The appeal of the MDC is allowed to the extent that the judgment against it in favour of the Moorhouses is reduced to $62,500.
The appeal by Vining is allowed to the extent that the apportionment of liability between it and Gascoigne Wicks is altered from 80:20 to 60:40.

The orders for costs in the High Court are varied to reflect differences in the effective proportions of the ultimate liability to AJVL which are to be borne by Vining, Gascoigne Wicks and the MDC.

The appeals are otherwise dismissed.
In this court there is no award of costs either way in respect of the MDC (which has been partly but not completely successful).
Vining and Gascoigne Wicks are to pay to AJVL costs and disbursements for a complex appeal on a band B basis and usual disbursements (apportioned as to 60% to Vining and 40% to Gascoigne Wicks).
Vining is to pay the Moorhouses their costs of and relating to the appeal (including disbursements) as fixed on an actual solicitor and client basis to be agreed between the parties and in default of agreement fixed by the Registrar.

___________________________________________________________________

REASONS OF THE COURT

(Given by William Young P)

Table of Contents

Para No
Introduction [1]
How the problem arose [10]

The mistaken belief of the Vining staff that the original water
permits were still available [10]

Misrepresentations made by Vining agents as to the water permits [18]

The failure by Gascoigne Wicks to make appropriate inquiries
as to the available water entitlements [19]

The terms of the agreement [21]

The approval of the agreement by the solicitors [26]

Due diligence [29]

What happened on settlement [34]

Missed warning signals [36]
The liability of the Moorhouses to AJVL [37]

Overview [37]

Did the agents of the Moorhouses misrepresent the
position as to the water entitlements? [39]

Was AJVL induced to enter the contract as a result? [45]

The quantum of damages [54]

Contributory negligence [64]
The liability of the MDC to AJVL [68]

Overview [68]

Was the information held by the MDC as to the water permits
subject to s 44A of LGOIMA? [72]

Does the MDC have immunity from suit under s 41 of LGOIMA? [79]

Did the MDC owe a duty of care in relation to the LIM? [92]

Did AJVL suffer any loss and if so what was the quantum? [98]
Contribution and / or apportionment between the Moorhouses
and the MDC [114]

Overview [114]

Section 17 of the Law Reform Act 1936 [118]

The 50:50 apportionment [123]
Apportionment Vining / Gascoigne Wicks [126]

Costs [130]

The orders [134]

Introduction

[1] David and Gillian Moorhouse owned “Altimarloch”, a farm property in the Awatere Valley, Marlborough. They held three resource consents entitling them to take class A, B and C water. We will refer to these resource consents as water permits and the underling rights as entitlements. Although not strictly running with the land, these entitlements were able to be transferred. The class A entitlements (amounting to 1,500 cubic metres per day) were able to be drawn directly from the Altimarloch stream. They were far more significant than the class B and C entitlements, which permitted the taking of water for storage purposes only.
[2] The Moorhouses subdivided the property and, in January 2001, sold part to McNaught and Walker Limited (MWL) for development as a vineyard and olive grove. Pursuant to this transaction, the Moorhouses transferred to MWL all their class B entitlements and half of their class A entitlements. This transfer meant that their class A entitlements were reduced to 750 cubic metres of water a day.
[3] Pursuant to an agreement for sale and purchase of 20 February 2004, the Moorhouses sold the balance of the property to Altimarloch Joint Venture Ltd (AJVL), a company associated with Mr Warren McNabb. Mr McNabb also had viticultural ambitions and was naturally interested in the availability of water. In circumstances which will be discussed in more detail later in this judgment, he was led to believe that the class A, B and C entitlements originally held by the Moorhouses would be transferred with the balance of the land.
[4] Soon after settlement, Mr McNabb discovered that half of the class A and all of the B entitlements had been transferred to MWL. So AJVL was able to obtain only the balance of the class A entitlements (ie the right to take 750 cubic metres a day) and the class C entitlements.
[5] The upshot was a claim for damages by AJVL against the Moorhouses premised on the contention that they, by their real estate agent, Vining Realty Ltd (Vining), and by their solicitors, Gascoigne Wicks, had represented to Mr McNabb and AJVL that the original water permits were available (and as a corollary would be transferred with the land). As well, AJVL sued the Marlborough District Council (MDC). This latter claim involved a number of causes of action which focused on alleged misrepresentation by the MDC in a Land Information Memorandum (LIM) it provided as to the water permits.
[6] In turn, the Moorhouses joined Vining and Gascoigne Wicks as third parties.
[7] The case produced two judgments delivered by Wild J, the first on 3 July 2008[1] and the second on 23 March 2009.[2] In the result, he entered judgment as follows:

(a) for AJVL under s 6 of the Contractual Remedies Act 1979 against the Moorhouses based on misrepresentations as to water permits made by their agents, Vining and Gascoigne Wicks;

(b) for AJVL against the MDC in tort for negligent misrepresentation and breach of statutory duty in relation to the LIM;

(c) for damages, as between AJVL and the Moorhouses of $1,055,907.16;

(d) for damages, as between AJVL and the MDC, of $400,000;

(e) for the Moorhouses against the MDC for $200,000 by way of contribution (representing half the common liability);

(f) that Vining and Gascoigne Wicks indemnify the Moorhouses for the entire amount of the net judgment against them apportioned as to 80 per cent against Vining and 20 per cent against Gascoigne Wicks;

(g) that the costs of AJVL on a 3B basis be paid by the Moorhouses and the MDC in the same proportions as their liability to AJVL and that Vining and Gascoigne Wicks indemnify the Moorhouses in relation to costs in the same proportions as earlier fixed, that is 80 per cent and 20 per cent respectively;

(h) that Vining and Gascoigne Wicks meet the Moorhouses’ costs on an indemnity basis.

[8] Although Vining initially challenged the Judge’s conclusion that the Moorhouses should be fully indemnified by Vining and Gascoigne Wicks, that argument, in the end, was not pressed. All other aspects of the Judge’s findings, as just summarised, are in issue.
[9] A number of procedural problems complicate our assessment of the appeals. These include the staged nature of the adjudicative process in the High Court, the lodging of appeals in relation to both judgments delivered by Wild J, changes of counsel for Vining and the MDC and, perhaps associated with this, some changes of (or developments in) position resulting in some arguments being advanced before us which were either not before the High Court or not signalled in timely notices of appeal. Further, there is room for debate as to the extent to which Vining and Gascoigne Wicks can challenge the judgment in favour of AJVL on the basis of arguments which might have been, but were not, the subject of appeal by the Moorhouses. All in all, there is considerable scope for disagreement as to whether all arguments which were put to us are legitimately on the table. Given our conclusions as to the substance of the disputed arguments and in an attempt to keep this judgment as simple as possible, we will address the merits of the contentions as advanced, at least where this is relevant to the ultimate outcome of the appeals.

How the problem arose

The mistaken belief of the Vining staff that the original water permits were still available

[10] The Vining agents involved (Mr John Hoare and Ms Jackie Herkt) had previously been involved as agents for the Moorhouses on the sale to MWL. As we have noted, this sale encompassed half of the class A entitlements and all of the class B entitlements. At the time of the sale to MWL, at least Mr Hoare knew that some of the water entitlements were being transferred. Unfortunately, when Mr Hoare and Ms Herkt embarked on the marketing of the balance of the Altimarloch land in late 2003, neither remembered this aspect of the earlier transaction. Equally unfortunately, they did not make direct inquiry of the Moorhouses as to the current situation.
[11] In January 2004, Mr Vern Harris, a registered forestry consultant who was advising Mr McNabb on the proposed acquisition and specifically the suitability of the property for viticulture, spoke to Ms Herkt and asked for copies of all relevant water permits. She arranged for her office assistant, Ms Coyle, to make a search of the relevant MDC records.
[12] When she was at the offices of the MDC, Ms Coyle signed a disclaimer in these terms:

Council has made the information available under Sections 10 to 18 (inclusive) of the Local Government Official Information and Meetings Act 1987 ONLY. Council does not warrant its accuracy and disclaims the information. No person should rely on any information without seeking appropriate independent and professional advice. The information provided does not constitute a Land Information Memorandum or any similar document.

[13] The resulting search produced copies of the three water permits but with no indication that any of the underlying entitlements had been transferred. How this happened was not the subject of direct evidence at trial (as neither Ms Coyle nor the MDC officer she dealt with gave evidence). It seems reasonably clear, however, that the problem lay in both the way in which the MDC maintained its records and also the incomplete nature of the search which was carried out.
[14] The MDC is a unitary authority meaning that it exercises the statutory functions of both a territorial authority and a regional council. Accordingly, the issuing of resource consents to take water, normally the responsibility of regional councils, is, within the district of the MDC, the responsibility of the MDC.
[15] The MDC maintains property files in relation to all the properties in its district. Each contains copies of correspondence, building consents and other relevant material which relate to that property. The property file for Altimarloch contained copies of the class A, B and C water permits. The MDC also maintains resource consent files.
[16] Unfortunately there was some inconsistency (or perhaps just a change of practice) in the way in which the MDC kept resource consent records on its property files. Originally copies of resource consents were kept on the property files. This is why the property file for Altimarloch contained the three original water permits. But by 2004, the system had changed. The primary records in relation to resource consents were maintained on the resource consent files and resource consent information on the property files was not kept current.
[17] As a result, a search of the property file would have revealed copies of the three original water permits but not the changes which resulted from the sale to MWL and the transfer to it of some of the water entitlements. From this, and the fact that Ms Coyle obtained copies of the three original water permits, it seems reasonable to infer that she searched only the property file and not the resource consents file.

