Great Northern Land Company Ltd v Crowley HC Auckland CIV 2009-404-7683
[2010] NZHC 1944
•1 October 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2009-404-7683
BETWEEN GREAT NORTHERN LAND COMPANY LIMITED
Plaintiff
ANDMICHAEL CROWLEY Defendant
Hearing: 13 May 2010
Counsel: A Commons for Plaintiff
N Thinn for Defendant
Judgment: 1 October 2010 at 5 pm
RESERVED JUDGMENT OF ASSOCIATE JUDGE SARGISSON (Summary Judgment Application)
This judgment was delivered by me on 1 October 2010 at 5 pm pursuant to
Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date ..........................
Solicitors:
Hornabrook Macdonald, PO Box 91845, Auckland
Thinn & Co, PO Box 37 324, Parnell, Auckland
GREAT NORTHERN LAND COMPANY LIMITED V CROWLEY HC AK CIV-2009-404-7683 1 October
2010
Introduction
[1] The plaintiff, Great Northern Land Company Limited, applies for an order by way of summary judgment that the defendant, Mr Michael Crowley, specifically perform an agreement for sale and purchase.
[2] Mr Paul Gray, a director of the plaintiff, has given evidence by affidavit in which he verifies the essential elements of the plaintiff’s claim and deposes, on behalf of the plaintiff, to the belief that the defendant has no defence.
[3] The application is opposed. The defendant opposes the application on four grounds. The first two grounds raise defences to the plaintiff’s claim. The defendant accepts that, on the face of it, he is obliged to settle the agreement. It is his position, however, that he has arguable defences in that he was entitled to cancel the agreement having been induced into entering it by a misrepresentation in terms of the Contractual Remedies Act 1979, and/or that he was misled into entering it in breach of the Fair Trading Act 1986. The third and fourth grounds relate to the remedy sought. It is submitted for the defendant that specific performance is impossible and/or unfair and unconscionable in all the circumstances of the case.
Background
[4] The plaintiff is the developer of a large subdivision of industrial land known as the Port Marsden Industrial Park in Ruakaka. By agreement for sale and purchase of 19 April 2007 it agreed to sell, and the defendant agreed to buy, lot 63 of the subdivision, comprising 3085 square metres of land.
[5] The statement of claim sets out the key terms of the agreement. They are not in dispute. Relevantly, the purchase price was $509,025 plus GST, a 10 per cent deposit was required to be paid in two tranches, and the settlement date was to be seven working days after the date of issue of a search copy of the certificate of title for the lot. The deposit was paid, as required by the agreement, in two equal tranches in May and October 2007. On 23 September 2009 the defendant’s solicitor
confirmed a separate certificate of title had been issued for the lot, fixing the settlement date at 2 October 2009.
[6] There is no dispute that the defendant failed to settle the agreement on 2
October 2009 and that the situation has not been remedied despite his having been served with a settlement notice on 6 October 2009. There is no dispute that the plaintiff remains ready, willing and able to settle.
[7] Against this background I address the defendant’s grounds of opposition in turn, but first it is useful to make brief reference to the principles that govern an application of the present kind.
Legal principles on summary judgment
[8] The plaintiff applies for summary judgment under r 12.2 of the High Court
Rules. Rule 12.2 provides:
12.2 Judgment when there is no defence or when no cause of action can succeed
(1) 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.
…
[9] The legal principles applying to applications for summary judgment were succinctly expressed by the Court of Appeal in Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162 at [26]:
The principles are well settled. 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: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). 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, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980]
AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ
84 (CA)
Misrepresentation
[10] The first ground on which the defendant opposes summary judgment is misrepresentation. The defendant relies on s 7 of the Contractual Remedies Act
1979. Section 7 provides:
7 Cancellation of contract
(1)Except as otherwise expressly provided in this Act, this section shall have effect in place of the rules of the common law and of equity governing the circumstances in which a party to a contract may rescind it, or treat it as discharged, for misrepresentation or repudiation or breach.
