BCH Investments Limited v Seal Construction Limited

[2019] NZHC 2692

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2019-404-000800

[2019] NZHC 2692

BETWEEN

BCH INVESTMENTS LIMITED

Plaintiff

AND

SEAL CONSTRUCTION LIMITED

First Defendant

AND

WENYAN HU

Second Defendant

CIV 2019-404-000803

BETWEEN

BCH INVESTMENTS LIMITED

Plaintiff

AND

SEAL CONSTRUCTION LIMITED

First Defendant

AND

WENYAN HU

Second Defendant

Hearing:	15 August 2019
Appearances:	C Jiang and M L Barnes for the Plaintiff No appearance for the Defendants
Judgment:	21 October 2019

JUDGMENT OF GWYN J

This judgment was delivered by me on 21 October 2019 at 2.00pm

Pursuant to Rule 11.5 of the High Court Rules

Counsel/Solicitors:

G Illingworth QC, Auckland Glaister Ennor, Auckland

…………………………

Registrar/Deputy Registrar

BCH INVESTMENTS LIMITED v SEAL CONSTRUCTION LIMITED [2019] NZHC 2692 [21 October 2019]

Introduction

[1]        The plaintiff, BCH Investments Limited, seeks summary judgment by way of formal proof in respect of its claims against:

(a)Seal  Construction  Limited,  the  first  defendant  in  proceedings CIV- 2019-404-800 and CIV-2019-404-803; and

(b)Wenyan Hu, the second defendant in proceedings CIV-2019-404-800 and CIV-2019-404-803.

Background

[2]        The plaintiff is the registered proprietor of the property at 79-95 Gills Road, Albany Heights, Auckland, which it has subdivided into 117 lots for residential purposes (the subdivision). It sold lots off the plan before titles were issued.

[3]        The plaintiff sold two lots in the subdivision, lots 55 and 57, to Seal Construction Limited, by separate agreements, each dated 2 June 2016 (the Agreements). The purchase price for each of lots 55 and 57 was $400,000.

[4]        The second defendant, Ms Hu, was the sole Director of the first defendant company and a signatory to both Agreements. Ms Hu was named in each of the Agreements as Guarantor.

[5]        By calculation under the relevant provisions of the Agreements the settlement date was determined as 12 August 2018 in respect of lot 55, and 26 January 20191 in respect of lot 57, but Seal Construction did not settle in respect of either. The lawyers for BCH issued settlement notices under the Agreements but Seal Construction and Ms Hu did not comply with those notices.

1 26 January 2018 was a Saturday and clause 1.2(1) of the Agreement provided that in that event settlement date was to be the last working day before the nominated date.

[6]        BCH began these proceedings in April 2019 against both Seal Construction and Ms Hu. It applied for summary judgment. The defendants have been served with both proceedings but neither of them has taken any steps in opposition.

[7]The plaintiff now seeks summary judgment by way of formal proof.

[8]        Initially BCH sought specific performance of the two Agreements. It also claimed damages in the alternative. On 14 August 2019 it served a notice on the defendants cancelling the Agreements. It now seeks damages caused by the failure of Seal Construction to settle and the failure of Ms Hu to honour her guarantee of performance by Seal Construction.

Service

[9]        The High Court Rules 2016 do not provide discretely for hearings by way of formal proof.2

[10]      Where, as here, the plaintiff wishes to seek judgment by default it must show that the defendants have been served.3

[11]      BCH’s statements of claim in each of CIV-2019-404-800 and CIV-2019-404- 803 were dated 18 April 2019 and filed in Court on that date. Service was effected on each of the first defendant and the second defendant on 10 May 2019. Affidavits of service have been filed. I am satisfied that each of the first and second defendants was served with:

(a)Notice of Proceeding when Summary Judgment Sought by Plaintiff dated 18 April 2019;

(b)Statement of Claim dated 18 April 2019;

(c)Interlocutory Application by Plaintiff seeking Summary Judgment dated 18 April 2019;

2 Chen v Zhong HC Auckland CIV 2010-404-001995, 14 November 2011 at [37].

3 High Court Rules 2016, r 15.4.

(d)Affidavit of Junwei Tang in support of Application for Summary Judgment sworn 5 April 2019; and

(e)Plaintiff’s Initial Disclosure dated 6 May 2019 (together “Proceedings”)

in relation to each of CIV-2019-404-800 and CIV-2019-404-803.

