Abil Property Taurarua Limited v Cozzolino HC Auckland CIV 2008-404-1800
[2010] NZHC 893
•25 May 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2008-404-001800
BETWEEN ABIL PROPERTY TAURARUA LIMITED
Plaintiff
ANDMAURIZIO COZZOLINO Defendant
Hearing: 12, 13, 14 October 2009
15, 16, 17 March 2010
Appearances: D J Chisholm for Plaintiff
P F Dalkie for Defendant
Judgment: 25 May 2010
RESERVED JUDGMENT OF PRIESTLEY J
This judgment was delivered by me on Tuesday 25 May at 10.30 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Counsel/Solicitors:
D J Chisholm, P O Box 2629, Shortland Street, Auckland 1140. Fax: 09 362 0750
Email: [email protected]
P F Dalkie, P O Box 392, Shortland Street, Auckland 1140. Fax: 09 336 1095Email: [email protected]
ABIL PROPERTY TAURARUA LTD V COZZOLINO HC AK CIV-2008-404-001800 25 May 2010
CONTENTS Paragraphs
The issue
1
The pleadings
6
The burden of proof
8
The witnesses
19
The relevant evidence
23
The agreement
24
The parties’ prior dealings
30
The plaintiff’s banking arrangements
38
The Cozzolinos’ interest wanes
41
The conflict
51
The immediate aftermath
64
Kitchens and paying for product
70
Plaintiff’s 18 January 2007 email
75
The 28 February 2007 email
79
The caveat
84
Other desultory events
98
Discussion
106
Result
133
Additional proceeding
139
The issue
[1] Did the parties to an agreement for sale and purchase of a townhouse in
Parnell orally agree to cancel it? That is the sole issue in this proceeding.
[2] There is no dispute that on 14 April 2005, the parties concluded an agreement for sale and purchase. The agreement obliged the defendant to buy from the plaintiff a townhouse which was to be built, as one of a block of four, in Taurarua Terrace in Parnell. The agreed purchase price was $2,123,500.
[3] The defendant says that 19 months later, on 28 November 2006, he and the plaintiff agreed to cancel the agreement. The plaintiff says it never agreed to cancel the contract. As the developer of the Taurarua Terrace apartments it says it would do its best to find a replacement buyer for the defendant at the same or a better price. Only then would the agreement be cancelled. But such a replacement buyer never materialised. As a result the agreement remained afoot.
[4] When the plaintiff’s solicitors pushed for settlement of the transaction in September/October 2007, the defendant asserted the agreement had been cancelled. It is common ground between the parties that the defendant’s stance amounted to a repudiation of the agreement. The plaintiff gave notice to the defendant that the contract was at an end. The plaintiff resold the property in May 2008 for
$1.8 million.
[5] The plaintiff claims damages of $400,599.67 for the defendant’s alleged breach of contract, plus interest and costs. The defendant’s counsel does not dispute the componentry or calculation of the plaintiff’s damages claim.
The pleadings
[6] The statement of claim pleads the 14 April 2005 agreement and its terms. It alleges certain factual matters, including the defendant lodging a caveat against the
title to the property to protect his interests as purchaser in April 2007. It pleads the completion of certain conditions of the agreement, being standard conditions in an agreement where a residence is being built. It pleads the alleged repudiation and subsequent cancellation of the contract, and seeks damages.
[7] The statement of defence, filed in May 2008 (the defendant has not pleaded to two subsequent amended statements of claim) admits the April 2005 agreement and alleges (paragraph 3) the agreement was cancelled “by mutual agreement on or about 28 November 2006”. Significantly, the defendant additionally pleads to the plaintiff’s allegation that the defendant had refused to settle the transaction and had repudiated the agreement by wrongfully claiming it was at an end, as follows:
10.1On or about 28 November 2006 the defendant and a representative of the plaintiff Mr Hadlow entered into discussions the result of which were:
i. The plaintiff agreed to treat the agreement as cancelled;
ii. The plaintiff would make payment to Spazio Casa for products supplied and reimburse Spazio Casa for the kitchen installed at the property by Spazio Casa.
These allegations were defined, for the balance of the statement of defence, as “the agreement to cancel”.
The burden of proof
[8] I have set out the relevant detail of the pleadings because it highlights the central issue. But secondly, and importantly, it illuminates the burden of proof.
[9] The plaintiff, suing for damages flowing from an alleged breach of contract, must prove its case on the balance of probabilities. But here the defendant admits the contract and further admits that he did not perform his obligations under it.
[10] Certainly the plaintiff’s various statements of claim plead the defendant’s stance that the contract had already been cancelled. The plaintiff classifies the defendant’s stance as a repudiation.
[11] So where falls the onus? Is it for the plaintiff to prove on the balance of probabilities that the contract was never cancelled? Or is it for the defendant to prove affirmatively that the contract was cancelled on 28 November 2006?
[12] The defendant’s pleading of the cancellation is essentially asserting a factual matter. This is not qualitatively the same as an affirmative defence. Rule 5.48(4) of the High Court Rules stipulates that affirmative defences must be pleaded, to which a plaintiff (r 5.62) must file a reply. Factual allegations (as opposed to affirmative defences) can be simply denied in a statement of defence (r 5.48(1)).
[13] The statement of defence raises not once but twice the defendant’s allegation that the agreement for sale and purchase had been cancelled. The contract was not denied. Rather its cancellation is asserted. The issue (supra) is raised twice. The defendant admits the April 2005 contract and its terms, but says it was cancelled by mutual agreement on 28 November 2006.
[14] The defendant’s answer to the allegations that he refused to settle the transaction and repudiated the contract is a positive assertion, - that on 28 November
2006 the parties agreed to treat the agreement as cancelled and additionally agreed Spazio Casa (a company linked to the defendant) would be reimbursed for product supplied and installed.
[15] Phipson on Evidence (17th Ed) at 6.00–6.06 states:
So far as the persuasive burden [legal burden] is concerned, the burden of proof lies on the party who substantially asserts the affirmative of the issue. If, when all the evidence is adduced by all parties, the party who has this burden has not discharged it, the decision must be against him. It is an ancient rule founded on considerations of good sense and should not be departed from without strong reason.
This proposition appears under the heading “Burden of Proof in Civil cases”
[16] Cross on Evidence states at 2.3.2 that a defendant must prove any matters which it pleads in confession and avoidance. To bolster that proposition the writers refer to dictum of Walsh JA in the New South Wales case of Currie v Dempsey [1967] 2 NSWR 532, 539:
In my opinion, the burden of proof [the legal burden] lies on a plaintiff, if the fact alleged, whether affirmative or negative, is an essential element on his cause of action, eg if its existence is a condition precedent to his right to maintain the action. The onus is on the defendant, if the allegation is not a denial of an essential ingredient in the cause of action, but is one which, if established, will constitute a good defence, that is, an “avoidance” of the claim which, prima facie the plaintiff has.
