Y&P NZ Limited v Wang [2019] NZCA 659 (18 December 2019)

Last Updated: 20 December 2019

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA451/2019 [2019] NZCA 659

	BETWEEN	Y&P NZ LIMITED Appellant
	AND	YANG WANG AND CHEN ZHANG Respondents

Hearing: Further submissions:	20 November 2019 27 November and 3 December 2019
Court:	Gilbert, Dobson and Whata JJ
Counsel:	B P Rooney and E Y Deng for Appellant G P Blanchard QC and J A Zwi for Respondents
Judgment:	18 December 2019 at 3 pm

JUDGMENT OF THE COURT

1. The appeal is dismissed.
2. The appellant must pay costs to the respondents for a standard appeal on a band A basis and usual disbursements. We certify for second counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by Gilbert J)







Table of Contents

Introduction [1]
The appeal [7]
Was the vendor ready, willing and able to settle?
Statutory provisions [12]
Terms of the agreement [17]
The facts [18]
High Court judgment [26]
Submissions [28]
Assessment [31]
Did the vendor waive the requirement to tender settlement? [35]
Is there any basis to provide relief from the contractual
requirement to pay interest for late settlement? [38]
Result [54]

Introduction

[1] By four separate agreements dated 2 May 2016, the appellant, Y&P NZ Ltd, agreed to sell to Yang Wang or nominee four adjoining blocks of bare land in Henderson, Auckland.^[1] The respondents were nominated as purchasers. To assist understanding, we will refer to the appellant as “the vendor” and the respondents as “the purchasers”.
[2] The purchase price in each agreement was expressed to be “plus GST^[[2]] (if any)”. The face page of the agreements recorded that “[t]he vendor is registered under the GST Act^[[3]] in respect of the transaction evidenced by this agreement and/or will be so registered at settlement”. The GST information completed by the purchasers in schedule 2 of the agreements indicated that they were not currently registered and would not be registered at settlement. Further, they did not intend to use the property for making taxable supplies. Under cl 14 of the agreements, the vendor and purchasers warranted that their respective statements as to GST were correct at the date of the agreements. Based on this information, the transactions would attract GST at the standard rate of 15 per cent.
[3] The day before the settlement date stipulated in the agreements, the purchasers advised the vendor that they were now registered for GST and the transactions should be zero-rated. The vendor ultimately took the position that it was too late to give notice of this change, relying on a clause in the agreements requiring any such notice to be given no later than two working days before settlement. The vendor insisted that the purchasers pay GST on the purchase price at the standard rate of 15 per cent. The parties were unable to resolve the issue. Both stood their ground and settlement did not occur. The vendor served settlement notices requiring payment of GST at the standard rate and subsequently purported to cancel the agreements.
[4] The purchasers protected their position by registering caveats against the titles to the land and sought specific performance of the agreements in the High Court. The vendor counterclaimed for removal of the caveats and for interest at the contractual rate of 14 per cent per annum.
[5] The High Court found in favour of the purchasers and made an order for specific performance of the agreements, including the obligation by the vendor to pay interest at the rate of 14 per cent.^[4] This order was made despite it emerging after proceedings were issued that, unbeknown to them, the purchasers were not in fact registered for GST at the settlement date provided for in the agreements, being 28 July 2016. Prior to the trial, the purchasers became registered for GST with retrospective effect to the settlement date. In his judgment delivered on 27 August 2019, Palmer J found that the vendor was not required to enquire into the purchasers’ GST status and was not justified in refusing to settle unless GST at the standard rate was paid.^[5]
[6] The vendor appeals. Because over three years have passed since the settlement date, the interest to be set off against the combined purchase price of $2,430,000 in terms of the judgment is now of the order of $1 million.

The appeal

[7] The vendor appeals on the following grounds:

• (a) The purchasers notified the vendor of their GST status in the agreements for sale and purchase. They failed to give proper notification of any change in their GST status before the settlement date. The vendor did not waive the requirement for formal notice. The purchasers were therefore in default in failing to tender settlement including payment of GST at the standard rate.
• (b) The transactions could only have been standard-rated for GST on the settlement date because the purchasers were not in fact registered for GST on that date. For this reason also, the purchasers were in default by not tendering settlement including payment of GST at the standard rate.
• (c) The order for payment of default interest at 14 per cent per annum has produced a “perverse and disproportionate result”, which was “penal, unreasonable” and “unfair”.

