Great Northern Land Company Limited v Engineer

[2012] NZHC 1737

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-004-003033 [2012] NZHC 1737

BETWEEN  GREAT NORTHERN LAND COMPANY LIMITED

Plaintiff

ANDSHERVEER ENGINEER First Defendant

ANDPARVIN ENGINEER Second Defendant

ANDSUNNY SINGH Third Defendant

Hearing:         16 July 2012

Counsel:         A Commons for Plaintiff

Judgment:      17 July 2012

JUDGMENT OF MILLER J

[1]    The plaintiff has sought judgment by way of formal proof against the first and second defendants, for failure to settle an agreement for sale and purchase of land.

[2]    The property concerned is Lot 11 in a development known as Port Marsden Industrial Park.  The developer was Great Northern Land Company Limited, whose interest has now been assigned to the plaintiff.  I will refer simply to the plaintiff.

[3]    The first and second defendants agreed to buy Lot 11 under an agreement dated 1 November 2007.   The purchase price was $662,860.00 plus GST, and a deposit of ten per cent was paid on 15 November 2007.

[4]    The agreement for sale and purchase contained a number of conditions:

GREAT NORTHERN LAND COMPANY LIMITED V SHERVEER ENGINEER HC AK CIV-2009-004-003033 [17 July 2012]

4.1      This Agreement is conditional upon:

4.1.1The Vendor obtaining a satisfactory (at its sole discretion) level of sales of Lots in the Subdivision by the Condition Date.

4.1.2The Vendor being satisfied (at its sole discretion) as to the financial viability of the Development (including the obtaining of all Consents) by the Condition Date.

4.1.3    The   Vendor   obtaining   issue   of   the   Consents   by   the

Condition Date.

4.1.4The Vendor obtaining issue of a separate certificate of title for the Lot by the Sunset Date.

[5]    The Condition Date was a date six months after the date of the agreement, and the Sunset Date was the date three years after the condition date.  Accordingly, the vendor had three and a half years in which to obtain a separate certificate of title.

[6]    By facsimile of 11 June 2009 the defendants’ solicitor wrote to the plaintiff’s solicitor asking whether the survey plan had been approved and deposited.   They received the response that the survey plan had been submitted to the Whangarei District Council for approval and the vendor expected to have titles issued some time in August.

[7]    The defendants promptly gave notice “rescinding the contract pursuant to the provisions of s 225 of the Resource Management Act”.   They thereby invoked s 225(2)  which  provides  any  agreement  to  sell  any  allotment  in  a  proposed subdivision made before the survey plan had been approved is deemed to be made subject to the condition that the purchaser may, at any time after the expiration of two years after the date of granting of the Resource Consent or one year after the date of the agreement, whichever is the later, rescind the contract “if the vendor has not made reasonable progress towards submitting a survey plan to the territorial authority or has not deposited the survey plan within a reasonable time after the date of its approval.”

[8]    The plaintiff’s solicitors rejected the cancellation.   They observed that the development is complex and staged, and involves multiple consents.   Reasonable progress had been made towards submitting the survey plan;  the plaintiff had been

in  constant  discussion  and  negotiation  with  the  District  Council  regarding  the resource  consent  terms  and  the  survey  plan.    A  chronology  prepared  by  the plaintiff’s engineers tends to confirm both that the development is complex and that it was being progressed continuously throughout.

[9]    The District Council approved the subdivision plan in August 2009, and titles were issued on 23 September 2009.   The plaintiff demanded settlement, issuing a settlement statement on 29 September 2009.  The defendants refused to settle, so the plaintiff cancelled on 14 October 2009.  This proceeding ensued.

[10]  The amended statement of claim sought an order for forfeiture of the deposit and judgment for $227,953.00 against the first and second defendants.   The third defendant, the real estate agent appointed by the vendor, was sued contingently.  The first and second defendants had claimed that the third defendant orally represented the purchase was a good opportunity as the entire development would be completed in one and a half years and the development could be onsold at a higher price.  I am told that the third defendant is overseas and evaded service.

[11]  The statement of defence put the plaintiff to proof generally, alleged that the contract was cancelled lawfully under s 225 of the Resource Management Act, and further  alleged  that  representations  were  made  by  the  plaintiff,  via  the  third defendant.  It is said that the third defendant represented that the property was a good investment, partly because there were few sections in the development, and the development would be completed within 18 months of entering into the agreement.

[12]  The defendants were initially represented, but their counsel was given leave to withdraw on 17 May 2012 and the proceeding was set down for formal proof today. I heard from Paul Gray, a director of Great Northern Land Company Limited, and Anthony Long, a valuer, who deposed to the value of the property, at date of the plaintiff’s cancellation, 14 October 2009.   That sum is $497,000.00 plus GST ($571,550.00 including GST).

[13]  Consistent with that evidence, an application was made for leave to amend the statement of claim to reduce the sum claimed.  That application was granted.

[14]  The plaintiff has made out its claim, and excluded the defences, on the balance of probabilities.   It will have judgment for $190,739.00, of which $66,286.00 has been met by forfeiture of the deposit, leaving a net sum payable of $124,453.00.  It will have interest under the Judicature Act from 14 October 2009, and costs and disbursements on a 2B basis, to be fixed by the Registrar.

[15]  This proceeding is adjourned to a callover three months hence as against the third defendant.   Mr Commons sought to preserve it in case this judgment is set aside, but unless steps have been taken to that end an election must be made whether to pursue the claim or not.

Miller J

Solicitors:

Hornabrook Macdonald Lawyers, Auckland for Plaintiff