[17] I note that Tipping J, when discussing which party had the onus of establishing a limitation defence in Humphrey v Fairweather [1993] 3 NZLR 91 (HC), cited with approval the passage from Phipson on Evidence (supra) as it appeared in an earlier edition. Although a limitation defence clearly enjoys the status of an affirmative defence, His Honour held that, as a matter of policy (in a case where there was genuine doubt as to the date cracks in an allegedly defective dwelling had been discovered), it was fair that a defendant asserting the limitation defence should carry the onus of establishing it.
[18] I thus conclude that, in the context of this proceeding, it is for the defendant to prove on the balance of probabilities that the parties agreed to cancel the contract on 28 November 2006. That is the only issue. There is no dispute that the parties were otherwise bound by the April 2005 agreement for sale and purchase. Nor is there any dispute that the defendant failed to perform his obligations under that agreement. The defendant relies totally on the assertion of an oral cancellation of the contract. It is for him to establish such a cancellation on the balance of probabilities.
The witnesses
[19] The hearing was adjourned part-heard on 14 October 2009, half way through its third day. By that stage the plaintiff’s witnesses had been heard and Mr Dalkie had opened.
[20] The hearing did not resume until 15 March 2010, five months later. Such a delay is intrinsically unsatisfactory in any proceeding, let alone a witness action where the parties’ narratives and credibility are important. Regrettably the required trial time was underestimated. A resumed hearing could not take place earlier because of overseas commitments of one of the defendant’s witnesses. Nonetheless
both the Court and counsel have done their best to ensure that the delay did not prejudice the parties.
[21] Evidence for the plaintiff was called from Mr C J Hadlow, who has a controlling interest in the plaintiff company and is its director; Mr P F Macnicol, who is the plaintiff’s accountant and financial adviser, and from Ms S C Barker, who was at the relevant time Mr Hadlow’s executive assistant and who accompanied him on a number of meetings he had with the defendant.
[22] The defendant for his part gave evidence. He also called his brother Mr Paolo Cozzolino who was involved in all major decisions and meetings affecting the defendant, and Mr G R Wheeler (called as a supplementary witness), who was a director of the Italian Kitchen Company which had a close commercial relationship with the defendant and Spazio Casa and which imported kitchen equipment for them.
The relevant evidence
[23] In this section of my judgment I set out under appropriate headings the relevant evidence and, where necessary, my findings.
The agreement
[24] Mr Hadlow is a developer. The plaintiff company was his vehicle for a development of four residential units at 16 Taurarua Terrace in Parnell. Mr Hadlow (and the plaintiff) were involved throughout the development.
[25] Mr Hadlow and the Cozzolino brothers knew one another. They were friendly. They had had a commercial association (mentioned briefly elsewhere) in previous developments.
[26] The defendant expressed an interest in Unit A of the Taurarua Terrace development, which was considered to be the best apartment on account of its size and its north facing. The defendant agreed to buy Unit A off the plans. However, the defendant, in conjunction with his brother Paolo and their companies, wanted to
be responsible for the unit’s tiling, flooring and kitchen installation. On the basis that the defendant would be carrying out this work on Unit A, the parties agreed to reduce the purchase price by $224,235. That agreed deduction for the work which would be done by the defendant (the reduction includes the land agent’s commission) is evidenced by an email which both parties initialled dated 11
February 2005. That email was subsequently attached to the 14 April 2005 agreement for sale and purchase.
[27] The purchase price was $2,123,500. The deposit was stipulated as $123,500 which, though payable to the trust account of the plaintiff’s solicitor, was in fact never paid. It was common ground between the parties that the defendant would satisfy the deposit obligation by supplying materials to the plaintiff’s Taurarua Terrace development.
[28] The agreement was otherwise standard. It has specific provisions tying the settlement date to the issue of a separate title and the provision of certificates for practical completion and code compliance. Interestingly, the agreement contains a warranty by the defendant (as purchaser) that no caveat would be lodged.
[29] Although the parties appear to have agreed that the $123,500 deposit was to be satisfied by the Cozzolinos supplying product, there was nothing in writing to that effect. The parties seem to have left that issue deliberately vague since, at the time the agreement was signed, it was not possible to quantify the value of product which the Cozzolinos would supply. As the Taurarua Terrace project proceeded, the amount owed by the plaintiff for product supplied by the Cozzolinos increased and became a matter of concern to the defendant.
The parties’ prior dealings
[30] Both parties gave evidence about their various transactions before entering into the April 2005 agreement. I record it in brief outline but find it has no relevance to the central issue of whether or not the parties came to an oral agreement on 28
November 2006 to cancel the April 2005 agreement.
[31] The pattern was one of the parties assisting each other with developments; falling into occasional crises; and being flexible with their commercial dealings with each other. Possibly, from the subjective perception of the Cozzolino brothers, some form of moral obligation was imposed on Mr Hadlow. Significantly, neither counsel stressed the parties’ prior dealings in their closing submissions.
[32] The most comprehensive evidence on past dealings was given by
Mr Paolo Cozzolino. Mr Hadlow and the Cozzolino brothers appear to have met in
2002. From 2003 onwards Mr Hadlow was the developer of a multi-unit apartment block called Kilbryde in Gladstone Road, Parnell. The Cozzolino interests became major suppliers for the Kilbryde project, providing tiles and bathroom fittings. A friendship seems to have developed.
[33] In mid-2004 Mr Hadlow seems to have confided in the Cozzolino brothers that he was under financial stress and that some expensive villas in the Kilbryde development remained unsold. The Cozzolino brothers at this stage were involved as developers of a block of land in Ventnor Road, Remuera. After various fits and starts, and various cancelled agreements replaced by others, an agreement was reached whereby the Cozzolino interests purchased a Kilbryde villa for $2.8 million, and Mr Hadlow’s interests purchased the Cozzolinos’ Ventnor Road interests. There was a substantial contra deal so far as the Kilbryde purchase was concerned for the supply of tiles and bathroom ware.
[34] Significantly, Mr Paolo Cozzolino considered one of the reasons why there were difficulties in finalising the sale terms of the Kilbryde villa, was Mr Hadlow’s anxiety over whether his financiers would permit him to enter into a contract where so much of the purchase price (at one stage $1,000,000) was to be satisfied by a contra deal for tiles and tapware.
