WAIKATO-TAINUI TE KAUHANGANUI INC v HOUSING NEW ZEALAND CORPORATION [2015] NZHC 1163

WAIKATO-TAINUI TE KAUHANGANUI INC v HOUSING NEW ZEALAND CORPORATION [2015] NZHC 1163 [28 May 2015]IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYCIV-2014-419-000424[2015] NZHC 1163BETWEEN WAIKATO-TAINUI TEKAUHANGANUI INCPlaintiffAND HOUSING NEW ZEALANDCORPORATIONDefendantHearing: 8 May 2015Appearances: Daniel Shore and Roxy Dhanjee for the PlaintiffFionnghuala Cuncannon and Kate Muirhead for the DefendantJudgment: 28 May 2015RESERVED JUDGMENT OF MOORE JThis judgment was delivered by me on 28 May 2015 at 3.00 p.m.pursuant to Rule 11.5 of the High Court Rules.Registrar/ Deputy RegistrarDate:CONTENTSIntroduction [1]Waikato Raupatu Claims Settlement Act 1995 [9]The PartiesWTK and HNZC [14]SEKCAI [16]The property [17The agreements [25]SEKCAI raises funds to purchase the property [52]Parties' submissions [60]Issues [66]Did the first agreement come to an end when HNZC enteredinto its agreement with WTK? [68]If the first agreement did come to an end, should WTK beentitles to specific performance: [80]In any event, should WTK be entitled to specific performanceof the second agreement? [81]Timing [85]The conditional nature of the agreement [87]SEKCAI's knowledge of WTK's interest [90]The principles of the Act and settlement [92]Other issues relevant to competing equities [98]Conclusion ` [101]Result [103]Introduction[1] Housing New Zealand Corporation ("HNZC") has mistakenly agreed to sellthe same house to two different purchasers.[2] The mistake arose from a misunderstanding on HNZC's part of its obligations under the Waikato Raupatu Claims Settlement Act 1995 ("the Act").[3] HNZC wrongly believed that under the Act it was required to offer the house to the plaintiff, Waikato-Tainui Te Kauhanganui Incorporated ("WTK") before itcould agree to sell the property to South East Kirikiriroa Community AssociationIncorporated ("SEKCAI").[4] Acting on that misapprehension. HNZC offered WTK a right of first refusal to purchase the property on the same terms as it had offered SEKCAI. WTK waived its right to purchase. As a consequence HNZC then entered an agreement for the sale and purchase of the house with SEKCAI.[5] Despite this, shortly afterwards, HNZC re-offered the property to WTK because it believed the terms of its offer to SEKCAI may have been more favourable for tax reasons than the offer it had earlier made to WTK. This time WTK elected to exercise its right to purchase and advised HNZC.[6] After it realised its error, HNZC advised WTK that the re-offer was incorrect and HNZC would dispose of the property to SEKCAI.[7] HNZC claims its initial agreement with SEKCAI was unconditional because, despite its earlier view, it was not compelled by the Act to first offer the property to WTK or to make the re-offer.[8] Furthermore, while HNZC accepts the second offer to WTK was enforceable, it claims SEKCAI has a better equitable interest in the property and WTK's claim inspecific performance should be refused. In that event HNZC accepts that WTK is entitled to an award of damages.Waikato Raupatu Claims Settlement Act 1995[9] In 1995 the Act came into force. The Act recorded the Crown's apology andits acknowledgement that its representatives and advisors acted unjustly and in breach of the Treaty of Waitangi in its dealings with the Kingitanga and Waikato in sending its forces across to Mangataawhiri in July 1863 and an unfairly labelling Waikato as rebels.1 The Crown expressed its unreserved regret and apology for the loss of lives and the devastation of property and social life which resulted. The Crown acknowledged that the subsequent confiscations of land and resources were wrong and had a crippling impact on the welfare, economy and development of Waikato. In appreciation of the sense of grief and injustice arising from the Crown'sfailure to recognise the Treaty of Waitangi, the Crown has agreed to return as much land in its possession as possible and the Crown, on behalf of all New Zealanders, sought to atone for these injustices and begin the process of healing to enter a new age of co-operation with the Kiingitanga and Waikato.[10] No doubt in recognition of the Crown's obligations to return to Waikato- Tainui as much of the land in its possession as possible, the Act requires the Crown to first offer to Waikato-Tainui any land it proposes to sell. In effect, the Act confers on Waikato-Tainui a first right of refusal in relation to the sale of residual Crown land.[11] There are, however, certain exceptions. One of those exceptions is contained in s 11 the relevant parts of which are set out below:11 Right of land holding trustee to acquire residual Crown land in certain circumstances(1) Where a Crown body (or any body that was a Crown body at the date on which this section comes into force or on which the body first acquired the residual Crown land concerned, whichever is the later) proposes to sell any residual Crown land to any person other than—[](c) the existing tenant of a house situated on any residual Crown land that is—1 Waikato Raupatu Claims Settlement Act 1995, s 6.(i) land of Housing New Zealand Limited or of Housing New Zealand Corporation; or[]the body shall give to the land holding trustee notice of the proposed sale setting out the price and other proposed terms of sale and offering to sell the land to the land holding trustee on those terms.