La Rosa v MacEnnovy Trust Ltd HC Auckland CIV 2009-404-53
[2010] NZHC 1538
•26 August 2010
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2009-084-000053
BETWEEN SUSAN LA ROSA AND IVAN LETICA Plaintiffs
ANDMACENNOVY TRUST LIMITED Defendant
Hearing: 2 February 2010
Appearances: C Orton for plaintiffs
D Beard for defendant
Judgment: 26 August 2010 at 12:30pm
JUDGMENT OF ASSOCIATE JUDGE ABBOTT
This judgment was delivered by me on 26 August 2010 at 12:30pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:
Corban Revell, PO Box 21 180, Waitakere City 0650 for plaintiffsMacky Roberton, PO Box 37622, Auckland 1151 for defendant
LA ROSA & ANOR V MACENNOVY TRUST LIMITED HC AK CIV 2009-084-000053 26 August 2010
[1] This proceeding concerns a dispute over the cancellation of an agreement for sale and purchase of an apartment. The plaintiffs agreed to buy the apartment from the defendant. The agreement was conditional on the plaintiffs being satisfied with a due diligence investigation. The plaintiffs say they were not satisfied. They cancelled the agreement and now seek summary judgment for the return of their deposit.
[2] The defendant says that the matter is not suitable for summary judgment. It says that there are matters of fact to be investigated as to whether the plaintiffs were entitled to cancel under the due diligence clause. It also says that it has other arguable defences.
Background
[3] The defendant, at the material times, was the owner and developer of a residential property at 8A Crown Lane, Remuera (the property), being developed as part of a five unit development.
[4] The plaintiffs and the defendant entered into a written agreement for sale and purchase of the property on 31 August 2009. It is not clear from the copies of the agreement for sale and purchase produced whether the agreed price was $1,610,000 or $1,600,000 (two cover pages for the agreement are produced, with these different amounts shown), but nothing turns on this.
[5] The agreement was drawn up on the standard form of the Real Estate Institute of New Zealand/Auckland District Law Society (8th edition 2006(2)). It provided for payment of a deposit of $165,000 and contained the following special conditions relevant to this application:
16.1 Notwithstanding any other provision contained in this agreement the deposit shall be paid to the vendors solicitor to be held as stakeholder and shall not be disbursed until settlement is completed.
16.2 In the event this agreement is cancelled in accordance with its terms then except in the event of default by the purchaser, the full deposit shall be
immediately refunded to the purchaser without deduction. The refund of the deposit in accordance with this clause shall be in addition to any other rights or remedies the purchaser may have.
17. This agreement is subject to the purchaser being satisfied with a due diligence investigation to be carried out by the purchaser in respect such aspects of the property that the purchaser deems relevant. In the event the Purchaser [sic] is not satisfied with any aspect of the due diligence investigation then the purchaser may cancel this agreement by notice in writing to the vendor and the purchaser shall not be obliged to give reasons for such cancellation and/or non-satisfaction of this condition. The date for the satisfaction of this condition shall be ... 4 September 2009. This condition is inserted for the sole benefit of the purchaser.
[6] The plaintiffs paid the deposit of $165,000.
[7] On 3 September 2009, the day before the due diligence clause was due to be satisfied, the plaintiffs’ solicitors wrote to the defendant’s solicitors and advised that the plaintiffs had certain issues about the agreement. They requested an extension of the date for advising satisfaction of clause 17 until 11 September 2009.
[8] The following day, before receiving a response to the request for an extension, the plaintiffs’ solicitor wrote again, advising that notwithstanding their concerns the plaintiffs would confirm the due diligence clause was satisfied if the defendant agreed to a reduction in the purchase price to $1,550,000. The defendant did not agree. After being advised that the defendant would not reduce the purchase price, the plaintiffs’ solicitors again wrote to the defendant’s solicitors requesting an extension of the date under clause 17 and confirmation that another condition was satisfied. The solicitor for the defendant returned the request, endorsed in handwriting:
“Extension is granted. Clause 15 is satisfied.”
