DELAMERE v LIU [2023] NZCA 427

DELAMERE v LIU [2023] NZCA 427 [6 September 2023]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA613/2021[2023] NZCA 427BETWEEN TUARIKI JOHN EDWARD DELAMEREAppellantAND YINGHENG LIURespondentHearing: 22 August 2022Court: Cooper P, Mallon and Wylie JJCounsel: A C Beck and J M Elliott for AppellantD B Hickson for RespondentJudgment: 6 September 2023 at 11.00 amJUDGMENT OF THE COURTA The appeal is dismissed.B Mr Delamere must pay the respondent's costs for a standard appeal on aband A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Cooper P)[1] The appellant, Tuariki Delamere, appeals against a judgment of the High Courtfinding him liable to the respondent, Yingheng Liu, for breach of contract.1 Mr Liusought to recover the sum of $350,000 (plus interest) that he paid to invest inTDA Botany Ltd, a company associated with Mr Delamere.1 Liu v Delamere [2021] NZHC 2445 [High Court judgment].[2] Two judgments were delivered by Lang J. In the first, he entered judgment infavour of Mr Liu, but rejected Mr Liu's claim against TDA Immigration andStudent Service Ltd (TDA Immigration), a company owned and operated byMr Delamere. He dismissed a counterclaim and set-off advanced by Mr Delamere.2In the second he addressed the amounts payable by Mr Delamere for damages, interestand costs.3 Following the second judgment, these figures were quantified respectivelyas $326,816.25, $75,437.62 and $56,956.00. In the result, judgment was entered fora total sum of $459,209.87.[3] The issues raised on the appeal concern the nature and effect of the contractualarrangements between the parties, whether the Judge was right to find liability on thebasis of an implied term and whether Mr Liu was entitled to relief in circumstanceswhere he was himself allegedly in breach of contract.Facts[4] Mr Beck, for Mr Delamere, accepted the summary of the facts at the outset ofthe High Court judgment, on which we base the following account. The Judgerecorded that Mr Liu is a Chinese national who attended secondary school in Aucklandbefore graduating from Massey University in 2006. Returning to China he becamethe general manager of a company owned by his parents, which manufactures railwaysignals. He returned to New Zealand in 2010, and, having become interested inobtaining New Zealand residency, contacted Mr Delamere to assist him to that end.4[5] As noted, Mr Delamere owns and operates TDA Immigration. At one time hewas the Minister of Immigration, and he has expertise in immigration matters. InAugust 2012, Mr Delamere and TDA Immigration agreed to assist Mr Liu to obtainpermanent residency in New Zealand. It was proposed that be achieved using afast-track immigration procedure known as "Business (Entrepreneur Plus)". Thisrequired Mr Liu to invest at least $500,000 in a business to be operated in2 High Court judgment, above n 1.3 Liu v Delamere [2021] NZHC 3348 [High Court quantum judgment].4 High Court judgment, above n 1, at [2]–[4].New Zealand. The business had to employ at least three New Zealand citizens orpermanent residents on a full-time basis for at least two years.5[6] The plan was for Mr Liu to satisfy these requirements by acquiring 30 per centof the shares in a company that would be formed to operate a branch of Mr Delamere'sbusiness and situated in Botany. Mr Delamere would hold the balance of the shares.The company would have three directors: Mr Liu, Mr Delamere, and his son,Jean-Paul Delamere. It was also agreed that Mr Liu would use his contacts in Chinato find potential clients who the company could assist to obtain New Zealandresidency. Mr Liu would be paid a commission if the company was engaged to act forpersons who he sourced.6[7] Three written agreements prepared by Mr Delamere were signed recordingthese arrangements on 24 August 2012. At that time TDA Botany had not beenincorporated. Mr Liu paid the sum of $500,000 into the bank account of anothercompany owned by Mr Delamere, TDA Immigration Mount Albert Ltd(TDA Mt Albert). That company had been operating for about a year and had severalemployees. TDA Mt Albert subsequently changed its name to TDA Botany andopened another office in Botany. The Judge found that TDA Botany thereafterassumed responsibility for paying the wages of two of the existing employees ofTDA Immigration.7[8] It was intended that of the $500,000 deposited into TDA Botany's bankaccount, $150,000 would be used as working capital. The balance of $350,000 wasplaced on term deposit to meet the future needs of the company as agreed by thedirectors. Mr Liu had the right to veto any proposed use of the money with which hedisagreed. Under the agreed arrangements he was to be the sole signatory on the termdeposit account and funds could not be removed from the account without his specificagreement.85 At [4]–[5].6 At [6]–[7].7 At [8]–[9].8 At [10].