(2)Subject to this Act, a party to a contract may cancel it if, by words or conduct, another party repudiates the contract by making it clear that he does not intend to perform his obligations under it or, as the case may be, to complete such performance.
(3) Subject to this Act, but without prejudice to subsection (2) of this section, a party to a contract may cancel it if—
(a) He has been induced to enter into it by a misrepresentation, whether innocent or fraudulent, made by or on behalf of another party to that contract; or
(b)A [term] in the contract is broken by another party to that contract; or
(c) It is clear that a [term] in the contract will be broken by another party to that contract.
(4)Where subsection (3)(a) or subsection (3)(b) or subsection (3)(c) of this section applies, a party may exercise the right to cancel if, and only if,—
(a) The parties have expressly or impliedly agreed that the truth of the representation or, as the case may require, the performance of the [term] is essential to him; or
(b)The effect of the misrepresentation or breach is, or, in the case of an anticipated breach, will be,—
(i) Substantially to reduce the benefit of the contract to the cancelling party; or
(ii) Substantially to increase the burden of the cancelling party under the contract; or
(iii) In relation to the cancelling party, to make the benefit or burden of the contract substantially different from that represented or contracted for.
(5) A party shall not be entitled to cancel the contract if, with full knowledge of the repudiation or misrepresentation or breach, he has affirmed the contract.
(6)A party who has substantially the same interest under the contract as the party whose act constitutes the repudiation, misrepresentation, or breach may cancel the contract only with the leave of the Court.
(7) The Court may, in its discretion, on application made for the purpose, grant leave under subsection (6) of this section, subject to such terms and conditions as the Court thinks fit, if it is satisfied that the granting of such leave is in the interests of justice.
[11] Counsel for the defendant submits, in terms of s 7(3) and (4) of the Act, that the defendant is entitled to cancel the agreement for sale and purchase as he was induced to enter into it by a misrepresentation, the effect of which was substantially to reduce the benefit of the contract to him.
[12] Counsel relies on a statement allegedly made by Mr Truscott, the plaintiff’s agent, at a meeting of 19 April 2007, the date on which the parties entered into the agreement. I proceed on the basis, as I must, that Mr Truscott did in fact make the statement alleged. The statement is this:
[That] the industrial land sold to the purchaser would increase in value to
$220 per square metre based on the rail link development from the deep water port at Marsden Point, to Oakleigh ….
[13] Counsel for the defendant submits the above statement constitutes a misrepresentation as to the imminent timing of establishment or construction of the rail link.
[14] The above statement is an expression of opinion as to future value. An expression of opinion is only a misrepresentation if it can be proved the speaker did not hold the opinion or that a reasonable person possessing his or her knowledge could not honestly have held it. However, if the speaker was in a better position to know the facts than the person addressed so that the latter relies on the statement, the
courts are sometimes willing to find that what appears to be a statement of opinion is a representation. In such instances the speaker is taken to imply that there are facts that justify the opinion. See John Burrows, Jeremy Finn and Stephen Todd Law of Contract in New Zealand (3rd ed, LexisNexis, Wellington, 2007) at [11.2.1](b). I accept that Mr Truscott was in such a position.
[15] In the present case, however, Mr Truscott deposes to having and continuing to hold the opinion expressed. There is no suggestion a reasonable person possessing his knowledge could not honestly have held it. There is no suggestion that there are not facts justifying the opinion. There is certainly no evidential foundation for either of these propositions. Indeed, the defendant implicitly accepts the validity of the opinion.
[16] Rather the defendant’s issue is with the timing of the rail link development. In a literal sense, of course, the statement is silent as to timing. Counsel for the defendant’s submission was, then, advanced in terms of what may be broadly understood as “misrepresentation by silence”.
