XIEYAN MAO v HARGUN SINGH [2022] NZCA 390

XIEYAN MAO v HARGUN SINGH [2022] NZCA 390 [22 August 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA533/2021[2022] NZCA 390BETWEEN XIEYAN MAOAppellantAND HARGUN SINGHRespondentHearing: 18 November 2021Court: Kós P, Cooper and Courtney JJCounsel: D Zhang and E Tie for AppellantM G Locke for RespondentJudgment: 22 August 2022 at 2:30 pmJUDGMENT OF THE COURTA The appeal is dismissed.B The appellant must pay the respondent costs for a standard appeal on aband A basis and usual disbursements.C The matter is remitted to the High Court for any further orders that maybe necessary to ensure the property is transferred in accordance with theHigh Court stay judgment in Singh v Mao [2021] NZHC 2230.____________________________________________________________________REASONS OF THE COURT(Given by Cooper J)Table of ContentsPara NoIntroductionThe factsThe proceeding in the High CourtThe appealFirst ground of appeal — Ms Mao's right to cancelThe appellant's argumentThe respondent's argumentAnalysisSecond ground of appeal — reliefThe stay in the High CourtResult[1][3][27][35][36][36][47][48][70][77][79]Introduction[1] The appellant, Xieyan Mao, appeals against a judgment ofAssociate Judge Bell ordering specific performance of an agreement for the sale andpurchase of land located at 57 Yeovil Road, Te Atatu, Auckland (the Agreement).1Under the terms of the Agreement, executed on 4 August 2020, Ms Mao was to sellthe property to the respondent, Mr Singh, with vacant possession. In fact, the propertywas subject to a fixed-term tenancy terminating on 6 July 2021. Ms Mao insisted thatMr Singh had to take the property subject to the tenancy and would not complete thesale on any other basis.[2] On the settlement date, Ms Mao issued a settlement notice and later purportedto cancel the Agreement on the basis that Mr Singh had not tendered settlement.Despite her breach of the Agreement by not providing vacant possession,she maintains that her settlement notice was valid and the cancellation of theAgreement was effective. She claims on appeal that the High Court was wrong to findthat she had not been entitled to issue a settlement notice and to cancel the Agreementwhen Mr Singh did not settle in accordance with her notice. She also argues that,in any event, it was not appropriate to order specific performance.1 Mao v Singh [2021] NZHC 1959 [High Court judgment].The facts[3] The property that is the subject of the dispute contained a dwelling house.Being just over 800 square metres in area, the property was suitable for redevelopment.In 2019 Ms Mao obtained resource consent to subdivide and construct up toseven residential units on the property. In June 2020 she let the property under aresidential tenancy agreement for a fixed term from 8 July 2020 to 6 July 2021.She then listed the property for sale with the real estate company, Shelter Realty Ltd,which was trading as Harcourts, Te Atatu South (Harcourts). The listing agent wasMr Mason Zhang, a friend of Ms Mao who had previously assisted her with the saleand purchase of various other properties.[4] The listing agreement with Harcourts recorded that resource consent had beenissued for the development of seven terraced houses, but nothing was said in thatagreement about tenancies. Ms Mao maintains that she told Harcourts about thefixed-term tenancy and when it would expire. But, in order to avoid disturbing thetenants she asked that there be no open homes, and stipulated that any potentialpurchasers would have to take the property subject to the existing tenancy. She saidMr Zhang assured her that he could sell the property without open homes and shesigned the listing agreement with Harcourts on that basis. Mr Zhang did not giveevidence in the High Court.[5] Mr Singh is a property developer and responded to an advertisement placed byHarcourts marketing the property on the basis that it had resource consent forseven terraced houses. The advertisement said nothing about the tenancy. It appearsthat Mr Zhang showed the property to several purchasers between 22 July and4 August 2020. Mr Singh was one of them. Ms Mao said that Mr Zhang told her ofthe interest in the property and confirmed that every viewer had been advised it wouldbe sold subject to the existing tenancy. Mr Singh however intended to remove theexisting house and carry out a multi-unit development.[6] The Agreement was executed on 4 August 2020 in the 10th edition of thestandard form approved by the Real Estate Institute of New Zealand and theAuckland District Law Society. The purchase price was $1.555 million and thedeposit of $155,000 was payable upon the Agreement becoming unconditional.The Agreement was subject to finance to be obtained within four working days.[7] The front page of the Agreement contained a box in which the names of tenantscould be stated. The box was left empty and the words "Yes/No" beside it wereuntouched. Consistent with that, no particulars of any tenancies were set out in sch 3.[8] On 7 August 2020, a solicitor acting for Mr Singh, Mr Jaswin Gandhi, advisedMs Mao's solicitor, Ms Sylvia Ding, that the finance condition was satisfied.Mr Singh paid the real estate agents the required deposit on that day.[9] On 20 August, Ms Ding sent a statement for settlement on 16 September. Thestatement was in a conventional form, recording the deposit and apportioning ratesbetween the purchaser and vendor. There were no other adjustments to the sale price.[10] Then, on 25 August, Ms Ding wrote to Mr Gandhi to advise about thefixed-term tenancy. The letter stated:Further to my email enclosing [the] settlement statement on 20 August 2020I am advised now that there is actually a tenant in the property. Howeverdue to the oversight by the agent the details [were] omitted [from] writing onthe agreement. It is advised that your client was aware of the existence of thetenant in the property and has agreed to keep the tenant on settlement [when]entering the agreement, but probably may not realize that it is [for] afixed term until 6 July 2021. (A tenancy agreement is attached [for] yourclient's information).Our client instructs us to advise that she has fully advised the agent of thedetails of the tenant, especially the fixed term of one year. As such our client'sposition is that she won't be responsible for any costs claimed by the tenantdue to the [break-up] of the fixed term of tenancy.Therefore it is up to your client to either take the tenant as it is and settle on16 September 2020, or to have the said agreement cancelled and the partiespropose to draft a new agreement.The Judge noted that the position set out in the email was subsequently maintained byMs Mao in the proceedings before him.22 At [7].