875 Frankton Road Limited v Gabe
[2013] NZHC 3146
•27 November 2013
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
CIV-2011-425-000032 [2013] NZHC 3146
BETWEEN 875 FRANKTON ROAD LIMITED Plaintiff
ANDROSALINA GABE First Defendant
RAJEEV NAIK Second Defendant
CIV-2011-425-000034
Hearing: 18 November 2013
Appearances: S N McKenzie for Plaintiff
No appearance for Defendants
Judgment: 27 November 2013
JUDGMENT OF D GENDALL J
Introduction
[1] This judgment relates to both proceedings CIV-2011-425-000032 and CIV-
2011-425-000034.
[2] Both these matters were the subject of a formal proof hearing on
18 November 2013. Ms Nicholl appeared as counsel for the plaintiff in each proceeding. There was no appearance for counsel for the first or second defendant in the proceeding CIV-2011-425-000032 or for the defendant in proceeding CIV-2011-
425-000034.
[3] By minute of Associate Judge Osborne dated 1 August 2013 certain directions in those matters were made. The plaintiff has complied with these
875 FRANKTON ROAD LIMITED v GABE [2013] NZHC 3146 [27 November 2013]
directions regarding its affidavit evidence, filing its synopsis of submissions and chronology. None of the defendants in either proceeding have complied by filing and serving their briefs of evidence as required under paragraph 10(d) of that minute, nor has there been any appearance on their behalf before me.
[4] Indeed, previous counsel who acted for the defendants in both proceedings, Mr McKeague ceased to be solicitor and counsel on the record and withdrew from this proceeding on 18 October 2012. No further counsel has been appointed to act for any defendants here, nor has there been any appearance by them or on their behalf at the hearing of this matter before me.
[5] That hearing therefore proceeded as a formal proof.
Background facts with respect to CIV-2011-425-000032
[6] With regard to this proceeding, on 30 October 2007 Wensley Developments The Marina (In Liquidation) (“Wensley”) as vendor and the first defendant Rosalina Gabe, (Ms Gabe) as purchaser entered into an agreement for the sale and purchase of Unit 305 at the Marina Apartments Development in Queenstown. The purchase price under this agreement was $1,136,250 and the agreement provided for payment of a deposit of $113,625. Settlement under the agreement was to take place following completion of Unit 305, deposit of the Unit Plan and issue of title.
[7] On 7 February 2008 Wensley and both the first and second defendants signed a variation to the agreement providing for the second defendant to be added as a joint purchaser.
[8] As to the deposit, $64,000 was paid by the second defendant on 20 February
2008 and the balance deposit of $50,000 was arranged through New Zealand Home Bonds Limited. In December 2008, Wensley advised the solicitors for the defendants that the apartment was completed, a certificate of title had been issued and the matter was ready for settlement. A code compliance certificate was issued and a copy provided to the defendants.
[9] Settlement was to take place on 23 December 2008, but it did not occur. The defendants’ solicitors had at the very last minute raised certain queries about the practical completion certificate and the code compliance certificate for the unit, and an issue concerning balustrades. These question were answered by Wensley’s solicitors but on 23 December 2008 the defendant’s solicitor purported to give notice to Wensley cancelling the agreement for what the defendants claimed were misrepresentations as to the nature, quality, investment return and overall construction standards of the Unit 305.
[10] Settlement obviously did not occur on 23 December 2008. A settlement notice was then issued by Wensley requiring the defendants to settle by 22 January
2009.
[11] Settlement did not occur on 22 January 2009. On 30 January 2009 Wensley’s solicitors advised the defendant’s solicitors that the settlement notice had expired and penalty interest was accruing.
[12] Discussions took place between the parties from February 2009 to September
2010. On 5 March 2009 New Zealand Home Bonds Limited paid the balance
deposit of $50,000 to Wensley’s solicitors.
[13] Then, on 30 September 2010 Wensley’s solicitors formally cancelled the agreement due to the defendant’s breach in failing to settle.
[14] Wensley retained the Home Bond deposit proceeds of $51,565.27 (including interest) and the part deposit paid earlier of $64,000.
[15] On 27 October 2010 Wensley assigned all of its rights pursuant to the agreement to the plaintiff and on that date Wensley sold several units including Unit
305 to the plaintiff. Unit 305 was said to have a market value of $525,000 excluding
GST at around 19 August 2010. The purchase price for Unit 305 was specified as
$525,000 in the on-sale agreement with the plaintiff.
[16] On 10 November 2010, Wensley’s solicitors gave notice to the defendants
that Wensley had assigned all of its rights pursuant to the agreement to the plaintiff.
