Downer v Signature Developments Limited - [2020] NZHC 2488

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2019-404-000544

[2020] NZHC 2488

BETWEEN
MALCOLM ROBERT DOWNER

Plaintiff

AND

SIGNATURE DEVELOPMENTS LIMITED

Defendant

Hearing: 27 & 28 July 2020

Appearances:

M J W Lenihan for the Plaintiff

R Amaranathan for the Defendant

Judgment:

23 September 2020

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 23 September 2020 at 3.00pm Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:
Alan Jones Law Ltd, Auckland
M J W Lenihan, Barrister, Auckland Rice Craig, Papakura

DOWNER v SIGNATURE DEVELOPMENTS LIMITED [2020] NZHC 2488 [23 September 2020]

Introduction

[1] The plaintiff, Robert Downer, seeks recovery of the deposit of $466,000 he paid the defendant, Signature Developments Ltd, when entering into an agreement for the sale and purchase (ASP)1 of a property in Pukekohe.

[2] Signature Developments had agreed to build an early childhood education (ECE) centre on the property (Pukekohe centre) and had agreed that the centre would be leased and operated by Kindergarten New Zealand Ltd (KiNZ), a subsidiary of the Auckland Kindergarten Association (AKA).

[3] Clause 26 of the ASP provided that the property would be subject to a tenancy under which KiNZ would be the tenant on the terms and conditions set out in an attached agreement to lease (ATL) between Signature Developments and KiNZ which Mr Downer had received and approved.

[4] Mr Downer cancelled the ASP before settlement because, without seeking or obtaining Mr Downer’s approval, Signature Developments consented to KiNZ assigning the ATL to Pukekohe Educare Ltd, a subsidiary of Educare Group Ltd, with the consequence that KiNZ would not have been the tenant of the Pukekohe centre at settlement of the ASP.

[5] Mr Downer says that, in entering into a deed of lease with Pukekohe Educare instead of KiNZ, Signature Developments breached cl 26, that cl 26 was an essential term of the ASP, and that he was entitled to cancel the ASP in accordance with s 37(2)(a) of the Contract and Commercial Law Act 2017 (CCL Act). In addition, Mr Downer says that in breaching cl 26 of the ASP, Signature Developments substantially reduced the benefit of the ASP to Mr Downer and that Mr Downer was therefore entitled to cancel the ASP in accordance with s 37(2)(b)(i) of the CCL Act.

[6] Signature Developments denies that cl 26 was an essential term of the ASP and says that it substantially performed cl 26 and that Mr Downer suffered no substantial material loss because he would have purchased the Pukekohe centre with a reliable

1 A list of acronyms is in the appendix to this judgment.

and secured tenant if he had settled the purchase of the centre with Pukekohe Educare as the tenant.

Agreed questions for determination

[7]The parties agree that the questions for determination are:

(a)Did the parties expressly agree on the signing of the ASP that the performance of cl 26 was objectively essential…

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 Downer v Signature Developments Limited

Details

AGLC: Downer v Signature Developments Limited [2020] NZHC 2488
Case: [2020] NZHC 2488
Decision Date: 23 September 2020

CaseChat Overview and Summary

In the case of Downer v Signature Developments Limited, the High Court of New Zealand was asked to determine whether Malcolm Robert Downer was entitled to a refund of the deposit he had paid Signature Developments Limited for the purchase of a property in Pukekohe. Signature Developments had agreed to build an early childhood education centre on the property, with Kindergarten New Zealand Ltd (KiNZ) as the tenant. However, without seeking or obtaining Mr Downer’s approval, Signature Developments consented to KiNZ assigning the lease to Pukekohe Educare Ltd. Mr Downer cancelled the agreement for sale and purchase (ASP) and sought a refund of his deposit, arguing that Signature Developments had breached the ASP by not consulting him and obtaining his approval before consenting to the assignment. Signature Developments denied that the performance of the clause in question was essential to Mr Downer.

The court had to determine whether the parties had expressly or impliedly agreed that the performance of the clause was essential to Mr Downer, whether there was sufficient and substantial performance of the clause, and whether the assignment of the lease substantially reduced the value of the ASP to Mr Downer. The court found that Signature Developments had breached the ASP by consenting to the assignment of the lease without seeking and obtaining Mr Downer’s approval. The court also found that the parties had agreed that the performance of the clause was essential to Mr Downer and that there was not sufficient and substantial performance of the clause. The court concluded that the assignment of the lease to Pukekohe Educare substantially reduced the value of the ASP to Mr Downer. Therefore, Mr Downer was entitled to cancel the ASP and recover his deposit plus interest. The court ordered Signature Developments to repay Mr Downer the sum of $466,000 plus interest at 5 per cent per annum from 21 February 2018 until the date of payment.

Orders