Anderson v De Marco

[2020] NZHC 2979

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-485-622

[2020] NZHC 2979

BETWEEN

NORMAN HUGH ANDERSON AND REBECCA ALICE CARRASCO
Plaintiffs

AND

EUGENE JOHN DE MARCO

Defendant

Hearing:

14–17 September 2020

Appearances:

E S Dalzell, B M Lambert and D Viatos

G D R Shand and P H Biddle for the Defendant

Judgment:

11 November 2020

JUDGMENT OF COOKE J

Table of Contents

Factual background[5]

The property[6]

Initial issues encountered by Mr De Marco[8]

Capital House Inspections report[14]

Further weathertightness work[18]

Parsons Building work[25]

Building Science Ltd report[31]

Sale process[36]

Post settlement revelations[43]

Misrepresentation[48]

The pleaded representations[51]

Acknowledgement form[59]

Did representations induce entry of the contract?[64]

Was it reasonable for the plaintiffs to rely on the representations?[65]

Were the representations false?[72]

(i)Mr Winton’s report[73]

(ii)Mr De Marco’s representations[85]

Is this a leaky home?[92]

ANDERSON v DE MARCO [2020] NZHC 2979 [11 November 2020]

Material reduction in, or change to the benefits of the contract[98]

Conclusion[103]

Remedies[106]

Breach of contractual warranty[110]

Conclusion and result[124]

[1]                 On 22 December 2017 the plaintiffs entered a sale and purchase agreement to acquire the defendant’s residential property at Karaka Bays, Wellington for

$1,200,000. The agreement was unconditional. They paid a deposit of $120,000 with settlement set for 31 May 2018.

[2]                 The disclosures made by the defendant to the plaintiffs prior to the agreement included a positive building inspection report that he had obtained for the property in December 2017. In the period leading up to settlement the plaintiffs became aware of additional information concerning the property, however, including an adverse building inspection report that the defendant had obtained in 2011. On 31 May 2018 the plaintiffs’ solicitors sought an explanation in relation to this information, and settlement did not proceed. The defendant’s solicitors responded by rejecting any contention that there had been any misrepresentation or breach of the agreement, and the defendant gave notice that settlement should proceed immediately. By letter dated 6 June 2018 the plaintiffs’ solicitors gave notice that the plaintiffs cancelled the agreement, and demanded a refund of the deposit and payment of consequential losses. The defendant’s solicitors subsequently gave notice that the defendant cancelled the agreement because of the plaintiffs’ failure to perform.

[3]                 The plaintiffs advance two causes of action — the first for misrepresentation under s 37 of the Contract and Commercial Law Act 2017, and the second for breach of contractual warranty. The plaintiffs seek a declaration that they validly cancelled the agreement, a return of the deposit, and damages for certain consequential costs. The defendant contends that the agreement was validly cancelled by the defendant, that the deposit was forfeit, and that no damages are payable.

[4]                 The defendant has subsequently sold the property. The dispute is limited to an argument on whether the $120,000 deposit is forfeit, and whether the plaintiffs may

recover  certain  additional  costs as damages.    The total claim is for $170,974.66 together with interest and costs.

Factual background

[5]                 I…