Lion Residences Limited v Robert Bell Consultants Limited

[2021] NZHC 1760

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-001492

[2021] NZHC 1760

BETWEEN

LION RESIDENCES LIMITED

Plaintiff

AND

ROBERT BELL CONSULTANTS LIMITED

Defendant

Hearing:

28 April 2021

Appearances:

J Donkin for the Plaintiff

I Hutcheson for the Defendant

Judgment:

14 July 2021

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 14 July 2021 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Alexander Dorrington, Auckland Croftfield Law, Auckland

J Donkin, Auckland
I Hutcheson, Auckland

LION RESIDENCES LTD v ROBERT BELL CONSULTANTS LTD [2021] NZHC 1760 [14 July 2021]

Introduction

[1]    Lion Residences Ltd (Lion) agreed to sell Robert Bell Consultants Ltd (RBC) a commercial property in Epsom, Auckland. RBC defaulted. Lion managed to sell the property to another buyer but claims it suffered losses because of RBC’s default. Lion applies for summary judgment of its claim against RBC.

[2]    RBC says that it is not liable because it was acting as an agent only and it disclosed that fact to Lion. It also claims that Lion misrepresented the amount it had spent on the property. Because of this, and the fact that Lion resold the property, it alleges that the damages claimed by Lion are excessive, and that Lion has not suffered any loss.

[3]    To order summary judgment, I need to be satisfied that RBC has no arguable defence to Lion’s claim, meaning that there no real question to be tried. That determination turns on these issues:

(a)Did RBC inform Lion that it executed the sale and purchase agreement as an agent for an identified principal?

(b)Did Lion misrepresent the amount it spent on the property?

(c)Did Lion suffer any loss and are the damages sought excessive?

The facts

[4]    Lion was incorporated on 7 September 2015 for the sole purpose of developing a property at 2 Mountain Road, Epsom, Auckland (the Property).1 Lion had identified the Property as being suitable for an intended development. The name of the company derives from the fact that the Property was the site of Lion Breweries’ original head office.

[5]    On 30 June 2016, Lion became the registered proprietor of the Property. It invested considerable time and money progressing the development of the Property.

1 Affidavit of Gregory Charles Liggins sworn 2 December 2020 at [4].

This included working with architects, planning consultants, and construction partners to explore the best possible use of the site. Lion obtained three resource consents, including two possible developments of the site: one for a six-level mixed-use development; the other for an eleven-level mixed-use development. Lion obtained the second resource consent after changes to the Auckland Unitary Plan permitted a larger building to be constructed.

[6]    Ultimately, Lion decided not to pursue the development, but to sell the Property to another party to continue the project. Lion engaged Reese Barragar of Barfoot & Thompson to market and sell the property. On 28 June 2018, Lion and RBC reached an agreement for the sale and purchase of the property in the ADLS-REINZ Agreement for Sale and Purchase (Ninth Edition 2012 (7)) Form (SPA).2

[7]    The director of RBC is Koc Kei Chong, also known as Robert Chong. He says that the company operates as a business consultancy and has represented clients in syndicates in potential purchases and acquisitions since 2015.3

[8]Key terms of the SPA included that:

(a)the purchase price was $7,850,000;

(b)a 15 per cent deposit, or $1,177,500, was payable upon execution of the SPA;

(c)settlement was to occur on 25 June 2019;

(d)the interest rate for late settlement was 14 per cent per annum.

[9]    RBC did not settle on 25 June 2019. Lion issued a settlement notice on the same date.4 RBC did not comply with the settlement notice. On 17 July 2019, Lion cancelled the SPA and gave notice that it was retaining the deposit and reserving all rights to claim for losses in excess of the forfeited deposit.

2      Affidavit of Jonathan Ferrier sworn 1 September 2020, exhibit JF1.

3 Affidavit of Koc Kei Chong sworn on 21 October 2020 at [3].

4      Affidavit of Jonathan Ferrier sworn 1 September 2020 at [7]–[11], and ABD-50.

[10]   On 12 August 2019, Lion engaged Bayleys Real Estate Ltd to market and sell the Property. The Property was sold via a tender process to Praxis Ltd for $6,600,000.5 The resale settled on 10 October 2019.

