IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2013-454-170 [2013] NZHC 1209

BETWEEN	WR ROBERT and Z ROBERT as trustees of the ROSS ROBERT FAMILY TRUST Applicants

AND	FOXTON EQUITIES LIMITED Respondent

Hearing:	16 May 2013

Appearances:	R. Wilson - Counsel for Applicant
B.J. Burt and H.L. Quinlan - Counsel for Respondent

Judgment:	14 June 2013

JUDGMENT OF JUSTICE D.I. GENDALL

This judgment was delivered by me on 14 June 2013 at 3.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ..................................................................

Solicitors:	Gavin White, Solicitor, PO Box 68, New Plymouth 4340
Chapman Tripp, Solicitors, PO Box 2206, Auckland 1140

WR ROBERT and Z ROBERT as trustees of the ROSS ROBERT FAMILY TRUST v FOXTON EQUITIES LIMITED [2013] NZHC 1209 [14 June 2013]

Introduction

[1]       On 13 December 2012 the applicants registered caveat no 9270321.1 against titles to properties in Foxton owned by the respondent containing together 6776 square metres being Lot 1 on Deposited Plan 21371 and part Lot 3 on Deposited Plan  10547  (certificates  of  title  identifiers  WN870/17  and  WN13C/790)  (the caveated land).  In the caveat, the applicants claim an interest over part of the land in those titles as purchasers under the Agreement for Sale of Purchase I note in [3] below. Around 28 February 2013, the respondent applied to the Registrar General of Land  to  lapse the  caveat  under s  145A of  the  Land Transfer Act  1952.  In  the application before me, the applicants now seek an order that the caveat not lapse.

[2]       The respondents oppose this application essentially on the following grounds:

(a)       The applicants do not have the requisite caveatable interest in the caveated land; and

(b)       If the applicant does have a caveatable interest in the caveated land, under all the circumstances prevailing here the Court should exercise its discretion to remove the caveat.

Background

[3]       The respondent owns a large block of commercial land in Foxton containing

7.3 hectares (the total site) of which the caveated land forms part. In 2008 the respondent tried to sell the total site as a whole, but after several unsuccessful attempts, decided to subdivide it.  A draft plan was drawn up subdividing the total site into 15 lots. On 10 June 2010 the respondent and the applicants entered into an Agreement for Sale and Purchase (the ASP) of Lot 6, delineated on this draft plan (Lot 6) containing an area of approximately 3370 square metres including one substantial commercial building.  The ASP provided for a price of $145,000.00 for this Lot 6 with a deposit of $14,500.00 to be paid when the ASP became unconditional.   Lot 6 formed part of and straddled the boundaries of the existing titles WN870/17 and WN13C/790 which represented the caveated land.   Clause

15(b) provided that the ASP was conditional upon Horowhenua District Council (the Council) approval of the proposed subdivision plan on conditions acceptable in all respects to the vendor by the 30th day of June 2010 (which date was later extended to
30 October 2010). Clause 15(a) of the ASP provided that:

15.0      (a)          The  vendor  shall  proceed  with  all  due  diligence  and  take  all reasonable steps to have the attached proposed plan of subdivision approved by the Council and on receiving such approval shall in like manner prepare a title plan of subdivision, seek the Council’s approval of that title plan and have the title plan deposited in the Land Registry Office.

[4]       Clause 8.7(2) of the ASP also required generally that:

The party for whose benefit the condition has been included shall do all things which may reasonably be necessary to enable the condition to be fulfilled.

[5]       The ASP went on to provide that, after it was signed, the applicants could go into possession of Lot 6 paying a rental of $100 a week, which they did.

[6]       And, clause 8.7(4) of the ASP deemed conditions not to be fulfilled until notice of fulfilment was served by one party on the other. Such notice was required to be in writing according to clause 1.2(1).