[17] Generally, mere silence cannot constitute misrepresentation, a rule dating back to Fox v Mackreth (1788) 2 Cox Eq Cas 320 at 320-321. However, if silence distorts a positive representation this may amount to misrepresentation: Oakes v Turquand and Harding (1867) LR 2 HL 325, Thompson v Vincent [2001] 3 NZLR
355 (CA) at [70]. These are the “half-truth” cases. Further, in some cases where a duty to speak arises, silence can be construed as positively affirming a misconception: Dell v Beasley [1959] NZLR 89 (SC) at 95. I address counsel for the defendant’s submissions under these heads.
A half-truth
[18] Situations of half-truth involve both silence and positive representation. A half-truth is an untruth. Silence as to the other half renders what is said deceptive. The silence is said to materially distort the positive representation. Thompson v Vincent [2001] 3 NZLR 355 (CA) is an illustrative case. It involved pre-contractual negotiations for the sale and purchase of a motel during which it was represented to
the purchasers that the motel had 22-24 units. The purchasers were not told planning consent was restricted to 12 units. The Court of Appeal upheld the finding of this Court that it was a half-truth to say the complex had 22-24 units without going on to say there was planning consent for only 12 of that number. The Court held that what was said was wrong.
[19] The positive representation relied on in the present case is that the land would increase in value to $220 per square metre based on the rail link development. I am prepared to accept as arguable (perhaps barely so), for the purposes of this application for summary judgment, that this representation, considered in isolation, is rendered deceptive by the absence of qualification as to the anticipated timeframe of the development.
[20] I am prepared to accept, further, that in considering how this representation would be reasonably understood, it is to be considered alongside another representation allegedly made by Mr Truscott:
Mr Truscott explained if I purchased the land at $160m2 I would be assured of a profit on resale because the plaintiff under no circumstances would be selling the land in the future at less than $220m2.
[21] The above is similarly imprecise as to timing. Title was not issued until (and thus resale by the defendant presumably not anticipated until at least) 10 September
2009, two and a half years after the agreement for sale and purchase was entered into. I accept, though, that the above envisages a short-term timeframe. If Mr Truscott represented without qualification that the land would increase to the same value, $220 per square metre, based on the rail link development, I accept in light of the uncontroverted evidence that development is not expected to reach fruition for some 10-15 years that the absence of qualification might render the representation deceptive.
[22] I am less persuaded that its deceptive effect, reasonably understood, was to imply the rail link development was imminent. For one thing, imminence is a relative term when one is talking of a 20 kilometre long rail corridor through private land. And it is imminence on which the defendant relies. But more importantly, it is apparent that the representation was qualified. On the defendant’s own evidence, Mr
Truscott explained to him that the rail link was proposed. In the circumstances in which the representation was made, there is no evidential foundation on which it may be said the representation was materially distorted by the silence as to timing such that the rail link development could be reasonably understood to be imminent. It was accompanied by an explanation that the development was a proposal only.
[23] This conclusion is reinforced by the fact that the defendant does not depose to a belief the rail link development was imminent, much less that he understood it to be imminent from Mr Truscott’s statement. Further, if the defendant had so understood, one might have supposed he would have relied on the same in his notice of opposition. He did not. He relied on the inconsistent alleged representation that “the land had a value of $220 per m2”, in support of which he provides no evidence and on which his counsel placed no reliance at hearing. The defendant’s real concern, it seems, is that the diminution in the value of the land since April 2007 is
visited on him and not the plaintiff. Unfortunate as that may be, it does not afford him a defence.
Positive affirmation of a misconception
[24] More broadly, counsel for the defendant submits that, the defendant having told Mr Truscott of his plans to construct a factory from which to transport furniture to local and export markets, a positive obligation was imposed on Mr Truscott to disclose that development of the rail link was not anticipated for some 10 to 15 years. Thus counsel’s written submissions speak of “non-disclosure” being itself misleading, and Mr Truscott’s “permitting the [defendant] to believe the construction of the rail link was imminent”. Counsel submitted at the hearing that common sense dictated the railway was important to the defendant’s venture.
