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Bhargav v First Trust Ltd

Bhargav v First Trust Ltd

Case [2023] NZHC 174 10 February 2023

Appeal

Breach of Contract

Misrepresentation

Unconscionable Conduct

Compensatory Damages

Unjust Enrichment

Civil Litigation & Procedure

Contract Law

Consumer Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2021-404-001260

[2023] NZHC 174

BETWEEN
AMEET BHARGAV and RENU KHAJURIA

Plaintiffs

AND

FIRST TRUST LIMITED

First Defendant

DAVINDER SINGH RAHAL
Second Defendant

continued overleaf…

Hearing: 7 December 2022

Appearances:

S E Wroe & B M Foster for the Plaintiffs

A R B Barker KC (via VMR) & A Grant for the First & Second Defendant

M R T Colthart & B Sanders for the Third & Fourth Defendants N K Dhaliwal for the Fifth & Sixth Defendants

Judgment:

10 February 2023

JUDGMENT OF TAHANA J

This judgment was delivered by me on 10 February 2023 at 4.00pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

BHARGAV v FIRST TRUST LIMITED [2023] NZHC 174 [10 February 2023]

continued from previous page…

AND

METSONS (NZ) LIMITED

Third Defendant

VINAY MEHTA
Fourth Defendant

LOCAL REALTY LIMITED

Fifth Defendant

GURBIR SINGH BAL

Sixth Defendant

Solicitors/Counsel:
Eldon Chambers
Grant & Co, Auckland
Andrew Barker KC, Auckland (Shortland Chambers) FortyEight Shortland, Auckland
Darroch Forrest Lawyers, Wellington Kennedys Law, Auckland

Introduction

[1] Ameet Bhargav and Renu Khajuria (the plaintiffs) claim against six defendants in relation to the purchase of their home, 1/5 Ribbonwood Crescent, Goodwood Heights, Auckland (the Property). The home is leaky.

[2] In July 2022, this Court entered judgment by way of formal proof against the first to fourth defendants in the amount of $861,113 plus interest and costs (the Judgment).1

[3] The first to fourth defendants now apply to set aside the Judgment and say that if the Judgment stands, there will be a miscarriage of justice. The first to fourth defendants took no steps to defend the claims until after the Judgment was issued.

[4] The first defendant, First Trust Ltd (FTL) sold the Property to the plaintiffs. The second defendant, Mr Rahal is a director and shareholder of FTL. FTL undertook renovations on the Property without a building consent. The plaintiffs claim this breaches the warranty in the sale and purchase agreement (the SPA). The plaintiffs also claim that FTL and Mr Rahal engaged in misleading and deceptive conduct in breach of the Fair Trading Act 1986 (the FTA) by covering up the fact that the home was leaky.

[5] The third defendant, Metsons (NZ) Ltd (Metsons), prepared a pre-purchase inspection report for the plaintiffs’ Property. Mr Mehta is a director of Metsons and carried out the inspection. The pre-inspection report did not disclose that the home was leaky. The plaintiffs claim that the Metsons and Mr Mehta engaged in misleading and deceptive conduct in breach of the FTA.

[6] I need to determine whether there will be a miscarriage of justice if the Judgment is not set aside.

1 Bhargav v First Trust Ltd [2022] NZHC 1710.

Background

FTL’s purchase of the Property

[7] FTL purchased the Property in 2019. Mr Rahal says he first became aware of the Property on Harcourts’ website in April 2019, where…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Bhargav v First Trust Ltd

Details

AGLC: Bhargav v First Trust Ltd [2023] NZHC 174
Case: [2023] NZHC 174
Decision Date: 10 February 2023

CaseChat Overview and Summary

The plaintiffs, Ameet Bhargav and Renu Khajuria, filed claims against six defendants in relation to the purchase of their home at 1/5 Ribbonwood Crescent, Goodwood Heights, Auckland, which is leaky. The first four defendants, First Trust Ltd (FTL), its director and shareholder Mr Rahal, Metsons (NZ) Ltd, and its director Mr Mehta, have applied to set aside a judgment by way of formal proof that was entered against them in July 2022. The plaintiffs claim that FTL breached the sale and purchase agreement by carrying out renovations without obtaining a building consent. They also allege that FTL and Mr Rahal engaged in misleading and deceptive conduct in breach of the Fair Trading Act 1986 by concealing the fact that the home was leaky. The plaintiffs further claim that Metsons and Mr Mehta engaged in misleading and deceptive conduct by preparing a pre-purchase inspection report that did not disclose the weathertightness issues. The court must determine whether there will be a miscarriage of justice if the judgment is not set aside.

The court found that there is a reasonable explanation for Mr Rahal's delay in responding to the proceedings due to his health at the relevant time. However, there is no reasonable explanation for FTL's delay as Mrs Rahal, the other director of FTL, could have sought legal advice on behalf of FTL. There is also no reasonable explanation for Metsons and Mr Mehta's delay as there was no evidence they were notified of the formal proof hearing or that they deliberately ignored it. However, the absence of a reasonable explanation may be disregarded if the other two limbs (substantial ground of defence, and no irreparable harm to the plaintiff) are satisfied.

The court found that there is a substantial ground of defence available to FTL and Mr Rahal in relation to the breach of contract claim as there is a dispute as to the quantum of damages. The court also found that there is an arguable defence in relation to the Fair Trading Act claim against FTL and Mr Rahal given the additional evidence provided as to Mr Rahal's actual knowledge at the time. There is also a substantial ground of defence available to Metsons and Mr Mehta in relation to the Fair Trading Act claim as the expert evidence of Mr Biggelaar and Mr Blissett should be tested at trial.

The court found that there will be no irreparable harm to the plaintiffs if the judgment is set aside as the first to fourth defendants have indicated they will pay the plaintiffs' costs incurred in obtaining the judgment. The plaintiffs will also be entitled to pursue their claims against the first to fourth defendants and apply for indemnity costs.

The court found that there would be a miscarriage of justice if the judgment was not set aside in part. The judgment is set aside in part, and the first to fourth defendants are to file and serve a statement of defence and any counterclaims to the plaintiffs' claims within 10 working days of the date of this judgment. The first and fourth defendants are jointly and severally liable for wasted costs of $25,095 and disbursements of $8,399.81. The Registrar is to list the matter for the first available date in the Duty Judge list for timetable orders.

Orders