VERBOEKET V SEAVIEW ROAD LIMITED HC WN CIV-2010-032-190

VERBOEKET V SEAVIEW ROAD LIMITED HC WN CIV-2010-032-190 15 December 2011IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2010-032-190BETWEEN PETER CHARLES ROBERTVERBOEKETPlaintiffAND SEAVIEW ROAD LIMITEDDefendantHearing: 17-19 October 2011Counsel: PSJ Withnall for PlaintiffS M Dwight and K M McMullen for DefendantJudgment: 15 December 2011 at 4:00 PMIn accordance with r 11.5 I direct the Registrar to endorse this judgment with a delivery time of 4pm on the 15th day of December 2011.RESERVED JUDGMENT OF MACKENZIE JTABLE OF CONTENTSIntroduction [1]Factual background [2]The pleadings [19]Was there an agreement? [21]The effect of the Nicholls lease [28]The vendor‟s cancellation [53]The counterclaim [65]Result [76]Introduction[1] This is an action by the plaintiff to recover its deposit of $165,000 and related expenses paid on a contract for the purchase of a commercial building in Lower Hutt, which did not proceed. The defendant counterclaims for damages for breach of the contract by the plaintiff.Factual background[2] In 2009, Seaview Road Limited (Seaview) was the owner of a four storey commercial building in Lower Hutt known as Apex House. Seaview decided to sell the building and it was listed with various real estate agents from early in 2009.[3] Mr Verboeket was a practising barrister, solicitor and registered patent attorney who was also actively engaged in running a number of companies for family trusts of which he is a trustee. In 2009 he had sold his interest in the law practice and was looking at other opportunities. Mr Verboeket had limited experience in property development. He discussed, with two potential business partners, Mr Giddens and Mr Naylor, the prospect of becoming involved in property development in Lower Hutt. Mr Naylor later dropped out, but Mr Giddens remained involved throughout.[4] They became aware that Apex House was on the market and decided to investigate it further. While they were investigating a possible purchase, Seaview entered into a conditional agreement, on 1 October 2009, to sell the property for $1.51 million to another party. That agreement was conditional upon the purchaser completing due diligence investigations within 30 working days. Mr Verboeket and his associates decided to put in a back up offer, at a price of $1.65 million. The purchaser was Mr Verboeket or nominee. The offer was subject to the previous agreement not becoming unconditional by 16 November 2009. It was further conditional upon:(a) The purchaser‟s approval of title within 20 working days;(b) The purchaser obtaining satisfactory reports from:(i) a registered engineer;(ii) an architect; and(iii) a registered valuer,all within 25 working days(c) The purchasers arranging satisfactory mortgage finance within 30 working days.[5] All of those times were to run from the date on which the prior agreement for sale and purchase did not become unconditional.[6] On 16 November 2009, Seaview‟s lawyers Cavell Leitch Law (Cavell Leitch) advised that the earlier contract was at an end and that the contract between Mr Verboeket and Seaview was now on foot. The condition as to approval of title was confirmed on the due date, 14 December 2009. Architect and engineer‟s reportswere obtained, which were satisfactory to Mr Verboeket. The valuer‟s reporthowever was not. The valuer valued the property at $1.3 million, well short of the $1.65 million purchase price. Mr Verboeket wrote to Cavell Leitch on 19 December 2009 confirming the conditions as to registered engineer‟s report and the architect‟s report but advising that the registered valuer‟s report condition was not satisfied. He enclosed a copy of the valuation and said:I understand that Simon Henry, the principal decision maker for the Vendor, is presently overseas and does not return to New Zealand until 15 January 2010. The Purchasers remain interested in proceeding with this transaction, but wish to discuss the way forward with Mr Henry (or in his absence his authorized nominee) to see if there is a way that the valuation issue can be resolved. For obvious reasons until the valuation issue is sorted out the matter of finance cannot be confirmed (although, and subject to a satisfactory resolution of the valuation condition, preliminary indications are that finance will not be an issue).Accordingly, it is proposed that the valuation condition be extended through to 18 January 2010, the finance condition to 1 February 2010, and settlement to 19 February 2010.The above has been communicated to the agent, Sean Creighton, who I understand has been in direct communications with the vendor, however as Mr Henry is away we have yet to receive a response. As the writer is onleave as from today please confirm via email that this is acceptable. Should you wish to discuss this matter I can be contacted via mobile.[7] Mr Henry, the director of Seaview dealing with the matter, did not want further delay as he was concerned about the effect on tenancy opportunities within the building. He responded to the real estate agent on the proposal for an extension of time on 20 December, in these terms:I can‟t wait any longer as we have good tenants that want their lease renewals signed off. We have been holding off signing them pending confirmation. I will go back to the market post 8 Jan.[8] That was conveyed to Mr Verboeket, who then communicated with Mr Henry by e-mail on 22 December as follows:I note your position. We will see what transpires. In the meantime you may wish to consider the following options:1. We are happy to immediately make an unconditional offer of $1.3 million. Deposit to be paid 8 January 2010. Settlement on 1 February 2010; or2. By way of alternative, we have today instructed Paul Butchers of CBRE (who was the valuer I believe you used for your own last valuation several years back) to provide us with an alternative valuation to see if that produces a higher valuation. Paul has indicated that he will be unable to start his analysis until 11 January.Nevertheless if Paul‟s valuation produces a higher figure than $1.3million we would be happy to offer that, but subject to confirmation of finance.As I have previously mentioned, should you renew any tenancies that would, from our perspective, make the property significantly less attractive.[9] On 23 December, Mr Verboeket was advised by the real estate agent that Mr Henry had instructed his solicitor to cancel the contract. That day, Cavell Leitch sent a fax to Mr Verboeket, cancelling the contract because of non-confirmation of the condition regarding the valuation report, which had been due for confirmation on 21 December 2009.[10] Mr Verboeket was not in his office when that fax was received. He was advised of its receipt by Mr Giddens by telephone on the morning of 24 December. He immediately sent a letter to Cavell Leitch dated 24 December 2009 in these terms:I refer to my letter of 19 December 2009.I now confirm that the Registered Valuer‟s Report condition is satisfied.I understand that your client is unwilling to extend the previous contract condition deadlines. That is fine. The finance condition therefore remains in place at 8 January 2010. I will refer closer to that time.