the true meaning of the terms of the contract itself, particularly as here regarding the true meaning and nature of the HastingsProperty as in "business use" being sold or conveyed.[81] APN countered that the "peas/beans" concept and the case law relied upon byOverton were applicable in relation to exclusion clauses, namely those which purportto exclude or limit a defendant's liability for breach of contract or formisrepresentation. APN distinguished such clauses from non-reliance clauses, adopting the analysis of Hoffmann LJ in William Sindall Plc v Cambridge Shire County Council31 that non-reliance clauses do not exclude a liability for misrepresentation but go to the question of whether there was a misrepresentation in the first place.[82] APN also invoked the observations of the Court of Appeal in PAE (New Zealand) Ltd v Brosnahan:32The parties were agreeing, in unequivocal terms at PAE's instigation, thatwhat the directors had said and done before the agreement no longer mattered. Effectively, they drew down the curtain of liability, excluding from it all preceding conduct. By this means, they also broke the chain of causation: s 43 FTA; David at [63].[83] I accept the submission that clause 18 is fairly characterised as a non-reliance clause. Consequently I do not adopt the analysis advanced by Mr Harley that clause 18 cannot be used to permit APN to convey what Overton did not agree to29 At [11] above.30 DHL International (NZ) Ltd v Richmond Ltd [1993] 3 NZLR 10 (CA) at 17. Reference was also made to Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444.31 William Sindall Plc v Cambridge Shire County Council [1994] 1 WLR 1016 (CA) at 1024.32 PAE (New Zealand) Ltd v Brosnahan (2010) 9 NZBLC 102,862 at [46].buy. I also agree with APN's analysis of the s 4(1) factors recorded at [78]. The circumstances of this case are such that in my view it is fair and reasonable that clause 18 should be able to be deployed by APN to defeat a claim that it made an implied misrepresentation.Did APN make a false representation in contravention of s 14 of the Fair Trading Act?[84] Section 14 addresses both false representations and other misleading conduct in relation to land. Section 14(1) relevantly provides:(1) No person shall, in trade, in connection with the sale or grant or possible sale or grant of an interest in land or with the promotion by any means of the sale or grant of an interest in land,—(a) (b) make a false or misleading representation concerning the nature of the interest in the land, the price payable for the land, the location of the land, the characteristics of the land, the use to which the land is capable of being put or may lawfully be put, or the existence or availability of facilities associated with the land.[85] Whether conduct is assessed as misleading depends upon the context including the characteristics of the person said to be affected. Conduct towards a sophisticated businessman may be less likely to be objectively regarded as capable of misleading or deceiving such a person than similar conduct directed towards a consumer.33[86] APN submitted that in a commercial context, where a party has not made an express representation, the courts are reluctant to imply a misleading misrepresentation from conduct or an omission to disclose information. Reliance was placed upon Des Forges v Wright34 where, in the absence of an express warranty or representation, Elias J declined to find a misrepresentation either by implication orby the respondents' innocent failure to disclose Affco's decision to shut down afactory. Her Honour held:3533 Red Eagle Corporation Ltd v Ellis [2010] NZSC 20, [2010] 2 NZLR 492 at [28].34 Des Forges v Wright [1996] 2 NZLR 758 (HC).35 At 764-765.Some caution is perhaps proper in cases of commercial dealings between parties at arm's length. Section 9 is not to be turned into a general warranty by the vendor of the expectations of the purchaser The Fair Trading Act isnot designed to provide a guarantee to purchasers who fail to look after their own interests in a manner which is reasonable in the circumstances.[87] For essentially the same reasons that applied in relation to the first of the breaches of contract cause of action, I find that there was no implicit representation, either in the terms as pleaded36 or of the true tenor that Karamu Road was structurally sound.37[88] APN also sought to deploy clause 18 in relation to the Fair Trading Act cause of action. While it recognised that the courts have long held that it is not possible to contract out of the FTA, for to do so would be contrary to the statute's consumer protection policy, it relied upon the observations of the Court of Appeal in David v TFAC Ltd:38While that justification has force in relation to consumer transactions, it has less force in the context of commercial transactions involving substantial independently advised parties negotiating from positions of equality. In thelatter case, any resulting contract can be expected to reflect the parties'wishes as to the allocation of risk and it is difficult to see why they should not be permitted to allocate risks between them by contracting out of the FTA.