[35] The economics of these interrelated deals were somewhat upset, so far as the Cozzolino brothers were concerned because a development property which they had sold in Rota Place, Parnell developed leaks. Their solution to this problem was to buy back the Rota Place property from the disgruntled purchaser. Their settlement obligation came, however, within the same timeframe as the Kilbryde and Ventnor
Road settlements. The Cozzolino brothers appear to have on-sold the Kilbryde property for an extra $250,000.
[36] The temporal significance of all these settlements was that they occurred in February and March 2005, with two transactions settling on 31 March. In the eyes of Mr Paolo Cozzolino, the Taurarua Terrace agreement was part of a series of linked transactions (although in contractual terms the Taurarua Terrace agreement was not linked). Mr Paolo Cozzolino’s perception was that he and his brother only became involved in the purchase “as a way to recoup our losses on the earlier deals which [Mr Hadlow] could not settle”.
[37] That perception, of course, is irrelevant. However, the agreement, and in particular the manner in which its deposit was to be paid, was a continuation of the parties’ commercial relationship over the previous two years whereby they bought and sold properties and made contra deals for the supply of tiles and bathroom fittings.
The plaintiff’s banking arrangements
[38] The plaintiff was in the course of negotiating finance with the ANZ National Bank Ltd. By mid-August 2005 two of the four Taurarua Terrace units (one being Unit A) were subject to agreements. The plaintiff’s solicitors forwarded to the bank a copy of the agreement with the defendant.
[39] The plaintiff’s funding facility with the bank was finalised in March 2006. The plaintiff entered into a Deed of Assignment with ANZ which assigned to the bank by way of security all agreements for sale and purchase into which the plaintiff entered in respect of the land, now mortgaged to the bank. This Deed of Assignment was consistent with an earlier June 2005 loan offer.
[40] Assignment of agreements for sale and purchase to the primary lender of a building developer is standard commercial practice. In the context of this proceeding I consider the assignment to be significant. From 8 March 2006, the plaintiff’s interest in the agreement for sale and purchase with the defendant had
been assigned to its bank. The plaintiff no longer had the right, as purchaser, to cancel the agreement. Certainly it could not do so without the agreement of the assignee bank. In terms of the loan arrangements between the plaintiff and the bank, cancellation of the agreement would be a significant breach.
The Cozzolinos’ interest wanes
[41] The defendant and his brother, Mr Paolo Cozzolino, operate as a team. The impression I gained was that Paolo Cozzolino is the senior partner.
[42] The defendant said he and his brother always bought property in his name but with the words “or nominee” added after his in any agreement. The practice on settlement would be to nominate a company as purchaser. The Cozzolinos, in addition to running their business interests in New Zealand, frequently returned to Italy (not necessarily at the same time) for extended visits to their homeland.
[43] Work did not begin on the Taurarua Terrace development until 18 January
2006, nine months after the agreement had been signed. Over the next three months there was an email exchange between Mr Hadlow and the defendant. Mr Hadlow wanted details of the interior fit-out for Unit A. The defendant for his part sought the architect plans because, according to his 11 April 2006 email, he wanted to make various modifications.
[44] On 28 April 2006, the defendant emailed Mr Hadlow as follows. The
English was fractured so I have used square brackets to modify it for easy sense:
Hello Cam, how are you? Hope well. I need from you please all the copy of our agreements for this house in Taurarua Cr, what is [been signed] and what is not been [signed] off. We never finalise all the agreements. Anyway I don’t think that I will be living in this house, so I will sell it [as] soon as I can. Can you let me know [who] was the agent that sold you the other house? So I can let them know that [it is] for sale if a buyer comes along. Thank you for your help.
Mr Hadlow posted a copy of the agreement and the amended and signed specifications the next week. The email came as somewhat of a surprise to him
because his impression was that the defendant had been keen to make various alterations to the unit to suit him and his family who would be living in it.
[45] Although neither counsel questioned the defendant on the point, the email carries a hint that, from the defendant’s point of view, the agreement for sale and purchase had not been finalised. Such a stance is untenable.
[46] Over the next few months there were attempts by Mr Hadlow to obtain fit-out details from the defendant. In an email dated 21 June 2006, the defendant sought a meeting with Mr Hadlow to discuss materials. During that month, Mr Paolo Cozzolino had noticed a layout of products being used by the plaintiff in its Ventnor Road and Taurarua Terrace developments. Not all the products were supplied by the Cozzolino interests. The defendant’s email asserts that he had only purchased the unit for the advantage of supplying product:
I need to have a meeting with you to discuss the deal that we made in regards [the house purchase] and your commitment to buy ALL your materials from your project. That is the only reason why [I bought] the house from you originally, I was not on the market to buy a house. So can [we] meet to clarify this situation before [it gets] too late and problems will come.
[47] In May, and again in August 2006, one or both of the Cozzolino brothers were in Italy for extended periods. There is no evidence whether the meeting requested by the defendant took place in a timely way.
[48] By August 2006, Mr Hadlow had the impression that the defendant was not going to attend to the fit-out of Unit A, and thus he had little choice but to attend to it himself. There was eventually a meeting between the defendant and Mr Hadlow on the fit-out issue, which resulted in an email from Mr Hadlow dated 30 August 2006. It noted that the defendant ought to be supplying and installing the complete kitchen and associated appliances, but Unit A’s fit-out would now be the same as the other three units in the development, with a corresponding reduction of the credit which had been factored into the sale price.
[49] This email brought a response from Mr Paolo Cozzolino on 31 August 2006. The email indicates that both brothers would be away for the next few weeks. Relevantly the email states:
I also had a meeting with Maurizio and would like to see if you are interested in cancelling our purchase agreement on the Tarawera [sic] home. We really don’t need the house right now and the only reason why we decided to buy was for helping with settlement of Ventnor and Gladstone as you know, plus the fact that you could buy some tiles from us. You could sell the house easily for $2.5 mil and you would be making $400K more than what you sold to us. We don’t want any margin, just cancelling the agreement and the house is [yours] again. Please let us know if this is suitable for you or we leave this as it is should this cause you too much trouble. We are also not in a position to buy any apartment in Ventnor Road right now but more than happy to buy one on the paper only to help you with your banking.
[50] Unlike with the defendant’s earlier email, Paolo Cozzolino’s email does not suggest that the agreement is not binding. It also suggests that the agreement can continue in force if cancelling it was “too much trouble”to the plaintiff.
The conflict
[51] Mr Hadlow’s evidence was that he had several meetings with both Cozzolino brothers in November 2006 to discuss the suggestion that the April 2005 agreement be cancelled. He is unsure whether there was any significant meeting on 28
November, which is the date the defendant asserts the agreement was cancelled.