[9] Once Mr Liu obtained permanent residency he had the right to transfer hisshares in TDA Botany back to Mr Delamere in return for repayment of the funds heldon term deposit. But the agreement did not prescribe what was to happen if hisapplication for permanent residency was declined, as in fact occurred.Immigration New Zealand was not convinced that Mr Liu had committed the fundsheld on term deposit for use in TDA Botany's business. Further, it considered thatTDA Botany had effectively retained the services of two existing employees, and hadnot created the three new employment positions required in accordance with theEntrepreneur Plus scheme.9 With Mr Delamere's assistance, Mr Liu appealedunsuccessfully to the Immigration and Protection Tribunal. He was subsequentlydenied leave to appeal by the High Court.10[10] Mr Liu then asked Mr Delamere to repay the funds held on term deposit, butdiscovered that most of the money had been transferred to a current account used tomeet TDA Botany's operating expenses.11 Mr Delamere had instructed the bank totransfer the funds because, contrary to the agreement, Mr Liu was not in fact the solesignatory on the term deposit account. Both Mr Delamere and his son had the abilityto give the bank instructions about the use of the money on term deposit.12[11] This litigation followed.The claim in the High Court[12] Although there were initially other causes of action advanced, by the end ofthe trial the only remaining claim was based on breach of contract. Mr Liu claimedagainst both Mr Delamere and TDA Immigration that they breached expresscontractual terms by failing to ensure Mr Liu was the sole signatory on the term depositaccount, and by directing the bank to transfer funds out of the term deposit accountinto TDA Botany's current account. Mr Liu also claimed the defendants breached an9 At [11]–[12].10 Liu v Ministry of Business, Innovation & Employment [2014] NZHC 3074.11 The Judge found that approximately $80,000 remained in the term deposit: High Court judgment,above n 1, at [13].12 At [13].implied term by failing to return the funds held in the term deposit account to him afterhis application for residency was declined.13[13] In response, the defendants argued the parties had entered into a joint ventureunder which Mr Liu had assumed an obligation to source clients in China who wouldengage Mr Delamere and his companies to assist them in obtaining New Zealandresidency. Because he failed to introduce any clients Mr Liu breached his obligationsunder the joint venture arrangement. They sought to recover expenditure thatTDA Immigration incurred in meeting TDA Botany's operating costs during thecurrency of the joint venture.14[14] The Judge identified six issues he considered it necessary to decide.15 The firstwas the nature of the contractual arrangements entered into on 24 August 2012, whichhe referred to as the immigration services agreement, the term deposit agreement andthe client sourcing agreement.16 The Judge rejected an argument advanced byMr Beck on the basis of evidence given by Mr Delamere that the three agreements didnot represent the entire agreement of the parties and that there were matters notreduced to writing which had nevertheless been orally agreed.17 Those mattersallegedly included agreements that Mr Liu had agreed to attract at least nine businessclients per year, and that Mr Liu would work full time on the business of TDA Botany.[15] In rejecting these claims, the Judge said:[27] Several factors persuade me that these issues were not orally agreedterms of the agreement between the parties. First and foremost, Mr Delameredid not include them in the Client Sourcing agreement. If they werefundamental, or even important, to his decision to enter into the arrangementone would expect him to include them in the written agreement. Secondly,the statement of defence does not allege that the arrangement was partlywritten and partly oral. Rather, it responds to several of Mr Liu's allegationsby stating that Mr Delamere "relies on the full terms" of the three writtenagreements and that the agreements "must be construed in their entirety."Thirdly, Mr Beck did not put these issues to Mr Liu in cross-examination ashaving been agreed between the parties orally. Fourthly, Mr Delamere neverraised any concerns about Mr Liu's apparent non-compliance with these13 At [14].14 At [15].15 At [16].16 The parties had described what the Judge referred to as the client sourcing agreement as the"Chinese Sourcing Agreement". To avoid confusion, we use the term adopted by the Judge.17 At [25]–[28].obligations in any of the email correspondence that took place after theagreement was signed. If they formed part of the agreed terms of thecontractual arrangement one would expect Mr Delamere to have voicedconcern when he became aware Mr Liu was not complying with them.