[7]       On  26  July 2010,  the  respondent  applied  for  resource  consent  from  the Council to effect the proposed subdivision and to define the new Lot 6.  However, as consent was not obtained by 30 October 2010, the parties informally agreed to extend the timeframe.

[8]       Finally, on 19 January 2011, the resource consent was granted.  It was subject however to numerous conditions (the subdivision conditions). The subdivision conditions related amongst other things to sewer and storm water systems and to compliance with  fire  fighting supply provisions.  Specifically,  the  respondent,  in addition to other matters, was required to:

(a)         ensure all buildings complied with the Fire Fighting Water Supply Code of Practice (Condition 9 – this alone it is now said would cost up to $1 million to fully comply with);

(b)	install a new water main;

(c)	create approximately 500 car parks; and

(d)	replace all existing kerb and channels along the entire land boundary.

[9]       The respondent says it started to work through the subdivision conditions with its advisors, and began engineering and surveying work.  This was, it maintains, so it could understand the full extent of the subdivision conditions and to enable it to be in a position to negotiate those conditions with the Council. These negotiations took place from mid 2011.   The applicants maintain they were never told directly from this point onwards right up to December 2012 whether the subdivision conditions were either acceptable or not acceptable to the respondent.

[10]     In  April  2011  however,  Mr  Lewis  Townshend  (Mr  Townshend),  the respondent’s agent for the sale of Lot 6, told the applicants of the resource consent, and requested payment of the $14,500.00 deposit.   And, on 12 April 2011, Mr Townshend emailed the applicant a copy of the latest subdivision plan. He also forwarded  an  email  between  himself  and  Mr  Kevin  Pike  (Mr  Pike),  a  senior employee of the respondent’s shareholder company and “agent” of the respondent, stating that the engineering and survey work was underway, and titles for the stage 1 lots (which included Lot 6) were 8 – 10 months away. The applicant paid the deposit on 20 April 2011.

[11]     In the meantime in about June 2011 the applicants, who had been renting Lot

6 for some time, discovered that the building on this property was in need of certain electrical repairs. It appears they tried through Mr Pike to get the respondent as landlord to pay for the repairs.  Comments were made on behalf of the respondent and it seems the applicants accepted those comments at the time as being an intimation that, as they the applicants were now the owners of the building on Lot 6, they should pay for the work. The applicants say they then spent some $35,000.00 on these repairs, although it appears now that there may be some argument over whether the repairs were done and the amounts spent before the conversation/s in question took place.

[12]     In any event, some months later in November 2011, the respondent entered into an agreement to sell another part of the total site (being Lot 4 on the plan containing about 2.4 hectares) to a third party, a Mr Jamieson.  Significantly perhaps, this  sale  agreement  contained  no  requirement  for  Council  approval  of  the

subdivision, or for the respondent to be satisfied with the conditions of Council’s subdivision consent, which were part of the ASP with the applicants.  The evidence before me, however, is that this agreement for the sale of Lot 4 to Mr Jamieson did not proceed.

[13]     The respondent contends now that it was in December 2011 that it realised the conditions of the Council’s subdivision consent were unacceptable, and it says it gave the applicants notice of this.  As I have noted above, however, the applicants dispute that. The applicants say instead they were assured at the time by Mr Townshend the respondent’s agent that the subdivision was proceeding along nicely.

[14]     Time marched on.  Then, in mid 2012, the parties had a discussion about the applicants looking for alternative premises.  The first-named applicant alleges that he asked if the applicants could get out of the purchase, but was told at the time by Mr Townshend that the ASP was unconditional and binding and the vendor would have the right to sue them if they tried to withdraw from the contract.

[15]     On 16 August 2012 the parties met and it is said Mr Pike informed the applicants  that  an  outside  party was  interested  in  purchasing  Lot  6  for  a  price
$100,000.00 over the figure the applicants were paying.   The applicants say they rejected this option however. The respondent’s position is quite the contrary to this however. It maintains now that at about this time the applicants were clearly told the Council’s subdivision conditions were unacceptable.

