Kawarau Village Holdings Limited v Neo
[2014] NZHC 2402
•26 September 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2012-404-007727 [2014] NZHC 2402
BETWEEN KAWARAU VILLAGE HOLDINGS
LIMITED Plaintiff
AND
LILY NEO
First DefendantSUM WENG KONG Second Defendant
ANNIE GAY SIOK LENG Third Defendant
TOH KWEE CHIN Fourth Defendant
LOH TZE LEONG and
LOW CHEE LENG as Executors of the Estate of LOW CHEE KWANG (Deceased)
Fifth Defendant
Hearing: 26 September 2014 Counsel:
T B Fitzgerald for the Plaintiff
No Appearance or, or for the DefendantsJudgment:
26 September 2014
(ORAL) JUDGMENT OF DUFFY J
Solicitors: Bell Gully, Auckland
KAWARAU VILLAGE HOLDINGS LTD v NEO and ORS [2014] NZHC 2402 [26 September 2014]
[1] This is a claim for breach of contract for failure to settle sale and purchase agreements of residential units. The plaintiff, Kawarau Village Holdings Limited, seeks judgment by way of formal proof against the second, third, fourth and fifth defendants. Counsel for the plaintiff has confirmed that the formal proof does not involve the first defendant.
[2] I have assessed the plaintiff’s claims, and I consider that it has proved the
elements of its cause of action.
Background
[3] The background to this proceeding is that Peninsular Road Limited, now in receivership and liquidation, (“PRL”), was incorporated to undertake a property development project at Kawarau Falls Station in Queenstown (“development”). The development was intended to comprise a range of accommodation options and recreational facilities, including 13 hotels and serviced apartment buildings. The development was to include a building known by the parties as the Kingston West Building.
[4] On 3 October 2006, the second and third defendants and PRL entered into an agreement for sale and purchase of unit 529 in the Kingston West Building. The purchase price was $345,000.
[5] On 6 November 2006, the fourth and fifth defendants and PRL entered into an agreement for sale and purchase of unit 606 in the same building. The purchase price was $401,000.
[6] Each sale and purchase agreement provided for the purchasers to pay a deposit of 15 per cent of the purchase price. The second and third defendants together paid a deposit of $17,250, a sum that fell short of the required 15 per cent. The fourth and fifth defendants together paid the 15 per cent deposit of $60,150.
[7] The land to be used for the development was subdivided in 2007. Melview (Kawarau Falls Station) Investments Limited (“MKFSI”) acquired title to the land to be used for, amongst others things, the Kingston West Building. PRL assigned its interests under the sale and purchase agreements to MKFSI in late 2007. On 22 October 2010, MKFSI assigned its interests under the sale and purchase agreements to the plaintiff. The plaintiff says that the defendants were notified of the assignment, first to MKFSI, and later to the plaintiff.
[8] “Settlement date” is defined in cl 1.1 of the sale and purchase agreements as
the latter of:
(a) The tenth working day after the date upon which the vendor’s solicitor has provided the purchaser’s solicitor with a copy of the certificate of practical completion; or
(b)The tenth working day after the date upon which the vendor’s solicitor has provided the purchaser’s solicitor with a search copy of the new stratus estate certificate of title for the unit.
[9] On 9 November 2011, the plaintiff provided the defendants’ solicitors with the certificate of title for units 529 and 606, and a certificate of practical completion for the Kingston West Building. Additional certificates of practical completion were provided to the defendants’ solicitors on 25 November 2011.
[10] On 7 December 2011, the plaintiff served settlement statements on the second, third, fourth and fifth defendants. The settlement statements called for settlement on 19 December 2011. The plaintiff says it was ready, willing and able to settle the purchases on the settlement date and at all times thereafter until the agreements were cancelled. The defendants failed to pay the amounts required under the agreements for sale and purchase by the settlement date.