[16] The next issue was whether the funds had been transferred out of the termdeposit account in breach of an express term of the term deposit agreement. On sevenseparate occasions between 26 August 2013 and 12 January 2015 funds had beentransferred out of the term deposit account and into the current account on the basis ofinstructions given by Mr Delamere to his accountant. Mr Liu's agreement was notsought. Mr Delamere said that Mr Liu must have known the funds were needed andbeing used to meet operating expenses and that TDA Botany needed to continuetrading if Mr Liu's application for residency was to be successful.18[17] The Judge rejected this defence, noting that TDA Botany had business incomefrom New Zealand based clients, Mr Liu was not provided with copies of thecompany's financial statements, and the term deposit agreement clearly requiredMr Liu's permission to be sought and obtained. If Mr Delamere had told Mr Liu thatthe funds were needed for operating expenses, Mr Liu could then have decided whathe wanted to do, including whether he wanted to jeopardise the chances of hisresidency application succeeding by not agreeing to the funds being withdrawn.19[18] The Judge also rejected an argument that Mr Delamere's compliance with hisobligations under the term deposit agreement was contingent on Mr Liu meeting hisobligations under the client sourcing agreement. Mr Beck argued that the claim couldnot succeed because the law would not permit a party in breach of contractualobligations under one agreement to enforce obligations under another.20 The Judgeheld that the two agreements were not interdependent:[37] The Term Deposit agreement prescribed the terms on which thesum of $350,000 would be held. It made no mention of the Client Sourcingagreement. Similarly, the Client Sourcing agreement made no mention of theTerm Deposit agreement. Although the two agreements had their genesis inthe same factual matrix they were independent of each other and performeddifferent functions. The obligations imposed on one party by one agreement18 At [29]–[30].19 At [31]–[34].20 At [36].did not depend on the other party performing the obligations imposed byanother agreement.[19] The Judge also rejected a claim that the arrangements overall constituted a jointventure. While he accepted there was a link between the three agreements arisingfrom the fact that Mr Delamere and TDA Immigration were endeavouring to assistMr Liu to obtain permanent New Zealand residency, he noted the agreements draftedby Mr Delamere distinguished between the participants: while Mr Liu was a party toall three, Mr Delamere and TDA Immigration were only parties to the term depositand immigration services agreements and TDA Botany was only a party to the clientsourcing agreement. It was only Mr Liu and TDA Botany who were to be involved insourcing clients from China, they alone were subject to the obligations under the clientsourcing agreement, and only TDA Botany would suffer loss in the event of a breachof Mr Liu's obligations under that agreement. Each agreement had a differentfunction.21[20] The Judge then dealt with an agency issue. Mr Liu's claim included anallegation that by procuring the transfer of the funds Mr Delamere had breachedobligations imposed on him under the term deposit agreement in his capacity asTDA Immigration's agent. The Judge did not accept that was so; rather, Mr Delamerehad acted as the agent of TDA Botany. However, there was no dispute thatMr Delamere had caused the transfers to take place and in doing so he had breachedhis own personal obligations under the term deposit agreement by failing to obtainMr Liu's prior consent.22[21] The Judge then turned to consider whether the defendants should be requiredto repay the $350,000 to Mr Liu. The Judge pointed out that the normal contractualrelief of putting the plaintiff in the position he would have been in had the breach notoccurred would result in the money being returned to the term deposit account. Thatwould not assist Mr Liu, unless there was a further order requiring the money to bepaid to him. At the trial, the Judge allowed Mr Liu to amend his pleading to allege an21 At [39]–[41].22 At [43], [45] and [47]–[48].implied term that the funds held in the term deposit account would be returned to himif his application for permanent residence failed.23[22] Applying Bathurst Resources Ltd v L&M Coal Holdings Ltd,24 the Judgeconcluded such a term should be