Land Trust Limited v Wam Property Limited
[2019] NZHC 2292
•12 September 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-1014
[2019] NZHC 2292
BETWEEN LAND TRUST LIMITED
First Plaintiff
STEPHEN ROBERT KELLY AND CITILOFTS (TRUSTEE) LIMITED AS
TRUSTEES OF THE 44 KEMPTHORNE TRUST
Second PlaintiffsAND
WAM PROPERTY LIMITED
Defendant
Hearing: 9 September 2019 Counsel:
M Locke for Plaintiffs
D K Wilson for Defendant
Judgment:
12 September 2019
JUDGMENT OF WHATA J
This judgment was delivered by me on 12 September 2019 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date: ………………………….
Solicitors: Ponsonby Law, Auckland
Whaley Garnett, Auckland
LAND TRUST LIMITED v WAM PROPERTY LIMITED [2019] NZHC 2292 [12 September 2019]
[1] Land Trust Limited (LTL) and Wam Property Limited (WPL) entered into an agreement for the sale and purchase of a property. A deposit was paid. The settlement date was extended. LTL, the purchaser, did not settle on time. WPL cancelled the agreement. It seeks declarations that:
(a)it has validly cancelled the agreement; and
(b)it is entitled to forfeit the deposit of $600,000.
Procedure
[2] LTL’s corresponding claim and defence were struck out.1 Its application for stay of this matter was declined.2 It has an appeal against that decision to be heard in October. WPL has agreed to hold onto the deposit pending the outcome of the appeal. Mr Locke appeared for LTL (and its nominee) to register a protest to this matter being heard, but otherwise did not seek to be heard. He said, in short, he wanted to keep his powder dry.
Background
[3] LTL and WPL entered into a sale and purchase agreement on 19 June 2015 (the agreement) for the sale and purchase of a property at 26 Randolph Street and 9 Karaka Street, Eden Terrace (the property). The purchase price was $6,018,000. LTL nominated Stephen Robert Kelly and Citilofts (Trustee) Limited as trustees of the 44 Kempthorne Trust (the Trust), to be purchasers under the agreement.
[4] On 18 November 2015, the terms of the agreement were varied in the following respects:
(a)The date for settlement of the agreement was extended to 29 February 2016; and
1 Land Trust Limited v Wam Property Limited HC Auckland CIV-2017-404-1014, 23 August 2019.
2 Land Trust Limited v Wam Property Limited HC Auckland CIV-2017-404-1014, 30 August 2019 and Land Trust Limited v Wam Property Limited CA425/2019, 5 September 2019.
(b)A deposit of $600,000 was to be paid by payments of $400,000 on 8 November 2015 and $200,000 on 22 December 2015.
[5] LTL and the Trust failed to make payment of the deposit in terms of the varied agreement, but they did pay a deposit totalling $600,025 by the following payments:
(a)$2,000 paid on 23 September 2015;
(b)$400,000 paid on 10 December 2015;
(c)$198,000 paid on 13 January 2016; and
(d) $25,000 paid on 17 March 2016.
[6] LTL did not settle the purchase of the property pursuant to the agreement on 29 February 2016. LTL claims that WPL was not able to complete a transfer of the property as represented. The key representation relied on was that there were 46 useable carparks on the property.
[7] On 1 March 2016, WPL served a settlement notice on LTL, pursuant to cl 10 of the agreement. This notice required the plaintiffs to settle the purchase amount under the agreement within twelve working days from the date of service of the notice. LTL and the Trust did not settle the purchase but deny that they were in default.
[8] WPL claims that, by an addendum to the agreement dated 12 April 2016, it undertook not to exercise its rights under the settlement notice before 5.00 pm on 10 May 2016, and that LTL and the Trust:
(a)acknowledged that WPL was ready, willing and able to settle and had been since 29 February 2016;
(b)accepted the validity of WPL’s settlement notice;
(c)accepted WPL had discharged its obligations in connection with the termination notices provided to tenants by WPL; and
(d)accepted that the payment which LTL and the Trust made of $25,000 on 17 March 2016 was in addition to all amounts owed under the agreement for sale and purchase.
[9] As at 23 June 2016, LTL and the Trust had not attended to the payment of the amount due under the settlement notice and had not settled their purchase under the agreement. LTL and the Trust, however, say that WPL was still not able to complete transfer because 46 useable carparks were not available.
