Gill v New Zealand Home Bonds Limited
[2014] NZCA 506
•16 October 2014 at 4 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA358/2014 [2014] NZCA 506 |
| BETWEEN | BERNADETTE GILL |
| AND | SANGEET GILL |
| AND | SURINDER GILL |
| AND | NEW ZEALAND HOME BONDS LIMITED |
| Hearing: | 6 October 2014 |
Court: | Harrison, Wild and Goddard JJ |
Counsel: | M J Foley and E O Peers for Applicants |
Judgment: | 16 October 2014 at 4 pm |
JUDGMENT OF THE COURT
AThe application for leave to appeal is dismissed.
BThe applicants are to pay costs to the respondent for a standard application for leave on a band A basis and usual disbursements.
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REASONS OF THE COURT
(Given by Harrison J)
Background
In November 2006 Bernadette Gill signed unconditional agreements to purchase from MacKelvie Trustee Ltd two residential apartments in a complex to be developed in Grey Lynn, Auckland. The separate purchase prices were $520,120 and $340,120, a total of $860,240. Settlement was due, in the event that deposits payable on the purchases were arranged to be paid by home bonds, in this case five business days after certificates of practical completion were issued. The deposit payable on both purchases was 10 per cent of the total price or $86,240.
In March 2007 Mrs Gill together with her daughter Surinder applied to New Zealand Home Bonds Ltd (NZHBL) to issue bonds for the deposit payments. In May 2007 NZHBL approved the application. In essence NZHBL agreed with Mrs Gill and her daughter to pay the deposits to MacKelvie if called upon by it at settlement. NZHBL’s obligation would arise if Mrs Gill “first defaults or fails in settling the agreement[s] …” and the vendor provided NZHBL with evidence of expired settlement notices served on Mrs Gill confirming the default.
Practical completion of the apartment complex occurred in mid 2009. By then a company called 33 Mac Trust Company Ltd (33 Mac) had acquired MacKelvie’s interest as vendor. It issued settlement notices to Mrs Gill in June 2009 and, later that month, made demand on NZHBL to pay the deposits. NZHBL rejected the Gills’ contention that the agreements had never become unconditional; and they were thus not in default in settling the agreements and the settlement notices should not have been served. In early July 2009 NZHBL paid $86,240 to 33 Mac.
NZHBL’s claim
NZHBL applied to the District Court for summary judgment against Mrs Gill and her daughters for $86,240 together with contractual interest at the rate of 18 per cent. It succeeded before Judge Neave.[1] However, on appeal to the High Court Fogarty J concluded that arguable defences were available to the Gills and set the judgment aside.[2] The proceeding was remitted for trial in the District Court, where Judge O’Driscoll found for the Gills on the ground that the agreements had never become unconditional and the settlement notices were therefore invalid.[3] Panckhurst J allowed an appeal.[4] He later refused leave to appeal.[5] The Gills now seek leave to appeal to this Court. They have not formulated a particular question or questions of law for determination in this Court but have identified the essential grounds of challenge.
Gills’ defence
[1]New Zealand Home Bonds Ltd v Gill DC Christchurch CIV-2009-009-2114, 22 June 2010.
[2]Gill v New Zealand Home Bonds Ltd (No 2) HC Christchurch CIV-2010-409-1587, 1 December 2010.
[3]New Zealand Home Bonds Ltd v Gill DC Christchurch CIV-2009-009-2014, 2 October 2013.
[4]New Zealand Home Bonds Ltdv Gill [2014] NZHC 312.
[5]New Zealand Home Bonds Ltd v Gill [2014] NZHC1278.
The Gills raised a number of defences to NZHBL’s claim. Well after proceedings were issued, and apparently in reliance on observations by Fogarty J, they shifted the focus of their defence to an exchange of correspondence in October and November 2006 between Mrs Gill and Brian Cutfield of Investment Directions Ltd. It is common ground that IDL was MacKelvie’s agent for sale of the apartments. Mr Cutfield negotiated the terms of the agreements with Mrs Gill in Brisbane.
Two letters are particularly relevant. The first, written by Mr Cutfield for IDL dated 18 October 2006 to Mrs Gill, stated:
This is to verify that should the unit you intend to purchase is not on sold [sic] before settlement is required in July 2008 [the time settlement was initially anticipated] that I personally will take the sale over at your purchase price that is reflected in the contract for the initial purchase.
Following a meeting between them, Mrs Gill wrote to Mr Cutfield on 2 November 2006 stating:
… we understand that we are purchasing the units only on the condition that they are resold – or on-sold prior to settlement possibly in March 2008 and that there would [sic] be a substantial profit for us in doing this transaction.
… we do understand from your letter that there will not be any responsibility on our part to incur any charges or penalties listed in the contract received only yesterday ie. 12.1 Settlement Notice, 12.2 Service and 12.3 Vendors Remedies Clauses or any other penalties or charges other than the usual commission and costs. Please list and advise us of costs involved.
After the on selling of the properties which has always been the idea, you will advise us of the most efficient way of disbursing the profit.
Mr Cutfield countersigned the letter to record his agreement. At the top were handwritten the words “attachment to contract dated 1-11-06”. However, it is common ground that, while Mrs Gill had then signed the agreement, MacKelvie did not sign until 7 November 2006 and the exchange of correspondence was not attached. It is also common ground that neither Mr Cutfield nor Mrs Gill communicated the existence of the exchange to MacKelvie or 33 Mac.