Agreements for sale and purchase

[12]      The Agreements are in similar terms with the exception of the description of the properties and a handwritten amendment which is discussed below. Both Agreements were signed on 2 June 2016. In each Agreement the purchaser is Seal Construction Limited, and Ms Hu is the guarantor. The purchase price in each Agreement is $400,000. The Agreements were in the form of the Real Estate Institute of New Zealand Incorporated and Auckland District Law Society Incorporated standard agreement for sale and purchase Ninth Edition 2012 (3), but also included further terms which, counsel for the plaintiff advised from the Bar, were drafted by the plaintiff’s solicitors. Of particular note is clause 23 “Builders terms”. In the original, unaltered Agreements, Clause 23(c) reads:

Should the Purchaser elect the builders terms and if settlement takes place within 6 months from the issue of section 224C, the purchase price shall remain the same. If settlement takes place after 6 months but within12 months from the issue of the section 224C, there shall be an adjustment to the purchase price and the Purchaser shall pay interest at the interest rate of 10% p.a. on such portion of the purchase price (including any deposit) so unpaid for the period from 1st day of the seventh months until the settlement date. The Purchaser shall give to the Vendor not less than 2 weeks written notice if the Purchaser decides to settle other than in accordance with clause 3.18 of the General Terms of Sale.

[13]      The plaintiff’s submissions explained that the purpose of the original cl 23(c) was to allow the purchaser to start works prior to the settlement date and, correspondingly, to compensate the plaintiff for allowing the purchaser to access the property before settlement date.

[14]      However, as deposed in Mr Tang’s Updating Affidavit of 9 September 2019, BCH and various other purchasers of lots in the development realised that to achieve this purpose the builder’s terms needed to be tied to the issue of building consents rather than a s 224(c) certificate. Accordingly, BCH had asked its solicitors to include a new clause 23(c)(ii) in the agreements for sale and purchase of the lots in the subdivision. Mr Tang’s 9 September 2019 affidavit annexes a copy of such an agreement between BCH and another purchaser.

[15]      In this case though the Agreements do not clearly provide for what the plaintiff says was the parties’ intention. On both Agreements the parties have handwritten a new cl 23(c) at the bottom of the page, which provides: “c. 5-month builders term from building consent issued and then further 5-month interest rate of 10% p.a. until settlement.” In the Agreement relating to lot 57 the original cl 23(c) has a line through it. That is not the case in the Agreement relating to lot 55 but the plaintiff’s submission before me at hearing was that the parties intended it to be deleted in the Agreement relating to lot 57 also.

[16]       I am satisfied by the subsequent conduct of the parties that it was their intention to settle on Builder’s Terms to the extent that they intended settlement to occur within the ten month period from the date of the issue of the Building Consent: on 16 October 2017 Seal Construction’s solicitors gave notice in respect of lot 55 of its election to settle on Builder’s terms under cl 23 and, similarly, on 19 October 2017 in respect of lot 57.

[17]      What is not clear is what else of the various versions of clause 23 they understood to apply. Subsequent correspondence from the plaintiff’s solicitors evidences some confusion as to which version of clause 23 is being relied on. For example, by facsimile of 26 March 2018 to the defendants’ solicitor, the plaintiff’s solicitors stated: “Builder’s terms as elected by your client shall commence from today and interest payable pursuant to builder’s terms at 10% per annum shall commence from the 6th month until settlement. Settlement date as defined in clause 20(b) is 13 September 2018.” This appears to be based on the original clause 23(c). The facsimile then goes on to state: “Clause 23(c) as amended by your client only relates to calculation of interest during the builder’s terms.”

[18]      Later, by email of 9 August 2018, the plaintiff’s solicitors wrote to the defendants’ solicitors: “Similar to Lot 55, we are recently advised by our client that the builders term clause 23(c) is meant to reflect the parties intention to vary the settlement date to 10 months after the issue of building consent with the latter 5 months to incur interest at 10% pa. Unfortunately, at the time of the agreement the parties did not consult with their respective lawyers and did not have the knowledge to variation [sic] clause 20 (the settlement date clause) properly to reflect the change in the settlement date.” A similar email was sent in relation to lot 57, on the same date. In response, the defendants’ solicitors said “I will take instructions and come back to you once I am able.” There is no further response before the Court in relation to either Agreement.