implied.25 He reasoned that it was the intention ofthe parties that Mr Liu should be able to withdraw from TDA Botany once the outcomeof his permanent residency application was known. Under the term deposit agreement,if successful he could seek to be repaid, and transfer his shareholding to Mr Delamere.Alternatively, he could elect to retain his shares and the money in the term depositaccount would be paid to Mr Delamere.26[23] The Judge thought the implied term would be reasonable and equitable as itmirrored the consequences that would have followed if Mr Liu's application had beensuccessful. Further, implication of the term was necessary to give the term depositagreement business efficacy: without it, the agreement failed to provide for one of thetwo possible outcomes of the residency application; and the term was obvious, capableof clear expression and did not contradict any express term of the agreement. Heimplied the term accordingly.27The appeal[24] Mr Beck's argument on the appeal was that the Judge:(a) wrongly concluded that there were three independent contracts;(b) failed to take into account breaches of contract by Mr Liu which meanthe was not in a position to demand performance by Mr Delamere. Thiswas to allow Mr Liu to benefit from his own wrong;(c) wrongly found Mr Delamere was personally liable for the transfer offunds which was carried out by TDA Botany;23 At [50]–[51].24 Bathurst Resources Ltd v L&M Coal Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696.25 High Court judgment, above n 1, at [58].26 At [55]–[56].27 At [57]–[58].(d) wrongly rejected the argument that the parties were engaged in a jointventure, in which Mr Liu owed fiduciary duties to Mr Delamere andTDA Botany, and which he breached by failing to devote himself to hisobligations under the venture full time, instead furthering his owninterests by devoting most of his time to the family business in Chinaand allowing his own personal interests to conflict with the interests ofthe joint venture; and(e) wrongly concluded that a term should be implied in the term depositagreement. The implied term had not been consistently formulated bythe Judge, and was not in fact capable of clear expression. It could notreasonably be concluded that the parties must have intended such aterm: it was far from obvious. Further it did not recognise thatMr Delamere was not the person who held the funds. The funds werein fact held by TDA Botany, which was not a party to the proceeding.The Judge had failed to confront the fact that to imply a term the test isone "of strict necessity, a high hurdle to overcome".28[25] Mr Beck was also critical of the Judge's conclusion that the quantum ofdamages was equal to the sum of $350,000 initially paid into the term deposit accountof TDA Botany. He submitted the Judge should have asked what the position wouldhave been if there had been no breach of contract: he contended in that case Mr Liumight have insisted that nothing be paid out of the term deposit and the company beallowed to fail thereby removing any chance of his residency being granted.Alternatively, he might have allowed payments to be made to give his application achance of succeeding. The reasoning adopted by the Judge did not factor in thepossibility that had Mr Delamere asked Mr Liu to agree to some of the deposit moneybeing used to meet operating expenses he might have agreed that should occur, so asnot to jeopardise his application for residency if the company could not continue totrade.28 Referring to Bathurst Resources, above n 24, at [116(a)].[26] The Judge had, in Mr Beck's submission, failed to consider the probabilities.While Mr Delamere had effectively made Mr Liu's decision for him, that did not meanthat Mr Delamere should be liable for 100 per cent of the loss. The Judge had failedto assess the damages on a proper basis, which would have involved assessing theimpact of Mr Liu's lost opportunity to decide whether the money should have beenpaid towards operating costs.Analysis[27] We accept that the three agreements that Mr Delamere drafted and Mr Liusigned were interrelated. All were part of an overall arrangement by which it wasintended Mr Liu would be able to achieve the status of permanent New Zealandresident. Although that endeavour was ultimately not successful, the three agreementswere designed to show a plausible basis on which it could be claimed Mr Liu had metthe investment requirements for residency. He would acquire a minority ownership ina New Zealand company (TDA Botany), employing staff for an effective downpayment of $150,000. The company would with his assistance seek to obtain businessfrom persons in China intending to seek New Zealand residency. This involved him,pursuant to the client sourcing agreement, organising seminars in China utilising hispersonal networks. TDA Botany would arrange for appropriate speakers to present atthe seminars organised by Mr Liu and assumed the role of preparing and submittingapplications, making submissions and any necessary communications with therelevant immigration authorities.