High Court
In summary, Panckhurst J found:
(1)When the correspondence was read together, IDL’s letter contained Mr Cutfield’s personal promise to purchase the apartments at cost if on sales were not achieved before settlement and Mrs Gill’s letter amounted to an acceptance, giving rise to a collateral contract between Mr Cutfield and Mrs Gill entered into in anticipation of the principal agreements for sale and purchase between MacKelvie and Mrs Gill;[6]
(2)Mrs Gill’s letter could not be intelligibly construed as containing an offer to MacKelvie, even though that is what she may have intended, which was capable of acceptance;[7]
(3)In express disagreement with Fogarty J, the correspondence did not require deletion or removal from the agreements of the standard clauses 12.1, 12.2 and 12.3;[8]
(4)Even if he was wrong on the underlying issue of contractual interpretations, NZHBL was contractually bound to pay the amount of the home bonds.[9]
Decision
[6]At [28]–[30].
[7]At [31].
[8]At [32] and [33].
[9]At [50]–[55].
In a clearly articulated argument in support Mr Foley relied on four grounds to advance the Gills’ application for leave to appeal against Panckhurst J’s judgment. On analysis, those grounds stand or fall on Mr Foley’s principal submission that the judgment raises important issues relating to the law of offer and acceptance which require clarification by this Court. In particular, he submitted the Judge erred in finding that the terms of Mrs Gill’s letter dated 2 November 2006 amounted to a side or collateral agreement between Mrs Gill and Mr Cutfield rather than constituting the terms of her offer to MacKelvie and thus did not form part of the agreement; and that the Judge failed to correctly interpret the contents of the letter or properly take into account Mrs Gill’s unchallenged evidence at trial in the District Court about Mr Cutfield’s promise to attach the letter to the agreements prior to delivery to MacKelvie.
Mr Foley submitted that, because Mrs Gill’s offer contained in her 2 November 2006 letter was never communicated to or accepted by MacKelvies, there was no consensus between those parties about the terms of their agreement. Thus no contract was ever concluded. As a result Mrs Gill did not default on her obligations under agreements which did not exist, she did not fail to settle on 33 Mac’s demand and NZHBL was not contractually liable to pay the deposits to 33 Mac.
We do not accept Mr Foley’s submission. In agreement with Judge Neave, Panckhurst J applied an orthodox approach to the law of offer and acceptance. The logical, indeed inevitable, consequence was his conclusion that the correspondence constituted a separate agreement between IDL or Mr Cutfield and Mrs Gill. Its essence was Mrs Gill’s acceptance of Mr Cutfield’s offer to resell or on sell the units or, arguably, to take an assignment of her interests if he was unable to effect sales before settlement. The necessary prerequisite to both steps was for Mrs Gill first be obliged to settle the agreements and take title.
Mr Cutfield and Mrs Gill were the sole parties to what was an independent or standalone agreement whereby Mr Cutfield undertook a personal obligation to Mrs Gill to perform certain duties. MacKelvie was not a party to their agreement. Mr Foley accepted that there was no evidence that MacKelvie had authorised Mr Cutfield to undertake the obligation on its behalf. The correspondence did not constitute an offer or form part of an offer which was ever accepted by MacKelvie. In any event its terms were arguably so uncertain as to be incapable of acceptance.
In this respect Mr Foley submitted that Mr Cutfield breached his duty as MacKelvie’s agent in failing to communicate Mrs Gill’s offer to it, which might somehow be relevant to the question of contractual construction. However, Mr Cutfield was under no duty to communicate an offer which was personal to him. Mr Cutfield’s undertaking to attach the documents to the agreements for sale and purchase was meaningless when they were not intended to and could not be construed to be an offer to MacKelvie and effect contractual liability.
In view of this conclusion we need only refer briefly to Mr Foley’s additional arguments. First, he submitted that Panckhurst J erred in finding that the correspondence did not form part of the agreements for sale and purchase when at first instance Judge O’Driscoll had made findings of fact to this effect. We reject this submission, which was also made and rejected in the High Court. While the findings of fact made in the District Court were largely uncontested on appeal, they were of little, if any, relevance to the primary issue. Indeed, almost all the evidence adduced at trial was irrelevant and inadmissible. Panckhurst J was correct that whether the documents could be construed as an offer to MacKelvie was one of law, not of fact.
Second, and allied to the previous ground, Mr Foley submitted there was procedural unfairness or impropriety because NZHBL did not give notice in the High Court of its intention to challenge Judge O’Driscoll’s findings of fact. That submission falls away when, as we have noted, the decisive finding was one of law, not of fact.
Third, Mr Foley submitted that leave should be granted because, in the four substantive decisions delivered in the history of this litigation, two judges have found in favour of Mrs Gill and two have found against. This submission is without merit where, in our view, the judgments of Panckhurst J in the High Court and Judge Neave in the District Court are plainly correct.
It follows that we are satisfied that the appeal does not raise a question or questions of law that is or are capable of bona fide and serious argument; and that there is no interest, public or private, of sufficient importance to outweigh the costs of an appeal.[10] In this respect we observe that the costs incurred jointly by the parties to date must have exceeded the amount in dispute.
Result
[10]Waller v Hider [1998] 1 NZLR 412 (CA).
The application for leave to appeal is dismissed.
The applicants are to pay costs to the respondent for a standard application for leave on a band A basis and usual disbursements.
Solicitors:
Buddle Findlay, Christchurch for Applicants
GCA Lawyers, Christchurch for Respondent
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