[19]      The effect of the amendment to cl 23(c) becomes relevant at the point of calculating the plaintiff’s damage: should that calculation include an “adjustment” to the purchase price, as well as 10 per cent pa interest on any portion of the purchase price unpaid after five months but within the ten months of building consent being issued? This question is addressed below at [54] – [61].

[20]Each Agreement otherwise provided inter alia:

(a)The purchase price was $400,000 plus GST (if any).

(b)A deposit of 10 per cent was to be paid to the vendor’s solicitor’s trust account.

(c)The guarantor of the purchaser gives her or his personal guarantee in respect of all the obligations of the purchaser under the Agreement. The guarantor may as between the vendor and the guarantor for all purposes be treated as the purchaser and the vendor shall be under no obligation to take proceedings against the purchaser before taking proceedings against the guarantor/s (cl 34).

(d)Upon service of a settlement notice, the purchaser shall settle on or before the twelfth working day after the date of service of the notice,

time being of the essence, but without prejudice to any intermediate right of cancellation by either party. If the purchaser does not comply with the terms of the settlement notice, then the vendor may sue for specific performance (cl 10.2).

(e)The settlement date is calculated as being ten months after the issue of building consent (cl 23(c), Builder’s terms).

Lot 55

[21]      On 21 June 2016, the first defendant paid a deposit of $40,000 in respect of lot 55.

[22]      On 12 October 2017, the plaintiff’s solicitors wrote to the first defendant’s solicitors confirming that building consent for lot 55 had been issued.

[23]       On 16 October 2017 the first defendant confirmed its election of settlement pursuant to the Builder’s Terms (cl 23(c)) meaning that settlement would occur within ten months of issue of the building consent. On 9 August 2018 the plaintiff’s solicitor wrote to the first defendant’s solicitors confirming pursuant to cl 23(c) of the Agreement that settlement was to occur on or before 12 August 2018.

[24]      On 12 August the plaintiff was ready, willing and able to settle. The first defendant did not settle by 12 August 2018, or at any time thereafter.

[25]      On 12 September 2018, the defendants’ solicitor wrote to the plaintiff’s solicitor stating, “Our client has advised that they are unable to settle.” On 14 September 2018 the plaintiff served the defendants with a Settlement Notice, requiring the defendants to settle in accordance with cl 10 of the Agreement (the Settlement Notice). At the time of issuing the Settlement Notice, the plaintiff was ready, willing and able to settle. The defendants did not settle within 12 working days of the issuing of the Settlement Notice or at all.

[26]      In early November the plaintiff put lot 55 back on the market, in conjunction with lot 54. Lots 54 and 55 were marketed together because they were adjacent lots

with a party wall on the boundary. The two lots were put up for auction on 22 November 2018, through Barfoot and Thompson. No bids were received at the auction. After the auction, two offers were received for lots 54 and 55 jointly. One offer was for $548,000 (equating to $274,000 for each lot), the other for $550,000 (equating to $275,000 for each lot). BCH did not enter into an agreement for sale with either of the offerors, as the offers were significantly lower than the reserve. BCH was concerned that selling them at this price would have affected the marketing of the remaining unsold lots of which there was a significant number.

Lot 57

[27]      On 21 June 2016, the first defendant paid a deposit of $40,000 in respect of lot 57.

[28]      On 19 October 2017, the first defendant confirmed its election of settlement pursuant to the Builder’s Terms (cl 23(c)), meaning that settlement would occur within ten months of issue of the building consent for lot 57.

[29]       On or about 26 March 2018 the plaintiff’s solicitors wrote to the first defendant’s solicitors confirming that building consent for lot 57 had been issued. On or about 9 August 2018 the plaintiff’s solicitors wrote to the first defendant’s solicitors, confirming pursuant to cl 23(c) of the Agreement, the settlement date would be no later than 26 January 2019.