[28] Under the term deposit agreement, Mr Liu had two options if his residencyapplication succeeded. First, he could sell his shares back to TDA Botany for theamount of the term deposit of $350,000, and 30 per cent of "the remaining net profitnot yet paid out" (in accordance with the immigration services agreement, whichentitled Mr Liu to 30 per cent of TDA Botany's net profits). In the alternative, if hewished to retain his shareholding, he agreed to pay the $350,000 to Mr Delamere.[29] It is apparent that these arrangements were such that, at Mr Liu's election, therelationship could be brought to an end once he had achieved permanent residencestatus. In that circumstance, he would cease to have any interest in the company. Hisparticipation in the arrangements would have resulted in him achieving permanentresidence for a cost of $150,000, less his salary, director's fee and 30 per cent of theprofits made by TDA Botany from intending migrants whether from China orelsewhere. His ability to terminate the arrangements is consistent with the fact thatthe client sourcing agreement did not make any specific requirements as to the levelof business he was obliged to generate for the company.[30] The fact that the three agreements were part of an overall arrangement does notmean that their provisions were interdependent in the sense argued for by Mr Beck.Had that been the intention it seems likely that there would have been provisions tothat effect in each agreement, and the provisions of each would have beencross-referenced and made contingent on the performance of each. Alternatively, theobligations could have been set out in one agreement. But here, the arrangementscould be implemented by the separate performance of each agreement.[31] We cannot accept the characterisation of the arrangements as constituting ajoint venture, in the sense that term is commonly understood, of an association enteredinto by the parties for the purpose of advancing a common endeavour with a view tomutual profit.29 We see the purpose of the arrangement as being achievement ofMr Liu's desired immigration status. It is clear that the overall objective was to securepermanent residency for Mr Liu, and to do that it was necessary to show that he hadacquired an interest in a New Zealand company carrying on business and employingstaff. Profitability was ultimately secondary to securing the successful immigration ofMr Liu and his family to New Zealand.[32] There were different parties to the agreements. The immigration services andterm deposit agreements were between Mr Delamere, Mr Liu and TDA Immigration,but the parties to the client sourcing agreement were Mr Liu and TDA Botany. If, asis now alleged, Mr Liu did not meet his obligations under the client sourcingagreement, TDA Botany, to which those obligations were owed, could havemaintained a claim against him. But it was not a party to the present proceeding.29 United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 10.[33] The fact that the $350,000 was placed in a term deposit and was only to be inplace for a period of two years is also contrary to the idea that there was a joint venture.This was specifically provided at cl 2(b)(i) of the term deposit agreement whichrecorded that the parties agreed that the "$350,000 will be placed on term deposit for2 years". Whatever the nature of the relationship between the parties, the obligationsassumed were contractual in nature and we see no room for any suggestion that theyhad a fiduciary nature.[34] The term deposit agreement which the Judge held had been breached wasspecific in the obligations it expressed concerning the use and management of the$350,000 deposit paid by Mr Liu. Clause 3 of the agreement included the followingprovisions:Use and management of the $350,000 on deposit3. All parties agree that in respect of the $350,000 referred to in 2(b)(i)above:a. These funds cannot be withdrawn from the deposit accountwithout the specific agreement of Yingheng Liu;b. The signatory to this account shall be Yingheng Liu solely;c. All parties agree that interest from the $350,000 deposit shallbe paid to Yingheng Liu as income.d. Should Yingheng Liu become physically or mentallyincapacitated so that he is unable to competently fulfil his roleand duties as a director then the Board of Directors of[TDA Botany] by majority vote may authorise another personto be a signatory to the said account;f. The funds may be used for whatever purpose as agreed by theBoard of Directors of [TDA Botany], subject to Yingheng Liuhaving a veto vote on any decision affecting those funds.