Misrepresentations made by Vining agents as to the water permits

[18] Wild J held that Vining’s agents misrepresented the position as to the water permits on three principal occasions:

(a) On 14 January 2004, when they supplied copies of three permits to Mr Harris. These were the documents obtained by Ms Coyle in the search which Ms Herkt commissioned after being spoken to by Mr Harris. In the circumstances the supply of copies of the water permits, in the context of the request made by Mr Harris, amounted to a representation that those water permits were current.

(b) When Mr Hoare later sent copies of the agreement for sale and purchase to Gascoigne Wicks (as solicitors for the Moorhouses) and Wain & Naysmith (the solicitors for AJVL / Mr McNabb) he enclosed copies of the three water permits. Again this was a representation that the three water permits were still current.

(c) In the course of a due diligence process provided for under the agreement for sale and purchase (see cl 18.2(c) below at [23]) Ms Herkt had a discussion with Mr Harris in which, on the basis of the Judge’s findings of fact, she said enough to reassure him as to the existence of the three original water permits.

The Judge also relied on more general representations made by Mr Hoare in the course of a property visit in late January 2004 when Mr Hoare told Mr McNabb that Altimarloch had ample water for irrigation purposes.

The failure by Gascoigne Wicks to make appropriate inquiries as to the available water entitlements

[19] Mr Sawyer of Gascoigne Wicks acted for the Moorhouses on the sale of the balance of the property.
[20] Although Gascoigne Wicks had also acted on the earlier sale to MWL, Mr Sawyer had not been involved. He did not check the file in relation to that sale and did not inquire directly of the Moorhouses as to the water permits they held. Instead, based on the copies of the water permits supplied to him by Vining along with the signed agreement, he formed the view that the original water permits were still available.

The terms of the agreement

[21] Mr Hoare prepared the agreement for sale and purchase which was dated 20 February 2004.
[22] Relevantly the agreement provided that all water rights relating to the property were to be transferred on settlement, but it was not specific as to their extent. This lack of specificity left scope for misunderstanding as between the Moorhouses, who knew the true position as to the water permits, and Mr McNabb who was acting under the provisional assumption (as we will explain) that the original class A, B and C water rights would be transferred.
[23] The agreement for sale and purchase was subject to a number of conditions:

18.1 This agreement is subject to and conditional upon the purchaser completing at their cost due diligence in relation to the subject property to the purchaser’s satisfaction of being satisfied, and the purchaser’s absolute and sole discretion that the outcome of due diligence enquiries in relation to property on or before 12 March 2004. The vendor will grant the purchaser and their appointed agents access to the subject property to complete such reports.

18.2 Due diligence enquiries may include but are not limited to:

(a) Viticulture inspection and feasibility reports.

(b) Marlborough District Council LIM report.

(c) Water issues including existing water easements, availability of advice to take water for irrigation purposes and the transferability of those rights to the purchaser.

(d) Obtaining sufficient finance to complete this transaction on terms and conditions satisfactory to the purchaser.

(e) Any other matters concerning the viability of the purchasers may be relevant to the Purchaser.

19 This agreement is subject to and conditional upon the vendor’s and the purchaser’s solicitor sighting and approving this agreement as to the title, form and “further terms of sale” including any easements and any encumbrances that may transfer to the purchaser with the title on or before 4 pm within five (5) working days from the date of this agreement.

[24] It is important to understand the staged nature of the contractual process:

(a) Clause 19 meant that the agreement was conditional upon the solicitors for the parties approving it. Given the issues the solicitors were entitled to take into account in deciding whether to give or withhold approval, there was substantial practical scope for either party to opt out.

(b) Once approved under cl 19, the cl 18 due diligence condition left AJVL / Mr McNabb with a further and substantial opportunity to opt out.

[25] The staged nature of the agreement provided a context in which Mr McNabb and his advisors were content initially to work on what they recognised was only a provisional assumption as to water entitlements. Mr Harris, for instance, had reservations as to whether the information supplied to him by Ms Herkt on 14 January 2004 was necessarily accurate, but given the conditional nature of the agreement there was no need for these reservations to be formally addressed either before the agreement was entered into or before it was approved under cl 19. This was because the due diligence process provided ample opportunity for full investigation.

The approval of the agreement by the solicitors

[26] Both Mr Naysmith and Mr Sawyer approved the agreement in terms of cl 19 on 27 February.
[27] In the case of Mr Naysmith it was because he considered that the position of AJVL was adequately preserved under the due diligence provision. Mr Naysmith thus did not see a need to investigate the extent of the water entitlements in advance of the due diligence process.
[28] The approval of the agreement by Mr Sawyer is rather more significant. Given that the copies of the agreement which were sent to the solicitors by Mr Hoare were accompanied by copies of the three original water permits, approval by Mr Sawyer of the agreement might be thought to imply that the entitlements associated with those permits would be transferred with the land. This is particularly so as there was some correspondence between him and Mr Naysmith at the time which made it abundantly clear that the existence of the three permits was important to the purchaser. The Judge therefore concluded that Mr Sawyer’s confirmation of the agreement was a further representation as to the availability of the three original water permits. This was not formally challenged on appeal, albeit that, in circumstances to which we will refer later, counsel for Gascoigne Wicks took issue with the Judge’s finding.

Due diligence

[29] Mr Naysmith managed to satisfy himself that, at least, the class A water permit was still available. As noted, he received copies of the three water permits from Mr Hoare after the agreement was signed. Further, he probably derived some comfort from the fact that Mr Sawyer had approved the agreement. Most significant, however, in this context was a LIM which he obtained from the MDC on 5 March 2004. This listed the original class A and C water permits as being associated with the land and attached copies of both.
[30] This LIM was issued as a result of a mistake made by the MDC employee who provided it. She plainly searched the right file, namely the consents file. But she overlooked the transfer of half of the entitlements associated with the original class A water permit.
[31] The terms of this LIM could, and perhaps should, have alerted Mr Naysmith to the likelihood of a misunderstanding about the water permits. On the basis of his at least provisional understanding of the situation, the Moorhouses were to transfer the original class A, B, and C water permits. But the LIM (accurately as we now know) indicated that there were no class B entitlements. This incongruity might be thought to have justified a further direct inquiry of the MDC (or perhaps of the Moorhouses) to see whether there was indeed a misunderstanding. But Mr Naysmith did not make such inquiry. Rather he discussed the situation with Mr Harris and left it to him to resolve.
[32] Mr Harris did not make direct inquiry of the MDC. Instead he spoke to Ms Herkt. On the basis of the findings of fact made by the Judge, Ms Herkt said enough to persuade him that there was no problem over the continuing availability of the original water permits.
[33] At the end of the exercise Mr Harris was satisfied as to the position concerning the water rights and told this to Mr McNabb. As a result, the agreement was confirmed.

What happened on settlement

[34] There is no doubt that AJVL and Mr Naysmith proceeded to settlement on the basis that the three original water permits would be transferred and transfers of them were prepared by Mr Naysmith and sent to Mr Sawyer for execution by his client.
[35] When Mr Sawyer had the Moorhouses in his office to sign the transfer of the land, he forgot to get them to sign the transfers of the water permits which Mr Naysmith had sent to him. He wished to avoid what he assumed would merely be the awkwardness of getting them back into his office to sign the transfers. So he took the short cut of forging their signatures on the transfers, which he handed over on settlement. We were told by counsel that his actions are now the subject of disciplinary proceedings.

Missed warning signals

[36] There were a number of warning signals which were missed by Mr McNabb and his advisors:

(a) A valuation obtained by the Moorhouses referred to the correct position as to the class A entitlements (in terms of 750 cubic metres of water which could be taken) and this was made available to the valuer retained by the McNabb interests. Unfortunately, Mr McNabb and his advisers simply concluded that their valuer had made a mistake. Mr Harris initially was alert to the possibility that some of the water entitlements may have been transferred earlier but his concerns as to this seem to have been allayed by the LIM and further discussions with Ms Herkt.

(b) The class C water permit was subject to a condition which referred to the then proposed subdivision which preceded the sale to MWL. As it turned out, the class C water permit was not affected by the sale to MWL, so any inquiry directed solely to that issue (ie whether the class C water permit was still held) would have produced a reassuring result. As well, because AJVL did not intend to utilise water storage, the class C water permit was of little interest to its advisers.

(c) The three water permits referred to an irrigated area which exceeded the area being transferred to AJVL, a point noted by Mr Hoare when he sent copies of the water permits to the solicitors along with copies of the executed agreement for sale and purchase. The significance of this incongruity was not picked up by anyone.

(d) The property which AJVL acquired was subject to an easement in favour of MWL which in fact was referable to the water entitlements which had been transferred to that company. Although Mr Naysmith made inquiries of Mr Hoare and also wrote to Mr Sawyer about this easement, no one got to the bottom of this issue and its significance was thus overlooked.