[11] That afternoon, Mr Gandhi asserted that the position adopted by Ms Mao was"absurd and preposterous" and he foreshadowed a more substantive reply.On 31 August, Ms Ding wrote again advising that Ms Mao had contacted the tenants,who were requiring compensation in the sum of $18,000 in order to vacate by20 November 2020, apparently a date which had been discussed between Mr Singhand Harcourts.[12] Later that same morning, Mr Gandhi wrote as follows:Dear SylviaWe will be writing to you soon in detail.The real estate agent is your client's agent.Your client has admitted in your earlier email that your client had provided thetenancy details to the agent. However, these details were not passed onto ourclient.Your client's agent had omitted / withheld significant information.Our client was led by the [agents] to believe that "vacant possession" will beprovided on settlement.The property was marketed as a development potential and our client has onthis basis engaged its architect and engineers straight after it signed theAgreement and has spent [a] considerable amount of money on theseprofessionals because our client wishes to commence development as soon asit settles.Our client has also paid your client a premium price because of thedevelopment potential.Any costs associated to remove the tenant [are] your client's costs.Our client requires vacant possession on settlement and if vacant possessionis not provided then your client will be in breach of the Agreement.As a consequence, our client will hold your client liable for all the costs anddamages it suffers together with penalty interest for late settlement.Our client proposes that it can defer settlement on a completely withoutprejudice basis for another month to 16/10/2020 to allow your client to removethe tenant and provide vacant possession on settlement. Our client's offer ona without prejudice basis is open until 4 pm this Friday, 4/9/2020.We look forward to hearing from you[13] On the same day, Ms Ding replied:1. [Our] client would never accept your client's offer unless your clienttakes over the tenant on settlement; [any] intention contrary to thatwill invalidate the [Agreement];2. In fact we note no "vacant possession" is written on the [Agreement]and our client is not bound by that and [is] not obliged to give vacantpossession on settlement;3. The fact is that your client was told and [made] aware of the tenantand confirmed to take over the tenant on settlement. There iscorrespondence evidencing that. Therefore your client is bound totake over the tenant on settlement.4. If your client requires the tenant to move out on 20 November 2020it is your client's duty to do that after settlement rather than ourclient's duty to inform the tenant now.In any event our client's position is that our client will not be responsible forany compensation to the tenant.[14] In a further email, on 4 September, Ms Ding wrote:Our client has accepted your client's offer on the honest belief that your clientwill take over the tenancy on settlement and [that] belief was confirmed bythe agent orally and afterwards and confirmed by the written email by theagent to the property manager (also copied to my client) on 5 August 2020.This email could be treated as supplementary to the main contract.As such your client is obliged to settle on 16 September 2020 on the basis totake over the tenant as agreed and accepted by [your] client.[15] That email also included suggestions that the parties could agree to avoid theAgreement with neither having any claim against the other, or that the dispute bereferred to arbitration.[16] In a response sent on 8 September, Mr Gandhi rejected those proposals.Among the points made in his email were the facts that the property had been marketedas a development site and purchased for that purpose; that the Agreement requiredvacant possession; that Mr Singh did not know, nor had he been made aware at thetime of signing the Agreement, that the tenants in the property were there for afixed term; and that he first learnt about the fixed-term tenancy when contacted byMr Zhang on 24 August. Mr Gandhi concluded:In view of the above, our client does not accept any of your client's optionsand requires "vacant possession" on settlement. Our client will charge yourclient penalty interest for late settlement if "vacant possession" is not given.The Agreement is very clear that "vacant possession" is to be provided.[17] Ms Ding replied the same day, asserting that Mr Gandhi's emails hadreinforced Mr Singh's "actual knowledge that he was aware of the existence of [the]tenancy and has agreed to take over the tenancy on settlement". Ms Ding statedthat if Mr Singh had done due diligence, he would have found out the tenancy was afixed-term one and accordingly had constructive knowledge of it. Mr Singh's: actual knowledge of the tenancy [had] negated the vendor's duty to yield avacant possession required by clause 3.1 of the [Agreement].In [other words] whether the particulars of the tenancy are included in thiscontract or not is irrelevant under [these] special circumstances.[18] She continued:Therefore our client requires your client [to] settle on 16 September 2020with the tenancy and our client will reserve her right to charge penalty interestfor later settlement and instruct us to serve the settlement notice if thesettlement does not proceed on 16 September 2020.[19] Mr Gandhi replied on 14 September. He reiterated Mr Singh's position thatvacant possession was required and if Ms Mao was unable to provide it on settlement,she would be in breach of the Agreement. He again proposed however that thesettlement could be deferred without penalty to 16 October to allow Ms Mao time torelocate the tenants. Alternatively, he suggested that settlement take place on16 September in accordance with the Agreement, subject to the tenants entering into anew tenancy agreement with Ms Mao which would provide for them to vacate theproperty on or before 20 November. The costs of relocating the tenants would be forMs Mao. If those proposals were not accepted, then Mr Gandhi had strict instructionsto issue a settlement notice on 16 September, in which penalty interest would beclaimed together with additional damages that would be suffered as a direct result ofMs Mao's breach of the Agreement.[20] Later that day, having received the relevant documents for e-dealing on thesettlement from Ms Ding, Mr Gandhi sought confirmation that Ms Mao would beproviding vacant possession on settlement. This drew the response on 15 Septemberthat Ms Mao was not required to provide vacant possession. Mr Gandhi's reply on thesame day was that Ms Mao could not unilaterally change the terms of the Agreement.It was clear that vacant possession had to be provided and Mr Singh would not settleuntil it was. Mr Gandhi noted that Mr Singh would hold Ms Mao liable for allconsequential loss if vacant possession was not provided.