BLACKLER V TIGER LILLY PRODUCTIONS LIMITED HC WN CIV-2009-485-1599

BLACKLER V TIGER LILLY PRODUCTIONS LIMITED HC WN CIV-2009-485-1599 23 March 2010IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV-2009-485-1599IN THE MATTER OF an appeal pursuant to s 72 of the District Courts Act 1947 BETWEEN SEAN ANTHONY BLACKLER Appellant AND TIGER LILLY PRODUCTIONS LIMITED Respondent Hearing: 17 February 2010 Appearances: The appellant in person, with his McKenzie friend M Papadopoulos M J Moohan for the respondent Judgment: 23 March 2010 at 4.00pmJUDGMENT OF CLIFFORD JIntroduction[1] The appellant, Mr Blackler, was the sole shareholder in Blackrocks Café and Bar Ltd, now in liquidation ("Blackrocks"). Mr Blackler was also the manager of that company's business, the Blackrocks Café and Bar ("the Café") which operated from premises at 163 The Parade, Island Bay ("the Café Premises") [2] In September 2007 Mr Blackler agreed to sell the chattels associated with the Café ("the Chattels") and the lease to the Café Premises ("the Lease") to the respondent, Tiger Lilly Productions Ltd ("Tiger Lilly"), for $90,000.00. [3] Tiger Lilly never performed that contract. Rather, Tiger Lilly dealt directly with Blackrocks' landlord to obtain a lease to the Café Premises.[4] Mr Blackler and Blackrocks subsequently sued Tiger Lilly for breach of contract. [5] In the District Court at Wellington Judge Broadmore dismissed that claim. Mr Blackler now appeals that decision.Mr Blackler's status to bring this appeal[6] Mr Blackler brings this appeal in his own name, not in the name of Blackrocks. The Court has received a letter from the liquidators of Blackrocks dated 29 January 2010 disowning the appeal on behalf of Blackrocks. According to that letter, Blackrocks was placed in liquidation on 26 March 2008. The letter states:As liquidators we advise that the company wishes to have no involvement in the appeal as an appellant, and Mr Blackler has no authority to make the appeal on behalf of the company or make submissions on behalf of the company for the appeal.[7] Notwithstanding that letter, Mr Moohan, counsel for Tiger Lilly, informed me that Tiger Lilly accepted that Mr Blackler had had assigned to him the benefit of Blackrocks' relevant rights and, moreover, that Tiger Lilly acknowledged that the liquidators were in no way involved in these proceedings. Tiger Lilly accepted Mr Blackler's status to bring the claim accordingly. [8] On 7 September 2009, shortly after filing his appeal, Mr Blackler filed a "conference memorandum" in which he advised that he had been assigned Blackrocks' cause of action against Tiger Lilly and was bringing the appeal in his own name but asserting Blackrocks' rights. He appended an unsigned form of a deed of assignment between him and Blackrocks. That unsigned deed records, amongst other things, that Mr Blackler paid $1 for the assignment and agreed to share any proceeds of the litigation on a 50:50 basis with the company. It would appear that Mr Blackler and Blackrocks filed proceedings as joint plaintiffs in the District Court on 28 February 2008, therefore shortly before Blackrocks was placed in liquidation. I have not been advised of the date upon which the deed of assignment is said to have been executed.[9] Given the terms of the liquidators' letter, which does not refer to, let alone acknowledge the validity of, the assignment of Blackrocks' cause of action, this remains a somewhat unsatisfactory position. [10] In order, however, to bring some finality to these matters, and on the basis of Tiger Lilly's acceptance that the liquidators have no liability for any costs, I accept – as did the District Court - that Mr Blackler has status to bring these proceedings on behalf of Blackrocks, as I do not think it is suggested that at any relevant time he was contracting on his own behalf. What is less clear is what the position would be between Mr Blackler and the liquidators were this appeal to succeed in whole or in part. Given the terms of the liquidator's letter, I am not in a position to make further comment on that matter.Background[11] On or about 28 September 2007 Mr Blackler and Tiger Lilly signed two copies of a document entitled "Conditional Offer for Sale and Purchase". The two documents were, in large measure, identical. [12] Each document comprises two printed pages. The first page of each document is headed up "Conditional offer for sale and purchase", the word "conditional" originally reading "unconditional", with "un" having been crossed out. One copy is dated 28 September 2007, one is undated. [13] At the foot of the first page of each of the documents, which otherwise record the names of the parties, slightly different wording has been added. On the first page of the first document the additional wording reads:* Condition* agreement with landlord regarding changes.On the first page of the second document the additional wording reads:* Condition 1. of agreement with landlord with transfer of the lease.