IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE	
CIV-2018-425-75
[2019] NZHC 928	

BETWEEN	CONOR JOSEPH ENGLISH
Plaintiff	
AND	WAYNE ANTHONY FOLEY
First Defendant	
AND	LAUREL HILLS LIMITED (formerly
known as Ladies Mile Properties Limited) Second Defendant	

Hearing:	2 April 2019	
Appearances:	A J Logan for Plaintiff
A S Olney for Defendants	
Judgment:	30 April 2019	

JUDGMENT OF ASSOCIATE JUDGE LESTER
(on defendants’ application for summary judgment) REDACTED VERSION

[1]	This proceeding concerns the circumstances under which the first defendant, Mr Foley, was the successful tenderer in relation to a development block of land at Ladies Mile in Queenstown and whether Mr Foley submitted the tender on behalf of the plaintiff, Mr English alone or on his own behalf and on behalf of Mr English.   Mr Foley incorporated the second defendant, Laurel Hills Ltd (formerly known as Ladies Mile Properties Ltd) (“Ladies Mile”) to complete the purchase of the land after his tender was accepted. Mr Foley’s summary judgment application proceeded on the basis that there was no distinction to be drawn between the first and second defendants and so this Judgment shall only refer to the second defendant, Ladies Mile, where necessary.

ENGLISH v FOLEY & ANOR [2019] NZHC 928 [30 April 2019].

Background

[2]	The events leading to Mr Foley lodging the tender for the Ladies Mile land took place over a relatively short period, there being approximately three weeks from the possibility of a tender being lodged, to an agreement for sale and purchase being entered into by the vendor with Mr Foley or nominee. The events cover the period from 15 April 2018 to 4 May 2018.

[3]	Prior to mid-April 2018, Mr English and Mr Foley had no connection. Both knew a Marc Holtzman, who is a resident of Hong Kong but who has a range of business and philanthropic ventures in a number of countries. Mr Foley got to know Mr Holtzman through a property acquisition he assisted Mr Holtzman with. Mr Foley is also a  builder/project  manager  and  through  his  construction  company  built  Mr Holtzman’s new Queenstown residence which was a very substantial project.

[4]	Through that connection Mr Holtzman and Mr Foley’s relationship developed to the extent that they developed what Mr Foley described as a high level of mutual understanding and trust, which led Mr Holtzman to say in the middle of 2017 that he and Mrs Holtzman, “… would be pleased for an opportunity to complete a joint project with [Mr Foley] in the future”.

[5]	Mr Foley goes on to recount that an initial project was considered and rejected.

[6]	Mr English in his affidavit describes having an enjoyable relationship over    a number of years with Mr Holtzman whom he describes as an “international business man”. He says his relationship with Mr Holtzman is a “close, personal and trusted relationship built over recent years”. Mr English says he was looking for property development opportunities in Queenstown and looking to partner with potential investors to develop property with.

[7]	Mr English and his family are based in Wellington. He describes looking for opportunities that would enable him and his family to relocate to the Queenstown/Central Otago area and to get involved in development opportunities that would enable him to act as project manager and to live at least part time in the Queenstown Lakes area, and ultimately to end up with a property there.

[8]	The narrative begins on Sunday 15 April 2018.

[9]	Mr English describes having lunch with Mr Holtzman at a restaurant in Arrowtown. There was a general discussion about politics and the potential to get together in relation to a property development, “… with Marc being the investor and myself the ‘doer’”. Mr English outlined to Mr Holtzman his plans to move his family to the Queenstown area.

[10]	Mr English describes a discussion he had on Monday  16 April  2018  with Mr Wood of Colliers International in Queenstown. Mr Wood introduced him to the Ladies Mile property. The Ladies Mile property is made up of two blocks totalling approximately 10 hectares. Mr Wood gave Mr English an indicative price of around
$5 million for the property.

[11]	The Ladies Mile property was of interest to Mr English and he brought it to the attention of Mr Holtzman. Mr Holtzman sent Mr English a WhatsApp message:

Perhaps I could ask you to send me any details, photos, layouts and numbers for the project. I am surely interested and thank you so very much.

[12]	Mr English and Mr Holtzman then met. Mr English brought details of another project  which was rejected with Mr English saying that Mr Holtzman  expressed      a strong preference for the Ladies Mile development.