[16]     On  this  aspect,  the  applicants  do  acknowledge  they  were  told  in  late

September 2012 of the problems with the Council’s conditions.

[17]     On 6 November 2012, the respondent sent the applicants a “Termination Agreement”, advising it would not be possible to complete the subdivision due to the unreasonable conditions imposed by the Council. Under this Agreement, the respondent would pay the applicants $35,000.00, refund the deposit, and give the applicant the first right of refusal for Lot 6 if it were to be offered for sale later.

[18]     The applicants did not sign this “Termination Agreement”.  Instead, they got the respondent to provide a written summary of the issues with the subdivision conditions, and the applicants then met with the Council themselves. The applicants now say they came to the conclusion that the respondent had lied about problems with the subdivision conditions, and on 6 December 2012, Mr Robert rang Mr Pike of the respondent. An email dated 10 December 2012 recorded the conversation. The respondent told the applicants that the reason for the “Termination Agreement” was that they had been struggling for over a year to agree as to acceptable terms and conditions with the Council.  It did seem however that about this time, perhaps as a result  of pressure by the applicants,  the Council  had  relaxed  its  position.   The applicants contend now that the respondent acknowledged then that, provided that was the case, the subdivision would proceed.   And they maintain the respondents said there would be a period of 6 months before title could be available. On 13
December 2012 the applicants responded, accepting first, that the subdivision was going ahead, and secondly, that it might take up to 12 months for title to come through. The applicants also registered the caveat in question here on 13 December
2012.

[19]     On 14 December 2012 however, the respondent sent an email purporting to terminate the ASP by reason of non-fulfilment of clause 15(b). The respondent says that this simply confirmed a telephone conversation Mr Pike and Mr Robert for the applicants had on 11 December 2012.

Counsels’ submissions and my decision

[20]     The general approach to applications such as the present was settled in Sims v

Lowe [1988] 1 NZLR 656 at 660 (CA):

The caveator seeks to clog or fetter the proprietary interest of another. As a matter of principle it seems right that he must justify the continued existence of his caveat. He will do that if he can show he has a reasonably arguable case for the interest he claims.

[21]     The applicants here seek to sustain the caveat and thus have the burden of establishing a “reasonably arguable case” that they have a caveatable interest in the property in question: Castle Hill Run Ltd v NZI Finance Ltd [1985] 2 NZLR 104 at

106 (CA). An order for removal of a caveat will not be made unless it is patently clear that the caveat cannot be maintained, either because there was no valid ground for lodging it, or no such ground now exists: Sims v Lowe at 659-660. The Court therefore should not finally determine the rights of the parties unless the facts are not in dispute and the law has been fully argued: New Zealand Limousin Cattle Breeders Society Inc v Robertson [1984] 1 NZLR 41 (CA).

[22]     Here the respondent goes on to argue that the caveat should not be upheld in the present case in the exercise of the Court's residual discretion. On this aspect, the authorities are clear that the Court does have a residual discretion to remove a caveat where there is no practical advantage in its continuance, even if it protects an otherwise caveatable interest.

[23]     This  principle  has  been  stated  in  the  following  terms  in  Pacific  Homes Limited (in receivership) v Consolidated Joineries Limited [1996] 2 NZLR 652 (CA) at 656:

In such circumstances the Court retains the discretion to make an order removing the caveat, though it will be exercised cautiously. An order will be made for removal only where the Court is completely satisfied that the legitimate interests of the caveator will not thereby be prejudiced. If, on the facts of the case, it can be seen that the caveator can have no reasonable expectation of obtaining benefit from continuance of the caveat in the form of the recovery of monies secured over the land or specific performance of an agreement or if the caveator's interests can be reasonably accommodated in some other way, such as by substituting a fund of money under the control of the Court, then it may be appropriate for the caveat to be removed notwithstanding that the right to the claimed interest is undoubted.

