Watherston v Kaikoura Pastoral Investments Limited [2015] NZHC 2084 (31 August 2015)

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UNDER	the Land Transfer Act 1952
IN THE MATTER	of an application that a caveat not lapse under Section 145A Land Transfer Act 1952
BETWEEN	RICHARD JOHN SCOTT WATHERSTON First Applicant
AND	ROCKY PEAKS CONTRACTING LIMITED Second Applicant
AND	KAIKOURA PASTORAL INVESTMENTS LIMITED Respondent

Hearing:	13 August 2015
Appearances:	R Lynn for Applicants DCJ Russ for Respondent
_Judgment:	_{31 August 2015}

Contracting Limited (RPC), claim an estate or interest in land owned by the respondent, Kaikoura Pastoral Investments Limited (KPIL), in the following terms:

R J S WATHERSTON v ROCKY PEAKS CONTRACTING LTD [2015] NZHC 2084 [31 August 2015]

Interest as purchaser under an option to purchase granted to the caveators in writing by the registered proprietor through an agent of the registered proprietor and dated December 2013.

In exchange for TPG undertaking to pay P.G.G.W $1.9 million to buy Rocky Peaks with settlement on 28^thFebruary, RW will undertake to work with Gaire Thompson (GT) for the best outcome for both parties, to complete the sale to a new J.V.C (Joint Venture Company)

-Any net proceeds from the sale of wool and livestock less agreed living costs also to be paid to debt reduction.

-RW will sign over complete financial control and any interest in plant and livestock subject to the receivership plus 80% of his shares in Kowhai Banks

-RW will continue to farm and manage the properties (including overseeing the dairy farm) in a good husband like manner for which he will receive a

-RW and his brother, the other 50% shareholder in the dairy farm will fully consult with GT re dairy operations and the proposed commercial development of part of the dairy farm adjoining SH1 and the Inland Road.

-RW and TPG are to negotiate an ongoing company structure for the operation and ownership based on funds available and 40% holding in the

-RW and family to have first right of refusal to purchase shares back in either enterprise.

[4] This document (the agreement) is on a sheet of paper with a logo for Thompson Property Group (TPG) at the top, and contact details for that group at the bottom.

[5] The option relied on by Mr Watherston and RPC is said to be contained in the seventh bullet point:

[6] Rocky Peaks is a farm of some 237 hectares. Mr Watherston bought the property in 1988 and has lived there since. In May 2013 Mr Watherston’s personal property was placed into receivership by a creditor, PGG Wrightson. At that time Mr Watherston owned another property, The Doone. The receivers decided to sell The Doone and engaged a real estate agent from Bayleys, who located Mr Gaire Thompson as a possible purchaser. Mr Thompson did not buy The Doone, and it was sold to a third party. However, on 20 December 2013, Mr Thompson bought Rocky Peaks from the receivers. The sale price was $1,900,000. In due course KPI was nominated as the purchaser and settled the purchase. It took title on 19 March

[7] Mr Watherston and Mr Thompson give varying evidence on how the agreement came to be drafted and sent to Mr Watherston to sign. Two companies, Okarahia Downs Limited and JNW Property Limited, own in equal shares and farm in partnership a dairy farm known as Kowhai Banks Dairy. Mr Watherston has an interest in this through trusts which own Okarahia Downs Limited. His brother controls JNW Property Limited. In 2013 these companies were, and still are, engaged in subdividing Kowhai Banks Dairy Farm to create a title on which it is intended to develop a business park. Despite this proposal having been under consideration for some time, a resource consent has not yet been obtained for one aspect of the activities proposed on the intended business park site, New Zealand Transport Authority approval has not yet been given for a road safety plan for the subdivision and other aspects of the subdivision still require completion. Considerable work has been undertaken, however, by the surveyors instructed for the project.

