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Aspec Construction Wellington Limited v Fawcett [2015] NZHC 535 (23 March 2015)

Last Updated: 21 September 2015

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2014-485-9311 [2015] NZHC 535

_{JUDGMENT OF ASSOCIATE JUDGE SMITH}

[1] The plaintiff (Aspec) applies for summary judgment against Mr Fawcet. It asks for an order directing Mr Fawcet to pay it the sum of $327,500, plus interest and costs.

[2] Mr Fawcet was late filing his notice of opposition to the summary judgment application, and was required to file an application for an extension of time to oppose the application. Mr Fawcet’s application for extension of time was heard together with Aspec’s application for summary judgment.

Background

[3] Aspec is a construction company. One of its projects was the construction of an apartment development in Evans Bay Parade, Wellington. The developer was a company called Delta Developments Limited (Delta), of which Mr Fawcet was a

_director.

ASPEC CONSTRUCTION WELLINGTON LIMITED v ANDREW JAMES FAWCET [2015] NZHC 535 [23

March 2015]

[4] By 2012 some of the apartments had leaks, and a dispute arose between Aspec and Delta. An arbitration award was delivered in October 2012 determining the final amount due by Delta to Aspec, and Aspec subsequently obtained a judgment in this court requiring Delta to pay it the amount of $571,182.46 plus interest and costs.

[5] Delta’s liability under the judgment was settled on terms set out in a settlement deed dated 12 June 2013 (the deed). Mr Fawcet was a party to the deed. Under the deed, Delta was required to pay Aspec $49,500 by 28 June 2013, and by the same date it was to procure the delivery to Aspec of 330,000 unencumbered Barter Card Trade Dollars. Those obligations were duly discharged by Delta.

[6] As their name suggests, Barter Card Trade Dollars (which I will refer to as “trade dollars”) are a form of alternative “currency”, which participating members use in member-to-member transactions for the sale and purchase of goods and services. The detail of how the system works need not concern us for the purposes of this judgment, but an extract from the Barter Card website which Mr Fawcet produced states that purchases made with trade dollars allow a company to buy goods and services at an effective discount equal to its gross margins, and conserve cash reserves which would normally be depleted by such purposes. The website extract says that one trade dollar is equivalent to $1 NZ for all intents and purposes, including tax, GST and pricing. That “exchange rate” has been accepted by Mr Fawcet in his opposition to the summary judgment application.

[7] Under the deed, Aspec was free to use the trade dollars to acquire such goods or services as it saw fit. But to the extent it had not used the trade dollars by

18 June 2014, the deed conferred on Aspec the right to “put” part or all of the trade dollars it still had on hand to Mr Fawcet, in exchange for cash. If it wished to exercise that right, it had to do so within a two month “window” commencing on

18 June 2014 and ending on 18 August 2014.

[8] Aspec exercised that right by serving formal notice on Mr Fawcet on

18 June 2014. It appears that it had used only 2,500 of the trade dollars it had received from Delta; its notice required Mr Fawcet to pay the sum of $327,500 to it

within ten working days, on receipt of which Aspec would transfer 324,257.43 trade dollars to Mr Fawcet.¹

[9] Mr Fawcet did not comply with the notice.

[10] Aspec then issued its proceeding in this Court, claiming the New Zealand dollar equivalent of 327,500 trade dollars.

[11] Under cl 7.2 of the deed, Aspec undertook to take all reasonable steps to procure that relevant subcontractors (being those who had provided relevant warranties of their work) would attend the development to remedy leaks in four specified units at the development, within five working days after notification to Aspec of the details of the leaks in those units. Mr Fawcet says that Aspec never did that, and that the discharge of Aspec’s obligations under cl 7.2 was a condition precedent to its right to call on him to exchange cash for the trade dollars, which has not been met.

[12] As a second string to his bow, Mr Fawcet contended at the hearing on

6 October 2014 that Aspec could not obtain judgment for the $327,500 it claims, because it still has the 327,500 trade dollars, and their value is equal to (if not slightly greater than) the amount which Aspec now claims. He argued that Aspec has suffered no loss.

[13] Aspec denies that there has been any failure on its part to discharge its obligations under cl 7.2. But more simply, it denies Mr Fawcet’s contention that the discharge of those obligations was a condition precedent to its right to call on him to pay cash for the trade dollars. It points out that the clause in the settlement deed under which it was entitled to serve notice on Mr Fawcet requiring him to exchange cash for the trade dollars was not made conditional on Aspec performing its own obligations under cl 7.2. It also relies on a “no set-off or deduction” provision which

_{was included at cl 5.1 of the settlement deed.}

¹ Under cl 3.3 of the deed, Aspec was entitled to deduct the 1 per cent fee (expressed in trade dollars) which it would incur on the transfer of trade dollars to Mr Fawcet. The 324,257.43 trade dollars Aspec would transfer to Mr Fawcet represented the balance (99 per cent) of the trade dollars after deduction of the 1 per cent fee.