[24]     And, in the Court of Appeal in Stewart v Kaipara Consultants Limited [2000]

3 NZLR 55 Blanchard J at para [27] noted:

The grant of a specific remedy to a person claiming an interest in land lies in the discretion of the Court. It is a discretion to be exercised in accordance with settled principles. But where the particular piece of land does not have attributes giving it a personal value to the claimant, unable easily to be measured and substituted in economic terms, then the Court in balancing the interest of the defendant and other affected parties (especially those who have entered into independent commitments which will be affected by the delay in establishing the claim) will properly lean in favour of freeing the title from the claim if a fund can be created which suffices to protect the claimant's legitimate interest.

[25]     To  reiterate,  in  circumstances  where  this  residual  discretion  is  to  be exercised, a caveat will only be removed if the Court is satisfied that the legitimate

interests of the caveator would not thereby be prejudiced. And, this discretion is one to be exercised cautiously.1

[26]     Generally, a caveat will be removed where the caveator has no reasonable expectation of obtaining benefit from continuance of the caveat, in the form of the recovery of money secured over the land, or specific performance of an agreement relating to the land, or if the caveator's interests can be reasonably accommodated in some other way.2

[27]    In the present case, both counsel for the applicants and counsel for the respondent accepted at the outset that a purchaser’s interest under an agreement for sale and purchase of land may be sufficient to support a caveat, while that agreement is on foot – Hinde McMorland & Sim, Land Law in New Zealand, para 4.019.

[28]     Here, the respondent’s position however is that the ASP was validly cancelled by the respondent due to the non-fulfilment of the subdivision consent condition in clause 15(b), and thus any caveatable interest the applicants had in the caveated land came to an end.

[29]     The applicants however dispute this and in response say that the condition in clause 15(b) of the ASP was either fulfilled or waived, or that the respondent is estopped from denying the fulfilment of the condition, and thus the ASP remains and is sufficient to support the caveat claimed.

Applicants’ Submissions

[30]    The fundamental contention advanced by the applicants in their present application is that they have a reasonably arguable case with respect to their claim to a purchaser’s equity in the caveated land, and therefore their caveat should not lapse. On this, they confirm that they intend to bring a claim for specific performance of the ASP and would accept conditions imposed in any order sustaining the caveat that
required them to bring and prosecute those proceedings diligently.

1 Stewart v Kaipara Consultants Ltd [2000] 3 NZLR 55
2 Pacific Homes Ltd v Consolidated Joineries Ltd [1996] 2 NZLR 652 at 7.

[31]     An initial submission advanced by the applicants here, is that the respondent was  not  entitled  to  leave  the  question  of  the  acceptability  of  the  subdivision conditions at large for 10 months. This determination had to be made within a reasonable time frame of receiving the Council’s consent.

[32]     The applicants contend that the evidence before the Court shows such a determination was made anyway prior to December 2011.  The conditions they say were acceptable to the respondent. This is based on Mr Pike’s affidavit in which he comments that it only became clear that the conditions were unacceptable in December 2011. Prior to that, there is a reasonable argument the applicants say, that the subdivision conditions must have been acceptable to the respondent. No formal objection was lodged with respect to the council’s conditions, and again it is reasonably arguable that the respondent made the decision by April 2011 to proceed with the subdivision, as payment of the deposit was sought then.   In addition, the applicants argue first, that the respondent continued with surveying, pegging and engineering design work (which the applicants dispute was for the purpose simply of gaining an understanding of the conditions), secondly, that the respondent told the applicants to pay for repairs itself because it was the owner of Lot 6, and thirdly, that the respondent on 4 November 2011 even entered into an unconditional agreement with a third party for the sale of another lot in the proposed subdivision.

