Dustin v Peszynski CA289/96 [1997] NZCA 319 (18 February 1997)

Last Updated: 28 January 2019

^{IN THE COURT OF APPEAL OF NEW ZEALAND C.A.289/96}

BETWEEN IAN LUKE DUSTIN Appellant

^{AND JERZY BOLESLAW PESZYNSKI}

^{and HAZEL JOAN PESZYNSKI}

Respondents

Coram: McKay J Barker J Tipping J

Hearing: 18 February 1997

^{Counsel: F.B. Barton for appellant}

^{L.A. Andersen for respondent}

^{Judgment: 18 February 1997}

^{JUDGMENT OF THE COURT DELIVERED BY BARKER J}

This is an appeal from a decision of Master Venning given in the High Court at Dunedin on 11 November 1996. This had been an interim judgment in which the Master had indicated that specific performance was the appropriate remedy for the plaintiffs. In a subsequent judgment delivered on 4 December 1996, the Master settled the

terms of the Court’s formal order of specific performance.

The case concerns the interpretation of a clause in an agreement for sale and purchase dated 14 May 1994 between the present respondents, Mr and Mrs Peszynski, as vendors and the appellant, Mr Dustin, as purchaser.

The appellant, a property developer, owned land adjoining Lake Dunstan in Central Otago which he wished to subdivide. The respondents also owned land adjoining Lake Dunstan; they indicated that they might possibly

wish to subdivide this land in the future. Under the agreement, the appellant was to purchase a block of land from the respondents which would yield 25 sections. Clearly, the advantage to him of purchasing this additional land would be to spread the cost of development over a greater number of sections.

As part of the agreement between the parties, two clauses were included which placed certain obligations on the appellant. The aim of these clauses was that the respondents would be able to connect any sections from their future subdivision to services in the subdivision being promoted by the appellant.

Although the two clauses of this agreement for sale and purchaser were in issue in the Master’s judgment, there is no argument now concerning his interpretation of

clause (1); the only contention relates to clause (2)

which reads -

“The purchaser agrees and undertakes to ensure that he will carry out his proposed subdivision both on the land sold herein and on his existing subdivision on the land adjacent to this property in such a manner as to ensure that all services such as water, sewage, power, telephone and stormwater shall be of such size and capacity to enable the vendor to carry out a subdivision of his own on his adjoining property of up to 100 sections. These services

^{shall not include any pump or pumps required except}

^{that the purchasers service pumping facilities must}

^{be able to cope with the first 20 of these sections.}

^{The purchaser hereby agrees as further consideration}

^{in respect of the signing of this agreement}

^{(irrespective of its completion) that he will allow}

^{the vendor to connect his property into these}

^{services and grant to the vendor as and for}

^{easements forever appurtenant to the vendors land}

^{(section 66 block 4 Wakefield Survey District) such}

^{easements as are required to bring all of the}

^{abovementioned services from their closest point on}

^{the purchasers adjoining land (section 17 block 4}

^{Wakefield Survey District) to the southeast corner}

^{of the vendors land. The purchaser shall at his}

^{cost have his engineer certify that the size and}

^{capacity of the services available to and in place}

^{for the vendors land are as required for this clause}

^{prior to the vendor being required to pass title.”}

The purchase price for the land was $400,000 plus GST to be paid as to $20,000 plus GST upon the signing of the agreement; at that time, the appellant as purchaser was entitled to enter into possession. A further $200,000 plus GST was payable on 28 February 1995; the balance plus GST was payable on 31 January 1996 or earlier, at the option of the purchaser.

The contract also provided in the event that the second payment of $200,000 due on 28 February 1995 was not paid on time, then the only remedy available to the vendors was to charge interest at the penalty rate until payment was made. Although the deposit was paid and the appellant entered into possession, the second instalment of $200,000 due on 28 February 1995 has not been paid; interest continues to be charged thereon.

The appellants issued summary judgment proceedings

seeking payment of the unpaid purchase price plus arrears of interest. The Master quite rightly held that the payability of the money sought by the respondents was interdependent on the vendors’ obligation to provide title. It is unclear why summary judgment proceedings were issued which asked only for judgment for a monetary sum without any reference to the vendors’ corresponding obligation to give title. Anyhow, the Master rightly held that the proper remedy available to the respondents was that of specific performance; there is no dispute

over that conclusion of the Master.

Essentially, the interpretation of clause (2) revolves around the last sentence. The solicitors who drew up the agreement were acting for both parties. These solicitors were not the solicitors now acting for either

party. There was no consultation by them over the terms

of the agreement with Mr Potter the surveyor who organised the subdivision for the appellant. It was unfortunate that such consultation did not occur over the requirement for a certificate.

One must look at the agreement as a whole, in particular, at clause (6) of the special conditions; this clause speaks about certain consequences of the vendors’ proceeding with further subdivision of the balance of their land. The expression in clause (6), “should they proceed with further subdivision of the balance of their land”, indicates that there was no obligation on the respondents ever to subdivide the balance of their land; indeed, Mr Peszynski in his affidavit in the summary judgment proceedings indicated that they had no present plans.