[89] Similarly in PAE (New Zealand) the Court of Appeal considered that there was nothing in the agreement and its particular commercial context which was contrary to public policy or to the underlying purpose of the FTA.39[90] I accept APN's submission. In the context of a commercial transaction of thepresent kind and in the light of the circumstances recited in the discussion of s 4(1)40it is appropriate that clause 18 should be able to be invoked to avoid liability under s 14.[91] However, if I had come to a different conclusion on either the subsistence ofa s 14 representation or APN's entitlement to invoke clause 18, I would not have36 At [31] above.37 At [65] above.38 David v TFAC Ltd [2009] NZCA 44, [2009] 3 NZLR 239 at [61].39 PAE, above n 32 at [46].40 At [78] above.upheld APN's limitation defence under s 43(5). The evidence did not satisfy me that it was standard practice in 2007 for an intending purchaser of a commercial property to obtain a structural survey as part of a due diligence exercise.[92] Nor did the evidence establish to my satisfaction that, if a structural survey had been commissioned, the earthquake-prone nature of the buildings would necessarily have been identified. I consider that a significant degree of hindsight underpins those contentions.Was APN's refusal to remediate a breach of clause 49.1?A pleading issue[93] APN takes objection to the manner in which the second alleged breach of contract was raised in the statement of claim. It notes that Overton has not pleaded a breach of the Lease giving rise to a claim for damages but rather that the failure to remediate was a breach of the Lease constituting repudiation of the Agreement. It submits that it is not apparent how a breach of the Lease could amount to a repudiation of, or even a breach of, the Agreement.[94] I recognise that the way in which the second alleged breach of contract is raised is unsatisfactory. It concerns an alleged breach of the Lease some four years after the alleged pre-contractual misrepresentation which is the basis of the claim for cancellation of the Agreement. It should have been the subject of a discrete cause of action with a discrete prayer for relief tied to the nature of the substantive allegation.41[95] As noted above42 Mr Harley acknowledged in the course of opening that the relief sought in respect of the second alleged breach of contract was necessarily confined to damages for breach of the Lease. I further note that in the course of settling the list of issues at [2] Mr Harley recognised that, as a consequence of issue (k) making reference only to the Lease, there was an implicit amendment to41 High Court Rule 5.27(2).42 At [30].paragraph 32 of the amended statement of claim to delete any allegation of a repudiation of the sale.[96] However the thrust of the allegation in paragraph 32 was raised at the outset, being formerly found in paragraph 31 of the initial statement of claim. While APN may have been puzzled as to its status, APN has been on notice of the essence of the complaint from the commencement of the proceeding. Indeed I note that the original statement of issues provided to Associate Judge Doogue43 included an issue of whether APN had repudiated the Lease.[97] While I accept that there is validity in APN's complaint about the adequacyof the pleading on this issue, the substance is plain enough. Consequently, it would not be appropriate to decline to address the substance of the complaint in this judgment.Overton's contention[98] Overton submits that the HSEA places a mandatory statutory obligation onAPN being the person "in control" of the place of work under the Lease. While acknowledging that clause 49.144 is awkwardly drafted and is difficult to reconcilewith some other provisions of the Lease, for example clause 21.1, it is Overton'ssubmission that its meaning is clear enough.[99] The effect of the clause is said to be to require APN to take all practicable steps to ensure that the premises at Karamu Road were suitable as a place of work for HSEA purposes. As such, clause 49.1 imposes an obligation on APN to identify and eliminate all significant hazards in the work place where practicable, forOverton's benefit, with the consequence that APN is required to undertake the strengthening of the premises at the estimated cost of $1.6 million.