[8] Whether the vendor validly terminated the agreements turns on whether it was entitled to insist on the purchasers paying GST at the standard rate. If not, the vendor’s insistence on receiving this payment was wrong and meant it was not ready, willing and able to settle, and was not entitled to cancel the agreements.
[9] However, even if the vendor was not correct on the GST issue, the purchasers were still obliged to tender settlement unless this requirement was waived.
[10] The question of whether either party is entitled to interest turns on the answer to these prior questions. The further question of whether there is any principled basis to provide relief from the consequence of the contractual interest provision is a discrete issue.
[11] We therefore consider the issues raised by the appeal can be conveniently dealt with under the following headings:

• (a) Was the vendor ready, willing and able to settle?
• (b) Did the vendor waive the requirement to tender settlement?
• (c) Is there any basis to provide relief from the contractual requirement to pay interest for late settlement?

Was the vendor ready, willing and able to settle?

Statutory provisions

[12] Section 11(1)(mb) of the GST Act provides that the supply of goods (which is defined in s 2 to include real property) must be zero‑rated in certain circumstances:

11 Zero-rating of goods

(1) A supply of goods that is chargeable with tax under section 8 must be charged at the rate of 0% in the following situations:

...

(mb) the supply wholly or partly consists of land, being a supply—

(i) made by a registered person to another registered person who acquires the goods with the intention of using them for making taxable supplies; and

(ii) that is not a supply of land intended to be used as a principal place of residence of the recipient of the supply or a person associated with them under section 2A(1)(c); ...

[13] Section 11(8B) of the GST Act provides that “[w]hether a supply of goods is zero‑rated under subsection (1)(mb) is determined at the time of settlement of the transaction relating to the supply”. The GST position can change between the date of the agreement and settlement.
[14] In terms of s 78F of the GST Act, a purchaser of land is required to notify the vendor at or before settlement of the transaction as to whether, at the date of settlement, the purchaser is, or expects to be, a registered person, is acquiring the land with the intention of using it for making taxable supplies and does not intend to use the land as a principal place of residence. The vendor is entitled to rely on such information in determining the tax treatment of the supply:

78F Liability in relation to supplies of land

(1) This section applies in relation to a supply that wholly or partly consists of land.

(2) At or before settlement of the transaction relating to the supply, the recipient is required to notify the supplier as to whether, at the date of settlement,—

(a) they are, or expect to be, a registered person; and

(b) they are acquiring the goods with the intention of using them for making taxable supplies; and

(c) they do not intend to use the land as a principal place of residence for them or a person associated with them under section 2A(1)(c).

(2B) For the purposes of subsection (2)(a), a recipient who is a registered person, or who expects to be a registered person, must provide their registration number to the supplier at or before the date of settlement.

(3) The supplier may rely on the information provided as required by subsection (2) in determining the tax treatment of the supply.

...

[15] The means of notification under s 78F(2) is provided for in s 14C of the Tax Administration Act 1994, which allows for communication by electronic means in certain circumstances.^[6]
[16] Part 8 of the GST Act deals with registration. Every person who becomes liable to be registered (under s 51(1)) shall apply for registration (s 51(2)). A person who intends to carry on a taxable activity from a specified date may apply to the Commissioner of Inland Revenue (the Commissioner) for registration (s 51(3)(b)). If the Commissioner is satisfied of eligibility for registration, the person shall be registered with effect from such date as the Commissioner may determine (s 51(4)(a)). Even where a person has not made an application for registration, if the Commissioner is satisfied that person is liable to be registered the person shall be registered for the purposes of the Act with effect from the date they first became liable to be registered (s 51(4)(b)).

Terms of the agreement

[17] The standard form agreement for sale and purchase used in this case makes provision for the purchaser to provide the required notification to the vendor of the GST position no later than two working days prior to settlement. This is presumably so that the settlement statement can be prepared in good time. However, this does not override the GST Act which dictates whether the supply is to be zero‑rated:

14.4 If GST is chargeable on the supply under this agreement at 0% pursuant to section 11(1)(mb) of the GST Act, then on or before settlement the purchaser will provide the vendor with the recipient’s name, address, and registration number if any of those details are not included in Schedule 2 or they have altered.

