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Dempsey v Howe

Dempsey v Howe

Case [2015] NZCA 9 5 March 2015

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IN THE COURT OF APPEAL OF NEW ZEALAND

CA674/2013
[2015] NZCA 9

BETWEEN	PAUL JOHN DEMPSEY Appellant
AND	BRUCE WILLIAM HOWE, JENNIFER MARGARET HOWE AND MBT LIMITED Respondents

Hearing:	4 February 2015
Court:	Ellen France P, Harrison and Wild JJ
Counsel:	D J MacRae and L G Cox for Appellant H L Thompson for Respondents
Judgment:	5 March 2015 at 3.30 pm

JUDGMENT OF THE COURT

AThe appeal is allowed in part. The High Court judgment is amended to provide that the net judgment amount is $193,789.03, not $258,135.95.
B Costs on the appeal lie where they fall.

____________________________________________________________________

REASONS OF THE COURT

(Given by Ellen France P)

Table of contents

Introduction  [1]
Background  [7]
Decision  [15]

(a) Rate of interest payable to the Howes[16]

(b) Approach to the gain on resale  [32]
(c) Deposit  [43]
Result  [44]

Introduction

On 22 March 2010 the appellant, Paul Dempsey, entered into an agreement for the purchase of a residential property owned by a family trust. The trustees were the respondents, Bruce and Jennifer Howe, and MBT Ltd, a trustee company. The agreement used the standard form REINZ/ADLS agreement form (8th ed, 2006(2)).
The agreement failed after Mr Dempsey did not settle for over two years and the vendors (the Howes) resold the property to someone else.
The Howes brought a proceeding in the High Court seeking interest until resale at the contractual rate for late settlement and to forfeit the deposit. Mr Dempsey cross-claimed seeking a refund of the deposit.
The Howes obtained judgment in their favour in the High Court.[1] Miller J found the Howes were not entitled to cancel the agreement and nor had Mr Dempsey repudiated. The Judge also held that the agreement had been brought to an end. By selling to a third party, in the circumstances, the Howes had repudiated the agreement, a decision Mr Dempsey had accepted. But the Judge found that the Howes were entitled to damages for delay resulting from Mr Dempsey’s failure to settle on the due date.
[1]Howe v Dempsey [2013] NZHC 2297 at [70].
Miller J held that interest was available to the Howes on the unpaid purchase price at the contractual rate of 12.5 per cent per annum.[2] His Honour found that some of the Howes’ claimed costs were to be recovered but that the gain on resale was too remote.[3] Lastly, the Judge concluded that Mr Dempsey was entitled to credit for the deposit and also that the Howes were not entitled to keep the deposit by way of forfeit.[4]
[2]At [80].
[3]At [90]-[94].
[4]At [88]-[96].
Mr Dempsey appeals. The issues on appeal relate only to the calculation of damages. In particular, the matters in dispute are as follows:
(a)whether and at what rate interest is available to the Howes;
(b)whether the gain on resale and resale costs should be factored in; and
(c)what the position was relating to the deposit paid by the purchaser.

Background

The narrative can be briefly stated as there is no dispute…

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 Dempsey v Howe

Details

AGLC: Dempsey v Howe [2015] NZCA 9
Case: [2015] NZCA 9
Decision Date: 5 March 2015 at 3.30 pm

CaseChat Overview and Summary

Dempsey v Howe is an appeal against a High Court judgment which ordered the appellant, Paul Dempsey, to pay damages to the respondents, Bruce and Jennifer Howe and MBT Limited, for his failure to purchase and settle on a property. The parties agreed on a purchase price of $5.5 million, with a deposit of $500,100, and settlement was due one year later. Dempsey paid the deposit but did not settle on time, despite a negotiated extension. The Howes resold the property and sued Dempsey for interest at the contractual rate on the unpaid purchase price and other costs. Dempsey cross-claimed for a refund of the deposit.

The High Court held that the Howes were not entitled to cancel the agreement and that Dempsey had not repudiated it, but that the agreement had ended by the Howes' resale. The Court awarded interest at the contractual rate of 12.5 per cent on the unpaid purchase price from the due date to the date of resale. The Court also held that Dempsey was entitled to a credit for the deposit and that the Howes were not entitled to forfeit it. Dempsey appealed, arguing that the interest rate should have been the legal rate rather than the contractual rate, that the gain on resale should have been factored in, and that the deposit should have been returned in full.

The Court of Appeal held that the contractual rate was an appropriate measure of loss, as the contract was of long duration and the loss from delay was expressly contemplated. The Court held that the gain on resale should be factored in under mitigation principles, as resale was a foreseeable outcome of failure to settle. The Court also held that the legal costs associated with resale were recoverable. The net judgment amount was reduced to $193,789.03. The Court held that the deposit should be returned to Dempsey and that costs on the appeal lie where they fall.

Orders