[11] He followed that up with a further letter to Cavell Leitch on 8 January 2010 as follows:I refer to my letters of 19 and 24 December 2009.In my letter of 24 December 2009 I confirmed that the Registered Valuer‟sReport condition had been satisfied. I have since, on my return from leave, noted a fax on my fax machine in which the vendor has purported to cancel the sale & purchase contract. As I made clear in my letter of 19 December 2009, as I was going on leave over the Christmas/New Year period communication would only be accepted via email or mobile telephone. In all of the circumstances, as you were notified of theacceptance of the Registered Valuer‟s Report condition prior to my being made aware of your client‟s purported cancellation I do not regard your faxed letter of 23 December as having any legitimate effect, and therefore that I consider that the contract remains on foot.I now confirm the finance condition. In all of the circumstances my position is that the contract is now unconditional. I have spoken to the vendor‟sagent, Sean Creighton, today and advised him of that informally. I have also requested details of the account into which the deposit is to be paid. As soon as I am notified of this the deposit will be paid.[12] The deposit of $165,000 was paid to the real estate agent on 8 January. Cavell Leitch responded in these terms, by e-mail dated 11 January:Thanks for your letter confirming the agreement as unconditional.We note settlement is scheduled for 1 February 2010 and will forward our settlement statement/tax invoice soon.[13] Apex House was leased to a number of commercial tenants occupying, in most cases, suites or rooms smaller than a whole floor. The contract between Mr Verboeket and Seaview was on the REINZ/ADLS standard form, eighth edition2006 (2). In the box on the front page dealing with tenancies the words "refer to attachment" were inserted. Attached to the agreement was a document headed "tenancy schedule by property (rent receivable) 12/05/2009 for property ApexHouse" which gave brief details of a number of tenancies.[14] One of the tenancies listed on the tenancy schedule was of Suite 206, an area of about 21 square metres. That was shown in the tenancy schedule as being let to Mabel Sue solicitor, for a term of four years from 25 March 2006, with a four year right of renewal. Ms Lewis, the property manager of the Rapaki Property Group of which Seaview is a part, said in evidence that Ms Sue had sublet Suite 206 from February 2009 to another solicitor, Mr Nicholls. In August 2009, Ms Sue had advised that she did not wish to exercise her right to renew the lease of Suite 206 after the expiry of the initial four year term on 25 March 2010, but that Mr Nicholls wished to remain as a tenant. Ms Lewis then dealt direct with Mr Nicholls and agreed on a lease of Suite 206, to commence on the expiry of the existing lease on 25 March 2010. Terms were formally offered to Mr Nicholls in an e-mail dated 7 September 2009, which read:Further to our telephone conversation, we will draw up an Agreement to Lease base on the following terms:Term: 4 YearsCommencement: 25 March 2010Rental: $5,000 per annum + GSTRent Review: Every 2 yearsOnce we receive your confirmation, we will proceed with paperwork.If you have any questions, please do not hesitate to contact me.Ms Lewis subsequently sent a form of agreement to lease by e-mail dated 15 September reading as follows:Please see attached offer for your consideration.If all is acceptable to you, please sign where required, initial every page and return to our office by mail.If you have any questions, please do not hesitate to contact me.Mr Nicholls responded to that by e-mail dated 17 September saying:Given that I am not renting a carpark, I don‟t agree for carpark areamaintenance (para 10) to be included in the outgoings; otherwise the rest is okay.Please advise whether you are prepared to make that amendment.Ms Lewis replied by e-mail dated 18 September in these terms:After consideration, I believe your request is fair.Our Auckland office will update the Agreement and we‟ll send you a newone.Kindly dispose of what we‟ve just sent you.The amended agreement to lease was sent under cover of an e-mail dated 24 September 2009. It was returned, signed by Mr Nicholls, on 27 October 2009. Ms Lewis then arranged for Mr Henry to sign the lease as director of Seaview, which he did on or about 29 October 2009.[15] Mr Verboeket‟s evidence is that he first became aware of the Nicholls lease asa result of a fortuitous conversation between Mr Nicholls and a valuer engaged by Mr Verboeket who was inspecting the property on 14 January 2010. He asserts that the existence of this lease was particularly material given the impact it had on the feasibility of the project which Mr Verboeket and Mr Giddens were investigating, to convert the building, in stages, to apartments. That required earthquake strengthening. Mr Verboeket asserts that the ability to start the project by undertaking the necessary earthquake strengthening required that Suite 206 be vacant, and that was pivotal to the ability to carry out earthquake strengthening work for the whole building.[16] Mr Verboeket wrote to Cavell Leitch on 22 January 2010. He attached a copy of the tenancy schedule annexed to the agreement for sale and purchase, and of the lease with Mr Nicholls. He requested a copy of all leases and agreements tolease for the property. He said: "Until the above matters are addressed your clientshould regard the sale and purchase agreement as "on hold". All of the purchaser‟s rights and remedies are expressly reserved." Cavell Leitch responded by letter dated28 January, in terms which Mr Verboeket said in evidence in his view trivialised the effect of the new lease of Suite 206. Cavell Leitch‟s letter also made clear thatSeaview expected settlement on 1 February 2010.[17] Mr Verboeket instructed solicitors, Costa Varuhas & Co. On 1 February 2010, Mr Verboeket responded to an e-mail from Cavell Leitch concerning settlement by stating that the matter was being handled by Mr Varuhas.He did not settle on 1 February, and on 2 February Cavell Leitch sent to Mr Verboeket a settlement notice under cl 9.1 of the contract. That required settlement on or before 18 February 2010. Mr Varuhas wrote to Cavell Leitch on 5 February 2010 requesting copies of all lease documentation held by Cavell Leitchfor the purpose of settlement. He said: „In the meantime, we reiterate that our client‟s position concerning the transaction, your client‟s conduct in connectiontherewith and the settlement notice, is entirely reserved." He sent a further letterrequesting a response on 9 February. Cavell Leitch replied on 11 February, forwarding a lease schedule and stating their understanding that Mr Verboeket had been given the documentation before confirmation of the contract. The letter said"Our client is ready and able to settle this transaction fully and intends to enforce its rights under the settlement notice should your client fail to settle". There was further correspondence, principally relating to the lease documents for the building. By letter dated 18 February, Mr Varuhas wrote a lengthy letter in which he asserted that the settlement notice was ineffective because: the vendor was not ready, able and willing to settle for several reasons; the settlement notice was defective because the vendor did not have the required documents for the leases; the agreement was not in force because the vendor had cancelled it in December; the vendor was in breach of its equitable obligations by entering into a new lease after 8 October; and the vendor was in breach of the Fair Trading Act.