Laidlaw v Parsonage

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IN THE SUPREME COURT OF NEW ZEALAND
SC 67/2009
[2009] NZSC 98

BETWEENJOHN CARR LAIDLAW AND ANOR

Applicants

ANDGEOFFREY FRANCIS PARSONAGE AND ANOR

Respondents

Court:Elias CJ, Blanchard and McGrath JJ
Counsel:G D R Shand for Applicants

K W Berman for Respondents

Judgment:21 September 2009

JUDGMENT OF THE COURT

The application for leave to appeal is dismissed with costs of $2,500 payable to the respondents.

REASONS
[1]       The single point on this proposed appeal is whether the Court of Appeal correctly concluded that the description of a purchaser in an agreement for sale and purchase as “X and/or nominee” is sufficient to bring the nominee within s 4 of the Contracts (Privity) Act 1982 with the consequence that the nominee can enforce the contract under s 8 of that Act. We are declining leave because the proposed argument for the applicant has no prospect of succeeding. The reasoning of the Court of Appeal is entirely convincing. We agree with that Court that statements to the contrary in the first of the cases under the Act to reach the Court of Appeal, Field v Fitton[1] are wrong. That has been the view almost unanimously taken in subsequent cases both at High Court and Court of Appeal level and such criticisms as have been made of it are unconvincing.
[1] [1988] 1 NZLR 482.
[2]       A nominee fits easily within the requirement in s 4 that the contractual promise must confer or purport to confer a benefit on a person “designated by … description”, particularly when the section goes on to say that the person need not be in existence at the time when the contract is made.
[3]       The very purpose of a nominee provision is to enable the nominee to take the benefit of the contract by enforcing it (as permitted by s 8), while at the same time leaving the vendor with the protection of the continuing liability of the purchaser if the nominee proves unwilling to complete. A designation by description requires no more than a sufficient identification of the person who may take the benefit. There is no good reason why that person should not be identified by the nomination of the purchaser. Identification by a third party or by the occurrence independently of an event or by some other particular means is not required by s 4.
[4]       The law on this point in New Zealand has been satisfactorily settled by the decision below.
Solicitors:
Grimshaw & Co, Auckland for Applicants
Daniel Overton & Goulding, Auckland for Respondents

CaseChat Overview and Summary

In the Supreme Court of New Zealand, the case of Laidlaw v Parsonage was brought before the Court to address the interpretation of the Contracts (Privity) Act 1982. The applicants, John Carr Laidlaw and Anor, sought leave to appeal a decision made by the Court of Appeal, which held that the description of a purchaser in a sale and purchase agreement as "X and/or nominee" was sufficient to include the nominee within the scope of section 4 of the Act. This inclusion would allow the nominee to enforce the contract under section 8 of the Act. The respondents, Geoffrey Francis Parsonage and ANOR, opposed the application for leave to appeal. The Court was tasked with determining whether the Court of Appeal's interpretation of the Act was correct and whether the proposed argument for the applicants had any chance of success.

The primary legal issue the Court had to address was the interpretation of the phrase "designated by...description" in section 4 of the Contracts (Privity) Act 1982. The applicants argued that the Court of Appeal had erred by following a previous case, Field v Fitton, which had suggested that a description in the contract was not sufficient to include a nominee within the Act's provisions. The Court had to decide whether the use of a nominee, as designated by the purchaser, met the criteria set out in section 4 of the Act and if the reasoning of the Court of Appeal was consistent with the law on this matter. The Court had to consider whether the description of the purchaser as "X and/or nominee" adequately identified the nominee as a person who could benefit from the contract.

The Supreme Court found that the Court of Appeal's reasoning was sound and that the proposed argument for the applicants had no prospect of succeeding. The Court agreed with the Court of Appeal's conclusion that the use of a nominee, as described by the purchaser, fell within the definition of a person designated by description in section 4 of the Act. The Court held that the purpose of a nominee provision was to allow the nominee to enforce the contract, while also providing the vendor with the protection of the purchaser's liability. The Court found that there was no requirement for the nominee to be identified by a third party or by some other particular means, and that the description provided by the purchaser was sufficient. The Court held that the law on this point in New Zealand had been satisfactorily settled by the Court of Appeal's decision.

The Supreme Court dismissed the application for leave to appeal and ordered the applicants to pay costs of $2,500 to the respondents. This decision confirmed the interpretation of the Contracts (Privity) Act 1982 as applied by the Court of Appeal and upheld the view that a nominee, as designated by the purchaser, could be included within the scope of the Act.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established