(e) The fact that the LIM did not refer to class B entitlements at least raised a question as to whether there had been a transaction affecting those entitlements. But Mr Naysmith left the resolution of this issue to Mr Harris and Mr Harris was in the end satisfied by reason of his discussion with Ms Herkt. That he was able to be satisfied on this score so easily was probably a function of the importance he placed on the class A entitlements and the relative insignificance of the class B entitlements.

The liability of the Moorhouses to AJVL

Overview

[37] The Moorhouses do not appeal against the judgment entered against them in favour of AJVL. This raises some procedural problems. Vining did not initially challenge the findings made against the Moorhouses but subsequently sought leave to amend its notice of appeal to raise arguments involving contributory negligence and reasonable reliance. Gascoigne Wicks did not appeal against the first of the two judgments delivered by Wild J but in their appeal against the second judgment and more extensively in their reply submissions, sought to challenge findings made by the Judge in the first judgment. We do not propose to engage directly with these procedural questions but rather will address the substantive merits of the underlying arguments unless the result, one way or the other, is not material to the outcome of the case.
[38] The judgment in favour of AJVL against the Moorhouses is based on s 6(1)(a) of the Contractual Remedies Act which provides:

6 Damages for misrepresentation

(1) If a party to a contract has been induced to enter into it by a misrepresentation, whether innocent or fraudulent, made to him by or on behalf of another party to that contract—

(a) He shall be entitled to damages from that other party in the same manner and to the same extent as if the representation were a term of the contract that has been broken; ...

The Judge found against the Moorhouses on the basis that the representations as to the water permits induced AJVL to enter the contract and were therefore to be treated as if “a term of the contract”; in other words, a warranty. This meant that AJVL was entitled to recover, as damages, the cost of obtaining water that was the functional equivalent of what it would have been entitled to if the representations had been true.

Did the agents of the Moorhouses misrepresent the position as to the water entitlements?

[39] In his first judgment, Wild J found in favour of AJVL and against the Moorhouses based primarily on representations made by Vining to AJVL and its agents. These were made when:

(a) Vining obtained copies of the A, B and C water permits from the MDC in January 2004 and sent them to Mr Harris. This was in response (on the findings of fact made by the Judge) to a request for the agent to send to him all consents relative to the property.

(b) Vining attached the three water permits to the agreement for sale and purchase and sent this composite document to AJVL’s solicitors (Wain & Naysmith) stating that the three water permits were those “pertaining to the property”.

(c) After the LIM was obtained by Mr Naysmith, Ms Herkt, in her discussion with Mr Harris, reassured him as to the water entitlements.

As well, and as already noted, the Judge also relied on more general representations made by Mr Hoare in the course of a property visit in late January 2004 when Mr Hoare told Mr McNabb that Altimarloch had ample water for irrigation purposes. In relation to Gascoigne Wicks, the Judge concluded that representations as to the water permits had been made through a combination of Mr Sawyer (of Gascoigne Wicks) approving the agreement on 27 February pursuant to clause 19 and subsequently handing to AJVL’s solicitors executed transfers to the water permits on settlement on 30 July.

[40] Vining makes no challenge to the finding that there were misrepresentations and Gascoigne Wicks did not appeal against the first judgment (which is the judgment in which the Judge made the finding that Mr Sawyer’s 27 February letter was a misrepresentation). In his reply submissions, however, Mr Barton, for Gascoigne Wicks, sought to argue that this finding was wrong. Given Mr Barton’s submission as to the 27 February letter and more particularly some down-stream arguments to which we will later refer, there are certain features of those findings which we should discuss.
[41] We note that some of the representations relied upon by the Judge were made after the agreement for sale and purchase had been signed. In the course of the hearing we suggested that on a literal approach to the concept of what constitutes the entering into a contract for the purposes of s 6 of the Contractual Remedies Act, such representations might be immaterial.
[42] In response to this suggestion, counsel took us to Mt Pleasant Estates Co Ltd v Withell where Tipping J took a broad approach to liability under the Act and held that a representation which was made after a conditional agreement was entered into, and which was material to the decision made by one of the parties to confirm the contract was actionable: [3]

Section 7(3) of the Contractual Remedies Act 1979 says that a party to a contract may cancel the contract if that party has been induced to enter into it by a misrepresentation. Mr Whiteside submitted that even if there had been a misrepresentation it did not induce Mr Withell to enter into the contract. The basis of the argument was that Mr Withell had already entered into the contract before the misrepresentation was made.

This is so at one level in that the contract was signed on 13 February, yet the representation, if made at all, was not made until 24 February. Mr Hughes-Johnson urged me to apply a purposive construction of the concept of entry into a contract for present purposes. Neither side referred to any authority and I have not been able to find any myself.

The contract when first entered into was conditional in a number of respects. In particular it was conditional upon Mr Mulligan's approval of title. In view of the problem with the restrictive covenant Mr Mulligan would have been perfectly within his rights not to approve title. On its face the title prevented Mr Withell from doing what he wished to do, namely construct two units on the land. Mr Wood's letter of 24 February must clearly have influenced Mr Mulligan in approving title, albeit on a conditional basis. At the time when Mr Mulligan had to decide whether to approve title Mr Withell had not unconditionally entered into the contract. He was not irrevocably bound to proceed. Mr Mulligan's action on his behalf in approving title was a step along the way towards reaching an unconditional contract or, putting it another way, irrevocably entering into the contract.

In my view a misrepresentation inducing a party to take a step towards reaching an irrevocable or unconditional contract can properly be regarded for the purposes of s 7(3) as being a misrepresentation inducing the party to enter into the contract. In most cases entry into a contract is not a single discrete event but rather a process whereby terms are negotiated and conditions are fulfilled. Any misrepresentation materially influencing a party along that continuum is in my view capable of being a misrepresentation inducing that party to enter into the contract.

I can see no difference in principle between a misrepresentation inducing a party to sign a conditional contract and a misrepresentation inducing a party to take a step towards making that contract unconditional. Indeed the latter situation is in a sense closer to the point at which the party becomes irrevocably bound than is a misrepresentation inducing entry into a conditional contract. For those reasons, had there been a misrepresentation, I would have concluded, as did the Judge, albeit without any reasoning, that the misrepresentation did induce Mr Withell to enter into the contract.

[43] We propose to follow that approach.
[44] There are two issues which arise in relation to the actions of Mr Sawyer:

(a) The first involves the question whether his letter of 27 February in which he approved the agreement was, in context, a misrepresentation as to the water permits. Mr Barton’s challenge to this finding was belated to say the least but was primarily in the context of the debate as to how liability should be apportioned between Gascoigne Wicks and Vining. We accept that it is open to argument that the letter was not a misrepresentation but we see no need to reach a final view on this point. The liability judgment as between AJVL and the Moorhouses is not under challenge. Further, the liability of Gascoigne Wicks to the Moorhouses does not turn on whether the 27 February letter was a misrepresentation. On the other hand, Mr Sawyer’s approval of the agreement is a material part of the context in which Mr McNabb and his advisers came to act on the belief that the three original water permits were still available.

(b) Mr Sawyer’s actions in forging the signatures of his clients to the transfers of the water permits and tendering the forged documents on settlement were misrepresentations but came too late to be directly relevant under s 6, as the contract was well and truly unconditional by this time. On the other hand, they are material to apportionment.

Was AJVL induced to enter the contract as a result?

[45] It is perfectly plain that AJVL entered into the contract on the basis and under the understanding that the three original water permits were still held and, at least in part, this was because of the misrepresentations just referred to. But Vining, supported rather belatedly by Gascoigne Wicks, maintain that, nonetheless, AJVL was not thereby induced to enter the contract. This argument is based on two overlapping contentions, namely that:

(a) in the particular business and contractual matrix, AJVL did not relevantly rely on the misrepresentations; and

(b) any reliance was unreasonable.

[46] We note in passing that there is no explicit requirement in s 6 for reliance by a representee to be “reasonable” in the sense that the misrepresentation would have induced a reasonable person to enter the contract. On the other hand, the cases suggest that there is such a general reasonableness requirement.[4]
[47] More specifically, Vining and Gascoigne Wicks rely on the following considerations:

(a) AJVL instructed Mr Harris to advise it on the suitability of the land to be acquired for development for viticulture;

(b) the agreement for sale and purchase was subject to approval by the solicitors on both sides and also to due diligence which extended to the purchaser satisfying itself as to the relevant rights;

(c) once AJVL had signed the agreement, its instructions to its solicitors (Wain & Naysmith) were specific as to inquiry concerning the water rights;

(d) the key permit was for water right A (because it enabled water to be drawn on a daily basis);

(e) prior to becoming committed to the agreement, AJVL had received conflicting information as to the availability of water permits;

(f) on this basis it was not reasonable for AJVL to rely on the Vining’s representation because it should have been obvious to AJVL that Vining was not the official or original source of the information and was at best passing on second hand information;

(g) further, the terms of the contract show that AJVL did not rely on the Vining representations (in that it specifically contracted for due diligence requirements); and

(h) the LIM received by AJVL from the MDC superseded any oral or written statements made by materials earlier provided by Vining.

