BETWEEN GEOFFREY WILLIAM TURNER Plaintiff AND FORD PASTORAL COMPANY HOLDINGS (NZ) LIMITED Defendant
[2023] NZHC 3017
•27 October 2023
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2019-470-000130
[2023] NZHC 3017
BETWEEN GEOFFREY WILLIAM TURNER
Plaintiff
AND
FORD PASTORAL COMPANY HOLDINGS (NZ) LIMITED
Defendant
Hearing: 7-10 November 2022 Appearances:
G Brittain KC, M P Ward-Johnston for the Plaintiff
D Bigio KC and M Morrison for First and Second Defendants
Judgment:
27 October 2023
JUDGMENT OF HARVEY J
This judgment is delivered by me on 27 October 2023 at 12.30 pm pursuant to r 11.5 of the High Court Rules.
.....................................................
Registrar / Deputy Registrar
Counsel:Ward Johnston Barristers Limited, Tauranga D Bigio King’s Counsel, Auckland
Solicitors: Kaimai Law, Tauranga (C Robbins)
Morrison Mallett, Auckland (M Morrison, S Tindale)
TURNER v FORD PASTORAL COMPANY HOLDINGS (NZ) LIMITED [2023] NZHC 3017 [27 October 2023]
Contents
Introduction[1]
Issues[7]
Background[8]
The paper road and easement[11]
Expert evidence
Mr Bos’ access way cost evidence[17]
Mr Craven’s property valuation evidence[21]
The alleged misrepresentations[26]
Should the first defendant’s Fair Trading Act 1986 counterclaims be granted?
The Company’s submissions[32]
Mr Turner’s submissions[50]
Legal principles[63]
Discussion[71]
Should the defendants’ Contract and Commercial Law Act 2017 counterclaims be granted?[96]
Is the plaintiff entitled to specific performance of the contract?[97]
Decision[100]
Introduction
[1] In November 2016, Geoffrey Turner sold 113 hectares of land in Katikati, Tauranga for $2.2 million by a tender process to Geoffrey Ford via the Ford Pastoral Company Holdings (NZ) Ltd.1 The Property is part of Mr Turner’s original block that he had subdivided for the sale. Critically for these proceedings, there is an existing paper road, without which the Property would be essentially landlocked.2 Mr Turner seeks specific performance of the contract for payment of the purchase price in full.
[2] Mr Ford alleged during the sale process that there was misleading and deceptive conduct and misrepresentation by the real estate agent, a Mr Fowler, acting as agent for Mr Turner, and in associated sales material, regarding whether the Property has an appropriate and exclusive access way. As a result, $710,498.30 was retained by Cooney Lees Morgan pending resolution of the dispute.
[3]The pleaded representations are:
1 For convenience now referred to as the Company. The Property is also known as Puriri Park. Mr Ford also purchased an adjoining property known as Longbush Park.
2 It is possible to access the property via the adjoining property now owned by the Fords, but it is not suitable for heavy vehicles.
(a)access to the Property would be by a paper road and an easement over Mr Turner’s adjacent property at 929 Work Road, which linked the Property to Work Road;
(b)such access would be exclusive;
(c)the Property could be utilized as a functional and standalone working farm and/or could be developed into a luxury commercial lodge/holiday destination and/or could be subdivided; and
(d)obtaining such exclusive access to the Property “would not be a problem” and “wouldn’t be an issue”.
[4] Mr Ford claimed that such representations were not true because there were substantial difficulties in constructing an exclusive accessway over the paper road. Part of the road was in a significant ecological feature requiring Council consent to remove. Development of the road required an agreement with the Council to construct the road to a high standard there would be costs for maintenance on an ongoing basis, and the road was open to the public.
[5] Mr Ford therefore argued that the reserved purchase price should be set off against the damages caused by the misrepresentations. He claimed that, but for the misconduct of Mr Turner and his agent, the correct market value of the land is $1.13 million. The Company brought counterclaims for misleading and deceptive conduct under the Fair Trading Act 1986 (FTA) or alternatively misrepresentation under s 35 of the Contract and Commercial Law Act 2017 (CCLA). Mr Ford also personally brought a claim in the alternative under that latter provision.
[6] Sadly, not long after the hearing of this matter Mr Turner passed away, following a period of illness. Judgment will be issued as between the named parties, subject to the arranging of substitution under r 4.50 of the High Court Rules 2016.3 The delay in issuing this decision and the inconvenience to the parties is regretted.
3 Following the approach in Carey’s Bay Marine Serviced Ltd v Elwing Discoveries Ltd [2022] NZHC 1930 at [5].
Issues
[7]The issues for determination are:
(a)Should the first defendant’s FTA counterclaim be granted?
(b)Should the defendants’ CCLA counterclaim(s) be granted?
(c)Is the plaintiff entitled to specific performance of the contract?
Background
[8] The parties filed an agreed statement of facts dated 26 October 2022 and what follows is drawn largely from that document. Mr Turner as vendor and Mr Ford “or nominee” as purchaser entered into an agreement for the sale and purchase of 113 hectares at 959 Work Rd, Katikati, known as Puriri Park, on 11 November 2016. The agreement was conditional on consent from the Western Bay of Plenty District Council for a subdivision/boundary adjustment based on three particular terms. First, Mr Turner would complete a subdivision by way of a boundary adjustment of the land comprised and identified SA576/18 and SA566C/769. Secondly, Mr Turner would obtain a resource consent from the local authority to the plan of subdivision on terms acceptable to Mr Ford. Thirdly, once Mr Ford accepted the terms of the resource consent, Mr Turner would sell him the land comprised in identifier SA56C/741, SA769/180, and a new identifier which would be created for Lot 2 of the subdivided land. That subsequently became Lot 2 LT 512389 comprised an identifier of 790811.
[9] Mr Ford paid Mr Turner $2.2 million. The transaction was zero rated for GST. Mr Turner retained the balance of the subdivided land which became Lot 2 LT 512389 comprised in identifier 790810. Under a deed of nomination and assignment dated 19 May 2017, Mr Ford nominated Ford Pastoral Company as purchaser. Following that, by deed of nomination and assignment date 28 June 2019, Ford Pastoral Company Holdings (NZ) Ltd, the first defendant, was nominated as purchaser.
[10] The boundary adjustment subdivision was completed, the contract became unconditional and it was settled on 3 August 2019. The parties agreed to a reduction in the purchase price of $19,341.12. Mr Ford had paid a $220,000 deposit so the
balance due on settlement was $1,960,650.88. However, due to Mr Ford claiming a set-off for losses arising from alleged misrepresentations, it was agreed that
$710,498.30 would be retained by Cooney Lees Morgan. Following either resolution by agreement or adjudication, that firm is to pay out the retention sum according to either a sealed order of the court or written instructions by consent of both parties. Then on 20 August 2019, Mr Ford paid Mr Turner $1,250,160.58. Identifiers SA56C/741, SA769/180 and 790811 were transferred by Mr Turner to the Company.