[14] The second page comprises the body of the document. In both cases it reads as follows:1. Background: The Purchaser has made the Vendor an unconditional offer to purchase the "Business" (hereinafter defined). The purpose of this agreement is to record in writing, the understanding reached between Parties in respect of the Purchaser's "Unconditional Offer". 2. Definitions: In this agreement the following definitions apply:a) "Lease" means the rental agreement in respect of the 163 The Parade, Island Bay, Wellington, as attached in "Schedule 1" of this Agreement. b) "Chattels" means freehold title to, by the Vendor, to the Purchaser, all chattels listed in Schedule 2" of this Agreement. c) "The Business" means unconditional assignment of all rights resting with the Vendor in respect of the "Lease" and "Chattels". 3. Agreement: The Purchaser "unconditionally" agrees to pay the vendor $NZ90,000.00 (exc. GST) for the purchase of the "Business". 4. Term: The Parties agree this offer expires on ______________2007.[15] One copy of the document is signed by Mr Blackler (for and on behalf of himself) and for and on behalf of Tiger Lilly Ltd by a Ms Aoyama, whose signature was witnessed by a Mr Te Awa, both directors of Tiger Lilly. The other copy of the document was not signed by Mr Blackler but was, as before, signed for and on behalf of Tiger Lilly Ltd by those two directors. [16] At the time that document was signed, a Mrs Saker, the landlady of the Café Premises, had obtained judgment against Blackrocks and Mr Blackler (as guarantor) for arrears of rent, termination of the Lease and an associated order that Blackrocks vacate the Café Premises by noon on 5 October 2007. [17] Blackrocks originally entered into the Lease for the Premises on 3 December 2004. The Lease was for a term of two years with two rights of renewal, taking it through to a final expiry date of 31 July 2010. On 22 June 2007 Mrs Saker gave notice to Blackrocks that, based on unpaid rent, she would terminate the Lease and re-enter. Blackrocks admitted owing rent but asserted that breaches of the Lease by Mrs Saker prevented her from taking those steps.[18] On 3 August 2007 Mrs Saker applied to the District Court at Wellington for: a) summary judgment against Blackrocks and Mr Blackler for rent arrears; and b) an order that Blackrocks and Mr Blackler deliver up possession. [19] In a judgment given on 24 September 2007, Judge Broadmore found in favour of Mrs Saker as regards that part of the Café Premises used for commercial purposes and for associated rental arrears. The Judge concluded: 1 Mrs Saker is therefore entitled to judgment on that part of her claim, but I will defer entering judgment until her counsel has provided the calculations referred to in paragraph [35] above. At that point, I will issue an addendum to this judgment dealing with the date on which an order for possession is to take effect, quantum, interest and costs.[20] On 28 September, the same day as the "conditional offer" document was signed, the Judge issued an addendum to his judgment formally entering judgment in favour of Mrs Saker against Blackrocks and Mr Blackler for rental arrears of some $20,000 and $11,000 respectively. At the same time, Blackrocks was ordered to give up possession of the Café Premises by noon on 5 October at the latest. [21] That same day, and in my judgement probably after the release of the Judge's order, Mr Blackler spoke to Mrs Saker. Mr Blackler's evidence was that Mrs Saker agreed she would not interfere with the sale that Mr Blackler was trying to organise. Mrs Saker's evidence was broadly similar. As she put it in her written brief:I recall receiving a phone call from Mr Blackler asking me if I would support a sale of the business and I said that I would because it was in my interests to do so. Mr Blackler told me he would pay me back all he and Blackrocks owed me, so I was happy to support the sale of the business. Apart from the fact that he was attempting to sell the business, I have no knowledge of the terms of that sale or what it entailed. As landlord I would vet the prospective new tenant since I would need to be satisfied so as to sign a new lease with them. I presumed that Mr Blackler would inform them that he had no lease to assign and that a new lease would be entered into.1 Saker v Blackrocks Café & Bar Ltd, DC Wellington CIV-2007-085-915, 24 September 2007 at [36].