[35] This money could not be used for any purpose without Mr Liu's agreement.The arrangements contemplated that any necessary contribution by Mr Liu to theday-to-day operating costs of TDA Botany would be met out of the $150,000 whichhe had contributed in accordance with cl 4, which was in the following terms:Use and management of the $150,000 on deposit4. All parties agree that in respect of the $150,000 referred to in 2(b)(ii)above:a. These funds shall be deposited into the [TDA Botany]operating account;b. The management and use of these funds will be as determinedand agreed by the Board of Directors;c. These funds shall be used to fund the day to day operations of[TDA Botany] and overseas venture opportunities;d. These funds will be used to fund the establishment of[TDA Botany] offices[36] Preserved intact, as the term deposit agreement provided (unless Mr Liu agreedto its use), once Mr Liu had been granted permanent residency the $350,000 depositcould be used for the purposes set out in cls 5 and 6 of the agreement: either to fundthe purchase of his shares in TDA Botany by the company, or alternatively to be paidto Mr Delamere, if Mr Liu wished to retain his shareholding.[37] The use of any part of the $350,000 deposit without Mr Liu's consent was abreach of the term deposit agreement. We reject Mr Beck's argument thatMr Delamere should not be held responsible for the transfer. It was Mr Delamere whoprocured the transfer of the funds from the term deposit account in the name ofTDA Botany to its current account. In doing so he acted as the agent of TDA Botany.He had no right to do so. He was a director and shareholder in the company and couldnot as its agent put the company in the position of breaching the provisions of theterm deposit agreement. While the Judge was clearly correct to hold that Mr Delameredid not act (as alleged in the statement of claim) as the agent of TDA Immigration inarranging for the transfer of the funds, Mr Delamere was himself a party to theagreement, and personally bound by its terms. The Judge's conclusion on that issueis plainly right.[38] We turn next to the challenge to the Judge's conclusion there was an impliedterm in the term deposit agreement to the effect that if Mr Liu failed in his applicationfor permanent residency, he would be entitled to be repaid the balance of the fundsheld in the term deposit account in return for transferring his shares in the companyback to Mr Delamere. The Judge also held that the implied term would extend toallowing Mr Liu the option of retaining the shares on the basis that the balance of thefunds held in the term deposit account would be paid to Mr Delamere.[39] Mr Beck's principal contention was that it could not be said the implied termwas one which the parties must have intended form part of their contract: in otherwords, the "strict necessity" test for the implication of a term had not been met.30Additional points made were that it could not be said that the parties must obviouslyhave intended such a term to apply, and the term which the Judge held should beimplied was not capable of clear expression. He argued that the failure of the contractto deal with the situation that would arise if Mr Liu's application for permanentresidency was unsuccessful was simply that the parties chose not to deal with thatsituation in the term deposit agreement.[40] The term deposit agreement provided only for what was to occur once Mr Liu'sapplication for permanent residency had been granted. The relevant context of theterm deposit agreement for present purposes includes the immigration servicesagreement and the client sourcing agreement. It was in the context of all threeagreements that Mr Liu made his investment. It is very clear that he would have madeno such investment but for his desire to progress his permanent residency application.It is equally clear that if the application were to fail there would have been no reasonor justification for a continued involvement in the arrangements on his part.[41] The term deposit agreement clearly contemplated that even if his applicationwere successful, he could decide to have no further involvement in TDA Botany. Inthat case the $350,000 deposit would be returned to him for his shareholding in thecompany. If he elected to retain his shareholding the $350,000 would go toMr Delamere. In the result his application was unsuccessful: could it be that theparties contemplated in these circumstances that he would maintain his interest andinvolvement in TDA Botany?30 Referring to Bathurst Resources, above n 24, at [116(a)].