[18] On 23 February 2010 Cavell Leitch sent a letter to Costa Varuhas & Co cancelling the agreement for failure to settle as required by the settlement notice. On 26 February 2010 Mr Varuhas wrote to Cavell Leitch asserting that there was no agreement in place between the parties, and that if there were then Seaview was not entitled to exercise any right of cancellation. He requested the return of the $165,000 deposit paid on 8 January 2010. Proceedings were initially commenced in the District Court in March 2010. Following a counterclaim by Seaview in those proceedings, the present proceedings were issued on 7 October 2010.The pleadings[19] The plaintiff seeks the return of the deposit of $165,000 and incidental relief. He pleads five causes of action:(a) that there was no contract when the deposit was paid;(b) that Seaview is in breach of its duties as a constructive trustee;(c) that Seaview has engaged in misleading or deceptive conduct in breach of s 9 of the Fair Trading Act 1986;(d) that Seaview made false or misleading representations in breach of s 14 of that Act; and(e) That Seaview wrongly purported to cancel the contract.[20] The defendant denies each cause of action, and counterclaims for the loss onresale consequent on the plaintiff‟s failure to settle the purchase.Was there an agreement?[21] The first cause of action was succinctly summarised by Mr Withnall in opening in these terms:Firstly, the plaintiff says that the payment of $165,000 to the defendant on 8 January 2010 was a gratuitous payment which was not due and which the plaintiff had no obligation to make and is accordingly entitled to its return. The Agreement of 8 October 2009 had been cancelled on 23 December 2009 and no negotiations or fresh Agreement having been entered into in writing (as required by s 24 of the Property Law Act 2007), the sum that had been due in part payment under a cancelled Agreement was not due and payable and accordingly a payment for an ineffectual transaction.[22] I have described, at [9] to [12], the sequence of events. I find that CavellLeitch‟s letter of 23 December 2009 was a notice properly given cancelling the contract. It would, but for the events that followed, have brought the contract to an end. Mr Verboeket, knowing that notice had been given, deliberately set out to mislead Cavell Leitch into believing that he had not received the notice of cancellation before he sent his letter of 24 December 2009 in which he purported toconfirm that the valuer‟s report condition was satisfied. Mr Verboeket treated the contract as if it were still in effect, and sought to have the vendor also treat the contract as if it were still in effect. He confirmed that position in his letter of8 January 2010, in which he made a statement, which he acknowledged in evidence that he knew to be untrue, that he had not received notice of the cancellation of the contract until his return from leave, in the New Year.[23] In that letter, Mr Verboeket also challenged the method by which notice was given. I find that the notice was properly given in accordance with cl 1.2 of the contract, and Mr Verboeket indirectly received actual notice of it. But even if it was not properly given, that could not avail Mr Verboeket on this cause of action. If it was not properly given, then the cancellation would be ineffective, so that a basic element of the first cause of action, namely that the agreement had been cancelled, would not be made out.[24] The vendors, through Cavell Leitch, accepted Mr Verboeket‟s assertion thatthe contract was still on foot and that it was unconditional. In those circumstances, the only possible contractual analysis which can be placed upon the correspondence is that Mr Verboeket, by his letters of 24 December and 8 January, made an offer toreinstate the cancelled contract, on its previous terms, and that Cavell Leitch‟s fax of11 January 2010 constituted an acceptance, on behalf of the vendor, of that offer. It simply defies common sense to assert that the actions of the parties after the notice of cancellation, including the actions of Mr Verboeket in paying the deposit, were devoid of contractual effect. The vendor was acting under a mistake, induced by Mr Verboeket‟s false statement that he was not aware of the cancellation when hesent his letter of 24 December 2009. That mistake might have provided grounds for relief to Seaview under s 6 of the Contractual Mistakes Act 1977, but Seaview does not seek relief. Relief is not available to Mr Verboeket, as he did not act under a mistake.[25] The previous agreement, and that correspondence, constituted a sufficient record in writing of the terms of the contract in terms of s 24(1)(a) of the Property Law Act 2007. Mr Verboeket‟s signature of the original agreement, and his letters of24 December and 8 January, constituted signature by him of that contract or written record in terms of s 24(1)(b).[26] That conclusion makes it unnecessary for me to address Seaview‟s alternativesubmission that Mr Verboeket is estopped from asserting that the agreement was cancelled.[27] The plaintiff‟s first cause of action must fail.The effect of the Nicholls lease[28] The next three causes of action involve similar factual issues, relating to the granting of the Nicholls lease, and the failure to disclose it. In the second cause of action, the plaintiff asserts that on entering into the sale and purchase agreement the defendant owed duties to the plaintiff as a constructive trustee not to derogate from the grant which the defendant agreed to sell the plaintiff in the agreement and not to grant any new leases in respect of the premises without disclosing and obtaining the consent of the plaintiff, and to disclose all information relating to the leases. The plaintiff asserts that the defendant breached those obligations to the plaintiff as constructive trustee by entering into the lease of Suite 206 with Mr Nicholls without consulting the plaintiff or obtaining its consent, and by failing to disclose the new lease to the plaintiff.[29] In the third cause of action, the plaintiff asserts that the defendant‟s actions inrespect of the lease of Suite 206 to Mr Nicholls constituted conduct in trade that was misleading or deceptive or likely to mislead or deceive, in breach of s 9 of the Fair Trading Act 1986.[30] In the fourth cause of action, the plaintiff asserts that the defendant‟s actionsin respect of the lease of Suite 206, and the failure to disclose that to the plaintiff, constituted false or misleading representations to the plaintiff in connection with the sale of the land, in breach of s 14 of the Fair Trading Act.[31] The essence of the plaintiff‟s case in respect of these three causes of action was again succinctly summarised by Mr Withnall in his opening. He said:Secondly, the Plaintiff says that if somehow there was a new Agreement brought into being the Defendant as vendor had an obligation, either asconstructive trustee of the beneficial interest in the land for the Plaintiff or so as not to engage in misleading or deceptive conduct in trade, or conduct likely to mislead or deceive, or make false or misleading representations in trade, to divulge the Nicholls Agreement to Lease and/or obtain the approval of the Plaintiff before entering into the Nicholls Agreement to Lease:Abdulla v Shah (1959) AC 124 (PC), ss 9 and 14 Fair Trading Act 1986,AMP Finance NZ Ltd v Heaven (1966) 6 NZBCL 104, 188 (CA).[32] The constructive trust which is pleaded in the second cause of action is the form of constructive trust described by the Court of Appeal in Bevin v Smith:1The "institutional" constructive trust in favour of a purchaser pending completion of a sale and purchase transaction is well established: Cope, Constructive Trusts (1992) pp 899 and 904, Official Assignee v Johnston[1974] 1 NZLR 79. As stated by Cope it rests on the equitable doctrine of conversion which looks upon that as done which ought to be done. Thus the purchaser under a specifically enforceable contract is treated in equity as the owner of the property and the vendor as constructive trustee. From the time the contract becomes specifically enforceable the purchaser is entitled to all benefits of a capital nature which accrue to the actual subject-matter of the contract whereas the vendor is entitled to retain such benefits which are unconnected with the subject-matter.