[17] As a result of the defendant’s breach of the agreement in failing to settle the
purchase, the plaintiff says it has suffered losses calculated as follows:
Purchase price pursuant to the agreement (inclusive of
GST)
$1,136,250.00
Less the deposits already paid $114,000.00
Less the income earned for Unit 305 in 2009 $7220.00
Less the income earned for Unit 305 in 2010 $19,180.00
Less the market value of Unit 305 at cancellation by
Wensley (including GST)
$590,625.00
$405,225.00
Plus interest from 23 December 2008 (settlement date)
to 30 September 2010 on $995,850 at 16% p.a. being
$436.54 per day for 647
Plus interest from 30 September 2010 (cancellation date) to 30 June 2011 (on the original purchase price less deposit, income and the market value $405,225 plus interest of $282,441.30) totalling $687,666.38 at
8.4% p.a. being $158.26 per day for 291 days
Plus interest on $733,720.04 (being $687,666.38 plus
$46,053.66) from 1 July 2011 to the date of judgment at the present Judicature Act rate of 5% p.a.
$282,441.38
$46,053.66
Background facts with respect to proceeding CIV-2011-425-000034
[18] This proceeding related to the sale of Unit 306 at the Marina Apartments
Development. It concerned an agreement for sale and purchase dated 14 March
2008 between Wensley as vendor, and the defendant Rajeev Naik (Mr Naik) as purchaser.
[19] Again the purchase price for this apartment was $1,136,250 but the deposit under this agreement was only $56,812. Otherwise the provisions of this agreement were virtually identical to those for the sale and purchase of Unit 305, the subject of proceeding CIV-2011-425-000032.
[20] So far as this apartment Unit 306 was concerned, no deposit was physically paid by the defendant, Mr Naik. It was partially offset by referral fees Mr Naik had earned from Wensley in referring purchasers for other units, 202, 304, and 305 at the development. The total value of referral fees offset against the deposit was $38,000 including GST.
[21] Again, so far as this Unit 306 was concerned, the apartment was completed and Mr Naik as purchaser called upon to settle by 23 December 2008. Once again on 22 December 2008 the defendant’s solicitor raised queries about the practical completion certificate, the code compliance certificate and an issue concerning balustrades for Unit 306. And again these questions were answered by Wensley’s solicitors.
[22] But on 23 December 2008, Mr Naik’s solicitor gave notice purporting to cancel the agreement, again for what Mr Naik claimed were misrepresentations made by Wensley as to the nature, quality, investment return and overall construction standards of Unit 306.
[23] Settlement obviously also did not occur on 23 December 2008. A settlement notice was issued expiring 22 January 2009 and again Mr Naik failed to settle on that date.
[24] Wensley’s solicitors on 30 January 2009 advised Mr Naik’s solicitor that the
settlement notice had expired and penalty interest was accruing under the contract at
$498.08 per day.
[25] Again, despite further discussions between the parties between February
2009 and September 2010, nothing was resolved.
[26] On 30 September 2010 Wensley’s solicitors wrote to Mr Naik advising the
agreement was cancelled due to his breach in failing to settle.
[27] On 27 October 2010 Wensley assigned all its rights pursuant to this agreement for Unit 306 to the plaintiff and also included Unit 306 in the sale of several units which Wensley, at that point, had sold to the plaintiff.
[28] As at 19 August 2010 Unit 306 was said to have a market value of $530,000 excluding GST ($596,250 including GST). The purchase price under the on-sale agreement whereby the plaintiff acquired Unit 306 was specified a figure of
$530,000.
[29] On 10 November 2010, Wensley’s solicitors again wrote to Mr Naik’s solicitors giving notice that Wensley had assigned all of its rights pursuant to this agreement to the plaintiff.
[30] The amounts sought by the plaintiff in this proceeding CIV-2011-425-000034 with respect to Mr Naik’s breach of the agreement for Unit 306 are said to be calculated as follows:
27.1 Purchase price pursuant to the Agreement (GST incl) $1,136,250.00
27.2Less off-set for referral fees being partial payment of the deposit
$38,000.00
27.3 Less the income earned for Unit 306 in 2009 $7,188.00
27.4 Less the income earned for Unit 306 in 2010 $30,765.00
27.5 Less the market value of Unit 306 at cancellation by Wensley $596,250.00
27.6 TOTAL $464,047.00
Interest
27.7 Plus interest from 23 December 2008 (settlement date) to 30
September 2010 (cancellation date) on $1,060,297.00 at the rate of 16% per annum being $464.79 per day for 647 days
27.8 Plus interest from 30 September 2010 (cancellation date) to
30 June 2011 (on the original purchase price less deposit, income and the market value $464,047.00 plus interest of
$300,719.13) total $764,766.13 at the rate of 8.4% per annum
being $176.00 per day for 291 days being:
27.9 Plus interest on $815,982.13 (being $764,766.13 plus
$51,216.00 from 1 July 2011 to the date of judgment at the rate of 5.0% per annum.