The paper road and easement
[11] The section of Work Rd nearest the Property runs in an approximately northwest-southeast position. The Property is to the east of Work Rd. Between the Property and Work Road is the adjoining Lot 1, being the land retained by Mr Turner following subdivision. Between Lot 1 and Work Rd there is a further parcel of land described on the plan as Lot 3 SA56C/680. The paper road runs along the southeast boundary of Lot 3, perpendicular to Work Rd. It then crosses Lot 1 before meeting Lot 2, which forms part of the Property. From Work Rd to where it connects to Lot 2, the paper road is approximately 1 km long. It continues along the boundary of the Property and to the northeast.
[12] Although the paper road connects directly to Work Rd, the easement, which is relatively short at about 80 metres, connects to Work Rd on one end and slightly further up the paper road at the other, and runs across Lot 3. The purpose of the easement is to connect the paper road to Work Rd without the expensive earthworks that would be required to cut through the steep bank where Work Rd and the paper road meet.
[13] In earlier plans for the subdivision, surveyors had proposed what counsel referred to as the “panhandle”. This was a small strip of land that was proposed to be included in the title for Lot 2 that was to run adjacent to the paper road through to Work Rd. It was said that some of the marketing materials and representations arguably apply to the “panhandle” however, that concept was abandoned.
[14] The conditions of sale in the agreement included clauses that the vendors agree to survey the portion of paper road to be used as access from Work Rd through to where it meets adjusted Lot 2 at the vendor’s cost (cl 31.1). The parties agreed that
the paper road access is presently unformed and unfenced, and that the formation and fencing of the road is to be at the purchaser’s cost (cl 32.1).
[15] The paper road passes through Wainui River Bush, which is designated as a significant ecological feature by the Council. Removal of such a feature is a restricted discretionary activity under the Natural Environment section of the District Plan requiring a land use consent. To form the road Mr Ford/the Company would be required to enter into an “agreement to undertake works on unformed road” with the Council. Agreement from the neighbouring property owners may also be required.
[16] The draft agreement provided by the Council would require Mr Ford/the Company to construct the access road in accordance with the plans approved by the Council which would need to comply with the Council’s standards; to obtain consents at its own expense, including for removal of vegetation and access corridor request; to erect a fence at its own expense; to undertake all maintenance and repair to keep the access to the standard it is in when works are complete and be responsible for keeping the area in a clean and tidy area. In addition, the road would be a public road and the Company would not be permitted to prohibit public access. There is also one point, about halfway along the paper road, where the land is in a steep contour.
Expert evidence
Mr Bos’ access way cost evidence
[17] Mr Bos is a senior structural-civil engineer and a director at Stratum Engineering. I am satisfied he is suitably qualified to give expert evidence, although I note Mr Brittain’s contention that Mr Bos could not be independent due to Stratum being involved in events and Mr Ford being a substantial client.4 He was asked to provide an engineering schedule and design for the construction of an access road along the paper road and easement, in respect of two scenarios. The costing for each scenario was completed with the input and assistance of J Swap Contractors Ltd.
4 Mr Bos holds a Bachelor of Engineering in Civil Engineering (First Class Honours) from the University of Auckland, holds CMEngNZ status and is a member of Engineering New Zealand. He has been practicing as a Civil and Structural Engineer since 1991.
[18] Scenario one works on the assumption that access is required in accordance with the Council’s conditions. Mr Bos’ estimated that the 2016 costs for the works would have been $530,989.75 with annual maintenance costs of $24,719.80. The 2022 costs would be $679,786.10 with an annual maintenance cost of $32,455.72.
[19] Scenario two assumes that the representations made were true, namely that Council consent to the formation of the road and/or the removal of the ecological bush feature was either not required or was simply a formality that did not impose any specific conditions of consent materially impacting on cost; the Company was only required to construct an exclusive access that was sufficient merely for vehicle access to an independent functioning farm and maintenance was only that required for an exclusive, private road rather than a public road.
[20] Mr Bos’ approach to scenario two was to cost an access way more in the nature of a “track” that would not require consenting and would be of a lower standard than that required of the Council. It would only need an experienced civil contractor rather than other specialists to undertake ecological and engineering monitoring. The costs associated with scenario two would be in 2016, $160,744.25 with an annual maintenance cost of $7,264.89. In 2022, the cost would be $222,473.50 with an annual maintenance cost of $9,249.47.
Mr Craven’s property valuation evidence
[21] Mr Craven gave expert valuation evidence in this proceeding.5 The defendants instructed Mr Craven to provide a valuation on the “true value” of the Property, that is, on the basis that the Property was landlocked, legal physical access could be obtained from the Council per the Council’s Draft Agreement, the costs of doing so would be $530,989.75 to construct and $24,719.80 to upkeep, and access would not be exclusive.6 The valuation provided for “scenario one” was $1,130,000.
5 I am satisfied his qualifications and experience qualified him to give this evidence. Mr Craven holds a Master of Arts in Land Economy from the University of Cambridge. He has been a registered land valuer since 2002, is a Fellow of New Zealand Institute of Valuers, a Fellow of Property Institute of New Zealand and is a member of the Taranaki Land Valuation Tribunal (since 2014). He has worked on a number of litigation matters as an expert witness or tribunal member.
6 Based on Mr Bos’ estimates.
[22] In determining the value for scenario one, Mr Craven took into account that the market tends not to discount values by total cost, but the valuation should take account of any “non normal” costs. It also includes an allowance to account for the additional liability imposed by the requirement to maintain the road to the Council’s standards and that exclusive access cannot be imposed. He referred to case law where compensation was awarded for lack of access, and his personal experience of discounts for properties without legal access.
[23] Ultimately, Mr Craven deducted the full cost of the paper road formation plus an additional $170,000 for maintenance costs, and applied a 25 per cent discount to the house site value for lack of exclusivity. In total, this was a $710,000 value reduction for the access issues and a $90,000 for lack of exclusivity.
[24] Mr Craven then provided his “scenario two” estimate of the Property’s value had the representations been true, namely that access would be exclusive, obtaining such exclusive access would be not be difficult, and the costs of construction would be $160,766.25 and $7,264 for annual maintenance.7 The valuation provided was
$1,710,000. This came from an overall sum of per ha valuation by land type, taking account of improvements, of $1.85 million with a value of $160,000 deducted for the access issues.
[25] Under cross-examination, Mr Craven was challenged as to whether he had undervalued the Property in circumstances where the neighbouring property was being advertised and tendered for concurrently. He rejected the proposition value would be affected by the possibility of acquiring both properties:
Q: So considering the value of Puriri Park as part of a combined purchase is a different value proposition than considering the value of Puriri Park on its own?