[13]	Mr English said the discussion lasted about an hour. The Ladies Mile property had a house on it already which he saw as being ideal for him and his wife to use while the project was developed. Mr English was keen to be the project manager and to commute between Wellington and Queenstown as required.

[14]	At this time the tender was due on Friday 20 April 2018 at 3pm. As it turns out the tender date was extended to 26 April 2018.

[15]	At this meeting, Mr English’s evidence is that after some discussion he and Mr Holtzman decided to put in a conditional tender for $5 million with a due diligence period. Mr English says he undertook to progress the tender paperwork. He recognised that a successful tender with a due diligence period in reality gave them an

option to purchase for the period of the due diligence period, as he says that the due diligence period would give him and Mr Holtzman some time to find out a lot more about the property before a final decision needed to be made. Mr Holtzman is described as being keen to invest but still needing to work through the various issues with the property.

[16]	Mr English in his affidavit says he does not recollect Mr Foley being mentioned at this meeting, although Mr English was aware that Mr Holtzman was building a substantial house close to Arrowtown.

[17]	On 17 April 2018, Mr Holtzman emailed the marketing materials for the Ladies Mile development to Mr Foley with the email stating, “Wayne, does this look of any interest from a development point of you? Marc” – it being common ground that the email should have said “development point of view?”.

[18]	Thus, Mr Holtzman became the common denominator between Mr English and Mr Foley.

[19]	Mr English says that on the same day as Mr Holtzman sent the above email to Mr Foley, Mr Holtzman explained to Mr English that he, Mr Holtzman, was about to travel overseas and that as he did not really know much about the local market he wanted to get his builder involved to get “a locally based second opinion of the project”.

[20]	Mr English says he had never met Mr Foley before and he knew nothing about him. Mr Holtzman explained to Mr English that he trusted Mr Foley and valued his opinion.

[21]	Mr English says that  Mr Holtzman  “…  never  asked  me  for Wayne  to  be a principal or an investor, rather he wanted his experienced professional advice.”

[22]	Mr Holtzman messaged Mr English on 17 April 2018, “Just spoke with Wayne who is going to take a careful look.”

[23]	Mr English had no objection to having an experienced local person advising Mr Holtzman in respect of the project.

[24]	On Wednesday 18 April 2018, Colliers advised that the tender closing date was extended to Thursday 26 April 2018 at 3pm. Mr English says that but for the extension, he would have submitted a tender at $5 million with 60 days due diligence by the original close of tender date.   The tender would have been on behalf of       Mr Holtzman and himself.

[25]	On 19 April 2018, Mr Holtzman sent Mr English Mr Foley’s contact details and said:

Will you please call Wayne Foley, my builder and friend. I sent the property information to Wayne who I trust. Wayne is very skeptical about taking on any development opportunities which require council subdivision approval.  I would like to ask you to please discuss this with him. Wayne has a great feel and understanding of Queenstown development and real estate opportunities. After you speak with him, will you please call me.

[26]	At this time, Mr English’s point of view was that as he was undertaking his own preliminary due diligence, he did not need Mr Foley involved to do that. However, respecting Mr Holtzman’s desire to use a trusted advisor, Mr English was prepared to work with Mr Foley.

[27]	As it happens, Mr English was about to leave for New York. Before leaving for New York, Mr English called Mr Foley. At that stage Mr Foley said he was yet to visit the property. Mr English records in his affidavit that he advised Mr Foley that the tender he and Mr Holtzman were looking at was $5 million but that they needed to do more due diligence.

[28]	That is consistent with an email sent by Mr Foley to Mr Holtzman on Sunday 22 April 2018 which referred to Mr English having called him to discuss the site.   Mr Foley reported that Mr English had indicated a site purchase bid would be around
$5 million. Mr Foley said, “I have had a look at the site today and it has good potential”.

[29]	The email continued, “The tender closes on the 26th which doesn’t leave much time for DD beforehand. I’m unsure what your approach to this level of investment is”. The email concluded, “Connor [sic] is in New York around now and I had agreed we would talk again when he has time.”

[30]	At this point, Mr English’s evidence is that he and Mr Holtzman had agreed that a conditional tender would be placed in order to obtain what would amount to an option to purchase while due diligence was being completed. In a practical sense, this approach was driven by the short timeframe for which the tender was open and the fact that both Mr English and Mr Holtzman were leaving for overseas a few days before the tender closed.

