Exciting Habitats Limited v Veracity Develop Limited
[2025] NZHC 2062
•25 July 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-003123
[2025] NZHC 2062
BETWEEN EXCITING HABITATS LIMITED
Plaintiff
AND
VERACITY DEVELOP LIMITED
First Defendant
WU YITONG
Second Defendant
Hearing: 24 June 2025 Appearances:
M J Fisher / K M Blockley for the Plaintiff J A Wickes for the Defendants
Judgment:
25 July 2025
JUDGMENT OF ASSOCIATE JUDGE COGSWELL
This judgment was delivered by me on 25 July 2025 at 3.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Castle / Brown, Auckland Loo & Koo, Auckland
M F Fisher, Auckland K Blockley, Auckland
EXCITING HABITATS LTD v VERACITY DEVELOP LTD [2025] NZHC 2062 [25 July 2025]
Introduction
[1] The plaintiff seeks an order for specific performance of two agreements for the sale and purchase of land by summary judgment.
[2] Neither agreement has been settled, as the parties have not agreed on completing the dispute resolution process provided for in the agreements to determine the compensation payable.
[3] The purchaser’s claims to compensation are based on allegations that the vendor misrepresented the properties and misled the purchaser in two respects:
(a)that the study referred to in marketing material was a separate room and/or not within the living room; and
(b)that the development would not have an incorporated society.
[4] The purchaser seeks to hold back the sum of $150,000 from each purchase. It says that it is ready, willing and able to settle by holding that sum back on settlement.
[5] The vendor disputes the purchaser’s entitlement to hold back any amount, but concedes that if any amount is to be held back it is no more than $30,000 per agreement.
[6] The key issues for determination are: first, is there a defence to the claim for specific performance of the agreements; and second, if not, what orders are appropriate?
Background
[7] The plaintiff and the first defendant entered into two agreements for sale and purchase of real estate in February 2022 (agreements). The agreements were for the sale of Lots 70 and 71 of a development being undertaken by the plaintiff at 18 Scott Road, Hobsonville. The agreements are identical.
[8] The plaintiff was the vendor and the first defendant the purchaser. The second defendant guaranteed the first defendant’s performance of its obligations under the agreements.
[9] At the time the agreements were entered into, the vendor had yet to obtain resource consent for the development. The purchaser was provided with plans and a schedule showing what dwelling the consent would permit to be constructed on each lot.
[10]The deposit was payable in two tranches:
(a)five per cent immediately upon execution of the agreement;
(b)a further five per cent of the purchase price immediately upon issue of the resource consent for the development.
[11] The resource consent that was granted required the architectural plans provided to the purchasers to be complied with. The plaintiff says that the internal configuration and layout could be changed when building consent is sought so long as the building envelope was unchanged.
[12] Settlement date under the agreements was 15 working days after the purchaser was advised by the vendor that a search copy of the Record of Title was available. Settlement date under the agreements was 22 November 2024.
[13] On 21 November 2024, the day before settlement was due, the purchaser raised allegations about misrepresentation, stating:
The project marketing schedule supplied by the vendor to [the purchaser] represents the property would transfer to [the purchaser] with consent permitting a dwelling of three bedrooms and a study. The approved resource consent plan obtained by [the vendor] which permits what [the purchaser] can erect on the property is for a three bedroom dwelling only, no study is permitted.
[The purchaser’s] previous solicitors enquired and were advised by [the vendor’s solicitors] (email 4 March 2022) that there would be no incorporated society or similar for the development. As it turns out, there is a Residents
Society for the development which [the purchaser] will be covered by and liable to pay levies to.
[14] The purchaser made a claim for compensation under cl 10.2 of the agreements. The purchaser advised under cl 10.3(2)(b) of the agreements that its estimate of the loss was the amount of $150,000 per property.
[15] The claim was said to be based on an appraisal given to the purchaser that considered that the net effect of the two misrepresentations was a change in the value of each property of between $150,000–$200,000.
[16] The vendor’s response was to issue settlement notices to the purchaser. No reduction in the purchase price was proposed. The notices made no reference to cl 10 of the agreements.
[17] On 28 November 2024, the purchaser wrote to the vendor stating that as the vendor had not disputed the purchaser’s claim to compensation within the three day period set out in cl 10 of the agreements, the time to dispute the purchaser’s claim to compensation had expired. The purchaser stated that it wished to settle the purchases, less the compensation amounts claimed.