[25] Counsel for the plaintiff submits the transaction was one where caveat emptor applies. Counsel relied on Unilever New Zealand Ltd v Cerebos Gregg’s Ltd (1994)
6 TCLR 187 at 192 for the proposition that Mr Truscott was obliged to avoid falsehood but not to provide compendious explanations. Silence can only amount to misrepresentation where a false meaning is affirmatively conveyed (at 192). Unwarranted assumptions are made every day (at 195).
[26] Tacit acquiescence in the self-deception of another creates no legal liability, unless it is due to active misrepresentation or to misleading conduct: see Law of Contract in New Zealand at [11.2.1](e). As to the latter, and to a similar effect, McCarthy J in Dell v Beasley at 95 stated:
Failure to disabuse a purchaser of a misconception as to a matter not going to title would amount to a misrepresentation only where there is a duty to speak, as where the misconception has been created by the vendor’s conduct, or the course of negotiations shows that the vendor’s failure to remove the misconception amounts in effect to an adoption of its truth.
[27] I do not regard the defendant’s evidence as disclosing an arguable defence of misrepresentation on this ground. First, he has not deposed directly to the misconception on which reliance is placed in his counsel’s submission, that development of the rail link was imminent. Secondly, the course of negotiations does not, in my view, give rise to a duty to remove the misconception, to the extent it may have existed. If the port can operate in the absence of the rail link it is far from clear the defendant’s proposed factory could not have. I accept counsel for the plaintiff’s submission that the alleged obligation was in effect to volunteer commercial advice. Mr Truscott was not so obliged. Finally, to the extent a duty to remove the misconception existed, it was clearly discharged by the explanation that the rail link development was a proposal only.
[28] If the defendant assumed the rail link development was imminent, the assumption was unwarranted. As Gault J stated in Unilever New Zealand Ltd v Cerebos Gregg’s Ltd at 195, unwarranted assumptions are made every day. The principle of caveat emptor applies. The defendant could have asked Mr Truscott what the timeframe of the proposed development was. On his own evidence, he did not. The defendant could have enquired as to the timeframe during the following 10 workings days, in the due diligence period reserved for his benefit by the agreement. He did not. Indeed, he acknowledges that the true position could have been discovered with accurate due diligence. His unwarranted assumption does not afford him a defence.
Inducement
[29] Section 7(3)(a) of the Contractual Remedies Act requires that a party has been induced to enter into the contract by the misrepresentation complained of. If I am incorrect in my above conclusion that there was no misrepresentation, it is clear, on a robust approach to the defendant’s pleading and evidence, that it is unarguable that the defendant was induced to enter the agreement for sale and purchase by the alleged misrepresentation on which his counsel relies. This is principally because if he was, he would have said so earlier.
[30] This is a case the background to which is such that a robust and realistic judicial attitude is appropriate: see Bilbie Dymock Corporation Ltd v Patel (1987) 1
PRNZ 84 (CA) at 86. I turn briefly to that background. The parties entered into the agreement on 19 April 2007. The agreement was conditional on the defendant being satisfied with due diligence. He evidently was. The defendant paid, without any apparent demur, the deposit in two tranches on 18 May 2007 and 16 October 2007. The plaintiff’s solicitors confirmed on 23 September 2009 that the certificate of title had been issued. Settlement was to occur on 2 October 2009. The defendant failed to settle. A settlement notice was served on 6 October 2009.
[31] It was not until 10 November 2009, and in the following terms, that the defendant, by his solicitor, first alleged misrepresentation:
The grounds of dispute are the property can not be sold at the values represented by the vendor’s agent; Mr Truscott, that is; “sections had been on sold for $180.00 and $200.00 per square metre”.
Second, Mr Crowley has been unable to obtain finance for the property or on sell the property because of the value of the land is far below its current cost. The reasons behind the lack of demand is the rail link is not completed and the Port Company is holding more than 200 hectares of land for sale closer to the Port area.
[32] As Venning J recorded in a minute of 28 January 2010 this came at a “very late stage” in the parties’ dealings.