A: I’m not so sure it’s a value difference. It’s a purchaser who’s intent on, may see some value, added value in getting two but I don’t see that it’s actually creating any specific additional value to Puriri Park, the fact it can be acquired with the next door property.
7 Based on Mr Bos’ estimates.
The alleged misrepresentations
[26] There are three sources of the alleged misrepresentations: the “information memoranda”, the “tender pack” and oral representations made by Mr Fowler. Further, the defendants rely on the fact these alleged representations carried the implicit meaning that construction and maintenance of such exclusive access road would not present undue difficulty or incur significant material costs, such that the value of the Property should not be materially discounted regarding any difficulty or cost in obtaining and maintaining access.
[27] The first information memorandum was emailed by Mr Fowler to Mr Ford on 30 September 2016. An updated version was provided in hard copy to Mr Ford at the site inspection on 6 November 2016 and upon request Mr Fowler emailed him soft copies of this version on 14 November 2016 (the second information memorandum). The documents were prepared by Mr Fowler. The particular representations in that document included that there was “an opportunity to create your dream home”, that the Property “warrants an amazing lodge or multiple lot subdivision” that “tourism and subdivision opportunities are obvious here” that the Property was a “Premium Farm with incredible options”, that it had “excellent contour”, that “you could create the ultimate Bay of Plenty subdivision or luxury lodge” and that “good climate and contour give horticultural potential”.
[28] Regarding access ways the document stated, “the surveyor has ensured that a generous road margin is included in the title so that an impressive gated entrance can be created on your private land” and “paper road along the edge of the property could be used as a part of the properties [sic] access”. The “generous road margin … included in the title” appeared to relate to the first “panhandle” concept for subdivision, which was included in the first information memorandum, with the paper road being an alternative that could also be utilised.
[29] The revised information pack included a colour satellite photo of the Property showing the location of the unformed paper road that appeared to run adjacent to apparent bush cover, a further survey drawing bearing “Birch Surveyors” branding
and the real estate company’s branding, and an accompanying letter of 28 October 2016 from Mr Salmons of Birch Surveyors Ltd to Mr Fowler that recorded:
Based on our assessment the unformed road, which is mostly clear of vegetation is the preferable access strip. We had a good look in the bush areas and whilst the contour is slightly more favourable in the bush, we believe that it is unnecessary to clear the bush to form the track where the road land is sufficient. We are also of the firm view that Council would not support clearance of this bush to form a road/track given the immediately adjacent unformed road.
Attached is a draft scheme plan based on our walkover today. We have shown a potential right of way access off Work Road which would be easier to construct than cutting the bank in if the existing unformed road alignment was to be used ...
[30] The letter noted that any questions from Mr Turner, Mr Fowler or prospective purchasers could be sent to Mr Salmons.
[31] On 6 November 2016, Mr Fowler took the Fords to inspect the Property. The oral representations he is said to have made are subject to factual dispute between the parties and are discussed in further detail below. In short, he was said to have represented that the access way would be exclusive and that there would be no issues constructing access.
Should the first defendant’s Fair Trading Act 1986 counterclaims be granted?
The Company’s submissions
[32] The Company brought two claims under the FTA. First, that Mr Turner was directly liable under ss 9 and 43 by reason of his misleading and deceptive conduct through the actions of his authorised agent, Mr Fowler. Alternatively, it claimed that Mr Turner had accessory liability under s 43(1)(d) as a party to Mr Fowler’s actions.
[33] Mr Bigio KC submitted that Mr Turner was “in trade” for the purposes of s 9 of the FTA. The representations were made in the course of marketing the sale of a subdivided part of Mr Turner’s Work Farm, which was itself in trade. The transaction was zero rated for GST, reflecting that Mr Turner’s farming business was GST registered, and the purchaser similarly intended to (and did in fact) farm the Property thereafter. Counsel referred to Cochrane v Clarke where the vendor defendants were
found to be in trade when selling their farm, even though it had not operated for six years.8 In addition, Mr Bigio pointed to other elements of the sale and purchase agreement and information memoranda that he submitted demonstrated the land’s commercial nature. Counsel also referred to Mr Turner’s conduct in negotiating the terms of the easement to reserve the rights of future owners of subdivided lots on his land which demonstrated the commercial hue of the transaction.
[34] In any case, Mr Bigio contended that it is beyond doubt that Mr Fowler/PGG Wrightson Real Estate Ltd was in trade as Mr Turner’s agent. Mr Turner, although he did not give evidence, accepted that Mr Fowler was in trade in his pleadings.
[35] Counsel argued that the Company’s case rested on two bases. First, there were representations made for Mr Turner by Mr Fowler that: the access would be exclusive; obtaining such exclusive access, which was to be formed at the purchaser’s cost, “would not be a problem” and “wouldn’t be an issue”; and construction and maintenance of an exclusive access road would not present undue difficulty or incur significant material costs. Further, it was argued that the said representations carried the implicit meaning that construction and maintenance of an exclusive access road would not present undue difficulty or incur significant material costs, such that the value of the Property should not be materially discounted in respect of any difficulty or cost in obtaining and maintaining such access. Counsel contended that the implicit meaning arose from the context in which the representations were made.
[36] The second basis was that Mr Fowler failed to disclose information concerning the formation of paper roads which he possessed but deliberately elected not to disclose. Mr Bigio submitted that his aspect of Mr Fowler’s conduct only became apparent after the service of briefs and Mr Fowler’s evidence at trial.
[37] Counsel pointed to the following aspects of the evidence. Mr Fowler held himself out as an experienced expert agent specialising in rural properties. He also held himself out to Mr and Mrs Ford as having specific expertise on the issue of forming access on unformed paper roads, referring in his brief to that knowledge.
8 Cochrane v Clarke CA66/04, 24 February 2005.
Mr Fowler had personal experience of accessing his own home from a paper road via an easement.
[38] Mr Bigio submitted that the information memoranda were comprehensive documents intended to give prospective buyers detail to make an informed decision. For instance, regarding subdivision and electricity, there were warnings that a purchaser would need to talk to a surveyor and that a large generator would likely require resource consent. There was no equivalent warning for road access requirements. Counsel highlighted that the information memoranda referred, under the heading “Native Forest”, to “significant tall forest” being on the Property and “on the District Plan”. However, Mr Fowler did not research the significance of this designation nor did he flag that this was an area an interested party should inquire into.
[39] Further, the inclusion of Mr Salmons’ letter in the second information memorandum gave the impression that a qualified surveyor had recommended the paper road because it was mostly clear of vegetation and would not involve Council consent. Overall, Mr Bigio argued that the second information memorandum provided comprehensive due diligence information for prospective purchasers to rely on.
