Johnstone v R B Road 391 Ltd - [2011] NZCA 393

IN THE COURT OF APPEAL OF NEW ZEALAND

CA493/2010

CA430/2011

[2011] NZCA 393

BETWEEN MALCOLM ALEXANDER JOHNSTONE, HEATHER PATRICIA JOHNSTONE AND HARTS GAULD TRUSTEES LIMITED (AS TRUSTEES OF THE JOHNSTONE INVESTMENT TRUST) AND JMAT HOLDINGS LIMITED
Appellants

AND R B ROAD 391 LIMITED
First Respondent

AND HESKETH HENRY
Second Respondent

Hearing: 27 July 2011

Court: O'Regan P, Heath and Lang JJ

Counsel: G J Kohler for Appellants
A Sherlock and N Penman-Chambers for First Respondent
No appearance by or on behalf of Second Respondent

Judgment: 17 August 2011 at 11.30 am

JUDGMENT OF THE COURT

AR B Road’s application for leave to adduce additional evidence is granted.
BThe appeals against the liability and quantum judgments of 6 July 2010 and 28 June 2011 are allowed. The orders made by the High Court on 28 June 2011 are set aside.

C In lieu of the orders made in the High Court:

(a)The application for summary judgment on the deposit made by the Johnstone interests in CIV-2009-404-2126 is dismissed.
(b)R B Road’s application for summary judgment for liability and damages in CIV-2009-404-7048 for wrongful cancellation of the agreement is dismissed.
(c)Both CIV-2009-404-2126 and CIV-2009-404-7048 are remitted to the High Court for a case management conference before an Associate Judge, on a date to be fixed by the Registrar, so that timetabling directions may be made for trial.

DCosts are awarded in favour of the appellants against the first respondent, in this Court, on a Band A basis for a standard appeal, plus usual disbursements.
ECosts in the High Court are reserved, for determination after trial.

____________________________________________________________________

REASONS OF THE COURT

(Given by Heath J)

Introduction

On or about 22 April 2008, the trustees of the Johnstone Investment Trust and JMAT Holdings Ltd (the Johnstone interests) entered into an agreement to purchase a property, known as Lot 4, 391 Rosebank Road, Avondale, (Lot 4) from R B Road 391 Ltd (R B Road). The agreement contained a condition subsequent (cl 15.1) that required vendor and purchaser “both acting reasonably” to be satisfied with terms and conditions to attach to a subdivision consent to be granted by the Auckland City Council (the Council), in respect of a proposed subdivision. In determining whether one or other of the parties was “satisfied”, the clause required “the conditions of consent that the [Council] is likely or could reasonably have been anticipated to impose in giving subdivision consent”, as at the date of the agreement, to be taken into account.[1] On 25 March 2009, the Johnstone interests purported to avoid the contract on the grounds that they were not “satisfied” in terms of cl 15.1.
[1] Clause 15.1 is set out at [16] below.
Having purported to cancel the agreement, the Johnstone interests issued summary judgment proceedings in a District Court to recover the deposit paid to R B Road’s solicitors, Hesketh Henry. Not long afterwards, R B Road issued its own summary judgment proceedings in the High Court, in which it sought specific performance of the agreement,…

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.

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Details

Case: [2011] NZCA 393
Decision Date: 17 August 2011

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard appeals from the High Court's judgments in two proceedings between the Johnstone interests and R B Road 391 Ltd, a property developer, concerning the sale and purchase of Lot 4, 391 Rosebank Road, Avondale. The High Court had entered judgment in favour of R B Road, awarding damages for the wrongful cancellation of the contract for sale and purchase. The Johnstone interests appealed both the liability and quantum judgments. R B Road applied for leave to adduce new evidence on appeal, in the form of an affidavit from a property valuer and adviser, which was granted. The Court of Appeal found that the High Court had erred in granting summary judgment to R B Road and set aside both judgments. The Court found that the Johnstone interests had raised sufficient evidence to deny R B Road's claim for summary judgment on liability. The case is remitted to the High Court for a case management conference before an Associate Judge to set timetabling directions for trial. Costs are awarded to the Johnstone interests in this Court on a Band A basis for a standard appeal, plus usual disbursements. Costs in the High Court are reserved, for determination after trial.

Orders