[22] On 1 October 2007, Mr Blackler, Mrs Saker, Ms Aoyama and Mr Te Awa, the directors of Tiger Lilly, met. This was the first time Mrs Saker had met Tiger Lilly's directors. The purpose of that meeting is disputed. The evidence in the District Court from Tiger Lilly's directors and Mrs Saker was that the meeting was for the purpose of Mrs Saker meeting Tiger Lilly's directors, and assessing their business plan, before later approving them as tenants. Mr Blackler's evidence was that the meeting was for the sole purpose of Mrs Saker advising whether Tiger Lilly could have a new lease. [23] After that meeting, Tiger Lilly went into occupation of the Café Premises on or about 3 October 2007 and began cleaning and redecorating. [24] On or about 4 October 2007, $2,000 was paid by Tiger Lilly to Mr Blackler. Around that date, Ms Aoyama provided an Auckland District Law Society standard form Agreement for Sale and Purchase of Business to Mr Blackler. Although unsigned, various details had been inserted in the copy of the document that was produced for the purposes of the trial. There was some dispute as to who inserted those details, but Ms Aoyama acknowledged that the handwriting appeared to be hers. In a box headed "Lease Details" a reference to a term of 3 x 3 x 3 years, and rights of renewal in 2010, 2013 and 2016 were inserted. [25] Around 6 October 2007, a sign was placed in the window of the Café Premises advising the public that the business had been sold. [26] On 9 October 2007, Mrs Saker met separately with Tiger Lilly's directors to discuss lease arrangements. The evidence of Tiger Lilly's directors was that it was at that meeting that, for the first time, they became aware of the true state of affairs as regards Blackrocks' lease of the Café Premises. That is, it was at that meeting they were made aware that the Lease had been terminated. [27] Immediately after that meeting Tiger Lilly advised Blackrocks and Mr Blackler that the agreement to purchase the Chattels and the Lease was at an end as there was no lease to be acquired. Mr Blackler acknowledged removing "some of the Chattels" that evening. He says he removed some $6,000 worth of Chattels. Itwas Ms Aoyama's and Mr Te Awa's evidence that he removed, if not all the Chattels, then by far the greatest part of them. [28] Later that day, and on the morning of 10 October, a proposal was put to Mr Blackler. In general terms, the proposal was for Tiger Lilly to pay Blackrocks $30,000, and for Blackrocks to return the Chattels that had been removed and otherwise co-operate in vacating the Café Premises and handing them over to Tiger Lilly. That proposal as put in writing, called a "Monetary Agreement", read as follows:This is to formally acknowledge that the sum of $30,000 (thirty thousand dollars) is a full and final settlement that has been paid as a gift to Sean Blackler for –• the Blackrock Café and Bar assets as listed on the appendix attached and• clearance of debt associated with the business commonly known as Blackrocks Café and Bar Island Bay, Wellington; in particular business equity and rent arrears. Both parties acknowledge the confidentiality of this settlement and Mr Blackler will, prior to signing this document, agree to the following:• return to the premises prior to receiving payment the double-door fridge listed as an asset• not pursue any litigation against the property owner and his former landlord Ms Stacey• ensure vacant occupation of the on-premises flat is available within 48 hours of this agreement document date• accept this is a full and final monetary settlement for the assets• hand-over all keys and vacate the premises immediately[29] Mr Blackler did not agree to that proposal. [30] Tiger Lilly eventually entered into a separate lease with Mrs Saker for the Café Premises towards the end of October 2007. [31] Mr Blackler and Blackrocks, as first and second plaintiffs respectively, subsequently commenced proceedings in the District Court against Tiger Lilly seeking the agreed purchase price of $90,000 together with some $21,000 of consequential losses, based on breach of contract. They argued that as Tiger