14.5 If any of the particulars stated by the purchaser in Schedule 2 should alter between the date of this agreement and settlement, the purchaser shall notify the vendor of the altered particulars and of any other relevant particulars in Schedule 2 which may not have been completed by the purchaser as soon as practicable and in any event no later than two working days before settlement. The purchaser warrants that any altered or added particulars will be correct as at the date of the purchaser’s notification. If the GST treatment of the supply under this agreement should be altered as a result of the altered or added particulars, the vendor shall prepare and deliver to the purchaser or the purchaser’s lawyer an amended settlement statement if the vendor has already tendered a settlement statement and a credit note or a debit note, as the case may be, if the vendor has already issued a tax invoice.

(Emphasis added).

The facts

[18] On 25 July 2016, in anticipation of settlement occurring on the agreed settlement date of 28 July 2016, the vendor’s solicitors sent the purchasers’ solicitors a settlement statement showing GST payable on the purchase price at the standard rate of 15 per cent.
[19] On 27 July 2016, the day before the settlement date, a legal executive employed by the purchasers’ solicitors telephoned a legal executive employed by the vendor’s solicitors and requested amended settlement statements showing the transactions as zero-rated for GST. There was a dispute about the extent of the information conveyed during this telephone call, but it is common ground the advice included that the purchasers were registered for GST and wanted amended settlement statements prepared on a zero-rated basis. The Judge did not find it necessary to resolve the contest about whether the further information required under the GST Act was also provided (intention to use the properties for making taxable supplies and not as a principal place of residence). We agree that this dispute was not material. Because the advice was given by telephone, it did not comply with the requirements of the GST Act or the agreements and it could not give rise to an estoppel in the circumstances of this case given what happened the following day, as we will shortly come to.
[20] After the telephone call, the legal executive acting for the vendor sent amended settlement statements as requested showing the transactions as zero-rated and asked for the purchasers’ GST numbers to enable tax invoices to be prepared. The GST numbers were supplied by return.
[21] However, upon hearing that the transaction was to be zero‑rated, the principal of the vendor became concerned that if settlement occurred on that basis, the vendor could be liable to pay the GST from its own pocket. On 28 July 2016, the settlement date specified in the agreements, the vendor’s solicitors advised the purchasers’ solicitors that they did not now accept the purchasers were able to settle on a zero‑rated basis and required settlement to proceed in accordance with the original settlement statement with GST being paid at the standard rate of 15 per cent. At 12.01 pm that day, the vendor’s solicitors sent an email to the purchasers’ solicitors drawing attention to the requirement to notify any change in the GST position no later than two working days prior to settlement and requiring “settlement today as per our settlement statement dated 25 July 2016 without the deduction of GST”.
[22] The vendor did not yield to the purchasers’ subsequent protests. The vendor’s solicitors advised the purchasers’ solicitors in an email sent at 12.52 pm that GST at 15 per cent would have to be paid and they required settlement on this basis:

Our client insists and requires your client to settle PLUS GST.

We are ready and willing to settle now. Our undertaking will be sent to you by fax soon.

If you are not able and willing to settle today as per our settlement dated 25 July 2016. (sic) We will charge your client penalty interest according to the agreement.

[23] The vendor’s solicitors emailed settlement undertakings and then, at 3.14 pm, emailed tax invoices on the basis GST was payable at the standard rate. The purchasers’ position that the transaction should be zero-rated remained firm. Their solicitors sent an email to the vendor’s solicitors at 3.28 pm stating “our position will not change”.
[24] The vendor served settlement notices later that day purporting to require the purchasers to settle within 12 working days by paying the balance of the purchase price plus GST at the standard rate and interest for late settlement as provided for in the agreements. The vendor then purported to cancel the agreements on 17 August 2016 when settlement on the basis they stipulated did not occur.
[25] As noted, it subsequently emerged that the purchasers were not in fact registered on the settlement date. The Judge explained the background to this as follows.^[7] The purchasers were respectively registered for GST in the period beginning 1 October 2014. They were advised of this by Inland Revenue in January and February 2015. However, in October 2015, Inland Revenue advised that it had cancelled the purchasers’ registrations because no taxable activity had occurred. The purchasers correctly stated their GST position in the agreements. They did not at that stage intend to use the properties for making taxable supplies. However, prior to the settlement date, they were advised by their accountant to re-register for GST. The purchasers thought they were registered at that stage, but in fact they were not. They did not discover this until February 2018. They immediately applied for re‑registration and were respectively registered on 22 February 2018 and 1 March 2018, effective from 1 April 2016, prior to the agreements being entered into on 2 May 2016.