[9] Between signing the agreement and 11 September 2009, the plaintiffs undertook a number of inquiries and made various visits to the property with tradespeople. On 11 September 2009 the plaintiffs’ solicitors wrote to the defendant’s solicitors advising that
“... the due diligence condition has not been satisfied and the agreement is now at an end”.
They requested return of the deposit.
[10] The solicitors for the defendant wrote the same day to the real estate agent advising that there was a dispute, and requiring the deposit to be held until the dispute had been resolved. The plaintiffs issued this proceeding to recover the deposit. The defendant has issued a separate proceeding seeking specific performance of the agreement.
[11] The plaintiffs subsequently purchased another apartment, which purchase was settled on 25 September 2009, the same date as the purchase of 8A Crown Lane was to have settled.
The principles for summary judgment
[12] The following principles relating to the court’s approach to summary judgment, established in the leading cases of Pemberton v Chappell and Bilbie Dymock Corp v Patel[1] are relevant to this case:
[1] Pemberton v Chappell [1987] 1 NZLR 1 (CA); Bilbie Dymock Corp v Patel (1987) 1 PRNZ 84 (CA).
a) The onus is on the plaintiff seeking summary judgment to show that there is no arguable defence, and the Court must be left without any real doubt or uncertainty in the matter;
b)The Court will not hesitate to decide questions of law where appropriate;
c) The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements made in affidavits; but
d)The Court must balance caution that there not be any prejudice to a defendant with a robust and realistic attitude when called for by the facts of the case.
The competing arguments
[13] The plaintiffs seek summary judgment on the basis that clause 17 of the agreement gave them an entitlement to cancel if they were not satisfied with aspects of the transactions. They say that, in effect, the clause gave them an option until the end of the due diligence period whether or not to proceed, but in any event a right to cancel if they were not satisfied with the transaction for any reason after undertaking the due diligence investigation.
[14] The defendant challenges the plaintiffs’ interpretation of clause 17. It contends that the clause did not give the plaintiffs an unrestricted right to cancel, and that it is a matter of fact, not capable of being determined on this application, whether or not the plaintiffs had done all that was necessary to enable them to rely on the clause. They also say that they have arguable defences that the plaintiffs failed to exercise the clause within time (because there was no consideration for the extension), that the plaintiffs are in breach of an obligation to act in good faith (contending that they never intended to complete the agreement), and that the plaintiffs misrepresented that they were bona fide purchasers (giving rise to possible defences under the Contractual Remedies Act or the Fair Trading Act).
[15] The issues for determination on this application are:
a) Whether it is possible to determine whether the plaintiffs were entitled to exercise the right of cancellation under clause 17 on this application (this requires consideration of the construction of the clause);
b)Whether the defendant has arguable defences based on lack of consideration for the extension of time for compliance with clause 17, on an applied obligation to act in good faith, or on the basis of a misrepresentation as to them being bona fide purchasers.
[16] Before turning to deal with each of those matters, I need to deal with a preliminary issue over an alleged failure of the plaintiffs to comply with timetable directions for the hearing.
Preliminary issues
[17] At the start of the hearing counsel for the defendant applied for the application for summary judgment to be struck out for failure to comply with timetable directions for the exchange of synopses of argument and materials for the hearing (a case book of relevant pleadings and case authorities to be relied upon).
[18] The plaintiffs were required to file and serve their synopsis and materials by
21 January 2010. They were posted to the Court and to the solicitor for the defendant on 20 January 2010, and received by the Court on 21 January 2010. It appears that they did not reach the solicitor for the defendant before the defendant filed and served its synopsis (in accordance with the timetable) on 28 January 2010. For that reason counsel for the defendant also filed a bundle of relevant pleadings, including some further documents that had not been produced in evidence and to which counsel for the plaintiffs objected.
