Juzwa v Hill

[2007] NZCA 222

IN THE COURT OF APPEAL OF NEW ZEALAND

CA214/05 [2007] NZCA 222

BETWEEN  EDWARD JUZWA AND HELEN JEAN RABINSKA

Appellants

AND  DAVID WILLIAM HILL AND GAIL HILL

Respondents

Hearing:         24 May 2007

Court:            O'Regan, Robertson and Ellen France JJ Counsel:     J H Olphert for Appellants

K J Crossland for Respondents

Judgment:      1 June 2007         at 4 pm

JUDGMENT OF THE COURT

A        The appeal is dismissed.

BThe  respondents  are  awarded  costs  of  $3,500  together  with  usual disbursements.

REASONS OF THE COURT

(Given by Robertson J)

EDWARD JUZWA AND HELEN JEAN RABINSKA V DAVID WILLIAM HILL AND GAIL HILL CA CA214/05  1 June 2007

Introduction

[1]      This appeal is against an order made by Courtney J requiring the specific performance of a Sale and Purchase Agreement of a property in Taupo.

[2]      A raft of issues were traversed in the grounds of appeal, but at the hearing the critical point was whether the appellants were estopped from enforcing the strict terms of the agreement as to payment of the final instalment of the purchase price. The Judge found estoppel applied and the appellants were not therefore permitted to avoid the agreement  for non-payment  of the instalment  and sell the property to another party.  She ordered the appellants to perform the agreement and transfer the property to the respondents.  The appellants say she erred in doing so.

The factual context

[3]      Mr Juzwa and Ms Rabinska (the appellants), as well as Mr and Mrs Hill (the respondents), originally lived in the United Kingdom.   There was a distant relationship between Ms Rabinska and Mrs Hill.

[4]      The  appellants  emigrated  to  New  Zealand  and  acquired  a  property  near Taupo.  They were visited there on two occasions by Mr and Mrs Hill.  During the later visit, the four agreed in principle that the Hills would purchase the house in which the appellants were residing for $350,000 with payment to be made by instalments.  The appellants intended to construct a new house on another part of the property they owned financed through the payments received.

[5]      Consistent with the relationship which existed between the four, they used the same lawyer – Mr Brian Elliott.   A written agreement was drawn up, the key terms of which were:

(a)      purchase price $350,000;

(b)      deposit of $150,000 to be paid on the execution of the agreement;

(c)      $100,000 to be paid six months after the date of agreement;

(d)      a further $100,000 twelve months from the date of the agreement; (e)         The balance (if any) upon possession; and

(f)       Clause  16.3  of  the  agreement  provided:  “If  settlement  of  this transaction has not occurred by 31 December 2003 (or such further time  as  the  parties  may  mutually  agree  upon  in  writing)  this agreement shall be deemed to have been avoided and the Vendors shall immediately place the property upon the market for sale”.  The vendors  were  to  reimburse  the  Hills  the  sums  they  had  paid  on account of their purchase from the proceeds of the subsequent sale.

[6]      Prior to signing the contract, Mrs Hill expressed to Mr Juzwa her concern with the timeframe for instalments and in particular the date of the last instalment. The Hills were not sure that they would be able to settle the sale of their own home by that time and there was a question of their getting permanent residency to live in New  Zealand.    Mr Juzwa told  Mrs  Hill that  the  appellants  would  not  hold  the respondents to the exact wording of the contract as regards the final payment having to be paid by a particular date.

[7]      In the High Court, Mr Juzwa denied this conversation but Courtney J found the assurance had been given and noted at [18]:

It is clear that the main attraction for both parties in the form of the contract was the flexibility it gave them to plan what they would do without having to borrow.

[8]      The written agreement was signed on 1 November 2002.   The deposit of

$150,000 was paid on 18 December 2002.  No change was made to the form of the agreement to reflect the assurance that had been given by Mr Juzwa.

[9]      In January 2003 Ms Rabinska was diagnosed with cancer.  She immediately ceased work.   Mr Juzwa later stopped work.   Not surprisingly, they began to face some financial liquidity difficulties.

[10]     The second instalment which was due (in terms of the contract) on 1 May

2003 was not paid until 29 August  2003.   No  issue  was  made  of the  delay in payment.