[33] The plaintiff commenced summary judgment proceedings on 20 November
2009. If it was to be opposed, a notice of opposition and affidavit were to be filed by
22 January 2010. No opposition was filed within time. On 28 January 2010 counsel for the defendant advised he was unable to file the notice of opposition and affidavit within time and sought until 18 February 2010 to do so. Venning J, with some reluctance, granted an adjournment. His Honour noted:
[3] The principal issue for the Court in determining whether to grant leave to the defendant to be heard and file an opposition given that he is now out of time is whether there is a reasonable prospect of an arguable defence being raised. I understand the only defence to be raised is the allegation of misrepresentation. As yet no details have been provided of that representation. Mr Thinn advises his client’s instructions are that there was a representation prior to entry into the agreement for sale and purchase as to the value of the subject land. Apparently representations to that effect were made by the real estate agent by email after the agreement for sale and purchase was concluded. But as yet counsel has not been able to locate any written representation prior to the entry into the agreement for sale and purchase.
[4] The defendant’s position does not appear strong. However, I am not prepared at this stage to deny the defendant one last opportunity to put his house in order. …
[34] His Honour extended the time for the defendant to file and serve a notice of opposition and affidavit to 12 February 2010. A notice of opposition and affidavit were filed on that date. The notice of opposition opposed the plaintiff’s application on the grounds, inter alia, that:
The Plaintiff by its agent represented at diverse times prior to the sale of the land, the land had a value of $220 per m2.
[35] The defendant does not now rely on the representation alleged in his early correspondence with the plaintiff that the land could be on sold at around $180 or
$200 per square metre. He does not rely on the email representation alleged before Venning J as to the value of the land. He does not rely on the representation alleged in his notice of opposition that the land had a value of $220 per square metre. Rather now, for the first time, he seeks to rely on the alleged representation that the value of the land would increase to $220 per square metre based on the rail link development, from which he implausibly asserts, despite recognising the development was only a proposal, he implied the development was imminent. Irrespective of whether it would be reasonably understood as such, and I find it would not be, it is inherently implausible against this background that it was this understanding that induced his entry into the agreement.
[36] The plaintiff has satisfied me the defendant has no defence to the plaintiff’s claim founded in misrepresentation.
Misleading or deceptive conduct
[37] Counsel for the defendant, in his written submissions, raised as a further ground of defence misleading or deceptive conduct under the Fair Trading Act 1986. Section 9 of that Act provides:
9 Misleading and deceptive conduct generally
No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.
[38] Counsel for the defendant submits the failure of the plaintiff to advise the defendant of the likely date of construction of the rail link constitutes an arguable defence of deceptive or misleading conduct in terms of s 9.
[39] The grounds on which this defence is advanced are in substance the grounds on which the defence of misrepresentation was advanced. While the category of misleading or deceptive conduct under s 9 arguably is wider than contractual misrepresentation, there remains a close analogy: Thompson v Vincent at [71].
[40] I do not find an arguable defence under s 9 of the Fair Trading Act. The Court of Appeal’s comments in the s 9 case of Unilever New Zealand Ltd v Cerebos Gregg’s Ltd, to which I adverted earlier, are apposite. There has been no false meaning affirmatively conveyed. The defendant’s assumption, if he did so assume, was unwarranted. Unwarranted assumptions are made every day.
Impossibility
[41] The defendant opposes the plaintiff’s application on two further grounds directed at the nature of the relief sought. His counsel submits, first, that specific performance is impossible in the absence of the defendant’s ability to pay the balance of the purchase price. His counsel submits, secondly, that specific
performance is unfair because the losses are due to factors the vendor ought to have known of and disclosed to the defendant prior to the agreement. I address each ground in turn.