[52] Mr Hadlow was unshakeable in his evidence. His reply to the overtures for cancellation from the Cozzolino brothers was that he would only agree to the agreement being cancelled if another buyer were found for the same or higher price. He also made it clear that the consent of the ANZ Bank would be necessary, because the agreement was an integral part of the plaintiff’s financing arrangements.
[53] Mr Hadlow said that during these meetings the brothers tried to encourage him to agree to cancellation by two suggestions. The first was that they saw the market value of that unit, once completed, as being greater than the purchase price. Secondly they were prepared to let him have any difference between the agreed price and the price of any on-sale. Mr Hadlow would have been prepared to agree to
splitting any increase in the sale price but only on the basis that a replacement agreement which the bank approved was in place. He shared the Cozzolino brothers optimism that the property market was buoyant at that time and that an on-sale should be possible.
[54] Cross-examination of Mr Hadlow did not modify his evidence. He accepted that he was interested in cancelling the agreement, particularly if there could be an on-sale at a higher price. However, his agreement to any cancellation was totally conditional on first a suitable replacement agreement being put in place for the same price or more, and secondly the consent of the plaintiff’s bank.
[55] The evidence of the defendant and his brother conflicts with Mr Hadlow’s. The defendant stated he and his brother met Mr Hadlow in their Parnell office (the office of Spazio Casa) on 28 November 2006. He said Mr Hadlow would often call in, sometimes twice a week, to talk things over. The purpose of this meeting was to discuss the cancellation of the contract on Unit A.
[56] At this meeting the defendant says they told Mr Hadlow they wanted to cancel the contract. They were spending a lot of time on other projects which they regarded as being more profitable. The defendant’s recollection is his brother revisited the points in his 31 August email, indicating that the market was in good shape and the unit could easily sell for $400,000 more. The defendant said that Mr Hadlow was very happy to take the unit back because he knew the market was good and reselling at a profit would benefit him.
[57] In contrast to Mr Hadlow, who said the brothers raised with him the inducement of him keeping the profit, the defendant’s evidence was that Mr Hadlow wanted to split the profit. This was rejected by the Cozzolino brothers who said that as far as they were concerned, Mr Hadlow could keep any profit himself. They did not want any future involvement. They wanted “a clean break”.
[58] The only concern Mr Hadlow expressed, according to the defendant, was that he did not want to tell his bank the contract was being cancelled. Therefore
cancellation of the agreement should be kept confidential. The defendant in evidence in chief said:
I did not say anything about that; it was up to him what he said with his bank, not our business. It did not surprise me he said that. He had done the same thing back in May 2004 [with the Kilbryde villa].
[59] The brothers then raised with Mr Hadlow what they saw as his obligation, the contract now being cancelled, to pay for the kitchen they had imported from Italy and other product which had been supplied. The defendant asserts that Mr Hadlow agreed to pay. Paolo said he would send the invoices. The meeting lasted half an hour.
[60] Mr Paolo Cozzolino’s evidence confirmed that of his brother’s and added certain detail, such as the participants making coffee and standing around in the bar area of the office. He confirmed he told Mr Hadlow he had to pay Spazio Casa for the product delivered for the other three units and for the kitchen which was to be installed in Unit A and that Mr Hadlow agreed to this. He told Mr Hadlow he would work out what was involved for the kitchen fittings, tiles and bathroom fittings and Mr Hadlow for his part agreed to reimburse Spazio Casa.
[61] Somewhat startlingly, the defendant, when being cross-examined by Mr Chisholm, gave evidence of a subsequent meeting at which he says Mr Hadlow confirmed the cancellation of the contract. This additional evidence was not detailed in his evidence-in-chief or in his brother’s. Nor was it put to Mr Hadlow in cross- examination. No blame attaches to Mr Dalkie for that because the additional evidence came some five months after Mr Hadlow had been cross-examined. Additionally, Mr Dalkie would have been unaware of it. Counsel were agreed there was no useful purpose served by recalling Mr Hadlow, who would certainly have denied the conversation. His brother’s additional evidence was put to Mr Paolo Cozzolino in cross-examination by Mr Chisholm. He appeared to be unaware of the conversation and certainly was not involved in it.
[62] Mr Chisholm, when the evidence was given, was suggesting to the defendant he knew full well that the agreement had not been cancelled. The defendant said (page 91 line 24 of the transcript):
The week after [28 November] he started discussing with me he couldn’t cancel the agreement in front of the bank we had to keep it quiet. Otherwise the funding was suffering.
So the agreement was cancelled and that is also why he never carried on with the emails or lawyer emails asking about the cancellation because he couldn’t go back to the bank....He said he could not email or fax me a cancellation because he would jeopardise the agreement. But he was handling it like last time. That is why we never asked him any more for that.
[63] I find that no such conversation occurred. One of the features of the post-28
November 2006 phase, as I detail later, was both parties vacillated and let things drift. I see the defendant’s evidence as being an attempt to rationalise why, in the wake of what he says was an unequivocal cancellation of the contract, he and his brother did not persist in trying to pin the cancellation down in writing. His rationalisation is that he was going along with what he said was Mr Hadlow’s desire to keep the cancellation a secret from his bank and thus (they) the Cozzolinos were not prepared to put anything into writing.
The immediate aftermath
[64] The next day (29 November 2006), the defendant sent an email to Mr Hadlow. There is brief reference to Paolo sorting out the bill. The email requested:
Just email [or] fax or which way is easier [for you] the termination of our contract so I can confirm that with my bank and make different plans. Please confirm it ASAP.
[65] This email surprised Mr Hadlow, on his evidence, because he thought he had made his position absolutely clear at the previous meetings. He ignored it.
[66] The same day (29 November) the defendant sent a fax to his solicitor, Mr Bhanabhai. The fax set out the defendant’s understanding of the meeting with Mr Hadlow the previous evening. He instructed Mr Bhanabhai to send a fax to the other side to that effect. The email concluded:
This is also VERY urgent, because we are dealing with a person [who changes] his mind 100 time (sic) a day, so we need to put on paper asap.
[67] This instruction is significant given the consent to cancel which the defendant alleges was never “put on paper”.
[68] The next day, on the defendant’s instructions, his solicitor Mr M Bhanabhai sent a fax to the plaintiff’s solicitors which stated:
We are instructed the parties have agreed to cancel the contract on the basis your client will reimburse ours for the cost of materials and a kitchen installed by our client. Our client will simply invoice yours for these. Please confirm as soon as possible.
This fax to his solicitor made Mr Hadlow “very annoyed”. Again he chose to ignore it and did not reply. A follow-up fax from the defendant’s solicitors seeking a reply followed on 6 December which was similarly ignored.