Lilly had obtained a lease to the Café Premises in the course of negotiations withMrs Saker, Blackrocks and Mr Blackler, the contract terms had been met. That is, the contract was only conditional on Mrs Saker approving Tiger Lilly as a lessee. That is what had happened. Moreover, Tiger Lilly had got the revised lease it wanted, namely a lease for an initial period of three years, with two further three year rights of renewal. It did not matter that Blackrocks itself did not have a lease to transfer to Tiger Lilly. [32] Tiger Lilly defended that claim on a number of bases. Tiger Lilly first argued there had been no concluded contract. Alternatively, if a contract had been concluded, it was conditional on the assignment of the Lease. That condition had not and could not have been satisfied. Moreover, Mr Blackler had misrepresented the position as regards the Lease so that Tiger Lilly was entitled to cancel the contract for breach of representation. [33] The case was heard over some three days in the District Court at Wellington. Judge Broadmore gave judgment orally in favour of Tiger Lilly at the close of the case. In his written reasons, delivered some time later, he held that: a) There was a binding agreement for sale and purchase signed on or about 28 September 2007 ("the Agreement"). b) The Agreement was conditional on Mrs Saker subsequently agreeing to an assignment of the Lease to Tiger Lilly. c) The Agreement never became unconditional because the condition that the Lease be assigned to Tiger Lilly was incapable of fulfilment. d) Mr Blackler very probably knew that the Lease had been cancelled when he entered into the Agreement, but even if he did not know about the earlier District Court judgment, he still made a misrepresentation because he was wrong in respect of the Lease being current. For the purposes of s 7 of the Contractual Remedies Act 1979, the rights of cancellation arise equally on an innocent as on a fraudulent misrepresentation.e) Tiger Lilly was therefore entitled to cancel the contract represented by the Agreement pursuant to s 7(4)(b)(iii) of the Contractual Remedies Act. [34] On that basis the Judge dismissed Mr Blackler and Blackrocks' claim.This appeal[35] This is an appeal by way of re-hearing pursuant to s 72 of the District Courts Act 1947. [36] As an appeal by way of re-hearing, not from the exercise of a discretion, theAustin, Nichols & Co Ltd v Stichting Lodestar approach applies. 2 Under that approach the appellant court is required to come to its own conclusion on the merits and, if that conclusion differs from that in the court appealed from, substitute its decision for that of the court appealed from. There were no issues in this case on which the court appealed from had particular expertise. However, the court appealed from did have the benefit of hearing the evidence in person, and issues of credibility are relevant in this case. I will take those matters into account in considering its conclusion on the merits. [37] Mr Blacker brings his appeal on two basic grounds. In doing so, he relies on similar arguments to those he made in the District Court. [38] First, he says that the Judge erred in fact and law in finding that the Agreement was not a binding unconditional contract for the sale and purchase of the business of Blackrocks as: a) the Agreement was subject only to the landlord's approval of Tiger Lilly as purchaser, which approval was given on or about 1 October 2007;2 Austin, Nichols & Co Ltd v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 41.b) Tiger Lilly duly paid a deposit of $2,000 on 3 October 2007, demonstrating that the Agreement was unconditional; and c) following payment of the deposit, Tiger Lilly moved into the Café Premises, began renovations and put up a sign saying the business "had been sold". [39] Second, he says that the Judge was wrong in fact and law in finding there had been a misrepresentation as to the status of the Lease which justified Tiger Lilly's cancellation of the agreement because: a) any misrepresentation made was to law, not fact, and therefore not an actionable representation; and b) cancellation was not pleaded by Tiger Lilly in the District Court and, if misrepresentation was found, it related to the quantum of damages rather than cancellation. [40] By way of relief, Mr Blackler seeks judgment for the original $90,000 agreed purchase price less $2,000 for the deposit paid. Alternatively, he seeks damages representing the value of the Chattels which he said Tiger Lilly took possession of. [41] In responding to this appeal, Tiger Lilly did not contest Judge Broadmore's decision that the Agreement was a binding contract. Rather, Tiger Lilly supported the Judge's decision that the Agreement had never become unconditional but, if it had, Tiger Lilly was justified in cancelling for misrepresentation.Relevant legal principles[42] This appeal, and Blackrocks' and the applicant's original case against Tiger Lilly, raise questions of contract interpretation. I therefore remind myself of the relevant legal principles.