[14] On the “no loss because Aspec still holds the 327,500 trade dollars” argument, Aspec accepted at the 6 October 2014 hearing that any judgment entered in its favour should be conditional on it transferring the equivalent number of trade dollars to Mr Fawcet on him satisfying the judgment.

Events subsequent to the 6 October 2014 hearing

[15] On 10 October 2014 I issued a minute in which I granted leave to Aspec to amend the claim for relief in its statement of claim, by substituting for the existing (simple debt) claim a claim for an order directing Mr Fawcet to pay Aspec the sum of $327,500 on receipt of which Aspec would transfer to him 324,256.43 trade dollars in accordance with cl 3.3 of the deed. I noted in issuing that minute that there could be no real doubt about what Aspec was seeking, as its statement of claim referred expressly to its obligation to transfer trade dollars to Mr Fawcet on receipt of his cash payment. I referred to the Court of Appeal decision in

Cegami Investments Ltd v AMP Financial Corporation (NZ) Ltd,² in which the Court

held that there is no good reason why the ordinary rules as to amendments of pleadings should not apply in summary judgment proceedings if the justice of the case so requires, and if there is no prejudice to the defendant. I allowed Aspec a period of seven days to file any amended statement of claim, and made directions permitting Mr Fawcet to file a further affidavit or affidavits, and further written submissions, directed to the new claim for relief. Provision was made for the filing of reply affidavits and written submissions by Aspec, and I directed that if either party wished to make supplementary oral submissions, they could apply by memorandum for the allocation of a further hearing date to hear the supplementary submissions. Aspec filed an amended statement of claim in response to that minute, on 17 October 2014.

[16] In his written submissions made following the filing of Aspec’s amended statement of claim, Mr Herbert submitted that the amended claim remained deficient, in that the pleading did not include an averment of Aspec’s ability and willingness to

_{perform its obligations under the contract. Mr Herbert submitted that such a}

² Cegami Investments Ltd v AMP Financial Corporation (NZ) Ltd [1990] 2 NZLR 308; (1990) 2

PRNZ 271.

pleading is a necessary requirement in any claim for specific performance. Aspec responded by filing, on 7 November 2014, a second amended statement of claim which included a “ready, willing and able to perform” pleading. It also filed an amended interlocutory application for summary judgment, and a supporting affidavit verifying its second amended statement of claim.

[17] Mr Fawcet objected to the filing of these further documents, on the basis that they had been filed without leave. I convened a telephone conference to deal with that objection.

[18] By minute dated 2 December 2014, I granted leave to Aspec to file the second amended statement of claim and the further verifying affidavit and amended application for summary judgment. I noted that the leave granted to Aspec on

10 October 2014 had been intended to allow it to properly plead what was clearly its case, namely that it wanted an order directing Mr Fawcet to specifically perform what it alleged was his contractual obligation to pay the requisite sum in New Zealand dollars in exchange for the delivery to him of the appropriate number of trade dollars. I accepted that the terms of the leave to amend given on

10 October 2014 had been too narrow, in that they did not allow amendments to anything more than the plaintiff’s claim for relief. The justice of the case required that the plaintiff should also be permitted to amend its pleading to include a “ready willing and able to perform” averment.

[19] By further directions made on 2 December 2014, I made provision for the filing of any further affidavits and/or written submission the parties may wish to file, and directed that either party may apply for a further hearing to hear supplementary oral submissions.

[20] Further written submissions were received from counsel, and I heard further oral argument on 13 February 2015.

Legal principles applicable to summary judgment

[21] The principles to be applied in considering an application for summary judgment have been clearly established through decisions of the Court of Appeal

such as Pemberton v Chappell,³ Grant v NZMC Ltd⁴ and Westpac Banking Corporation v M M Kembla New Zealand Ltd.⁵ The following broad principles are to be applied:

(a) The plaintiff must satisfy the Court that the defendant has no arguable defence to the claim brought against it. The issue is whether there is a real question to be tried.

(b) It is generally not possible to determine disputed issues of fact based on affidavit evidence alone, particularly when issues of credibility arise. Issues of law, even though they may be complex, can, however, be determined in an application for summary judgment.