High Court judgment

[26] The Judge observed that notification in terms of s 78F of the GST Act required three elements — whether, at the date of settlement the purchasers were:^[8] registered; acquiring the properties with the intention of using them for making taxable supplies; and not intending to use the land as a principal place of residence. The Judge found the first two elements were satisfied. The purchasers’ solicitors advised the vendor’s solicitors by email on 27 July 2016 of their GST numbers. In subsequent emails sent on 1 and 4 August 2016 they advised that the purchasers were registered for GST.^[9] However, the Judge was not satisfied that the purchasers gave express written notification that they did not intend to use the land as a principal place of residence.^[10] Nevertheless, because the transactions never settled, the final occasion for giving such notice never arose.^[11]
[27] The Judge considered that the provision of revised settlement statements on a zero-rated basis on 27 July 2016 constituted an implied waiver of the notice requirement in cl 14.5 of the agreements.^[12] In any event, if the vendor had wanted to insist on formal notice being given, it could have done so but this would have only resulted in settlement being deferred.^[13] It would not have been a valid reason for the vendor to refuse to settle at all.^[14] Settlement should have occurred on a zero-rated basis.^[15]

Submissions

[28] Mr Rooney, for the appellant vendor, acknowledges that, in accordance with s 11(8B) of the GST Act, the question of whether the supply was zero-rated must be determined at the “time of settlement of the transaction relating to the supply”. He notes that the expression “at the time of settlement” is not defined in the Act but accepts it must mean “the moment of settlement”. However, Mr Rooney submits it must also mean “the moments before settlement” once the vendor has completed all steps and is ready to settle, save for payment, because the true position must be known before the “moment of payment” so that “the correct amount to charge and to pay is known”.
[29] Mr Rooney acknowledges that even as late as 3.28 pm on the settlement date, when the purchasers’ solicitors advised “our position will not change”, the purchasers could have given notice of a change in their GST position, but he says they did not do so. He says the supplies could not have been zero‑rated on the settlement date because the GST particulars in the agreements meant that GST was standard‑rated and the purchasers did not formally notify the vendor of any change. Mr Rooney therefore submits that the purchasers wrongly insisted on zero‑rating and wrongly refused to settle.
[30] Mr Blanchard QC, for the purchasers, submits that whether a transaction must be zero-rated is determined “at the time of settlement”. He says that settlement never occurred because the vendor made it clear that it would be futile to tender settlement on any basis other than by paying GST at the standard rate. He says the notice requirements under the GST Act and cl 14 of the agreements are irrelevant because the time within which to give such notice never expired. Had it not been for the vendor’s insistence on payment of GST at the standard rate, the purchasers would have tendered settlement on the correct, zero-rated, basis. In any event, Mr Blanchard submits that the required notice was given. He says it was implicit in the notice the purchasers gave (that they intended to use the properties for making taxable supplies) that they did not intend to use them as a principal place of residence. Although it transpired that the purchasers were not registered for GST at the time, this could have been arranged promptly and did in fact occur with retrospective effect.

Assessment

[31] Whether the supply must be zero-rated is determined at the time of settlement. The “time of settlement” in terms of s 11(8B) of the GST Act is the time the transaction actually settles, irrespective of whether that occurs on the agreed settlement date. The time of settlement and the contractually agreed settlement date do not always coincide.
[32] These transactions have still not settled. It follows that the time within which notice can be given under s 78F of the GST Act has still not passed. Such notification can be given at any time up to, including “at”, settlement. There is also still time for the requisite notice to be given in terms of cl 14.5 of the agreements. This clause provides for notice to be given at any time up to two working days before settlement. The notice period in the agreements is not calculated by reference to the “settlement date”.
[33] The GST position is determined by the GST Act, not by the agreements. If the requirements of s 11(1)(mb) are met at the time of settlement, the supply must be zero-rated. The vendor was accordingly not entitled to insist that the GST position be determined and fixed based on the written information supplied to it up to two working days prior to the agreed settlement date and require that any settlement thereafter must proceed on a standard-rated basis. In the event s 11(1)(mb) did apply, the purchasers were obliged to give written notice in terms of s 78F of the GST Act. The vendor could not refuse to accept such a notice and demand payment of GST at the standard rate. The most the vendor was entitled to do was to insist on receiving two working days’ notice prior to settlement proceeding.
[34] In this case the purchasers expected to be registered at settlement and intended to use the properties for making taxable supplies, not as a principal place of residence. The purchasers are GST registered with retrospective effect and settlement must proceed on a zero-rated basis. We agree with the Judge that the vendor was not entitled to insist that any settlement must take place on a standard-rated basis. By wrongly insisting on GST being paid at the standard rate as a condition of settlement, the vendor was not ready, willing and able to settle.