[8] Mr Watherston says that Mr Thompson’s real interest was not in buying Rocky Peaks, but rather in obtaining a share of the proposed business park. According to Mr Watherston the agreement he has with Mr Thompson is that once

the development of Kowhai Banks Dairy has reached a point where part of it could be sold, Mr Thompson would buy 80 per cent of the shares in Okarahia Downs Limited, and Mr Watherston would use the money from that purchase to buy back Rocky Peaks from Mr Thompson.

[9] According to Mr Watherston, bullet point seven of the agreement gives him and his family the right to buy back the Rocky Peaks property, and Mr Thompson’s right to buy into Kowhai Banks Dairy is contained in the second bullet point:

RW will sign over complete financial control and any interest in plant and livestock subject to the receivership plus 80% of his shares in Kowhai Banks Dairy (the dairy farm).

[10] Based on this, Mr Lynn for says that Mr Watherston’s position is that as soon as the subdivision of Kowhai Banks Dairy has been completed the Watherston interests in that property will be valued, a price for 80 per cent of these interests will be struck, and that will be the price which will also apply to the sale of Rocky Peaks back to Mr Watherston, subject however to an adjustment for interest and holding costs, and the net proceeds of the sale of wool and livestock from Rocky Peaks. Mr Watherston would arrange for RPC to take title.

[11] According to Mr Watherston, Mr Thompson drafted the agreement, sent it to Mr Watherston on 20 December 2013, and said that it had to be signed before he would commit to buying Rocky Peaks from the receivers. He did as Mr Thompson wished, emailing the document back to him the same day. He does not know whether Mr Thompson signed the agreement, and Mr Thompson’s evidence is silent on this point.

[12] Mr Watherston says he wishes to proceed as intended, namely to exercise the option which he believes he has, and to assign the consequent agreement to purchase Rocky Peaks to RPC, which has been incorporated for the purpose. It was not incorporated when the documentation was signed in December 2013, but has already purchased some stock and plant from KPIL.

[13] As well, Thompson Property Group Limited has lodged a caveat against the land owned by Okarahia Downs Limited claiming an interest in the Kowhai Banks Dairy property:

Pursuant to an Agreement dated 20 December 2013 made between Richard John Scott Watherston (as the director of Okarahia Downs Ltd (the registered proprietor of a half share of the property)) and the caveator relating to creation of an ownership share in the property by the said proprietor in favour of Thompson Property Group Limited.

[14] Mr Thompson has a different perspective on how the agreement came to be signed and what he agreed to. He says that the real estate agent from Bayleys introduced him to Mr Watherston and asked him if he could help Mr Watherston with “his predicament”. At that point, Mr Watherston’s principal interest was to save The Doone from forced sale. Only when the receivers sold it to a third party did Mr Watherston become keen to retain Rocky Peaks. He says Mr Watherston maintained he would receive money from a claim he believed he had concerning shares he owned in a publicly listed company. Mr Thomopson says that he agreed to buy Rocky Peaks, and if and when funds became available to Mr Watherston from this claim, Mr Watherston would buy the shares in KPI, thereby buying the property back. In return for agreeing to enter into this transaction, Mr Thompson was to receive an interest in Kowhai Banks Dairy, which he was interested in acquiring. It was for this reason that he agreed to buy Rocky Peaks on the terms set out in the agreement.

[15] Mr Thompson says that, even though his position is that neither Mr Watherston nor RPC has an option to purchase Rocky Peaks from him, the property has been offered to Mr Watherston and he has been either unable or unwilling to sign an unconditional agreement to buy it. Now Mr Thompson has a third party who is prepared to buy the property, and an affidavit from that party confirms this position.

[16] The key difference between the evidence of Mr Watherston and the evidence of Mr Thompson relates to payment for the shares in Okarahia Downs Limited. Mr Watherston maintains Mr Thompson is to buy these at valuation, and he will buy back Rocky Peaks at the same price, but with stipulated adjustments. Mr Thompson

maintains he is to receive the shares in Okarahia Downs Limited as his recompense for giving Mr Watherston a chance to keep Rocky Peaks. The agreement document does not support Mr Watherston’s position, and is consistent with Mr Thompson’s.