[33] The basis upon which a constructive trust of that sort will arise was described by Henry J in Official Assignee v Johnston:2For a comprehensive statement of the effect on title of an agreement for sale and purchase such as the instant agreement, I cite a paragraph from Williams on Title (3rd ed) 665. It reads:"An agreement for the sale of land, if it is such an agreement as the court will enforce by a decree of specific performance, is in equity an alienation of the beneficial interest in the property, and as from the date of the binding contract, the vendor's beneficial interest is transferred from the land to the purchase-money, and, if his interest was of the nature of real estate, it is, as from that date, converted into personalty. As regards the land, he becomes, as between himself and the purchaser, constructively a trustee for the purchaser with the right to be indemnified by the purchaser against the liabilities of the trust property; and the purchaser becomes the beneficial owner, with the right to dispose of the property by sale, mortgage or otherwise, and to devise it by will. On his death intestate it devolves on his legal personal representatives who hold it, subject to the requirements of administration, on trust for sale and for distribution of the net proceeds among the persons entitled on intestacy. In one sense the vendor becomes a mortgagee since he has a vendor's lien on the property for the payment of the balance of the purchase-money or the whole of it if no deposit been paid."1 Bevan v Smith [1994] 3 NZLR 648 (CA) at 659.2 Official Assignee v Johnston [1974] 1 NZLR 79 (SC) at 82.[34] In this case there was, before 16 November 2009, no contract between Mr Verboeket and Seaview which could give rise to a constructive trust in favour of Mr Verboeket under that principle. The contract was conditional upon the prior contract not proceeding. If that contract had proceeded, there would have been no contract for the sale of Apex House to Mr Verboeket. The equitable doctrine of conversion, as described in Bevin v Smith, had no application. Seaview was not subject to any obligation to hold its interest in the land in such a way as to protect the equitable interest of Mr Verboeket in the land prior to 16 November 2009, as he had none.[35] I find that, in the exchange of e-mail correspondence between Ms Lewis and Mr Nicholls set out at [14], a contract for the lease of Suite 206 from Seaview to Mr Nicholls was concluded no later than Ms Lewis‟ e-mail of 18 September. The offer made by submission of the form of agreement to lease in the e-mail dated 15 September was the subject of a counter offer by Mr Nicholls in his e-mail of 17 September, which counter offer was accepted by Ms Lewis‟ e-mail of 18 September. In those circumstances, I find that, in signing the lease on or about 29 October, Seaview did not enter into any new contractual commitment in respect of Suite 206. The lease had been entered into before the agreement for sale and purchase was entered into as a backup offer, on 8 October.[36] But, if I am wrong in that conclusion, and the agreement to lease Suite 206 to Mr Nicholls was entered into in September 2009 and it was not concluded until Mr Henry signed the lease on or about 29 October, Seaview did not at the time the lease was entered into owe any duty as a constructive trustee to Mr Verboeket.[37] So far as events after 16 November are concerned, I need not address the issue whether a conditional contract, such as existed between Mr Verboeket and Seaview after that date, will give rise to a constructive trust. As counsel for Seaview submits, all that remains for the plaintiff‟s claim after that date is the allegation that Seaview acted in breach of constructive trust by failing to disclose all information about the leases. She submits that the obligation that arises under constructive trust is an obligation on the vendor not to deal with the property inconsistently with the agreement for sale and purchase. It has nothing to do with disclosure of information.I accept that submission. Seaview‟s obligation under the agreement for sale andpurchase was to deliver the property in the form and condition which it had contracted. In the events that occurred, and in the way the plaintiff‟s case has beenpresented, it is not necessary for me to address directly the effect of the Nicholls lease, and the discrepancy in the tenancy schedule which did not disclose it, onSeaview‟s ability to perform its contractual obligation. I touch upon that obligation in dealing with the fifth cause of action. For the second cause of action, it is sufficient to find that there is no obligation on Seaview, as a constructive trustee, todisclose information about the leases. The vendor‟s obligations in that regard are contractual, not equitable. The second cause of action must fail.[38] It is convenient to deal together with the two causes of action under the Fair Trading Act. The conduct complained of is an omission to disclose the lease of Suite 206 to Mr Nicholls. The point at which that omission first occurred was when the tenancy schedule was incorporated into the agreement for sale and purchase. That schedule forms part of the contract. In those circumstances, it may be questionable whether either s 9 or s 14 of the Fair Trading Act is engaged. First, any errors in the tenancy schedule will have contractual consequences. As a general principle, it may be questionable whether an error which leads to a particular contractual consequence can be said to be misleading or deceptive conduct. Second, the error was discovered before the contract was settled, so that the purchaser had the opportunity to exercise any contractual rights to which the error gave rise. On that basis, the allegedly deceptive or misleading conduct could cause no loss. I do not consider it necessary to venture into these questions. I assume, without deciding, that neither the fact that an error in the schedule incorporated into the contract may have contractual consequences, nor the fact that the error was discovered before the contract was settled, precludes the availability of a remedy under the Fair Trading Act.[39] Counsel for the defendant submits that the lease was not provided to the plaintiff in November 2009 because it was inadvertently overlooked. To the extent, if any, that this may be relevant, I find that the failure to disclose the Nicholls lease in the tenancy schedule, or to mention it thereafter, was inadvertent and not deliberate. Ms Lewis‟ evidence which I have described at [12] explains the sequenceof events with regard to the lease. Ms Nguyen, the office manager for Rapaki based in Auckland, was the person responsible for providing tenancy schedules and other information to the real estate agents with whom Apex House was listed. Thetenancy schedule is a print out from Rapaki‟s property management system. TheNicholls lease was in the process of negotiation and had not been fully documented when that information was first given. It did not become operative until March 2010. Those factors explain why the tenancy schedule in the property management system would not have been updated. On the evidence, I accept the submission that the failure to disclose was inadvertent.