Did the vendor waive the requirement to tender settlement?

[35] The vendor’s obligation to convey title is interdependent with the purchasers’ obligation to make payment in accordance with the agreements. Ordinarily, a purchaser is required to tender payment and a vendor will not be in default of its obligation to settle unless the purchaser has done so. However, a purchaser is not required to go through the motions of tendering settlement if the vendor has made it clear that this would be a futile exercise. Such a conclusion is not to be drawn lightly.^[16]
[36] We are satisfied the Judge was correct to find that tender of settlement on any basis other than payment of GST at the standard rate would be rejected and therefore futile. The vendor made this clear in its correspondence on and following 28 July 2016, including in the settlement notices served on that date. The vendor left no room for doubt on this issue. Its solicitors wrote on the settlement date advising “[o]ur client insists and requires your client to settle PLUS GST”. The vendor’s position on this has never changed.
[37] It follows from our conclusion that the vendor wrongly insisted on payment of GST at the standard rate as a condition of settlement that it was not entitled to cancel the agreements. The purchasers did not accept the vendor’s repudiation and the agreements remained on foot. The appeal against the order made in the High Court for specific performance of the agreements must accordingly be dismissed. The sole remaining issue concerns whether the order for payment of interest at the contractual rate was appropriate.

Is there any basis to provide relief from the contractual requirement to pay interest for late settlement?

[38] The relevant provision is cl 3.14(2):

Vendor Default: Late Settlement or Failure to Give Possession

3.14 (1) For the purposes of this subclause 3.14:

(a) the default period means:

(i) in subclause 3.14(2), the period from the settlement date until the date when the vendor is able and willing to provide vacant possession and the purchaser takes possession; and

...

(b) the vendor shall be deemed to be unwilling to give possession if the vendor does not offer to give possession.

(2) If this agreement provides for vacant possession but the vendor is unable or unwilling to give vacant possession on the settlement date, then, provided that the purchaser provides reasonable evidence of the purchaser’s ability to perform the purchaser’s obligations under this agreement:

(a) the vendor shall pay the purchaser, at the purchaser’s election, either:

(i) compensation for any reasonable costs incurred for temporary accommodation for persons and storage of chattels during the default period; or

(ii) an amount equivalent to interest at the interest rate for late settlement on the entire purchase price during the default period; and

(b) the purchaser shall pay the vendor an amount equivalent to the interest earned or which would be earned on overnight deposits lodged in the purchaser’s lawyer’s trust bank account on such portion of the purchase price (including any deposit) as is payable under this agreement on or by the settlement date but remains unpaid during the default period less:

(i) any withholding tax; and

(ii) any bank or legal administration fees and commission charges; and

(iii) any interest payable by the purchaser to the purchaser’s lender during the default period in respect of any mortgage or loan taken out by the purchaser in relation to the purchase of the property.