[42] We think the answer to that question must be no. We consider that to give thearrangements business efficacy it was necessary to imply a term enabling the return tothe $350,000 to Mr Liu in those circumstances. We think the parties must haveintended that if the permanent residency application failed Mr Liu would be able tosurrender his shares for the return of the deposit, just as he could if it were successful.To hold otherwise would be to construe the agreement as requiring him to maintainhis investment in a company when the sole purpose of his investment had disappeared,while at the same time allowing him to withdraw when the objective had beenachieved. Not only would that be unreasonable and inequitable, but it would also denythe agreement business efficacy. We consider the Judge was right to conclude that aterm should be implied.[43] Mr Beck was critical of the fact that the implied term was worded by the Judgein different ways. At one stage the Judge said the term was "to the effect that the fundsheld in the term deposit account were to be returned to [Mr Liu] if he was not grantedpermanent residency".31 Later, the Judge referred to an implied term that:[58] if Mr Liu failed in his application for permanent residency, hewould be entitled to be repaid the balance of the funds held in the term depositaccount in return for transferring his shares in the company back toMr Delamere. Alternatively, he could retain the shares and the balance of thefunds held in the term deposit account would be paid to Mr Delamere.In the quantum judgment the Judge said that subject to adjustments he would enterjudgment for "the amount Mr Delamere ought to have arranged for TDA Botany torepay to Mr Liu once the efforts to obtain permanent residency had failed".32[44] We do not consider these differences in wording have the significance thatMr Beck sought to attach to them. We doubt that it was appropriate to hold that therewas an implied term in the contract entitling Mr Liu to maintain his investment inTDA Botany if his application for permanent residency failed. We do not considersuch a term would be necessary to give effect to the existing agreement, or give itbusiness efficacy. But otherwise, an implied term that the funds held in the termdeposit account would be returned to Mr Liu with all accrued interest if his application31 High Court judgment, above n 1, at [51].32 High Court quantum judgment, above n 3, at [7].for permanent resident status was not granted, was appropriate.33 This is effectivelywhat the Judge held, despite minor differences in the wording he adopted. We do notconsider his approach was wrong.[45] Another issue raised by Mr Beck was that the Judge was wrong to hold therewas an implied term because TDA Botany was not itself a party to the term depositagreement. We do not agree. The term deposit agreement recorded at the outset thatMr Liu had invested the sum of $500,000 in TDA Botany, and then set out theagreement of Mr Delamere, Mr Liu and TDA Immigration as to how the money wasto be used. TDA Botany was not a party to the agreement, but it did not need to be.Given it was the term deposit agreement that dealt with the use of the money, that wasthe appropriate agreement in which to imply the term.[46] This leaves for consideration Mr Beck's criticism of the Judge's approach tothe assessment of damages. It was based on what the Judge said in the followingparagraph:34[34] Mr Delamere did not have to take this step. At any stage he couldhave told Mr Liu that TDA Botany needed to use the funds held in the termdeposit account to meet its operating expenses. He could also have toldMr Liu the company could not continue trading unless this occurred. HadMr Delamere advised Mr Liu of these facts Mr Liu would have been requiredto decide whether to agree to the funds held in the term deposit account beingused to meet TDA Botany's operating expenses. If Mr Liu refused to allowthis to occur he would obviously have jeopardised his prospects of obtainingpermanent residency. Ultimately, however, this was a decision theTerm Deposit agreement required Mr Liu, and not Mr Delamere, to make.In making the decision for him Mr Delamere deprived Mr Liu of the ability topreserve the funds held on term deposit even though this would in allprobability have cost him the opportunity to obtain permanent residency.