[19] Counsel for the plaintiffs arranged for further copies of the synopsis and the plaintiffs’ materials to be delivered to the defendant on 29 January 2010 (being the working day before the hearing) there being a three day weekend in between. Counsel argued that the defendant had been prejudiced by the late delivery of these documents in that it was unable to identify facts to which the plaintiffs were referring and identify which were in dispute, and because it had inadequate notice of the authorities and documents on which the plaintiffs were relying.
[20] I accept that the service copies of the documents were sent to the defendant at a post office box nominated by the defendant in its notice of opposition as a place for service (in accordance with r 5.44 of the High Court Rules). On this basis they would be deemed to have been served on 25 January 2010: rr 6.1(1)(a)(i) and
6.6(1)(a)(i). Equally I accept the evidence of the solicitor for the defendant that they did not arrive on the stipulated date (or indeed before the hearing).
[21] I do not regard this as a basis for striking out the application. I accept that the delay in receipt of the documents may have made the task of counsel for the defendant more difficult than it would have been, but not that the defendant was
irreparably prejudiced. I accept the advice of counsel for the plaintiffs that the defendant had been made aware, in advance of the timetable for exchange of synopses, of the plaintiffs’ view of the construction of clause 17, and the authorities on which they were relying. It is also clear from the bundle of documents that the defendant filed that it had all of the relevant pleadings. Clearly counsel for the defendant was able to prepare his synopsis before he saw the plaintiffs’ synopsis (it addressed this preliminary point, the construction of clause 17, and the defences signalled in the notice of opposition). The plaintiffs’ case was straight-forward, and clearly did not depart from the case that had earlier been advised.
[22] Counsel for the defendant invited me to find that time was of the essence in complying with the timetable. That is not an appropriate concept for procedural directions. It must always be in the power of the Court, taking into account reasons for failing to meet a timetable and balancing the interests of both sides, to grant an extension to a timetable order. After I indicated this view, counsel for the defendant accepted that he was in a position to argue the matter that day, and the hearing proceeded.
[23] I will deal briefly with the objection taken by counsel to the plaintiffs to further documents being produced in the defendant’s bundle. The documents are records of a real estate agent’s listing of the property that the purchasers ultimately purchased. They appear to have been taken off a website. As they were arguably public records, I did not rule against them being taken into account (bearing in mind the interlocutory nature of the application), although for reasons that will be apparent I do not regard them as having any material significance.
The construction of clause 17
[24] The essential issue for determination is whether clause 17 constrains the plaintiffs in any significant way in the exercise of the right of cancellation of the agreement.
[25] Counsel for the plaintiffs submitted that the legal effect of the clause was to turn the agreement into an option for the period of the due diligence clause.[2] In the alternative, he argued that even if it was not an option the clause allowed the plaintiffs, after undertaking a due diligence investigation, to make an entirely subjective assessment as to whether or not to proceed[3].
[2] B S Developments No 12 Ltd v P B & S F Properties (2006) 7 NZCPR 603 (CA); O’Leary v Sentiero Properties Ltd (2006) 7 NZCPR 869 (CA); Prime Property Group Ltd v Amtrus Pacific Properties Ltd HC Wellington CIV 2003-485-208, 25 March 2004.
[3] Horgan v Thompson (2004) 5 NZCPR 81 (CA).
[26] Counsel for the defendant argued that the clause did not give the plaintiffs an unrestricted option to cancel. He submitted that their decision to cancel had to be reached fairly and reasonably (in other words it had to be justifiable objectively), and solely on matters arising out of the due diligence investigation. He relied on Lerner
v Schiehallion Nominees Ltd[4] in support of that proposition.
[4] Lerner v Schiehallion Nominees Ltd [2003] 2 NZLR 671.