[21] Mr Gandhi wrote to Ms Ding again on 16 September. He advised that his firmwas "in funds, ready, willing, and able to settle now". Once again he soughtconfirmation that vacant possession would be provided. He had strict instructions tocharge penalty interest until vacant possession was given.[22] The sale did not settle. Mr Gandhi returned the funds that had been borrowedfor the purposes of settlement. Ms Ding then sent Mr Gandhi a settlement notice on16 September. The notice said nothing about vacant possession. It recited the fact ofthe Agreement, noted that settlement was required to take place that day, and assertedthe vendor was "ready, willing and able to complete settlement" on that day "but for[Mr Singh's] default under the [Agreement]". It continued:Accordingly the vendor hereby gives notice in terms of Clause 11 of theAgreement and requires you (without prejudice to any other remediesincluding penalty interest available to the vendor) to settle on or before the12th working day after the date of service of this notice upon you, time beingof the essence.[23] The notice concluded by stating that unless Mr Singh settled within the timespecified, the vendor would be entitled without prejudice to any other rights orremedies available, including commencing proceedings for specific performance orcancelling the Agreement, forfeiting and retaining the deposit and commencingproceedings for damages.[24] The next event was the settlement notice served by Mr Gandhi, on thesame day. That notice, too, recited the Agreement, the settlement date, the fact thatMr Singh was in all material respects ready, willing and able to proceed to settle onthe settlement date and asserted that Ms Mao had failed to settle by not providingvacant possession. The notice required settlement within 12 working days, time beingof the essence, and recorded that if Ms Mao did not comply with the terms of thesettlement notice Mr Singh would exercise such remedies as he might decide pursuantto the Agreement, at law or in equity.[25] On 2 October , Ms Ding emailed Mr Gandhi cancelling the Agreement for non-compliance with the settlement notice she had earlier sent.[26] Mr Singh commenced proceedings in the High Court on 8 March 2021.The proceeding in the High Court[27] The statement of claim alleged that Ms Mao was required under the terms ofthe Agreement and by Mr Singh's settlement notice to provide vacant possession ofthe property on 16 September 2020. It alleged that payment had been tendered on16 September, and that Mr Singh was "ready, willing, and able to settle on that date".Ms Mao however had failed to provide a transfer with vacant possession or indeed anytransfer and accordingly was in breach of the Agreement. Mr Singh sought an orderfor specific performance and claimed penalty interest under the Agreement. At thesame time, Mr Singh applied for summary judgment seeking orders for specificperformance, penalty interest and liability for any "[w]asted or unnecessaryexpenditure incurred as a result of [Ms Mao's] breaches of the Agreement".[28] Ms Mao filed a notice of opposition to the application for summary judgmentin which she asserted that Mr Singh had confirmed that he would take the tenants onsettlement and had thus waived Ms Mao's obligation to provide vacant position.The notice of opposition complained that the Agreement had not been "amended toreflect the intentions of the parties or the waiver".[29] Having set out the background and referred to the relevant provisions of theAgreement, the Judge noted that while Mr Singh had the option of cancelling theAgreement he wished to continue with it. He was entitled to compensation for beingkept out of possession and Mr Gandhi was on good ground in claiming interest forlate settlement until vacant possession was provided.3 Because Ms Mao did not acceptMr Singh's entitlement to compensation, he was in a position where he had to make aclaim under cl 10.3 of the Agreement.4 The problem was that while Mr Gandhi'scorrespondence had referred to a claim for interest for late settlement, none of his3 At [37].4 Clause 10.3, set out below at [57], specifies certain notice requirements for making claims tocompensation under cl 10.emails constituted a notice under cl 10.3(2). The Judge described this as a "fumble"by Mr Gandhi.5[30] As a consequence of that error, Ms Mao argued that she could give asettlement notice under cl 11.1 of the Agreement, but only if she was in all respectsready, willing and able to proceed to settle in accordance with the Agreement.However, she would only settle if Mr Singh took the property subject to thefixed-term tenancy and without any compensation.[31] It is relevant to note that in an affidavit sworn in the High Court Ms Maorecorded that after the deposit had been paid but before the settlement date the tenantshad advised her that they would agree to move out of the property if paid the sum of$18,000. Their position was advised to Mr Gandhi on 31 August. However, there hadbeen a subsequent exchange of emails between Mr Singh and Mr Gandhi, which MsMao summarised in her affidavit:Subsequent emails between Sylvia Ding and Jaswin Gandhi were attached to[Mr Singh's] affidavit The essence of these emails are that my positionwas that the Property was sold with the existing tenants, which [Mr Singh]was well aware of and accepted to take them on settlement (and that theyshould have carried out due diligence before they committed to taking thetenants), but because of [Harcourts'] mistake, this information was notrecorded in the [Agreement]. However, [Mr Singh], now knowing that thetenants asked for $18,000 compensation, insisted on vacant possession as perthe [Agreement], regardless of the fact that he had previously advised[Harcourts] that he would take the tenants on settlement.[32] Counsel for Ms Mao submitted in the High Court that although Mr Singh mighthave cancelled the Agreement, in fact he affirmed it. As the vendor, Ms Mao wouldonly be in default if she failed to settle when Mr Singh properly tendered settlement.Because she had not agreed to any compensation, Mr Singh was obliged to make aclaim under cl 10 of the Agreement, but did not do so. That meant he was required totender settlement without any deduction. Because he had not tendered settlement,Mr Singh was in default and Ms Mao was entitled to give a settlement notice. Hersettlement notice was valid and it had not ruled out an adjustment because of thetenants. Mr Singh could still have made a claim under cl 10 but did not do so. In thesecircumstances, Ms Mao was entitled to cancel the Agreement.5 At [38].