[40] Counsel then turned to the inspection on 6 November 2016. He referred to Mr and Mrs Ford’s evidence that Mr Fowler explained that while it was the purchaser who would be responsible for forming the paper road, the access would be exclusive. Mr Bigio submitted that all parties envisaged a standard, private farm access road. In this context, he referred to the Fords’ evidence that Mr Fowler told them access would not be an issue and that farmers/land users do this all the time without difficulty. Mr Bigio highlighted that Mr Fowler did not lead the group on a walk over the unformed paper road and the Fords were unable to see its length and state from the vantage point.
[41] In addition, counsel underscored that, according to the Fords, Mr Fowler made no mention of the fact the road ran through the protected Wainui River Bush that would require consent for removal; that Council and neighbour consent would be required to construct access; that construction may be difficult and costly; and that access would not be exclusive and the terms of the Council’s consent would or might entail maintenance costs.
[42] Mr Bigio submitted that according to Mr Ford, Mr Fowler told him more than once that it would be better to lodge an unencumbered tender to ensure he secured the Property. This was consistent, in counsel’s submission, with Mr Fowler’s evidence under cross examination, that he would inform interested purchasers of this reality. Mr Ford denied that Mr Fowler warned him to get legal advice or include a due diligence clause. Mr Bigio emphasised that it was Mr Ford’s clear impression, based on everything Mr Fowler said that it would be a straightforward and inexpensive matter to construct a suitable farm track to provide exclusive access to the Property.
[43] Counsel contended that the written and oral representations were false. Exclusive access was not possible and could not be achieved by a standard private farm access track suitable to service the farm. Wainui River Bush was identified under the operative District Plan as a significant ecological feature, so removal and any earthworks necessary for the purpose of forming access was a restricted discretionary activity requiring consent. Mr Bigio reiterated that consent was needed from the Council and from neighbours. The conditions that the Council imposed under the Agreement required that Mr Ford's nominated purchaser, the Company, would have to construct and maintain a non-exclusive public road at a “very significant cost”.
[44] Mr Bigio submitted that in such circumstances, it was misleading and deceptive to represent that securing access would be “no issue” and “no problem” and to assure the prospective purchaser that “people do it all the time” regarding forming a farm access on a paper road, while not qualifying such representations with any warnings or red flags of the risks that Mr Fowler knew existed. Regarding the alleged omission, counsel contended that Mr Fowler had experience that “developing a paper road is not easy and can come with plenty of issues”, but “left [Mr Ford] to form his own judgment about any technical or legal issues in developing the paper road”. Mr Bigio argued that Mr Fowler did not provide any reason for Mr Ford to further investigate the access issue despite knowing the reason Mr Ford needed to do so.
[45] Counsel submitted that under the Red Eagle stage 1 test, the characteristics of Mr Ford as known to the defendant are relevant.9 This is because the test is whether
9 Red Eagle Corp Ltd v Ellis [2010] NZSC 20.
a reasonable person in the claimant’s situation, that is, with the characteristics known to the defendant or of which the defendant ought to have been aware, would likely have been misled or deceived. Mr Ford denied being a property developer; he had never personally been a farmer nor previously purchased farms; and there was no evidence to suggest he was previously experienced with forming access to farms using unformed paper roads. Counsel argued that whatever experience Mr Ford had as a businessman and director, it was reasonable for him to rely on the representations.10
[46] Mr Bigio submitted that Mr Ford was misled and deceived by the conduct, causing loss. Mr Ford’s evidence was that he did not include any material discount in the purchase price offer because his understanding was that the cost of forming the access would not be material to the price since access would not be an issue and he thought it would be straightforward and inexpensive to construct a suitable farm track. Had he known of the risk he would not have tendered $2.2 million.
[47] Counsel noted that the second alternative counterclaim under the FTA sought to make Mr Turner liable per s 43(1)(d) for his accessory liability to Mr Fowler as the person primarily responsible for making the misleading and deceptive representations. Mr Bigio submitted that per s 43(1)(d) of the FTA, the Court can make orders under s 43(2) against any person where the claimant has suffered loss by conduct of another that does or may constitute “being in any way directly or indirectly knowingly concerned in, or party to, the contravention” of the applicable parts of the FTA. In this alternative claim, there is no need to show that the accessory, Mr Turner, was in trade.
[48] Mr Bigio argued that Mr Turner was directly or knowingly concerned in, or party to, the contravention of s 9 by Mr Fowler. He appointed PGG Wrightson/Mr Fowler as his agent under a written listing agreement dated 23 August 2016. Counsel submitted that the evidence establishes Mr Turner approved the first and second information memoranda. Mr Bigio contended that it is difficult to conceive of a situation where the vendor of a property is not liable as an accessory under ss 43(1)(d) and 43(3) for the contravening conduct of his expressly authorised real estate agent where he approved the key written representations and profited from the contract.
10 Referring to Sullivan v Wellsford Properties Ltd [2018] NZCA 168 and Valda Video Ltd v United Video Franchising Ltd HC Auckland CP123/00, 21 August 2001 in support.
[49] In addition, Mr Bigio argued that despite conflicting authorities on the point, the fact the Company was nominated as purchaser did not stand in the way of it pursuing an FTA claim.11 Mr Ford wrote that he was tendering on behalf of a nominee which was a company yet to be formed. He is also its sole shareholder and a director. He signed the deed of nomination for both nominator and nominee. Accordingly, the Company seeks orders:
(a)Under s 43(3)(c) varying the ASP by reducing the purchase price by such sum as is awarded as equitable compensation for the misleading or deceptive conduct by Mr Turner or his agent, Mr Fowler;
(b)Alternatively, under s 43(3)(f) directing Mr Turner to pay the Company the amount of the loss or damage suffered as a result of the misleading or deceptive conduct;
(c)Alternatively, an order setting off against the balance of the purchase price held an amount that the court thinks just as equitable compensation for the misleading or deceptive conduct, and an order to pay the Company such amount of the funds determined to be just as equitable compensation.
Mr Turner’s submissions
[50] Mr Brittain KC (as he then was) submitted that there were four key points of context relevant to Mr Ford’s complaint with the formation of the road. First, although the neighbour Aldridge has not formally consented to development of the paper road, the Council’s position was that the neighbour’s approval was not required, and the development of the road could occur. Secondly, Mr Ford knew that resource consent was required to remove bush from 3 September 2018 at the latest. On 4 October 2018, Cooney Lees Morgan raised the issue of the resource consent for the first time, in the context of an alleged misrepresentation that there would be no problems in developing the road. The resource consent was the sole issue raised. In any event, the resource consent to clear bush was granted on 30 November 2018. Counsel contended that the
11 Relying on Sullivan v Wellsford Properties Ltd, above n 10, at [17] and KA (Newmarket) v Hart
HC Auckland CP467-SD01, 4 July 2002 at [24]; cf Do Yay Ltd v Wei [2020] NZHC 759.
process was expected and insignificant. He noted that there was no evidence of the associated costs nor were the costs part of the claim.