[48] It is clear on the evidence that when the agreement was entered into, Mr McNabb believed that the original three water permits were available to be transferred and this was primarily because Vining had supplied the three permits to Mr Harris. That the agreement was subject to a due diligence clause does not detract from this conclusion. That clause was just part of the bundle of rights which made up the agreement into which he entered. This approach, however, is reasonably narrow because it focuses on the position at the time the agreement was signed. At this time Mr McNabb / AJVL intended that the question of water entitlements should be the subject of the due diligence process. The implication of this is that their belief as to the original three water permits’ availablility was only provisional, in the sense of being able to be displaced by the results of further investigations which were to be carried out.
[49] The strength of the arguments for Vining and Gascoigne Wicks on this issue lies in the apparent unfairness of holding the Moorhouses to representations made by their agents when Mr McNabb / AJVL reserved the right to inquire into the availability of water. This is all the more so given that Mr McNabb and AJVL, through their agents, actually did make inquiries into the availability of water and only confirmed the contract when satisfied on this point.
[50] Complicating this consideration, however, is the reality that the due diligence process was influenced by three post-contract representations made on behalf of the Moorhouses:

(a) Mr Hoare attaching further copies of the water permits to the copies of the agreements for sale and purchase which he sent to the solicitors;

(b) Mr Sawyer approving the contract; and

(c) the last discussion which Mr Harris had with Ms Herkt.

[51] Although we see this aspect of the case as finely balanced, we have in the end come to the conclusion that the Judge was right to hold that AJVL and Mr McNabb were relevantly induced by the misrepresentations to enter the contract:

(a) For the reasons given by Tipping J in Withell we accept that post-contract but pre-confirmation representations can give rise to liability under s 6 of the Contractual Remedies Act.

(b) There is no requirement under s 6 for the representation to be the only basis upon which the representee relevantly acted.[5] The primary reasons why Mr McNabb and his advisors believed that the three original water permits were available were, on the one hand, the provision (on two occasions) by Vining of copies of the original permit, the Gascoigne Wicks approval of the agreement and Ms Herkt’s assurances to Mr Harris and, on the other hand, the inclusion of the class A water permit in the LIM. There was a distinct and substantial causative link between the misrepresentations made by the Moorhouses’ agents and the resulting understanding of those on the AJVL side of the transaction as to water entitlements.

(c) While it was perhaps unwise (certainly with the benefit of hindsight) of Mr Harris to resolve his doubts over the water permit situation by going back to Ms Herkt, she was, for these purposes, standing in the shoes of the Moorhouses. In this context, it does not lie in the mouths of the Moorhouses (although in reality in the mouth of Vining) to assert that Mr Harris was not entitled to rely reasonably on what was said.

[52] On the related issue of reasonableness, we accept that there were a number of indications which might have alerted those on the AJVL side of the transaction to the possibility that there was a problem over the water entitlements. But we nevertheless agree with the Judge’s finding that reliance on the relevant representations was reasonable.
[53] There are four key reasons for this latter conclusion:

(a) Under the Contractual Remedies Act a representation of the kind made operates in effect as a warranty. While this is subject to reliance on the representation being reasonable, where a clear and unequivocal representation is made, the representee should normally be able to take it at face value.

(b) To put this another way (and to repeat a point just made), it does not normally sit well in the mouth of someone who has been guilty of misrepresentation to blame the other person for believing the misrepresentation.

(c) Broadly we think that it was reasonable for the AJVL team to rely on Vining’s representations on the basis that such significant and explicit representations would not have been made without them having checked with the Moorhouses.

(d) Vining was part of the process from beginning to end. It was Vining which first asserted that the three original water permits were still held. And it was the discussion between Ms Herkt and Mr Harris which finally laid to rest Mr Harris’s doubts on this score.

The quantum of damages

[54] It will be recalled that the purchase price was $2.675m. Wild J found that the value of the land with half the class A and all the class C entitlements (ie as acquired) was $2.55m. Its value, assuming the original water permits were still in place, as assessed by the Judge, was $2.95m. The major problem with this aspect of the case is that the cost of acquiring water equivalent to that available under the original water permits considerably exceeded the detriment loss of $125,000 (ie $2.675m – $2.55m) and the difference in value between what was promised and what was supplied of $400,000 (ie $2.95m – $2.55m).
[55] In his first judgment, the Judge held that the appropriate measure of damages was the cost of the construction of a storage dam large enough to provide the same amount of irrigation as would have been available if the original class A water entitlements (ie carrying the right to take 1,500 cubic metres a day) had been transferred to AJVL. After the first hearing, but before judgment was delivered, an opportunity arose for AJVL to acquire some additional class A water entitlements (carrying the right to take another 400 cubic metres a day). This meant that the storage dam required to make up the difference (now only 350 cubic metres a day) was smaller than would otherwise have been the case. Overall, the costs of acquiring the additional water more than exhausted the savings achieved on the smaller dam. But there were timing reasons (associated with likely delays in building the dam and the immediate need for water) which meant that the course proposed by AJVL was reasonable. Indeed, it was not argued in the High Court that the damages should be capped by the cost of a larger dam.
[56] The Judge’s eventual award was made up as follows:

(a) Cost of acquiring additional water entitlements $320,000.00

(b) Construction of storage dam $661,660.00

(d) Irrigation and pumping equipment $52,689.16

TOTAL $1,055,907.16

[57] The challenge to this part of the judgment was mounted by Gascoigne Wicks. In general the complaint was that the Judge adopted a ‘Rolls Royce’ rather than a pragmatic approach. More particularly, Mr Barton contended that the Judge should have awarded damages on a diminution in value basis (which would have produced a much smaller sum) or alternatively by attributing a value to the class A water entitlements which were foregone. As well there was at least a suggestion (if perhaps not a submission) that the Judge should not have fixed damages on the basis of the information supplied but should have gone back to the parties on the basis that the cost of constructing a dam is affected by the fluctuating cost of diesel.
[58] On the diminution argument, Mr Barton relied particularly on the decision of the House of Lords in Ruxley Electronics Ltd v Forsyth[6] which concerned the construction of a swimming pool which was not as deep as specified. In issue was whether the proper measure of damages was loss of amenity (£2,500) or reconstruction of the pool to the correct depth (£21,560) with the House of Lords preferring the former approach.
[59] Mr Barton, in the alternative, argued that the cost to AJVL of acquiring some of the missing class A entitlements could fairly be taken as indicating the market value of those entitlements and that damages should be awarded accordingly.
[60] We accept that a plaintiff cannot always insist on being placed in precisely the same situation as would have obtained if the contract had been correctly performed and indeed that this is likely to be particularly so in building cases where the cost of performance may far exceed any realistic assessment of the loss to the plaintiff. That said, Ruxley is fairly regarded as an exception to the general rule that the purpose of an award of damages is to place the injured party as nearly as possible in the position it would have been in if the contract had been performed. In other words, the primary measure of damages is expectations based.
[61] In this case, the unchallenged evidence was that AJVL’s expectations as to the availability of water could only be satisfied by the building of a dam. The only challenge to AJVL’s contention that this was the appropriate measure of damages was based on the contention (no longer relied on) that a dam would be necessary for frost control purposes.
[62] In the subsequent phase of the case – that is after the first judgment – AJVL submitted affidavit evidence as to the costs of the revised proposal. It was not then suggested by Gascoigne Wicks that the wrong measure of damages was being relied on. There was no suggestion of betterment and in particular the arguments now advanced by Gascoigne Wicks were not put forward.
[63] There has thus been something of an attempt to run a new case on appeal and this provides a context which is inauspicious (from the viewpoint of Gascoigne Wicks) for an evaluation of their arguments, albeit that, as already explained, we are prepared to entertain them. The truth is that an award of damages on either of the bases contended for by Gascoigne Wicks would not satisfy AJVL’s expectations. The requirement for irrigation water is real and tangible and there is no obvious reason why AJVL should be not be compensated for the actual cost of obtaining the functional equivalent of what was warranted (via s 6 of the Contractual Remedies Act) as being available. And as to the time at which the cost of building a dam should be assessed, there comes a time (and we are well satisfied that this time has been arrived at in this case) when the music has to stop and a final decision is made.

Contributory negligence

[64] In the High Court Wild J was prepared to entertain a contention that the damages otherwise payable to AJVL ought to be reduced to allow for contributory negligence on the part of AJVL albeit that he rejected this argument on the facts.
[65] On the issue whether a defence of contributory negligence might be available, the Judge said this in his second judgment:

[102] Mr Wylie contended that contributory negligence is not a defence available to the Moorhouses, because they are sued only in contract. The defence is available only to a defendant sued in tort, and the Moorhouses are not: Rowe v Turner Hopkins & Partners [1980] 2 NZLR 550 at 552-556; Todd, The Law of Torts in New Zealand 4th Edition 2005 pp 857-8, Blanchard, Civil Remedies in New Zealand 2003 pp468-469.

[103] I do not accept this. As I find his reasoning persuasive, I accept the contrary view expressed by Cooke P in Mouat v Clark Boyce [1992] 2 NZLR 559 (CA) at 564-565, albeit obiter.

[104] In that passage Cooke P expressed his agreement with the English Court of Appeal’s decision in Forsikringsaktieselskapet Vesta v Butcher [1989] UKHL 5; [1989] AC 852 that the (materially similar, English) Contributory Negligence Act applies in cases of concurrent sources of duty. The English Court had affirmed the approach of Hobhouse J at first instance ([1986] 2 All ER 488 at 508), analysing the application of the Act to contract actions into three categories:

(1) Where the defendant’s liability arises from some contractual provision which does not depend on negligence on the part of the defendant.