[31]	At this point, Mr English viewed Mr Foley’s role as a friend/sounding board for Mr Holtzman. However, it appears that Mr Holtzman approached Mr Foley against the background of he and Mr Foley having discussed being jointly involved in business opportunities. Mr Foley goes further in his affidavit saying that Mr Holtzman assured him that Mr Holtzman was not interested in pursuing any property deal with Mr English unless it was something that would fit within the relationship between Mr Foley and Mr Holtzman, and the possibility of undertaking a joint development that they previously discussed.

[32]	Mr Foley says that he was familiar with the land as he drove past it twice every day and that it had a prominent “For Sale” sign on it. That said, it seems Mr Foley had not taken any steps towards acquiring the land prior to Mr English’s contact with Mr Holtzman prompting Mr Holtzman to contact Mr Foley on 17 April 2018 asking “Does this look of any interest from a development point of view” as previously noted.

[33]	Accordingly, the seeds of the dispute were sown at the outset. Mr English says he  understood  Mr Foley’s  involvement   was   as   advisor/sounding   board   to   Mr Holtzman. Mr Holtzman, who had had previous discussions about development with Mr Foley, contacted Mr Foley asking him if the project was of any interest from a development point of view. Mr Holtzman’s position was that he would not be undertaking developments in Queenstown without the local knowledge of Mr Foley.

Thus,  Mr Holtzman   envisaged  Mr Foley  being   involved,  it   would  appear  as   a principal, but may not have communicated that to Mr English.

[34]	Mr Holtzman is reported to have said to Mr Foley that he (Mr Holtzman) understood Mr English would be dependent upon funding from Mr Holtzman for the project to go ahead, thus Mr Foley says he understood that Mr English would only be involved in the project if Mr Holtzman was also involved as Mr Holtzman was the source of the funding.

The tender is submitted

[35]	As noted, Mr English was travelling to New York. Mr English recounts that while he says he was promised the tender documents by Colliers, such had not come through by email. The time difference between New York and New Zealand complicated submitting the tender. Mr English thought he had an extra day to put the tender in which was not the case because of the time difference.

[36]	Mr English was in text contact with Mr Foley and I set out the text exchange (with Mr English’s texts being in italics):

(a)	 Tue, 24/04/2018 17:03 SIM1

(i)	Hi wayne i am in nyc. How did the inspection go? Kindest regards Conor

(ii)	Hi – it’s a good site ! I have been trying to connect with Marc to gauge level of his interest before contacting planner etc – maybe you could try him ?

(iii)	Connect with the planner. We need answers

(b)	 Wed, 25/04/2018 13:31 SIM1

(i)	Wayne how things looking

(c)	 Thu, 26/04/2018 13:38 SIM1

(i)	Voicemail: Message from this caller, left at 12:12 on 26/04/18 (duration 17 secs). Select [REDACTED] to listen to the … [being call from Mr Foley]

(ii)	Conor - I will submit a tender today to secure a place at the table – have left a message for you to call me – Wayne

(d)	 Thu, 26/04/2018 14:17 SIM1

(i)	Wayne  I have been sent no documents but yes please put in  a tender. If i get docs i will as well

(ii)	I will explain it is on behalf of me you and Marc – ok ?

(iii)	I would put it in on behalf of you or whoever “or nominee”. Have you got tender docs? If so can u email. [REDACTED]

(e)	 Thu, 26/04/2018 14:33 SIM1

(i)	I will sendtender in shortly – I have put 5m and 60 days dd

(f)	 Mon, 23/07/2018 12:01 SIM1

(i) Voicemail: Message from this caller, left at 12:01 on 23/07/18 (duration 22 secs). Select [REDACTED] to listen to the message

(g)	 Tues, 24/07/2018 10:44 SIM1

(i) Voicemail: Message from this caller, left at 10:44 on 24/07/18 (duration 17 secs). Select [REDACTED] to listen to the message

(h)	 Wed, 25/07/2018 08:45 SIM1

(i) Voicemail: Message from this caller, left at 08:45 on 25/07/18 (duration 25 secs). Select [REDACTED] to listen to the message

[37]	In the meantime, Mr English was chasing Colliers for a copy of the tender documents.   In  response  to  one  such  email,  Colliers  emailed  Mr English  on   26 April 2019 at 12.05pm (New Zealand time) as follows:

Hi Conor

Just had a call from Wayne Foley who said that he was going to look at the tender document for you so have sent him a copy.