[12] Section 11 of the Act also sets out a prescriptive scheme once notice of the proposed sale is given and a one month timeframe within which the offer is to be accepted.2[13] Where the Crown has offered to dispose of land to a land holding trustee on terms more favourable than an earlier offer made to the land holding trustee it must first re-offer the land to the land holding trustee on the more favourable terms.3The partiesWTK and HNZC[14] WTK is a land holding trustee for the purposes of the Act.[15] HNZC is a Crown body for the purposes of the Act. It is the registered proprietor of the property in question.SEKCAI[16] SEKCAI has, since 2001, been HNZC's tenant in the property. HNZC claims its contract with SEKCAI to sell the property is legally binding. SEKCAI is not a party to these proceedings because it does not have the financial means to engage in this litigation. Furthermore, because SEKCAI and HNZC share a community of interest in the outcome, the position of SEKCAI is protected by HNZC. SEKCAI'sposition is covered by an affidavit sworn by its manager.2 Section 11(2) of the Act.3 Section 11(4) of the Act.The property[17] The property at the centre of this dispute is located at 53 Wellington Street, Hamilton. It is a former residential home. However, since shortly after SEKCAI became HNZC's tenant, SEKCAI has operated the premises as a Community House which provides a wide range of social and charitable services to the local South East Hamilton community. These services include free and confidential budgeting advice, free legal advice, benefit and ACC advocacy services, community education courses, an opportunity shop,4 low cost fruit and vegetable sales supplemented, from time to time, by produce grown in the adjacent community garden, a bread run, free computer access, room and equipment hire, referrals to other agencies and a wide range of other community services.[18] In addition to these services the Community House offers school holiday programmes, community events, Christmas celebrations, supervision of sentences ofcommunity work, scholarship programmes for university students, sporting, culturaland musical scholarships and participates in JustWork, a joint social enterpriseproject which assists those who are recovering from mental health issues.[19] It is plain from the affidavits filed by both HNZC and SEKCAI that the Community House plays a central and vital role in the community it serves.5[20] In January 2002, shortly after SEKCAI took over the lease, it approached the Hamilton City Council and successfully negotiated the use of an adjacent reserve as a community garden. This garden operates as an extension to the Community House's activities and complements the activities of SEKCAI. The community garden now includes a hen enclosure, two green houses, bird boxes, raised gardens for wheelchair users, an orchard, a thriving and productive vegetable garden and a pizza oven.[21] The community garden and the team of volunteers who operate and support it have won various community awards.4 This is located in a converted Skyline garage at the rear of the community house. It is staffed by volunteers and sells quality second hand books, clothing, linen, hand crafts and other items.5 Hamilton East, Hillcrest, Silverdale, University (suburb), parts of Peachgrove and Hayes Paddock.[22] The community garden's operations are closely integrated with those of the Community House. They are described as inseparable with the garden representing an essential and established part of SEKCAI's vision for the Community House as a model of sustainable living.[23] In 2014 the Community House received over 11,000 contacts from walk-in visitors, groups and phone enquiries. A substantial proportion of those contacts were Maori many of whom identified themselves as belonging to Waikato-Tainui.[24] SEKCAI's funding is reliant on grants from charitable trusts and entities. These account for more than half of SEKCAI's total annual income which issupplemented by donations from local individuals, businesses and public sector agencies.The agreements[25] From an early point in its tenancy with HNZC, SEKCAI indicated it aspired to purchase the property because it wished to have a stable, permanent and well established base in the heart of South East Hamilton, a high needs area for family support and a community in need of voluntary charitable facilities and services.[26] However, given SEKCAI's limited financial resources it had insufficient funds to purchase the property without generous external support.[27] In 2011 SEKCAI approached HNZC and renewed its interest in purchasing the property. At that time HNZC was not looking to sell the property but indicated that approval to sell would be required and a purchase price would need to be agreed.[28] It was not for another 10 months, in mid-June 2012, that matters progressed to the point that a valuation could be obtained. SEKCAI indicated it wished topurchase the property in about a year's time at an agreed figure. The delay wasbecause SEKCAI needed time to approach potential funders to assist with the purchase.[29] HNZC obtained a valuation which indicated the current market value, including chattels, was $345,000 inclusive of GST (if any).