$300,719.13
$51,216.00
Evidence
[31] The only sworn or deposed evidence before the Court in these proceedings are detailed affidavits of Julie Raewyn Wensley Jack (Ms Jack) in each case dated
5 November 2013. Ms Jack was also present at the hearing of this matter on
18 November 2013 and gave evidence confirming the contents of those affidavits.
[32] In the case of each of the sales of Unit 305 and 306, Ms Jack confirms in her affidavit the provisions of the standard Third Edition July 1999 Agreement for Sale and Purchase of Real Estate form used by the Law Society and Real Estate Institute which formed the basis for these contracts. In addition, she confirms the matters outlined in each statement of claim and that the defendants as purchasers of each of the apartments defaulted both on settlement and after expiry of the settlement notices, with ultimately those contracts being cancelled by Wensley. Confirmation of the subsequent assignment to the plaintiff of Wensley’s rights under the agreements is testified and any suggestion in the defendants’ original pleading that they had the right to cancel the agreements for misrepresentation or otherwise is firmly refuted.
[33] On all of this, there is no sworn evidence before me here filed on behalf of any of the defendants. Nor, as counsel for the plaintiffs has confirmed, was the plaintiff served by the defendants with briefs of evidence for either proceeding.
[34] As I understand the defences the defendants in each proceeding originally endeavoured to advance in their pleadings, these were simply that they were entitled to, and have, cancelled both agreements for misrepresentation on the part of Wensley and further, that Wensley’s assignment to the plaintiff was alleged not to be of the agreements for sale and purchase themselves but only “rights under those agreements”.
[35] None of these contentions are in any way supported by evidence advanced for the defendants. On the contrary, what evidence there is before the Court appears to refute any suggestion that misrepresentation of any kind may have occurred here. None of this is in any way answered by the defendants.
[36] In terms of liability here I am satisfied that the defendants in each case defaulted under their respective agreements for sale and purchase in that they failed to settle either on the settlement date or prior to expiry of the settlement notice. Wensley, and following the assignment the plaintiff, in each case therefore had the right in terms of the agreements and under the Contractual Remedies Act 1979 to cancel these contracts ultimately and to proceed to recover any loss from the defendants as purchasers in breach.
[37] Similarly, pursuant to s 7(2) of the Contractual Remedies Act 1979 Wensley and the plaintiff were entitled to cancel these contracts on the basis that the defendants had repudiated them by making it clear that they did not intend to settle.
[38] Proper settlement notices were issued by Wensley. In each case, the defendants failed to complete settlement prior their expiry.
[39] The defendants, as I see it, were liable to Wensley and now to the plaintiff to whom those rights have been appropriately assigned, an assignment for which proper notice was given.
[40] With respect to the plaintiff’s quantum claims on each proceeding as outlined at [17] and [30] above, again there is no evidence before the Court providing any opposition to these claims. The amounts claimed appear to me to be in order.
Conclusion
[41] Accordingly, for the reasons outlined above, the claim by the plaintiff in each proceeding CIV-2011-425-000032 and CIV- 2011-425-000034 succeed. Judgment is granted to the plaintiff against the defendants in each proceeding.
Orders
CIV-2011-425-000032
[42] As to this proceeding judgment is entered for the plaintiff against the defendants as set out at [17] above as follows:
(a) Judgment for the difference between the purchase price under the
Agreement less deposit, income and the resale value of the Unit being
$405,225.00.
(b) Penalty interest at the rate of 16% per annum as per the Agreement
$282,441.38.
(c) Interest at the rate of 8.4% per annum pursuant to the Judicature Act
1908, $46,053.66.
(d) Interest at the rate of 5.0% per annum pursuant to the Judicature Act
1908 from 1 July 2011 to the date of this judgment.
(e) Interest at the rate of 5.0% per annum pursuant to the Judicature Act
1908 on the judgment sum (until date of full payment).
CIV-2011-425-000034
[43] As to this proceeding judgment is entered for the plaintiff against the defendant as set out at [30] above as follows:
(a) Judgment for the difference between the purchase price under the
Agreement less deposit, income and the resale value of the Unit being
$464,047.00.
(b) Penalty interest at the rate of 16% per annum as per the Agreement
$300,719.13.
(c) Interest at the rate of 8.4% per annum pursuant to the Judicature Act
1908 $51,216.00.
(d) Interest at the rate of 5.0% per annum pursuant to the Judicature Act
1908 from 1 July 2011 to the date of this judgment.
(e) Interest at the rate of 5.0% per annum pursuant to the Judicature Act
1908 on the judgment sum (until date of full payment).
Costs
[44] As to costs, no formal submissions were advanced to me with respect to this issue. The plaintiff clearly is entitled to costs from the defendants with respect to each proceeding.
[45] A direction is now made that if the parties are unable to settle the issue of costs between them then they may file memoranda sequentially and, in the absence of either party indicating they wish to be heard on the question of costs, I will decide that issue based on the material then before the Court.
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D Gendall J
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