[51] Thirdly, there is no expert evidence that the contour of the underlying land has been problematic or required an upgrade in design leading to an increase in costs. Fourthly, counsel argued that Mr Ford always knew that Council consent would be required to develop the road, because it was referenced in the surveyor’s letter in the information memorandum and confirmed in correspondence from Cooney Lees Morgan to Kaimai Law on 15 January 2018.
[52] Mr Brittain submitted that the catalyst for Mr Ford’s dissatisfaction was the terms of the agreement to undertake works put forward by the Council. He contended that the clauses were not onerous and in any event Mr Ford could negotiate with the Council. In addition, counsel argued that at the time the contract was formed, no party could have predicted the precise terms that Council would require before giving consent to development of the road. Mr Fowler gave no assurances in that regard.
[53] In addition, Mr Brittain contended that Mr Salmons, the surveyor, could have been approached to discuss such matters, but Mr Ford chose not to do so. He also chose not to take any advice from his own consultants. Counsel argued that Mr Ford took a commercial risk and there was accordingly no basis for a legal remedy.
[54] Mr Brittain submitted that there was no misrepresentation regarding the ease of forming access over the easement and paper road. Although the second information memorandum stated that there was a “generous road margin included in the title” this was a carryover from the “panhandle” concept. Mr Ford accepted he was not misled by this statement. Regarding Mr Salmons’ letter, counsel submitted that this referred to clearing bush in the previous adjacent “panhandle” area, and it was obvious the small piece of bush on the paper road would need to be cleared.
[55] Further, regarding the letter, Mr Brittain contended that the surveyor invited questions from potential purchasers. In all, counsel argued that the letter did not carry an inference that it would be unnecessary to obtain the Council’s consent to clear the bush on the paper road. Instead, in Mr Brittain’s submission, it implied that consent
will be required to remove any bush, and that the Council would not support removal of the substantial bush next to the road. Mr Fowler did not volunteer an opinion on what might be involved in developing the road in the information memoranda because he had included the surveyor’s letter.
[56]Counsel pointed to cl 24.1 of the tender form, which provided that:
The vendor and purchaser both acknowledge that before signing this agreement that it has been recommended that they seek legal, technical and other advice or information and that they have either obtained that advice or information; or have included a provision in this Agreement to obtain that advice or information; or have decided not to do so of their own accord.
[57] So, to the contrary of the information memoranda and tender park containing express or implied representations as to how easy it would be to form the access, Mr Brittain submitted that the purchaser was advised to take technical advice and invited to contact the surveyor.
[58] Counsel then turned to the alleged oral representations that “access wouldn’t be an issue”, “farmers/people do this all the time with no issue” and “access would not be a problem”. Counsel submitted that there was no discussion about the process, standards required and costs of building. He contended that the Court must ascertain the meaning of the words used in the statement that is alleged to be a misrepresentation, which must be assessed in the context of the transaction. For a farm property requiring substantial investment, it would be expected for a potential purchaser to have knowledge of farming. Mr Brittain argued that it should have been obvious that the paper road would require the Council’s consent, and that neighbours could potentially become involved.
[59] In addition, Mr Brittain emphasised that Mr Fowler’s evidence was that anything he said about the word “easy” was in reference to the easy contour of the land. Mr Fowler denied telling the Fords that forming the road would be “no problem” and “no issue”. Counsel submitted that under cross examination both Mr and Mrs Ford conceded that discussion about the paper road and the easement was concerned with its physical location, and the type of terrain that would be encountered. Mr Brittain contended that Mr Fowler’s evidence should be preferred because he had no
reason to overstate due to strong interest, and Mr and Mrs Ford’s allegations are “late inventions”. Counsel argued that at most, Mr Fowler’s words were an expression of an opinion, honestly held, regarding the relative ease of the terrain. That type of statement is not actionable. The words were “sales patter” as to the lay of the land, which Mr Ford could equally assess for himself from the vantage points.
[60] Mr Brittain described the defendant’s pleaded meaning of “would not present undue difficulty or incur significant material costs, such that the value of the Property should not be materially discounted” as a “quantum leap” from the words “no issue”. He submitted that the pleaded meaning is untenable and unreasonable. In addition, if a warranty of that kind was desired, it could have easily been added to cl 46 of the contract, which was drafted by Mr Ford’s lawyer.
[61] Counsel contended that silence cannot render a party liable unless the party knew of the information withheld. Here, there is no evidence Mr Fowler or Mr Turner knew that the Council would impose development standards or other conditions on the development of the road, in contrast to Lynn v AC Fryer & Sons Ltd.12 The resource consent for clearing bush within the ecological feature was easily obtained. Counsel submitted that there was also no duty to disclose an opinion.
[62] Mr Brittain contended that there was no misrepresentation that Mr Ford would have the exclusive right to use the easement. It was clear that the easement was exclusive but members of the public would have the right to use the paper road. In any event, the allocation of rights in respect of an easement and access to a public road are matters of law, and Mr Ford received legal advice prior to submitting his tender.
Legal principles
[63] Section 9 of the FTA provides that: “No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.” “Trade” is defined as “any trade, business, industry, profession, occupation, activity of commerce, or undertaking relating to the supply or acquisition of goods or services or to the disposition or acquisition of any interest in land”. The definition of “in trade”
12 Lynn v AC Fryer & Sons Limited (2013) 14 NZCPR 879 (HC).
is a wide one which “encompass[es] all kinds of commercial dealing by the party whose conduct is under examination”.13
[64] The standard under s 9 is one of strict liability; an intent to mislead or deceive is not required.14 Assessing misleading or deceptive conduct requires “construing plain words in their statutory context”.15 There is no prescriptive test given the variability of potentially applicable circumstances. Instead, “[t]he approach to be taken in a particular case depends on the type of situation under scrutiny”.16
[65]As the Supreme Court confirmed in Red Eagle Corp Ltd v Ellis: 17
The question to be answered in relation to s 9 in a case of this kind is accordingly whether a reasonable person in the claimant’s situation — that is, with the characteristics known to the defendant or of which the defendant ought to have been aware — would likely have been misled or deceived.
[66] “Conduct” is defined in s 2(2) to include omitting to do an act. The Court of Appeal addressed the position as to omissions in relation to s 9 as follows:18
What must be shown are misrepresentations by words or conduct or a combination of words and conduct. In trade description cases the focus is upon what is said and done rather than what is not said or done. The legal obligation is to avoid falsehood, it is not an obligation to provide compendious explanations. Of course silence in particular circumstances can amount to a misrepresentation as can literal truth but in each case only when, as a result, there is affirmatively conveyed another meaning that is false.