[40] Where a breach of s 9 or s 14 is established, there must be proof that the deceptive or misleading conduct, or the misrepresentation, was causative of the loss for which a remedy is sought under s 43 of the Act. The Supreme Court in Red Eagle Corporation Ltd v Ellis3 recommended a two stage approach under which the Court should first determine whether a breach of s 9 is proved, and then under s 43,look to see whether it is proved that the claimant has suffered loss or damage "by"the conduct of the defendant.[41] Making the assumption which I have described at [38], I proceed on the hypothesis that the first limb of that approach, a breach of s 9, might be satisfied. I find that the second limb, loss or damage arising from the conduct as required by s 43, is not established, for the reasons which follow. I reach that conclusion, even on the assumption described at [38], that the plaintiff‟s contractual rights in relationto the error do not preclude the possibility of a loss arising from the conduct.[42] The plaintiff contends that the lease to Mr Nicholls was of crucial importance to him. He further contends that the importance of not entering into additional leases had been made known to Seaview. Mr Verboeket‟s evidence in chief on the importance of the Nicholls lease was put in his evidence in chief in these terms:15.8 The existence of this new lease was particularly material given the impact it had on the feasibility of the project, and in particular the ability to even start by undertaking earthquake strengthening, which was a necessary prerequisite, as Room 206 being vacant was pivotal3 Red Eagle Corporation Ltd v Ellis [2010] NZSC 20.to our ability to carry out earthquake strengthening work for the whole building.15.9 The failure to disclose the existence of the lease made all the difference to our proceeding with the sale & purchase of Apex House, and induced us to incur the unnecessary consultant‟s expenses to satisfy conditions for satisfactory registered engineer‟s, architect‟s and valuer‟s reports and to arrange mortgage finance. The non-disclosure of the existence of the Nicholls lease was central to committing to the Agreement.[43] I do not accept that evidence. It is not consistent with the other evidence.Mr Verboeket‟s evidence is that a key issue for him in his proposed development was the ability to be able to develop the building in a staged floor by floor basis. He said that on the face of it the building had an ideal lease profile for conversion purposes with whole floors appearing to come free in stages. The tenancy schedule, and some annexures to Mr Verboeket‟s brief of evidence which were prepared withthe object of demonstrating that, do not bear out that proposition. The ground floor was subject to a single lease, subject to a six year term expiring in September 2011, but with a six year right of renewal, that is to October 2017. Parts of the first floor were vacant, and the lease of the remainder expired in March 2011, with no right of renewal. The second floor, on which Suite 206 is located, was leased in four tenancies. One of those, with an area of approximately 28 square metres, expired on 31 January 2011. Two other tenancies, with an area totalling approximately 110 square metres, had rights of renewal which extended to September 2014 and December 2016. The previous lease of Suite 206 to Mabel Sue was shown in the tenancy schedule as having a right of renewal until March 2014. The third floor was partly vacant and the remainder was let in two tenancies, one of which had rights of renewal expiring finally in July 2011, and the other (also to Mabel Sue) had rights of renewal extending to March 2014. I do not consider that that lease maturity profile provides substantial support for Mr Verboeket‟s evidence that the building "had anideal lease profile for conversion purposes, with whole floors appearing to come freein stages".[44] So far as Suite 206 is concerned, the tenancy schedule showed that the lessee had rights until 2014. The right of renewal beyond March 2010 had in fact been relinquished by Ms Sue, but that was immediately followed by the grant of the new lease to Mr Nicholls. The comparison which Mr Verboeket sought to make in hisevidence between the situations, before and after the Nicholls lease: on the one hand a lease expiring in March 2010 for which the right of renewal had been relinquished, and on the other a lease expiring in March 2016, does not reflect the position as it must have been known to Mr Verboeket. The true comparison was between a lease expiring in March 2010 but with a right of renewal to March 2014, and a lease expiring in March 2014 with a right of renewal to March 2016.[45] As further support for his claim that the Nicholls lease was a crucial impediment to his proposals, Mr Verboeket said that the necessary earthquake strengthening work involved work to one of the outside columns of the building, in the area of Suite 206, and this would not have been possible while a tenant was in occupation. His evidence is that had he known of the existence of the Nicholls lease of Suite 206 he would have almost certainly stopped investigations at that point and terminated the contract, because the risk that he would have been prevented from undertaking any apartment conversions at all was simply too great.[46] I do not accept Mr Verboeket‟s evidence on this point. Mr Verboeket adduced no evidence to support the proposition that the room was too small for a tenant to be able to stay in occupation during the earthquake strengthening work. The defendant adduced evidence from a consulting engineer, Mr Brookie, who described ways in which the work could have been carried out while a tenant remained in occupation. His opinion was that the work on each level would be likely to take between one and two weeks to complete and that it could be done out of normal hours to minimise disruption to existing tenants. I accept his evidence.[47] That evidence gives no guarantee that the work could have been carried out. The cooperation of the tenant would have been necessary. However, Mr Verboeket made no attempt to ascertain whether or not the work could have been carried out, or whether that cooperation could have been obtained, perhaps for a payment for inconvenience. He did not approach Mr Nicholls. He did not advise Seaview of this issue so that it might approach Mr Nicholls.[48] Further, Mr Verboeket‟s evidence that the Nicholls lease of Suite 206 was essentially fatal to the carrying out of the earthquake strengthening work to thecolumn does not take sufficiently into account the position in the tenancies adjoining that column on the other floors. On the ground floor, the lease expired in October 2011 with a right of renewal to October 2017. The first floor would have become available in March 2011, but, as the position was shown in the tenancy schedule and as it must have been known to Mr Verboeket when he decided to purchase, the third floor was subject to the lease to Ms Sue with a right of renewal extending to March 2014. There is no evidence which might support the proposition that the consent of the tenants on other floors might be easier to obtain than that of Mr Nicholls. Mr Verboeket sought to distinguish those tenancies on the basis that area of Suite 206 was smaller. I do not find that a persuasive distinction, in the lightof Mr Brookie‟s evidence.[49] For these reasons I find that Mr Verboeket has failed to prove that, if he had proceeded with the purchase, the existence of the Nicholls lease would have caused him loss or damage. I am forced to the conclusion that Mr Verboeket‟s relianceupon the Nicholls lease of Suite 206 as a reason for not proceeding to settlement of the purchase of Apex House was a pretext, not a valid commercial reason for seeking to be released from the contract. That is a harsh conclusion to reach. I am reinforced in reaching that conclusion by Mr Verboeket‟s actions over thecancellation of the contract in December 2009. On that occasion, he adopted a strategy which involved making a statement which he knew to be false in seeking to avoid the cancellation of the contract and have it renewed. I consider that his reliance on the Nicholls lease as a pretext for escaping from the contract is consistent with that earlier behaviour.