[18]Neither transaction has settled.
[19]These proceedings commenced on 29 November 2024.
[20] There is a dispute between the parties as to which of them was in breach of the obligation to use the process to determine the compensation payable under cl 10 of the agreements. Correspondence has passed between the parties setting out each of their views on the effect of the settlement notices issued by the vendor and compliance with cl 10 of the agreements.
[21] By the date of the hearing, neither party had instituted the compensation procedure provided for by cl 10 of the agreements.
The issues
[22]The issues are:
(a)Is it reasonably arguable that the vendor misrepresented that the study referred to in marketing material was a separate room and/or not within the living room?
(b)Is it reasonably arguable that the vendor misrepresented that the development would not have an incorporated society?
(c)Should specific performance be granted, and, if so, on what basis?
Summary judgment principles
[23]Rule 12.2(1) of the High Court Rules 2016 provides:
The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[24] The relevant principles governing a summary judgment application are well-established:1
(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried. The Court must be left without any real doubt or uncertainty.
(b)The onus is on the plaintiff, but where the evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.
(c)The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, for example where the
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].
evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable.
[25] A defendant is under an obligation to lay a proper foundation for their defence in the affidavits filed in support of the notice of opposition.2
Issue one
[26] The first issue is whether it is reasonably arguable that the vendor misrepresented that the study referred to in marketing material was a separate room and/or not within the living room.
[27] The purchaser alleges that it was misled into thinking that the study referred to in marketing material would be able to be used as a separate room, increasing the value of the property. In fact, the plans provided to the purchaser show a study “nook” in the corner of the lounge room.
[28] Marketing material for the development was provided to the purchaser before it entered into the agreements. That material included two documents:
(a)a document entitled “T4”, which is a table setting out in relation to each lot various details of the proposed dwelling to be constructed on Lots 70 and 71. The table, relevantly, shows:
Lot Number
Total Rooms
Beds
Study
70
4.0
3.0
1.0
71
4.0
3.0
1.0
(b)a document entitled “T5”, which is a series of building types proposed for the relevant lots. Those plans make clear that the living room and study in the units is one indivisible space. The electronic version of the plans when reviewed show the proposed location of furniture in those
2 Middleditch v NZ Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.
spaces, making it clear that the study is not a separate room but part of the overall living space.
[29] The purchaser relies on the analysis contained in the document referred to as “T4”. It says that the document records that there are four in total rooms and that the study is a separate room.
[30] I do not consider that it is reasonably arguable that the purchaser was misled as to the fact that the study was a separate space in these units.
[31] The purchaser was an experienced developer. It was provided documents T4 and T5 before it entered into the agreements. It appears that it was the purchaser’s own assumption that the “study” could be used as a separate bedroom; there is nothing in the marketing material to suggest that use.
[32] Whilst the agreements remained conditional and when the purchaser was still able to cancel the agreements under s 225 of the Resource Management Act 1991, the purchaser asked the vendor some questions about the development. Included in that enquiry was the comment:
The construction is required to comply with the provisions in the land covenant, our client requests your client to provide housing plan to be attached to the Agreement.
[33]The response was:
The house design plan was included in the file bundle made available to prospective purchasers. I suggest you contact the agent for access to the file bundle. You should look to the resource consent application within the bundle. It includes architectural designs for all houses in the development.
[34] The purchaser had been sent those documents on 16 February 2022, before it entered into the agreements. It had the requisite information to understand the layout and, importantly, that there was not a separate study. It is obvious from a review of the proposed layout of the dwellings that the study was not a separate habitable space.
[35] The document which is T4 makes it clear that Units 70 and 71 would have three bedrooms and one study. The plans make it clear that the study being provided was a study nook, and not a separate room in the proposed dwelling.
[36] The vendor’s position is that the purchaser had the plans and could not have been misled into the configuration being offered. I agree. I do not consider that it is arguable that the purchaser was misled.
[37]I also note that under the agreements at cl 26.5 the purchaser agreed:
The Purchaser acknowledges that he/she has inspected the property, and that he/she purchases the same solely in reliance upon his/her own judgment and not upon any representation or warranty made by the Vendor or agent of the Vendor.