[30] On 21 August 2012 HNZC advised SEKCAI that it intended to offer the property for sale but noted the property was residual Crown land subject to the Act. This was identified by a notation on the certificate of title.[31] It was for this reason that, on 9 November 2012, HNZC notified WTK of the proposed sale of the property to SEKCAI and offered to sell it to WTK on the same terms as those offered to SEKCAI. WTK was required to respond within one month.6[32] However, HNZC was mistaken as to its statutory obligations. It was not required to give WTK a right of first refusal because it was intending to sell theproperty to an "existing tenant". This is a specific exception in terms of s 11(1)(c)(i) of the Act. HNZC did not appreciate this exception governed its proposed sale to SEKCAI. HNZC would not have offered the property to WTK had it been aware of the effect of the statutory exception.[33] WTK did not respond within the formal notice period of one month and later confirmed it did not wish to purchase the property. Acting in accordance with ss 11(3) and (4) of the Act WTK formally reserved its right to receive a re-offer should the property be offered to another party on more favourable terms or upon the expiry of a two year period.[34] On 20 September 2013 HNZC and SEKCAI executed an agreement for saleand purchase of the property ("the first agreement"). This agreement provided asfollows:(a) the purchase price was $300,000 plus GST (if any);(b) no deposit was payable;6 Section 11(2) of the Act.(c) the settlement was to be "in terms of the [Act] – condition 25";(d) chattels were as inspected and approved by the purchaser;(e) the purchaser (SEKCAI) was registered for GST, and was acquiring the property with the intention of using it for making taxable supplies, and was not intending to use the property as a principal place of residence for itself or one of its associates.[35] Notably, the agreement contained a clause which HNZC routinely includes in such agreements where the subject land is believed to be covered by the Act and thus where WTK would have a right to acquire that property under the Act. This is cl 25 which provided that should WTK elect to acquire the land pursuant to its rights under the Act then HNZC would give SEKCAI notice the agreement was at an end.[36] Shortly after the agreement for sale and purchase was executed, HNZC realised that the purchase price of $300,000 plus GST (if any) might be considered to be different to the purchase price in HNZC's first offer to WTK (i.e. $345,000 including GST) because if WTK or its nominee was able to zero-rate the transaction, then this offer would result in a lower price paid by WTK.[37] As a consequence, HNZC considered that s 11(4) of the Act might be engaged and, if so, despite the earlier sale and purchase agreement with SEKCAI, the property would need to be re-offered to WTK.[38] No doubt because WTK had failed to accept the earlier offer but also because HNZC has offered more than 400 such properties for sale to WTK since 1998 of which no more than 10 per cent have led to sales to WTK or its nominee, HNZC would have assumed it to be most unlikely WTK would accept the re-offer.[39] So on 8 October 2013 the property was re-offered to WTK with a purchaseprice of "$300,000 – GST not included".[40] Again, HNZC had mistakenly believed it was required to make the re-offer. Had it correctly understood the true position it would not have re-offered the property to WTK.[41] Two days after the re-offer WTK contacted HNZC about arranging an inspection of the property. There were also discussions about whether the re-offer included chattels.[42] On 30 October 2013 WTK confirmed by email that it wished to exercise its right to purchase the property ("the second agreement") and asked that HNZC forward the agreement for sale and purchase for WTK's completion and return.[43] On 21 November 2013 HNZC advised SEKCAI that its agreement of 20 September 2013 was at an end.[44] HNZC then commenced negotiations with SEKCAI for them to vacate the property. At the same time discussions took place between WTK and HNZC as to whether WTK would be prepared to sell the property to SEKCAI and not the first time home buyer that WTK had indicated would be taking over the property. WTK said it was not prepared to alter its position. HNZC then asked WTK if it would be prepared to accept late possession and settlement in order to give SEKCAI an opportunity to find alternative premises for its Community House operations. Again, WTK was not prepared to do this.[45] At some point in late November 2013. HNZC came to the conclusion that it had not been required to re-offer the property to WTK because the sale was to a tenant and the purchase price in the first offer to WTK was effectively the same as the purchase price in the SEKCAI sale and purchase agreement. The only reason the purchase price in the first agreement with SEKCAI was described as $300,000 plus GST (if any) was because the transaction could be zero-rated for GST. However, the sale to WTK or its nominee could not be zero-rated for GST. Accordingly, the total to be paid by WTK or its nominee would be the same as the original offer.