IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-003022 [2015] NZHC 1878

BETWEEN	MARLENE JEANNETTE COX,
MITCHELL CAVANAGH COX, DARRIN EDWARD COX, LEVONNE CHERIE COX AND KYLIE JANE COX Plaintiffs	

AND	
AUCKLAND COUNCIL Defendant	

Hearing:	28 July 2015	

Appearances:	
A Webb and S Jackson for the Plaintiffs
L A O'Gorman for the Defendant	

Judgment:	
10 August 2015	

JUDGMENT OF GILBERT J

This judgment is delivered by me on 10 August 2015 at 3 pm pursuant to r 11.5 of the High Court Rules.

..................................................... Registrar / Deputy Registrar

COX & ORS v AUCKLAND COUNCIL [2015] NZHC 1878 [10 August 2015]

Introduction

[1]      This case concerns whether the plaintiffs are precluded by a settlement agreement from pursuing claims for compensation arising out of an agreement by the defendant to purchase their land for public works.   This depends on the proper construction of the settlement agreement and whether it was subsequently cancelled.

[2]       I start by setting out the context, including the relevant provisions of the land purchase agreement (LPA) and the discussions and correspondence leading to the settlement agreement.    I will then summarise the subsequent events including the purported cancellation of the settlement agreement.

Land Purchase Agreement

[3]       The plaintiffs owned  land  in  Massey North  that  was  required  for  roads, services and storm water management facilities in connection with the establishment of a new town centre pursuant to a plan change to the Waitakere City Council District Plan.  The plan change was notified in March 2005 and became operative in June 2007.

[4]       On 7 October 2010, the plaintiffs entered into the LPA with Waitakere City Council, now Auckland Council, for the purchase of their land pursuant to s 17 of the Public Works Act 1981.  The parties were unable to agree on whether compensation should be assessed on the basis of the zoning prior to, or after, the plan change; whether there should be an adjustment for curtilage; and whether the payment should be inclusive or exclusive of goods and services tax.  The valuation outcomes for all these possible scenarios were agreed between the parties leaving only questions of law  to  be  determined.    The  parties  therefore  agreed  to  apply to  this  Court  for declarations as to the correct approach.  Council agreed to meet the plaintiffs’ costs in connection with the proceedings.

[5]       The LPA settled on 26 November 2010, with compensation being paid on the basis of Council’s understanding of the correct approach.   The LPA provided for further payments of compensation to be made depending on the Court’s determination.   The declaration acquiring the plaintiffs’ land was published in the

New  Zealand  Gazette  in  November  2011  and  registered  against  the  titles  on

8 December 2011.

Declaratory judgment proceeding

[6]       In September 2011, the plaintiffs and other land owners who signed similar LPAs and who were represented by the same lawyers, commenced a proceeding in this Court seeking declaratory relief in accordance with the LPAs (the declaratory judgment proceeding).   After the declaratory judgment proceeding was filed, the plaintiffs endeavoured to introduce evidence concerning representations allegedly made by Council staff at public meetings and on other occasions prior to the LPAs being signed to the effect that compensation would be paid on the basis of the new zoning (the representation issue).   In a judgment delivered on 13 December 2012, Katz J determined that evidence concerning the representation issue was irrelevant
and inadmissible in the context of the declaratory judgment proceeding.1   However,

the Judge observed:2

Obviously, the applicants may have other causes of action available to them arising out of the representations that were allegedly made.  However such causes of action would not be amenable to determination by way of declaratory judgment and would need to proceed by way of ordinary proceedings.

Settlement agreement

[7]       On 31 January 2013, Gerard Curry, counsel representing the plaintiffs and other land owners at the time, sent an email to Matthew Casey QC, who was then acting for Council, stating that he was awaiting instructions on whether to appeal the judgment of Katz J and raising the prospect of settlement:

… turning to without prejudice matters of pragmatism, if the Council offered realistic solatium payments the proceedings could be settled.  Please let me know whether the Council will offer solatium.