[43] The established approach to contract interpretation in New Zealand requires a Court to ascertain objectively the meaning the parties intended the contact to bear. In order to do this the Court looks for the meaning the document would have conveyed to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.3 Consistent with this approach, the Court is not required to settle on a meaning that the parties could not have intended. It is implicit in this approach that material extrinsic to the contract will ordinarily be referenced in the course of interpretation of a contract, without any ambiguity being required. 4 There are two categories of extrinsic evidence, however, to which special rules have traditionally applied and which are relevant here. These are previous negotiations and post-contractual conduct. [44] The Supreme Court in Vector Gas Ltd v Bay of Plenty Energy Ltd has recently confirmed that evidence of previous negotiations is admissible where it tends to establish the parties' knowledge of relevant circumstances, including "the genesis of the transaction, the background, the contract, the market in which the parties are operating, [and] the subject matter of the intended contract." 5 Evidence of previous negotiations may also be used, once the meaning of the contract has been settled, to establish convention estoppel. Although the Court was clear that evidence of previous negotiations is not admissible where it is evidence of subjective intention, it was divided as to whether such evidence was otherwise, where relevant, generally admissible.3 Boat Park Ltd v Hutchinson [1999] 2 NZLR 74 at 82 adopting the statements of Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 All ER 98 (HL) at 114-115. This was affirmed by the Supreme Court in Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5 at [19] Tipping J, [61]-[64] McGrath J, supported by Blanchard J and Gault J.4 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5 at [4] Blanchard J, [22] Tipping J, [62] McGrath J, [150]-[151] Gault J. Wilson J dissented on this point, stating that extrinsic evidence is not generally admissible, with three exception, one of which being where there is an ambiguity in the words of the contract. However, he acknowledged that his approach would probably lead to the same result as that of the majority at [127]-[128].5 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5 at [13] per Blanchard J. See also at [29] Tipping J, [73] McGrath J, [129] Wilson J and Gault J's judgment at [157]-[158] where he considered previous negotiations.[45] The Supreme Court has also recently held that, in appropriate circumstances, evidence of the post-contractual conduct of the parties is now admissible. 6 This is subject to the condition that such conduct be share or mutual. 7 However, this area appears still to be under development – see the further comments of Tipping and Wilson JJ in Vector Gas as to the mutuality requirement.8Discussion[46] As can be seen from Judge Broadmore's decision, and as is confirmed by my review of the transcript of the evidence the Judge heard and of the written submissions of counsel at the trial, much of the evidence and argument related to the significance not only of pre-contractual negotiations between Blackrocks, Mr Blackler and Tiger Lilly, but also "pre-contractual" discussions between Mr Blackler and Mrs Saker (who is not a party to the contract). There was also considerable attention paid to conduct subsequent to the signing of the Agreement, and in particular what happened at and after the meetings on 1 and 9 October. In light of the various views expressed by the Supreme Court in Vector Gas, an analysis of the proper relevance, from a legal perspective, of that range of material extrinsic to the written contract represented by the Agreement is not straightforward. [47] However, in my judgement it is possible to consider the original dispute between the parties and this appeal in fairly straightforward terms. [48] Tiger Lilly contracted with Blackrocks and Mr Blackler to acquire the Lease and the Chattels.6 Gibbons Holdings Ltd v Wholesale Distributors Ltd [2007] NZSC 37, [2008] 1 NZLR 277 at [7] Elias J, [52] Tipping J, [73]-[74] Anderson J and [111] and [122] Thomas J. Blanchard J reserved his judgement on this point at [27]-[28].7 Gibbons Holdings Ltd v Wholesale Distributors Ltd [2007] NZSC 37, [2008] 1 NZLR 277 at [52] Tipping J, [73]-[74] Anderson J.8 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5 at [30]-[31] Tipping J, and at [122] Wilson J.