Lifestyle Group Ltd v Maxwell - [2007] NZCA 290

IN THE COURT OF APPEAL OF NEW ZEALAND
CA146/06
[2007] NZCA 290
BETWEENLIFESTYLE GROUP LTD

Appellant

ANDGEORGE MAXWELL AND HELEN KIRSTEN MAXWELL

Respondents

Hearing:15 May 2007

Court:Arnold, Gendall and Harrison JJ
Counsel:G J Praat for Appellant

N Burley and J L Bagrie for Respondents

Judgment:13 July 2007 at 11 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellant must pay to the respondents costs in the sum of $6,000 plus usual disbursements. We certify for second counsel.

____________________________________________________________________
REASONS OF THE COURT
(Given by Harrison J)
Introduction
[1]       Lifestyle Group Ltd appeals with leave from a decision of Goddard J delivered in the High Court at Nelson on 21 April 2006 upholding an arbitrator’s decision that it was liable to pay contractual interest for a period of delay of more than 18 months in settling its obligations under an agreement to purchase a campground property from George and Helen Maxwell: CIV 2004-442-395.
[2]       The agreement resulted from Lifestyle’s election to exercise an option to purchase contained in a deed of lease. A separate provision of the deed, cl 47, obliged the Maxwells to install a new professionally designed sewerage/wastewater disposal system at the campground. Goddard J, reversing the arbitrator, found that the Maxwells had breached cl 47 by installing a defective system. However, she upheld the arbitrator’s decision that the provision was not a term of the agreement for sale and purchase and that the Maxwells’ breach did not justify Lifestyle’s refusal to settle on the due date.
Arbitration
[3]       On 29 September 2001 the parties entered into a deed whereby the Maxwells agreed to lease the Pakawau Beach motor camp in Golden Bay to Lifestyle for a term of three years at an annual rental of $90,000 plus GST, escalating by $5,000 annual increments to $100,000 plus GST in the third year.
[4]       Clause 47 of the deed provided:
New Wastewater Disposal System
The Landlord shall at their [sic] expense install and make operational by 1 November 2001 a new sewerage/wastewater disposal system. The system shall be professionally designed and the Landlord shall obtain a Producer Statement from the business which supplies and installs the system. Forthwith after completion of the system the Landlord shall obtain and provide to the Tenant both a Tasman Council Code Compliance Certificate and a guarantee from the installing contractor.

[5] The Maxwells engaged a specialist engineer and contractor to design and build the sewerage/wastewater disposal system, which was commissioned in January 2002. However, within a year the plant manifested operating deficiencies. It was producing unacceptable odours and causing ponding of effluent on the irrigation field. Also Lifestyle learned that the Maxwells had failed to obtain a building consent and code of compliance certificate. The parties were unable to resolve their differences over liability for rectifying the deficiencies.
[6] The parties referred this dispute to arbitration in accordance with the deed. Following a hearing in Nelson in April 2005 the arbitrator found that the Maxwells had fulfilled their obligations by engaging a…

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.

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Details

Case: [2007] NZCA 290
Decision Date: 13 July 2007

CaseChat Overview and Summary

The Court of Appeal of New Zealand was called upon to adjudicate in the case of Lifestyle Group Ltd v Maxwell. Lifestyle Group Ltd, the appellant, contested a decision of the High Court upholding an arbitrator's ruling that it was liable to pay contractual interest for a delay exceeding 18 months in settling its obligations under an agreement to purchase a campground property from George and Helen Maxwell. The agreement stemmed from Lifestyle's decision to exercise an option to purchase contained within a lease deed. The crux of the dispute involved a clause in the deed that obligated the Maxwells to install a new sewerage/wastewater disposal system at the campground. The High Court had ruled that while the Maxwells had indeed breached this clause by installing a defective system, this breach did not justify Lifestyle's refusal to settle on the due date.

The legal issues before the Court of Appeal were twofold: first, whether Clause 47, which pertained to the installation of the sewerage/wastewater disposal system, was incorporated by reference or otherwise into the agreement for sale and purchase; and second, whether the Maxwells' breach of Clause 47 constituted a failure to provide vacant possession, thereby defaulting and making them ineligible to claim interest for late settlement. The Court of Appeal found that Clause 47 was not incorporated into the agreement for sale and purchase as it was a separate term of the lease. Furthermore, the Maxwells' breaches were not of such a nature that they would justify Lifestyle's refusal to settle, as the agreement explicitly stated that breach of warranty did not defer the obligation to settle. The Court of Appeal upheld the High Court's decision, dismissing Lifestyle's appeal and affirming the Maxwells' entitlement to contractual interest for the delay in settlement.

The appeal is dismissed, and the appellant, Lifestyle Group Ltd, must pay the respondents, George and Helen Maxwell, costs in the sum of $6,000 plus usual disbursements. The Court certified for second counsel.

Orders