(2) Where the defendant’s liability arises from a contractual obligation which is expressed in terms of taking care but does not correspond to a common law duty to take care which would exist in the given case independently of contract.

(3) Where the defendant’s liability in contract is the same as his liability in the tort of negligence independently of the existence of any contract.

[105] Subsequent cases such as Barclays Bank plc v Fairclough Building Ltd [1995] 1 All ER 289 (CA) and Bristol & West Building Society v Kramer & Co [1995] NPC 14 (HC), have held, in not dissimilar circumstances to those here, that contributory negligence does not apply to Hobhouse J’s category (1), where the breach is solely of that contractual provision.

[106] I consider this case is in Hobhouse J’s category (2). I accept that the Moorhouses are sued, for damages for misrepresentation, only pursuant to s6 Contractual Remedies Act 1979. Section 6(1) provides that the plaintiff is entitled to damages from the Moorhouses “in the same manner and to the same extent as if the representation were a term of the contract that has been broken”. I note also that s6(1)(b) expressly provides that the plaintiff is not entitled to damages for deceit or negligence in respect of the misrepresentation. Thus, concurrent liability – or at least concurrent recoverability – in negligence is expressly proscribed. However, the misrepresentations sued upon by the plaintiff are essentially negligent misrepresentations. They were made to the plaintiff by the Moorhouses’ agents Bayleys and GW, both of whom admit that they owed a tortious as well as a contractual duty of care to the Moorhouses. A further point is that s9 Contractual Remedies Act effectively permits the Court to hold the plaintiff partly responsible for its own loss, by giving a wide discretion as to the amount or form of relief.

[66] In respectful disagreement with the Judge, we consider that the present case fits squarely into Hobhouse J’s category (1). Since liability under s 6 of the Contractual Remedies does not turn on negligence, it is beside the point that Vining and Gascoigne Wicks were negligent. And since the present issue is between AJVL and the Moorhouses, it is likewise beside the point that Vining and Gascoigne Wicks owed duties of care to the Moorhouses. Section 9 of the Contractual Remedies Act to which the Judge referred addresses relief which can be awarded on cancellation of a contract and does not apply in the present context.
[67] Because we see the case as being in category (1), contributory negligence was not available as a defence.

The liability of the MDC to AJVL

Overview

[68] This aspect of the case turns on a LIM provided by the MDC to AJVL’s solicitors on 5 March 2004. As noted, this LIM referred to the class A and class C water permits and attached copies of both. The LIM did not refer to the transfer of half of the class A water entitlements to MDL and, in this respect, was in error. At least by implication, however, it indicated that no class B water permits were held (as none were mentioned).
[69] AJVL invoked three causes of action against the MDC; negligence, breach of the statutory duty imposed by s 44A of the Local Government Official Information and Meetings Act 1987 (LGOIMA) and breach of the Fair Trading Act 1986.
[70] We propose to focus on the first cause of action. The second cause of action (breach of statutory duty) is problematic. There is nothing in the statutory context to suggest an absolute and indefeasible duty to provide information. Such a duty is seldom imposed except where personal safety is involved. Further, if such a duty had been intended, we would have expected its metes and bounds to have been clearly defined along with a detailed specification of the consequences. Indeed at trial, counsel for AJVL maintained that the statutory duty relied on was merely “a statutory duty to take care”.[7] On this basis, the second cause of action is simply the first cause of action with its fingers crossed. It does not warrant separate consideration. As well, the Fair Trading Act claim (with its “in trade” requirement)[8] is at best an awkward fit for the LGOIMA statutory context.
[71] The MDC acknowledges that, assuming there was a duty of care, it was negligent and does not argue contributory negligence. In that context, we see the first cause of action as best discussed by reference to the following questions:

(a) Was the information held by the MDC as to the water permits subject to s 44A of LGOIMA?

(b) Does the MDC have immunity from suit under s 41 of LGOIMA?

(c) Did the MDC owe a duty of care in relation to the LIM?

(d) Did AJVL suffer any loss?

Was the information held by the MDC as to the water permits subject to s 44A of LGOIMA?

[72] The LIM procedure is provided for by s 44A of the Local Government Official Information and Meetings Act 1987, which provides:

44A Land information memorandum

(1) A person may apply to a territorial authority for the issue, within 10 working days, of a land information memorandum in relation to matters affecting any land in the district of the authority.

(2) The matters which shall be included in that memorandum are—

(a) Information identifying each (if any) special feature or characteristic of the land concerned, including but not limited to potential erosion, avulsion, falling debris, subsidence, slippage, alluvion, or inundation, or likely presence of hazardous contaminants, being a feature or characteristic that—

(i) Is known to the territorial authority; but

(ii) Is not apparent from the district scheme under the Town and Country Planning Act 1977 or a district plan under the Resource Management Act 1991:

(b) Information on private and public stormwater and sewerage drains as shown in the territorial authority's records:

(ba) any information that has been notified to the territorial authority by a drinking-water supplier under section 69ZH of the Health Act 1956:

(bb) information on—

(i) whether the land is supplied with drinking water and if so, whether the supplier is the owner of the land or a networked supplier:

(ii) if the land is supplied with drinking water by a networked supplier, any conditions that are applicable to that supply:

(iii) if the land is supplied with water by the owner of the land, any information the territorial authority has about the supply:

(d) Information concerning any consent, certificate, notice, order, or requisition affecting the land or any building on the land previously issued by the territorial authority (whether under the Building Act 1991, the Building Act 2004, or any other Act):

(e) Information concerning any certificate issued by a building certifier pursuant to the Building Act 1991 or the Building Act 2004:

(ea) information notified to the territorial authority under section 124 of the Weathertight Homes Resolution Services Act 2006:

(f) Information relating to the use to which that land may be put and conditions attached to that use:

(g) Information which, in terms of any other Act, has been notified to the territorial authority by any statutory organisation having the power to classify land or buildings for any purpose:

(h) Any information which has been notified to the territorial authority by any network utility operator pursuant to the Building Act 1991 or the Building Act 2004.

(3) In addition to the information provided for under subsection (2) of this section, a territorial authority may provide in the memorandum such other information concerning the land as the authority considers, at its discretion, to be relevant.

(4) An application for a land information memorandum shall be in writing and shall be accompanied by any charge fixed by the territorial authority in relation thereto.

(5) In the absence of proof to the contrary, a land information memorandum shall be sufficient evidence of the correctness, as at the date of its issue, of any information included in it pursuant to subsection (2) of this section.
(6) Notwithstanding anything to the contrary in this Act, there shall be no grounds for the territorial authority to withhold information specified in terms of subsection (2) of this section or to refuse to provide a land information memorandum where this has been requested.

(Emphasis added)

[73] The case for AJVL proceeded on the basis that the water permits issued in respect of Altimarloch were within the scope of s 44A(2)(d) as “consent[s], ... affecting the land ... previously issued by the territorial authority”. If so, it was incumbent on the MDC to provide information as to them in the LIM. Despite argument to contrary from the MDC, this contention was upheld by the Judge.
[74] Before us, Mr Goddard QC for the MDC raised the issue again. He sought to draw a distinction between consents issued by a territorial authority as such (which are plainly within s 44A(2)(d)) and consents issued by a unitary authority which would usually be granted by a regional council, including consents to take natural water. A LIM cannot be requested of a regional council. Further, whereas a land use consent issued by a territorial authority attaches to the land, a consent to take water is personal to the holder and can be transferred to any other person (compare ss 122, 134 and 136 of the Resource Management Act 1991). For this reason, he maintained that the water permits did not relevantly affect the land.
[75] Our reasons for rejecting these arguments are broadly similar to those given by the Judge in the High Court and also follow closely the arguments advanced to us by Mr Casey QC for AJVL.
[76] Mr Casey took us to the relevant definitions in s 2 of the Local Government Act 2002 and s 2 of the Resource Management Act. He maintained that under those definitions, a unitary authority is “a territorial authority with additional functions, rather than a regional council or a hybrid”. We agree with that approach, which we think is compelled by the relevant definitions. On that basis (although he also invoked more generally ss 14 and 33 of the Resource Management Act) he maintained that the water permits were relevantly consents issued by a territorial authority, namely the MDC. We agree.
[77] While accepting that the resource consents were not land use consents and thus did not relevantly “attach” to the land, Mr Casey contended that they did nonetheless “affect the land” for the purposes of s 44A(2)(d). As he noted, they were location and area specific. Section 136(2) of the Resource Management Act provides for transferability of permits either:

(a) to any owner or occupier of the site in respect of which the permit is granted; or

(b) to another person on another site, or to another site ...

Again we agree with Mr Casey. We think it clear that the water permits did affect the land.

[78] Accordingly, we are of the view that the water permits held by the Moorhouses were properly within the purview of s 44A(2)(d).

Does the MDC have immunity from suit under s 41 of LGOIMA?

[79] This section provides:

41 Protection against certain actions

(1) Where any official information is made available in good faith pursuant to Part 2 or Part 3 or Part 4 of this Act by any local authority,—

(a) No proceedings, civil or criminal, shall lie against the local authority or any other person in respect of the making available of that information, or for any consequences that flow from the making available of that information; and

(b) No proceedings, civil or criminal, in respect of any publication involved in, or resulting from, the making available of that information shall lie against the author of the information or any other person by reason of that author or other person having supplied the information to a local authority.