[11] Clause 12.1 of the agreement provides that if the sale is not settled on settlement date, either party may serve on the other party a settlement notice. Under cl 12.2, the party that is served a settlement notice must settle within 12 working days from the date of service.
[12] On 20 December 2011, the plaintiff served settlement notices on the second, third, fourth and fifth defendants. The settlement notice stated that they were required to settle within 12 working days from the date of the notice. The second, third, fourth and fifth defendants failed to settle in accordance with the settlement notice.
[13] On 15 March 2012, the plaintiff gave notice to cancel the sale and purchase agreements pursuant to cl 12.3 of the agreements.
[14] In 2011, the defendants in this proceeding and other purchasers had initiated proceedings in the High Court to recover their deposits. Gilbert J ordered the plaintiffs in that proceeding to pay security for costs and, eventually, the claim was struck out in relation to the second, third, fourth and fifth defendants only. The plaintiff then commenced this separate proceeding in respect of the losses it suffered as a result of the defendants’ failure to settle.
High Court Rules
[15] The applicable rule in the High Court Rules, r 15.9, provides for formal proof for claims:
15.9 Formal proof for other claims
(1) This rule applies if, or to the extent that, the defendant does not file a statement of defence within the number of working days required by the notice of proceeding, and the plaintiff seeks judgment by default for other than a liquidated demand.
(2) The proceeding must be listed for formal proof and no notice is required to be given to the defendant.
(3) After a proceeding is listed for a formal proof hearing, no statement of defence may be filed without the leave of a Judge granted on the ground that there will or may be a miscarriage of justice if judgment
by default is entered, and on such terms as to time or otherwise as the Judge thinks just.
(4) The plaintiff must, before or at the formal proof hearing, file affidavit evidence establishing, to a Judge's satisfaction, each cause of action relied on and, if damages are sought, providing sufficient information to enable the Judge to calculate and fix the damages.
(5) If the Judge before or at the formal proof hearing considers that any deponent of an affidavit filed under subclause (4) should attend to give additional evidence, the Judge may direct accordingly and adjourn the hearing for that purpose.
[16] I am satisfied that this is an appropriate case for formal proof. I am also satisfied that the plaintiff has proved that the second, third, fourth and fifth defendants are liable in terms of the allegations made against them in the statement of claim.
Quantification of damage
[17] Regarding quantification of damage, the plaintiff seeks compensation for the difference between the purchase price under the relevant agreement and the value of the property as at the cancellation date. Since the statement of claim was filed, the plaintiff has received the deposits paid by the defendants and, accordingly, the figures claimed as damages have changed.
[18] In a memorandum dated 24 September 2014, the plaintiff refers to the evidence of Mr Schellekens, a hotel valuer, that the market value of unit 529 at cancellation date was $117,500, and the market value of unit 606 at cancellation date was $142,000. Mr Schellekens has provided two valuations. The plaintiff has elected to rely on the figures that are contained in his more conservative valuation.
[19] In respect of the second and third defendants, the plaintiff seeks judgment in the sum of $206,553.97. This is the purchase price of $345,000 minus the deposit of
$17,250, and interest of $3,696.03 minus the value of the unit at $117,500.
[20] The plaintiff seeks judgment in the sum of $184,002.78 against the fourth and fifth defendants. This is the purchase price of $401,000 minus the deposit of
$60,150, and interest of $14,847.22 minus the value of the unit at $142,000.
[21] The plaintiff then seeks penalty interest under the agreements from
19 December 2011 (settlement date) until 15 March 2012 (cancellation date). The plaintiff seeks interest under s 87 of the Judicature Act 1908 from the cancellation date until the date of judgment, and post-judgment interest pursuant to r 11.27 of the High Court Rules.
[22] The plaintiff seeks interest at the rate specified under s 87 of the Judicature Act. The current prescribed interest rate is five per cent under the Judicature (Prescribed Rate of Interest) Order 2011.