[46] Accordingly, on 2 December 2013 HNZC wrote to WTK confirming it was not required to re-offer the property to WTK for the reasons described above. The letter advised that HNZC intended to proceed to sell the property to SEKCAI under the first agreement.[47] WTK responded by advising it did not accept HNZC's position.[48] On 3 December 2013, HNZC wrote to SEKCAI, informing it that the earlier cancellation had been incorrect and that the agreement for sale was still valid.[49] On 6 December 2013 SEKCAI lodged a caveat against the property's title.[50] On 14 April 2014 WTK lodged a caveat.[51] In the meantime HNZC has attempted to find an alternative suitable property in its housing portfolio to sell to WTK. These efforts have, to date, been unsuccessful, but HNZC remains committed to sell a comparable and suitable property to WTK.SEKCAI raises funds to purchase the property[52] SEKCAI did not have the capital funds to purchase the property.[53] In late December 2012 HNZC advised SEKCAI that WTK had not responded within the required notice period and, as a result, HNZC was authorised to sell the property to SEKCAI.[54] The purchase price was $300,000. Without the capital reserves, SEKCAI turned to the New Zealand Lottery Grants Board ("Lotteries") for assistance.[55] On 5 March 2013 SEKCAI submitted its funding application. It requested $226,667 from Lotteries. This figure represented the $340,000 purchase price for the property (being $345,000 less $5,000 for chattels supplied by SEKCAI), less $63,000 for funds SEKCAI had raised itself for the deposit and $49,833 from a bank loan to cover any funding shortfall.[56] Lotteries also required SEKCAI to include a feasibility report together with its funding application. SEKCAI instructed a valuer to examine alternative options for SEKCAI in relation to the continuation of its activities including whether it would be more desirable to continue to lease the property rather than purchase it, purchase an alternative property or continue with the proposal to purchase 53 Wellington Street. That feasibility report concluded that the purchase of the property was the most desirable and feasible option.[57] In early July 2013 SEKCAI received confirmation from Lotteries that they had approved the grant of $266,667 for the purchase of the property.[58] The grant was tagged with three particular conditions. These were that, first SEKCAI would need to provide Lotteries, within three months (i.e. early October 2013) written confirmation from WTK agreeing to the sale of the property. Secondly, to Lotteries required a copy of the final sale and purchase agreement and, thirdly, SEKCAI was required to draw down the grant by 20 June 2015.[59] SEKCAI also applied to Trust Waikato to fund part of the purchase price and in mid-December 2013 received a letter from Trust Waikato confirming the trust would make a $30,000 grant to SEKCAI to assist in the purchase. That funding remains available until 9 December 2015.Parties' submissions[60] Both parties accept that HNZC has a binding agreement with WTK for the sale of the property. Where the parties differ is in relation to the nature of the first agreement between HNZC and SEKCAI.[61] HNZC argues that the first agreement of 20 September 2013 is unconditional. It thus argues that while WTK is entitled to damages for breach of contract, WTK is not entitled to specific performance of the second agreement.[62] HNZC submits that SEKCAI has a stronger claim in equity because its agreement was first in time and, in any event, SEKCAI's particular needs for the property, are greater and more deserving having regard to the established roleSEKCAI performs in the South East Hamilton community and the fact it has no realistic or practical alternative but to purchase the property if it is to continue its service to the local community. HNZC remains committed to identifying a suitable alternative residential property to sell to WTK. Furthermore, having received the funding grant from Lotteries for the specific purpose of enabling SEKCAI to purchase the property it will likely lose that funding, and thus the opportunity to acquire the property unless it is spent for the purposes of the grant by 20 June 2015.[63] SEKCAI submits that while damages the appropriate remedy in this case WTK has suffered no loss and should receive only a nominal award.[64] Conversely, WTK submits that the agreement with SEKCAI was conditional on WTK not accepting an offer to buy the property on the same terms. It thus submits that the first agreement came to an end on 21 November 2013 when HNZC advised SEKCAI that WTK had accepted its offer. It argues that any agreement between HNZC and SEKCAI results from the attempted retraction of 3 December 2013 and is later in time and thus ranked lower in priority than the agreement between HNZC and WTK.[65] Finally, WTK submits that in any event it has the stronger claim in equity in the property and so should be entitled to specific performance. In the event that specific performance is not ordered in its favour, WTK seeks damages based on the present value of the property less the amount which it would have paid under the contract.Issues[66] This case turns on three issues.(a) First, did the first agreement, namely the agreement of 20 September 2013 between SEKCAI and HNZC, come to an end when HNZC entered into the second agreement, namely the agreement of 30 October 2013 with WTK?