[17] The Court recently summarised the principles to be applied, in NGW v GS.¹

(a) A caveat should be removed if it is clear that there was no valid ground for lodging it, or that any valid ground no longer exists.

(b) It is for the applicant to demonstrate a reasonably arguable case for concluding that the interest claimed has, in fact, come into existence. The onus is on the applicant to establish that this is the case.

(c) The Court has a discretion to order removal of a caveat, even if the caveator establishes an arguable case for the interest claimed, although such discretion will be exercised cautiously.

(d) Although the summary procedure available under the Land Transfer Act is unsuitable for determination of disputed questions of fact, evidence must meet a threshold of credibility, and there may be cases where the Court can say that the allegations made are baseless.

(e) A Court will generally allow a caveat to lapse if it is defective and does not state all of the particulars required by s 137 of the Land Transfer Act. The Courts have taken a more relaxed attitude to this issue where caveats are lodged pursuant to interests claimed under the Property (Relationships) Act.

[18] Mr Lynn, for Mr Watherston and RPC, says the agreement is a binding contract. The parties intended to create a legal relationship, there was an offer, acceptance of it, and good consideration. The agreement complies with s 24(1)(a) and (b) of the Property Law Act 2007. Mr Watherston wishes to exercise the option to purchase Rocky Peaks as soon as he is in a position to do so, and the fact that KPI has lodged a caveat against the title to the land owned by Okarahia Downs Limited shows that Mr Thompson and KPIL also regard the agreement as valid and enforceable.

[19] Mr Russ, for KPIL, says that if the agreement is sufficiently certain to be enforceable, it is in any event an option to purchase shares, not land, and does not

_{therefore create an interest in land in respect of which a caveat may be
registered}

under s 137 of the Land Transfer Act. If, however, the agreement purports to create an option to purchase land, it is unenforceable by virtue of s 24 of the Property Law Act 2007.

[20] Thirdly, Mr Russ says that the agreement reached is to later reach a binding agreement, that there are material terms left for later agreement, and the agreement is void for uncertainty.

[21] In my view, the first issue to be decided on this application is whether the agreement is an option to purchase land, or shares. Only if the agreement purports to create an option to purchase land is it necessary to decide whether it is unenforceable by virtue of s 24 of the Property Law Act 2007.

[22] Because s 137 of the Land Transfer Act permits the registration of a caveat to protect an interest in land arising from an unregistered agreement or other specified instrument, it is necessary, first, to decide whether Mr Watherston has raised a reasonably arguable case that he has an interest in land arising from the agreement. This requires, first, an analysis of the meaning of the document relied on as creating this interest, and issues relating to the enforceability or validity may be put to one side. Only if the document purports to create an interest in land will they fall for determination.

[23] Mr Russ argues that close examination of the agreement leads to the conclusion that it is an option to purchase shares. To explain his argument, Mr Russ refers first to the various references to companies in the agreement, and assigns them numbers. He starts with the “new JVC (Joint Venture Company)” referred to in line three, and calls this company one. He then refers to bullet point two in which reference is made to 80 per cent of Mr Watherston’s shares in Kowhai Banks Dairy. As explained earlier, through one or more trusts Mr Watherston has shares in Okarahia Downs Limited, one of the two companies which jointly own Kowhai Banks Dairy. Mr Russ describes this company as company two.

[24] Thirdly, Mr Russ refers to the fifth bullet point where reference is made to an ongoing company structure which Mr Watherston and the TPG are to negotiate, for the operation and ownership of the 40 per cent holding in Kowhai Banks Dairy, which Mr Thompson or the TPG would own as a result of receiving 80 per cent of the shares in Okarahia Downs Limited, a 50 per cent shareholder. Mr Russ describes this ongoing company structure as company three.

[25] Mr Russ then refers to the sixth bullet point which gives Mr Watherston and his family a first right of refusal to purchase shares back in “either enterprise”. He says that this must be a reference to company two and company three, which relate to Kowhai Banks Dairy.