1	Cox & Ors v Auckland Council [2012] NZHC 3384.
2	At [40].

[8]       Mr  Casey’s  reply  email  included  the  following  response  in  relation  to

possible settlement:

I had expected you to put forward a figure that the Council might consider by way of ‘solatium’ payment to settle the matter.  I will seek instructions in response to your email but it is difficult to know what might be considered realistic  by  your  clients.    I  note  that  the  PWA provides  for  a  solatium payment of $2,000 per claimant, which I would be prepared to recommend to the Council if that is what is contemplated.

[9]       The question of settlement was next discussed in a telephone conversation on

5 February 2013.  Mr Curry told Mr Casey that his clients had decided not to appeal the judgment but that a number of them were upset and aggrieved by Council’s refusal to honour the assurances they claim were given by Council staff regarding the basis on which they would be compensated.  Mr Curry told Mr Casey that the Council should make a substantial solatium payment to recognise this concern.

[10]     After taking instructions, Mr Casey wrote to Mr Curry on 11 February 2013 in the following terms:
1.    Further  to  our  recent  discussions  I  am  instructed  to  propose  a settlement of all outstanding matters as between the Council and the four parties you represent, on the basis of an ex gratia all-in payment of $100,000.  Please note that this is a one-time proposal, is not open for negotiation and is subject to approval by a council officer with delegated financial authority.

2.    The payment will be in addition to so much of your costs as are covered by clause 5(f) of the Land Purchase Agreements, being the costs of the declaratory judgment proceeding, but will be inclusive of all other costs including those associated with the representation issue and other attendances.  I understand that the Council is holding two unpaid invoices from you that include attendances not covered by clause 5(f) and has asked for a breakdown to separate the costs for which it is responsible from those it is not.

3.    Council will forego its entitlement to party-and-party costs on the directions application, which come to $5,970.

4.    As a purpose of the settlement is to save further costs, and because the hearing is coming up and the exchange of submissions imminent, Council’s offer will remain open until 4pm this Friday, 15 February
2013.  It will be assumed that your clients do not accept the proposal if I have not heard from you by then.

5.    It would be of assistance if, when responding, you could provide an up-to-date account of the costs that are within clause 5(f) so as to avoid any disagreement.

[11]	Mr Curry responded by letter dated 15 February 2013 which relevantly states:

Your letter refers to the four parties that I represent.  In fact, I represent five being the five mentioned in the application to the Court ie Merlene Cox, the Cox Family, Norma Grimmer, Rex Bridgford and Mr & Mrs Pavich.  The Cox Land is held in two different titles: one is owned by Merlene Cox and the other is owned by the family.  Given that there are five parties would the Council increase its offer to $125,000?

On a point of clarification, in your paragraph 2 you refer to a payment being in addition to such of my costs as are covered by clause 5(f) but “… will be inclusive of all other costs including those associated with the representation issue and other attendances.”   For clarity, I state my understanding of the payment offered in respect of costs:  it is that any payment received from the Council would cover all clause 5(f) costs but the Council will not be paying any costs in respect of the representation or other issues not covered by 5(f).

I am instructed to advance settlement in order to save costs.  However, I do seek an extension of time until 4pm Wednesday, 20 February 2013 in order to allow time for a response to the two points I have raised in the two paragraphs immediately above and also to work just a little further with the Claimants.   If I did not consider there was a real prospect of achieving settlement I would not be seeking an extension of time.

…

Please  appreciate  that  for  some  of  the  Claimants  the  issues  are  very emotional.  It took considerable effort to get to the point where I considered that it was appropriate to seek the extension of time that I do.

[12]	Mr Casey responded later that day agreeing to the requested extension:

I have instructions to agree to the extension you have requested to next Wednesday.   Council has not ruled out a modest increase but will want certainty as to the final amount, including how much it owes in respect of your costs.