[67]However, as to expressions of honestly held opinions, the Court of Appeal in
Premium Real Estate Ltd v Stevens stated:19
[54] … It is difficult to see why an honestly held, reasonably based opinion should be actionable under s 9 simply because it is not borne out by subsequent events. The person expressing the opinion may have done all that could sensibly be done to reach an informed view but would still be liable, even if the subsequent events or circumstances were unforeseeable.
13 Red Eagle Corp Ltd v Ellis, above n 9 at [26], at n 13.
14 Taylor Bros Ltd v Taylors Textile Services [1988] 2 NZLR 1 (HC); Commerce Commission v New Zealand Nutritionals (2004) Ltd [2016] NZHC 832 and Gilmore v Smith (2002) 10 TCLR 392 (HC).
15 Carter Holt Harvey Ltd v Cottonsoft Ltd (2004) 11 TCLR 161, 8 NZBLC 101,541 (HC) at [21].
16 Red Eagle Corp Ltd v Ellis, above n 9 at [26].
17 At [28].
18 Unilever New Zealand Ltd v Cerebos Gregg’s Ltd (1994) 6 TCLR 187 (CA) at 192 (citation omitted).
19 Premium Real Estate Ltd v Stevens [2009] 1 NZLR 148 (CA).
[68] If a contravention of s 9 is made out on the balance of probabilities,20 the court may turn to the “second stage” in s 43.21 Section 43 enables the Court to make one or more of the orders set out in s 43(3) if:
… a court or the Disputes Tribunal finds that a person (person A) has suffered, or is likely to suffer, loss or damage by conduct of another person (person B) that does or may constitute any of the following:
(a) a contravention of a provision of Parts 1 to 4A (a relevant provision):
(b) aiding, abetting, counselling, or procuring a contravention of a relevant provision:
(c) inducing by threats, promises, or otherwise a contravention of a relevant provision:
(d) being in any way directly or indirectly knowingly concerned in, or party to, a contravention of a relevant provision:
(e) conspiring with any other person in the contravention of a relevant provision.
[69] The Court must therefore determine, first, whether the particular claimant was in fact misled or deceived, and secondly, if so, was the (counterclaim) defendant’s conduct the effective cause, or an effective cause, of the claimant’s loss or damage (whether an injurious consequence already suffered or future loss)?22
[70] A “common-sense” approach should be taken to causation.23 The Court should also consider whether the claimant’s own conduct in failing to take reasonable care to look after their own interest should be regarded as the sole or a contributory operative cause of the loss.24 Unless the carelessness destroys the causation between the contravention and the loss or damage, it does not disqualify the claim, but may affect the exercise of the Court’s discretion under s 43(3).25
20 Barbalich v Leaders Real Estate (1987) Ltd [2014] NZHC 3383.
21 Red Eagle Corp Ltd v Ellis, above n 9, at [29].
22 At [29]–[31].
23 At [29].
24 At [30].
25 At [30]–[31].
Discussion
[71] The first question is whether Mr Turner was in trade, either personally or via his authorised agent Mr Fowler. I accept that he was. A person who engages in a one- off transaction for the sale of land may be acting “in trade”.26 Mr Turner was selling a high-value property in a professional manner through the use of marketing materials and by marketing two properties together.27 In any event, Mr Fowler was clearly Mr Turner’s agent and acting in trade.28 Mr Turner did not contest this.
[72] The paramount question for the first stage is whether the representations were objectively misleading. Put another way, were they likely to mislead the reasonable person with the characteristics of the defendant? Any assessment will necessarily involve findings on the personal characteristics of Mr Ford, particularly in the context of whether he is an experienced property developer, which he denied. I tend to agree with Mr Ford. While it is evident that he has a number of business interests including farming and property, I was not convinced, having heard his evidence and the cross examination, that Mr Ford could accurately be described as an experienced property developer, particularly in respect of farming properties.29 He did however have some experience with purchasing commercial properties.
[73] I now turn to the pleaded representations. The first, that access would be by a paper road and easement, is correct and I did not understand the defendants to suggest this was a misrepresentation.30 Instead, the alleged misrepresentation is that the access would be exclusive.31 The particular representations pleaded that I understand to carry this meaning are, firstly, the statement in the information memorandum that the “surveyor has ensured that a generous road margin is included in the title so that an impressive gated entrance can be created on your private land”.32 Secondly, Mr
26 Cochrane v Clark CA66/04, 24 February 2005 at [36], referring to Undrill v Senior HC Blenheim CP9/94, 20 August 1997 and Sunnylea Farms Ltd v Gray (2004) 21 NZTC 18,667 (HC).
27 Compare Cashmore v Sands (2007) 8 NZBLC 101,897 (HC).
28 Hamid v England (2011) 12 NZCPR 844, (2011) 13 TCLR 376 (HC).
29 See for instance Notes of Evidence, p 14.30 Defendant’s counterclaim, 2 September 2022, at 26(a). The same for the representation pleaded at paragraph 26(j), which does not make any representations that the paper road could be easily used, just “could be used”. There does not appear to be anything misleading or deceptive in this context.
31 Defendant’s counterclaim, 2 September 2022, at 26(b) and 26(q).
32 At 26(i).
Fowler’s oral representation that the purpose of the easement was to link Work Road to the paper road and thereby ensure there would be direct exclusive access to the Property.33 Thirdly, the omissions in the marketing materials and Mr Fowler’s representations to alert Mr Ford about the lack of exclusivity of access.34
[74] The statement referring to a “generous road margin” is found in both versions of the information memoranda. It is incorrect insofar as by the second memorandum the shape of the title had changed to exclude the “panhandle” referred to here as the “generous road margin”. However, its inaccuracy would not be misleading as the maps attached to both the Tender Pack and the memorandum show that there is no panhandle/road margin in the title, and it would be obvious the statement had been erroneously brought over from the original memorandum. Mr Ford accepted in his evidence that he “understood from the survey plan … that access to Work Road would be achieved via an easement … and then via an unformed legal road”. As to that statement’s reference to “private land”, there is nothing that represents or implies exclusive road access and I do not consider it misleading in the context of describing a privately owned, large, rural section.
[75] The plaintiff in his pleadings denied that any representations were made regarding Mr Ford having exclusive legal rights of access over the easement or paper road.35 However, Mr Fowler’s evidence stated that he and Mr Ford:
… discussed that the proposed easement would ensure that members of the public could not get on the paper road once the paper road had been developed. We did not discuss the neighbours using the paper road, but it was obvious that they could if they wished to. Our discussion was only about making sure the general public could not, because of the easement, and that only the parties with the right to use the easement would be able to get on the to the road. …
(emphasis added).