[26] Then Mr Russ says that bullet point seven refers to company one, because it is company one which the agreement provides was to become the owner of Rocky Peaks.

[27] In support of this argument Mr Russ makes the following points. First, it is implicit in the use of the term “100% of the Rocky Peaks property” that the property is to be owned in shares assessed by way of percentage. This, Mr Russ says, is entirely, and only, consistent with the reference in line three to a new JVC company, which is to be the vehicle for ownership of Rocky Peaks. Although there is reference elsewhere to ownership in percentage terms of Okarahia Downs Limited, and through it Kowhai Banks Dairy, these do not relate to the Rocky Peaks property, which is specifically mentioned in the seventh bullet point. So the seventh bullet point must refer to buying shares in company one.

[28] Secondly, Mr Russ says that people speak of percentages of shareholdings, but not of land, so common usage dictates that bullet point seven is not a reference to buying the property itself. Thirdly, Mr Russ says that this interpretation is consistent with Mr Thompson’s evidence.

[29] As the correct approach to interpretation of the contract is to first examine the wording of the contract before considering extrinsic evidence as to its meaning, I proceed this way.

[30] I am persuaded by Mr Russ’s argument, as it is supported by the wording of the document itself. The opening paragraph of the agreement contains mutual promises. The Thompson Property Group undertakes to buy Rocky Peaks on the terms stated, and Mr Watherston undertakes to work with Mr Thompson to complete the sale of the property to a new joint venture company. It is clear from this that at the time this agreement was entered, Mr Watherston and Mr Thompson were contemplating operating Rocky Peaks through a joint venture company which would buy Rocky Peaks from TPG once it had bought it from PGG Wrightson, which was the appointer of the receivers. That being the case, the right to buy back Rocky Peaks could only be exercised in respect of the percentage of the joint venture company which Mr Watherston did not already own as a result of the intended negotiations referred to in the opening paragraph. The use of the term “100%” in bullet point seven is entirely consistent with that.

[31] I therefore find that the option granted in the seventh bullet point is an option to purchase shares in the envisaged joint venture company (company one) which was to become the owner, after negotiation, of the Rocky Peaks property.

[32] It follows that, even if the option to purchase is enforceable, a point put in issue by the remaining arguments presented by Mr Russ, it is not an interest in land which is capable of registration and cannot, therefore, support a caveat under s 137 of the Land Transfer Act.

[33] This is sufficient to determine this application. Nonetheless, as the second issue was fully argued, I now turn to consider it.

Second issue: If the agreement purports to create an option to purchase land, is it unenforceable by virtue of s 24 of the Property Law Act 2007?

(1) A contract for the disposition of land is enforceable by action unless – (a) the contract is in writing or its terms are recorded in writing; and (b) the contract or written record is signed by the party against whom

[35] As can be seen,²the agreement is said to be between Richard Watherston and Gaire Thompson, but does not bear the signature of Mr Thompson. It was TPG which undertook to purchase Rocky Peaks. Compliance with s 24 of the Property Law Act 2007 therefore requires that the document be signed by TPG. As I have noted, there is no evidence Mr Thompson, its director, has in fact signed it.

[36] Applying s 24, therefore, the option is unenforceable. However, in some circumstances, the courts may enforce agreements which are otherwise unenforceable, by applying the authenticated signature fiction or the doctrine of part performance which is expressly preserved by s 25.

[37] This fiction is described by French J in Tait-Jamieson v Cardrona Ski Resort

[27] That doctrine provides that if certain requirements are met, the written, printed or typed name of a party appearing in the writing as some part of its substance (for example, in the space for the name of the party) can be held to be the signature of that party. The fiction is that the party has authenticated the expression of their name as their signature for the purpose of further authenticating the writing of which it forms part.

[31] It was common ground that the Judge had correctly identified the three requirements or features of the authenticated signature fiction doctrine, namely:

(i) The document must have been prepared by Mr Tait-Jamieson or his authorised agent and have his name printed or written on it.