(b) Secondly, if not, should WTK be entitled to specific performance?(c) Thirdly, in any event, should WTK be entitled to specific performance?[67] I shall deal with each of these issues in turn.Did the first agreement come to an end when HNZC entered into its agreement with WTK?[68] This issue turns on the proper interpretation of clause 25 of the agreement between HNZC and SEKCAI. Of particular relevance is clause 25.2 which provides:"25.2 The vendor shall forthwith take all steps to comply with its obligations under the Act. Should the Land Holding Trustee elect to acquire the land pursuant to its rights under the Act then the vendor shall give notice to the purchaser that this agreement is at an end and the parties shall be released from their obligations thereunder and any deposit paid shall be refunded and neither party shall have anyfuture claim whatsoever against the other."[69] Ms Cuncannon, for HNZC, submits that this clause applies only to offers which it is required to make pursuant to s 11 of the Act. She submits that while clause 25 was included because HNZC mistakenly thought WTK had a right to acquire the property under the Act, the proper interpretation of the clause is that it was only ever intended to be engaged if the Act did, in fact, confer such a right on WTK. She submits that clause 25 was simply intended to ensure compliance with the Act and HNZC and SEKCAI did not intend to give WTK a right to acquire the property beyond that contained in the Act.[70] She submits that this interpretation is consistent with the parties' actualintention and the text of clause 25 (in particular the first sentence of clause 25.2) which provides that:"The vendor shall forthwith take all steps to comply with its obligations under the Act."[71] Ms Cuncannon submits that as SEKCAI was an existing tenant of HNZC, s 11 was not engaged and thus HNZC was not required to offer the property. As aresult, the condition in clause 25 was satisfied and the agreement with SEKCAI became unconditional.[72] However, Mr Shore, for WTK submits that the references in clause 25 to the Act are merely denotive. They do not limit clause 25 to only those offers which are required to be made under the Act. He thus submits that by WTK accepting the offer, clause 25.2 was triggered and the agreement between SEKCAI and HNZC came to an end.[73] Both parties accept that the resolution of this issue is to be determined by reference to the standard principles applicable to contractual interpretation.7[74] Traditionally, contractual interpretation has been limited to the "four corners of the document".8 However, this has been supplanted by an approach which seeks to give the document the meaning which it would have in its full "factual matrix".9This approach was summarised by Blanchard J in the following way:10[19] The ultimate objective in a contract interpretation dispute is toestablish the meaning the parties intended their words to bear. In order to beadmissible, extrinsic evidence must be relevant to that question. Thelanguage used by the parties, appropriately interpreted, is the only source oftheir intended meaning. As a matter of policy, our law has always requiredinterpretation issues to be addressed on an objective basis. The necessaryinquiry therefore concerns what a reasonable and properly informed thirdparty would consider the parties intended the words of their contract tomean. The court embodies that person. To be properly informed the courtmust be aware of the commercial or other context in which the contract wasmade and of all the facts and circumstances known to and likely to beoperating on the parties' minds. Evidence is not relevant if it does no morethan tend to prove what individual parties subjectively intended orunderstood their words to mean, or what their negotiating stance was at anyparticular time.7 WTK's first cause of action is based on breach of contract. The second cause of action, breachof statutory duty, was not advanced in the course of the hearing on the grounds that the issues to be determined in relation to the first cause of action engaged the same principles.8 Benjamin Developments Ltd v Robt Jones (Pacific) Ltd [1994] 3 NZLR 189 (CA).9 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] NZLR 444 at [5], [11], [62] and [127].10 At [19].[75] There are two possible interpretations of clause 25. They are:(a) that HNZC and SEKCAI intended to give WTK a right to acquire the property; or(b) that HNZC and SEKCAI intended to give WTK a right to acquire the property only if HNZC was obliged to do so under the Act.[76] It is common ground HNZC's offer to WTK was not required in terms of s 11of the Act.[77] I am of the view that clause 25 was simply intended to ensure compliance with the Act and HNZC and SEKCAI did not intend to give WTK a right to acquire the property except where it was specifically required by the Act.[78] I am satisfied this is the correct interpretation for a number of reasons.