[49] As regards the Lease, by Judge Broadmore's decision of 24 September 2007 Mrs Saker had been found to be entitled to judgment for cancellation. All that was required to give effect to that judgment was confirmation of rental arrears calculations. That judgment was perfected on 28 September. By that judgment, the Lease was deemed to have been determined as of the date of the service of the statement of claim on Blackrocks, sometime in August. Therefore, at or about the time of the contract, the Lease was no longer in existence. That Mr Blackler may have negotiated to remain in possession of the Café Premises to conclude a sale of the Café Business, does not alter that conclusion. Neither Blackrocks nor Mr Blackler was capable of giving effect to the Agreement, to the extent that it called for the transfer to Tiger Lilly of the right to the premises represented by the Lease. [50] Looked at from this perspective, in my judgement, perhaps the more appropriate assessment of the status of the Agreement is that – given the substantial importance of the transfer of the benefits provided by the Lease to the contract overall – the Agreement never came into existence because it was a condition to it coming into existence that the subject matter exist. In many ways, Judge Broadmore himself recognised that basic reality in his judgment where, as he said at [51]:Another analysis is the simple fact that Mr Blackler contracted for the sale of something he did not have at the time it was required to be handed over. He cannot therefore complain if the defendants failed to pay for something he could not deliver.[51] In this appeal Mr Blackler argued that it was sufficient if, irrespective of Blackrocks' ability to transfer the Lease, Tiger Lilly acquired a right to occupy the Café Premises with the consent of the landlord. Therefore the status of the Lease did not matter. All that matters is, as in fact happened, Tiger Lilly acquired a lease of what had been the Café Premises, and now conducts its business from those premises pursuant to that lease. On that basis, Blackrocks should be entitled to damages for Tiger Lilly's failure to perform the Agreement. [52] That is an interpretation of the Agreement that requires Tiger Lilly to pay Blackrocks a considerable sum of money for something Blackrocks did not have.That is not an interpretation of the Agreement that I find commercially realistic, even accepting the informal way the Agreement refers to the consent of the landlord. In my judgement, the Agreement on its face is clear: it was that Blackrocks would assign the Lease to Tiger Lilly and the landlord's consent to that assignment was to be obtained. [53] In terms of the possible relevance of the matrix of facts, what would perhaps be relevant here is evidence that, at the time the Agreement was signed, both parties were aware that Blackrocks had no lease and that the District Court had that day ordered that Blackrocks give up possession, but the parties nevertheless agreed to the terms of the contract represented by the Agreement on that basis. Were that to be the case, then perhaps there would be grounds for arguing that, as Tiger Lilly knew Blackrocks had no lease to assign, all the Agreement called for was for Mrs Saker as landlord to approve them as new tenants. It would appear (see [21] above), that Mrs Saker may have been of the view that that was what was going to happen. The evidence is also clear, however, that that was not what Tiger Lilly nor its directors understood. They were clear, and the Judge heard and accepted this evidence, that the first time they became aware that Blackrocks did not have a lease to assign was at the meeting on 9 October. I therefore do not think the argument can be made, by reference to the matrix of facts, that the Agreement should now be construed as Mr Blackler would have it. [54] The uncontested evidence of Tiger Lilly's directors was that – the right to occupy the Café Premises and the possible usefulness of the Chattels aside – there was no goodwill attached to the Café Business by the time Tiger Lilly entered into the contract. That is, in my view, reflected in the fact that Tiger Lilly changed the name of the business and re-presented it to the market. In those circumstances, what Tiger Lilly contracted to buy from Blackrocks was a legal right to occupy the Café Premises. That Tiger Lilly considered that its contract with Blackrocks was at an end once it discovered Blackrocks had no such right, is not surprising. [55] By reference to that analysis, alone, I would dismiss this appeal.