[30]       On 26 January 2019 the plaintiff was ready, willing and able to settle. The first defendant did not settle by 26 January 2019 or at any time thereafter.

[31]      On 25 January 2019 the plaintiff served the defendants with a Settlement Notice, requiring the defendants to settle in accordance with clause 10 of the Agreement (the Settlement Notice). At the time of issuing the Settlement Notice the plaintiff was ready, willing and able to settle. The defendants did not settle within 12 working days of the issuing of the Settlement Notice, or at all.

[32]      Lot 57 remained listed with several agents but was not put up for auction, in light of the outcome of the auction for lots 54 and 55, which counsel explained from the Bar was for the purpose of testing the market.

Capacity in which Ms Wenyan Hu signed the Agreements

[33]      The plaintiff seeks summary judgment against Ms Wu in her capacity as guarantor of Seal Construction’s obligations under each of the Agreements.

[34]      Each Agreement records on the first page, “GUARANTOR/S’ NAME/S (refer clause 34 of Further Terms of Sale)”. Wenyan Hu is handwritten beside that reference in each of the Agreements.

[35]Clause 34 of each of the Agreements states:

(a)The Guarantor/s of the Purchaser being either the Directors of the Purchaser Company or Trustees of the Purchaser Trust as the case may be, give their personal guarantee in respect of all the obligations of the Purchaser under this agreement.

(b)The Guarantor/s indemnifies and agrees to keep indemnified the Vendor against any loss the Vendor might suffer should the Purchaser default under this Agreement or should this Agreement be lawfully disclaimed or abandoned by any liquidator, receiver or another person.

(c)The Guarantor/s may as between the Vendor and the Guarantor/s for all purposes be treated as the Purchaser and the Vendor shall be under no obligation to take proceedings against the Purchaser before taking proceedings against the Guarantor/s.

[36]      The Companies Office register (last updated on 09 November 2018) shows Wenyan Hu as the sole Director of Seal Construction Limited.

[37]      Ms Wenyan Hu has signed the Agreements under the heading “Signature of purchaser(s)”. She has not signed separately as guarantor and indeed there was no

specific place on the Agreements for her to do so. I note that the signature for the vendor is under the heading “Signature of vendor(s) and/or Signature of guarantor(s)”. The additional words “and/or Signature of guarantor(s)” were not present in the heading to the purchaser’s signature. Had there been a space to sign as guarantor and had Ms Wu elected not to sign in that space, that might – but not necessarily - have meant that she had not assumed liability as guarantor.4

[38]      Section 27 of the Property Law Act 2007 requires that a contract of guarantee must be in writing and signed by the guarantor. A single signature may be sufficient to bind both the company and the guarantor personally.5 The point is discussed in The Modern Contract of Guarantee:6

Intention may be important however, when one party signs the guarantee once in two different capacities. For example, a guarantee so executed by a person as an officer of that person’s company and also in his or her private capacity binds both that person and the company as long as there is nothing to indicate that he or she signed the guarantee solely for and on behalf of the company.

[39]      Ms Hu has taken no steps in the proceedings and has not therefore presented any argument that she intended to sign the Agreements only as director of Seal Construction Limited.

[40]      I am satisfied that Ms Hu has signed the Agreements in two capacities: first as director of Seal Construction Limited and, second, as guarantor of the Agreements.

Judgment sought

[41]      The statements of claim in both proceedings sought specific performance of the Agreements or, in the alternative, damages in lieu. In its Synopsis of Submissions for Formal Proof Hearing, dated 12 August 2019 (the original submissions), the plaintiff advised that it had elected to cancel the Agreements and seek damages and that it would be notifying the defendants of cancellation. A single notice of cancellation, dated 13 August 2019, referring to both proceedings and addressed to

4      Chiswick Investments v Pevats [1990] 1 NZLR 169 (HC).

5      McCarthy v Derbyshire HC Auckland CIV-2005-404-003105, 6 December 2005 per Keane J.

6      Wayne Courtney, John Phillips and James O’Donovan The Modern Contract of Guarantee (3rd English ed, Sweet & Maxwell, London, 2016) at 3-081.

both Seal Construction Limited and Ms Wenyan Hu, was served on Ms Hu on 14 August 2019. The notice of cancellation referred to cl 10.4 of the Agreements and the plaintiff’s intention to pursue remedies against the defendants, including remedies under that sub-clause.