One attached for your records. This is for both properties but there is the option to tender for them individually as well.

Tenders close today at 3pm.

[38]	However, Mr English says there was no attachment.

[39]	As the text record shows, at 12.12pm New Zealand time, that is seven minutes after the email from Colliers saying that they had had a call from Mr Foley, Mr English missed a call from Mr Foley.

[40]	There is then the text from Mr Foley:

Connor – I will submit a tender today to secure a place at the table – have left a message for you to call me – Wayne. (emphasis added)

[41]	Also on 26 April 2018, Mr Foley forwarded an email he had obtained from local surveyors and planning consultants who had been involved with the project. That email referred to the number of potential lots that could be developed on the Ladies Mile land (that information being included in the marketing material). The email went further, referring to development costs for the potential 15 rural residential lots and/or the 60 low/medium density residential lots. That  information  was  forwarded  by Mr Foley  to  both  Mr English  and  Mr Holtzman.    Further,  Mr Foley  prepared    a handwritten document aimed at identifying the margin that a development of the property could realise. That was also sent to both Mr Holtzman and Mr English.

[42]	Mr Foley lodged the  tender  and  in  the  course  of  doing  so  he  advised  Mr McIsaac of Colliers:

… that Marc Holtzman and Conor English were interested but I did not discuss with him any details about any potential relationship between us.

[43]	Referring to the text exchange with Mr English, Mr Foley says that Mr English in the text at 2.17pm (set out at [36](d)(i)) refers to also putting in a tender if he got the tender documents. Mr Foley says:

For that reason I wanted to check with him that it was ok with him for me to say to Colliers that he and Marc had expressed interest in being involved with me if my tender was successful.

[44]	On 29 April 2018, Mr Holtzman messaged Mr English  after  referring  to  Mr English’s time in New York said:

Wayne made the tender. Let’s see what happens. Spoke with him a few hours ago.

[45]	On Wednesday 2 May 2018 at 1.52pm, Mr Foley emailed Mr Holtzman and Mr English as follows:

Dear Conor and Marc

Per below and attached the vendors have accepted the conditional bid for the property and once I sign these documents we have a 40 day due diligence period.

We will need to discuss on what basis we are moving forward from here and also the scope and costs of the due diligence investigations.

I can mobilise consultants pretty quickly and will be meeting the agent on site
to review the residence at 10am tomorrow. (Emphasis added)

[46]	The vendors responded to the tender by seeking to reduce the due diligence period from 60 to 40 working days and Mr Foley agreed to change that.

[47]	Then in another email to Mr English and Mr Holtzman of 2 May 2018 at 4.15pm, Mr Foley said:

Dear Conor,

Now that we have secured the option to purchase I need to discuss with you what is the basis upon which we move forward with the Due Diligence what the intentions are as far as you and Marc are concerned vis equity and also costs of the due diligence process.

Can you please call me at a time to suit. (Emphasis added)

[48]	Mr English replied on 4 May 2018, saying he had returned from New York the night before, and would call Mr Foley that morning.

Post tender steps

[49]	Mr Foley and  Mr English  had  a  discussion  on  4  May 2018  on  which  Mr English reported back to Mr Foley by email to confirm the accuracy of the discussion. It included broad timeframes for the completion of the development, due diligence costs for different options and some questions for Mr Foley to confirm.

[50]	Mr Foley replied to the email setting out his comments in red type.

[51]	Annexed to Mr Foley’s affidavit is an email that he sent to Mr Holtzman on Monday 7 May 2018, which appears to have had an attachment as the email reads, “Hi Marc, FYI. Maybe you could call me today if you have time.” But what was attached is recorded as “Redacted for privilege”.

[52]	Mr Foley’s affidavit gives some suggestion as to what the privilege might be as he says:

On about 7 May 2018 I become aware that if Marc Holtzman took more than a 25% interest in the Land then consent from the Overseas Investment Office might be required.

