Hearing:	22 October 2014
Court:	Miller, Heath and Dobson JJ
Counsel:	G M Illingworth QC and D G Collecutt for Appellants R O Parmenter for First and Second Respondents No appearance for Third Respondent
Judgment:	16 December 2014 at 10.30 am

JUDGMENT OF THE COURT

AThe appeal against the order of specific performance is dismissed.
BWe order that settlement take place on 23 January 2015 or within 10 working days of the appellants notifying the second respondent’s solicitor that they are ready to settle, whichever is sooner.
CCalculation of damages is remitted to the High Court.
DThe appellants must pay one set of costs to the first and second respondents as for a standard appeal on a band B basis, with usual disbursements.

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REASONS OF THE COURT

(Given by Miller J)

Introduction

This appeal concerns a property swap that was badly negotiated and documented, and went wrong in consequence.
Michael Coughlan and Annemarie Wilson own one of the two properties, a tenanted home at Army Bay, Whangaparaoa. The first respondents, who are the trustees of Gary Cox’s family trust, own the other, at Pauanui. In December 2012 the parties agreed to exchange properties on the basis that no money would change hands and vacant possession would be given at Pauanui but Army Bay would remain tenanted.
Agreements for sale and purchase were signed, but they did not accurately record the parties’ agreement. The parties addressed most of these deficiencies informally, by email or in dealings with one another, but they overlooked a mistake about price: through a solicitor’s error the agreements provided for a small price differential in Mr Cox’s favour. This caused trouble when it came to light at settlement. Mr Cox conceded, but not before Mr Coughlan and Ms Wilson had announced their intention to withdraw. They maintain that no binding contracts were ever formed; alternatively, that they cancelled the agreements in exercise of their rights. Rodney Hansen J in the High Court disagreed, ordered that they perform the agreements, and awarded damages.[1]

Narrative

[1]Cox v Coughlan [2014] NZHC 164 [High Court decision].

The material facts narrated in the judgment of Rodney Hansen J are not in dispute. We substantially adopt that narrative.
Negotiations for the swap began in May 2012 and in October of that year solicitors were instructed. The Cox interests instructed Tara Wratten, of Daniel Overton & Goulding, and Mr Coughlan and Ms Wilson instructed Paul Jennings, of Conveyancing Shop Lawyers.
On 7 December 2012 Mr Jennings sent to Ms Wratten agreements for sale and purchase for each property, using the Ninth Edition (2012) of the familiar REINZ/ADLS form. Mr Coughlan and Ms Wilson had signed them. The purchase price for Pauanui was specified as $425,000, and for Army…

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 Coughlan v Cox

Details

AGLC: Coughlan v Cox [2014] NZCA 617
Case: [2014] NZCA 617
Decision Date: 16 December 2014 at 10.30 am

CaseChat Overview and Summary

The appeal concerns a property swap that went wrong due to poor negotiation and documentation. The appellants, Michael Coughlan and Annemarie Wilson, own a tenanted home at Army Bay, Whangaparaoa, and the respondents own a property at Pauanui. The parties agreed to exchange properties without money changing hands and with vacant possession at Pauanui but Army Bay to remain tenanted. The agreements for sale and purchase were signed, but they did not accurately record the parties' agreement. The Court was required to decide whether enforceable contracts were created when all of the terms were not recorded in a written agreement and signed by both parties, whether an enforceable contract was created although the identity of the Army Bay purchaser changed, whether the tenancy condition was satisfied, and whether damages should have been quantified in accordance with the terms of the agreements.

The Court found that both parties did affix their signatures to the agreements for sale and purchase, and their conduct after execution showed that they intended to be bound. The identity of the purchaser at Army Bay was not material as it was a property swap. The Court also found that the objective evidence of subsequent conduct showed that the amendments were accepted, including the change of parties. The Court found that notice of fulfilment of the tenancy condition was implicit in an email from Ms Wratten, and the parties' subsequent behaviour was consistent with an understanding that the condition had been satisfied.

The Court found that the agreements for sale and purchase preserved the right to claim damages at common law, so that Mr Cox was not limited to the remedy in cl 13(5). The Court found that Mr Cox is entitled to damages based upon rent at $380 per week until completion, subject to the offsetting liability discussed. The case must be remitted to the High Court to fix damages.

The appeal against the order for specific performance fails. The Court orders that settlement take place on 23 January 2015 or within 10 working days of the appellants notifying Mr Cox's solicitor that they are ready to settle, whichever is the sooner. Mr Cox is entitled to damages calculated in accordance with this judgment. The proceeding is remitted to the High Court for that purpose. The first and second respondents are entitled to one set of costs as for a standard appeal on a band B basis, with usual disbursements.

Orders