[33] The Judge described that argument as "somewhat artificial". He said:[45] As it was presented at the hearing, counsel accepted that ifMr Singh had made a claim under cl 10, Ms Mao would have no defence tothe claim for specific performance. It was not, however, submitted that ifMr Singh had made a claim under cl 10, Ms Mao would have had a change ofheart and would have settled with arrangements made following theprocedures in cl 10. Such an argument would have failed on the evidence.[34] The Judge then referred to the Supreme Court's decision inBahramitash v Kumar and held that by her words and conduct Ms Mao had clearlyshowed an unwillingness to settle in accordance with the Agreement even ifMr Singh's tender of settlement had included a formal claim under cl 10.6 "She wasnot in all material respects, ready, willing and able to settle" and therefore was notentitled to issue her settlement notice on 16 September.7 In those circumstances,Ms Mao was not entitled to cancel the Agreement. Accordingly, the Agreement"remained in full force and effect", and Mr Singh was entitled to sue for specificperformance under its relevant provisions.8The appeal[35] Ms Mao's notice of appeal alleged three grounds, one of which was abandonedin the submissions filed prior to the hearing. The grounds on which the appealproceeded were:(a) that the Judge erred in finding Ms Mao was not entitled to issue asettlement notice and cancel the Agreement when Mr Singh did notsettle in accordance with her notice; and(b) even if she was not entitled to cancel the Agreement, it wasinappropriate for the Judge to have ordered specific performance.6 At [46]–[49], citing Bahramitash v Kumar [2005] NZSC 39, [2006] 1 NZLR 577 at [17]–[18]and [20].7 At [49].8 At [49].First ground of appeal — Ms Mao's right to cancelThe appellant's argument[36] Mr Zhang, who appeared for the first time in this Court, informed us thatMs Mao no longer disputes she was obliged to give vacant possession, but he says thefact of the matter was that she could not do so, given the tenancy. In thesecircumstances, he contends that cl 3.13(2) of the Agreement was triggered.[37] Clause 3.0 of the Agreement contains provisions concerning possession andsettlement. Clause 3.13 contains provisions under the heading "Vendor Default:Late Settlement or Failure to Give Possession". Clause 3.13(2) provides as follows:(2) If this agreement provides for vacant possession but the vendor isunable or unwilling to give vacant possession on the settlement date,then, provided that the purchaser provides reasonable evidence of thepurchaser's ability to perform the purchaser's obligations under thisagreement:(a) the vendor shall pay the purchaser, at the purchaser's election,either:(i) compensation for any reasonable costs incurred fortemporary accommodation for persons and storage ofchattels during the default period; or(ii) an amount equivalent to interest at the interest rate forlate settlement on the entire purchase price during thedefault period; and(b) the purchaser shall pay the vendor an amount equivalent tothe [interest] earned or which would be earned on overnightdeposits lodged in the purchaser's lawyer's trust bank accounton such portion of the purchase price (including any deposit)as [is] payable under this agreement on or by the settlementdate but remains unpaid during the default period less:(i) any withholding tax; and(ii) any bank or legal administration fees and commissioncharges; and(iii) any interest payable by the purchaser to thepurchaser's lender during the default period in respectof any mortgage or loan taken out by the purchaser inrelation to the purchase of the property.[38] Mr Zhang submitted there was no doubt that Mr Singh, when faced withMs Mao's breach, chose to affirm the Agreement. Mr Singh had unequivocallyrejected an offer made by Ms Mao that the Agreement be cancelled with neither partyhaving any claim against the other. Further, Mr Gandhi's email of 15 Septembersought confirmation that vacant possession would be provided on the settlement date,his letter of 16 September advised that his firm was in funds and that Mr Singh was"ready, willing, and able to settle now", reiterating the request for confirmation thatvacant possession would be provided. Finally, the settlement notice issued byMr Singh had demanded settlement within 12 working days. In the circumstances,either Mr Singh had no right to cancel the Agreement and cl 3.13 was engaged as soonas Ms Mao was unable to provide vacant possession or, while he had the right to cancelthe Agreement, he failed to do so, having affirmed it instead, and therefore was obligedto proceed in accordance with it.[39] Mr Zhang referred to observations made by Tipping J in Holmes v Booth:9Under the general law if one party is in breach of contract, either actual oranticipatory, [where that] breach justifies cancellation, but the innocent party(A) elects to keep the contract alive, he keeps it alive for the benefit of theparty in breach (B) as well as for his own benefit. Thereafter A remains subjectto all his own obligations and liabilities under the contract. He may well havea right to claim damages for breach, but having elected to proceed he mustproceed in terms of the contract. If he fails to do so he may thereby give Bgrounds for cancellation, thus putting an end to his own right to requireperformance. That is exactly what is said to have happened in this case.The position is a fortiori if B's breach does not entitle A to cancel.[40] Although Tipping J was in the minority in that case, his approach hassubsequently been endorsed in Property Ventures Investments Ltd v RegalwoodHoldings Ltd.10 This meant that Mr Singh was obliged to proceed with the transaction,subject to his claim for compensation under cl 3.13. Any dispute under cl 3.13 was tobe resolved in accordance with the mechanism provided by cl 10.11[41] Under cl 10.1, given that Mr Singh had not purported to cancel the Agreement,his obligation to settle remained. Mr Singh should have made a claim for9 Holmes v Booth (1993) 2 NZ ConvC 191,633 (CA) at 191,648 (emphasis added).10 Property Ventures Investments Ltd v Regalwood Holdings Ltd [2010] NZSC 47, [2010] 3 NZLR231 at [72]–[73] per Blanchard, McGrath and Wilson JJ. See also at [96] per Tipping J.11 We set out the relevant parts of this clause below at [57].compensation flowing from the failure by Ms Mao to provide vacant possession.Once such a claim had been made, it would be for Ms Mao to respond. She couldhave chosen one of three options:(a) accept Mr Singh's claim and agree to an amount of compensation beingdeducted from the purchase price, in which case, settlement could haveproceeded on 16 September 2020, the originally agreed settlement date;(b) dispute Mr Singh's right to make the claim. In that case, Ms Mao wouldhave to give notice to Mr Singh within three working days after serviceof Mr Singh's notice of claim. The Agreement provided for arbitrationas the mechanism for the resolution of any such dispute; or(c) accept Mr Singh's right to make the claim, but dispute the amountpayable, in which case an interim amount could be paid to a stakeholderpending resolution of the dispute over quantum.