[56] In terms of the Judge's analysis that the Agreement never became unconditional, the Judge categorised the condition in question as being that Mrs Saker had to agree to an assignment of the Lease to Tiger Lilly, and that the Lease had to be assigned to Tiger Lilly. Given that the Lease had ceased to exist by the relevant time, his conclusion that the contract never became unconditional is another way of concluding that Blackrocks and Mr Blackler never became entitled to performance by Tiger Lilly. [57] In the circumstances, I do not consider it necessary to rely on the alternative misrepresentation argument. In his judgment, Judge Broadmore referred to Harding v Victoria Insurance Co Ltd [1924] NZLR 267 at 271. As the Judge acknowledged, that is a case about the duty an insured has to make full disclosure of every material fact. That is a duty particular to insurance contracts and not one that obviously applied to Blackrocks and Mr Blackler in these circumstances. In terms of a representation argument, it seems to me the more straightforward approach is that where someone contracts to sell, ie assign, a lease, there is an implied representation that they have (or will have) that lease to sell or assign. That Blackrocks neither had, nor was in any position to acquire, a lease to assign to Tiger Lilly, to my mind constitutes a fairly obvious breach of such an implied representation. Again, I do not think it is an answer to that for Mr Blackler to say that he may have negotiated with Mrs Saker to allow Blackrocks to remain in possession for a short period of time to try to effect a sale of its business. [58] In reaching these conclusions I have carefully considered the range of other arguments Mr Blackler's made in this appeal, based on negotiations and actions involving himself, Mrs Saker and the directors of Tiger Lilly. I have done so, putting aside the conceptual difficulties of categorisation as to relevance and admissibility that arise, in terms of the correct approach to contract interpretation following Vector Gas. [59] There were, in effect, four such post-contractual matters that Mr Blackler relied on in this appeal. These were Ms Aoyama's actions after the meeting of 1 October in paying a deposit, providing a detailed standard form document to Mr Blackler and placing a "This business has been sold" sign in the window of the CaféPremises. Mr Blackler also relied on what he said could be taken from the terms of the Financial Agreement provided to him, which he did not accept. [60] As for the meeting of 1 October, I accept there is some inconsistency in the evidence, as between Ms Aoyama and Mr Te Awa, as to whether or not Tiger Lilly had, in fact, been approved as a possible tenant by Mrs Saker at that meeting. However, in my view, that inconsistency is not material, nor is it of great assistance to Mr Blackler. The actions of Tiger Lilly, through its directors, after that meeting are quite consistent with it proceeding on the basis that the transaction would go ahead, and that by way of purchase from Blackrocks, Tiger Lilly would acquire a right to occupy the Café Premises. [61] Seen in this light, Ms Aoyama's actions in paying a deposit and providing a detailed standard form document to Mr Blackler, with certain details filled out, and going into possession and starting to redecorate the premises, are all consistent with a purchaser acting on the assumption that a formal condition will be satisfied. That, in my view, would not be unusual in relatively informal contracts for the sale and purchase of small, personal businesses. Similarly, placing a sign in the window that "the business has been sold" again reflects an assumption that a formal requirement, namely the actual implementation of the assignment of the lease, will happen in the near future. Again, even in more formal business purchase