[27] The clause in the present case is similar to a clause in an agreement for sale and purchase considered by the Court of Appeal in B S Developments No 12 Ltd v B P & S F Properties.[5] The clause in that case made the agreement conditional on the purchaser being satisfied with the property as a suitable investment at the agreed purchase price after carrying out a due diligence investigation (with certain possible matters for investigation identified). The clause was expressly stated to be for the sole benefit of the purchaser, and included the following sub clause:
14.3The parties agree that satisfaction of the condition contained in Clause 14.1 shall be at the sole and absolute discretion of the Purchaser and that if the condition is not fulfilled due to the Purchaser not being satisfied with any aspect of the property, the Purchaser shall not be obliged to state any reason for the Purchaser’s lack of satisfaction. ....
[5] B S Developments No 12 Ltd v P B & S F Properties (2006) 7 NZCPR 603 (CA); O’Leary v
Sentiero Properties Ltd (2006) 7 NZCPR 869 (CA).
[28] The Court of Appeal took the view that it was a matter of the subjective judgment of the purchaser whether or not the condition had been satisfied and referred to earlier authority that such a clause had the effect of converting the
agreement into an option to purchase, albeit one that runs on after the exercise date until the agreement is avoided:[6]
[6] At [34]-[37].
[34] Clause 14 is worded in a way which makes the satisfaction or non- satisfaction of that condition entirely a matter of the subjective judgment of the purchaser. In that sense, it is not really a condition at all, and the requirement of cl 8.7(2) that the purchaser “must do all things which may reasonably be necessary to enable a condition to be fulfilled” seems hollow. Read literally, it requires the purchaser to convince itself to be satisfied. Read realistically, it provides little room for the vendor to criticise the purchaser for failing to comply with cl 8.7(2).
[35] A contract in very similar terms to the agreement in this case (including cl 14) was considered by the High Court in Prime Property Group Limited v Amtrust Pacific Properties Limited HC WN CIV-2003-485-
208 25 March 2004. In that case both parties accepted, and the Judge concluded, that the effect of the insertion into the contract of a condition in
terms of cl 14 was to convert what, on its face, appears to be an agreement
for sale and purchase, into an option to purchase. However, for reasons which we will come to, the difference between a real option and the effective option created by agreements of the kind used in this case is that an option typically has an exercise date, and if it is not exercised by that date it lapses. In the present case the effective option keeps running until one of the parties avoids the contract. As both this case and Prime Property demonstrate, this can lead to uncertainty which could be avoided if the arrangement were documented as an option, which would better reflect the commercial realities of the situation.
....
[37] ... if the option analysis is adopted, ... in effect the vendor has allowed the purchaser to play all the cards during the due diligence period, and remains committed to a sale to the purchaser until the due diligence period has ended and the due diligence condition has not been satisfied.
[29] At about the same time as its decision in B S Developments, the Court of Appeal considered the effect of a similar clause which made an agreement for sale and purchase conditional on the purchaser being satisfied that the property was suitable for it. The clause read:[7]
...This agreement is conditional upon the purchaser being satisfied after taking such advice as the purchaser may wish that the property is in all respects suitable for the purchaser. The purchaser shall notify the vendor’s solicitor not later than 4.00pm 40 working days from the signing of this agreement by both parties.
[7] O’Leary v Sentiero Properties Ltd (2006) 7 NZCPR 869 (CA).
[30] The issue in Sentiero was that the vendor had entered into two separate agreements to sell the same property, one as a consequence of an option to purchase in a lease. Both purchasers wish to take the property. In the course of addressing the competing claims, the Court of Appeal considered whether any equitable interest had passed in the agreement containing the above clause. In the course of its discussion the Court of Appeal expressed the view that:
... that clause effectively allowed Sentiero to pull out of the contract for any reason prior to 14 July 2004.[8]
[8] At [33].