[53]	Otherwise, Mr Foley does not refer to the privilege that is being claimed.

[54]	Mr Foley recounts that on or about 12 May 2018, he had a discussion with Mr Holtzman. Mr Holtzman was apparently not comfortable with the uncertainty around the planning process and did not want to proceed with the deal.

[55]	Mr Foley advised Mr Holtzman that Mr Foley would proceed with the due diligence in part because of reputational issues given it was his name on the contract and he had dealt with Colliers over the tender.

[56]	Mr Foley says:

I had never met Conor, had never had business dealings with him, and I really knew nothing about him. The only basis on which I would have contemplated him becoming involved in the property was with Marc.

[57]	Mr Foley then says that he did not hear further from Mr English until an email on 25 May 2018 (the last contact  being  the  email  exchange  on  4  May  2018).  Mr English said he was coming to Queenstown and in a further email on 28 May 2018 he said he was going to talk to the Council, the planner and possibly a neighbour.

[58]	Mr Foley at this point says  that  this  email  suggested  to  him  that  either Mr Holtzman had not told Mr English that Mr Holtzman had decided not to be involved, or that Mr English was ignoring Mr Holtzman’s decision  on that issue.  Mr Foley says:

I had had no communication from [Mr English] since 4 May 2018 and Marc’s decision not to be involved had effectively ended whatever possibility there had been of Conor being involved.

[59]	Mr Foley on 28 May 2018 emailed Mr English inviting  him  to  telephone Mr Foley on his mobile. Mr English made that call. Mr Foley says he told Mr English that Mr Holtzman was no longer interested in the property and that any possibility of Mr English’s involvement in the project was at an end. Mr Foley says Mr English was not happy and that he wanted to discuss it with Mr Holtzman. Mr English said that if Mr Holtzman did not want to proceed then Mr English had another interested party he could bring in. Mr Foley told Mr English that he was not interested in being involved in a venture with people he had never met and did not know, which at that time included Mr English.

[60]	Mr Foley then says he got an email from Mr English on 10 June 2018 which repeated what Mr English had said earlier about meeting with the Council, a planner and a neighbour. Mr Foley says this was of concern to him given the phone call of  28 May 2018. Mr Foley said he recognised a potential for confusion if Mr English came to Queenstown and gave the impression to others that he had an interest in the project when Mr Foley considered that was not the case.

[61]	Mr Foley sent Mr English an email later that day which included the following:

The contract for the property is in my name. I have absolutely no desire or intention of forming business ventures with people I have never met including yourself.

…

You have no interest in the contract whatsoever so I don’t know in what capacity you intend to meet with anyone else and suggest you should not be meeting anyone you have suggested.

…

I know you may feel disappointed but you should know this is the position and that is the end of the matter.

[62]	Unfortunately, it was not the end of the matter and these proceedings followed.

Amended statement of claim

[63]	An amended statement of claim dated 18 October 2018 pleads two causes of action.  The first is that Mr English and Mr Holtzman engaged Mr Foley to submit   a tender on their behalf. The following particulars are relied on:

13.	The Plaintiff and Mr Holtzman engaged the First Defendant to submit a tender on behalf of both of them.

Particulars

(a)	The First Defendant was initially engaged by Mr Holtzman on or about 17 April 2018.

(b)	Mr Holtzman engaged the First Defendant to “have a careful look” at the property on his behalf and advise on the value of the purchase and development of the land.

(c)	The means by which the First Defendant was engaged by  Mr Holtzman are not known to the Plaintiff.

(d)	On 19 April 2018 Mr Holtzman provided the property information to the First Defendant and put the Plaintiff in contact with him as his “builder and friend”. Mr Holtzman explained that the First Defendant “has a great feel and understanding of Queenstown Development and real estate opportunities”.

(e)	Following a clerical error which saw the tender documents sent to the wrong email by Colliers, the Plaintiff engaged the First Defendant to submit a conditional tender on behalf of the Plaintiff and Mr Holtzman. This engagement was made by text messages sent between 24 and 26 April 2018.

(f)	The agency was to enable the Plaintiff and Mr Holtzman to acquire and develop the land for residential purposes, with the lots created being on-sold for profit  to  the  Plaintiff  and  Mr Holtzman.