[47] Mr Beck claimed this was to be seen as a finding of lost opportunity, which theCourt later chose to ignore when it came to calculating damages. He submitted thatin cases of lost opportunity a breach of contract does not give rise to liability for thewhole of the loss. Rather, damages have to be assessed on the basis of the balance ofprobabilities, taking into account what would have happened had Mr Delamere toldMr Liu that it was necessary for money in the term deposit account to be used to fund33 The term deposit agreement provided that interest on the $350,000 deposit would be paid toMr Liu as income.34 High Court judgment, above n 1.the ongoing activities of TDA Botany. The Judge had wrongly failed to analyse thequantum of the claim on this basis. Mr Beck relied for this submission onBenton v Miller & Poulgrain (a firm),35 a case involving allegations of negligenceagainst a solicitor, and the discussion in Burrows, Finn and Todd on the Law ofContract in New Zealand.36[48] In Benton it was alleged that if the solicitor, Mr Poulgrain, had givenappropriate advice in relation to relationship property claim, the plaintiff, Mr Benton,and his wife would have entered into an agreement declaring a property to be hisseparate property.37 But under cross-examination, he appeared uncertain that his wifewould have signed such an agreement. In discussing the issue of the standard of proof,Glazebrook and William Young JJ observed:38[47] In cases which turn on how a plaintiff would have acted in the absenceof a breach of duty, the all or nothing approach is usually (although notalways: see Davies v Taylor) applicable. So if the plaintiff shows that it ismore likely than not that he or she would have acted in a particular way, theCourt acts on the assumption that this is the way the plaintiff would haveacted. If this is not established as being more likely than not, then the Courtacts on the basis that the plaintiff would not have acted in that particular way.This approach can be justified in various ways depending on the context. These rationales are applicable in cases where the plaintiff has not establishedon the balance of probabilities that he would have acted differently in theabsence of the defendant's breach of duty. They are not of such obviouscogency in cases in which the plaintiff has shown, but only by a narrowmargin, that he or she would have acted differently but then seeks full damageson an all or nothing basis. There is no doubt, however, that the all or nothingapproach is usually applied in both situations: [49] As this passage shows, the proper approach turns on the state of the evidence.The discussion in Benton was about what the plaintiff would have done if properlyadvised, which is not this case. Here the issue is as to the effect of a breach of theclear contractual term requiring the deposit to be retained intact. Mr Beck was forcedto rely on the Judge's observation about the decision Mr Liu would have had to make35 Benton v Miller & Poulgrain (a firm) [2005] 1 NZLR 66 (CA).36 Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract inNew Zealand (7th ed, LexisNexis, Wellington, 2022) at [21.2.2(f)].37 Benton, above n 35, at [15], citing Davies v Taylor [1974] AC 207 (HL).38 At [47].had Mr Delamere told him the term deposit money was needed. But he was unable topoint to any factual finding establishing that Mr Liu would have approved theexpenditure of the money (or some of it) if asked prior to its use. The Judge plainlymade no such finding. We heard no argument that the Judge should have found, onthe evidence, that Mr Liu would have been prepared to agree to the expenditure of themoney.[50] Had the Judge made such a finding, it would have been contrary to Mr Liu'sevidence that, if his application for permanent residency was declined, the money inthe term deposit would be returned to him so that his effective loss would be limitedto the $150,000 allocated to working capital. Mr Liu stated that his understanding wasthat $150,000 was all that he was ever risking as part of the arrangements withMr Delamere.[51] We see the extract of the judgment we have set out above at [46] as simplyunderlining the importance of the contractual term that was breached. Absent morefactual findings, the damages sustained were the loss of the substantial portion of theterm deposit money wrongly taken from the account. In these circumstances thefactual basis for Mr Delamere's argument has not been established and we reject it.There is nothing in the discussion in Burrows, Finn and Todd which suggests adifferent outcome. The proper analogy is not to a lost opportunity, but rather to moneywrongly taken in breach of a contractual term.[52] For these reasons we are satisfied that the appeal cannot succeed.Result[53] The appeal is dismissed.[54] Mr Delamere must pay the respondent's costs for a standard appeal on a band Abasis and usual disbursements.Solicitors:Upper Hutt Law Ltd, Wellington for AppellantPCW Law Ltd, Auckland for Respondent