[31] The conclusion to be drawn from these cases is that an agreement can be worded so as to make satisfaction of a condition entirely a matter for the subjective determination of a purchaser. On its face, that is what the parties have done in this case with language such as:
“... the purchaser being satisfied ...”
“... such aspects of the property that the purchaser deems relevant ....” “In the event the Purchaser [sic] is not satisfied with any aspect ...”
“... the purchaser shall not be obliged to give reasons ...”
“This condition is inserted for the sole benefit of the purchaser.”
[32] Counsel for the defendant sought to meet this in two ways. First, in his written submissions he contended that it was open to the defendant to argue that a subjective interpretation was contrary to the intention of the parties entering into the contract (relying on the authority of Lerner v Schiehallion Nominees Ltd [9] and the line of cases traversed in that judgment). In the course of his oral submissions, counsel appeared to accept that Lerner did not preclude a subjective determination if
the words were sufficiently clear, and focused more on an argument that even if the clause was to be construed, in effect, as an option, it was not an unrestricted one. He argued that it was still to be confined to matters properly arising out of a due diligence investigation, and that this excluded matters known to the parties at the time of the agreement, and which could be taken to have been accepted as part of the parties’ agreement.
[9] Lerner v Schiehallion Nominees Ltd [2003] 2 NZLR 671 particularly at [31]-[38
[33] Ultimately it is a matter of interpretation of the clause in issue. To the extent that the learned judge in Lerner preferred an objective consideration to a subjective one, on the basis that a subjective interpretation would have the effect of converting an agreement into an option, the decision must now be read in light of the subsequent Court of Appeal decisions. However, I read Lerner as expressing a view on conditional clauses generally, rather than saying that the parties cannot provide, by clear words, for a subjective view. In any event, I take the view that it is a matter for the wording of the individual contract.
[34] I note that that also appears to be the view taken by the learned judge in Prime Property Group Ltd v Amtrus Pacific Properties Ltd[10] (the case to which the Court of Appeal referred in B S Developments). In that case the Court had to consider a due diligence clause in similar terms to the present.[11] The issue in that case was whether the purchaser was able to exercise rights under the clause after the date for fulfilment. Under the due diligence clause the agreement was conditional on the purchaser completing an investigation, “entirely to its satisfaction” within 20 working days. The clause was said to have been inserted for the sole benefit of the purchaser, and satisfaction of the clause was said to be at the sole and absolute discretion of the purchaser, who had no obligation to disclose any reason for non- satisfaction. The Court found[12] that the combined effect of the due diligence clause and standard clause 18.7(2) in the body of the agreement, pursuant to which the agreement ran on until cancelled, was to give the purchaser an option subject to the vendor cancelling the contract in writing.
[10] Prime Property Group Ltd v Amtrus Pacific Properties Ltd HC Wellington CIV 2003-485-208, 25 March 2004
[11] The precise clause is not quoted in the judgment but the important elements of it were set out in paragraphs [22]-[24] of the judgment.
[12] At [33].
[35] Further support for this view can be found in Horgan v Thompson.[13]
[13] Horgan v Thompson (2002) 5 NZCPR 81 at [38]-[39]
[36] This leads me to the argument that the clause (whether construed as a form of option or otherwise) nevertheless required the plaintiffs to make their judgment on matters arising out of the due diligence investigation. Counsel for the defendant argued that the matters which the plaintiffs have disclosed as having been taken into
account in making their decision were all matters either of public knowledge (registered details about the form of the Body Corporate) or were known to the plaintiffs at the time of the agreement (the toning of wooden floors and absence of blinds) and were not matters arising out of the due diligence investigation. He referred to the fact that the cost of recoating the floor and of adding blinds appeared to be more substantial than the plaintiffs had anticipated.