[42]Clause 10 of each of the Agreements provides:

10.4 If the purchaser does not comply with the terms of the settlement notice served by the vendor then, subject to subclause 10.1(3):

(1)      Without prejudice to any other rights or remedies available to the vendor at law or in equity, the vendor may:

(a)sue the purchaser for specific performance: or

(b)cancel the agreement by notice and pursue either or both of the following remedies namely:

(i)forfeit and retain for the vendor’s own benefit the deposit paid by the purchaser, but not exceeding in all 20% of the purchase price; and/or

(ii)sue the purchaser for damages.

…

(3) The damages claimable by the vendor under subclause 10.4(1)(b)(ii) shall include all damages claimable at common law or in equity and shall also include (but shall not be limited to) any loss incurred by the vendor on any bona fide resale contracted within one year from the date by which the purchaser should have settled in compliance with the settlement notice. The amount of that loss may include:

(a)interest on the unpaid portion of the purchase price at the interest rate for late settlement from the settlement date to the settlement of such resale; and

(b)all costs and expenses reasonably incurred in any resale or attempted resale; and

(c)all outgoings (other than interest) on or maintenance expenses in respect of the property from the settlement date to the settlement of such resale.

[43]      While clause 10 allows a vendor to claim the loss on any bona fide resale within one year, BCH has not sought that remedy here. It did try to sell lot 55 but was not

satisfied with the prices offered. While lot 57 remained listed for sale, it has not been resold.

[44]      In his text Sale of Land Dr D W McMorland addresses how damages are to be measured at common law when there has not been a resale: 7

If the vendor’s damages are to be measured on the basis of the loss of profit, the calculation is the difference between the value of the land, measured as at the appropriate date, and the contract price, minus the deposit. This presupposes that the land is worth less than the contract price. If the deposit is greater than the difference between the value and the price, the vendor is clearly better merely to forfeit the deposit, and has no need to claim damages.

In a loss of profits measure the vendor cannot recover any sum which would have been spent or lost in order to make the profit, that is, the damages recovered cannot be a combination of loss of profits and wasted expenditure; the measure must be either one or the other.

(citations omitted)

And he goes on:8

In addition to the loss of profit, which is the natural result of the breach, if the vendor can recover any other losses suffered which were within the contemplation of both parties at the time the contract was made as the probable result of the breach of it.

[45]      Dr McMorland deals with the question as to the time when the loss of profit is to be measured in another part of his text:9

… Until the mid-1970’s the assessment was routinely made as at the date of the election to cancel the contract, the time at which the obligation to perform terminated. That provided a just assessment in stable economic times, but a subsequent period of high inflation meant that such a measure was not just and caused a revision of the whole question.

[46]      As Associate Judge Bell recently noted in BCH Investments Limited v Zhu10 that era of high inflation has passed. While economic conditions have varied in the intervening period, more recently the Auckland property market has been steady and may be in a slight decline. In those circumstances, I adopt the approach which Dr

7      D W McMorland Sale of Land (3rd edition, Cathcart Trust, Auckland, 2011) at 619.

8      At 620.

9      At 604.

10     BCH Investments Limited v Zhu [2019] NZHC 1958 at [16] – [17] (interim judgment); BCH Investments Limited v Zhu [2019] NZHC 2014 (final judgment).

McMorland described as having been routinely followed up until the mid-1970s, and as approved in BCH Investments Limited v Zhu.

[47]       Until BCH gave its notice cancelling the Agreements, it required Seal Construction Limited to perform as purchaser and Ms Hu to perform as guarantor. It could therefore say that any time up until it gave cancellation it was entitled to payment of the purchase price including any extra interest because of builder’s terms and for late settlement. Therefore, cancellation marks the time where the loss of value is to be measured.

[48]      BCH has provided a valuation from Brian Herbert Turner, a Registered Valuer. His valuation report values each of lots 55 and 57, as at 5 August 2019, at $250,000. I accept that it is appropriate to proceed on the basis of the registered valuation to ascertain the net proceeds of sale BCH would have received on a nominal resale of the properties as at the cancellation date of 13 August 2018.