contracts, there may be public announcements that a "business has been sold" before all legal formalities, including settlement, have been attended to. [62] I have also considered, in this context, the significance of the "Financial Agreement" that Tiger Lilly presented to Mr Blackler. Mr Blackler argued, as had been argued on behalf of Blackrocks at the trial, that the terms of that agreement showed that Tiger Lilly was prepared to pay some $90,000 to Blackrocks, notwithstanding the fact that by then Tiger Lilly knew that Blackrocks had no lease. I do not think – putting various obvious difficulties of the relevance and admissibility of an unsigned settlement proposal aside – that the unsigned draft agreement can be interpreted in that way. In my view, it is clear – as I think Mr Blackler himself realised all along – that the sum of $30,000 was in effect to be for the Chattels to be returned by Mr Blackler, and perhaps also to procureMr Blackler's agreement not to disturb matters by continuing litigation against Mrs Saker. I simply do not think it is possible to construe that draft document as a promise to pay not only the $30,000 for the by then missing Chattels, but also an additional amount of some $60,000 for rental arrears and other amounts as counsel for Blackrocks and Mr Blackler had argued in written submissions before the Judge. [63] I turn now to the question of the Chattels. In this appeal, Mr Blackler argued that even if he did not succeed as regards the appeal on the question of the Lease, nevertheless judgment should be given in his favour for the value of the Chattels (some $18,000 worth) that he said were left at the Café Premises and which Tiger Lilly therefore took possession of without paying for. [64] There was a conflict of evidence on this point. As noted above, Mr Blackler's evidence was that he had removed some $6,000 worth of the Chattels. The clear evidence at trial of Ms Aoyama, Mr Te Awa and a third director of Tiger Lilly, Mr Rogers, was that there was nothing left of any value in the premises once Mr Blackler had stripped it. At the same time, Mr Rogers at one point appears to acknowledge that painting and plumbing improvements, carpet, and some percentage of the assets at the time of purchase by Mr Blackler, worth some $7,000, had, in fact, been left by Mr Blacker. The carpet mentioned by Mr Rogers was not contained in the list of assets that was "attached" to the agreement for sale and purchase. The improvements and the assets at the time of purchase, however, were. [65] In his judgment, Judge Broadmore did not separately discuss the question of whether or not Mr Blackler had a claim for damages in respect of the Chattels. The Judge took the position that the Agreement was not enforceable by Mr Blackler, so that his claim for damages generally could not succeed. [66] Even if the claims by Blackrocks and Mr Blackler under the Agreement itself fail, nevertheless if Tiger Lilly did acquire Chattels, it should – on the principle I would suggest of quantum meruit – account to Blackrocks for those Chattels. [67] Given that Judge Broadmore did not reach a conclusion on this matter, I think the better approach here is to remit to him for further consideration the question ofwhether or not Tiger Lilly owes Blackrocks anything in respect of Chattels that may have been left in the Café Premises and that Tiger Lilly subsequently acquired. [68] On this basis, therefore, the appeal is dismissed but the question of whether or not, separately from the Agreement, Tiger Lilly acquired some of the Chattels and therefore should account to Blackrocks for the value of those, is remitted to Judge Broadmore for further consideration. Given what is likely to be the relatively small amount of money involved, I encourage the parties to resolve that matter between them. [69] Tiger Lilly is entitled to costs. As I perceive matters, it would appear that costs on a 2B basis for a half-day appeal are appropriate, discounted to reflect the partial success Mr Blackler has had as regards my remission to Judge Broadmore of the question of possible payment for certain of the Chattels. I suggest that a 12.5 per cent discount would be appropriate to recognise that partial success. If, however, the parties are unable to agree on costs, I will receive submissions."Clifford J"Solicitors: Collins & May Law Office, Lower Hutt for the respondent (michael@collinsmay.co.nz) Copy to: Mr S A Blackler, P O Box 7532, Newtown, Wellington, appellant (blackrocks café@hotmail.com)