[38] Due to my finding on this issue, I do not need to determine whether I accept the appraisal evidence of the change in value. Nor do I need to determine what the likely costs or approach would be to creating a separate space in the area marked “study”. I have found that there was no misrepresentation.
Issue two
[39] The second issue is whether it is reasonably arguable that the vendor misrepresented that the development would not have an incorporated society.
[40] The purchaser complains that it enquired with the vendor as to whether the development would be subject to an incorporated society. The vendor’s response was unequivocal in its email of 3 March 2022, stating that “There will be no incorporated society or similar for the subdivision.”
[41] Ultimately, that statement was incorrect, because on granting the resource consent, the Council imposed an obligation on the developer that there be an incorporated society.
[42] The vendor accepts that the representation was made but says that it is not actionable as it was a correct statement of intent at the time. Furthermore, the vendor accepts for the purposes of this application that based on expert evidence it has
provided that the sum of $30,000 is a reasonable interim amount of compensation that may be deducted from the balance of the purchase price payable under each agreement.
[43] The vendor says that amount can be held on trust in the purchaser’s solicitor’s trust account pending determination of the dispute over whether the representation is actionable, and if so, whether that is the correct amount of compensation payable for that misrepresentation.
[44] Misrepresentations can be expressed or implied by the words and conduct of a party. An important question in all misrepresentation cases is: what was the meaning of the misrepresentation? Was the statement made fairly capable of the meaning alleged? The meaning relied upon must be reasonable in all the circumstances.
[45] A misrepresentation is a representation of past or present fact that is false or misleading, and excludes statements of intention, opinion and law. A statement of intention impliedly asserts that the intention is genuinely held at the time the statement is made. If the intention is not genuinely held when the statement is made, then it is a misrepresentation of an existing fact.
[46] I consider that it is arguable that the vendor made a misrepresentation when it confirmed to the purchaser that there would not be an incorporated society or similar for the subdivision. That statement was wrong.
Issue three
[47] The next issue is whether specific performance should be granted, and if so, on what terms?
[48] The dispute concerns whether the Court should order the parties to settle and permit the purchaser to retain some amount pending resolution of the compensation claim or whether the parties should be obliged to complete the process for compensation claims set out in cl 10 of the agreements. For the reasons that follow,
the parties must complete the process for compensation claims provided by cl 10 of the agreements. Settlement is deferred until that process is complete.
[49] The key issue is whether the settlement notices issued by the vendor were notices for the purposes of cl 10 of the agreements.
[50] The purchaser validly issued notices under cl 10.2(1) of the agreements on 21 November 2024, being within one working day of settlement. Those notices complied with the requirements of cl 10.3(2). The notices stated the breaches of the agreement relied on, gave estimates of the compensation claimed and were particularised to extent reasonably possible at that date.
[51] Settlement date was 22 November 2024. The vendor’s response to the cl 10.2 notices was to issue settlement notices on 25 November 2024. They were issued within three working days of the purchaser’s cl 10.2 notice as required by the agreements.
[52] The vendor’s settlement notices did not acknowledge the purchaser’s cl 10.2 notices nor did they agree to any amount by way of compensation.
[53] However, I consider that, by rejecting any claim by the purchaser to compensation at all, the settlement notices were notices under cl 10.6 of the agreements in response to the purchaser’s cl 10.2 notices. They were notices disputing the purchaser’s right to make a compensation claim.
[54] There is no prescribed form or requirements for a notice under cl 10.6, other than it indicate that the vendor disputes the purchaser’s right to make a compensation claim. The settlement notices were valid notices under cl 10.6 of the agreements.
[55] The effect of those notices was that the parties were required to have the disputes resolved by the process set out in cl 10 of the agreements.
[56] There is a two-step process anticipated. First, under cl 10.6(2), it must be determined whether the purchaser has the right to make a claim for compensation.
This determination does not determine the amount of that claim, just whether an entitlement to make a claim exists.
[57] Then, if it is determined that the purchaser has the right to make the claim to compensation under cl 10.2(1) but the amount of the compensation is disputed, there is a process under cl 10.8 of the agreements to determine the amount of compensation payable.
[58] Authorities that provide the Court may decree specific performance on terms that a sum be set aside pending resolution of the disputed amount of the purchaser price have now been largely superseded by the incorporation of cl 10 into the agreements.3
[59] The plaintiff’s argument that the Court should carry out the cl 10 process for the parties as part of ordering specific performance is not accepted. There are express terms providing the machinery to determine compensation claims in the agreements. The parties agreed to this process and they are bound to follow it.