[49]      BCH also claims the costs of the attempted resale of lot 55. Those are appropriate mitigation costs.

[50]      BCH has also incurred costs relating to the ownership of the properties in terms of rates and building consent extension fees, which I find it is entitled to claim.

[51]      BCH is entitled to default interest at the rate of 15 per cent, pursuant to cl 3.12 of the Agreements, from settlement date until the date of cancellation, 13 August 2019 and to interest under the handwritten cl 23(c) of the Builder’s Terms for a period of five months, on the unpaid purchase price of $360,000 in respect of each Agreement.

[52]      In the Updating Submissions provided by counsel at the hearing the calculation of the difference in the value of the properties between the date of the Agreements and the date of cancellation includes a “Builder’s term price adjustment” of $14,893 in respect of each lot.

[53]      As I have noted above,11 while the original cl 23(c) referred to an “adjustment to the purchase price”, that clause was struck out in the Agreement relating to lot 55 and the plaintiff’s submission before me was that the parties intended it to be deleted in the Agreement in relation to lot 57 also. In both cases, the handwritten cl 23(c) was to replace the original. The evidence before the Court as to the parties’ intention about which version of cl 23(c) was to apply was unclear.

[54]      By Minute of 29 August 2019 I sought clarification from the plaintiff as to the contractual basis for claiming both a “builders term price adjustment” and “builders term” interest and any consequent recalculation of the amounts claimed.

[55]      In response the plaintiff filed the updating affidavit of Junwei (Thomas) Tang dated 9 September 2019, referred to at paragraph [14] above.

[56]      Mr Tang deposes that it was the parties’ intention that the sale and purchase agreements for each of lots 55 and 57 should be read as including the original cl 23(c), together with the addition of handwritten words, effectively as cl 23(c)(ii).

[57]      In support of the proposition that this was what the parties intended, Mr Tang appended a sale and purchase agreement for lot 54 in the same development. The vendor in that agreement is the plaintiff but the purchaser is neither of the defendants.

[58]      The lot 54 sale and purchase agreement clearly contains cl 23(c)(i) and (ii) which, together, have the effect argued for by the plaintiff in these proceedings, i.e. that if the defendants elected to proceed on the builder’s terms and settlement took place within five months from the issue of the building consent, the purchase price would remain the same. If settlement took place after five months but within ten months from the issue of the building consent, there would be an adjustment to the purchase price and the purchaser would be required to pay interest at 10 per cent per annum on any portion of the purchase price unpaid.

[59]      In this case, which came before me on a formal proof, I am not prepared to accept that the builder’s term sale price adjustment should apply, in the absence of any

11     At paragraphs [12] – [20].

clear documentary evidence confirming that this was indeed both parties’ intention (see paragraphs [16] – [ 19] above). It is not established to my satisfaction as required by High Court Rules 2016, r 15.9(4). It is therefore not properly included in the calculation of the difference in value of the properties (the difference between what BCH would have got had the settlements taken place according to the Agreements and what it will nominally receive now).

[60]      The handwritten amendment to cl 23(c) which I find does apply in relation to lots 55 and 57 does provide for interest at the rate of 10 per cent per annum after five months. I therefore conclude that 10 per cent per annum interest can be claimed.

[61]      Accordingly, I have considered the damages payable to the plaintiff by reference to the plaintiff’s original submissions, not the updating submissions of 15 August 2019. The plaintiff has provided the following calculations:

(a)Difference in value: BCH seeks damages for its losses based on an estimate of the net proceeds of sale it would have received had it been able to sell the lots at their current valuation. This is made up of the difference between what BCH would have got had the settlements taken place and what it will nominally receive now.

(i)Under the Agreements, BCH would have received $400,000 less sales commission/introduction fee of $9,000, less legal costs of $3,105, = $387,895 per lot.

(ii)The current registered valuation of each lot is $250,000. Under a nominal resale as at 13 August 2019 (the date of cancellation), BCH would receive $250,000 less estimated commission of

$11,356.25 under Barfoot and Thompson’s commission calculator, less estimated legal costs of $2,000, = $236,643.75 per lot.