[69] Understandably, Mr Hadlow was pressed in cross-examination about why he did not reply, particularly since he had a very different view of what had been agreed about cancellation of the April 2005 contract. Mr Hadlow’s explanations were that he knew that the contract had not been cancelled; that he deliberately chose to ignore the requests for confirmation; and that, with the advantage of hindsight, he now realised that it was a mistake to remain silent.
Kitchens and paying for product
[70] The defendant’s change of heart over the fit-out and kitchen for Unit A caused the plaintiff some difficulty, and I so find. The defendant had ordered a kitchen unit from Italy. There had been, however, problems with its availability and delays in shipping it. Mr Wheeler’s evidence about the kitchen which he had imported at the defendant’s request, was essentially undisputed. The container was cleared through the wharf and unloaded in January 2007. Mr Wheeler collected it on
24 January. Kitchens were installed in Unit A and the other three Taurarua Terrace units by 9 February 2007. The installing sub-contractor invoiced Mr Wheeler for the work on 9 February 2007. Additionally, the defendant had ordered and paid for a Corian bench top, which he had wanted to be installed in Unit A, for which the plaintiff now had to pay.
[71] Mr Hadlow considered that he had no option but to reimburse the defendant for the kitchen deposit and the bench top. He applied to his bank for a special drawdown facility. The defendant was reimbursed for the bench and the kitchen deposit on 23 February 2007.
[72] The change in the stance of the Cozzolino brothers caused the plaintiff difficulties in another area. Although the parties had agreed that the $123,500 deposit stipulated in the April 2005 agreement would be satisfied by product, by the beginning of 2007 the amount of product supplied had soared to just over $150,000. Mr Hadlow considered, and I accept his evidence, that being pressed as he was by the Cozzolino brothers, he had no option but to reduce the outstanding Spazio Casa balance of product down to the vicinity of the agreed deposit. This was achieved by a payment of $24,157 on 25 January 2007 which reduced the balance to just over
$126,000.
[73] There was corroborative evidence of the drawdown facility and the sums paid from Mr Hadlow’s executive assistant, Ms S C Barker.
[74] The parties invited me to draw competing inferences from these various payments. The defendant submits that the payments confirm that the contract had been cancelled and that the plaintiff was taking steps to pay for outstanding product. This is what the defendant pleaded in his statement of defence ([7] supra). The plaintiff submits, on the basis of Mr Hadlow’s evidence, that the payments were necessary first because of the defendant’s change of heart about fitting out Unit A, and secondly because the invoices for unpaid product had risen considerably beyond the agreed deposit. Mr Hadlow in evidence advanced as a third reason that if the apartment were to be on-sold and the agreement cancelled, the Spazio Casa interests would have to be paid in any event.
Plaintiff’s 18 January 2007 email
[75] On 18 January 2007, Mr Hadlow emailed the Cozzolino brothers. This email, coming as it did as the kitchen was awaited, sets out the plaintiff’s position. It said:
I feel that I need to record transactions relating to townhouse A. Points it should be noted are [the plaintiff] has paid all of the costs relating to the fit- out of townhouse A which is originally your expense. This includes the
$75,000 payment to [fitting out subcontractor] and then the cost of the tiles, basins, taps etc probably a total of $110,000 or more. It is appreciated that
you would like to cancel your purchase agreement but it is not as simple as
that. Unfortunately it is all tied in with the bank’s finance of the project. I
do, however, agree that we will not pursue the settlement and will actively market the property and make every endeavour to attain a sale on your behalf.
[76] The Cozzolino brothers made no written reply to that email. Mr Paolo Cozzolino’s evidence, however, was that the email was the first indication he had of Mr Hadlow’s stance. His view was that the contract had been cancelled on 28
November 2006. The defendant, by reference to his cellphone records, said he telephoned Mr Hadlow the next day and told him he could not go back on his word. The brothers say they had another meeting with Mr Hadlow in their office a few days later. Their version is that Mr Hadlow tried to persuade them to stay with the agreement because it would sell well and that they would all be able to split the profit (that is the defendant’s version). Mr Paolo Cozzolino’s version is that he did most of the talking, that Mr Hadlow did not have much to say, but that he did say he had nothing to worry about since he (not both parties) would make a good profit. Both brothers say that Mr Hadlow agreed at the end of the meeting that the contract had been cancelled and confirmed the 28 November 2006 arrangements.
[77] This version of events was put to Mr Hadlow by his counsel. He denied that a meeting of that sort took place. He did not dispute that the defendant’s phone records show a call on 19 January, but disputed the defendant’s version of the conversation. Mr Hadlow does not recall what the conversation was about.
[78] Mr Hadlow’s use of words in the email “we will not pursue you for settlement” is problematic. Given that the development was not yet completed, it is probable Mr Hadlow remained optimistic that an on-sale for Unit A could be achieved.
The 28 February 2007 email
[79] During February 2007 there were a number of email exchanges between Ms Barker and various employees of Spazio Casa, all of whom were trying to agree on invoice totals for product which had been supplied to the Taurarua Terrace development.
[80] Around 28 February 2007, Mr Hadlow heard from the Taurarua Terrace project manager that Bradley Masterton, a Spazio Casa employee, had told him the plaintiff owed a large amount of money to Spazio Casa. Mr Hadlow was angry about this. Developers, I am sure, are sensitive to any suggestions which could indicate financial difficulties. Rumours of that sort, if passed on to subcontractors and other trades, can produce problems.
[81] In any event, Mr Hadlow handwrote an email which he asked Ms Barker to send for him. The email relevantly read:
You need to understand that Maurizio contracted to buy one of the townhouses and the supply product to the project was to be his deposit under that agreement. He has subsequently changed his mind and, although we have no legal obligation to do so, we are releasing him from his obligation to pay $2 million. I suggest you refrain from making comments to our contractors when you do not know all the facts. Furthermore I will not be making payment until I am satisfied our account is sorted.
[82] This email seems to have galvanised Mr Masterton into trying to sort out the invoices. He emailed another Spazio Casa employee to the effect that “Cam is now getting to be a pain in the ass and it seems as though they are wanting to come up with any excuse possible to stop from making any payments”. To Ms Barker, however, Mr Masterton apparently was extremely apologetic and sought advice as to how he could placate Mr Hadlow with a gift.
[83] Understandably the defendant seizes on the language that he was being “released” from his obligation to pay $2 million. This email, it was submitted, is clear evidence that Mr Hadlow had indeed agreed to cancel the contract. Mr Hadlow’s explanation is that at the time he was extremely confident Unit A would be on-sold. Nonetheless, the cancellation of the contract was, in his eyes,
always conditional on a new purchaser being found who would pay the same or a higher purchase price.