[13]	Mr Curry sent a further letter to Mr Casey on 18 February 2013:

As promised, I now enclose a note of my fee for outstanding land purchase issues.  I have billed it at a low fee for the attendances involved.  This has been done in order to enhance the possibility of settlement.

If the Council were minded to settle on a payment of $25,000 per Applicant but considered that the total including fees exceeded what was reasonable I would  be  pleased  to  confer  further.     I  would  prefer  to  enhance  the Applicants’ position rather than my own.

If  you  could  structure  your  reply  on  the  basis  of  an  equal  amount  per
Applicant it would assist.

[14]	In an email sent shortly after this letter was received, Mr Casey sought the following clarification from Mr Curry:

In order to be clear on what this proposal entails, can you confirm that if
Council accepts the offer it will be required to pay:

	(a)	$125,000 – being $25,00 for each claimant (apportioned however the claimants might agree between them); and		
	
(b)	$21,528 in respect of your costs (incl GST) – in satisfaction of all outstanding and unpaid costs.		

[15]	
Mr Curry replied by email later that day:		
	
I comment as requested.		
	
As to your (a) a zero was left off the $25,000.  On apportionment, it would assist the applicants if the $25,000 was specified as an ex gratia payment for each claimant rather than leaving the apportionment for them.		
	
Your (b) is substantially correct.  The only refinement is expressed in the 5th para of my letter dated 15/2/13 dealing with invoice 275.  I consider that the services specified in that invoice are reasonably connected to the purchase issues.    However,  I  will  accept  the  Council’s  view  on  that  and  forego payment if the Council considers they are not reasonably connected.		
	
I hope this clarifies the position.  I would be happy to correspond or confer further as may assist.		

[16]	
Mr	Casey	sent	the	following	email	to	Mr	Curry	the	next	
day,	
19 February 2013:

I have instructions to conclude the matter on the following basis:

(a)        An ex gratia payment of $125,000 being $25,000 for each of the
5 claimants.

(b)	Payment of your costs, inclusive of GST and disbursements, in the total sum of $25,000.

Please confirm that this is accepted.  It will be necessary for us to advise the Court that the matter has settled so the fixture can be vacated.  The Council client will require a formal settlement agreement and discharge from the claimants (which I shall forward shortly); and a revised bill of costs / GST invoice from you.  I will also prepare a notice of discontinuance.

[17]     Mr Curry replied by email the following day, 20 February 2013, accepting the offer:

The offer is accepted.  I will send the required replacement invoice to you tomorrow.

Subsequent events

[18]     On 21 February 2013, Mr Casey sent Mr Curry a draft settlement agreement and notice of discontinuance.  The draft settlement agreement contains the following form of release:

The settlement agreement and the payments made under clause 1 are in full and final settlement of all claims the claimants or any of them may have against the Council or any employee or agent of the Council arising out of or in connection with the acquisition by the Council of the claimants’ land including (but without limitation) any claims based on representations by the Council, its employees or agents.

[19]     On 4 March 2013, Mr Curry sent Mr Casey an email requesting a meeting:

… to talk through difficulties encountered in the settlement process.  These turn on the extent of the Council’s proposed Settlement Agreement which seeks to extend the settlement to claims based on representations.

…

[20]     At the meeting which took place two days later, Mr Curry advised that the plaintiffs did not accept that the settlement extended to the representation issue.3
Mr Casey rejected this suggestion and pointed out that his letter dated 11 February

2013 proposed “a settlement of all outstanding matters” in response to Mr Curry’s invitation to Council to make a substantial solatium payment to recognise the claimants’ concerns regarding the representations allegedly made by Council employees.

[21]      The following day,  7  March  2013,  Mr Curry telephoned  Mr Casey and suggested  that  settlement  was  conditional  upon  a  formal  deed  being  signed.
Mr Casey maintained that the matter had settled.