[50] For these reasons, I find that Mr Verboeket has not established any loss arising from his claimed reliance on the alleged misleading or deceptive conduct or misrepresentation, so that both the third and fourth causes of action must fail.[51] In addressing these causes of action, it has not been necessary for me to deal with one matter upon which Mr Verboeket placed much reliance, and on which there was a conflict between his and Mr Giddens‟ evidence, and Mr Henry‟s evidence.That matter is whether, and how clearly, Mr Verboeket made it known to Mr Henry his wish that no further leases should be granted. For the reasons which follow, I donot consider that question relevant, and I therefore do not address the conflict of evidence on it.[52] The two telephone conversations between Mr Henry and Mr Verboeket (one of which Mr Giddens overheard) on which Mr Verboeket principally relies both took place in November. By then, the Nicholls lease was in place. The position was then governed by the contract, which included rights for the purchaser to make investigations and requisitions as to title. In the events that occurred, and in the waythe plaintiff‟s case has been presented, it is not necessary for me to determinewhether the existence of the Nicholls lease might have prevented Seaview from performing its contract. I address that issue, to the extent necessary, in dealing withthe plaintiff‟s fifth cause of action.The vendor's cancellation[53] The fifth cause of action asserts that the defendant‟s cancellation of thecontract was wrongful. The pleading is in these terms:26. By letter from the Defendant‟s solicitors to the Plaintiff‟s solicitors dated 23 February 2010, the Defendant purported wrongfully to cancel the Agreement in that:(a) The Defendant purported to cancel the Agreement pursuant to a settlement notice dated 2 February 2010, when the Defendant was not ready, willing and able to settle the Agreement prior to, on, or after 2 February 2010.(b) The Defendant purported to cancel the Agreement relying ona letter from the Plaintiff‟s solicitors to the Defendant‟ssolicitors dated 18 February 2010 as repudiation of the Agreement, when such a letter did not amount to an unequivocal refusal by the Plaintiff to perform the Agreement.27. By letter from the Plaintiff‟s solicitors to the Defendant‟s solicitorsdated 26 February 2010, the Plaintiff gave notice accepting theDefendant‟s wrongful purported cancellation of the Agreement andin turn cancelled the Agreement accordingly.[54] In his letter of 22 January to Cavell Leitch Mr Verboeket purported to put thesale and purchase agreement "on hold". In Property Ventures Investment Ltd v Regalwood Holdings Ltd Tipping J said: 4In his Sale of Land Dr McMorland discusses cl 6.5, observing:It is sometimes thought by a purchaser faced with a breach by a vendor of a warranty or undertaking in cl 6.0 that the purchaser hasthe "right" not to settle until the matter is "sorted" or until thevendor has agreed to a variation of the contract by a reduction ofthe purchase price. That is not so. There is never a "right" to avariation of a contract; by definition, a variation is a bilateral agreement. If a breach of a warranty or undertaking is established, the purchaser will have certain remedies and must decide which of those to exercise. If cancellation is one of those, the purchaser must elect on or before the settlement date whether or not to cancel. There is no right to refuse to settle while threatening to cancel if the vendor will not reduce the price, a tactic sometimes employed. It is the purpose of cl 6.5 to make this situation, which is the law in any event, a clear and express term of the contract. A breach of any warranty does not defer the obligation to settle on the due date as required by the contract.However, the clause does not take away from the purchaser any right or remedy the purchaser may have consistent with settlement. [Emphasis added.]I respectfully agree with that analysis. The purchaser is exercising a right consistent with settlement if he deducts from the purchase price a genuine pre-estimate of the amount by which the value of the property has beendepreciated by reason of the vendor‟s breach of warranty, and tenderssettlement on that basis. A vendor who is in breach of warranty cannot insist that the non-cancelling purchaser settle by paying the full purchase price. The vendor will be in further breach by declining to accept a tender based on a deduction by the purchaser of a genuine pre-estimate of the loss caused by the breach of warranty.[55] This contract is in the same form as that discussed by Dr McMorland, and includes cl 6.5 which provides:Breach of any warranty or any undertaking contained in the clause does not defer the obligation to settle. Settlement shall be without prejudice to any rights or remedies available to the parties at law or an equity, including but not limited to the right to cancel this agreement under the Contractual Remedies Act 1979.[56] It is unnecessary to decide whether the discrepancy in the tenancy schedule attached to the contract, which did not include the Nicholls lease, meant that delivery4 Property Ventures Investment Ltd v Regalwood Holdings Ltd [2010] NZSC 47; [2010] 3 NZLR231 at[97]-[98].of possession subject to that lease would have been a breach by Seaview of a warranty or undertaking covered by cl 6.0, and if so whether that might have given rise to a right to cancel. If he had a right to cancel, Mr Verboeket did not exercise it. Nor is it necessary for me to consider whether Mr Verboeket might have been able to deduct from the purchase price a genuine pre-estimate of the amount by which the value of the property had been depreciated by reason of a breach of warranty by the vendor, as Tipping J suggested. He did not take any such action. Mr Verboeket sought to employ the tactic described by Dr McMorland, by purporting to put theagreement for sale and purchase "on hold". That was not a course that was open tohim.[57] The discrepancy between the tenancy schedule and the actual lease situation might be a matter of title which could have been the subject of a requisition under cl 5.0. That clause enables a purchaser to raise objections to the vendor‟s title, andprovides a mechanism for dealing with those. This contract was also subject to the specific approval of title clause to which I have referred. Copies of the leases were given to the purchaser, and these did not include the Nicholls lease. In those circumstances, the purchaser might well have been able to raise a valid requisition as to title when that lease became known, despite the earlier approval of title and the absence of a requisition under cl 5.0.[58] If that had been done, cl 5.4 might require consideration. That clause provides:Except as otherwise expressly set forth in this agreement, no error, omission or misdescription of the property or the title shall annul the sale but compensation, if demanded in writing before settlement but not otherwise, shall be made or given as the case may require.