(c) Although the Court should adopt a robust approach, summary judgment may be inappropriate where the ultimate determination turns on a judgment that can only properly be reached after a full hearing of all the evidence.

The issues to be determined

[22] The following issues fall to be determined:

(1) Should Mr Fawcet be granted an extension of time to oppose the summary judgment application?

(2) On the true construction of the settlement deed, was Aspec entitled to give written notice to Mr Fawcet requiring him to pay cash for the trade dollars, if Aspec had not performed its obligations under cl 7.2?

(3) If the answer to issue 1 is “no”, has Aspec shown, to a standard

sufficient to entitle it to summary judgment, that it has discharged its clause 7.2 obligations?

³ _{Pemberton v Chappell [1986] NZCA 112; [1987] 1 NZLR 1 (CA) at 3.}

⁴ _{Grant v NZMC Ltd [1988] NZCA 135; [1989] 1 NZLR 8 (CA).}

⁵ Westpac Banking Corporation v M M Kembla New Zealand Ltd [2000] NZCA 319; [2001] 2 NZLR 298 (CA).

(4) If Aspec was entitled to give the written notice to Mr Fawcet, is the appropriate remedy (following Mr Fawcet’s failure to comply with the notice) an order for specific performance, directing Mr Fawcet to pay $327,500 to Aspec in exchange for the 324,256.4 trade dollars?

[23] I will consider each issue in turn.

Issue 1: Should Mr Fawcet be granted an extension of time to oppose the summary judgment application?

[24] I am satisfied that an extension of time should be granted. Mr Fawcet has explained that he was not able to contact one of his witnesses, Mr Charlett, until

25 August 2014, only two days before the notice of opposition was due to be filed. Mr Charlett had been overseas until 23 August 2014. Mr Fawcet was unable to get Mr Charlett’s affidavit completed until 29 August 2014, and he explains that, because there was a degree of “interlinking” between Mr Charlett’s affidavit and his own affidavit, neither affidavit was sworn until 29 August 2014. The documents were filed on 1 September 2014.

[25] The last day for filing a notice of opposition was 27 August 2014, being three working days before the first call of the summary judgment application on

2 September 2014.

[26] In my view, the delay in filing has been reasonably explained, and Mr Leggat has not pointed to any significant prejudice his client will suffer if an extension of time is granted. There will accordingly be an order extending the time for Mr Fawcet to file his notice of opposition and affidavits in opposition, to the dates on which those documents were filed.

Issue 2: On the true construction of the settlement deed, was Aspec entitled to give written notice to Mr Fawcet requiring him to pay cash for the trade dollars, if Aspec had not performed its obligations under cl 7.2?

Relevant Provisions of the Deed

[27] Clauses 3, 5, 7, and 14 of the deed materially provide:

3 Buyback

3.1 If, no sooner than 18 June 2014 and no later than 18 August 2014, Aspec retains any of the 330,000 [trade dollars] which were received under clause 1.2, Aspec may, by written notice to [Mr Fawcet], require [Mr Fawcet] to exchange the number of [trade dollars] specified in the notice for the equivalent number of New Zealand Dollars.

3.2 Upon receiving a notice under clause 3.1, [Mr Fawcet] will, within

10 working days, pay to Aspec the specified sum of New Zealand

Dollars, time being of the essence.

3.3 Upon receipt of payment of the sum required to be paid under the notice referred to in clause 2.1 above, Aspec will pay to [Mr Fawcet] the number of [trade dollars] specified in the notice (minus any [trade dollars] fees that Aspec may incur as a result of such transfer).

3.4 For the avoidance of doubt, Aspec may expend [the trade dollars] in its complete discretion and shall be under no obligation to spend, or to endeavour to spend, any or any minimum number of the [trade dollars].

5 No Counterclaim, Set-Off or Deduction

5.1 Neither [Mr Fawcet] nor Delta may make any counterclaim against Aspec or exercise any right of set-off or deduction against, or in respect of, all or any portion of any payment payable by either of them under this Deed.

7 Release of Aspec under Contract

7.1 Subject to clause 7.2, Delta will have no further claim on Aspec under the Contract (whether or not the existence of that claim or possible claim is known to Delta at the date of this Deed).

7.2 Notwithstanding clause 7.1, Aspec will, promptly, and no later than five working days after notification of the details of the leaks in relation to Units S204, S208, S505 and S506 at the Development (by Aspec or otherwise), take all reasonable steps to procure that the relevant sub-contractor (being the sub-contractor that has warranted any defective work resulting in the leak) attend the Development to remedy those leaks as quickly as practicable and in a workmanlike manner.