(iii) It must be shown either from the form of the document or the surrounding circumstances that it was not intended to be signed by anyone other than Cardrona, and that when signed by Cardrona it

³Tait-Jamieson v Cardrona Ski Resort Ltd [2011] NZHC 969; [2012] 1 NZLR 105 (HC).

[39] Before considering these requirements, it is necessary to consider whether this doctrine still applies to the sale of land. The fiction has come in for some criticism. In Firstpost Homes Ltd v Johnson, the English Court of Appeal held that older case law giving an extended definition to the word “signed” was no longer applicable.⁴Peter Gibson LJ said:⁵

The Act of 1989 seems to me to have a new and different philosophy from that which the Statute of Frauds 1677 and section 40 of the Act of 1925 had. Oral contracts are no longer permitted. To my mind it is clear that Parliament intended that questions as to whether there was a contract, and what were the terms of the contract, should be readily ascertained by looking at the single document said to constitute the contract.

... For my part I do not see why it is right to encumber the new Act with so much ancient baggage, particularly when it does not leave the “signed” meaning which the ordinary man would understand it to have.

No contract to which this section applies shall be enforceable by action unless the contract or some memorandum or note thereof is in writing and is signed by the party to be charged therewith or by some other person lawfully authorised by him.

[41] The section applied to every contract for the sale of land, as does s 24 of the

[42] Section 27 of the Property Law Act 2007 provides that a contract of guarantee must be in writing and signed by the guarantor. Section 27 is considered at length in Northcott v Davidson.⁶In particular, Associate Judge Bell compared s 27 with s 2 of the Contracts Enforcement Act 1956. The learned Judge said:

[27] Under the Contracts Enforcement Act 1956, an oral guarantee could be enforced if there was some memorandum or note of it in writing signed by the guarantor. Similarly, under s 24 of the Property Law Act 2007, a contract for the disposition of land may be enforced if there is a written record of the agreement, signed by the party the agreement is to be enforced against.

However, under s 27, the guarantee itself must be in writing. An oral contract of guarantee is not enforceable even if the guarantor has signed a written record of the guarantee.

[43] His Honour went on to note that s 2 of the Contracts Enforcement Act and s 27 of the Property Law Act may have different effects if found to apply.⁷Under the former, the contract is unenforceable, but not void. Under the latter, the contract is void if the requirements of the section are not met. That is not the case with s 24. If the requirements of this section are not met, a contract to which those requirements applies remains unenforceable, as under the Contracts Enforcement Act.

[44] The Associate Judge went on to find that as a result of the changes to the formal requirements for guarantees brought about by s 27, the authenticated signature fiction no longer applies to contracts of guarantee. The extended meaning of signature which underpins the authenticated signature fiction will not satisfy the requirement of s 27 of the Property Law Act 2007 for a guarantee to have been signed.

[45] Section 24 of the Property Law Act 2007 does not differ from s 2 of the Contracts Enforcement Act in the way s 27 does. The basis on which the learned Judge rejected the application of the authenticated signature fiction to contracts of guarantee, does not therefore apply to contracts for the sale of land.

[46] Whilst there may be sound reasons for the Court to re-examine whether the authenticated signature fiction should continue to apply in relation to contracts for the disposition of land to which s 24 of the Property Law Act 2007 applies, this is not an appropriate case for the Court to undertake that exercise, for the following reasons. First, this is an interlocutory application for an order that a caveat should not lapse. The Court is not examining the document relied upon as a binding option to purchase land after hearing oral testimony including cross-examination. Nor is the Court required or able to make a final ruling on the merits of Mr Watherston’s

_{claim to have an option to purchase land. Even though, for reasons
given in relation}

to the first issue, the caveat must lapse, Mr Watherston’s contractual rights remain

[47] Secondly, neither counsel presented argument of substance in relation to the authenticated signature fiction. Thirdly, given the decision on the first issue, this decision on the second issue is obiter.