3	The other claimants represented by Mr Curry took no issue with the scope of the settlement.

[22]    Mr Curry then filed a memorandum seeking directions as to whether a settlement had been reached and proposing a timetable for the exchange of evidence and the allocation of a fixture to determine this issue.  He advised that the hearing scheduled for 19 March 2013 to determine the declaration proceeding should be vacated.  Mr Casey responded with a memorandum contending that settlement had been reached and agreeing that the fixture should be vacated.

[23]     Messrs Curry and Casey withdrew as counsel at this stage because they were required to give evidence.  The parties subsequently agreed that the most appropriate procedure to determine whether settlement had been reached was for Council to apply to strike out the declaration proceeding.  This application was filed on 14 May
2013.

[24]     On 23 May 2013, Mr Webb, who had by then been instructed to act for the plaintiffs, filed a notice of opposition.  The plaintiffs did not oppose an order being made dismissing the declaratory proceeding but resisted an order for costs.  In their notice of opposition, the plaintiffs acknowledged that they agreed to settle the declaration proceeding on 20 February 2013 but claimed that this did not preclude them from “pursuing a cause of action based on misrepresentation (or any other basis) relating to the sale of the land”.

[25]     The strike out application came before Wylie J on 11 June 2013.  There being no opposition to it, the Judge made an order dismissing the declaration proceeding.4
The Judge considered that it was not necessary for him to determine whether there had been a settlement and, if so, on what terms.5

It is not necessary for me to go on and consider whether the proceeding was settled, or what the terms of settlement were.  Nor is it necessary for me to determine whether or not there was a global settlement, or individual settlements between the Council and each of the applicants.  I do record that the Cox family members, in their notice of opposition, did accept that a settlement agreement was concluded on 20 February 2013.  They may well face difficulties if they later seek to resile from that proposition.  However, this does not compel the conclusion that the settlement extended to the representation issue.   That matter is not directly before the Court on the present application, and in my view, it is not appropriate to endeavour to deal with it in the present context.

4	Cox & Ors v Auckland Council [2013] NZHC 1459 at [40].
5	At [41].

[26]     On 26 June 2013, Council’s solicitors wrote to Mr Webb asserting that the plaintiffs’ refusal  to  accept  that  a settlement  of all  outstanding issues  had  been reached amounted to a repudiation of the settlement agreement.  Council advised that it did not intend to pay the agreed ex gratia sum until the plaintiffs and the other claimants were prepared to perform their obligations under the agreement.  However, Council did agree to pay the amount outstanding in relation to costs.  This payment was made on 5 July 2013.

[27]     On 30 October 2013, the plaintiffs filed a claim for compensation under the Public Works Act in the Land Valuation Tribunal and served a notice of claim on Council.   Council’s solicitors responded on 27 November 2013 claiming that this action was contrary to the plaintiffs’ acceptance that a settlement agreement had been reached resolving the declaration proceeding and also contrary to the LPA.  Council threatened to seek indemnity costs if the claim was pursued.

[28]     There  were  no  material  developments  for  the  next  nine  months.    On

1 September  2014,  the  plaintiffs’ present  solicitors  wrote  to  Council’s  solicitors

purporting to cancel the settlement agreement. This letter relevantly states:

We have been referred to the above proceedings and your letters dated 26
June 2013 and 27 November 2013, following the disputes that emerged as to the scope of an agreement reached in February 2013.  Among other things,
your client has asserted that our clients have repudiated and/or breached an
agreement to settle those proceedings reached in February 2013.

We are instructed that, in addition to the position recorded on behalf of your client, no party has entered into a formal settlement agreement and your client has not made payment in accordance with that agreement reached. Our clients regard your client’s position as a repudiation of the agreement and by this letter give notice that they cancel the agreement.

As a result, fresh declaratory proceedings will be necessary to determine the quantum of any further compensation due to our clients for the acquisition of their land. Please indicate if you are authorised to accept service.