7.3 Other than as set out above, Delta agrees to indemnify Aspec against any claims made against Aspec by any owners of units in the Development.

9 AJF Guarantee

9.1 Guarantee: This clause shall apply if any notice is served by any official assignee or receiver, manager, liquidator or other personal representative appointed as a result of any insolvency of Delta or any other person entity which seeks to set aside, in whole or in part, the

[$49,000 cash payment made by Delta] or the transfer of [the trade dollars provided by Delta to Aspec].

9.2 Payment: In the event of a notice such as referred to in subclause 9.1 being served, AJF will, on demand by Aspec, pay to Aspec the amount of the payment or the dollar equivalent of the [trade dollars] (as the case may be) which is/are sought to be set aside, without any deduction, set-off or counterclaim.

9.3 Absolute Liability: It is the intent of the parties that the guarantee and obligations of AJF under this Deed will be absolute and unconditional in any and all circumstances and the liability of AJF under this Deed will not be abrogated, prejudiced or affected by any covenant or obligation of Aspec being unenforceable in any way or by:

...

(b) any omission or neglect;

...

(d) any avoidance for any reason whatever by statute or otherwise of any payment by or on behalf of Delta or AJF to Aspec;

...

(f) any failure or breach of any express or implied condition upon which this Deed is based;

...

(j) any other dealing, matter, event or thing which, but for this provision, could or might operate to abrogate, prejudice or affect this Deed.

14 Entire Agreement

This Deed constitutes the entire agreement between the parties with respect to the payments now agreed between them.

[28] The reference to “AJF” in cl 9 is a reference to Mr Fawcet.

Submissions for Mr Fawcet

[29] For Mr Fawcet, Mr Herbert submits that the settlement deed was intended to involve the following process:

(I) Delta would procure payment of the 330,000 trade dollars on

28 June 2013.

(II) Aspec was then to use its best endeavours to procure the remedy of various leaks at the development, using trade dollars as necessary.

(III) After 18 June 2014, on the basis that Aspec would by then have satisfied the cl 7.2 condition, Mr Fawcet was required (on demand by Aspec) to exchange any remaining trade dollars in Aspec’s possession for the equivalent number of New Zealand dollars.

[30] Mr Herbert submits that Aspec has failed to show that it used its best endeavours to procure the remedy of the various leaks, and on that basis was never entitled to make demand on Mr Fawcet for the trade dollars/cash exchange.

[31] In answer to Aspec’s reliance on the “no set-off or deduction” provision at cl 5.1 of the settlement deed, Mr Herbert submits that Mr Fawcet’s defence is not a counterclaim, set-off or deduction. As he put it in his written submissions, the deed is “layered”, so that the obligation to exchange cash for trade dollars is conditional on Aspec performing its obligations under cl 7.2. He submits that such an interpretation makes sense in the context of the deed, because the trade dollars were needed to pay for the procurement of the sub-contractors to carry out the repairs. There was no benefit to Delta or to Mr Fawcet prior to the repairs having taken place.

[32] In his oral submissions, Mr Herbert addressed the question of the factual matrix in which the settlement deed is to be interpreted. Two of the obvious “background” factors were said to be that the development was known to have leaks, and that Aspec had shortly before the completion of the deed obtained a large High Court judgment against Delta. Against that background, Mr Herbert questioned why the parties provided for a gap of a little over one year before Aspec could serve notice on Mr Fawcet requiring him to pay cash for the trade dollars. His answer was that the gap was intended to allow Aspec time to arrange for the leaks in the four units referred to cl 7.2 to be fixed. A quid pro quo was intended – Aspec fixes the leak, then it is entitled to redeem its trade dollars for cash.

[33] As for cl 9 of the deed, Mr Herbert submits that the entire clause was intended to apply only in the circumstances described in sub-cl 1. None of those circumstances had arisen when Aspec served its notice on Mr Fawcet. Mr Herbert also submits that cl 5.1 would be redundant if cl 9 had been intended to apply in all circumstances (i.e. if cl 9 was not limited to the circumstances described in sub-cl 1).

Submissions for Aspec

[34] For Aspec, Mr Leggat submits that if Mr Fawcet’s payment obligation in cl 3.2 was intended to be conditioned on performance by Aspec of its obligations under cl 7.2, the deed would have expressly said so. He also submits that Aspec’s obligations under cl 7.2 were for the benefit of Delta, and are not able to be enforced by Mr Fawcet.