[11]     The final instalment was not paid at the end of 2003.   Settlement did not occur before 31 December 2003.

[12]     There was some controversial evidence in the High Court about exactly what transpired between the parties in January,  including allegations of fabrication of evidence by Mr Juzwa which Courtney J did not find it necessary to determine.

[13]     It was, however, common ground that on 12 January 2004 Mr Juzwa rang the Hills (who were still living in England) and said that if they did not make the final payment immediately he would sell the house to someone else.  On 29 January 2004 he rang again and told the Hills he had sold the house to his brother.

[14]     Courtney  J  found  that  the  Hills  were  entitled  to  rely  on  Mr Juzwa’s assurances regarding the flexibility of the date upon which the final instalments had to be paid and that Mr Juzwa and Ms Rabinska were estopped from enforcing the black letter words of the contract in that regard.  The Judge accordingly granted the Hills an order for specific performance of the Sale and Purchase Agreement within defined time parameters.

Did the Hills rely on the appellants’ assurances?

[15]     Equitable estoppel operates to prevent a party from denying an expectation that it had raised where to do so would be unconscionable.  In Goldstar Insurance Co Ltd v Gaunt [1998] 3 NZLR 80 at 86 this Court stated:

[B]efore judgment  can  be given  against  a  defendant  on  the  grounds  of estoppel, some action, or representation, or omission to act, must have been carried out by, or on behalf of, that defendant causing the plaintiff to have acted in a manner causing loss.

[16]     Mr  Olphert  submitted  that  the  respondents  did  not  in  fact  rely  on  the assurance.  He argued that the respondents had the opportunity to alter the contract

as to the timing of the final payment prior to signing and they did not do so.  He also asserted that it was unreasonable to expect non-enforcement of the date of the final payment  because  the  instalments  were  required  to  fund  the  building  of  the appellants’ new house and the respondents knew that Ms Rabinska had cancer and was in desperate need of money.

[17]     Mr Crossland did not argue with the legal analysis, but submitted that these arguments were merely challenges at an appellate level of factual findings which were available.

[18]     Respondents’  counsel  relied  on  Rae  v  International  Insurance  Brokers

(Nelson Marlborough) Ltd [1998] 3 NZLR 190 where this Court said at 198:

Any tendency or wish to engage in a general factual retrial must be firmly resisted.   This Court will not reverse a factual finding unless compelling grounds are shown for doing so.

[19]     In the present case there was ample evidence to support the Judge’s finding that the respondents relied on the assurance given by Mr Juzwa.  This included:

(a)      Mrs  Hill  rang  the  solicitor,  Mr Elliott,  on  25  September  2002  to discuss  her  concerns  regarding  the  timing  of  the  final  payment. Mr Elliott then spoke to  Mr Juzwa.   According to Mr Elliott’s file note, Mr Juzwa appeared to agree to flexibility.   The Judge held on the evidence that, had the appellants not given such assurance, the respondents would have insisted that the contract be re-drafted.

(b)      All  of  the  payments  were  made  late  and  the  appellants  did  not complain.   Payment dates were negotiated between the parties.   For example, Mrs Hill stated in an email to Mr Elliott  dated 2 August

2003:

With  regards  to  the  second  payment,  we  discussed  with [Mr Juzwa] if he needed it and he confessed he was behind schedule so we agreed mid-August was acceptable.  We are in the process of gathering the money so that we can transfer it within the next couple of weeks.

(c)      Evidence that the respondents were in a position to be able to pay on time (they could have raised a loan) had they thought it was required.

[20]     We find no basis for interfering with the finding of fact by Courtney J that the Hills received advice from the appellants that the strict timetable requirements would not be enforced against them.  In the informal environment which existed between the parties there was no need to alter the words of the contractual document.   The document had been prepared and was in the parties’ hands, although unsigned, when the assurance was given.  It was clearly of pivotal importance to the Hills when they subsequently signed up to the arrangement.

[21]     Mr Olphert directed us to some parts of the evidence suggesting that there had not even been reliance by the Hills upon the assurance which was given so that an estoppel could not arise.  It is unnecessary for us to rehearse the detail.  Such an appreciation  is not  available  if the evidence  is read  as  a  whole  and  within  the informal environment.