[37] I do not see that this argument can assist the defendant. If the clause provides for a subjective determination, without any obligation to disclose reasons (as I find it does), it is difficult to see how it can restrict the matters that the plaintiffs can take into account. However, even if this could be arguable, it does not assist the defendant in this case. In my view it goes to the very heart of a due diligence investigation that the property has the value being ascribed to it, and is likely to retain that value. In the present case this must take into account the plaintiffs’ view of that value and I have no difficulty believing that matters such as floor colouring or blinds will be a factor in that assessment. More significantly, however, I take into account that the plaintiffs were clearly uncomfortable about the fact that other units in the development had not sold, and there were concerns as to the financial viability of the defendant. These were clearly matters that were explored in the due diligence period, they were flagged by the plaintiffs as matters of concern, and it was for them to make their determination on them (irrespective of the assurances which the defendant or its agents sought to provide).
[38] Taking all of these matters into account, I find that clause 17 gave the plaintiffs the right to cancel the agreement, and that there are no further factual matters for investigation which preclude a determination of this point.
Other defences
(a) Lack of consideration for extension to due diligence period
[39] The defendant claims that it has an arguable defence on the basis that no consideration was given for extension of the due diligence period from 4 September
2009 to 11 September 2009. There is nothing in this point. First, I consider that
there was consideration for the defendant in keeping the agreement alive (otherwise it seems likely that the purchaser plaintiffs would have cancelled on 4 September
2009) The argument seems to be predicated on the basis that the agreement would have become binding had it not been extended. Prime Group Property Ltd v Amtrus Pacific Properties Ltd is an authority against that.[14] Counsel for the defendant referred me to two authorities: Cook Islands Shipping Co Ltd v Colson Builders Ltd and Minaret Resources Ltd v McLellan.[15] Neither of them assists the defendant. In Cook Islands Shipping the Court found there was no consideration because the party extending time was doing no more than it was already obliged to do. That is not the case here. The defendant was not obliged to extend time. In Minaret one of the parties attempted to vary a date unilaterally. That is not the case here.
(b) Alleged obligation to act in good faith
[14] Prime Property Group Ltd v Amtrus Pacific Properties Ltd HC Wellington CIV 2003-485-208,
25 March 2004 at [33].
[15] Cook Islands Shipping Co Ltd v Colson Builders Ltd [1975] 1 NZLR 422; Minaret Resources Ltd v
McLellan (2003) 5 NZCPR 161.
[40] Counsel for the defendant submitted that it was arguable that the plaintiffs were in breach of an obligation to act in good faith by refusing to confirm their satisfaction with clause 17 unless the defendant agreed to reduce the purchase price by $60,000. He submitted that the plaintiffs’ advice to this effect of 4 September
2009 was evidence of bad faith and unfair dealing as it established that the plaintiffs had no intention of fulfilling their existing contractual obligation. He acknowledged that there was no express term of good faith in the agreement but contended that it could be implied, relying on Allenby v Southland Building and Investment Society[16] and Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd.[17]
[16] Allenby v Southland Building and Investment Society HC Auckland CP 556/94 28 July 1995, Master Kennedy-Grant.
[17] Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd (1999) ATPR 41703, 43014.
[41] In the absence of an express term, there is no reason to imply a duty of good faith in this agreement. The Court will consider applying a duty of good faith into a contract such as a franchise agreement or agency agreement which has what has been described as a “relational character” but not into transactional agreements such
as agreement for sale and purchase of land: Walton Mountain Ltd v Apple New
Zealand Ltd; Chan v Ng.[18]
[18] Walton Mountain Ltd v Apple New Zealand Ltd (2004) 5 NZCPR 241 at [67]; Chan v Ng HC Auckland CIV-2007-404-6226, 28 March 2008 at [33]-[38].
[42] As was the case in Chan v Ng, I consider that this case does not meet the test for the test for an implied terms generally as set out in BP Refinery (Western Port) Pty Ltd v Shire of Hastings.[19] It is not necessary to give business efficacy to the parties’ agreement – they have drawn up a comprehensive agreement, and can be expected to have provided expressly for the obligation if it was intended to be part of their bargain.