[100] Overton contends that clause 49.1, being specific as to the HSEA obligation, must prevail over the general provision in clause 21. It submits that APN's vacation43 Minute dated 6 August 2013.44 At [13] above.of the premises early and the removal of its employees during the Lease term is contrary to the purpose of the clause and does not discharge APN's liability under it.APN's contention[101] APN first argues that clause 49.1 must be read as subject to clause 21 which expressly provides that APN is not obliged to make any structural repairs or to undertake works of a capital nature. It states:Compliance with Statutes and Regulations21.1 THE Tenant shall comply with the provisions of all statutes, ordinances, regulations and by-laws relating to the use of the premises by the Tenant or other occupant and will also comply with the provisions of all licences, requisitions and notices issued by any competent authority in respect of the premises or their use by the Tenant or other occupant PROVIDED THAT:(a) The Tenant shall not be required to make any structural repairs alterations or additions or carry out improvements or upgrading of the building or building services or other works of any kind of a capital nature nor to replace or install any plant or equipment except where required by reason of the particular nature of the business carried on by the Tenant of the premises or the number or sex of persons employed on the premises; and(b) The Tenant shall not be liable to discharge the Landlord's obligationsas owner under the Building Act 2004 unless any particular obligation is the responsibility of the Tenant as an occupier of the premises.[102] Clause 49.1 obliges APN to comply with the HSEA in respect of its "use in the premises as part of a place of work". APN submits that it has complied with itsHSEA obligations by removing its staff and operations to safe premises and that the clause no longer applies since APN has vacated Karamu Road. It says that there is no obligation either in clause 49.1 or elsewhere in the Lease for APN to continue to use the property. There is only an obligation to continue to pay rent and outgoings which APN has done and is continuing to do.[103] It further argues that not only does its construction of the clause accord with common sense but also that it would be a bizarre conclusion that it was the parties'intention that, in the event of structural soundness issues arising, the tenant's onlyway of complying with clause 49.1 would be by the expenditure of a sumsignificantly in excess of a million dollars in structural repairs rather than by simply vacating the property. The bizarre consequence is said to be magnified in a scenario in which the structural problems only come to light close to the end of a lease.Analysis[104] The HSEA adopts a preventive approach to maintaining and promoting health and safety in the workplace, its principal object being to provide for the prevention of harm. The Act does not adopt a prescriptive approach to the duties of those made responsible for safety in the workplace. Rather it provides a comprehensive set of general principles but leaves the detail of acceptable practices to be worked out and implemented by regulations and codes of practice within the various industries:Central Cranes Ltd v Department of Labour.45[105] Those general principles, so far as they concern the duties of employers in relation to hazard management, are found in ss 7-10 which focus upon the identification, elimination, isolation and minimisation of hazards. The essence of those obligations is echoed in clause 49.1(a), (c) and (d).[106] Hazard is defined in s 2 as follows:hazard—(a) means an activity, arrangement, circumstance, event, occurrence, phenomenon, process, situation, or substance (whether arising or caused within or outside a place of work) that is an actual or potential cause or source of harm; and(b) includes—(i) a situation where a person's behaviour may be an actual or potential cause or source of harm to the person or another person; and(ii) without limitation, a situation described in subparagraph (i) resulting from physical or mental fatigue, drugs, alcohol, traumatic shock, or another temporary condition that affectsa person's behaviour.45 Central Cranes Ltd v Department of Labour [1997] 3 NZLR 694 (CA) at 701.Section 46A makes provision for the giving of hazard notices describing a hazard identified in a place of work.