[42] But on Mr Zhang's case, Mr Singh had not followed the mechanisms providedfor by the Agreement. On the contrary, he had done exactly what cl 10.1 forbade himto do, and delayed settlement. He was unwilling to settle until Ms Mao providedvacant possession and as a consequence took a course that was not open to him.[43] Mr Zhang submitted there were three errors in the Judge's approach. First,the fact that Ms Mao took an "entrenched position"12 was irrelevant because theprovisions of the Agreement, in particular cl 10.6, provided a mechanism to resolvedisputes in respect of any compensation payable. Given the dispute-resolution processin that clause, there should be no reason to make the "tendering is futile" inquiry(into whether Ms Mao would have been willing to settle in accordance with theAgreement even if Mr Singh's tender of settlement had included a formal claim undercl 10). Clause 10.6 could have the effect of compelling a party to resolve a dispute.Further, Ms Mao's position was not "as entrenched" as the Judge found. Ms Mao hadoffered to arbitrate the dispute and overall, the facts did not justify a conclusion thatthe tender of settlement would have been futile, if such a test indeed applied.12 Referring to High Court judgment, above n 1, at [48].[44] The second error that Mr Zhang submitted the Judge made turned on the factthat Mr Singh had refused to settle unless he received vacant possession, but by hisconduct had refused to participate in a dispute-resolution process. As we understandit, Mr Zhang argued the Judge was wrong to proceed on the basis that Ms Mao wouldnot change her mind regarding the process to be followed, when Mr Singh himself hadrefused to participate in the dispute-resolution process contemplated by cl 10.6.[45] Thirdly, Mr Singh had never been open to settlement with compensation in lieuof vacant possession. His insistence on vacant possession was an entrenched position,and "not a course of action that was available to him, either under general law or the[Agreement]". Mr Zhang argued that in accordance with Bahramitash v Kumarit must be shown that without any real doubt the vendor "would have refused to settlein response to a contractually proper tender before the court will say tender [will]be futile".13 Mr Singh did not make a contractually proper tender.[46] It followed that Ms Mao was entitled to issue her settlement notice and tocancel the Agreement when Mr Singh did not comply with it.The respondent's argument[47] For the respondent, Mr Locke submitted the facts of the case do not engageeither cl 3 or cl 10 of the Agreement. Mr Zhang was wrong to submit that Ms Maocould not have given vacant possession, when her own affidavit filed in the High Courtrecorded that the tenants would have moved out of the property in return forcompensation of $18,000. Instead of paying that sum, Ms Mao appeared to complainthat Mr Singh was unjustified in insisting that any such compensation should be amatter between her and the tenants. This was relevant in two ways. First, Ms Maocould have provided vacant possession but chose not to do so. Second, it providedjustification for the Judge's conclusion that Ms Mao was not ready, willing and ableto settle in accordance with the Agreement. Mr Locke submitted the Judge's reasoningwas correct.13 Referring to Bahramitash v Kumar, above n 6, at [20] (emphasis added).Analysis[48] Mr Zhang's argument in support of the appeal endeavours to establish byreference to cls 3.13(2) and 10.1 of the Agreement that Mr Singh was obliged to settleeven though Ms Mao was at no stage prepared to comply with the requirement thatthe property be sold with vacant possession. That was Ms Mao's position at allrelevant times during the dealings of the parties and remained the position when thecase was argued in the High Court. Ms Mao's argument on appeal essentially proceedson the ground that cls 3.13(2) and 10 of the Agreement obliged Mr Singh to settle thetransaction on a basis which he had clearly not contracted upon. Whether or not theAgreement is to be applied in this way has to be assessed in the context of herconsistently maintained position.[49] The analysis must also take into account that there is no reason to doubt thatMr Singh was in a position to settle and had the funds necessary for that purpose butchose not to do so in the face of Ms Mao's determination that the property would notbe sold for vacant position.[50] As has been seen, the principal ground of the appeal is that the Judge erred infinding that Ms Mao was not entitled to issue a settlement notice and cancel theAgreement when Mr Singh did not settle in accordance with her notice. On the viewwe have formed, there is a straightforward answer to that question.[51] Clause 11.0 of the Agreement is headed "Notice to complete and remedies ondefault". Clause 11.1(1) and (2) then provide:11.1 (1) If the sale is not settled on the settlement date, either partymay at any time thereafter serve on the other party asettlement notice.(2) The settlement notice shall be effective only if the partyserving it is at the time of service either in all material respectsready, able, and willing to proceed to settle in accordance withclauses 3.0 and 10.0 or is not so ready, able, and willing tosettle only by reason of the default or omission of theother party.[52] Ms Mao's settlement notice was served at a time when she was plainlycontinuing her stance that she would not provide vacant possession under theAgreement. In this Court, but only now, she concedes that she was obliged to givevacant possession. At the time she served the settlement notice she was not preparedto do so. She was not, therefore, "in all material respects ready, able, and willing toproceed to settle in accordance with clauses 3.0 and 10.0" of the Agreement.That meant she could not satisfy the requirements for issuing a valid settlement notice.