Although the clause refers to an “engineer’s” certificate, affidavits from both sides came from registered surveyors who considered themselves competent in designing and servicing subdivisions; it seems that their certificates would be acceptable to the Central Otago Local Authority. No point was taken of the fact that Mr Potter was not an “engineer”, although one would have thought that this term was reasonably well known in contracts of this nature.

Mr Potter considered that he could not certify in terms

of clause (2) without considerable technical information, concerning particularly the form of the subdivision of

the respondents’ land. As noted by the Master, Mr

Potter required information about -

(a) The length of cable and voltage in relation to the power supply. Any certificate about power would have to come from the local electricity authority;

(b) The nature and siting of the subdivision to enable calculation of the pressure required for water supply;

(c) The elevation of allotments in order to confirm sewerage service;

(d) Stormwater services; there is no piped stormwater service upon the appellant’s existing subdivision.

Mr Potter also noted the implication of certifying that the services were sufficient, given the potential of a subdivision of up to 120 sections. However,clause (2) speaks only of 100 sections; one would have thought that the certificate should only relate to a subdivision of

100 sections maximum. Mr Potter was also justifiably concerned about his possible civil liability; for that

reason, he did not consider it prudent to give a certificate until he had sufficient detail of any subdivison.

Against that evidence, Mr Hughes, another Cromwell surveyor, made an affidavit to the effect that it was possible for the certificate required by clause (2) to be given; that a subdivisional concept plan, actually provided by the respondents, would be adequate for calculating design requirements.

As noted by the Master, it was not claimed by the appellant that the condition in clause (2) was impossible to perform or that the contract was frustrated. Correspondence shows that various attempts were made to ascertain the intention of the respondents with regard to the subdivison of the balance of their land; the contention was made throughout by the appellant that no engineer could give a certificate until certain information was known.

The question for this Court, as it was for the Master, is one of the proper construction of clause (2). The clear intention of the clause, as the Master found, was to enable the respondents to have the benefit of services such as water, sewerage etc installed by the appellant on his subdivision, available for any future subdivision

they may choose to undertake. By entering into the contract, the appellant accepted the obligation at his cost to have his engineer certify the size and capacity of the services available to enable the respondents to

carry out a subdivision of up to 100 sections. There is no reference to the respondents being required to submit the concept plan or indeed any information.

In our view, to give the clause meaning and business efficacy, it would be incumbent on the respondents to make it possible for the appellant’s expert or engineer

to enter on their land if necessary to check measurements or ascertain such other technical information as might be required. That is not to say there is any financial obligation on the respondents to obtain professional assistance to enable them to supply the information upon which the appellant was wrongly insisting be supplied by them at their cost.

We note that there must have been some discussion about this clause at pre-contract negotiations. The words “an independent” are deleted and the word “his” is

substituted before the word “engineer”. Clearly, the parties turned their minds to the situation that it could be the appellant’s expert or certifier; there was no requirement to involve somebody completely independent.

Before the Master and before this Court, the respondents accepted that any plan could be prepared in the most advantageous way to the appellant, consistent with his obligation to obtain a certificate as to size, capacity and services relating to the subdivision; of course,

there would be no requirement for the respondents, should they ever choose to subdivide, to work in accordance with that plan. However, there would be an obvious advantage to them in doing so, but there was no requirement that they should do so.

There is no basis for an implied term to give “business efficacy” to the contract. Indeed, the acknowledgment

of the appellant that the clause is capable of fulfilment would certainly mitigate against any implied term. That was the finding of the Master with which we agree.

We agree that, in the circumstances of this case, if a subdivision concept plan of 100 sections would enable the certificate to be given, or if further information is required to enable the certificate to be given, the obligation to obtain that information lies with the defendant, i.e. the appellant. The provision of such information is incidental to and part of obtaining the engineer’s certificate at the appellant’s cost.

Consequently, we find that the Master was correct in his interpretation of the clause; therefore there is no arguable defence; the plaintiffs in the Court below were entitled to summary judgment for specific performance.

At the hearing before us, counsel for the appellant sought leave to file an additional affidavit from Mr Potter which put times on the fulfilment of the various procedures required for the omnibus certificate; that is a certificate covering several utilities. Mr Andersen did not oppose the admission of this further affidavit. In effect, the affidavit said it would take about 15 weeks from start to finish to assemble the necessary information to enable a proper certificate to be given.

So, with that information in mind and purely to deal with the effluxion of time since the Master’s judgment was delivered, we propose to vary the order that he made

viz -

(a) The time for settlement is extended from 19 December

1996 to 4 March 1997;

(2) The amount to be tendered on that date is now increased to $501,550.40 which is an agreed calculation including the additional interest required;

(3) The time for supplying the certificate by the appellant’s engineer is extended from 2 April 1997 to 1 July 1997.

The appeal is dismissed with costs to the respondents of

$3,500 plus disbursements as fixed by the Registrar including reasonable travelling and accommodation expenses of counsel.

^{Solicitors: Caudwells, Dunedin, for appellant}

^{Calvert & Co, Dunedin, for respondents}