The caveat
[84] An advertising campaign for the Taurarua Terrace Apartments was undertaken in March 2007. There is very little evidence about the extent to which, if at all, Unit A was marketed, or what efforts were made by the parties to secure the sale or on-sale (as the case may be) for the apartment. The marketing operation itself seems to have focussed on another apartment. Unfortunately, there were no sales, nor were there any offers received. During the same timeframe there were various email exchanges relating to unpaid accounts of Spazio Casa. Ms Barker for her part had calculated the additional costs which were to be added to the purchase price as a result of the defendant’s decision not to proceed with the fit-out of Unit A.
[85] On 1 May 2007, the plaintiff’s solicitors wrote to the defendant’s solicitors advising that completion of the development was imminent. The letter, on the basis of advice supplied by Ms Barker and Mr Hadlow, calculated the product supplied (being the agreed deposit) at $114,138. Also attached to the letter was a schedule of the fit-out items (totalling $171,356) which contractually the defendant had agreed to provide. This letter was sent on Mr Hadlow’s instructions. He was about to leave New Zealand for a three month holiday.
[86] On 4 May 2007, the defendant lodged a caveat against the Taurarua Terrace title. The caveat was in fact dated 4 April 2007 and was signed by Mr Bhanabhai as the defendant’s solicitor and authorised agent. The caveatable interest claimed was pursuant to the 14 April 2005 agreement for sale and purchase with the caveator being the purchaser. Lodging the caveat was a breach of a specific term of that agreement ([28] supra).
[87] Mr Hadlow was by this stage overseas, so it was left to Ms Barker to try to sort matters out. Over the next fortnight the plaintiff’s solicitors left a number of telephone messages and wrote (twice) to Mr Bhanabhai pointing out that the April
2005 agreement prohibited lodging a caveat and requesting its withdrawal. No reply was received.
[88] Ultimately, Mr Hadlow himself emailed the defendant, pointing out that the caveat was “vexatious” and could delay the sale of the units.
[89] A reply email was sent by Mr Paulo Cozzolino which said:
I didn’t realise that this was holding up the title .... we will remove the caveat but was put in place to have a kind of protection over this huge amount of money outstanding (and was put on before our last meeting). As you know we had [numerous times] been told that payment was coming to and only five month later our verbal agreement to cancel the contract you told me that you could not do that anymore for a variety of reasons. We understood why and we are working together to overcome and find an amicable solution to the point that we were discussing the option to purchase it again if a trade was in place.
[90] This email displays on the Cozzolinos’ part some ambivalence as to the alleged cancellation of the contract. They were looking at the option of repurchasing it.
[91] In any event, the caveat was withdrawn. But the lodging of the caveat is puzzling. Mr Paolo Cozzolino, when giving evidence, waived privilege and frankly stated that he was advised by his solicitor not to lodge the caveat. His evidence was that he ignored that advice because he wanted to exert some pressure on the plaintiff for payment of outstanding Spazio Casa accounts.
[92] Both brothers gave evidence in chief that the reason the caveat was lodged was to apply pressure and ensure that a $50,000 payment (relating to product) was made by 20 April 2007. Both brothers in their briefs say the caveat “was registered” on 4 April 2007. That is incorrect. Although 4 April is the caveat’s date, it was not lodged for a further month. Both brothers say they were advised by Mr Bhanabhai that lodging the caveat was not a good idea. In that regard privilege is waived.
[93] Mr Paolo Cozzolino, when cross-examined, attempted to distance himself from the decision to lodge a caveat. He stated he did not put the caveat on, but his solicitor did. He professed not to “know the fine details”. Mr Paolo Cozzolino said
he was not familiar with the “deep concept of a caveat”, which I accept. The defendant twice, in cross-examination, tried to turn the lodging of the caveat to his advantage by asking rhetorically why he would put a caveat on the title to a house (Unit A) which he owned.
[94] There has been no evidence from Mr Bhanabhai on the matter. The documentary evidence of letters sent by the plaintiff’s solicitors to Mr Bhanabhai in early May carry notations suggesting that a number of telephone calls were made to him but not returned. Nor did he reply to two letters. Mr Bhanabhai, of course, was the author of communications to the plaintiff’s solicitors on 30 November and 6
December 2006 seeking confirmation that the agreement had been cancelled. He had received no reply to those.
[95] Clearly the Cozzolino brothers gave instructions to Mr Bhanabhai to lodge the caveat. They say so and those instructions were followed. But a solicitor would know that the use of a caveat to enforce a non-registerable debt is an abuse. Furthermore, the caveatable interest specified was created by an agreement which contained a term not to lodge a caveat. Finally, Mr Bhanabhai, were he of the view that his client had cancelled the contract, would undoubtedly warn that lodging a caveat was impermissible if the contract had indeed been cancelled, or alternatively ran counter to his client’s stance if cancellation was in dispute.
[96] Any prudent solicitor faced with clear instructions to lodge a caveat in any or all of those circumstances would undoubtedly record his advice in writing. Despite the waiver of privilege, there is no evidence of any such written advice.
[97] I am not, in the absence of Mr Bhanabhai, prepared to make any adverse comment about his role in the matter. As an officer of the court he is presumed to have acted properly. But at the very least the defendant was, by lodging a caveat, acting equivocally. Out of one side of his mouth he was asserting that the contract was cancelled yet, out of the other side, was prepared to assert he had a proper caveatable interest and deploy a formal document which depended entirely for its validity on the contract being afoot.
Other desultory events
[98] The parties’ evidence covered other events which cast little light on the central issue. I record them briefly because what they show is that the defendant for his part was not acting as one might expect a person to act who had confidence that his contract had been cancelled and that he had no further interest in Unit A.
[99] On 27 June 2007, Mr Bhanabhai, with no reference to the caveat phase, wrote to the plaintiff’s solicitors to the effect that the parties had “mutually agreed to cancel the agreement” and requesting repayment of the deposit or GST refund which the plaintiff was expecting. Mr Hadlow denies there was any conversation or agreement relating to the deposit being repaid (which in any event was made up for the supply of product) from a GST refund and that the instructions given by Mr Bhanabhai were a fabrication. I uphold Mr Hadlow’s evidence in that regard.
[100] A certificate of title and a code of compliance certificate were issued in
August 2007. The plaintiff’s solicitors sent the defendant a settlement statement on
21 August 2007 following by a settlement notice which expired on 12 September
2007.