[29]      Council’s solicitors replied on 8 September 2014 stating that all payments due under the LPAs had been made and all claims for compensation had been fully settled. They went on to state:

The Council has unfortunately faced ongoing breaches and repudiation of the settlements by your clients.   For example, on 30 October 2013 your clients  served  on Auckland  Council  a  notice  of  claim  before  the  Land

Valuation Tribunal.  The Council has reserved all of its rights in respect of those ongoing breaches, and meanwhile it has advised that it is awaiting acknowledgement by the Vendors of the terms of the 20 February 2013 settlement agreement and that they intend to perform their obligations before making the  corresponding  ex  gratia  all-in  payment  (subject  to  rights  of setoff).

In the above circumstances, your clients have no right of cancellation, nor any grounds to commence declaratory proceedings seeking further compensation.

[30]     The plaintiffs’ solicitors replied on 25 September 2014 maintaining that the settlement agreement had been validly cancelled by their earlier letter.  They claimed that Council’s continued refusal to make payment under the settlement agreement amounted to a further repudiation of it “to the extent that it may have remained on foot” and they gave further notice of cancellation.

The present proceeding

[31]     The  plaintiffs  issued  the  present  proceeding  in  November  2014.    They contend that the settlement agreement was an accord and conditional satisfaction and that their right to pursue their claim for compensation was not to be released until the formal settlement agreement was executed, the ex gratia payment made and a notice of discontinuance filed.  This is pleaded in their statement of claim as follows:
19.	The Agreement to Settle was conditional and those conditions were never satisfied before it was cancelled.

Particulars

Settlement conditional

(a) The Agreement to Settle was conditional on:

(i)     Agreement by all parties as to the terms and conditions to be recorded in a formal written agreement signed by all parties.

(ii)      Payment being made to all the claimants in the amounts agreed to between the parties.

(iii)     A notice of discontinuance being agreed to, signed by all   parties   to   the   Prior   Proceeding   [the declaration proceeding] and filed in Court.

(b)     The  Prior  Claimants,  including  the  Plaintiffs,  gave  no release of their rights pursued in the Prior Proceedings until the Agreement to Settle was completed.

(c)	In the premises, none of (a)(i)-(iii) above was satisfied.

[32]     The plaintiffs argue that  Council  repudiated  the settlement  agreement  by making it clear in the letter from its solicitors dated 26 June 2013 that it would only make  the  ex gratia  payment  if  the  plaintiffs  agreed  to  the  terms  of  the  draft settlement agreement.  The plaintiffs contend they were therefore entitled to cancel the settlement agreement.   Because the declaration proceeding has not been determined, merely struck out, the plaintiffs say that there is nothing to prevent them from issuing fresh proceedings seeking similar declarations.   In any event, the plaintiffs submit that the settlement agreement did not preclude other claims, including claims arising out of the representation issue.

[33]     The plaintiffs seek declarations in the following terms:

(a)	A declaration that the Agreement to Settle has been cancelled.

(b)     Alternatively to (a) a declaration that the Agreement to Settle came to an end on the failure of the parties to agree on the conditional aspects of the Agreement to Settle.

(c)     A declaration that the plaintiffs may pursue their rights to have compensation set for the acquisition of their land.

(d)	Alternatively to (c) relief under s 9 Contractual Remedies Act.

[34]     Mr  Webb  explained  that  the  plaintiffs’  principal  objective  is  to  pursue increased compensation for the purchase of their land, either through issuing fresh proceedings  in  this  Court  seeking declaratory relief in  terms  of the  LPA or by pursuing their claim in the Land Valuation Tribunal. Although the plaintiffs still feel aggrieved concerning the representation issue, they acknowledge that it will be difficult to establish that any loss was suffered as a result of this.   However, they wish to preserve the prospect of pursuing such a claim as well.