[53] Mr Zhang's argument that Ms Mao was ready, able, and willing to proceed inaccordance with cl 3.0 was based on cl 3.13(2), which we earlier set out.14 Beforedealing with that provision however it is necessary to notice the preceding provisionsof cl 3. In particular, under cl 3.1, unless particulars of a tenancy are included in theAgreement, the property is to be "sold with vacant possession" and the vendor"shall so yield the property on the settlement date". By her conduct Ms Mao showedthat she was not prepared to comply with that provision.[54] Insofar as cl 3.13(2) is concerned it is clear that Ms Mao was unwilling to givevacant possession. Mr Zhang argued that she could not do so because of the tenancy.We accept that was the situation on the settlement date, but that was as a result of herown failure to ensure she could give vacant possession. It is clear that somearrangement could have been made with the tenants. On Ms Mao's own evidence,they would have agreed to go on payment of $18,000. But she apparently regardedthat as a sum she should not have to pay even though, under the terms of theAgreement, it was her obligation to do what was necessary to give vacant possession.There was no doubt about Mr Singh's ability to perform his obligations under theAgreement and so Ms Mao would have had an obligation under cl 3.13(2)(a)(ii) to paypenalty interest, subject to any deduction under cl 3.13(2)(b).[55] We note also that under cl 3.13(6), the provisions of cl 3.13 are "withoutprejudice to any of the purchaser's rights or remedies including any right to claim forany additional expenses and damages suffered by the purchaser". This means that thepurchaser's rights to sue for breach of contract are preserved: it is not obliged to adoptthe procedures set out in the clause. It should also be noted that cl 3.13(7) providesthat if the parties are unable to agree on the amount payable under the cl 3.13, either14 See above at [37].party "may make a claim under" cl 10.0. Again, the permissive nature of the languageindicates that they cannot be required to do so.[56] Mr Zhang's submission is that Mr Singh was obliged to proceed through thecl 10 process, acquiring the property subject to the tenancy, and then claimingcompensation as envisaged by cl 3.13(2) and (6). It was plain that the parties wouldnot be able to agree on any amount payable, again because of the stance adopted byMs Mao; it was her claim that notwithstanding what the Agreement said aboutvacant possession, Mr Singh was bound to acquire the property subject to the tenancyand if necessary seek compensation under the Agreement.[57] This takes us to cl 10.0, "Claims for compensation". Relevantly, the clauseprovides:10.1 If the purchaser has not purported to cancel this agreement, the breachby the vendor of any term of this agreement does not defer thepurchaser's obligation to settle, but that obligation is subject to theprovisions of this clause 10.0.10.2 The provisions of this clause apply if:(1) the purchaser claims a right to compensation for:(a) a breach of any term of this agreement; or(2) there is a dispute between the parties regarding any amountspayable:(a) under ... subclause 3.13 ...10.3 To make a claim under this clause 10.0:(1) the claimant must serve notice of the claim on the other partyon or before the last working day prior to the settlement date(except for claims made after the settlement date for amountspayable under ... subclause 3.13, in respect of which theclaimant may serve notice of the claim on the other party atany time after a dispute arises over those amounts); and(2) the notice must:(a) state the particular breach of the terms of theagreement, or the claim under ... subclause 3.13 ... ;and(b) state a genuine pre-estimate of the loss suffered by theclaimant; and(c) be particularised and quantified to the extentreasonably possible as at the date of the notice.10.5 If the amount of compensation is agreed, it shall be deducted from oradded to the amount to be paid by the purchaser on settlement.10.6 If the purchaser makes a claim for compensation under subclause10.2(1) but the vendor disputes the purchaser's right to make thatclaim, then:(1) the vendor must give notice to the purchaser within threeworking days after service of the purchaser's notice undersubclause 10.3, time being of the essence; and(2) the purchaser's right to make the claim shall be determinedby an experienced property lawyer or an experienced litigatorappointed by the parties. If the parties cannot agree on theappointee, the appointment shall be made on the applicationof either party by the president for the time being of theNew Zealand Law Society. The appointee's costs shall bemet by the party against whom the determination is made.10.7 If the purchaser makes a claim for compensation undersubclause 10.2(1) and the vendor fails to give notice to the purchaserpursuant to clause 10.6, the vendor is deemed to have accepted thatthe purchaser has a right to make that claim.10.10 The procedures prescribed in subclauses 10.1 to 10.9 shall not preventeither party from taking proceedings for specific performance of thecontract.10.11 A determination under subclause 10.6 that the purchaser does not havethe right to claim compensation under subclause 10.2(1) shall notprevent the purchaser from pursuing that claim following settlement.[58] The Judge found that once Mr Singh had decided not to cancel the AgreementMr Singh had an obligation to settle under cl 10.1. He could claim compensationunder cl 3.13, but it was clear that Ms Mao did not accept the basis upon which sucha claim would have been advanced. Mr Singh's obligation was therefore to make aclaim under cl 10.3. Mr Gandhi's correspondence did not include such a claim.15[59] However in the circumstances of this case, Mr Singh's failure to tendersettlement and his failure to make a claim under cl 10 did not entitle Ms Mao to givea settlement notice. We have already explained that she was not ready, willing andable to settle in accordance with the agreement, but in Bahramitash v Kumarthe Supreme Court held that a vendor would ordinarily not be in default in relation toits obligation unless the purchaser made a proper tender of settlement.16 It is for thepurchaser to begin the process of settlement by tendering the settlement sum, and avendor will not breach its obligations in the absence of such a tender.17[60] However, there can be words or conduct which indicate that proper tender bythe purchaser would be futile. Demonstrated futility has a two-fold significance.First, the vendor is not able to treat the purchaser as being in default by failing to makea tender. Second, the vendor in such circumstances will have shown that it is not ready,willing and able in all material respects to perform its settlement obligations.18A finding of futility will not lightly be made, and the futility of the exercise mustbe clear. That is, "it must be shown to have been a forgone conclusion that the tenderwould not have been accepted or was not able to be accepted".19 As the Court put it:20In other words, in must be shown that without any real doubt the vendor wouldeither have refused to settle in response to a contractually proper tender or,if willing, would not have been in a position to do so.