[33]     The applicants say also that the respondent cannot rely on the fact no notice was given in accordance with clauses 8.7(4) and 1.2(1) of the ASP.  If clause 15(b) was satisfied, the respondent had an obligation to give notice of the fulfilment to the applicants. They cite Purewal v Connell Street [2012] NZCA 42, which involved the same clause 8.7 in an agreement for sale and purchase of property conditional on Purewal  arranging  finance.  Purewal  did  arrange  finance,  but  did  not  notify  the vendor Connell. The Court of Appeal held that, while it was true that the condition was not technically fulfilled, Purewal could not take advantage of that because the non-fulfilment was entirely their fault. In the present case, the applicants maintain the respondent cannot rely on the non-fulfilment of the notice condition to avoid the ASP when it was its fault the notice requirements were not complied with.

[34]     Alternatively,  the  applicants  submit  the  email  of  12 April  2011  was  an implied notice of fulfilment of clause 15(b). Although it was silent on whether the conditions were acceptable to the respondent, it contained a message that the titles were thought to be 8 – 10 months away. That the conditions were acceptable it is said was implied.

[35]     The applicants also suggest that the 12 April 2011 email, together with the contemporaneous request for the deposit, amounted to an implied waiver of clause
15(b). The evidence it is said shows that both parties were working together on the mutual assumption that the subdivision was proceeding.

[36]     Furthermore, the applicants submit that if clause 15(b) was not fulfilled, this was due to the respondent’s failure to meet its obligation to take all reasonably necessary  steps  to  enable  the  condition  to  be  fulfilled.  As  noted  above,  the respondent cannot rely on non-fulfilment to avoid the contract. The respondent could have taken the formal step under s 127 of the Resource Management Act 1991 to apply to the Council to change or cancel any of the subdivision conditions which it did not do.  The applicant submits that, as late as 10 December 2012, the respondent intended to proceed  with the subdivision.   This was because several  conditions which the respondent questioned had been relaxed, apart from condition 9 (the fire fighting water supply condition),  which  the applicants  say could  have  been  the subject of a s 127 application. There is no explanation by the respondent of the abrupt turnaround. The applicants also maintain that in any event whether or not the respondent acted unreasonably is not an appropriate question for this summary hearing.

[37]     Finally,  the  applicants  argue  the  respondent  is  estopped  from  relying  on clause 15(b) to terminate the ASP.   As noted above, they say this is because the respondent through its agents told the applicants that subdivision approval was obtained, requested the deposit, obliged the applicants to pay for necessary repairs because it said the applicants were the owners of Lot 6, remained positive about the subdivision and repeatedly told the applicants that the subdivision was “trucking along nicely”. In mid 2012 the respondent is said to have been involved in the applicants being told they were bound to the ASP contract when they tried to “exit”.

If this was not the case, the applicants say there was a duty on the respondent to say at this point that the respondent still considered the ASP to be conditional. The applicants have acted to their detriment upon these representations first, in paying for repairs to the building of $35,000.00, secondly, in refraining from looking for alternative premises, and  thirdly, in wrongly paying the deposit  (albeit this was subsequently refunded).

Respondents’ Submissions

[38]     In response, as I have noted above the respondent submits that the applicants have no caveatable interest in the caveated land, because this lapsed when it validly terminated the ASP as clause 15(b) was never fulfilled.   It argues that it satisfied clause 8.7(2) by obtaining expert reports for submission to the Council, undertaking survey work to understand the nature of the conditions and whether or not they may have been acceptable, and attempting throughout to negotiate those conditions with the Council. A s 127 application to the Council the respondent says was unnecessary here, it would have been costly and would have lead to greater delay.

[39]     Furthermore, no notice was served on the applicants that the condition had been fulfilled. The email of April 2011 it is said cannot constitute such notice - it is between parties other than the applicants, does not advise that the conditions are acceptable, does  not mention clause 15(b) and  does not advise that the ASP is unconditional. The reference to engineering and survey work was a precondition to the respondent understanding the conditions.

[40]     Clause 15(b), the respondents argue, was never waived, as such waiver would have to be in writing in accordance with clause 1.2(1) of the ASP.  Neither was it impliedly waived. Although the respondent was optimistic about the subdivision, it says it kept the applicants informed that it was negotiating with the Council about the conditions.