[23] I have carefully considered the evidence that the plaintiff relies upon. I am satisfied that the plaintiff is entitled to the quantified damages that it seeks, and to the interest that it seeks, both in terms of penalty interest under the agreement, and the later interest claimed under s 87 of the Judicature Act.
[24] The plaintiff has helpfully provided me with a draft judgment by default in case of an unliquidated amount. That judgment sets out the judgment sums and interest that I have entered against the second, third, fourth and fifth defendants. Accordingly, judgment is given in accordance with that draft, namely:
1. Against the second and third defendants:
(a) Judgment in the sum of $206,553.97 in respect of the cause of
action in the plaintiff’s statement of claim dated 21 December
2012:
(b)Penalty interest of $11,704.10 under cl 16.5(a) of the agreement on the sum of $324,631.58, being the balance required to complete settlement as set out in the settlement statement dated 19 December 2011, at a rate of 15 per cent
from 19 December 2011 until the cancellation date, being
15 March 2012, calculated as follows:
(i) $324,631.58 x 0.15 (i.e. 15 per cent per annum) / 365 =
$133.41 per day;
(ii) There are 88 days between 19 December 2011 and
15 March 2012;
(iii) $133.41 x 88 = $11,740.10.
(c) Interest of $26,201.22 under s 87 of the Judicature Act from the cancellation date, being 15 March 2012, until the date of judgment, being 26 September 2014, at the rate specified by s 87 of the Judicature Act 1908 and the Judicature (Prescribe Rate of Interest) Order 2001 (five per cent per year), calculated as follows:
(i) $206,553.97 x 0.05 (i.e. five per cent per annum) / 365
= $28.29 per day;
(ii) There are 926 days between 15 March 2012 and
26 September 2014;
(iii) $28.29 x 926 = $26,201.22;
(d) Post-judgment interest pursuant to r 11.27 of the High Court
Rules at the rate specified by s 87 of the Judicature Act; and
(e) Costs and disbursements as at 26 September 2014 of $7,800 as per the schedule:
2. Against the fourth and fifth defendants:
(a) Judgment in the sum of $184,002.78 in respect of the cause of
action in the plaintiff’s statement of claim dated 21 December
2012;
(b) Penalty interest of $11,874.42 under cl 16.5(a) of the agreement on the sum of $328,345.68, being the balance required to complete settlement as set out in the settlement statement dated 19 December 2011, at a rate of 15 per cent from 19 December 2011 until the cancellation date, being 15
March 2012, calculated as follows:
(i) $328,345.68 x 0.15 (i.e. 15 per cent per annum) / 365 =
$134.93 per day;
(ii) There are 88 between 19 December 2011 and 15 March
2012;
(iii) $134.93 x 88 = $11,874.42.
(c) Interest of $23,340.62 under s 87 of the Judicature Act from the cancellation date, being 15 March 2012, until the date of judgment, being 26 September 2014, at the rate specified by s 87 of the Judicature Act and the Judicature (Prescribe Rate of Interest) Order 2001 (five per cent per year) calculated as follows:
(i) $184,002.78 x 0.05 (i.e. five per cent per annum) / 365
= $25.25 per day;
(ii) There are 926 days between 15 March 2012 and
26 September 2014;
(iii) $25.20 x 926 = $23,340.62.
(d) Post-judgment interest pursuant to r 11.27 of the High Court
Rules at the rate specified by s 87 of the Judicature Act; and
(e) Costs on a 2B basis, and disbursements as at 26 September
2014 of $7,808, as per the schedule.
SCHEDULE OF COSTS and DISBURSEMENTS
Costs on a 2B basis
Step Allocated Days
Commencement of proceeding by plaintiff (item 1) 3
Sealing order or judgment (item 29) 0.2
3.2 days at a daily recovery rate of $1,990 $6,368
Disbursements
Filing fee (statement of claim and notice of proceeding)
$1,350
Filing application for judgment by default (Note: the fee for this item covers the sealing of the judgment)
$90
Total disbursements $1,440
Total costs and disbursements $7,808
Duffy J
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