(2) The making available of, or the giving of access to, any official information in consequence of a request made under Part 2 or Part 3 or Part 4 of this Act shall not be taken, for the purposes of the law relating to defamation or breach of confidence or infringement of copyright, to constitute an authorisation or approval of the publication of the document or of its contents by the person to whom the information is made available or the access is given.

[80] At trial no attention was given to s 41 of LGOIMA save for an assumption on all sides that it had no application. This was on the basis that the issuing of LIMs is provided for under s 44A (which is in Part 6 of the Act) and is not subject to s 41 (which only applies to official information made available in good faith pursuant to Parts 2, 3 and 4 of the Act).
[81] Before us Mr Goddard maintained that a request for a LIM is a request for official information which, falling within s 10 in Part 2 of LGOIMA, engages both s 44A and Part 2, with Part 2 applying subject to any specific provisions in s 44A to the contrary.
[82] More specifically he noted:

(a) the inclusion of s 44A(6), which precludes refusals of LIM information “notwithstanding anything to the contrary in this Act”, is needed because Part 2 otherwise applies and absent such a provision, such a request might be refused under s 17; and

(b) other provisions of Part 2 obviously apply to a LIM request, including ss 11 (requirement to assist requesters), 12 (transfer of requests) and 13(1A) – (3) as to charges, s 27 (complainants to Ombudsmen) and ss 42 – 43 (general provisions).

[83] Mr Casey contended that this whole argument was not available to the MDC. It was not relied on in the High Court. Accordingly the MDC had not led evidence to show that it had acted in “good faith” in the sense in which that phrase was construed in Mid-Density Developments Pty Ltd v Rockdale Municipal Council.[9]
[84] He also contended that s 44A provides, in a self-contained way, for the obtaining of the information specified in s 44A(2). His take on s 44A(6) is not that it presupposes a connection between s 44A and Part 2 but rather is inconsistent with such a connection.
[85] This issue of interpretation falls to be determined largely by reference to the parliamentary intention in relation to s 44A. In other words, the primary issue is whether the legislature in 1991 (which is when s 44A was introduced), intended that the provision of LIMs should be subject to s 41.
[86] Section 44A was part of the statutory reforms associated with the introduction of the Building Act 1991. That statute dealt rather incoherently with civil liability in the context of defective buildings[10] but there can be no doubt that such liability was in the minds of those who promoted the reforms. It seems clear enough that the LIM process was intended to reduce litigation, a purpose which has probably been fulfilled even though its relative success has likely been obscured by the leaky home catastrophe which has been another, and less welcome, effect of the 1991 building industry reforms. The more that buyers resort to the LIM process, the better informed their purchasing decisions and the less likely subsequent disappointment and resulting litigation.
[87] Indeed, often enough what is said in a LIM will protect territorial authorities from (rather than expose them to) liability. In the context of leaky home cases, territorial authorities (along with other defendants) can be expected to rely on failures by purchasers to seek LIMs which, if obtained, would have alerted them to the problems of which they later complain.[11] This Court has held that a failure to obtain a LIM may (depending of course on what would have been revealed) amount to contributory negligence warranting a reduction in damages.[12]
[88] If the legislature had intended that s 41 would apply to exclude liability in the case of negligently issued LIMs, it would have been simple to have inserted s 44A in Part 2. That the legislature did not do so might be thought to be a fair indication that it did not intend the s 41 protection to apply.
[89] There are also two slightly more diffuse considerations which point to the same conclusion:

(a) As already noted, s 44A was enacted in a context in which concerns about civil liability were very much alive. If there was a legislative intention to confer a statutory immunity from suit (as opposed simply to leaving duty of care questions to the courts), such intention could fairly be expected to be spelt out.

(b) As noted, the failure to put s 44A in Part 2 tells against the MDC’s argument. And associated with this is the consideration that the potential scope of s 41 to a negligently issued LIM is not entirely obvious. The tenor of s 41 (with its references to criminal liability, defamation and breach of copyright) suggests a desire to avoid legal consequences for territorial authorities of compliance with official information requests rather than an intention to acquit such authorities of liability for non-compliance. It is highly likely therefore, that when s 44A came to be inserted in LGOIMA, those responsible for the drafting overlooked the potential for arguments as to s 41 (just as everyone did in the High Court). In this context, the fact that the legislature was not more explicit as to the non-applicability of s 41 is not significant.

[90] To come back to s 41, we see no need to engage with the argument whether the process of issuing a LIM might engage Part 2 of the Act as well as s 44A. Instead, based on our view of the parliamentary intention in 1991 when s 44A was enacted, we construe s 41 as not engaged by a supply of information which is made primarily under a section of the statute which is not in Parts 2, 3 or 4.
[91] We are satisfied that s 41 does not operate to provide a statutory immunity.

Did the MDC owe a duty of care in relation to the LIM?

[92] On this aspect of the case, the arguments for Mr Goddard mainly rested on us accepting his contentions as to whether s 44A can fairly be taken to encompass information as to water permits and the scope of s 41. Given our conclusions as already expressed his argument thus largely falls away. For the sake of completeness, however, we should address the issue.
[93] We take the test from Attorney-General v Body Corporate 200200:[13]

[36] In determining whether a duty of care exists, the ultimate question for the Court is whether it is just and reasonable that such a duty be imposed. The Courts look to the proximity or relationship between the parties and also to any wider policy considerations that bear on whether a duty of care should be imposed.

Proximity

[37] Foreseeability is a necessary precondition for the imposition of a duty. But a conclusion that harm was foreseeable does not in itself warrant the conclusion that there is sufficient proximity to justify the imposition of a duty of care. Relevant to this assessment are:

(a) whether duties of care have been imposed in analogous situations;

(b) the substantiality of the nexus between the defendant’s alleged negligence and the plaintiff’s loss (a factor which may to some extent overlap considerations of remoteness and causation);

(c) general considerations of vulnerability on the part of the plaintiff and the potential burden on the defendant (or others similarly placed) of taking precautions against the risk in issue (see, for instance, Woolcock Street Investments Pty Ltd v CDG Pty Ltd (formerly Cardno & Davies Australia Pty Ltd) [2004] HCA 16; (2004) 205 ALR 522 at para [23]). This necessarily raises the question whether the plaintiff (and others similarly placed) or the defendant (and others similarly placed) are better placed to take steps to avoid or minimise the relevant risk; and

(d) the nature of the relevant risk. The Courts are most likely to find proximity where the underlying risk is associated with health, personal injury or death and more likely to do so where there is a risk of property damage than where the loss is purely economic. Of course, in building defect cases it is not always easy to distinguish between property and economic loss. Also relevant is the size of the class affected by the risk. The larger that class (and thus the more indeterminate the alleged duty), the less likely it is that a duty will be imposed.

Policy – general

[38] In this case, the policy issues that arise are primarily associated with the particular statutory context ... and thus fall to be considered in terms of the principles which apply when an attempt is made to impose a duty of care on a public body.

The imposition of a duty of care on public bodies

[39] The primary policy issue that must be addressed is whether the imposition of a duty of care would be consistent with the terms and policies of the statute which governed the functions of the defendant. A duty of care will not be imposed if the effect would be inconsistent with the scheme and policy of the Act (see, for instance, Attorney-General v Prince and Gardner [1998] 1 NZLR 262). Reference can usefully be made to X (Minors) v Bedfordshire County Council [1995] 2 AC 633; Fleming v Securities Commission [1995] 2 NZLR 514; Oceania Aviation Ltd v Director of Civil Aviation (Court of Appeal, CA 163/00, 13 March 2001); and Graham Barclay Oysters Pty Ltd v Ryan [2002] HCA 54; (2002) 211 CLR 540.

There cannot be any question as to proximity. The foreseeability criterion is well and truly satisfied. So too is vulnerability, given that the practice of purchasers is to obtain and rely on LIMs. Other factors which are redolent of proximity are that the information is provided in return for the payment of a fee, the associated direct dealing between the person who requests the information and the territorial authority which provides it, and the reality that much of the information covered by s 44A can only practically be obtained from a territorial authority. It is perhaps significant here that the MDC required a waiver of liability from the Vining employee who obtained the copies of the water permits initially but that no such disclaimer is associated with the issuing of a LIM. Given the obviousness of the point we see no point in reviewing analogous cases. We note, however, as did Wild J, that there are a number of cases which, broadly anyway, support the imposition of a duty.[14]

[95] What about policy?
[96] There is nothing in the language of s 44A to suggest that a territorial authority should avoid being subject to a duty of care in relation to the provision of a LIM. The language of s 44A is mandatory. Territorial authorities can charge for the provision of a LIM (and there is no reason why such charge should not cover the taking of appropriate care and appropriate insurance arrangements). As well, sauce for the goose is sauce for the gander considerations suggest that if a failure to obtain a LIM can amount to contributory negligence, a negligently issued LIM ought fairly to sound in damages. Nor can the MDC legitimately complain that the imposition of a duty of care has the practical consequence of burdening it with obligations in a way which might cut across its statutory functions or discretions. In this instance, the MDC was required under s 35(5) of the Resource Management Act to keep proper records in relation to the water permits.
[97] Accordingly we are satisfied that the MDC owed a duty of care when issuing the LIM.