[10] By letter dated 23 June 2016, WPL purported to cancel the agreement pursuant to cl 10. WPL has, however, given a written undertaking to the solicitors for LTL and the Trust to hold the deposit of $600,000 pending determination of the substantive claim in the proceedings.
The evidence
[11] WPL’s version of events is supported by evidence of Warren Dale De France, a director of WPL.
LTL’s claim and WPL’s counterclaim
[12] LTL and the Trust commenced a claim against WPL for misrepresentation, breach of warranty and for wrongful cancellation of the agreement. The nub of their complaint is that WPL misrepresented the existence of legal vehicle access to 46 carparks. There is no evidence before me to support this claim.
[13]WPL, by way of counterclaim to LTL’s claim, seeks:
(a)a declaration that it has validly cancelled the agreement; and
(b)a declaration that WPL is entitled to forfeit the deposit of $600,000.
[14] WPL also sought the sum of $76,125. This sum comprises the loss WPL made on the resale of the property (at $1.5m), the real estate agent’s commission on the resale of $158,125, less the deposit already forfeited. For present purposes, it does not seek this relief at this stage.
Submissions by WPL
[15] Mr Wilson, former counsel for WPL, submits that LTL and the Trust’s liability in respect of the deposited sum is effectively affirmed in the addendum to the agreement for sale and purchase – see [8] above. He says that notwithstanding the extension of time to settle, LTL and the Trust did not settle and WPL cancelled the agreement by cancellation notice on 23 June 2016.
[16] Mr Wilson also notes that Mr Kelly, the sole director of LTL, was made bankrupt in October 2017 and that the Trust is currently removed from the Companies Register. A replacement trustee, Landgro Limited, is currently in receivership and is no longer a trustee. The only party therefore that judgment can be made against is LTL.
[17] Mr Wilson identifies one possible fish hook, namely, the $25,000 which was said to be in addition to all other monies owned under the agreement. He says the status of the $25,000 is unclear. He submits, however, that cl 10.4 of the agreement clearly states that the vendor on cancellation, after non-compliance with a settlement notice, may forfeit and retain the deposit paid by the purchaser but not exceeding in all 10 per cent of the purchase price.
Assessment
[18] The parties reached agreement for the sale and purchase of the property. The purchase price was $6,018,000. A deposit of $600,000 was paid. The time for settlement was extended by agreement. The addendum Mr Wilson referred to makes clear that LTL and the Trust accepted that WPL had done everything necessary to complete settlement, including the giving of a settlement notice. LTL admit in their statement of defence that they have failed to settle, but that the settlement notice was invalid because WPM was not ready, willing and able to settle in terms of the agreement, namely that there would be 46 usable carparks on the property with access to it.
[19]Clause 10.4(1) states:
If the purchaser does not comply with the terms of the settlement notice served by the vendor then, subject to subclause 10.1(3):
(1)Without prejudice to any other rights or remedies available to the vendor at law or in equity the vendor may:
(a)sue the purchaser for specific performance; or
(b)cancel this agreement by notice and pursue either or both of the following remedies namely:
(i)forfeit and retain for the vendor’s own benefit the deposit paid by the purchaser, but not exceeding in all 10% of the purchase price; and/or
(ii)sue the purchaser for damages.
[20] Clause 10.4(1)(b)(i) is plainly engaged on the uncontested facts. As it was entitled to do, WPL elected to cancel the agreement and to forfeit and retain the deposit for its own benefit.3 LTL’s foreshadowed defence is based on an alleged misrepresentation about the car parks. Vendor’s misrepresentation provides a proper basis for avoiding a vendor’s cl 10.1 remedy.4 But there is no evidence to support either the existence of a representation or the failure to meet it.
[21] Accordingly, the declarations sought are made. The damages claim is adjourned pending the outcome of the decision of the Court of Appeal. There shall be an order for costs in favour of WPL. Quantum will be fixed by agreement or, if there is no agreement, submissions on quantum are to be filed within ten working days following the decision of the Court of Appeal on the stay appeal.
3 As noted by Elizabeth Toomey New Zealand Land Law (Thomson Reuters, Wellington, 2017) at 13.25.05(1).
4 See discussion in Toomey at 13.25.05(6). See also discussion in Noble Investments Ltd v Keenan (2005) 6 NZCPR 433 (CA) and Kumar v Station Properties [2015] NZSC 34 dealing with readiness to settle on agreed terms.