[60] Where the parties cannot agree on compensation, the provisions of cl 10 apply. This provides for an amount to be set aside to allow settlement to proceed and therefore removes the vendor from breach, as a party seeking performance cannot be in significant breach.4 The cl 10 process preserves the purchaser’s position regarding compensation where it would be inequitable for the vendor to obtain the full amount of the purchase price on settlement without protection of the purchaser’s claim.
[61] Clause 10.9 of the agreements provides that if a determination has to be made under cl 10.6(2) and/or cl 10.8(4), then the settlement date shall be deferred to the second working day following the date of the determination. If determinations are to be made under both cl 10.6(2) and cl 10.8(4), then the settlement date is deferred to
3 See Arranmore Developments Ltd v Zeeland Developments Ltd (2010) 11 NZCPR 799 (HC). The clause relating to claims for compensation was first introduced in the standard form ADLS/REINZ Agreement for Sale and Purchase after the Supreme Court decision in Property Ventures Investments Ltd v Regalwood Holdings Ltd [2010] NZSC 47, [2010] 3 NZLR 231. See Elizabeth Toomey (ed) New Zealand Land Law (3rd ed, Thomson Reuters, Wellington, 2017) at 1473–1475; and Don McMorland “The 10th ed (2) of the REINZ-ADLS sale and purchase form” (2020) 19 BCB 43 at 45–47.
4 New Zealand Land Law, above n 3, at [13.22].
the second working day following the date on which notification of both determinations is made to both parties.
[62] Accordingly, settlement date is deferred, due to the need to determine the claims under cl 10.6(2) and cl 10.8(4) of the agreements.
[63] The parties must follow the process set out in clause 10.6(2) and cl 10.8(4). Neither party claims the right to cancel the agreements.
[64] An order for specific performance will direct them to complete those steps, following which settlement will fall due. As the settlement date has been deferred, issues about late interest do not arise.
What orders are appropriate in determining the application for summary judgment?
[65] An award of specific performance of a contract for the sale of land is discretionary. A claimant for specific performance must be ready, willing and able to perform their contractual obligations when the proceeding seeking specific performance is issued and when relief is granted.
[66] I consider that the vendor was ready, willing and able to perform their contractual obligations at the date these proceedings were issued, as I have found that the settlement notice was a notice under cl 10 of the agreements and the vendor never expressed an intention not to follow this procedure.
[67] Further, by 20 January 2025 it was specifically proposing that the cl 10 process be followed.
[68] The purchaser objects to the part of the vendor’s email of 20 January 2025 being read after the words, “without prejudice to”. The purchaser says that communication is privileged under s 57(1) of the Evidence Act 2006.
[69] That part of the communication specifically states that the parties should follow the cl 10 procedure. It is only said to be “without prejudice” to the vendor’s stated position on what issues arose in its summary judgment application.
[70]The correspondence is not privileged as claimed because:
(a)it was not intended to be confidential;
(b)it was not marked “without prejudice”;
(c)the vendor did not make an offer of settlement, but rather sought the performance of the cl 10 obligations whilst preserving its position that there was no misrepresentation; and
(d)the vendor expressly characterised in later communication that its 20 January 2025 communication was an open communication, something that the purchaser did not take issue with.
[71] I consider that the letter is not protected by the privilege set out in s 57(1) of the Evidence Act 2006.
[72] I conclude from that letter that the vendor was ready, willing and able to settle when the proceedings were issued, or at the latest from 20 January 2025 as by then it had expressed its unequivocal agreement to use the cl 10 process.
Decision
[73] The first and second defendants have no arguable defence to the plaintiff’s claim for specific performance of both agreements.
[74] The plaintiff is entitled to summary judgment for specific performance of both agreements.
[75] The parties must complete the steps required by cl 10.6(2) and cl 10.8(4) of the agreements by completing the process set out in cl 10 of the agreements.
[76] The settlement dates under the agreements are deferred in accordance with cl 10.9 until the determinations under cl 10.6(2) and cl 10.8(4) of the agreements are delivered.
[77]The performance of the agreements remains under the supervision of the Court.
[78] I direct that the proceedings be listed in my Chambers List at the first available date after 1 November 2025.
[79]Costs are reserved.
Associate Judge Cogswell
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