[42] The relevant considerations attaching to the defence of impossibility were helpfully distilled by Associate Judge Osbourne in Ngai Tahu Property Ltd v Dykstra (2009) 10 NZCPR 734 (HC) at [12]. I respectfully adopt them:
a)A Court of equity will not require that to be done which cannot be done. Equity does not act in vain. See Equity and Trusts in New Zealand (2nd ed, 2009) at para 24.4.12, p753.
b)The defendant must establish a very substantial probability that it would not be able to comply with an order for specific performance: see the second formulation in D’Arcy-Smith v Stace (2003) 4 NZ ConvC 193,771 at 193,775, [26]. There is a consistency between this formulation and Dr Spry’s “sufficiently great likelihood” of impossibility.
c)Anything less than a very substantial probability that performance will be impossible is insufficient – anticipation of possible difficulties or even a demonstrated difficulty in finding purchase money is unlikely to constitute a defence of impossibility. In such cases and subject to any other overriding equitable considerations a Court in equity is likely to order specific performance in the ordinary manner (with or without conditions) – the defendant may then later approach the Court for a modification or variation of the order: see Spry at p128; D’Arcy-Smith v Stace above.
d)In an ordinary proceeding, pleading of impossibility is in the nature of an affirmative defence and the onus of proof rests upon the defendant as the person taking the point: Humphrey v Fairweather [1993] 3 NZLR 91.
e)On an application for summary judgment, r. 12.2(1) High Court Rules applies. The plaintiff must prove that the defendant has no arguable defence to the claim for an order for specific performance. The onus on the application remains on the plaintiff although, when the plaintiff establishes its contractual entitlement, the evidential onus shifts to the defendants to demonstrate a tenable defence: Auckett v Falvey HC Wellington CP296/86 20 August 1986
Eichelbaum J. Thus, where there is raised an impossibility defence to a summary judgment application for specific performance, the plaintiff must prove that the defendant has no arguable defence that there is a very substantial probability that the defendant will be unable to comply with an order for specific performance.
[43] In the present case, the plaintiff has established its contractual entitlement. The evidential onus is on the defendant to demonstrate a tenable defence. The
question is whether the evidence shows to the Court’s satisfaction that the plaintiff has proved that the defendant has no arguable defence that there is a very substantial probability that the defendant will be unable to comply with an order for specific performance. I answer this question in the affirmative. My reasons follow.
The defendant’s evidence
[44] The defendant in his affidavit deposes as follows:
24.The vendor in these circumstances has sought specific performance of the contract. I have commissioned a valuer’s report in respect of the property and I expect to have that report filed in this Court by 19
February 2010.
25.Once the report is procured and matched with my own financial position which I have summarised below, I do not believe it is possible to specifically perform the agreement as requested by the plaintiff.
26.The properties that I have owned, built and developed in Auckland have now been sold. I obtained equity after payment of mortgages and payment of debts associated with my business from those properties of around $150,000.
27.In August 2009 when the request was made for vendor finance I asked my family to advance that sum to me as security over those properties. The sum of $250,000.00 was the maximum my resources permitted in relation to payment for the property. It is unlikely any Bank will provide finance for the property for the shortfall between the amount in my possession and the amount required to settle.
28.This is a case where the vendor is requesting an order of specific performance where non-compliance can lead to contempt of Court and for me, there is a real possibility my lawyer tells me of going to jail for contempt of court if I am unable to settle.
The parties’ submissions
[45] Counsel for the plaintiff submits that the above test is not met:
In the present case Mr Crowley’s notice of opposition raises the defence of impossibility but his evidence is vague and leaves significant gaps in the evidence necessary to establish a very substantial probability that he would not be able to comply with an order for specific performance. He provides no statement of assets and liabilities. He provides no evidence as to his income. He provides no evidence of attempts to seek funding to settle the agreement. Instead he simply states it is “unlikely” that any bank would provide finance ….
[46] Counsel for the defendant accords this limb of the defence little emphasis. Counsel’s written submissions on the point are limited to that that payment of the sum due under the agreement, given the defendant’s circumstances and the value of the property, “may be difficult”.