(a) First, the limited interpretation accords with business and commercial common sense. This transaction was plainly a significant one for SEKCAI. It was one which it had anticipated since 2001. SEKCAI expended significant effort obtaining funding from Lotteries and elsewhere. The evidence suggests that it is by no means certain that even if an alternative property could be identified, the proposed funding which is already in place for the purpose of acquiring the present property would remain available to purchase another. It is therefore unlikely that SEKCAI would have agreed to a general condition allowing HNZC to re-offer the property unless that was necessary to give effect to the Act.(b) Secondly, clause 25 is a standard clause inserted by HNZC in all agreements where residual Crown land is to be sold. Clause 25 is intended to ensure that parties comply with the Act in a sale and purchase agreement for a property where WTK has a right to acquire that property under the Act.(c) Thirdly, and more significantly, the actions of the parties once they identified the offer was not required by s 11 demonstrates that they understood clause 25 as applying only to offers required by the Act. Once HNZC realised its mistake it quickly moved to correct its earlier purported cancellation and informed SEKCAI that the agreement was remained in force.(d) Fourthly, the text of clause 25 and, in particular, the first sentence of clause 25.2 provides that:"The Vendor shall forthwith take all steps to comply with itsobligations under the Act"This is consistent with this interpretation. It is also consistent withthe parties' actual intention as appears from the evidence filed by HNZC and SEKCAI.[79] It thus follows I am satisfied that clause 25 did not apply to offers made to WTK other than those required by the Act. I am satisfied that in all thecircumstances the purpose of clause 25 was to give effect to the Act and not createany rights beyond those which are conferred by s 11. I find that the first agreementis a binding, unconditional contract between HNZC and SEKCAI to sell andpurchase the property.11If the first agreement did come to an end, should WTK be entitled to specific performance?[80] Because I have determined the first agreement did not come to an end, the question of whether WTK is entitled to specific performance does not arise.In any event, should WTK be entitled to specific performance of the second agreement?[81] Specific performance is a discretionary remedy which allows the Court to order a party to fulfil its obligations under a contract in lieu of awarding damages for11 I note that WTK has not attempted to submit that HNZC delayed in moving to rescind the purported cancellation when it learned of its error in interpreting s 11. Nor has WTK argued that SEKCAI accepted this repudiation and cancelled the agreement.breach of contract.12 While historically the remedy was only available where damages would be an insufficient remedy, it is now accepted that specific performance is an appropriate remedy in a wide range of cases.13 In particular, specific performance is frequently ordered in cases involving the sale of land.14However, the remedy is not available as of right and the plaintiff must show that the remedy is an appropriate one in the circumstances.15[82] In the present case, there is the added difficulty that there are two contracts for which specific performance may be ordered. By ordering specific performance of one agreement, the Court must implicitly refuse specific performance on the other.As such, in exercising the Court's discretion it is necessary to consider thecompeting equities in favour of each agreement.[83] There are four factors which WTK submits demonstrate that it has the stronger equity and that specific performance should be granted:(a) timing;(b) the conditional nature of the agreement;(c) SEKCAI's knowledge of WTK's interest; and(d) the principles of the Act and the settlement.[84] I shall deal with each of these factors in order. I shall then consider other issues relevant to the competing equities.Timing[85] It is a well accepted principle that where equities are equal, the first in time will prevail.16 WTK submits that despite SEKCAI being the first to conclude an12 Laws of New Zealand Specific Performance (online ed) at [1].13 At [2]; see Butler v Countrywide Finance Ltd [1993] 3 NZLR 623 (CA).14 Foreman v Hazard [1984] 1 NZLR 586 (CA) at 594; Waimor Holdings Ltd v Dean [1981] 2 NZLR 416 (HC) at 426.15 Loan Investment Corporation of Australasia v Bonner [1970] NZLR 724 (PC) at 735.16 Strack v Hatchi Sydney Corporation Pty Ltd HC Christchurch CP 77/98, 8 July 1998; McDonaldagreement with HNZC, WTK's interest is the first in time. This submission is based on the argument that the first agreement was cancelled and a second agreement of 3 December 2013 was entered between HNZC and WTK.[86] However, given my finding that the first agreement was unconditional this argument cannot succeed. I am satisfied that SEKCAI was the first party to enter an agreement with HNZC and that agreement remains on foot.The conditional nature of the agreement[87] Mr Shore submits that SEKCAI was aware the contract could be cancelled if WTK accepted an offer under the Act. He submits that it must thus follow that SEKCAI elected to accept the risk it may not succeed in securing the property. For this reason, Mr Shore submits it would not be unfair if SEKCAI was to lose its interest in the property.