[35]     Council’s position is that it was not obliged to make the ex gratia payment because, until 23 May 2013, the plaintiffs denied that any settlement agreement had been reached and thereafter maintained that the settlement agreement did not resolve all outstanding issues between the parties.   Council argues that the plaintiffs were

therefore in breach of the settlement agreement and were not entitled to take advantage of their own wrongdoing and cancel it.

The issues

[36]	The plaintiffs identify the following issues as requiring resolution: (a)	What was the status of the settlement agreement?
(b)       Was the settlement agreement validly cancelled?

(c)	Are the plaintiffs entitled to commence fresh  proceedings seeking declarations in terms of the LPA?

(d)	Are the plaintiffs entitled to pursue compensation in relation to the representation issue?

What was the status of the settlement agreement?

[37]     In Osborn v McDermott, the Supreme Court of Victoria Court of Appeal identified three categories of settlement being accord executory, accord and conditional satisfaction, and accord and satisfaction.6    Phillips JA explained these categories as follows:

Thus, there are three possibilities, not two.  First, there is the mere accord executory which, on the authorities, does not constitute a contract and which is altogether unenforceable, giving rise to no new rights and obligations pending performance and under which, when there is performance (but only when there is performance), the plaintiff’s existing cause of action is discharged.   Secondly, at the other end of the scale is the accord and satisfaction, under which there is an immediate and enforceable agreement once the compromise is agreed upon, the parties agreeing that the plaintiff takes in satisfaction of his existing claim against the defendant the new promise by the defendant in substitution for any existing obligation. Somewhere between the two, there is the accord and conditional satisfaction, which exists where the compromise amounts to an existing and enforceable agreement between the parties for performance according to its tenor but which does not operate to discharge any existing cause of action unless and until there has been performance.

6	Osborn v McDermott [1998] 3 VR 1 (CA) at 10.

Where there is a mere accord executory, no suit can be maintained upon the compromise unless and until there has been performance, and then suit is ordinarily unnecessary.  Upon default in performance, the plaintiff’s existing cause of action continues unaffected.   With accord and satisfaction, either party may sue upon the compromise, but only on the compromise and for nothing else: the original cause of action has gone.  Where there is accord and conditional satisfaction, the plaintiff is bound to await performance and accept it if tendered, but if there be no performance, then the plaintiff may proceed according to general principles called into play when any agreement is repudiated: the plaintiff may either treat the agreement (the accord) as at an end and proceed on his original cause of action; or he may, at his option, sue on the compromise agreement, in place of the original cause of action. Thus, the consequence should there be default in performance varies according to the case and, as indicated by Murphy J in Fraser at 401-2, it would be surely in the best interests of the parties if their legal advisers saw to it, when settling litigation, that the intended consequence upon default was clearly expressed and not left to implication.

[38]     The Court of Appeal adopted these categories in Humphries v Carr.7    The categorisation  of  the  settlement  involves  determining  what  the  parties  actually agreed,  applying  ordinary  principles  of  contractual  interpretation.    As  Tipping J observed in Tag Pacific Ltd v The Habitat Group Ltd in the context of construing a release clause, the “ultimate objective is always to ascertain the intention of the parties from the words  they have used, interpreted in the light of the objective circumstances known to them at the time”.8

[39]     Mr Casey’s initial offer on 11 February 2013 remained open for acceptance within a short timeframe.   This was because one of the primary purposes of the settlement from Council’s perspective was to save further costs being incurred.  The hearing was shortly due to commence and the exchange of submissions was imminent.  Mr Curry confirmed in his letter of 15 February 2013 that the plaintiffs were similarly motivated in seeking a settlement by a desire to save costs.   The parties’  mutual  objective  of  saving  costs  would  only  be  achieved  once  the proceedings were fully and finally settled.