Discussion
[47] I accept the submissions of counsel for the plaintiff. The defendant’s evidence does not establish an arguable defence that there is a very substantial probability that the defendant will be unable to comply with an order for specific performance. The defendant deposes to a belief that it is not possible that he specifically perform the agreement, and later asserts that it is unlikely any bank will provide the necessary finance. But the evidence is confined to this. The belief and accompanying assertion are general, unsubstantiated, and unsupported by evidence. There is no evidence of his income, no evidence beyond unsubstantiated and incomplete assertions as to his financial position, and no evidence of attempts at financing. I regard the observation of Associate Judge Osbourne in Carr v Humphries HC Dunedin CIV-2006-412-513, 8 April 2009 at [29] as apposite:
The statements in the evidence which the defendant relies upon are generalised and lacking in the sort of detail which might indicate to a Court that the defendant had substantial grounds for his assertions.
[48] I accept further the operation of the policy factors advanced by counsel for the plaintiff and encapsulated in the following from D’Arcy-Smith v Stace (2003) 4
NZ ConvC 193,771 (HC) at [30]:
There is a further matter which the plaintiffs raise before me. This is the contention that to allow the defendant’s own default here to resist specific performance of her obligations would threaten to emasculate the solemnity and sanctity of the law of contract. The parties here entered into a bargain and the courts have generally gone to some lengths to hold the parties to their bargains. The plaintiffs contend that to do otherwise would set the tone for the slippery slope of perception that contracts can be entered into without taking the necessary care and the consequences of entering into a contract escaped from just as easily. In my view there is merit in this suggestion.
[49] Finally, as to the defendant’s concerns regarding the possibility of imprisonment for contempt of court, I note the following from Pasedina (Holdings) Pty Ltd v Khouri (1977) 1 BPR 9460 (NSWSC) at 9461-9462:
As I said earlier, it was submitted that, as damages would be an adequate remedy for the plaintiff, the defendants should not be subjected to the risk of contempt proceedings if it turned out that they could not, in fact, raise the money to complete the contract. I do not think that the existence of that risk is enough. Committal for contempt is the remedy of last resort and, if the event supposed happened, it would be open to the court to leave the plaintiff to its right to execute against the defendants for all moneys due to the plaintiff including its right, with the leave of the Court if required, to enforce its lien over the subject land for the unpaid purchase money ….
[50] To this possible end, I reserve leave to either party to apply further in the event of any difficulty in the implementation of this order.
Unfairness
[51] Counsel for the defendant responsibly accepted that this ground of defence turned on favourable findings in respect of either of the grounds of misrepresentation or misleading or deceptive conduct. In respect of both of those grounds, the plaintiff has satisfied me the defendant has no defence. I find similarly on this ground. The plaintiff has satisfied me the defendant has no defence that the circumstances in which the agreement was made render it unfair to call for specific performance of the agreement.
[52] The situation in the present case, as it was in many of the cases canvassed above, is sad and unfortunate. Mr Truscott was clearly vigorously engaged in the business of selling. The defendant, by his own admission, failed to undertake due diligence in his purchase. Property values have evidently since collapsed. The extent to which this is due to non-completion of the rail link is doubtful. The defendant contends he laboured under the misapprehension the rail link was “imminent” and based his expectations as to value on this. For my part, the evidence makes clear the rail link proposal was and remains in its very early stages and I doubt the market was similarly misapprehended. But in any case, the defendant is correct that much of the burden of the recent decline in property values falls on him. Such risks inevitably attend unconditional agreements for sale and purchase where settlement follows entry into the agreement by some years.
Result
[53] I order that the defendant specifically perform the agreement for sale and purchase. Settlement under the agreement is to be made and completed within 25 working days of the date of this judgment.
[54] Leave is reserved to either party to apply further in the event of any difficulty in the implementation of this order.
[55] I order costs in favour of the plaintiff on a 2B basis together with disbursements to be fixed by the Registrar.
Associate Judge Sargisson
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