Contract – express terms – implied terms – Bathurst Resources Ltd v L & M Coal Holdings Ltd  NZSC 85 – business efficacy – damages – lost opportunity – joint venture
Delamere v Liu  NZCA 427.
Immigration consultant Tuariki John Delamere appealed unsuccessfully against the High Court order that he pay Yingheng Liu $459,209.87 in damages and interest for breach of contract.
Delamere owned two companies providing immigration services, TDA Immigration and Student Service Ltd (TDA) and TDA Immigration Mt Albert Ltd (Mt Albert).
Liu engaged TDA to assist him to obtain permanent New Zealand residency via the Business Entrepreneur Plus fast-track procedure. Under this procedure, Liu had to invest a minimum of $500,000 in a business operated in New Zealand and employing at least three New Zealand citizens full-time for two years or more.
To meet the criteria, Liu invested in a new company to be formed by Delamere. Liu would have a 30% shareholding, be one of three directors, and would contribute $150, 000 to the operational costs and $350,000 to be kept on term deposit.
Three agreements recorded the arrangement:
- Chinese sourcing agreement (CSA) between Liu and TDA Botany (a company associated with Delamare);
- immigration services agreement between Liu, TDA and Delamere; and
- term deposit agreement between Liu, TDA and Delamere.
The Chinese sourcing agreement required Liu to use his contacts to source clients for the company and he would be paid commission for every client he attracted. The term deposit agreement provided that Liu would have sole signing rights on the term deposit account and the funds would be used only if he agreed. The agreement also provided that Liu would receive interest on the funds, which would be returned to him if he gained residency and not wish to retain the shares.
The agreement was silent on what would happen if Liu’s application was declined. This is what eventuated but Delamere and TDA refused to pay back the $350,000 on term deposit. Liu discovered most of the money had been withdrawn and he was not the sole account signatory.
The High Court found in Liu’s favour. He claimed Delamare and TDA had breached express terms of the term deposit agreement and an implied term by failing to return the $350,000.
On appeal, Delamere argued the three agreements were interdependent, that Liu was in breach, and that Delamere was not personally liable for the $350,000. They had a joint venture, there was no implied term in the term deposit agreement, and damages should be calculated on a lost opportunity, not breach of contract.
Applicable principles: whether there was a joint venture – whether oral terms existed – whether a breach of express term – whether agreements were independent – whether a term could be implied –whether damages calculation method correct.
Held: The arrangement was not a joint venture. The three agreements were independent and there were no provisions making them interdependent.
On the evidence, “oral terms” did not exist and therefore Liu was not in breach. The relevant context of the term deposit agreement were the Chinese sourcing agreement and immigration services agreement.
The term that Liu could claim back the $350,000 if his application was declined, was necessary to give the agreement business efficacy because Liu entered the agreements only to obtain residency.
Delamere was personally liable because he was a party to the term deposit agreement and he arranged the withdrawals.
This was not a case of lost opportunity but of breach of a clear contractual term. Benton v Poulgrain (a firm)  1NZLR 66 (CA) was distinguished.
After 14 years as general counsel for a local authority, Andrea Hilton is now a sole practitioner practicing local government law.