[88] The difficulty with that submission is that WTK did not exercise a right under the Act. The offer it accepted was not required by the Act. WTK is effectively arguing that because SEKCAI was willing to accept a particular risk that it would not receive the property it must be taken to have accepted all the risks which might have led it to lose its interest. I do not accept that submission. Any person assuming a risk can be presumed to have weighed up whether the risk is one worth taking or not. When entering an agreement the party must be assumed to have taken into account the question of risk in the context of their decision to be bound. It does not follow that the Court should infer that in deciding to be bound the party agreed to assume all the risks which might possibly arise.[89] For this reason I do not consider this factor alters the priority of equities involved in this case.v Isaac Construction Co Ltd [1995] 3 NZLR 612 (HC).SEKCAI's knowledge of WTK's interest[90] This argument is closely related to the second. Mr Shore submits that SEKCAI knew that WTK had an interest in the property and thus SEKCAI's interestmust be subject to the earlier interest. I cannot accept this argument for two reasons:(a) First, WTK is not exercising the interest registered on the property.Instead, it is attempting to benefit from HNZC's error in offering the property to WTK. For the reasons discussed above, the fact that SEKCAI was willing to enter the agreement despite its knowledge ofWTK's interest under the Act does not mean that SEKCAI should bevulnerable to any other interest which may arise. As WTK is not claiming under the Act it cannot rely on a priority which a claim under the Act would enjoy.(b) Secondly, I am satisfied that this argument cannot succeed because itapplies equally to WTK's knowledge of SEKCAI's interest. Whenthe offer was made to WTK, it was aware of the agreement between SEKCAI and HNZC. Any argument that SEKCAI was on notice ofWTK's interests also applies to WTK in its decision to enter anagreement with HNZC[91] For these reasons I do not consider this factor alters the priority of the equities.The principles of the Act and settlement[92] This submission is the most compelling of those advanced by WTK. Ms Dhanjee, who carried this part of the argument, forcefully submits that given the significance of the Act and its purposes, driven by the Crown's apology andacknowledgement of grievances, the balance must unequivocally favour achieving the intention of nationally significant legislation versus a tenant wanting to purchase property. In particular, she emphasises the key principles which underpin the Act namely:(a) "land for land" – "I riro whenua atu, me hoki whenua mai" ("As land was taken, land must be returned"); and(b) "Ko te moni hei utu mo te hara" ("The money is the acknowledgement by the Crown of their crime").[93] Ms Dhanjee submits that the settlement represented an important commitment by the Crown to compensate Waikato-Tainui and that the Court must give effect to these principles. She thus submits that an agreement which gives priority to these principles should be given priority over one which does not.[94] I accept that in general, principles of tikanga may well be relevant to issues of equity and priority. However, despite Ms Dhanjee's persuasion I am not satisfied that in this particular case they should be applied. My reason is founded in the nature and mechanism of the settlement between the Crown and Waikato-Tainui. This is encapsulated by the Act which, inter alia, records its purpose as being to give effect to certain provisions of the deed of settlement.[95] The Act, in addition to recognising the wrongs which Waikato-Tainui has suffered at the hands of the Crown and its agents, contains the means for compensation or recompense. This recompense reflects the key principle that "Asland was taken, land must be returned." The Act also provides that the compensation is final in relation to those claims settled by the Act.17 Thus the provisions of the Act must be taken as representing the full extent of the compensatory obligations the Crown owes to Waikato Tainui.[96] More specifically s 11 reflects the Crown's ongoing obligation to Waikato- Tainui to return any residual Crown land it proposes to sell. The limitations on that obligation recognise the legitimate interests of third parties who may otherwise be adversely affected by the disposition. Those exceptions include sale to another Crown body,18 land held for educational purposes by the Crown,19 a person who is entitled to purchase the land under the terms of any gift, endowment or trust relating17 Section 9 of the Act.18 Section 11 of the Act.19 Section 11(1)(c) of the Act.to the land.20 A further exemption is engaged in this case where the potential purchaser is an existing tenant of a house situated on the residual Crown land of HNZC. In creating these specific exceptions Parliament must have intended that those falling within the exception were outside the Crown's general obligation to return land under the Act and in terms of the deed of settlement.[97] In the particular circumstances of this case I do not accept the generalprinciples underpinning the settlement displace the express provisions of the Act.Other issues relevant to competing equities[98] While the above reasons are sufficient on their own to decline to grant specific performance, I consider that this conclusion is further supported when regard is had to the significance of SEKCAI in the community it supports. In my view, this position adds strength to the equity it enjoys.