AAA Development (Ormiston) Ltd v Ormiston Group Ltd HC Auckland CIV 2008-404-2616

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2008-404-2616

BETWEEN  AAA DEVELOPMENT (ORMISTON) LIMITED

Plaintiff

ANDORMISTON GROUP LIMITED Defendant

Hearing:         14 - 16 and 23 June 2010

Appearances: I Williams for the plaintiff

A Liew for the defendant

Judgment:      23 November 2010

JUDGMENT OF CLIFFORD J

Solicitors:

Kemps Weir Lawyers, P O Box 62566, Auckland for the plaintiff

(Counsel: I Williams: [e-mail]) Forest Harrison, P O Box 828, Auckland for the defendant

(Counsel: A E Liew: [e-mail])

AAA DEVELOPMENT (ORMISTON) LIMITED V ORMISTON GROUP LIMITED HC AK CIV-2008-404-

2616  23 November 2010

Contents

Introduction....................................................................................................... [1] Background ..................................................................................................... [10] The subdivision of land generally.................................................................. [18] The factual narrative

An overview of the evidence.................................................................. [21]

28 February 2006 – 10 March 2008..................................................... [38]

10 March 2008 – 24 July 2008 ............................................................. [54]

24 July 2008 – 21 January 2009........................................................... [63]

21 January 2009 onward ...................................................................... [70] The legal issues that arise ............................................................................... [74] Section 225 and the S&P Agreement

Section 225(1) – a vendor’s implied obligation to deposit

the survey plan ...................................................................................... [77]

Section 225(2) – a purchaser’s express rights of cancellation

and rescission ....................................................................................... [89] Clause 14 of the S&P Agreement ......................................................... [99] Overall relationship between s 225 and clause 14 ............................. [105] Can parties contract out of s 225? ..................................................... [115]

The efficacy of Ormiston’s 10 March 2008 notice of avoidance............... [133]

The efficacy of AAA’s 24 July 2008 notice of acceptance of repudiation/cancellation ............................................................................... [141]

Acceptance of repudiation? ................................................................ [143]

Cancellation for ongoing breach? ....................................................... [158] The efficacy of AAA’s 21 January 2009 notice of cancellation................. [165] Consequences of my findings ....................................................................... [172] Costs ............................................................................................................... [183]

Introduction

[1]     The plaintiff AAA Development (Ormiston) Limited (“AAA”) and the defendant, Ormiston Group Limited (“Ormiston”) are parties, as purchaser and vendor respectively, to  a written  agreement dated 28  February 2006  (“the S&P Agreement”) for the sale and purchase of certain land at Ormiston Road, Flatbush, Auckland (“the Land”).

[2]      In these proceedings, and as finally pleaded, AAA seeks:

a)        a declaration that it lawfully terminated the S&P Agreement either on

24 July 2008 or on 21 January 2009;

b)a direction  authorising  the release to  it  of  deposit  monies  it  paid pursuant to the S&P Agreement together with accrued interest;  and

c)        damages for wasted expenditure.

[3]      At trial, and although not the subject of any pleading prior to trial nor of any application  at  trial  to  amend  its  statement  of  claim,  AAA  in  effect  sought  a declaration that the S&P Agreement had in fact come to an end on the earlier date of

10 March 2008, when Ormiston had purported to cancel, or avoid, the S&P Agreement.    It  is  to  be  noted  immediately that,  at  the  time,  AAA  denied  that Ormiston was in a position to so cancel or void the S&P Agreement.  It did so on the basis that Ormiston was at that time in breach of its obligation under the S&P Agreement to obtain resource consent for the subdivision of the Land.…