[59] That point was also mentioned by Tipping J in Property Ventures. He said:5Finally I mention the rule in Flight v Booth. This rule was a judicially imposed restriction on the literal effect of contractual clauses like cl 5.4. The stipulation that "no" misdescription shall annul the sale is not to be takenliterally. The effect of the rule is that if the misdescription affects the subject- matter of the contract to such an extent that the purchaser might well not have entered into the contract if aware of the true position, the purchaser may elect to cancel, despite the no-annulment provision. There is little or no5 At [105].difference between this basis for cancellation and the ordinary breach ground for cancellation under s 7 of the Contractual Remedies Act 1979, which is entirely consistent with the rule. The only point which may need attention in a case in which it is raised is whether a no-annulment provision like cl 5.4 might prevail over the rule in Flight v Booth as an expressly agreed remedy which ousts cancellation pursuant to s 5 of the Act. The answer to that may be that a variance in the subject-matter of the extent necessary to attract the rule goes beyond the concept of misdescription.[60] As Tipping J notes, the effect of the rule in Flight v Booth6 is that if the misdescription affects the subject matter of the contract to such an extent that the purchaser might well not have entered into the contract if aware of the true position,the purchaser may elect to cancel, despite the "no annulment" provision. Whether that principle is engaged here does not arise, because the purchaser did not elect to cancel.[61] If it had been necessary for me to determine the question, I would have held that the error in the tenancy schedule did not affect the subject matter of the contract to such an extent that the purchaser might well not have entered into the contract if aware of the true position. For the reasons I have given in considering the Fair Trading Act causes of action, I have not accepted Mr Verboeket‟s evidence that the difference between the tenancy schedule and the Nicholls lease was crucial. I have held that that was a pretext, rather than a reason, for seeking to escape from the contract.[62] I need to mention the possibility that the purchaser might have adopted thestrategy, on receipt of the vendor‟s settlement notice dated 2 February 2010, ofputting the vendor to the proof of its readiness and ability to settle, by tendering the purchase price, but refusing to accept documents proffered that did not match thetenancy schedule, and cancelling on the grounds of the vendor‟s failure to settle. Again, it is not necessary for me to address in detail the questions of whether that was an available strategy, and what its consequences might have been, since that is not what the purchaser did. I have summarised the correspondence at [16]. At no stage did that include an assertion that the purchaser was ready willing and able to settle in accordance with the terms of the contract as the purchaser asserted them to be. Unless the purchaser tendered payment, the vendor could not be shown to have6 Flight v Booth (1834) 131 ER 1160 (CP).breached the contract.7 There had been no indication from the vendor that proper tender would be futile.[63] At this point it is relevant also to mention another issue which was the subject of dispute in evidence. The contract had been subject to finance. Finance was confirmed by the letter of 8 January set out at [9]. Mr Verboeket did not have an offer of finance from BNZ, whom he had approached. He said in his evidence inchief that "it was clear that funding would not be a significant issue [so] I was comfortable confirming the finance condition". He maintained that position under cross-examination. It is not necessary for me to make any factual finding on that position, beyond recording that finance had not been arranged. Demonstration that he was ready willing and able to settle would have required Mr Verboeket to tender the purchase price. He did not.[64] For these reasons, the plaintiff‟s fifth cause of action must also fail.The counterclaim[65] The defendant has counter-claimed for the plaintiff‟s breach of the contract infailing to settle. The defendant relies on the notice dated 23 February 2010 cancelling the contract. It asserts that upon cancellation the deposit paid by the plaintiff was forfeited to the defendant and that the defendant is entitled to recover damages, which it calculates at $467,952.32 made up as follows:105. Seaview has suffered loss and damage as follows:Purchase price under agreement of 8 October 2009 $1,650,000.00Less value of property at date of settlement $1,080,000.00Sub total $570,000.00Plus Agents‟ commissions $54,843,75Plus legal costs $8,081.57Less deposit paid $165,000.00Balance $467,925.327 Bahramitash v Kumar [2005] NZSC 39; [2006] 1 NZLR 577 at [16]-[18].[66] For the reasons I have given in dealing with the plaintiff‟s claim, I find thatthe vendor was entitled to cancel the contract, because the purchaser had not settled the contract in accordance with the settlement notice. He had not taken any action which might have been available to him under the contract to ensure that his failure to settle would not constitute a breach of the contract by him triggering the vendor‟sright to cancel for breach. Accordingly, the vendor is entitled to recover damages forthe purchaser‟s breach.[67] It is common ground that the measure of damages includes the difference between the price the defendant would have received on the settlement date and the market value of the building on that date. In support of its claim that the market value of the property at the date of settlement was $1.08 million, the plaintiff relies upon the evidence of a valuer, Mr Wall. He carried out a market valuation, in June 2010, for the purpose of assessing the current market value of Apex House at 1 February 2010. He assessed its value at $1.08 million.[68] The plaintiff called no evidence to challenge Mr Wall‟s valuation. He soughtto rely upon two valuation reports which had been earlier obtained, which were included in the bundle of documents, subject to objection by the defendant as to their admissibility. I ruled on their admissibility in the course of trial. I repeat that ruling here.[1] A ruling is required as to the admissibility of two valuation reports which are contained in the bundle of documents. They have been included subject to objection by the defendant as to their admissibility. They are:(a) A valuation report dated 17 December 2009 carried out by Appraisal Property Consultancy Limited assessing the market value of Apex House as at 9 December 2009; and(b) A valuation report dated 14 January 2010 carried out by C B Richard Ellis assessing the market value of Apex House at that date.[2] Neither of the valuers who prepared the reports is to be called as a witness. That means that any statement by the valuers which is offered to prove the truth of its contents is a hearsay statement. Hearsay statement is defined in s 4 of the Evidence Act 2006 in these terms:Hearsay statement means a statement that—(a) was made by a person other than a witness; and(b) is offered in evidence at the proceeding to prove the truth of its contents[3] The issue here is whether each of the valuation reports is offered as truth of its contents. Its contents are an expression of opinion by the valuer. The basis on which the evidence is potentially relevant, under s 7, is that it has a tendency to prove a matter of consequence to the determination of the proceeding, namely the market value of Apex House at the relevant date. That is a question of fact. Evidence which goes to that issue must accordingly, for the purposes of the hearsay rule, be treated as evidence of fact. The valuation reports state, as a fact, what opinions the valuers hold as to the market value. The reports are therefore offered to prove the truth of their contents.