[76] I am therefore satisfied on the factual dispute that Mr Fowler made a representation that access would be exclusive by virtue of the public being unable to use the easement. This is supported by Mr Ford’s description of the encounter being
33 At 26(q)(i).
34 At 26(u).
35 Plaintiff’s amended statement in reply and defence to counterclaim, 30 September 2022, at 12(h).
that Mr Fowler suggested building a large entrance across the easement so that it was “obvious” that the accessway was private. I do not accept that Mr Fowler expressly represented that the purchaser could legally exclude the public from the paper road itself. As a matter of law, the easement cannot be accessed by the public. On the other hand, the public has the right to access public roads. The Council’s draft terms of agreement acknowledge this:36
8.1 Ford Pastoral acknowledge that this agreement does not provide for exclusive access to or of the Road, and that they cannot legally prohibit any person from accessing the Road.
8.2The Council acknowledges that the ROW is not public access.
[77] Thus the current legal position is that the public cannot access the paper road (once formed) unless (a) they illegally cross the easement; (b) they cross the steep bank which will be the section of unformed paper road or (c) the paper road connects to another public road, for instance somewhere to the north. Put another way, the public has the right to access the road but they are practically impeded by the easement and the land contour. In addition, neighbours may travel along the road (but are not entitled to use the easement, except for the owners of Mr Turner’s land, which is the subservient land). All things considered, the representation that the easement would prevent public access was not misleading.
[78] As to the pleaded omission, this will be actionable if the plaintiff by silent conduct can be construed as positively confirming in Mr Ford’s mind a misrepresentation. I do not consider this is the case. First, there would be no need to discuss the purpose of the easement “providing exclusivity” if there was not some reason the road was not otherwise exclusive. Secondly, the access situation is a straightforward matter of legal entitlements. Mr Ford agreed in cl 24.1 of the agreement for sale and purchase that “it has been recommended that [he] seek legal, technical and other advice or information and that [he has] either obtained that advice or information … or [has] decided not to do so of [his] own accord”.
36 Agreement to undertake works on unformed road, Common Bundle Vol 3, p 696, at cls 8.1 and 8.2.
[79] Mr Ford was aware at the time of tender the paper road was owned by the Council but stated in cross-examination he “did not have a clear understanding that that could be a public road open to the public that I would have to construct, fund, maintain as per Council’s requirements”. That confusion is precisely the kind of issue that required legal and/or technical advice. It could not be expected of a vendor or real estate agent to provide a purchaser with such information, especially in light of cl 24.1. Accordingly, I dismiss the claim under the FTA insofar as it relates to misleading and deceptive conduct regarding the exclusivity of the access to the Property.
[80] The critical representation was that access to the Property could be easily constructed. This is said to be represented by Mr Fowler stating on 6 November 2016 access “would not be a problem” and “wouldn’t be an issue”.37 The defendants also pleaded that the letter from Mr Salmons of Birch Surveyors Ltd included in the second information memorandum contains this meaning.38 Further, Mr Ford pleaded there was an omission to alert him to any potential issues that might arise concerning access. These representations are also said to have carried the implied meaning that construction and maintenance of access would not present undue difficult or incur significant material costs, such that the value of the property should not be materially discounted in respect of any difficulties.
[81] The plaintiff disputed that the oral representations even happened or carried the meaning pleaded by the defendants. His case is that to the extent any ease of construction was discussed it was limited to the contour of the land.
[82] The discussion occurred at the viewing when Mr Fowler, Mr Ford and Mrs Ford were at the approximate point where the access joined to the Property. Mr Ford said he could not be certain of the precise location (as it was not pegged) and in response to his questions Mr Fowler “assured him access would not be a problem”. Mr Ford therefore did not insist on walking the path of the paper road to assess the terrain. In his reply brief Mr Ford stated “he assured us when we looked at it that
37 At 26(p).
38 Set out at [29] of this judgment.
forming farm access along the route of the paper road would not be a problem”.39 Mrs Ford’s evidence was that:
There was no discussion with Mr Fowler about the process that would be involved in constructing the access over the paper road and easement, nor the likely costs of constructing such access. I did not press Mr Fowler for more details because I understood from what he had told us, that access over paper roads were routinely formed and did not pose a major issue that warranted further investigation.
[83] Mr Fowler’s evidence was that he knew from experience that some paper roads existed where it would be physically impossible to build a road, but on the Property the land contour was relatively easy. At the viewing he described talking about the line of the paper road; how it would cut through the bush then emerge to incredible views from the house site; that there was tall forest where the drive would divert from the paper road but that it was relatively clear of undergrowth; and that the boundary between new lots 1 and 2 would be placed such that (driveway) access could be formed between the bush and the boundary where possible.
[84] His evidence is consistent with Mrs Ford’s in that he stated: “there was no discussion about Council’s role in building a road on the paper road, or neighbours’ involvement. The Fords never asked me for advice about what was involved in developing the paper road.” Mr Fowler went on to state, “Our discussion was limited to identify the physical location of where the access would be on the proposed easement and the paper road”. He accepted he may have made a comment about the relatively easy contour but could not recall it.
[85] Considering all the accounts given of the oral statements, my conclusion is that it is most likely Mr Fowler’s verbal assurances related to the physical or practical ease of construction by reference to the land’s contour and vegetation. I did not understand there to be any complaint regarding the contour of the land. Regarding the resource consent needed for clearing vegetation in the significant ecological area, as mentioned, this was granted on 30 November 2018, and there is no evidence of associated costs or delay. Accordingly, I do not consider Mr Fowler’s oral statements, referring to the physical ease of constructing the road, to be misleading.
39 Emphasis added.
[86] Turning to Mr Salmons’ letter, the overall impression made is that the panhandle concept had been abandoned because it would require significant bush clearance that the Council would be unlikely to agree to, given the presence of the alternative — the unformed road. The letter indicated that the unformed road is “mostly” clear of bush. It is silent as to the issue of Council consent or involvement in forming the paper road. I do not consider it implied that Council consent would not be required for the paper road formation. Again, none of what is explicitly stated is misleading.
[87] The last question regarding this issue is whether the whole of the conduct of the plaintiff and his agent, including any possible omission, was objectively deceptive and misleading. It does appear that Mr Ford was left with an incorrect impression about what would be involved in constructing access to the Property. He thought an inexpensive, farm-style track could be created, but instead it has come to pass that a road meeting Council standards is required and must be maintained. Such a fact is not conclusive of whether there was misleading or deceptive conduct.40 The problem is that there is little evidence suggesting Mr Turner or Mr Fowler knew this, specifically, in advance. A person cannot misrepresent by silence something they do not know.41
[88] Mr Bigio relied on Mr Fowler’s statement at a meeting in 2019 — in response to being asked by one of Mr Ford’s lawyers whether he had said creating the access road would be easy — that if the Fords had asked him at the time he would have said developing a paper road is not easy and can come with plenty of issues. That statement does not amount to Mr Fowler admitting that at the time he showed Mr and Mrs Ford the Property he knew access would require the construction of a public road meeting the Council’s conditions (under a draft agreement which was not at the time in existence). At most it could be said to be Mr Fowler’s opinion about the process of developing a paper road, which he was under no obligation to disclose. There is no evidence of which facts, if any, Mr Fowler knew to be in existence relating to the Property which would cause him to form such an opinion that he might have been
40 Mills v United Building Society [1998] 2 NZLR 392 (HC), citing Taco Company of Australia Inc v Taco Bell Pty Ltd (1982) 42 ALR 177.
