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Armstrong v Mitchell

Armstrong v Mitchell

Case [2018] NZHC 2353 7 September 2018

Breach of Contract

Misrepresentation

Remedies for Breach of Contract

Standing

Specific Performance

Property Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-3005

[2018] NZHC 2353

BETWEEN ANTHONY JOHN RICHARD ARMSTRONG
Appellant

AND

MICHAEL WILLIAM MITCHELL and EMMA MARIE MITCHELL

Respondents

Hearing: 18 July 2018

Appearances:

K D Puddle and P Shanahan-Pinker for the Appellant H K Gladwell for the Respondents

Judgment:

7 September 2018

JUDGMENT OF PALMER J

This judgment is delivered by me on 7 September 2018 at 3.30 pm pursuant to r 11.5 of the High Court Rules.

.....................................................
Registrar / Deputy Registrar

Solicitors:
K3 Legal Limited, Auckland Insight Legal Limited, Auckland

ARMSTRONG v MITCHELL [2018] NZHC 2353 [7 September 2018]

Summary

[1] In 2017, Mr Michael Mitchell and Mrs Emma Mitchell bought a property in Mangawhai, Northland, from Mr Anthony Armstrong. Before settlement, they discovered two bays of the four-car garage, a water-tank and a fence may encroach onto a neighbour’s property. They sought compensation and $25,000 was withheld at settlement. They subsequently sued for pre-contractual misrepresentation and Mr Armstrong counterclaimed for the $25,000. Mr Armstrong sought summary judgment on the basis the Mitchells elected not to requisition the defect in title and are deemed to have accepted title under the standard form sale and purchase agreement (the Agreement). He was unsuccessful in the District Court and now appeals.

[2] Clause 6.2 of the Agreement deems the purchaser to have accepted the title of the vendor subject to any requisitions or objections within the specified timeframe. There was a defect in the title. While the Mitchells did not requisition the defect (ask for it to be remedied), they did object to it by text within the specified timeframe. Accordingly, they are not deemed to have accepted title under the Agreement. I decline the appeal.

What happened?

Negotiation for sale and purchase

[3] Mr Armstrong, a builder, bought a two-acre property at 56 Atkin Road, Mangawhai in 2013. He bought it when it was being subdivided and without surveying its boundaries. It had a house and four-car garage on it and a concrete water tank used for garden irrigation. Mr Armstrong replaced a wire fence, on what he says he thought was the boundary, with a wooden fence.

[4] In October 2016, Mr Armstrong listed the property for sale on TradeMe. The description included the four-car garage. Mr and Mrs Mitchell inquired about the listing through text exchanges. They viewed the property, by themselves. The garage was attractive to them as Mr Mitchell is a mechanic. By 16 December 2017, by text exchange, the Mitchells had agreed they would make a formal offer at $585,000.

[5] Over December 2017 and January 2018, there were continued texts. Mr Armstrong’s lawyers prepared a draft sale and purchase agreement in the ninth edition 2012 (5) of the Real Estate Institute of New Zealand (REINZ) Auckland District Law Society (ADLS) standard form contract. The Mitchells’ lawyers amended it. The purchase price was to be $585,000 with settlement on 10 March 2017 or earlier by agreement.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Armstrong v Mitchell

Details

AGLC: Armstrong v Mitchell [2018] NZHC 2353
Case: [2018] NZHC 2353
Decision Date: 7 September 2018

CaseChat Overview and Summary

The High Court of New Zealand Auckland Registry heard an appeal by Mr Anthony Armstrong against the decision of the District Court in Mitchell v Armstrong. Mr Armstrong, a builder, had sold a property in Mangawhai, Northland, to Mr and Mrs Mitchell, who discovered that part of the four-car garage, a water tank, and a fence encroached on the neighbouring property. They objected to the defect in title but did not requisition it. They sought compensation and $25,000 was withheld at settlement. They subsequently sued for pre-contractual misrepresentation and Mr Armstrong counterclaimed for the $25,000. Mr Armstrong sought summary judgment on the basis the Mitchells elected not to requisition the defect in title and are deemed to have accepted title under the standard form sale and purchase agreement (the Agreement). The District Court declined the application. The High Court, in declining the appeal, held that the Mitchells did object to the defect in title by text within the specified timeframe and are not deemed to have accepted title under the Agreement.

The legal issues were whether the District Court's decision was wrong and whether the Mitchells had a cause of action for misrepresentation. The court found that the encroachment was a requisitionable defect in title and that the Mitchells objected to it within the specified timeframe. The court was not satisfied the Mitchells’ cause of action could not succeed or that they had no defence to Mr Armstrong’s counterclaim.

The court declined the appeal. If costs cannot be agreed, the court reserved leave for the Mitchells to file submissions of up to 10 pages within 10 working days of the date of the judgment and Mr Armstrong to file submissions in reply of up to 10 pages within five working days of that.

Orders