[99] Mr Shore submits that in exercising the balance it must unequivocally favour achieving the intention of a nationally significant legislation as against a tenant wanting to purchase a property.[100] However, I consider that submission fails to properly recognise the identity and the circumstances of the tenant in the present case. In considering this issue Itake into account the following factors:(a) First, SEKCAI has been the tenant in the property for 14 years.(b) Secondly, during that time SEKCAI has developed the property into a Community House which serves the South East Hamilton community in a wide range of charitable and philanthropic endeavours, some of which are described earlier in this judgment. The Community House is a central feature and focus in the community. SEKCAI and the Community House occupy a prominent position in the charitable diaspora of the Waikato district and have been publicly recognised and applauded for their good works. Both the Community House and20 Section 11(1)(e) of the Act.the community it serves would be seriously disadvantaged if required to move to a new location.(c) Thirdly, the community garden, situated as it is immediately adjacent to the Community House, provides an adjunct to complement the work and activities of the Community House. Over more than a decade the community garden has been developed to operate in conjunction with the Community House not only by providing fresh produce to the community but also providing a venue for teaching sustainable living and providing a refuge and working place for those recovering from mental illness. If the Community House was required to move to another location it begs the question as to what would happen to the community garden.(d) Fourthly, SEKCAI has been successful in its application to Lotteries and Trust Waikato. With the $266,667 approved by Lotteries and the $30,000 promised from Trust Waikato all but a very modest shortfall is available to SEKCAI to apply for the purchase of the property. No undertaking has been given by either organisation that in the event the purchase of this property did not take place grants to a similar level would be approved for the purchase of an alternative property. Indeed, Lotteries has made it clear that its grant is tied to the property in question and will lapse if not used by 20 June 2015. The Trust Waikato grant is required to be drawn down by 9 December 2015.(e) Fifthly, WTK advised HNZC that the intended purchaser was a first home buyer. It is reasonable to assume that the putative owner intends to convert the property back to a residential dwelling. There is no evidence that the property in question has any special features which would make it either more desirable or more appropriate to this particular owner than any other dwelling HNZC has in its portfolio. HNZC continues its assurance it remains willing to sell a suitable property to WTK.Conclusion[101] For these reasons I am satisfied that the first agreement remains on foot andSEKCAI's equitable interest is greater than WTK's and thus enjoys priority.[102] I am not prepared to order specific performance in favour of WTK.Result[103] SEKCAI has a valid contract to purchase the property and its interest in the property is stronger than that of WTK's. I decline to grant specific performance in favour of WTK..[104] I also grant leave to the parties to seek further directions and/or orders as may be necessary to give effect to this judgment.[105] This finding, of course, does not affect WTK's entitlement to damages. Because HNZC is in breach of its contract with WTK, WTK is entitled to damages as of right.21 However, although the parties covered the question of damages in their helpful written submissions, both agree that the question of damages should be reserved until the question of the competing priorities and the validity of the first agreement is determined. I also agree that this is the appropriate course.[106] Accordingly, I invite counsel to discuss the question of damages with a view to reaching a settlement as to quantum. If the parties are unable to reach agreement it will be necessary to reconvene the Court to determine this question. In that event I direct the parties to file a joint memorandum which will include the following:(a) an estimate of the time required for the damages hearing;(b) whether any further evidence should be filed;(c) timetabling orders which provide for the:21 Baker v Beasley [1965] NZLR 1031.(i) date by which WTK is to file and serve further evidence (if any);(ii) date by which HNZC is to file and serve further evidence (if any);(iii) date by which WTK is to file and serve further reply evidence (if any);(iv) date by which WTK is to file and serve its submissions;(v) date by which HNZC is to file and serve its submissions;(vi) date by which WTK is to file and serve submissions in reply (if any); and(vii) the date for filing a joint memorandum defining the issues.[107] Counsel are to consult with the Registrar for the purpose of obtaining a suitable date for the continuation of the hearing.[108] The Registrar is to arrange a telephone conference in one month's time toreview progress.[109] Costs are reserved.Moore J