Discussion

[35] It seems to me that there is force in Mr Leggat’s submissions on this issue. On its face, the cl 3.1 entitlement of Aspec to serve notice on Mr Fawcet, and his obligation under cl 3.2 to pay the amount set out in the notice, were unconditional (assuming the notice was served within the window of time between 18 June and 18

August 2014). One would have expected that if the intention had been to make Aspec’s entitlement under sub-cl 3.1 and 3.2 conditional in the manner for which Mr Fawcet now contends, it would have been a simple enough matter for the drafts- person to have said so.

[36] Sub-clauses 3.1 and 3.2 must also be read with cl 5.1, under which neither Mr Fawcet nor Delta were to “exercise any right of set-off or deduction against, or in respect of, all or any portion of any payment payable by either of them under this Deed”. Mr Fawcet’s obligation to pay cash for the trade dollars on receipt of written notice under cl 3.1 would have been a “payment payable” by him under the deed, and the effect of cl 5.1 is that Mr Fawcet was not entitled to deduct or set-off any sum against such a payment.

[37] Mr Herbert submits that the issue is not one of Mr Fawcet seeking to make a counterclaim, set-off or deduction, but whether a necessary pre-condition to Aspec’s right to give the notice had or had not been met.

[38] I accept that submission as far as it goes, but the submission remains entirely dependent on reading in a “subject to compliance with its obligations in cl 7.2” qualification on Aspec’s rights under cl 3.1, when no such qualification appears in cl 3 itself.

[39] I am not convinced by Mr Herbert’s argument that the deed was deliberately “layered” in the sense referred to at para [31] above, with the period of approximately a year before Aspec would be entitled to “put” the trade dollars to Mr Fawcet being intended to allow Aspec to expend the trade dollars on the procurement of the subcontractors to carry out the repairs. First, the wording of cl 7 of the deed does not suggest that the parties contemplated that Aspec would be paying any subcontractor to do remedial work – the clause only required Aspec to take reasonable steps to procure that subcontractors who had warranted defective work which had resulted in the leaks would attend at the development to remedy their defective work. Those subcontractors would presumably have been obliged to cover the costs of the remedial work themselves.

[40] Secondly, Mr Herbert’s submission does not, in my view, have sufficient regard to the fact that Aspec was fully entitled to use the trade dollars as it saw fit when it received them from Delta in June 2013. It might have used them in July

2013 to purchase goods or services which were entirely unrelated to the development, in which case it would have had no need to “put” any trade dollars to Mr Fawcet in the two month period provided for in cl 3.1 of the deed. Looked at in that way, it can be seen that the intention was that Aspec would receive “full value” under the deed immediately it was paid by Delta, possibly before it received any notice under cl 7.2 setting out details of leaks in the four units. Clauses 3.1 and 3.2 of the deed were only concerned with Aspec’s entitlement to convert all or part of the value it had already received into a different and presumably more liquid form of value, namely cash.

[41] I also accept Mr Leggat’s submission that cl 7 is not concerned with the relationship between Aspec and Mr Fawcet at all; it records a settlement reached between Aspec and Delta. Clause 3, on the other hand, is concerned only with the relationship between Aspec and Mr Fawcet. The unqualified obligation on Mr Fawcet to pay on demand, read with the specific reference to Mr Fawcet in cl 5.1 and the fact that cl 7.2 appears to be concerned only with possible claims by Delta against Aspec, leads me to conclude that Aspec’s right to “put” any remaining trade dollars to Mr Fawcet was not qualified in the manner for which he now contends.

[42] That interpretation seems to me to be consistent with the emphasis in cl 9 of the deed on the obligations of Mr Fawcet being “absolute and unconditional in any and all circumstances” – see cl 9.3, under the sub heading “Absolute Liability”. Even if cl 9 was only intended to operate in the circumstances described in cl 9.1 (and it is common ground that none of those circumstances apply), it is noteworthy that Mr Fawcet’s obligation under cl 9.2 to make payment to Aspec was again not made subject to any condition in respect of the discharge of Aspec’s cl 7.2 obligations. If Mr Fawcet had no ability to delay or defer payment to Aspec under cl

9.2 of the deed on account of alleged failure by Aspec to comply with its cl 7.2 obligations, it is not clear why any different approach would have been intended to apply to Mr Fawcet’s payment obligation under cl 3.2.