[40]     Mr Curry sought a short extension of time to accept the offer explaining that he required clarification on two issues and further time to work with his clients.  He said that he would not have sought an extension of time if he did not consider there
was a real prospect of achieving settlement.  The requested extension of time was

7	Humphries v Carr [2012] 1 NZLR 742 (CA) at [20].
8	Tag Pacific Ltd v The Habitat Group Ltd (1999) 19 NZTC 15,069 at 15,074.

granted.   This indicates that the parties intended that they would be bound immediately upon acceptance.

[41]     Mr Casey advised on 19 February 2013 that he had instructions to conclude the matter on the basis of his communications with Mr Curry.  He asked Mr Curry to confirm that the offer was accepted so that the Court could be advised that the matter had settled and the fixture could be vacated.  Again, this indicates that the parties were expecting a settlement that would be immediately binding.

[42]     Although Mr Casey advised that Council would require a formal settlement agreement, a revised costs invoice and a notice of discontinuance, it is clear that these steps were intended to be taken after the Court was told that the fixture was no longer required because the matter had settled.   These steps would be taken in implementation of the settlement agreement and were not pre-conditions to it.

[43]     Mr Curry’s response to the offer was clear and unequivocal:   “The offer is accepted”.

[44]     The parties must be taken to have intended by the language employed by the senior lawyers representing them that they would be bound by the terms of the offer immediately upon acceptance.  The plaintiffs’ initial position, that there was merely an accord executory and there would be no enforceable agreement until execution of a formal settlement agreement, was untenable.  It was rightly abandoned at the time Mr Webb became involved in the matter on about 23 May 2013.

[45]     I  consider  that  the  settlement  agreement  is  properly  characterised  as  an accord and satisfaction.  There was no question that Council was ready, willing and able to meet its obligations under the settlement agreement.  As noted, one of the principal objectives of the settlement was to save both parties from incurring further costs in the declaration proceeding.  Mr Casey requested confirmation of acceptance of the offer in his email of 19 February 2013 so that the Court could be advised that the  declaration  proceeding  had  settled  and  the  fixture  could  be  vacated.    This indicates that the parties intended that their rights in the declaration proceeding

would be extinguished immediately on settlement being reached and prior to its implementation.

[46]     However, whether or not the settlement agreement amounted to an accord and satisfaction or an accord and conditional satisfaction is not determinative of the outcome  in  this  case.    The  critical  issue  is  whether  the  settlement  agreement, however categorised, extended to cover all outstanding matters between the parties, including the representation issue, or whether it merely settled the declaration proceeding.    If  the  former,  Council  repudiated  the agreement  by insisting on  a comprehensive  form  of  release  to  which  it  was  not  entitled.    If  the  latter,  the plaintiffs repudiated the agreement by refusing to acknowledge the scope of the agreed release.

[47]     Mr Casey’s letter of 11 February 2013, which formed the foundation of the settlement offer, was formulated in response to Mr Curry’s advice that a number of his clients were aggrieved by Council’s refusal to honour assurances allegedly given by Council staff regarding the basis of compensation.  Mr Curry specifically invited Council to make a substantial solatium payment to recognise this concern.

[48]     Council responded to that invitation by making a substantial ex gratia offer. This offer was stated to be in settlement of “all outstanding matters” between the Council and the parties represented by Mr Curry. As was well known to both parties at the time, the outstanding matters included the declaration proceeding and the representation issue that the plaintiffs had tried unsuccessfully to draw into that proceeding.   It is abundantly clear that Council was seeking finality on all issues, primarily to save costs.  The reference to “all outstanding matters” in this context must be taken as including the representation issue.

Was the settlement agreement validly cancelled?

[49]     The plaintiffs’ solicitors relied on two matters in purporting to cancel the settlement agreement on 1 September 2014.  The first was that no formal settlement agreement had been entered into.  The second was that Council had not made the ex gratia payment.