Did AJVL suffer any loss and if so what was the quantum?

[98] According to Mr Goddard, AJVL suffered no loss by reason of the MDC’s negligence. His argument, in a nutshell, is as follows. As a result of entering into and confirming the agreement for sale and purchase, AJVL agreed to pay $2.675m and in return received:

(a) land and water entitlements worth $2.55m; and

(b) a deemed statutory warranty from the vendors (under s 6 of the Contractual Remedies Act) which was worth distinctly more than the $125,000 difference between the purchase price and the value of what was acquired.

[99] This aspect of the case is conceptually difficult.
[100] There is considerable apparent force in the argument advanced by Mr Goddard. As a result of the MDC’s negligence, AJVL confirmed the contract. But although the rights which it obtained were not precisely the same as those which it had expected to obtain, they were – at least as it has turned out (that is at the end of the litigation) – of substantially the same value and worth distinctly more than AJVL had agreed to pay.
[101] Mr Goddard relied on the decision of the House of Lords in Nykcredit Mortgage Bank plc v Edward Erdman Group Ltd.[15] That case concerned the liability of valuers who had overvalued a property over which the appellant financier had taken security. The approach of the House of Lords was that in determining whether (and in that case, particularly, when) the financier suffered a loss, the value of the borrower’s covenants (that is to repay the money advanced) was required to be taken into account. On Mr Goddard’s argument the statutory quasi-warranty as to the water permits is equivalent to the borrower’s covenants.
[102] The countervailing argument is based primarily on Eastgate Group Ltd v Lindsey Morden Group Inc.[16] The purchaser of a company had taken the belt and braces approach of both obtaining warranties from the vendor as to the financial performance of the company being acquired and also taking advice from its accountants which covered the same ground as the warranties. The purchaser sued the vendor for damages for breach of warranty and the vendor sought to join the accountants to obtain contribution from them under the Civil Liability (Contribution) Act 1978 (UK) from the accountants. That Act provides (see s 1(1)) that:

Any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect to the same damage (whether jointly with him or otherwise).

This statute therefore covers, in part at least, the same ground as s 17 of the Law Reform Act 1936, albeit that it is not confined to tortfeasors.

[103] The arguments and the judgments in Eastgate are, of course, directed to the language of the 1978 Act but a fundamental issue was whether the purchaser had a claim against its accountants in relation to issues covered by the warranties which it obtained from the apparently solvent vendor. In the High Court the Judge concluded that no such claim was available given the judgment in Nykcredit. But the Court of Appeal took a different view; this for reasons given by Longmore LJ at [14]:

[14] The logic of this approach is that, when damages fall to be assessed against a negligent valuer, the value of the buyer's covenant to repay must be brought into account to reduce the claim against the valuer. That was done by Devlin J in Eagle Star Insurance Co Ltd v Gale & Power (1955) 166 EG 37, approved in the dissenting judgment of Sir Denys Buckley in London and South of England Building Society v Stone [1983] 1 WLR 1242. But it does not follow that the same approach is correct for cases not of a borrower's covenant to repay his loan but of breach of contract, eg by a vendor of a business. The vendor's liability is to compensate the claimant for the loss suffered by his breach of warranty. This is a liability for damages not a covenant to repay a debt; as a matter of ordinary principle, whereby a claimant is entitled to compensation for loss actually suffered, any actual diminution of the buyer's loss would normally have to be taken into account in assessing the buyer's claim against the vendor. It cannot be the case, merely because a valuer can require a claimant, who brings an action for damages against him, to bring into account the value of a borrower's covenant to repay a debt, that therefore any party liable to a claimant for professional negligence can require the claimant to bring into account the value of his claim against any other contractor for breach of warranty. This is due to the essential difference between a claim for repayment of a debt (to which there can ordinarily be no substantive defence and in respect of which a claimant does not have to prove loss) and a claim for damages for breach of contract (to which there may be many defences and in respect of which the claimant must prove his loss). If a claimant's loss has in fact been diminished, that diminution must be brought into account in a claim for damages for breach of warranty.

[104] Mention should also be made of the decision of the High Court of Australia in Burke v LFOT Pty Ltd.[17] This case involved a successful claim by the purchaser of a commercial building against the vendor (and an associated party) based on misrepresentations as to the nature of the leases. The purchaser’s solicitor had not recommended that the purchaser make inquiry as to the solvency and financial standing of the tenants. Contending that this involved negligence on the part of the solicitor, the vendor (and the associated party) sought contribution from the solicitor (who was not sued direct by the purchaser). This contribution claim evoked some diversity of opinion in the High Court and eventually failed. But given that the case involved a claim by one set of wrong-doers (the vendor and associated party) against another (the solicitor) rather than a direct claim by purchaser against the solicitor, it is not directly material to the present phase of the inquiry. More particularly, the approach of the judges in the majority was not inconsistent with the purchaser having a claim against the solicitor.
[105] A key plank in Mr Goddard’s argument is that the damages awarded against the Moorhouses have been assessed on an expectations basis whereas any damages against the MDC must be fixed by reference to the detriment suffered by AJVL.
[106] We do not see this as a decisive consideration. As our earlier discussion about the quantum of damages payable by the Moorhouses to AJVL indicates, expectation damages for breach of contract are not automatic. The entitlement of AJVL to expectations damages under the s 6 quasi-warranty is not absolute (in the sense that a creditor has an absolute right to payment of a debt). If we had decided to award detriment damages to AJVL there is no obvious reason why the MDC could fairly demand that AJVL resort first to the Moorhouses for payment. To put this point another way, the Nykcredit analogy would then be far weaker.
[107] As well, much of the strength of Mr Goddard’s argument is based on hindsight. AJVL’s claim against the Moorhouses has only succeeded after some hard litigating. It was not clear at the outset of the litigation that AJVL could establish liability against the Moorhouses or, if so, that damages would necessarily be expectations based.
[108] Further, as a matter of common sense, and given the significance of the negligently issued LIM in terms of the problem which arose, we see little intrinsic appeal in an approach which means that the MDC egg can insist that the Moorhouse chicken logically comes first.
[109] Mr Goddard maintained that Eastgate had been implicitly over-ruled by the House of Lords in Royal Brompton NHS Trust v Hammond (No. 3).[18] We do not agree. Eastgate is referred to without disapproval in Lord Steyn’s speech in Royal Brompton[19] and further, an illustration given by Lord Steyn[20] is in terms which, on our interpretation, and contrary to the contention of Mr Goddard, is at least consistent with the Eastgate approach. That illustration seems to be a simplified version of the Eastgate facts and the discussion by Lord Steyn seems to suggest that there was a claim against the accountants in Eastgate.
[110] Accordingly we hold that the expectations based entitlement to damages of AJVL against the Moorhouses (as upheld in this judgment) is consistent with a conclusion that AJVL relevantly suffered a loss as a result of the MDC’s negligence.
[111] What was the loss?
[112] This involves the identification of a loss based on three figures:

(a) the purchase price of $2.675m;

(b) the value of the land with half the class A and all the class C entitlements, assessed by the Judge at $2.55m; and

[113] The Judge assessed the liability of the MDC to AJVL as $400,000 (being the difference between (c) and (b). This approach, however, necessarily builds in an element of expectations into the assessment. On an orthodox detriment basis, the loss suffered is the difference between the contract price and what the property was worth, in other words (a) – (b) or $125,000. We can see no basis for departing from this approach.

Contribution and / or apportionment between the Moorhouses and the MDC

Overview

[114] It is perfectly clear (and agreed on all sides) that AJVL cannot recover more than its “best case” loss, namely the expectations-based award made by the Judge which we have upheld.
[115] In the High Court, Wild J held that there was a common liability of $400,000 which he apportioned 50:50 between the Moorhouses and the MDC. Adjusting that conclusion to our findings as to quantum, the common liability is now reduced to $125,000. And if his 50:50 apportionment is adopted the result will be that the MDC is required to contribute $62,500 to the Moorhouses.
[116] Vining and Gascoigne Wicks, who stand in the shoes of the Moorhouses for these purposes, were unenthusiastic about the Judge’s approach, which involved using the MDC’s exposure to damages at the suit of AJVL as capping its liability to the Moorhouses. They will be even more unenthusiastic about the imposition of such a cap based on our provisional quantum assessment against the MDC of $125,000.
[117] To avoid such a cap, Vining and Gascoigne Wicks sought to invoke s 17 of the Law Reform Act 1936. This, at least on their argument, provides a basis for imposing a liability on the MDC to the Moorhouses which exceeds its liability to AJVL. There is as well a more general argument advanced by the MDC as to whether a 50:50 apportionment is appropriate.

Section 17 of the Law Reform Act 1936

[118] This section relevantly provides:

17 Proceedings against, and contribution between, joint and several tortfeasors

(1) Where damage is suffered by any person as a result of a tort (whether a crime or not)—

...

(c) Any tortfeasor liable in respect of that damage may recover contribution from any other tortfeasor who is, or would if sued [in time] have been, liable in respect of the same damage, whether as a joint tortfeasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by him in respect of the liability in respect of which the contribution is sought.