[101] There were desultory discussions between Mr Hadlow and the Cozzolinos about the possibility of the defendant’s money obligation on settlement being met by trading property which with the Cozzolino interests owned at Ruakaka. This proposal was unacceptable to the plaintiff’s bank. There were further proposals that perhaps land owned at Tinopai might be traded for Units A and B at Taurarua Terrace. As late as February 2008 the defendant and his wife came to inspect Unit A. Ms Barker’s impression was the primary purpose of the visit was to see whether the defendant could fit his car into Unit A’s garage. The defendant’s version is that he and his wife were to inspect the interiors of both apartments to see whether they could be made “more sellable”. This undisputed visit is odd if the defendant considered the contract was at an end.
[102] On 29 November 2007, the plaintiff’s accountant Mr P F Macnicol, met with
Mr Hadlow and certainly Mr Paolo Cozzolino (the defendant denies categorically
that he attended the meeting) to discuss a possible structure which would lead to the purchase price for Unit A being reduced. Nothing came of that meeting. In all probability the meeting took place in Spazio Casa’s office. It did not last very long. However, Mr Macnicol’s evidence (and I am unable to find that the defendant was present although certainly there were two males at the meeting, one of whom I find was Mr Paulo Cozzolino) was that none of the attendees made any mention of the agreement having been cancelled.
[103] Significantly, some of these encounters and discussions took place after the expiry of the plaintiff’s settlement notice on 12 September 2007.
[104] In this subsection of my judgment I have deliberately omitted some of the parties’ evidence about ongoing discussions and proposals. The omission is not an error. Rather it is because there are areas of uncertainty or conflict where I am satisfied that an analysis would not assist one iota on the central issue. At most it is a continuation of the parties’ hope to settle the contract.
[105] Any hope that the parties may have entertained of salvaging matters petered out in March 2008. This and a related proceeding eventuated. Unit A was sold by tender, with settlement occurring at $1.8 million in July 2008.
Discussion
[106] Both counsel adopted during interchanges with the Bench and in their submissions the dictum of Lord Hoffman in Re B (Children) [2008] UKHL 35 at [2]:
If a legal rule requires a fact to be proved (a “fact in issue”), a judge or jury must decide whether or not it happened. There is no room for finding that it might have happened. The law operates a binary system in which the only values are zero and one. The fact either happened or it did not. If the tribunal is left in doubt, the doubt is resolved by a rule that one party or the other carries the burden of proof. If the party who bears the burden of proof fails to discharge it, the value of zero is returned and the fact is treated as not having happened. If he does discharge it, the value of one is returned and the fact is treated as having happened.
[107] As I have observed (supra) it is for the defendant to establish that the agreement for sale and purchase was cancelled unconditionally by the parties as a result of the 28 November 2006 discussions.
[108] Counsel’s submissions were comprehensive and focused. There is no need for me to do more than replicate their salient points.
[109] I am mindful of the fact that the parties’ evidence conflicts and that each party has a clear vested financial interest in maintaining their respective versions of events in November 2006.
[110] There is force in Mr Dalkie’s submission that a helpful way to try to resolve the conflict is by looking closely at contemporaneous events, and in particular contemporaneous documents. From documents which are not self-serving, submitted Mr Dalkie, it is likely that the Court might infer where the true facts lay.
[111] Both counsel in their closing submissions dealt extensively with the facts. But, as is apparent from the lengthy narrative in the previous section of this judgment, the various dealings and actions of the parties do not resolve conclusively the nature of their discussions and agreements on 28 November 2006.
[112] Mr Chisholm’s major submissions can be thus summarised:
•It is highly improbable that Mr Hadlow would jeopardise the plaintiff’s relationship with its bank and the funding for a development by secretly agreeing to cancel the agreement which, in any event, had been assigned to the bank and was thus not the plaintiff’s to cancel.
• On at least four occasions after November 2006 the Cozzolino brothers attempted to negotiate alternative ways of satisfying the purchase price.
•The defendant lodged a caveat for his own purposes, asserting that he was the purchaser.
•Aspects of the evidence from the Cozzolino brothers was equivocal and unsatisfactory.
• The parties had a history of recording important transactions in writing.
[113] Mr Dalkie’s submissions for the defendant highlighted the following matters:
• Mr Hadlow’s reasons for failing to reply to the three letters between 29
November and 6 December 2006, asserting that the contract had been cancelled, were unconvincing. His hindsight acknowledgement that he should have replied should be rejected.
•Mr Hadlow’s personality and demeanour were consistent with a man who was able quickly to correct any misapprehension.
•The steps taken by the plaintiff between December 2006 and March 2007 to assemble details of and pay outstanding Spazio Casa accounts was totally consistent with an agreement for the parties to cancel the contract and refund the deposit.
•Certain terminology used in emails by both Ms Barker and Mr Hadlow such as “release”, “not pursue” and “settle” was only explicable in the context of the 28 November meeting concluding with an agreement to cancel the agreement.
•There are various unsatisfactory features about Mr Hadlow’s evidence as regards the delivery of the kitchen and payment for the kitchen and the bench top.
•Never did any of the plaintiff’s emails, particularly those relating to payments for the kitchen fit-out and other product, make any reference to payment being made on settlement with any purchaser of Unit A.
•Mr Hadlow’s explanation as to why he was making these payments were “uncommercial accounting gymnastics” because, if the contract was indeed still afoot, the money would be repaid to him on settlement.
•Emails and correspondence from the plaintiff from January 2007 onwards was self-serving.
•There is no evidence that during the marketing campaign for the Taurarua Terrace apartments in March 2007, that the Cozzolinos were involved or asked to contribute to marketing expenses, which might well have been the case if the defendant was still obliged to complete.
• On the defendant’s evidence Mr Hadlow was not averse to withholding information from his bank as he allegedly had with the Kilbryde transactions.
[114] Both parties, on the evidence, have a history of assisting each other with their various development projects. The Taurarua Terrace development sat within that timeframe, although there was absolutely no legal linkage.
[115] I am satisfied that the defendant, at the time he signed the agreement, saw Unit A as a potentially good investment. He negotiated a significant reduction in the purchase price so that he could control important aspects of the fit-out. As with other interactions, the Spazio Casa interests would additionally benefit by supplying product for the plaintiff’s development.
[116] I am satisfied too that, subjectively, the defendant and his brother considered the plaintiff had some moral obligation towards them because the temporally linked Kilbryde/Ventnor/Rota Place transactions were not being as profitable for them as they had hoped. But that subjective perception of the defendant was not a factor which led him to enter into the April 2005 agreement.
[117] As is apparent from various emails, by 31 August 2006 the defendant wanted to cancel the agreement. But, as is clear from the language used by Mr Paolo Cozzolino, this was not then regarded as a pressing issue.