[64]	The second cause of action is that of a joint venture. The pleading is that if the relationship between the parties was not a relationship of principal and agent then:

The Plaintiff, Mr Holtzman [sic] and the First Defendant submitted a tender through the First Defendant on 26 April 2018. The Plaintiff and First Defendant were, together with Mr Holtzman [sic], engaged in a joint venture.

[65]	The particulars given for the joint venture cause of action essentially mirror those given for the agency cause of action but expressed in terms of a joint venture.

Defendants apply for summary judgment

Summary judgment principles

[66]	Counsel were agreed as to the principles that apply to the defendants’ summary judgment. While the defendants required leave in order to bring the application, leave was not in issue and accordingly leave is granted.

[67]	The key point is that the defendants have to show that none of the plaintiff’s causes of action can succeed. As noted in McGechan on Procedure.1

Summary judgment will not be appropriate where it is possible for the plaintiff to amend its claim so as to remedy the defects relied on by the defendant.

… the defendant must be able to knock out the entire claim in order to be able to apply for summary judgment.

[68]	The plaintiff reinforced that summary judgment is inappropriate where the ultimate determination of  the  issues  can  only  be  reached  after  a  full  hearing.  In reliance on Westpac Banking Corporation v  M  M  Kembla  New  Zealand  Ltd, Mr Logan submitted:2
The assessment made by the court on an interlocutory application is not to be arrived at by a fine margin on the available evidence.

Defendants’ submissions

[69]	At the heart of the defendants’ submissions was that Mr Foley’s consent to act as agent or as part of a joint venture was essential to both claims and that that component was missing.

[70]	Mr Olney said that the text messages reproduced at [36] above could not on an objective analysis found a conclusion that Mr Foley was consenting to act either as agent for Mr Holtzman and Mr English or in a joint venture with them.

[71]	Mr Olney’s practical point was that on Mr English’s case, he needed an agent to put the tender in because of the time difference in New York and so one would have

1	McGechan on Procedure (online loose-leaf ed, Thomson Reuters) at [HR12.2.07(1)].
2	Westpac Banking Corporation v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA).

expected him to have expressly requested Mr Foley to have acted as his agent in the text exchange.

[72]	Mr Olney submits that the Court is in a position to determine that the text messages cannot give rise to the alleged agency upon which the first cause of action depends. He accepts, however, that the text messages must be considered in context.

[73]	Mr Olney says that all the communications show that Mr Foley’s intention was to submit a tender in  his  own  right  and  only  to  keep  open  the  possibility  of  Mr Holtzman, and through him Mr English, investing in the project on a basis to be agreed.

[74]	As far as the second cause of action relating to the joint venture goes, Mr Olney says the causes of action  are  mutually exclusive.  In  the agency cause  of action  Mr Foley, as an agent would have no interest as a principal, while if he is a joint venturer he has an interest as joint venturer but also acted on behalf of the three joint venture members.

Plaintiff ’s submissions

[75]	Mr Logan’s submission was that the circumstances of this case did not make it suitable for summary judgment. He refers to the text messages and the reference of securing a place at the table and in particular the emails referred to at [44] and [45].

[76]	Mr Logan’s submission is that Mr Foley in his own words refers to the option being secured not by Mr Foley individually, but on behalf of others as well.

[77]	In respect of the joint venture cause of action, Mr Logan referred to
Chirnside v Fay as follows: 3

General observations on joint ventures

[91] Before leaving this aspect of the case it may be helpful if we make the following general remarks. The essence of a joint venture which is not yet contractual is that it is an arrangement or understanding between two or more parties that they will work together towards achieving a common objective.

3	Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433 (emphasis added).

It is fallacious to think that there can be no joint venture unless and until all the necessary details have been contractually agreed. A joint venture will come into being once the parties have proceeded to the point where, pursuant to their arrangement or understanding, they are depending on each other to make progress towards the common objective. Each party is then proceeding on the basis that he or she is acting in the interests of all or both parties involved in the arrangement or understanding. A relationship of trust and confidence thereby arises; each party is entitled to expect from the others loyalty to the joint cause, loose as the formalities of the joint venture may still be.  This  in  essence  is  the  position  which   was   reached   between Messrs Chirnside and Fay. Neither of them was thereafter entitled to act solely in his own interests.