[119] Vining and Gascoigne Wicks maintain that the Moorhouses and the MDC are joint tortfeasors for the purposes of this section. A similar submission was advanced to, and rejected by, Wild J in the High Court
[120] Despite the partial repetition, we think it right to set out s 6(1) of the Contractual Remedies Act:

6 Damages for misrepresentation

(1) If a party to a contract has been induced to enter into it by a misrepresentation, whether innocent or fraudulent, made to him by or on behalf of another party to that contract—

(a) He shall be entitled to damages from that other party in the same manner and to the same extent as if the representation were a term of the contract that has been broken; and

(b) He shall not, in the case of a fraudulent misrepresentation, or of an innocent misrepresentation made negligently, be entitled to damages from that other party for deceit or negligence in respect of that misrepresentation.

[121] The reality is that, given s 6(1)(b) there is no claim in tort available against the Moorhouses. So, and in agreement with Wild J, we cannot see how the Moorhouses can be regarded as tortfeasors and therefore how the Law Reform Act can apply.
[122] Given this conclusion, we need not consider issues which would have been down-stream of a conclusion that the Moorhouses and the MDC were joint tortfeasors, in particular as to what is meant in this context by the expression “the same damage” and whether, as a matter of law, the MDC’s liability to the Moorhouses could exceed its liability to AJVL.

The 50:50 apportionment

[123] It is common ground amongst the parties that if the Law Reform Act does not apply (as we have held that it does not) the common liability of $125,000 falls to be apportioned. We adopt this common position with some gratitude as it avoids the necessity for us to navigate our way through some reasonably complex case law.
[124] The Judge’s 50:50 apportionment was challenged by Mr Goddard. This was very much for reasons which were really variations of his primary arguments that the MDC’s negligence caused no loss and that the liability of the Moorhouses is logically prior to that of the MDC. As is apparent, we do not accept these premises. He also challenged the fairness of the 50:50 apportionment suggesting that if there was to be apportionment it should be two-thirds to the Moorhouses and one-third to the Council.
[125] We accept (at least for present purposes) that a 50:50 allocation was not necessarily required. But we see no reason to differ from the 50:50 apportionment adopted by the Judge. In reality the Council’s contribution, in the form of the negligently issued LIM, to what happened was extremely significant. We see it as having broadly the same causal potency as the misrepresentations made by Vining and Gascoigne Wicks.

Apportionment Vining / Gascoigne Wicks

[126] In the High Court Wild J apportioned liability between Vining and Gascoigne Wicks on a 80:20 basis. We consider that in reaching this apportionment he was primarily influenced by the following considerations:

(a) his distinct dissatisfaction with the evidence of Mr Hoare;

(b) a general dissatisfaction over the casual way in which Vining marketed the property;

(c) the number of times that Vining misrepresented the position in comparison to the single relevant misrepresentation by Mr Sawyer (in the form of confirmation of the agreement); and

(d) a rather gentle interpretation of Mr Sawyer’s actions in forging the water permits which, on the Judge’s approach, did not compound Gascoigne Wicks’ breach of duty to the Moorhouses.

[127] It is on the last of these points we have some difficulty with the approach of the Judge. It is true that by the time Mr Sawyer forged the water permit transfers, the contract was well and truly unconditional. And if the problem had been detected ahead of settlement (as it would have been without the forgery), there would still have been an imbroglio. It is, however, likely that the course of events would have been different. AJVL would have had to make a decision whether to proceed with settlement. It is quite possible that, given the uncertainties over litigation, AJVL would have elected to cancel, in which case, on the basis of the findings of fact of the Judge, the liability of the Moorhouses would have been around $400,000.
[128] We note in passing that this aspect of the case does not turn simply on an appreciation of the causal potency or blameworthiness of the actions of Vining and Gascoigne Wicks for which the Moorhouses have been held to be vicariously responsible. Each owed a duty of care to the Moorhouses and in this respect we regard the forgery by Mr Sawyer as being material even though it was not relevantly a misrepresentation for the purposes of s 6 of the Contractual Remedies Act.
[129] Against that background, we attribute rather more weight to the forgery by Mr Sawyer of the water permit transfers than the Judge did. On that basis we attribute liability 60 per cent to Vining and 40 per cent to Gascoigne Wicks.

Costs

[130] In the High Court the Judge required Vining and Gascoigne Wicks to indemnify the Moorhouses for costs in favour of AJVL and awarded indemnity costs in favour of the Moorhouses against Vining and Gascoigne Wicks. This latter order was challenged by Vining.
[131] We accept that the award of indemnity costs is indeed exceptional. But it is fair to say that the circumstances of this case were exceptional. In particular:

(a) Vining’s negligence was of a high order, particularly given that Mr Hoare at least must, at one time, have been well aware of the true position over the water permit (having been involved in the original sale to MDL) and both he and Ms Herkt failed to consult the Moorhouses;

(b) Gascoigne Wicks was also extremely negligent given that it too, had acted on the sale to MWL;

(c) Mr Sawyer’s actions in forging the water permit transfers were extraordinary; and

(d) Vining and Gascoigne Wicks acted unreasonably in not assuming the conduct of the litigation on behalf of the Moorhouses.

[132] As well, there is a slightly different consideration. Part of the understanding between the Moorhouses on the one hand and Vining and Gascoigne Wicks on the other was that they would not embroil the Moorhouses in litigation of this type. The costs incurred by the Moorhouses were in a real sense part of the loss they suffered as a result of the negligence of Vining and Gascoigne Wicks.
[133] We have no difficulty at all with the award of indemnity costs made by the Judge. As well, we are well satisfied that the appropriate approach to costs in this Court is that Vining should indemnify the Moorhouses for their solicitor and own client costs in respect of the appeal.

The orders

[134] In the result:

(a) the appeal of the MDC is allowed to the extent that the judgment against it in favour of the Moorhouses is reduced to $62,500;

(b) the appeal by Vining is allowed to the extent that the apportionment of liability between it and Gascoigne Wicks is altered from 80:20 to 60:40;

(c) the orders for costs in the High Court are varied to reflect differences in the effective proportions of the ultimate liability to AJVL which are to be borne by Vining, Gascoigne Wicks and the MDC;

(d) the appeals are otherwise dismissed;

(e) in this court there is no award of costs either way in respect of the MDC (which has been partly but not completely successful);

(f) Vining and Gascoigne Wicks are to pay to AJVL costs and disbursements for a complex appeal on a band B basis and usual disbursements (apportioned as to 60% to Vining and 40% to Gascoigne Wicks); and

(g) Vining is to pay the Moorhouses their costs of and relating to the appeal (including disbursements) as fixed on an actual solicitor and client basis to be agreed between the parties and in default of agreement fixed by the Registrar.

Solicitors:
Duncan Cotterill, Nelson for Vining Realty Group Limited
Radich Law, Blenheim for Marlborough District Council
Raymond Sullivan McGlashan, Timaru for Mr and Mrs Moorhouse
Anderson Lloyd, Dunedin for Gascoigne Wicks
Buddle Findlay, Christchurch for Altimarloch Joint Venture Limited

[1] Altimarloch Joint Venture Ltd v Moorhouse HC Blenheim CIV-2005-406-91, 3 July 2008.

[2] Altimarloch Joint Venture Ltd v Moorhouse HC Blenheim CIV-2005-406-91, 23 March 2009.

[3] Mt Pleasant Estates Co Ltd v Withell [1996] 3 NZLR 324 (HC) at 328–329.

[4] See Savill v NZI Finance Ltd [1990] 3 NZLR 135 (CA); Harrison v Amcor Trading (NZ) Ltd HC Auckland HC167/97, 13 May 1999.

[5] New Zealand Motor Bodies Ltd v Emslie [1985] 2 NZLR 569 (HC); Pearson v Wynn (1986) 2 NZCPR 449 (HC).

[6] Ruxley Electronics Ltd v Forsyth [1996] 1 AC 344 (HL).

[7] Altimarloch Joint Venture Ltd v Moorhouse HC Blenheim CIV-2005-406-91, 3 July 2008 at [148].

[8] Fair Trading Act 1986, s 9.

[9] Mid-Density Developments Pty Ltd v Rockdale Municipal Council [1993] FCA 408; (1993) 44 FCR 290 (FCA).

[10] See Sunset Terraces [2010] NZCA 64; Byron Avenue [2010] NZCA 65.

[11] See Byron Avenue.

[12] Byron Avenue at [136] per William Young P.

[13] Attorney-General v Body Corporate 200200 [2007] 1 NZLR 95 (CA).

[14] See in particular Resource Planning Management Ltd v Marlborough Wine Centre Ltd HC Blenheim CIV 2001-485-814, 10 October 2003; Smaill v Buller District Council [1998] 1 NZLR 190 and Mid-Density Developments.

[15] Nykcredit Mortgage Bank plc v Edward Erdman Group Limited Ltd [1997] 1 WLR 1627 (HL).

[16] Eastgate Group Ltd v Lindsey Morden Group Inc [2002] 1 WLR 642 (CA).

[17] Burke v LFOT Pty Ltd [2002] HCA 17; (2002) 209 CLR 282.

[18] Royal Brompton NHS Trust v Hammond (No. 3) [2002] 1 WLR 1397 (HL).

[19] At 1411.

[20] At 1412.

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