[41]     The respondent maintains it was entitled to terminate the ASP.   This was because the imposed conditions as they stood would have rendered the subdivision of a substantially different character than that contemplated at the time of entering

into the ASP, and they would have required the respondent to spend significantly more to comply with the conditions than was anticipated.   It argues also that the applicants cannot insist on the ASP remaining alive indefinitely, on the slight chance that satisfactory conditions might be obtained.

[42]     As to the issue of estoppel, the respondent submits that no representation was made that clause 15(b) had been satisfied.  In addition, it says the applicants suffered no  detriment  –  the  deposit  has  been  refunded,  and  the  respondent  offered  to reimburse for costs incurred.

[43]     Furthermore, the respondent submits that in any event the Court’s residual discretion should be exercised here to allow the caveat to lapse. This is because, even if the ASP was to remain on foot, the applicants can be adequately compensated for any breach by damages – and a caveat is not necessary. Lot 6 is an industrial site, with which the applicants have no unique or special relationship. The purchase of alternative industrial property would satisfy the applicants. Also, the caveat affects land not subject to the ASP, and is preventing the sale of a much larger site. This it is said is disproportionate, considering that Lot 6 comprises less than 5% of the total area of the site.

Caveatable interest in land

[44]     As I have noted above, both parties accept that a purchaser’s interest under a sale and purchase agreement relating to land may be sufficient to support a caveat, while that agreement is on foot. The sole question here is whether the respondent validly terminated the ASP on 14 December 2012 and/or 20 December 2012. If so, the applicants have no caveatable interest in the caveated land and the caveat must lapse. This, of course, depends entirely upon whether clause 15(b) was satisfied.

[45]     Dealing first with the requirement of written notice under clauses 8.7(4) and

1.2(1) of the ASP, in my view the applicants are right that the respondent cannot rely on that alone to terminate the ASP – if clause 15(b) had been satisfied, but the respondent failed to give notice, the respondent cannot then rely on its own failure to terminate the contract.

[46]     However the lack of notice may tend to show that clause 15(b) had not been fulfilled – if it had, the respondent argues, they would have given such notice. This leads to the question of whether the subdivision conditions had been accepted by the respondent.

[47]     This is purely a factual question. The train of events between these parties which occurred once the ASP was signed was complex, and much of the evidence on this is significantly contested.  On the one hand, the respondent left it a long time before notifying the applicants that the conditions were unacceptable. It made no objection to the Council, and it seems that to an extent it may be seen to have proceeded with the subdivision when it undertook the surveying and engineering work. The respondent also did a number of things which might suggest the ASP had become unconditional – through its agent it instructed the applicants that they should pay for repairs to the building on Lot 6 as they were the owners, and it required the applicants to pay the deposit. It also entered into an unconditional agreement with a third party for another lot in the subdivision, suggesting that the subdivision conditions necessarily were acceptable to the respondent.

[48]     On the other hand, the evidence before the Court might seem to indicate that the respondent was simply in negotiation with the Council during the relevant timeframes. The subdivision consent came with a huge number of conditions that it is said were unexpected. On the respondent’s evidence, it did not accept the conditions, and was trying to assess whether it could modify or proceed with them, which was perhaps the reason for the engineering and survey work.

[49]     Nor do I think at one level that the respondent acted unreasonably in not accepting the conditions, if indeed that was the case. There is a reasonable argument open here too as I see it that the respondent was entitled not to proceed with a s 127 application to the Council if it would be too costly. It may have been that the other subdivision conditions fell away, however Condition 9 concerning fire safety remained, and it does not appear to be contested that this  would have required expenditure of $1 million to fulfil.

[50]     Yet all this must contrast with the actions of the respondent, who arguably some 4 days before termination, through its agent told the applicants the subdivision would proceed.