[48] I therefore turn to the requirements for the fiction to apply, as set out by French J. The first and second are met. The document was prepared by Mr Thompson, had his name printed on it, and was sent to Mr Watherston for signature. The third element presents more difficulty for Mr Watherston. As can be seen from the document, the names Gaire Thompson and Richard Watherston appear at the foot of the document, one on each side, as might be expected for a layout for separate signatories. Mr Thompson asked Mr Watherston to sign it, and Mr Watherston signed below his name and inserted the date on which he did so. In relation to this, Mr Watherston says in his affidavit:

He sent me the contract between TPGL and me on 20 December 2013, and said it had to be signed before he would commit to the offer to buy Rocky Peaks. At the time I discussed it with my son Ben, daughter Gemma and wife Hillary. We were all happy with the terms of this so I signed the contract and emailed back to TPGL.

The agreement recorded that it was to be signed prior to Mr Thompson submitting the offer for Rocky Peaks. I am unsure if he did ever sign the agreement as the only copy of the agreement that I hold is not signed by him. However I had five telephone conversations with Mr Thompson on the

20^thof December 2013 to get the contract sorted, and Mr Thompson did enter into an agreement to purchase Rocky Peaks (as agent) from the

[49] Mr Thompson describes the document dated 20 December 2013 as a letter. After referring to his negotiations to purchase Rocky Peaks from the receiver, he says:

However before proceeding I prepared the letter of 20 December 2013 ... The purpose of that letter was to give me some level of comfort before I submitted the offer to purchase. There were no specifics on any agreement regarding any buy back ...

[50] Mr Thompson does not take issue with Mr Watherston’s view that the agreement recorded that it was to be signed prior to Mr Thompson submitting his offer for Rocky Peaks. Plainly, however, it does not. This requirement may have been expressed in one of the telephone conversations, but on Mr Watherston’s evidence, uncontradicted by Mr Thompson, the document was intended to be signed by Mr Thompson, and this accords with the way the document is laid out, and indeed was dealt with by Mr Watherston when he placed his own signature below his name, towards the foot of the page. It follows, therefore, that the third requirement for application of the authenticated signature fiction is not met.

[51] In reaching this conclusion I have considered the lengthy analysis of the requirements for a signature in order for there to be compliance with s 2 of the Contracts Enforcement Act 1956, in Welsh v Gatchell.⁸After analysing a number of authorities, Miller J said:

[51] I draw from these cases the following propositions. Although the content of the document and the signature upon it may be written at the same time and by the same person, they serve different legal purposes. A signature is a distinct and personal act that identifies the party to be charged and evidences his or her intention to be bound by the contents of the document. For that reason, a name need not be interpreted as a signature where it serves some other purpose, as in the case where it appears as part of the substantive content. A signature may appear in any position, but it must govern the whole. A name, initials, or other mark that identifies the party to be charged may suffice as a signature. It need not be handwritten; in particular, it may be stamped or typed.

[52] On the agreement, Mr Thompson’s name appears at the foot of the page. It is typed. In terms of the passage quoted, it is a name identifying the party to be charged, as he is the director of TPG. If the passage quoted were to be applied literally, it might be found that Mr Thompson’s name typed at the foot of the document was sufficient to satisfy the requirement of s 24 of the Property Law Act

2007. However, the crucial issue is whether the presence of the typed name of Mr Thompson on the document evidences his intention on behalf of TPG to be bound to its contents. Thus, whilst a typed name may suffice to identify the party to be charged, and may suffice as a signature, it will not suffice unless it is found that it

_{evidences an intention by the party whose name thus appears to be bound
by the}

document. Were it otherwise, the intention of s 24 of the Property Law Act 2007 would be entirely avoided.⁹On the evidence before the Court it is not established that the presence of Mr Thompson’s name evidences that intention. In my view the presence of Mr Thompson’s name evidences an intention that he sign it, taking into account the format of the document and the fact that Mr Thompson prepared it and expected Mr Watherston to sign it, as he did. Their respective names identify them

[53] For the sake of completeness, although there is a TPG heading on the agreement, a printed header cannot serve as a signature in the absence of evidence that it was intended to serve that purpose and bind the party named in the header to the contract. There is no such evidence here.