[107] While "hazard" is certainly broadly defined, I do not consider that it extends to include the status of a building as being earthquake-prone. Earthquake-prone buildings are addressed in the Building Act 2004 and are the subject of their own notice procedure concerning the reduction or removal of the danger posed by such a building. I do not consider that Parliament intended that buildings which are so affected should be the subject of parallel statutory processes under the HSEA as well as under the Building Act.[108] Consequently I do not consider that the inclusion of clause 49.1 in the Lease imposed any obligation on APN to take steps to remediate Karamu Road given my view that the earthquake-prone nature of the buildings is not a hazard as defined in the HSEA.[109] Even if an earthquake-prone building is a hazard under the s 2 definition, I do not consider that clause 49.1 should be construed as applying to the structural integrity of the buildings. What the clause states is that APN will comply with the stated duties in respect of "the premises and its fit-out, fixtures and fittings, equipment and any alterations made by the Tenant in or to the premises". In myview clause 49.1 is limited to a tenant's partitioning and fit-out and does not extend to impose any obligation on APN in relation to long-existing structural deficiencies in the buildings.[110] My view as to the proper scope of clause 49.1 is supported by the presence in the Lease of several clauses which specify that APN has no obligation in relation to upgrading work or structural repairs to the premises.[111] The definition of outgoings in the First Schedule, which APN is required to pay in accordance with clause 3.1 of the Second Schedule, includes the following:7. Cleaning, maintenance and repair charges are provided by any express provisions of the Second Schedule to this lease, but (for the avoidance of doubt) excluding charges for (inter alia):(a) external maintenance;(b) structural repairs to the building; and(c) replacement or major renovation of building services.13. The costs incurred and payable by the Landlord in supplying to the territorial authority a building warrant of fitness and obtaining reports as required by sections 108 and 110 of the Building Act 2004, but (for the avoidance of doubt) excluding any costs of upgrading or other work to make the building comply with the Building Act 2004.[112] In the interpretation clause 46.1, the definition of "structural repair, alteration or addition" was amended to delete the exclusion of building services and insert the phrase "and includes the replacement or major renovation of building services".That is consistent with the amendment to clause 21.1 (above) to add the words "orcarry out improvements or upgrading of the building or building-services or otherworks of any kind of a capital nature".[113] Clause 8.4 provides:8.4 NOTWITHSTANDING any other provision of this lease, the Tenant shall not be liable to repair any inherent defect in the premises or theLandlord's fixtures and fittings nor to pay any outgoings incurred bythe Landlord in remedying any inherent defect.[114] Clause 49.1 is to be construed in the context of those several provisions. Furthermore I consider that the clause is also to be construed against the background of the statement in clause 5 of the IM disclaimer that no undertaking was made that the property complied with, among other statutes, the "Health and Safety Act 1992"and clause 3 to the effect that no structural survey had been made. In thosecircumstances clause 49.1 cannot reasonably bear the construction that APN's HSEAobligation extended to the expenditure of such a significant sum in the remediation of the premises to remove structural unsoundness. To conclude otherwise would be inconsistent with business common sense.46[115] In support of its interpretation Overton relies again upon the fact of the composite sale and lease back and what it describes as "the essence of APN's continued business use". Finally, and with reference to the IM disclaimer, Overton46 Boat Park Ltd v Hutchinson [1999] 2 NZLR 74 (CA) at 82.invokes the contra proferentem rule. In my view neither of those points advanceOverton's case concerning the proper construction of clause 49.1.Disposition[116] Overton's claims for implied misrepresentation, contravention of s 14 of theFair Trading Act and for breach of the Lease by failing to remediate Karamu Road fail.[117] In those circumstances I consider that it is unnecessary to determine what damages would have been recoverable in the event that Overton had been successful. The issue of damages would be potentially complex, involving as it does the question of remediation to either 34 per cent NBS or 67 per cent or possibly even greater. I do not consider that it is productive to engage with those issues on a contingent basis.[118] APN is entitled to costs on a 2B basis. I certify for second counsel.________________________________Brown J