[22]     It is to be remembered that, even after the highlighting of a difference of opinion and appreciation, the Hills moved in and stayed with the appellants in the house which is the subject of this controversy for more than six weeks after their arrival.  This was after they had sought independent legal advice and confirmed their position.  It would be unrealistic to focus on a few disparate comments and suggest that there was another scenario available.

[23]     Equally  we  are  satisfied  there  was  proper  evidence  for  Courtney  J  to conclude that it was reasonable for the Hills to rely on the assurance of flexibility in relation to the final payment.  Among the relevant factors were:

(a)      the  appellants  had  not  strictly  enforced  times  for  the  previous payments;

(b)      at the time the assurance was given and the contract was signed the appellants were not under any financial constraints; and

(c)      the parties were distantly related and never operated as strict arm’s length dealers.

[24]     We find no substance in the assertion that there was no  proper basis for finding the appellants were estopped.

Did the assurance have to be in writing?

[25]     Section 2 of the Contracts Enforcement Act 1956 provides:

2        Proof of contracts relating to land and to guarantees

(1)      This section applies to -

(a)       Every contract for the sale of land

…

(2)       No contract to which this section applies shall be enforceable by action unless the contract or some memorandum or note thereof is in writing and is signed by the party to be charged therewith or by some other person lawfully authorised by him.

[26]     Mr  Olphert  submitted  that  the  dates  for  the  various  payments  were fundamental to the contract.  Any change altered the core structure of the contract and must be viewed as a variation rather than as a waiver:  Watson v Healy Lands Ltd [1965] NZLR 511 at 513 (SC). Counsel submitted that the assurance operated as a variation of the contract and therefore was not enforceable as it was not in writing: Contracts Enforcement Act, s 2.

[27]     We do not agree.  The Judge was entitled to decide this case on the basis of estoppel.  Estoppel operates to enforce a promise made but which is not a term of the contract.   The assurance that the stipulated time for payment need not be strictly adhered to did not need to be viewed as a variation.

[28]     Estoppel has  been applied  to  variations  in the  timing  of payment  in  the context of sale of goods:  see Charles Rickards Ltd v Oppenheim [1950] 1 KB 616 (CA). Estoppel can have application in the context of the sale of land.

[29]     In this case the parties complied with  the  terms  of s 2  of the  Contracts

Enforcement Act in the Agreement for Sale and Purchase which they completed.

[30]     Section 16.3 set a date for settlement but included a proviso that there could be flexibility or accommodation about this if the parties mutually agreed in writing.

[31]     We concur with the conclusion of Courtney J that the assurance given was a commitment   made   by  the  appellants  to  the  Hills  that,   notwithstanding   the requirement that an alteration of settlement date should be mutually agreed upon in writing, the appellants assured the respondents that would not be necessary.

[32]     It does not contravene the statutory requirement for the parties to do that because there was no contractual obligation.  It was a pivotal concession which went to the heart of the contractual arrangement subsequently entered into between them.

[33]     In light of the latitude which had existed in respect of the earlier payments for which finite dates were provided (but not adhered to without any complaint), the relationship between the parties and the various imponderables which existed on both sides of the transaction, there was nothing unreasonable or improper about the arrangement.  Equity was available to ensure compliance with the assurance given.

[34]     The settlement and the final payment could be not postponed forever.  In late January 2004 it was anticipated that payment could be made within some weeks. After the assertion that there had been a subsequent sale to Mr Juzwa’s brother (and the Hills were in the process of physically moving to New Zealand) the outstanding matters appear to  have gone  into  litigation  mode without  attention to  means of resolving mutual problems within a family.   There is no evidence that the balance owing was tendered, or that there was an offer to repay to the Hills the amount they had paid.  Nothing is made of these omissions in the case.

Result

[35]     We are satisfied that, on the evidence, it was open to the Judge to determine that the assurance had been given and was reasonably relied upon.   This did not

infringe the statutory requirements for the disposal of an interest in land to be in writing.

Conclusion

[36]     The appeal is dismissed.

[37]     The  respondents  are  entitled  to  costs  of  $3,500  together  with  usual disbursements.

Solicitors:

Olphert Sandford, Rotorua, for Appellants
Stace Hammond, Hamilton, for Respondents