[61] We consider the Judge was right to conclude that futility was demonstrated bythe facts of this case. On the settlement date the property was tenanted, and Ms Maowas both unable to comply with her obligation under the Agreement to convey theproperty with vacant possession and unwilling to do so in any event. Although shehad established that the tenants would be prepared to move on payment of the sum of$18,000 compensation, no arrangements had been made to that effect. In fact she did15 High Court judgment, above n 1, at [38].16 Bahramitash v Kumar, above n 6, at [16].17 At [17].18 At [18].19 At [20].20 At [20].not accept that it was her obligation to provide vacant possession under the Agreement.She maintained that stance in defending Mr Singh's claim in the High Court, and therecan be no real doubt about her position. Had Mr Singh tendered the purchase priceless the amount required to buy the tenants out, Ms Mao would not have accepted thatpayment as an adequate tender because she denied her responsibility to do so underthe Agreement. The situation presented was not just that the property was tenanted,but that Mr Singh was confronted with the prospect that he would have to pay out thetenants to secure vacant possession. And it was by no means clear that the tenants'offer to Ms Mao would extend to Mr Singh. There was therefore no certainty that$18,000 was all Mr Singh would have been asked to pay.[62] These conclusions are important. We are satisfied they establish futility, andthat Mr Singh was therefore not in breach of the Agreement by failing to tendersettlement. And the fact that he did not cancel the Agreement in response to Ms Mao'sstance does not mean he was obliged to settle on her terms. Under cl 10.1, hisobligation to settle was "subject to the provisions of this clause 10.0". That obviouslyincludes cl 10.10, with the result that nothing in the preceding subclauses had the effectof preventing him from taking proceedings for specific performance of the Agreement,which he subsequently did. In the situation that arose, Mr Singh was not obliged tomake a claim for compensation under cl 10. He could sue for specific performance.[63] We do not consider these conclusions are contrary to anything said inProperty Ventures Investments Ltd v Regalwood Holdings Ltd.21 In that case,the Court had to consider a provision in a sale and purchase agreement that provided:226.5 Breach of any warranty or undertaking contained in this clause doesnot defer the obligation to settle. Settlement shall be withoutprejudice to any rights or remedies available to the parties at law or inequity, including but not limited to the right to cancel this agreementunder the Contractual Remedies Act 1979.[64] For the majority, Blanchard J wrote:23[72] The subclause is not happily drafted but both its language and certainpolicy considerations lead us to the view that cl 6.5 does no more than21 Property Ventures Investments Ltd v Regalwood Holdings Ltd, above n 10.22 At [2].23 Footnotes omitted.confirm the position under the general law, namely that, while the contractremains on foot, the existence of a breach of warranty is not a licence for apurchaser simply to sit on its hands refusing to proceed to settlement until thebreach is remedied. To adopt Tipping J's metaphor from Holmes v Booth,a purchaser who has come to this fork in the road is faced with onlytwo possible routes, cancellation or performance, and once the latter is chosenis bound to perform in accordance with the contract when called upon. Thereis no intermediate road available. Nor can the purchaser suspend an electionwithout risking default. It risks being taken to have affirmed the contract butdefaulted in performance.[65] Blanchard J went on to explain that while the first sentence in the clause inquestion did not create any difficulty, there was an ambiguity in the second.He considered that it was to be understood as looking prospectively towards thesettlement which must occur unless the purchaser elected to cancel and validlydid so.24 Clause 10.1 of the Agreement in this case takes a different form but, as withthe clause at issue in Regalwood, it provides that in the absence of cancellationthe breach by the vendor of any term of the Agreement25 does not defer the purchaser'sobligation to settle.[66] However, there does not appear to have been an equivalent to the words nowused in cl 10.1 that the "obligation is subject to the provisions of this clause 10.0",which leads directly to the preservation of the right to seek specific performance undercl 10.10. Indeed, the predecessor of cl 10.0 appears to have been inserted into thestandard-form agreement in response to the Supreme Court's suggestion in Regalwoodthat:26It should not be beyond the wit of the drafters of standard-form real estatecontracts to devise a mechanism which will enable speedy resolution ofbona fide and reasonable purchasers' claims for equitable compensation orset-off and protect each of the contracting parties whilst doubt about thecorrect position remains.The clause thus represents a distinct difference to the wording in the Regalwoodclause, which contemplated exercise of the right only after settlement had taken place.24 At [73].25 The reference to "any term of the Agreement" means the net is cast more widely that the clausediscussed in Regalwood, which was limited to a breach of warranty or undertaking.26 At [75]. For further discussion, see MGH Trah Ltd v Fox Mortimer Trustee Co Ltd [2021]NZCA 59, (2021) 22 NZCPR 102 at [38]–[40].[67] The second distinction that can be made is that Regalwood was not a casewhere it could have been concluded that the tender of settlement would have beenfutile. Here, it was Ms Mao's conduct which relieved Mr Singh of the obligation totender settlement. This was not a case of a breach of warranty, as in Regalwood,but rather a clearly justified conclusion that vacant possession would not be providedin accordance with the Agreement. In these unusual circumstances, we considercl 10.10 enabled Mr Singh to seek specific performance on the basis that he wanted torely on the Agreement.