[50]     As  to  the  first  of  these,  the  plaintiffs  wrongly  refused  to  perform  their obligation  to  sign  a  settlement  agreement  with  an  appropriate  form  of  release covering all outstanding matters.  They could not then rely on the fact that no such agreement was signed as justifying their cancellation of the settlement agreement. This would allow them to take advantage of their own wrongdoing which is not permitted.

[51]     For the reasons that follow, I also reject the plaintiffs’ alternative contention that they were entitled to cancel the settlement agreement because the ex gratia sum was not paid.

[52]     Council agreed to make the ex gratia payment to save the costs that would otherwise be incurred in dealing with the plaintiffs’ claims.  The payment was to be made in return for a comprehensive release and discharge.

[53]     The plaintiffs made it clear that they were not prepared to implement the settlement agreement and refused to be bound by it.  They refused to acknowledge the scope of the agreed release.   They commenced a claim in the Land Valuation Tribunal; threatened to issue fresh declaration proceedings; and maintained that they were entitled to pursue a claim arising out of the representation issue.  These actions clearly indicated to Council that it would be futile to pay the ex gratia sum because it would not receive the benefit promised in return.

[54]     In these circumstances, I do not consider that Council was obliged to make the payment even though it chose to affirm the agreement and not cancel it.  Council consistently stated that it was ready, willing and able to perform its obligations under the settlement agreement and asked the plaintiffs to advise if they were prepared to acknowledge and perform their obligations under it. At no stage did the plaintiffs do so.  Given their ongoing repudiation of the settlement agreement, the plaintiffs were not able to rely on the fact that Council had not paid the ex gratia sum as justifying cancellation.

[55]     This analysis is supported by the Supreme Court’s decision in  Ingram v Patcroft Properties.9     The Supreme Court confirmed that if one party to a contract (Party A) represents to another (Party B) that performance by Party B would be to no avail and Party B relies on that, then Party A cannot cancel the contract on the ground of non-performance by Party B. Blanchard J, who gave the reasons of the Court, cited with approval a passage from Priestley JA’s dissenting judgment in
Nina’s Bar Bistro Property Ltd (Formerly Mytcoona Property Ltd) v MBE Corporate

(Sydney) Pty Ltd:10

… repudiatory conduct, although unaccepted by the innocent party will relieve him from carrying out obligations on his side which it would in the circumstances be futile to fulfill.

…

… repudiatory conduct of a party at fault is a representation to the innocent party that so far as the party at fault is concerned the contract is at an end.  If the innocent party thereafter takes some step to his detriment, the party at fault will not be heard thereafter to say that he is treating the contract as on foot. This is the settled law of estoppel by conduct. …

[56]     Blanchard J summarised the general principle of estoppel that applies in such circumstances as follows:11

… if one party expressly or impliedly indicates or represents to another that performance on the other’s part is unnecessary or will be of no avail, and the other party relies upon that indication or representation, the first party is unable afterwards to complain of the non-performance.   So stated, the repudiating party’s inability to cancel the contract on the ground of the other party’s breach is the result of an estoppel, as Priestley JA thought.

[57]     It follows that the plaintiffs did not validly cancel the settlement agreement.

Are the plaintiffs entitled to commence fresh proceedings seeking declarations in terms of the LPA?

[58]    For the reasons given, the plaintiffs are not entitled to commence fresh proceedings seeking declarations in terms of the LPA.

9	Ingram v Patcroft Properties [2011] 3 NZLR 433 (SC).
10	Nina’s Bar Bistro Property Ltd (Formerly Mytcoona Property Ltd) v MBE Corporate (Sydney)
Pty Ltd  [1984] 3 NFWLR 613 (CA) at 633.
11	At [39].

Are   the   plaintiffs   entitled   to   pursue   compensation   in   relation   to   the representation issue?

[59]	The plaintiffs are also not entitled to pursue compensation in relation to the representation issue.

Result

[60]	The defendant is entitled to judgment on the plaintiffs’ claims.

[61]	Costs are reserved.

M A Gilbert J