[43] It is not necessary for me to make any finding on the point, but I note also that the “Absolute Liability” provisions at cl 9.3 of the deed appear on their face to have been intended to apply not just to the guarantee which is included at cl 9.1 (which I accept had no application) but also to the (presumably wider) “obligations of [Mr Fawcet] under this Deed”, and the “liability of [Mr Fawcet] under the Deed”. The draftsperson did not use the expression “under this clause” in the introductory part of cl 9.3. If cl 9.3 were given that broader interpretation, Mr Fawcet’s obligation to pay under cl 3.2 would have been “absolute and unconditional”, and would not have been “abrogated, prejudiced or affected” by ... “(f) any failure or breach of any express or implied condition upon which the Deed is based”. I think that provision would have been broad enough to catch any breach by Aspec of its obligations under cl 7.2.

[44] I conclude, on the plain wording of the deed, that there is no basis for “grafting onto” Mr Fawcet’s cl 3.2 payment obligation any condition relating to performance by Aspec of its cl 7.2 obligations. Neither party has pointed to anything in the background circumstances leading to the execution of the deed which would suggest any different conclusion. The fact that Aspec had obtained an arbitration award (on which it had entered judgment) for a sum significantly in excess of the

$49,000 and 330,000 trade dollars for which Delta agreed to settle the judgment debt suggests that Aspec was probably holding most of the cards in the settlement negotiation, and was thus able to obtain from Mr Fawcet an unqualified undertaking to “take out” any remaining trade dollars Aspec might still hold after a year.

[45] My answer on Issue 2 is “yes”.

Issue 3: If the answer to issue 1 is “no”, has Aspec shown, to a standard sufficient to entitle it to summary judgment, that it has discharged its clause 7.2 obligations?

[46] In view of my findings on Issue 2, there is no need to consider this question.

Issue 4: If Aspec was entitled to give the written notice to Mr Fawcet, is the appropriate remedy (following Mr Fawcet’s failure to comply with the notice) an order for specific performance, directing Mr Fawcet to pay $327,500 to Aspec in exchange for the 324,256.4 trade dollars?

The parties’ submissions

[47] Mr Fawcet submits that specific performance is not normally available on a claim for payment of a sum of money. He refers to the text Civil Remedies in New Zealand,⁶ where the authors state that “specific performance will not generally be available to enforce a contractual obligation to pay money, because damages will be adequate”. However, if a purchaser is entitled to specific performance because damages are not an adequate remedy, the vendor will equally be entitled to specific

_{performance, even though he or she is only entitled to receive a payment of money.}⁷

⁶ Andrew McIntyre “Specific Performance” in Peter Blanchard (ed) Civil Remedies in New

_{Zealand (Thomson Reuters, Wellington, 2011) at 8.7.2.}

⁷ Turner v Bladin [1951] HCA 13; (1951) 82 CLR 463 (HCA), cited in McIntyre above n 5 at 8.7.2, n 57.

[48] Mr Herbert submits that damages will be an adequate remedy in this case, and that there are no special circumstances which would overcome what he described as the “general presumption” that specific performance will not be available to compel an obligation to pay money. He submits that there is simply no evidence to support Aspec’s claim that damages would not be an adequate remedy.

[49] In addition, Mr Herbert submits that Aspec is itself in breach of contract and has not shown that it has the ability to perform its obligations under the deed – he submits that there is no evidence that Aspec will be capable of procuring the subcontractors to attend the site to carry out necessary remedial work.

[50] Mr Herbert further submits that the Court will not intervene to compel specific performance of only part of the contract.⁸

[51] In response, Mr Leggat says that the deed created not simply an obligation on Mr Fawcet to pay money, but reciprocal obligations on both parties. He submits that, in effect, Mr Fawcet is seeking to re-write the deed by asserting a right to say “no thanks, you keep the trade dollars”. Mr Leggat further submits that the deed contains entirely separate and discrete rights and obligations, and that Mr Fawcet is neither entitled to the benefit of Delta’s rights under the deed nor liable for the discharge of Delta’s obligations (except in the circumstances provided for in cl 9 of the deed).

[52] Mr Leggat submits that the “ready, willing, and able” requirement of an action for specific performance is to be considered in substance, rather than on the basis of any “technical” approach.⁹ He refers to the affidavit of Aspec’s managing director, Mr Wendon, in which Mr Wendon confirms Aspec’s readiness and willingness to perform, and says that that evidence is sufficient.