[68] It will be apparent from what we have already said that we do not accept thatthe Judge erred in the specific ways Mr Zhang submitted. We do not consider thatMr Singh was obliged to tender settlement and engage in the procedures set out incls 10.3 and 10.6 of the Agreement. We have seen no reason to disturb the Judge'sfinding that the position adopted by Ms Mao was "entrenched": there was everyindication that she would not change her mind.27 Finally, there was no reason forMr Singh to settle with compensation in lieu of possession. Mr Singh was not obligedto tender the settlement in the circumstances.[69] For these reasons the first ground of appeal fails.Second ground of appeal — relief[70] The Judge considered that specific performance as sought by Mr Singh was anappropriate remedy. He gave brief reasons for doing so, including the fact that specificperformance is well established as an appropriate remedy to enforce agreements forthe sale and purchase of real estate. He noted that the property represented adevelopment opportunity, which Ms Mao had been prepared to sell on a rising market.It was not clear that Mr Singh would be able to obtain a comparable developmentopportunity at the same price. He also considered that damages might not be anappropriate remedy, because Ms Mao was apparently resident in Australia, therebypotentially making enforcement more difficult. Further, the Judge thought thatcalculating damages would be a "less efficient remedy than specific performance",observing that the calculation of damages to compensate for a lost development27 High Court judgment, above n 1, at [48].opportunity would not be as straightforward as allowing the developer to actually havethat opportunity.28 He considered that although Mr Singh had delayed commencingthe proceeding for approximately five months after Ms Mao cancelled the Agreement,the delay was insufficient to count against an order for specific performance.29[71] Mr Zhang suggested that the Judge did not take into the account the severityof the remedy, submitting that having genuinely believed the Agreement was validlycancelled, Ms Mao commenced a development of the property herself, incurring costsin the process. He submitted there was no reason to suppose that damages could notbe quantified. He supplemented this with evidence from the bar about Ms Mao'sfinancial position. Mr Zhang also raised issues concerning Mr Singh's conduct,criticising him on the basis Mr Singh had insisted throughout on the land beingtransferred to him with vacant possession, an outcome to which he claimed Mr Singhwas not entitled. He also criticised Mr Singh for not invoking the correct process toresolve the dispute. Further, Mr Zhang raised an issue as to whether Mr Singh was infact entitled to the loan which he had obtained in order to settle. This argument wasapparently based on the fact Mr Singh had obtained a bank loan for 80 per cent of thepurchase price of the property, which Mr Zhang claimed Mr Singh would not normallyhave been able to do as somebody intending to develop it.[72] None of these arguments is persuasive. The remedy of specific performancehas often been considered the appropriate remedy to enforce agreements for thesale and purchase of real estate and that remains the position.30 In Foreman vHazard Richardson J, writing for this Court, said:31Land is always treated as being of unique value in respect of which thecommon law remedy of damages is inadequate so that the remedy ofspecific performance is available to the purchaser as a matter of course unless,following settled principles, the Court refuses the remedy.[73] There is no reason why specific performance should not be ordered in this case.28 At [53].29 At [54].30 Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract inNew Zealand (7th ed, LexisNexis, Wellington, 2022) at [21.4.2(d)]; and D W McMorland Sale ofLand (3rd ed, Cathcart Trust, Auckland, 2011) at [12.29].31 Foreman v Hazard [1984] 1 NZLR 586 (CA) at 594.[74] It will be apparent from what we have already said that we cannot acceptMr Zhang's criticisms of Mr Singh, who simply wanted to get what he bargained for.This land was marketed as appropriate for redevelopment, and Mr Singh purchased itfor that purpose. In his affidavit filed in the High Court Mr Singh said he made theoffer to purchase the property because of its development potential. While he couldsee the house was tenanted when he was shown the property by the agent, his intentionwas to remove the house. He had not been given any details of any existing tenanciesand of course knew the Agreement provided for vacant possession. We consider thatMr Singh had no obligation to make inquiries about the tenancy in the circumstances.[75] A comparison of Mr Singh's conduct with that of Ms Mao is not favourable toher, taking into account her insistence that Mr Singh was obliged to take the propertysubject to the tenancy, a position only conceded as incorrect when the matter reachedthis Court. In the meantime Mr Singh had twice offered to extend the settlement dateto give Ms Mao time to secure vacant possession — offers which she declined.[76] We see no error in the Judge's conclusion as to remedy. The second ground ofappeal also fails.The stay in the High Court[77] Subsequent to the delivery of the High Court judgment, Ms Mao made anapplication for a stay of execution. In a further judgment dated 27 August 2021,Associate Judge Bell granted a stay.32 He noted he had earlier directed that settlementtake place on 20 August 2021.33 Ms Mao had not settled in accordance with the orderbut, having regard to the appeal, the Judge was satisfied that execution should bestayed. He accordingly granted a stay subject to conditions, including that Ms Maobe in a position to grant vacant possession of the property within four weeks of thisCourt giving its decision on the appeal.34[78] In the circumstances, and given that our decision is to dismiss the appeal,we consider the appropriate course to follow is to remit the matter to the High Court32 Singh v Mao [2021] NZHC 2230 [High Court stay judgment].33 At [1], citing High Court judgment, above n 1, at [56].34 At [14].for any further orders that may be necessary to ensure that the property is transferredin accordance with the High Court stay judgment.Result[79] The appeal is dismissed.[80] Ms Mao must pay Mr Singh costs for a standard appeal on a band A basis andusual disbursements.[81] The matter is remitted to the High Court for any further orders that may benecessary to ensure the property is transferred in accordance with the High Courtstay judgment in Singh v Mao [2021] NZHC 2230.Solicitors:Advent Ark Lawyers, Auckland for AppellantGandhi Lala Lawyers, Auckland for Respondent