[78]	Justice Blanchard, writing extrajudicially, notes:4

… parties to a business venture who have not fully concluded their bargain and are still in the process of negotiation may nevertheless be held by equity to the standards expected of fiduciaries if matters have so far progressed towards that conclusion that one or both have become dependent on the other and there is an entitlement to expect some degree of loyalty to the venture.

[79]	In what in some cases is called an “inchoate joint venture”, fiduciary obligations have been found.

[80]	In Equity and Trusts in New Zealand, Geoff McLay notes:5

… recent decisions of the Court of Appeal and Supreme Court in Chirnside would appear to favour a less contractually focused approach in which the court more readily concludes that the parties intended themselves to be bound even though much in their relationship was still to be worked out.

[81]	Accordingly, Mr Logan submits that something less than contractual certainty is required to give rise to a joint venture.

Discussion

[82]	Mr English does not suggest that there was a concluded development agreement between him and Mr Holtzman beyond an agreement to put in a conditional tender as referred to at [14] above. The intention was to secure the tender and through incorporating into the tender a due diligence process thereby obtaining what would

4	Peter Blanchard “Fiduciary Obligations Between Parties to Unincorporated Joint Ventures” in Maree Chetwin and Philip A Joseph (eds) Joint Ventures Law (The Centre for Commercial Corporate Law Inc, Christchurch, 2008) 1 at 11.
5	Geoff McLay “Equity and  Joint  Ventures”  in  Andrew  Butler  (ed)  Equity  and  Trusts  in  New Zealand (2nd ed, Brookers Ltd, Wellington, 2009) at [40.3].

amount to an option to purchase. Mr English did not see Mr Foley as part of the project other than as advisor to Mr Holtzman.

[83]	Mr Foley had a similar intention to secure the tender. He says his intention was only to do business with those he knew, which meant that Mr English would only come in under the wing of Mr Holtzman.

[84]	There is common ground between the parties to the extent that both intended that the tender process was to secure an option to purchase with a due diligence period to allow further discussion.

[85]	When I raised with Mr Logan (counsel for Me English), what was to occur after the tender was secured, said that what there was, was a “deal to get a deal”.

[86]	Accordingly, I characterised this in discussions with  counsel as  there  being a two-stage process. Stage one was that the tender would be secured to allow due diligence to follow. Once the tender was accepted, stage two would require discussions about funding both of the due diligence process and the ultimate purchase. So much is consistent with the correspondence from Mr Foley of 2 May 2018 upon securing the tender.

[87]	Mr Logan’s argument was that before stage two could be completed, Mr Foley terminated the relationship and took the benefit of the option for himself.

[88]	On this basis (which is, as Mr Olney correctly pointed out, a diversion from the pleadings), there was not a concluded agreement for the development as a whole, but a concluded agreement of a more limited nature being only to secure the option.

[89]	In my opinion, so much is arguable, meaning while the case may need to be repleaded, is not suitable for summary judgment. I hold that view for the following reasons:

(1)	Mr Foley had no independent interest in the project prior to contact from Mr Holtzman. So much follows from Mr Foley’s evidence that he drove past the land with its large “For Sale” sign each day without

taking any interest in it. Mr Foley knew Mr Holtzman and Mr English were interested in the project but the terms of their interest were undeveloped. Mr Foley knew they wanted to put in a tender with a due diligence  period  to   allow   the   development   to   be   reviewed. Mr Holtzman had extended an invitation to Mr Foley to at least express an interest in getting involved in the project and Mr Foley was taking albeit preliminary steps in that regard. Accordingly, all gentlemen were interested at a preliminary stage in the project.

(2)	The time for advancing matters was short. All recognised the benefits of securing the tender with a due diligence period to enable the viability of the project and how it might be advanced between them to be addressed. When I say ‘advanced between them’ I do so noting that Mr English’s position is that Mr Foley would not be a principal, and Mr Foley’s position that Mr English would not be a principal or at least would not be involved in the absence of Mr Holtzman. However, those positions are expressed in the context of the project as a whole not in the context of the preliminary step of securing the tender.