(iii)$387,895 less $236,643.75 equals $151,251.24, less the deposit of $40,000 (retained by the plaintiff) = $111,251.24 for each lot.

(b)Default interest: in relation to lot 55, interest on the unpaid portion of the purchase price at the default rate of 15 per cent, from the settlement date to the cancellation date, which equals $54,147.94. In relation to lot 57, interest on the unpaid portion of the purchase price at the default interest rate of 15 per cent from the settlement date to the cancellation date, which equals $29,441.09.

(c)Builder’s term interest: under cl 23(c) of the Agreements, if settlement took place after five months but within ten months of the issue of building consent the purchaser would pay interest at the rate of 10 per cent per annum on such portion of the purchase price (including any deposit) so unpaid for the five months. Interest for the period of five months on the unpaid purchase price of $360,000 equals $14,893.15 per lot, i.e. $29,786.30.

(d)Resale costs: Barfoot and Thompson’s marketing for the re-sale was

$1,344.50 for lots 54 and 55, = $672.25 for lot 55.

(e)Outgoings on, or maintenance expenses: BCH has incurred the following outgoings and maintenance expenses; rates totalling

$1,431.68 for lot 55 and $785.94 for lot 57.

(f)Other damages: BCH has paid $102 for extension on the building consents for each of lots 55 and 57, totalling costs of $204.

[62]      Counsel invited me to give summary judgment for the amounts set out above, but also sought orders that the proceedings remain on foot to allow BCH to seek damages in relation to prospective building consent extension fees, which may arise on 13 November 2019 (for lot 55) and on 3 April 2020 (for lot 57), if it is not able to sell the properties before those dates.

[63]       The plaintiff has elected to cancel the Agreements and crystallise its losses as at the point of cancellation. The calculations of damages were submitted to me on that basis. It would not be consistent with that approach to give judgment for the amounts sought but nevertheless adjourn the proceedings to allow for some possible prospective claim for further loss. The assessment of the damages to which the plaintiff is entitled occurs as at 13 August 2019, the date on which it cancelled the Agreements.

Damages
Item	Lot 55	Lot 57
Difference in value	$111,251.24	$111,251.24
Default Interest	$54,147.94	$29,441.09
Builder’s term interest	$14,893.15	$14,893.15
Fees associated with the attempted resale	$672.25
Outgoings on or maintenance expenses	$1,431.68	$785.94
Consequential losses: Building consent extension fee	$102.00	$102.00
TOTAL	$182,498.26	$156,473.42

[64]      I give judgment for the sum of $156,473.42 in respect of CIV 2019-404-800 and $182,498.26 in respect of CIV 2019-404-803.

Costs and disbursements

[65]      In light of the amounts claimed, the plaintiff seeks costs and disbursements pursuant to the District Court Rules 2014. I accept that category 2, band B is appropriate in this case. By Minute (No 2) dated 13 September 2019 I invited counsel to consider whether there was any element of duplication in the Costs Schedule provided at the hearing, having regard to the virtually identical nature of the two proceedings.

[66]      The plaintiff’s memorandum as to costs (23 September 2019) notes that some costs were apportioned across both proceedings in the original schedule of costs and therefore an award in terms of that schedule is appropriate.

[67]      I have concluded that there remains a small element of duplication and some further costs should be apportioned across both proceedings. Specifically, the plaintiff seeks a time allocation of 1.5 days ($2,865.00) for preparing each statement of claim. The statements of claim are identical in all respects except for the description of the property and relevant dates. Accordingly, I allow one day for each proceeding.

[68]      Similarly, a time allocation of 1.5 days ($2,865.00) is sought for preparation of the summary judgment application and supporting affidavits for each of the proceedings.

[69]      The affidavits are in identical form, although the relevant dates are different and some of the appendices are different. The interlocutory applications are in identical form, except for minor differences in the relevant dates. Accordingly, I allow one day for each proceeding

[70]      I therefore grant costs and disbursements in terms of the schedule provided by counsel at the hearing, subject to the reductions at [67] and [69] above:

Costs: $11,937.50

Disbursements: $2,126.67 (excl GST) for each proceeding.

Gwyn J