[53] In response to Mr Herbert’s submission that the Court will not enforce part of

a contract, Mr Leggat submits that Aspec is seeking to enforce all of Mr Fawcet’s obligations, which are entirely separate from Delta’s rights and obligations under the

8. Citing Ryan v Mutual Tontine Westminster Chambers Association [1893] 1 Ch 116 (CA) at 123 per Esher LJ.

⁹ Referring to Hurrell v Townend [1982] 1 NZLR 536 (CA) at 550.

deed. Any reluctance of the Courts to order specific performance of only certain obligations under a contract (which is not a rigid rule anyway) has no application where a contract is divisible. The Court may even order specific performance of separate obligations between the same parties.¹⁰ Mr Leggat submits that no issue can arise where all of the obligations between two parties to a tripartite agreement are being ordered to be performed, and the other obligations contained in the

agreement are not between those two parties and are different in nature.

[54] Mr Leggat confirms that Aspec will submit to an order being made against itself to the effect that it will, upon receipt of the $327,500 for Mr Fawcet, transfer the 324,256.43 trade dollars to Mr Fawcet.

[55] If I should find that Aspec is not entitled to specific performance, Mr Leggat submits that judgment against Mr Fawcet should be entered for liability, with a later hearing to determine the appropriate remedy.

Discussion and conclusions

[56] In an appropriate case, the Court may order specific performance for the payment of a sum of money. The decision of the House of Lords in Beswick v Beswick is an example of such a case.¹¹ In that case, Mr Beswick Sr., when he was in his seventies and in poor health, made an agreement with his nephew that he would transfer the goodwill and trade utensils of his coal business to his nephew. Part of the consideration for this was the agreement that the nephew would, on the

death of Mr Beswick Sr., pay to Mr Beswick Sr.’s widow a sum of 5 pounds per week for life. When Mr Beswick Sr. died, the newphew paid the widow one sum of

5 pounds, then refused to pay any further sum. The widow brought actions in her capacity as administrator and in her personal capacity for specific performance of the agreement. The House of Lords found in the widow’s favour because (inter alia) specific performance was the most appropriate outcome in the circumstances. Specific performance was more convenient than an action for arrears of payment,

_{followed by separate actions as each sum fell due. Further, the parties to the}

¹⁰ _{Citing Laws of New Zealand, Specific Performance (online ed) at [21]; John McGhee (ed) and}

_{Snell’s Equity (32}^nd _{ed, Sweet & Maxwell, London, 2010) at [17-025].}

¹¹ Beswick v Beswick [1967] UKHL 2; [1968] AC 58.

agreement were intending an annuity for a widow; a lump sum of damages did not accord with this.¹²

[57] Mr Herbert refers to a general presumption that specific performance will not be available in cases where a party seeks to compel performance of an obligation to pay money, but I do not think the cases support the view that there is a presumption to that effect (although damages will no doubt often be considered an adequate remedy in such cases). In the end, I think it depends on what is most appropriate in the circumstances of the particular case.

[58] In Butler v Countrywide Finance, Hammond J stated:¹³

[...] the law of civil remedies in this the country is, as it should be, steadily evolving into a regime in which what is required of a Court is a context- specific evaluation of which remedy is the most appropriate in the circumstances of a given case, rather than doctrinaire or a priori solutions. The problem then becomes one of informed remedial choice.

[59] Considerations which may be relevant in determining whether specific performance is the most appropriate remedy include among others :¹⁴

(a) Plaintiff autonomy. Generally speaking, a plaintiff as the injured party should have first choice of remedy.

(b) Economic efficiency. The debate on the efficiency of specific performance versus damages is not concluded, but is nonetheless a relevant factor.

(c) The relative severity of the remedy on the parties.

(d) The moral view to be attached to the interests at stake. (e) The conduct of the parties.

¹² _{Beswick v Beswick, above n 10 at [88] per Lord Pearce.}

¹³ _{Butler v Countrywide Finance [1993] 3 NZLR 623 at 631.}

¹⁴ At 632-633.

[60] In this case, the first of the factors listed by Hammond J in Butler (plaintiff autonomy) clearly favours Aspec. The fourth factor (the moral view to be attached to the interests at stake) arguably also favours Aspec. One of the very purposes of the regime set out at cl 3 of the deed appears to have been to relieve Aspec of the burden of finding a market for any trade dollars it wished to be rid of, and that purpose would be defeated if Mr Fawcet were permitted to fall back on a “damages is an adequate remedy” argument.