(3)	The evidence is at least arguably against Mr Foley putting in a tender only on his own behalf, and with him believing that Mr English would be putting in his own independent tender. Mr Olney’s written submissions were advanced on this basis, submitting that at the time of the text exchange,  two  separate  tenders  were  in  contemplation.  Mr Olney says the first tenderer was Mr Foley contemplating submitting a tender on his own behalf to keep open the possibility of future discussions and secondly, a separate tender by Mr English on behalf of himself and Mr Holtzman. On this basis, the two tenders would be competing. In that context, Mr Foley sharing details as to his assessment of the profitability of the project and of the price and the condition for a due diligence period he intended to attach to a tender does not make sense. If these were to be arms-length tenders then that detail would not have been supplied.

(4)	The next point is the wording of Mr Foley’s emails, already referred to above. Mr Olney suggested that these emails should not be read as if they had been written by lawyers, but that is not the point. Unguarded communications are often the most telling. The communications on their face, as can reasonably be read, are consistent with Mr Foley viewing himself as securing the option for the benefit of himself and others.

(5)	The text exchange is also capable of being read as Mr Foley offering to put the tender in on behalf of Mr English and Mr Holtzman (the reference to securing a place at the table)  which  was accepted  by  Mr English. Mr English was unconcerned about how the tender was expressed.

(6)	I am also mindful that discovery has not been completed. There is the potential for non-party discovery against Colliers given their communications to Mr English that they regarded Mr Foley as acting on his behalf.

[90]	All of these points are consistent with an arguable joint venture of a much more limited nature or at least an inchoate joint venture but one which had reached the point where equitable obligations were owed by Mr Foley to the others. In my view, there was arguably a common objective between all three men involved to secure the tender. There is also a reasonable argument, in my view, that the common understanding between the three men was that Mr Foley would put the tender in with discussions to follow if the tender was secured:6
A joint venture will come into being once the parties have proceeded to the point where, pursuant to their arrangement or understanding, they are depending on each other to make progress towards the common objective.

[91]	Mr Holtzman relied on Mr Foley to undertake a preliminary review of the development potential of the land and to advise him in that regard.   As between    Mr Holtzman and Mr English, Mr English says that it was left with him to put the

6	Chirnside v Fay, above n 3, at [91].

tender in. As between Mr English and Mr Foley, the text exchanges as I have said can be read as Mr Foley offering to put  the tender in  given the logistical issues  with  Mr English being in New York. However, Mr Logan’s point was that if his client can get to the point of establishing a joint venture to secure the tender or if the parties’ discussion had got to the point where they owed fiduciary duties to each other, that if the joint venture then went no further, the joint venture asset being the option to purchase resulting from the tender was not something Mr Foley could simply take for himself.

[92]	Once there is an arguable basis for the claim to be recast then the matter is not eligible for a defendants’ summary judgment. On that basis, I need not dwell on the agency issue. Given Mr Logan’s acceptance during the hearing that if the tender had been secured that  there was only  a “deal  to  do a deal”, the pleading that there was a joint venture or an agency to actually complete the purchase will need to be recast. The reality is, on the case as presented by Mr Logan, that the high point for Mr English was that there was an agreement to agree once the tender had been secured. The claim of a joint venture was always going to present difficulties in a defendants’ summary judgment application where a joint venture may be established which is not yet contractual.

[93]	It will be for the plaintiff to reflect on whether an agency cause of action is pleaded.

[94]	It is also clear, however, that the plaintiff is going to have to re-plead. The communications that support the idea of there being a joint venture to secure the tender are not on the basis that Mr Foley was  merely an agent to secure the tender for      Mr Holtzman and Mr English. That will be an assessment for the plaintiff to make when he repleads.

Decision

[95]	The defendants’ application for summary judgment is dismissed.

Costs

[96]	My initial reaction is that there should be no order as to costs. While the application for summary judgment has been dismissed, that was only on the basis that the argument as developed by Mr Logan, and which I considered was reasonably arguable, is one that is a departure from the claim as pleaded. Given the application for summary judgment was brought after the defendants sought particulars of the statement of claim, the challenge to the statement of claim as framed was a reasonable one to pursue.

[97]	If counsel wish to be heard on costs then memoranda not more than three pages are to be filed within five working days of release of this judgment (that is by Tuesday 7 May 2019)

Associate Judge Lester

Solicitors:
AWS Legal, Queenstown

Copy to counsel: A S Olney, Barrister, Wellington
Ross Dowling Marquet Griffin, Dunedin