[39] In his written submissions, Mr Rooney contended that the purchasers did not plead any entitlement to contractual interest. While such a claim was referred to in the relief sought in the second amended statement of claim, he claimed it was not separately pleaded as an entitlement in the body of the claim.
[40] There is nothing in this point. The interest provision was pleaded in the body of the claim and in the relief sought. The purchasers gave fair notice to the vendor that interest at the contractual rate would be sought as part of the order for specific performance. The vendor also relied on the interest provision in its pleadings. It pleaded the interest provision in its first amended counterclaim and sought an order directing the purchasers to pay interest at that rate, which it calculated to be $978.65 per day, from 28 July 2016 to the date the caveat is removed. In any event, the interest provisions form part of the agreements. An order for specific performance in terms of the agreements includes these provisions. It is for the party seeking relief from the obligation to raise the issue in its pleading and set out the basis upon which it contends the provision should not be enforced.^[17]
[41] Mr Rooney’s next point was that cl 3.14(2)(b) of the agreements require credit to be given for a purchaser’s funds held on overnight rates in a solicitor’s trust account when settlement is late. This is correct, but, as Mr Rooney now accepts, this offset has been allowed for.
[42] Mr Rooney further submitted that cl 3.14 does not contemplate a long-term delay in settling the purchase of bare land. He also contended the clause does not apply where there has been a wrongful cancellation. Mr Rooney argued that the agreements do not provide any remedy for losses for wrongful cancellation and there is no contractual interest provision for wrongful cancellation.
[43] There is nothing in the clause to indicate that there is a cut-off date for its application or that it ceases to apply if a party wrongfully cancels the agreement. It would be extremely odd, and contrary to the purpose of the interest provision, if it were to cease to apply after some unspecified lapse of time, or upon a party purporting to cancel the agreement without any right to do so in circumstances where the other party does not accept the repudiation and elects to keep the agreement on foot. A party cannot escape the obligation to pay interest at the contractual rate by the simple expedient of wrongly purporting to cancel the agreement.
[44] Neither party pleaded that the provision requiring payment of interest at the agreed rate provided is a penalty. Nor was any other basis pleaded as to why the provision should not be enforced. This is hardly surprising since both parties sought orders for such interest to be paid to them.
[45] The purchasers are not seeking interest or losses for the vendor’s wrongful purported cancellation. Having rejected the repudiation, the purchasers simply seek performance of the agreements according to their terms, not any losses occasioned by the breach. There is therefore no requirement for the purchasers to prove their losses, contrary to Mr Rooney’s contention.
[46] Mr Rooney sought and was given the opportunity to file further submissions on the interest issue following the hearing of the appeal. In particular, he wished to consider whether there is any proper basis for the Court to provide relief from the obligation to pay interest, taking account of the significant delays that have occurred. Mr Blanchard opposed any new issue being raised at this late stage. He was given an opportunity to respond. We now turn to address these further submissions, filed after the hearing.
[47] Mr Rooney refers to considerable authority for the general rule that the court will only enforce specific performance of a contract as a whole, not just parts of it.^[18] However, he contends that this general principle does not apply where a contract, although in the form of a single contract, contains two or more parts which can be treated in substance as separate contracts.^[19] Mr Rooney also draws attention to those situations referred to in Principles of Equitable Remedies where a defendant’s obligation may not be enforceable.^[20] For example, specific performance of an obligation may not be ordered if it is interdependent on performance of another term of the agreement that is not specifically enforceable. Another example is where a vendor is unable to provide title to part of the land it has agreed to sell. In that case, the purchaser can seek an order for performance as to the balance of the land and an abatement of the purchase price. A party may also waive their right to specific performance of particular terms inserted for their benefit. There again, a court may order performance of the other terms of the agreement, while not requiring performance of the terms that have been waived.
[48] No such exceptions to the general rule apply here. None of the agreements comprises two or more severable agreements such that performance of one may be ordered but not the other. The vendor’s obligation to pay interest is a standard provision and there is no suggestion it is not specifically enforceable. There has been no waiver.
[49] Finally, Mr Rooney sought to support his contention that any order for specific performance should exclude the interest obligation by referring to this Court’s analysis in Attorney-General for England and Wales v R.^[21] That case is plainly distinguishable. There, the discretionary remedy of specific performance by injunction was declined for various reasons including the lack of mutuality of remedy. R had been a member of the United Kingdom Special Forces. The Director of Special Forces required all members to sign a promise not to publish any information relating to their service. R signed this agreement but later wrote a book giving his account of his involvement in the Gulf War. This Court found the agreement was enforceable but declined to enforce it by the discretionary remedy of injunction, confining any remedy to damages or an account of profits. This was in part because R could not specifically enforce the Ministry’s promise of continuing employment provided in return for his promise of confidentiality.
[50] The circumstances of this case are far removed from the authorities Mr Rooney cites. This case concerns agreements for sale and purchase of land on standard terms and conditions. A purchaser is normally entitled to an order for specific performance in such a case.^[22] We can see no reason why the purchasers should not be entitled to an order for performance of the agreements according to their terms, including the requirement that they be paid interest for late settlement.
[51] The underlying theme of Mr Rooney’s submissions to avoid the application of the interest provision was a complaint about the disproportionality of the outcome, which reduces substantially the consideration the vendor will receive for its land. However, that consequence is not a ground for avoiding the contractual provisions.
[52] In the course of the vendor’s earlier challenge to the purchasers’ caveats, which it pursued all the way to the Supreme Court, the vendor received clear signals that it was wrong as a matter of law to demand that GST be paid at the standard rate on these transactions. This Court stated in its judgment delivered on 3 July 2017:^[23]