[61] As for the second and third potentially relevant considerations identified by Hammond J in Butler (economic efficiency, and the relative severity of the remedy on the parties), there is not enough evidence for me to determine how these factors may affect the question of whether specific performance is the appropriate remedy. It may be that if the evidence were available these factors would be seen to favour Mr Fawcet. On the “severity” issue, if I made an order for specific performance, Mr Fawcet would be at risk of a contempt finding if he failed to comply with the order. And, relevant also to the economic efficiency issue, it may be that the evidence would show there is a ready market for the trade dollars. If that were the case, there would be little to be gained by making an order which would put Mr Fawcet at risk of a contempt finding in the event of default, when Aspec could easily secure the cash it wants by simply selling the trade dollars. In such a case, I think it would also be clear that damages would be an adequate remedy.

[62] Weighing the various considerations, I am not satisfied on the evidence that Aspec has shown that damages would not be an adequate remedy, or that specific performance is the appropriate remedy for some other reason. I accordingly decline to enter summary judgment for specific performance.

[63] It is not strictly necessary for me to make any findings on Mr Herbert’s other submissions in opposition to the claim for specific performance, but I add that I would not have been inclined to accept his submissions based on the proposition that the Court will not enforce only part of a contract. Delta has substantially discharged its obligations under the deed in this case, and if specific performance had been an appropriate remedy against Mr Fawcet there would seem to be no reason why

specific performance would not have been available to compel performance of the

(as yet unperformed) obligations of the third party to the deed.

[64] My findings so far on Issue 4 do not mean that Aspec should not succeed on its summary judgment application as far as liability is concerned. Indeed, I think it must succeed on liability, as I have found that Aspec was entitled to issue the notice it issued under cl 3.1, and Mr Fawcet acted in breach of contract in failing to pay the sum demanded within the allowed period of ten working days. At the very least, Aspec must be entitled to nominal damages for breach of contract. There will accordingly be judgment for Aspec on liability.

[65] The next question is whether judgment should be entered on Aspec for liability, with damages to be assessed at trial, or whether it should remain open to Aspec to seek an order for specific performance at trial (or damages if specific performance cannot be had).

[66] Rule 12.3 of the High Court Rules provides that the Court may give judgment on the issue of liability, and direct a trial on the issue of amount, if the party applying for summary judgment satisfies the Court that the only issue to be tried is one about the amount claimed. The rule does not appear to contemplate the entry of summary judgment on liability while leaving it open to the plaintiff to pursue remedies other than damages, such as an order for specific performance. Under r 12.3, the only issue which may be left over for assessment at a later trial is whether the plaintiff is entitled to “the amount claimed”.

[67] In Ghent v Brinkman, the Court would have declined to accede to the application for judgment on liability, as there was no clear dichotomy between issues affecting liability on the one hand, and damages on the other. The plaintiff’s claims for aggravated and exemplary damages in that case appeared to open up virtually the whole field of the conduct of the respective parties, necessarily leading to an examination of all aspects of the relationship between them. In those circumstances the Court would have had to examine and pronounce upon the same issues at the assessment of damages stage as (by virtue of the summary judgment on liability) would have been presumed to have been decided in favour of the plaintiffs. Not only

would that mean that the summary judgment procedure would have conferred little advantage from the point of view of saving expense and time, but it would put the Court in the position where it might make findings which would not readily be reconciled with a holding that there was no tenable defence. ¹⁵

[68] I think similar considerations apply in this case. To enter judgment on liability and leave it open to Aspec to pursue its claim for specific performance (or damages in the alternative) would run the risk of opening up all matters which might in equity be considered as a bar to an award of specific performance (including, conceivably, the issue of whether Aspec had discharged its liability under cl 7.2 of the deed). I think the better course is to dismiss the claim for specific performance, but enter judgment for liability in favour of Aspec, with damages to be assessed at trial. There will be orders accordingly.

Results

(a) Mr Fawcet’s application for an extension of time to file his notice of opposition and affidavits in opposition is allowed. The time is extended to the date or dates on which the notice of opposition and affidavits in opposition were filed.

(b) Aspec’s application for an order for specific performance of

Mr Fawcet’s obligations under cl 3.2 of the deed is dismissed.

(c) Summary judgment is entered for Aspec on liability, with the quantum of damages to which Aspec is entitled to be assessed at trial.

(d) Aspec is directed to file a further amended statement of claim, setting out its claim for damages, within 28 days of the date of this

_judgment.

¹⁵ Ghent v Brinkman HC Wellington CP 379/87, 11 September 1987 at 12-13.

(e) Mr Fawcet is to file a statement of defence to Aspec’s further amended statement of claim, within 14 days after the further amended statement of claim has been served on him.

(f) A case management conference is to be allocated for the first available date after 1 June 2015.

(g) Costs are reserved.

Associate Judge Smith

Solicitors:

Ford Sumner, Wellington for applicant