41 Des Forges v Wright [1996] 2 NZLR 759 (HC).
expected to disclose. Instead, the evidence tended to suggest his opinion was based on his general experience with paper roads.
[89] In addition, counsel referred to Mr Fowler stating he personally has access to his property via a paper road. There was, however, no evidence relating to the nature of the paper road Mr Fowler has personal access to, including for instance whether he was involved in its construction (if it has been developed) and whether it was subject to the same or similar Council conditions as have been proposed for the Property’s paper road. It therefore also gives me limited information as to the foreknowledge held by Mr Fowler about the potential Council conditions that would be imposed on the Property’s paper road.
[90] Accordingly, I conclude that Mr Fowler did not have knowledge that the development of the paper road would entail regulatory difficulties and would be more expensive that might be expected at face value. He did not therefore engage in conduct that was misleading or deceptive by omitting to raise the possibility of Council road agreement conditions and/or that implementing such conditions could be expensive.
[91] In any event, I do not consider Mr Fowler’s silence as to the “non-practical” aspects of developing a road to be misleading because this was a high-value sale to a tenderer who had experience purchasing properties. Such a purchaser would be expected to undertake due diligence on important aspects of the Property. Access to a property, especially in this case, is one such important issue. The circumstances include the contractual terms in the tender offer made by Mr Ford: first, as mentioned, cl 24.1 which confirms parties have obtained legal and technical advice or have chosen not to, and cl 32.1 which makes the purchaser liable for the cost of constructing the access road.
[92] In agreeing to that cost a reasonable purchaser would make enquiries to determine the process that might be involved and the approximate cost. Whether that involved specifically asking Mr Fowler about the regulatory process, inquiring further with the surveyor who invited such inquiries, or undertaking his own independent inquiries, a reasonable purchaser would carry out those steps and would not rely on an assumption that the real estate agent was fully knowledgeable about the subject of
constructing road access and would raise any potential issues without being asked. The FTA is not designed to provide a guarantee to purchasers who fail to look after their own interests in a manner which is reasonable in the circumstances.42
[93] Finally, there are a handful of representations on which argument was not pursued or emphasised. The defendants refer at paragraphs 26(m) and (o) to representations that the land had “excellent contour” and “good contour.” Even so, my impression from the hearing is that there was a dearth of solid evidence as to bad contour. That said, there was nonetheless mention of one part of the paper road having a steep contour and 2:1 slope. Overall, my impression is that when put into context, these representations referred to the property as a whole, and were not misleading.
[94] The other group of less pursued representations referred to the Property’s potential uses. The defendants contended that if exclusive access could not be established then the Property could not be used for those various purposes. These particulars are therefore contingent on the access issue. Further, no evidence was put to establish that an exclusive accessway was necessary to use the Property as a working farm, luxury commercial lodge/holiday destination or subdivision.
[95] My findings above make it unnecessary to turn to the second step. As I have noted above I consider it would have been unreasonable for Mr Ford to rely on Mr Fowler’s representation by silence as to the ease of constructing the access way. For completeness, I record that had I found any of the misrepresentations made out, I would have considered Mr Ford’s failure to undertake due diligence in relation to the road access a contributing factor to his loss and reduced any damages accordingly.
Should the defendants’ Contract and Commercial Law Act 2017 counterclaims be granted?
[96] As I have concluded that the defendants’ claims under the FTA fail on the basis that there were no actionable misrepresentations, the claims under the CCLA also fail.
42 Des Forges v Wright above n 41.
Is the plaintiff entitled to specific performance of the contract?
[97]Clause 10 of the tender agreement provided:
10.0 Claims for compensation
10.1 If the purchaser claims a right to compensation either under subclause
8.3 or for an equitable set-off:
(1) the purchaser must serve notice of the claim on the vendor on or before the last working day prior to settlement; and
(2) the notice must:
(a) …
(b) in the case of a claim to equitable set-off, state the particular matters in respect of which compensation is claimed;
(c) comprise a genuine pre-estimate of the loss suffered by the purchaser; and
(d) be particularised and quantified to the extent reasonably possible as at the date of the notice.
10.2 …
10.3 If the amount of compensation is agreed, it shall be deducted on settlement.
10.4 If the amount of compensation is disputed:
(1) an interim amount shall be deducted on settlement and paid by the purchaser to a stakeholder until the amount of the compensation is determined.
(2) the interim amount must be a reasonable sum having regard to all of the circumstances;
(3) …
(4) the stakeholder shall lodge the interim amount on interest-bearing call deposit with a bank registered under the Reserve Bank of New Zealand Act 1989 in the joint names of the vendor and the purchaser;
(5) …
(6) the amount of compensation determined to be payable shall not be limited by the interim amount; …
(7) …
10.5 The procedures prescribed in subclauses 10.1 to 10.4 shall not prevent either party taking proceedings for the specific performance of the contract.
[98]The undertaking provided by Cooney Lees Morgan provided:
We undertake that:
a) we are holding the Retention Funds in our trust account for our client’s benefit;
b) immediately following settlement we will transfer the Retention Funds to a ledger in the joint names of Geoffrey William Turner and the Ford Pastoral Company Holdings (NZ) Limited and will provide you with confirmation of that transfer;
c) following the transfer set out in paragraph 2 [sic] above, we will hold the Retention Funds (together with any interest accrued less withholding tax and commission) undisbursed until we receive either:
i. a sealed Court order containing directions as to payment of the Retention funds; or
ii. written instructions signed by both Geoffrey William Turner and Ford Pastoral Company Holdings (NZ) Limited directing payment of the retention funds.
[99] From the above, it is evident that the plaintiff is entitled to payment of the remaining purchase price, subject to any set-off from the defendants’ counterclaims. The plaintiff’s desire to secure the balance of the purchase price currently held by solicitors is contingent on the resolution of the defendants’ counterclaims. As all those claims have now been dismissed, then my conclusion is that the plaintiff is entitled to the balance of the purchase price currently held by the solicitors.
Decision
[100]The plaintiff’s claim for specific performance is granted.
[101]The first and second defendants’ counterclaims are dismissed.
[102]Cooney Lees Morgan, solicitors of Tauranga, are ordered to release the
$710,498.30 held by them to Mr Turner, subject to substitution for the estate as noted above at [6].
[103]If costs cannot be agreed, submissions may be filed within 15 working days.
Harvey J
0
10
1