[The GST Act] requires the notice to be given by or on settlement. The respondents could have complied with the statute by giving notice on the day of settlement. They were not given the opportunity to do so because of the appellant’s insistence that the settlement take place at the 15 per cent GST rate. ...

The Supreme Court confirmed this in declining leave to appeal on 22 August 2017:^[24]

[5] The basis of the proposed appeal is the contention that the respondents had not complied with s 78F of the Goods and Services Tax Act 1985. Subsection (2) provided, at the relevant time, that a purchaser of land who contends that the purchase is zero-rated must provide a statement in writing to the vendor to the effect that the conditions for zero-rating are satisfied. Such statement must be provided “[a]t or before settlement”. No such statement was provided. On the other hand, as the Court of Appeal pointed out, the transaction never settled and therefore the final occasion for the giving of such a statement never arose.

(Footnote omitted).

[53] The vendor must have known that interest would continue to run in terms of the agreements, and they would be liable to pay it, if the stance it maintained was confirmed to be wrong in law.

Result

[54] The appeal is dismissed.
[55] The appellant must pay costs to the respondents for a standard appeal on a band A basis and usual disbursements. We certify for second counsel.

Solicitors:
Park Legal Barristers & Solicitors, Auckland for Appellant
Yang Lawyers, Auckland for Respondents

---

^[1] The agreements were in the form of the third version of the ninth edition of the standard form agreement for sale and purchase of real estate approved by the Real Estate Institute of New Zealand and the Auckland District Law Society.

^[2] Goods and Services Tax.

^[3] Goods and Services Tax Act 1985.

^[4] Wang v Y&P NZ Ltd [2019] NZHC 2112 [High Court judgment].

^[5] At [2].

^[6] Section 14C of the Tax Administration Act 1994 was amended with effect from 2 June 2016 by s 79 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016.

^[7] High Court judgment, above n 4, at [10].

^[8] At [50].

^[9] At [51].

^[10] At [52].

^[11] At [52].

^[12] At [53].

^[13] At [53].

^[14] At [53].

^[15] At [54].

^[16] Bahramitash v Kumar [2005] NZSC 39, [2006] 1 NZLR 577 at [20].

^[17] Varney v Anderson (1992) 2 NZ ConvC 191,347 (CA).

^[18] Andrew Butler (ed) Equity and Trust in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [24.4.11] citing Ryan v Mutual Tontine Westminster Chambers Assn [1983] 1 Ch 116 (CA); Peter Blanchard (ed) Civil Remedies in New Zealand (2nd ed, Thomson Reuters, Wellington, 2011) at [8.8.9]; Laws of New Zealand Specific Performance (online ed) at [21]; Edward Fry and George Northcote (eds) A treatise on specific performance of contracts (6th ed, Stevens and Sons, London, 1921) at [821]; Shea v Elam Project Ltd HC Auckland M1521/93, 22 October 1993 at 13; and Bruns v Freeth HC Auckland A990/85 , 9 March 1987 at 10.

^[19] Gareth Jones and William Goodhart Specific Performance (2nd ed, Butterworths, London, 1996) at 59.

^[20] I C F Spry Principles of Equitable Remedies: specific performance, injunctions, rectification and equitable damages (9th ed, Lawbook Co, Sydney, 2014) at 113.

^[21] Attorney-General for England and Wales v R [2002] 2 NZLR 91 (CA).

^[22] Property Ventures Investments Ltd v Regalwood Holdings Ltd [2010] NZSC 47, [2010] 3 NZLR 231 at [67].

^[23] Y&P NZ Ltd v Wang [2017] NZCA 280, (2017) 18 NZCPR 734 at [25].

^[24] Y&P NZ Ltd v Wang [2017] NZSC 126.