Hearing:	12 November 2013
Court:	Elias CJ, McGrath, William Young, Glazebrook and Arnold JJ
Counsel:	R M Kelly, K J Jarvis and S A Eckhoff for Appellants D J Goddard QC, M J Tingey and S V A East for Respondent
Judgment:	15 October 2014

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe orders of Toogood J are reinstated.
CThe respondent must pay costs of $25,000 to the appellants collectively, together with reasonable disbursements.
DThe order for costs in the Court of Appeal is quashed. Costs in that Court are to be fixed in light of this judgment.

____________________________________________________________________

REASONS

Para No
Elias CJ, McGrath, Glazebrook and Arnold JJ	[1]
William Young J	[103]

ELIAS CJ, McGRATH, GLAZEBROOK and ARNOLD JJ

(Given by Arnold J)

Table of Contents

Para No
Introduction	[1]
Section 7 of the Contractual Remedies Act 1979	[4]
Factual background	[10]
High Court and Court of Appeal decisions	[37]
Overview of arguments	[48]
Our assessment	[50]
Preliminary observations	[50]
Framework for analysis	[55]
Was Station in breach of an essential term?	[67]
(i) Certificate of practical completion	[68]
(ii) Side agreements	[76]
Basis of appellants’ refusal to complete	[95]
Decision	[102]

Introduction

Between late 2005 and early 2006, the appellants entered into agreements with the respondent, Station Properties Ltd (in liquidation and in receivership) (Station), for the purchase of units in an apartment development in Queenstown (the agreements). They claimed to have done so on the understanding that they would not be required to purchase the units, their role being simply that of underwriters facilitating the raising of funding to enable the construction of the development so that it could be on-sold to an organisation which would operate it under a brand name as serviced apartments. They were, in effect, investors who expected to receive a return on what was intended to be a relatively short-term investment.
Between the time the agreements were made and the time the development was substantially completed in mid-2008, the value of the units dropped significantly as a result of a general downturn in the property market. Station was unable to find a purchaser for the development and looked to the appellants and other purchasers to settle their transactions. The appellants refused to settle. One, Mr Selwyn, purported to cancel his agreement. Ultimately, in April 2010, Station took the view that the appellants had repudiated the agreements and cancelled them. Station then sued the appellants for damages for breach of contract, based on the resale prices achieved for the units or, in the case of the Donaldsons, on its then market value.
Station was unsuccessful in the High Court,[1] but succeeded in the Court of Appeal.[2] The…

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.

Continue reading Kumar v Station Properties Ltd

Details

AGLC: Kumar v Station Properties Ltd [2014] NZSC 146
Case: [2014] NZSC 146
Decision Date: 15 October 2014

CaseChat Overview and Summary

Vikram Kumar and Nirupamala Kumar (the Kumars) and Robert James Selwyn (Mr Selwyn) and Michael Donald and Patricia Bronwyn Donaldson (the Donaldsons) (the appellants) brought an appeal against Station Properties Ltd (in liquidation and in receivership) (Station). The appeal was against a decision of the Court of Appeal that set aside a decision of Toogood J in the High Court. The appeal was allowed and the orders of Toogood J were reinstated. The Court of Appeal's order for costs was quashed. The appellants were granted costs of $25,000. The Court of Appeal was to determine costs in light of this judgment.

The parties had entered into agreements for the purchase of units in an apartment development in Queenstown between late 2005 and early 2006. The appellants claimed to have done so on the understanding that they would not be required to purchase the units, their role being simply that of underwriters facilitating the raising of funding to enable the construction of the development. Between the time the agreements were made and the time the development was substantially completed in mid-2008, the value of the units dropped significantly as a result of a general downturn in the property market. Station was unable to find a purchaser for the development and looked to the appellants and other purchasers to settle their transactions. The appellants refused to settle. Ultimately, in April 2010, Station took the view that the appellants had repudiated the agreements and cancelled them. Station then sued the appellants for damages for breach of contract. The question on which this Court granted leave was whether Station was entitled to cancel the agreements. The Court held that the appellants were entitled to cancel the agreements as Station was in breach of essential terms of the agreements. The appellants were not required to settle their purchases.

Orders