[4] Section 17 sets out the hearsay rule. It provides:A hearsay statement is not admissible except—(a) as provided by this subpart or by the provisions of any other Act; or(b) in cases where—(i) this Act provides that this subpart does not apply; and(ii) the hearsay statement is relevant and not otherwise inadmissible under this Act.[5] Section 18(1) provides:A hearsay statement is admissible in any proceeding if—(a) the circumstances relating to the statement provide reasonable assurance that the statement is reliable; and(b) either—(i) the maker of the statement is unavailable as a witness; or(ii) the Judge considers that undue expense or delay would be caused if the maker of the statement were required to be a witness.[6] In this case it is not contended that the maker of the statement is unavailable as a witness and there has been no argument put thatundue expense or delay would be caused if the valuers were required to be witnesses.[7] Section 19 deals with the admissibility of hearsay statements contained in business records. The valuation reports are not business records as defined in s 16.[8] Mr Withnall relies on the provisions dealing with the admissibility of opinions contained in ss 23 to 25. Under s 23 a statement of opinion is not admissible in a proceeding except as provided by s 24 or 25. Section 24 is not relevant to the present situation. Admissibility must therefore turn on s 25. Section 25(1) provides:An opinion by an expert that is part of expert evidence offered in a proceeding is admissible if the fact-finder is likely to obtain substantial help from the opinion in understanding other evidence in the proceeding or in ascertaining any fact that is of consequence to the determination of the proceeding.[9] That provision cannot apply here. The opinion contained in each of the reports is an opinion by an expert, but it is not part of expert evidence offered in this proceeding. The statements are not admissible under s 25 as opinion evidence. That makes it unnecessary to consider whether I would be likely to obtain substantial help from an opinion where the maker of the opinion is not available to be tested on that opinion.[10] For these reasons, I rule that neither of the valuations is admissible as proof of the value of the building, or as the opinion evidence of the writer of the report as to the value of the building.[69] The consequence of that ruling is that there is no evidence from a valuer tochallenge Mr Wall‟s valuation. One challenge which was advanced to Mr Wall‟svaluation was cross-examination of him on the method used for the calculation of operating expenses which he used in calculating the market value under one of the three methods which he used, the investment or economic approach, which he regarded as the most appropriate method for this building. He did not accept the validity of the propositions put to him challenging his methodology. There was no evidence to support that alternative methodology. I accept Mr Wall‟s evidence onthis point.[70] The plaintiff sought to rely upon some conditional agreements for the sale of the building which had been entered into during the period after cancellation, when Seaview was endeavouring to resell the property. There were three contracts, for prices ranging between $1.23 and $1.35 million. None of those contracts everbecame unconditional. I do not regard them as a reliable indicator of the market value of the property. A more reliable indicator is the price at which the property was in fact sold. It was sold under an agreement entered into in March 2011 for $1.03 million. Before that contract could be settled, Seaview had to carry out certain work to remove Apex House from the earthquake prone list, and settlement of the sale took place on 20 September 2011.[71] In the absence of any cogent evidence to contradict it, I accept Mr Wall‟sevidence as to the market value.[72] Another component of the damages calculation was the real estate agent‟s commission. Mr Henry‟s evidence was that this was deducted from the deposit. He was cross-examined about that. Seaview had issued a third party notice against the real estate agent, Wellington Real Estate Ltd. That claim was withdrawn, by a memorandum signed by counsel for the defendant and the third party, in December 2010. Mr Henry said that the commission had not been refunded, and to the best of his knowledge an arrangement had been made where the matter of a refund was dependent on the outcome of the present claim. In the light of that evidence, I accept that the defendant has suffered a loss in the amount of the commission.[73] The next question is whether that amount properly forms part of thedefendant‟s claim against the plaintiff. Mr Withnall submits that a claim for loss of bargain cannot include expenditure it was necessary for the vendor to incur for the purposes of the bargain. He therefore submits that, if commission is to be claimed, it must be the commission on the resale. There is authority for that, as a general proposition.8 In this case, the form of contract has specific provisions as to the calculation of damages. Clause 9.4 provides:If the purchaser does not comply with the terms of the settlement notice served by the vendor then, subject to clause 9.1(3):(1) Without prejudice to any other rights or remedies available to the vendor at law or in equity the vendor may:8 H McGregor (ed) McGregor on Damages (18th ed, Thomson Reuters, London, 2009) at[22.033].(a) Sue the purchaser for specific performance; or(b) Cancel this agreement by notice and pursue either or both of the following remedies namely:(i) Forfeit and retain for the vendor‟s own benefit thedeposit paid by the purchaser, but not exceeding in all 10% of the purchase price; and/or(ii) Sue the purchaser for damages(3) The damages claimable by the vendor under subclause 9.4(1)(b)(ii) shall include all damages claimable at common law or in equity and shall also include (but shall not be limited to) any loss incurred by the vendor of any bona fide resale contracted within one year from the date by which the purchaser should have settled in compliance with the settlement notice. The amount of the loss may included:(a) Interest on the unpaid portion of the purchase price at the interest rate for late settlement from the settlement date to the settlement of such resale; and(b) All costs and expenses reasonably incurred in any resale or attempted resale; and(c) All outgoings (other than interest) on or maintenance expenses in respect of the property from the settlement date to the settlement of such resale.[74] In its calculation of damages, the vendor has given credit to the purchaser for the full amount of the deposit paid, $165,000. Under cl 9.4(1)(b), it was not required to do so. The deposit actually received by the vendor was the net amount, after deduction of the commission. The vendor should not, in the light of cl 9.4, be required to give credit for more of the deposit than it actually received. In those circumstances, I consider that it is appropriate to allow in the calculation, the commission paid on the sale.[75] The other item in the calculation is legal expenses. There is no challenge to that item, and I allow it.Result[76] There will be judgment for the defendant on the plaintiff‟s claim. There will also be judgment for the defendant on its counter-claim in the sum of $467,925.32.[77] My preliminary view is that the defendant should receive costs, on a 2B basis. The parties may submit memoranda if they are unable to agree in the light of that indication."A D MacKenzie J"Solicitors: C V Law Ltd, Wellington for PlaintiffCavell Leith Pringle & Boyle, Christchurch for Defendant