[55] Section 26 of the Property Law Act 2007 preserves the doctrine of part- performance. In TA Dellaca Ltd v PDL Industries Ltd,¹⁰Tipping J framed the test for the application of this doctrine in the following terms:

1. Was there a sufficient oral agreement such as would have been enforceable but for the Act?

2. Has there been part performance of that oral agreement by the doing of something which:

(a) Clearly amounts to a step in the performance of a contractual obligation or the exercise of a contractual right under the oral contract; and

(b) when viewed independently of the oral contract was, on the probabilities, done on the footing that a contract relating to the land and such as that alleged was in existence.

3. Do the circumstances in which that part performance took place make it unconscionable (fraudulent in equity) for the defendant to rely on the Act?

[56] It is convenient to refer to the second element first. Although not enunciated in this test, the conduct in question must be that of the party seeking to rely on the contract.¹¹

[57] Mr Russ says that there is no evidence that Mr Watherston has performed any of the obligations imposed on him by the agreement. Mr Lynn, for Mr Watherston, says that Mr Watherston has honoured the obligation on him set out in the third bullet point:

RW will continue to farm and manage the properties (including overseeing the dairy farm) in a good husband like manner for which he will receive a negotiated management allowance.

[58] After Mr Thompson bought Rocky Peaks and turned his mind to financing the purchase, it evidently became apparent that he could not raise the necessary monies unless he had an income stream from the farm by way of rent. So he and Mr Watherston agreed that the latter would lease the property, rather than managing it and receiving a management allowance, as intended by bullet point three.

[59] Certainly, however, Mr Watherston has continued to farm the property, and although as tenant, has continued to manage it. As well, there does not seem to be any issue that he has continued to oversee Kowhai Banks Dairy, nor that he has undertaken these tasks in other than a good husband like manner. Although there seem to be issues in relation to payment of rent, there is no suggestion by Mr Thompson that Mr Watherston has not honoured his obligations in bullet point three.

[60] Consistent with bullet point three, also, RPL, under Mr Watherston’s direction, bought stock and plant from KPI which KPI had bought from the receivers. I find that it is arguable that Mr Watherston has part-performed the agreement dated 20 December 2013 in the terms decided in T A Dellaca v PDL Industries Ltd.

[61] Real problems lie in Mr Watherston’s pathway to establishing the first element, though. There are material differences between Mr Watherston and

Mr Thompson on exactly what was agreed. Either could be correct, but the onus of establishing an arguable case lies on Mr Watherston. As I have said, the agreement does not support Mr Watherston’s evidence on the terms agreed on. Further, the agreement lacks certainty on material points. There is no indication of the price at which the option might be exercised, nor of when settlement of a purchase might be, or any other terms that might apply. I do not accept Mr Lynn’s argument that the price would be value of the share in Kowhai Banks Dairy as it conflicts with Mr Watherston’s assertion that the price would be the amount Mr Thompson paid for Rocky Peaks plus his interest and holding costs, adjusted for the net proceeds of sale of wool and livestock. And the difficulty with this evidence is that this formula is not in the written agreement, and cannot be implied into it. Perhaps, at trial, Mr Watherston could establish a partly written and partly oral contract, but that is not presently suggested.

[62] I find that Mr Watherston has not established the requisite elements of the doctrine of part performance. I therefore conclude that by application of s 24 of the Property Law Act 2007 the agreement is not enforceable.

[63] Given the decision of the Court on the first and second issues, it is not necessary to canvas the arguments of counsel on other issues, and as the applicants may choose to take steps to enforce the right they believe they have in other proceedings, it is preferable not to do so.

[65] Costs are reserved. If not agreed, the respondent may file a memorandum within five working days and the applicant may do so within a further five working

High Court of New Zealand Decisions

Watherston v Kaikoura Pastoral Investments Limited [2015] NZHC 2084 (31 August 2015)