[19] BP Refinery (Western Port) Pty Ltd v Shire of Hastings (1977) 16 ALR 363 at 376.
[43] The authorities to which counsel for the defendant referred me do not assist the defendant. In Allen v Southland Building Society the Court was being asked to strike out a cause of action based on an implied term. The passage on which counsel relies was a dictum that there is no legal authority that precludes the implication of an implied term. The Court had to satisfy itself in that case that there was no possible basis that the cause of action could succeed, based on the pleading. In this case the defendant has had opportunity to put forward an evidential basis for its argument. The matters raised do not assist it:
a) The plaintiffs’ offer to accept the due diligence condition was satisfied if the defendant accepted a reduced purchase price does not, of itself, indicate bad faith: it is entirely explicable in terms of the plaintiffs taking on unknown risks.
b)The real estate agent has said in evidence that one of the plaintiffs told her, after the agreement had been cancelled, that the plaintiffs had no intention of settling, or ability to settle, the agreement. This statement is strongly disputed. It does not cross the threshold of credibility. It seems more likely to be a misinterpretation of a statement made after the event. The defendant has put nothing else forward to support this. The evidence from the plaintiffs all indicates an intention and ability to proceed with the transaction if they were satisfied following their
due diligence investigation. They visited the property with tradespeople and clearly were financial able to complete the purchaser given that they settled on another apartment shortly afterwards.
c) The defendant contends that the plaintiffs were already committed to the purchase of another apartment before they entered into this agreement. As evidence for this they rely on the website materials to which I referred at the beginning the judgment, and to which the plaintiffs object. Although it is true that the material records that the plaintiffs entered into the agreement for the other apartment on
14 August 2009, that has been explained by the plaintiffs (with support from the real estate agent on that transaction) as an error in dating of the agreement, which should have been 14 September 2009 (the date was subsequently corrected). The plaintiffs have also given unequivocal evidence that they were not introduced to the other property until after they had cancelled the present agreement. In light of the clear evidence of the plaintiffs (supported by the evidence of the agent) I place no weight on the website material.
[44] The decision in Garry Rogers Motors does not take the matter any further. That case involved a franchise agreement. The comment by the Court that a term of good faith will be implied in an appropriate contract, and perhaps even in all commercial contracts, needs to be read in that context. I do not see it overriding the views expressed in Walton Mountain and Chan.
(c) Misrepresentation/misleading or deceptive conduct
[45] I deal with these matters together as they essentially involve the same allegation, namely that the plaintiffs made a pre-contractual representation that they were bona fide purchasers. The defendant’s case is that they were not. As I have already indicated, it relies on the alleged statement made by Ms La Rosa to the real estate agent after the agreement had been cancelled, (which I regard as equivocal at
best) and the website material suggested that they were already committed to the other purchase (a proposition that I have rejected on the evidence before the Court).
[46] I find that there is no credible evidence of any misrepresentation. I also consider that it is questionable whether the plaintiffs could be said to be acting in trade.
[47] In summary I find that the defendant does not have an arguable defence on any of these matters.
Decision
[48] For the reasons I have traversed in this judgment I find that the defendant does not have an arguable defence to the plaintiffs’ claim for return of their deposit. I make an order that the plaintiffs are entitled to the deposit of $165,000 currently held by Macky Roberton, Barristers and Solicitors, pending determination of this dispute. They are also entitled to the interest that has been earned on that sum since
11 September 2009.
[49] As the successful party, the plaintiffs are entitled to costs. Counsel did not address me on this aspect. In the absence of any reason to take a different view, I consider that the plaintiffs should be entitled to costs on a 2B basis together with disbursements as fixed by the Registrar. If there is any issue over costs, the plaintiffs are to file a memorandum within 15 workings days, and the defendant is to respond within a further 5 working days. I will then determine the matter on the basis of
those memoranda.
Associate Judge Abbott