[51]     The overall result presents a very confusing situation. This may be as a consequence of significant miscommunication to the applicants of the respondent’s actual situation, possibly on the part of the respondent’s agent, Mr Townshend. The question is finely balanced, but I am satisfied the applicants have done enough to show a reasonably arguable case that they continue to have a caveatable interest in the caveated land as clause 15(b) was satisfied or waived.   I reach this conclusion noting also that the facts here appear to be much disputed and a final determination of the rights of the parties under the ASP needs to occur in a properly pursued separate action for specific performance.

Residual discretion

[52]     This then leads me to consider whether in any event I should exercise my residual discretion now and require the caveat to lapse. The respondent suggests the caveat is preventing sale of the entire site.  But, as noted above, this question also depends on whether the legitimate interests of the applicants here will not be prejudiced by removal of the caveat.

[53]     The respondent has offered to set-aside $150,000 of the proceeds from any sale of all or part of the total site which might eventuate to be held in a solicitors trust account, in case the applicants are successful in a claim for damages. The respondent says any damages would be the difference in the cost of an alternative property and what the applicants would have paid for Lot 6 ($145,000). A fund of
$150,000 it says would enable the applicants to be fully compensated, even if the only reasonable alternative property would be more than twice as expensive as Lot 6. The applicants however contend that damages would not be an adequate remedy here and in any event, the amount of the fund proposed by the respondent is inadequate. The applicants say their best current estimate of any damages claims would be in excess of $384,000.00.

[54]     Whether a damages fund set aside may be an adequate substitute for a caveat depends on whether there is any practical advantage for the applicants in maintaining the caveat over the caveated land. The applicants say they originally intended to seek specific performance of the ASP.   In that case they contend a remedy of damages would not be an adequate substitute.

[55]    However, this invites an inquiry into why the applicants seek specific performance.  The respondent maintains that Lot 6 is simply an industrial site and building having no special characteristics, and with which it says the applicants have no special relationship. As suggested above, it seems the applicants had tried also to exit the ASP previously.

[56]     In Attorney-General for England & Wales v R [2002] 2 NZLR 91 , Tipping J

held:

At common law only contractual obligations involving the payment of a sum of money were regarded as specifically enforceable. The enforcement of other obligations was available only in equity and was thus discretionary and subject to equitable considerations. As has often been said, specific performance is normally granted when damages or other financial relief would be inadequate. Put conversely, specific performance will not ordinarily be granted in cases where financial relief constitutes an  adequate  remedy;  for  a  recent  authoritative confirmation of  this general but not immutable principle see Cooperative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1, 11 per Lord Hoffman. In parallel with this approach is the fact that specific performance and restraint by injunction are discretionary remedies, not available as of right: Stickney v Keeble [1915] AC 386,
419. It is important, however, to note that the discretion involved is a judicial discretion and must be exercised in a principled way: Lamare v Dixon (1873) LR 6
HL 414, 423 and Argyll Stores (supra) at 16.

…

The authorities and texts on the granting of specific performance, either by mandatory order or injunctive relief, demonstrate that there are several principled bases, potentially relevant to the present case, upon which such equitable relief may be withheld. The first is that the contract was procured by means which, although not amounting to grounds of invalidity like duress or undue influence, are nevertheless regarded by equity as unfair. The second related basis is when the conduct of the party seeking specific performance is such as to disqualify that party from seeking the  assistance  of  equity. The  third  basis  is  when the  contract is supported  by  consideration which  is  sufficient  in  law,  but  which  is  materially inadequate in the eyes of equity. The fourth basis is when there is a lack of mutuality of remedy, ie when the Court could not order specific performance against the plaintiff if the contractual default had been that of the plaintiff.