[118] Nonetheless, enthusiasm for Unit A having waned in the intervening 19 months, the defendant’s perception was that the plaintiff should acquiesce in letting him off the contractual hook. His 28 April 2006 email ([44] supra) points to an early mindset of not wanting to be bound.
[119] Significantly, by November 2008, the plaintiff was well aware that the defendant’s waning interest would produce the unexpected consequence of the plaintiff having to shoulder the financial burden of Unit A’s fit-out. It was also apparent that the product supplied by the Spazio Casa interests exceeded (by something in the order of 25%) the stipulated deposit of Apartment A.
[120] When faced with these issues, Mr Hadlow was, by late November 2006, during which month there had been discussions between him and the Cozzolino brothers about releasing the defendant from his contractual obligations, in a difficult position. He needed to complete the Taurarua Terrace development in a timely fashion. He was faced with unexpected fit-out costs. He was also faced with the fact that the Cozzolino interests, in addition to changing their mind about the interior fit- out, were owed money for the supply of product in excess of the deposit.
[121] Faced with that situation, yet not wanting to rupture what had been a mutually beneficial association for the parties, I consider it is highly improbable that Mr Hadlow would agree to cancel the contract without more. The best he could do would be to agree to the contract’s cancellation provided that a replacement buyer, at the same or better price, could be found.
[122] Such a condition of cancellation would, in the situation the plaintiff found itself, make commercial sense. Current market conditions appear to have justified some optimism that a replacement buyer could be found without difficulty.
[123] It would not have been in the plaintiff’s commercial interests on 28
November 2006 to have agreed unconditionally to the cancellation of the April 2005 agreement. Such an arrangement would release the defendant from his contractual obligations with no corresponding benefit. The speed with which a replacement buyer for Unit A would be found, and the purchase price for a new agreement, were
unknown and problematic. Importantly, and decisively in my judgment, to release the defendant from the agreement by cancelling it without any reference to the plaintiff’s bank, would be a serious breach of the plaintiff’s obligation. It would at a stroke, have collapsed the financier’s interest in the agreement, which could have had serious future consequences for the plaintiff.
[124] Looking at the contemporaneous documents and conduct of the parties, as Mr Dalkie has helpfully urged, does not alter my perception of the plaintiff’s stance. Certainly Mr Hadlow was unwise not to have rejected the defendant’s and Mr Bhanabhai’s written suggestions that the contract had been cancelled. It is possible that his failure to do so was a reluctance to put his clear understanding into writing, namely that the contract was only conditionally cancelled. The condition was to find a replacement buyer. Such a reluctance might well have been rooted in his awareness of his obligation to his bank. Just as the contract was not the plaintiff’s to cancel unconditionally, nor could it be cancelled conditionally.
[125] Nor do I consider that the activity between December 2006 and March 2007, of organising payment of the Spazio Casa invoices, was driven by cancellation of the contract. Rather, I accept Mr Hadlow’s evidence that payments were necessary first because of the excess of supplied product over the deposit, secondly because of the insistence of the Spazio Casa interest to be paid for the kitchen and other supplied kitchen items, and thirdly because, if a replacement buyer were to be found, the invoices would have to be paid in any event. It is significant that the plaintiff had to approach its bank for funding to meet the kitchen and bench payment demand.
[126] So, my assessment of events in the four months which followed 28
November 2006 tilt me towards accepting the plaintiff’s evidence that the cancellation of the contract was conditional, rather than accepting the defendant’s evidence that the cancellation was unconditional.
[127] Certainly both parties exhibited ambivalence. The plaintiff did nothing to refute the defendant’s 29 and 30 November 2006 suggestion that the contract had been cancelled. But significantly the defendant did nothing further to pursue his cancellation claim. There was no further attempt to obtain written confirmation of it.
I accept that the defendant and his brother, relying on their pattern of dealings with the plaintiff and their subjective perception of Mr Hadlow’s obligation to them, believed that the contract would be cancelled. I do not consider they could have any confidence in believing the contract was cancelled.
[128] The defendant’s subsequent actions in prioritising payment of product; lodging a caveat which, if the contract was cancelled would be impermissible; and having discussions later in the year exploring alternative payment options were all totally inconsistent with an unconditional cancellation of the contract. On the defendant’s own evidence, he even contemplated purchasing an additional apartment in the development.
[129] There is no proper basis on which I am prepared to make an adverse credibility finding against Mr Hadlow. I accept his evidence, which largely accords with my assessment of the plaintiff’s commercial interests. I do not see problematic words used in emails, such as “release”, “not pursue” and “settle” as giving the lie to Mr Hadlow’s narrative.
[130] Nor am I prepared in the circumstances, to make a total adverse credibility finding against the defendant or Mr Paolo Cozzolino. I believe their expectation about what would happen has highly coloured the way in which they have presented their evidence. On occasions (such as the defendant’s additional evidence and his statement that he would hardly want to caveat his own house) their evidence struck me as being selective and self-justifying. Their evidence reflects their November
2006 hope and expectation rather than the reality. Such an approach was reinforced by their waning interest in Unit A.
[131] The only evidence at all that Mr Hadlow accepted unconditionally the defendant’s proposal that the agreement be cancelled comes from the Cozzolino brothers. I do not consider the surrounding facts, documents, and the subsequent actions of the parties support this conclusion. Furthermore, the defendant, on 29
November 2006 ([66] supra), had stressed the importance of the cancellation being recorded in writing. Yet it never was.
[132] Thus, I decline to find, on the evidence, that the 14 April 2005 agreement was unconditionally cancelled by the parties on 28 November 2006. And approaching the same issue in another way, the evidence in its totality falls short of satisfying me, on the balance of probabilities, that the agreement was cancelled.
Result
[133] Accordingly, there is judgment for the plaintiff.
[134] Counsel are directed to produce a draft order for sealing. I note Mr Dalkie’s concession that there is no dispute over the sum claimed.
[135] The plaintiff is additionally entitled to interest and costs.
[136] In the circumstances, it seems to me that interest should run from the date of filing this proceeding.
[137] Unless counsel have a contrary view, costs on a 2B scale would seem appropriate.
[138] Leave is reserved to the parties (which I hope is unnecessary given the seniority and experience of counsel) to apply if the componentry of the judgment and costs cannot be agreed.
Additional proceeding
[139] This proceeding was heard together with Spazio Casa Ltd v Abil Property Taurarua Ltd, CIV 2008-404-3230. Counsel indicated no judgment was required on that proceeding since a result would inevitably flow from this judgment. That proceeding stands adjourned sine die and is to be discontinued when resolved.
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Priestley J
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