[57]     It is accepted generally, however, that damages will not normally constitute an  adequate  remedy  where  land  is  the  subject  of  an  Agreement  for  Sale  and Purchase. In Sale of Land D.W. McMorland, 2nd ed. 2000, it is said:

It remains true that specific performance is more readily available when land is the subject matter of the contract than in some other cases. This is because one of the essential requirements of equity for the award of the remedy is automatically met in all such contracts. Equity has traditionally required that damages should not be an adequate remedy for the breach, a requirement met in every sale of land contract because of the uniqueness of each piece of land …

[58]     In Lyons v Stewart HC Napier CP19/97, 29 October 1997 the reason given for declining to grant specific performance related to the hardship that would be caused to the vendor in that case if specific performance was ordered. There, the vendor was approached unsolicited to sell her property and was provided with no opportunity for independent advice. She was taken to the purchasers' solicitors for this purpose. There was clearly pressure placed on her to sign the contract from both her husband from whom she was separated, and the purchasers. Further, the Court found that she understood the agreement she was signing was a mere option and not a binding sale contract. On this basis, the Court in that case found unfairness and hardship to such an extent that specific performance was refused.

[59]     In the present case, although the respondent contends the land in question as an industrial site has no “peculiar and special value” (as noted in MacBuild Developments Limited v Fletcher Development and Construction Limited [1991] 2
NZ Conv C 191,164 (HC)) in my view this is not the end of the matter.  For some time, the applicants, through Mr Robert’s business, have occupied and operated a business from Lot 6 pursuant to the tenancy arrangement in the ASP.  As such, the applicants and possibly also their customers would have developed a relationship with the land in question and to be required to move and purchase an alternative site would not be altogether a simple and easy proposition.  And generally I am satisfied here that the applicants would not have an adequate remedy in damages.

[60]     The possibility of a future sale has also been put forward by the respondent as the reason why the caveat needs to be removed now.  But, there is no evidence before the Court that the respondent has an imminent or even a remote possibility of a sale for the site, or any part of it which might include the caveated land.  In my view the respondents concerns here can be properly accommodated in other ways.

[61]     It has been suggested that a preferable course might be to allow the present application and preserve the caveat, but to reserve leave to the respondent to bring a

fresh application to have the issue of the removal of the caveat reconsidered in the future (on appropriate conditions if necessary) once it is known whether there may be a purchaser for the site or any part of it.  In my view that would properly protect the interests of all parties here.

[62]     I conclude therefore that this is not an appropriate case where the Court should exercise its residual discretion and require the caveat to lapse.  As I see the position, the circumstances here are such that a cautious approach should be taken. The caveat is to remain although, in granting the present application, this is to be on certain conditions which will follow below.

Conclusion and Orders

[63]     For all the reasons outlined above, the present application to sustain the caveat succeeds, but strictly on the conditions which I specify below.

[64]     Orders are now made as follows:

(a)       An order is made making permanent the interim order made earlier in this Court that Caveat 9270321.1 lodged against certificates of title WN870/17 and WN13C/790 (Wellington Registry) shall not lapse.

(b)       The applicants, within 15 working days of the date of this judgment, are to commence specific performance proceedings to enforce such rights as they consider they have under the ASP, and thereafter to prosecute those proceedings with reasonable expedition.

(c)       If  the  applicants  fail  to  comply with  these  conditions  outlined in [64](b) above, leave is granted to the respondent to request this Court to have the matter brought back before the Court so that consideration can be given to discharging the order sustaining the caveat.

(d)       Leave is also reserved for the respondent to bring an application in this Court for the lapse of the caveat in the exercise of the Court’s residual discretion or otherwise, in the event that at any time the

respondent shall have a genuine agreement for the sale of all or any part of the site (which includes all or a part of the caveated land) to a third   party   purchaser   and   such   agreement   is   prevented   from completion by the presence of the caveat.

[65]     As  to  costs,  the  applicants  have  effectively  succeeded  in  their  present application and I see no reason why costs should not follow the event in the usual way.  Costs are therefore awarded to the applicants on this application on a category
2B basis together with disbursements as fixed by the Registrar.

‘Justice D.I. Gendall’