Legal principles

[11]    The principles relevant to the plaintiff’s application for summary judgment are well-known and are not in dispute:6

The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

Lion’s claim

[12]   Lion claims that RBC breached the SPA by failing to settle the purchase of the Property on 25 June 2019; and failing to settle the purchase of the Property on       12 July 2019 in accordance with the settlement notice. Lion maintains that it is entitled to damages, including those specifically provided for in cl 11.4 of the SPA.

[13]Clause 11.4 provides:

If the purchaser does not comply with the terms of the settlement notice served by the vendor then…

(1)Without prejudice to any other rights or remedies available to the vendor at law or in equity, the vendor may:

…

5      Affidavit of Jonathan Ferrier sworn 1 September 2020 at [20]; Resale agreement at ABD-60.

6      Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].

(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 15 per cent of the purchase price; and/or

(ii)sue the purchaser for damages…

…

(3)The damages claimable by the vendor under subclause 11.4(1)(b)(ii) shall include all damages claimable at common law or in equity and shall also include (but shall not be limited to) any loss incurred by the vendor on any bona fide resale contracted within one year from the date by which the purchaser should have settled in compliance with the settlement notice. The amount of that loss may include:

(a)interest on the unpaid portion of the purchase price at the interest rate for late settlement from the settlement date to the settlement of such resale; and

(b)all costs and expenses reasonably incurred in any re-sale or attempted resale; and

(c)all outgoings (other than interest) on or maintenance expenses in respect of the property from the settlement date to the settlement of such resale.

[14]Lion seeks damages as follows:

(a)loss on resale of the property, of $72,500. The original sale price was

$7,850,000, and it resold for $6,600,000. The difference is $1,250,000. RBC had, however, paid a 15 per cent deposit of $1,177,500, and when that is taken into account the loss on resale is $72,500.

(b)interest of 14 per cent per annum on the unpaid portion of the purchase price from 25 June 2019 until settlement of the resale on 10 October 2019: $273,847.24.

(c)commission and marketing charges incurred by Lion on the resale of the property: $139,341.36.

(d)fees and expenses incurred by Lion in respect of the cancellation of the SPA and resale of the property: $3,174.

(e)rates incurred by Lion in respect of the property from 26 June 2019 to 10 October 2019: $7,647.58.

[15]Lion therefore seeks judgment for:

(a)       damages of $496,510.18;

(b)interest, from 10 October 2019 until the judgment sum is paid in full;

(c)costs.

RBC’s defence

[16]RBC’s defence is that:

(a)it executed the SPA as an agent for an identified principal and is therefore not liable;

(b)if it is liable, it has a set-off and/or counterclaim arising out of Lion’s misrepresentation of the amount Lion spent on the property;

(c)the claim for damages is excessive; and

(d)Lion has not suffered any loss.

[17]   RBC had also maintained in its notice of opposition that the plaintiff breached the SPA by retaining a portion of the deposit exceeding 10 per cent of the purchase price. At the hearing this ground of opposition was not pursued, as it was accepted that cl 11.4 of the SPA, as amended, permitted retention of 15 per cent of the purchase price when the purchaser failed to settle.

Issue 1 – did RBC inform Lion that it executed the SPA as an agent for an identified principal?

[18]   RBC claims that when it entered into the SPA it acted as an agent for the purchaser, which was a syndicate of parties based in Macau and Hong Kong (the Syndicate). Further, that it informed Lion of that fact, through Mr Barragar.

[19]   The legal principles are well-settled. An agent who signs a contract in her or his name must make both the existence and the identity of the principal known to the other party if she or he is to evade personal liability under the contract. As expressed by the learned authors of Law of Contract in New Zealand:7

Where an agent…makes the contract in his or her own name, concealing the fact that he or she is a mere representative, the doctrine of the undisclosed principal comes into play. By this doctrine either the agent, or the principal when discovered, may be sued…There is an onus on persons entering into such contracts and claiming to be entering them as agents to make the fact of agency and the identity of the principal plain to the other party to the contract. Without such, the inference otherwise to be drawn of personal liability is not displaced.

[20]    The courts will endeavour to ascertain the capacity in which a person signed a document from a consideration of the document itself.8 Even in a summary judgment context, where the onus of proof is on the applicant, the evidential onus is on the defendant to establish, to an arguable level, that the fact of the agency and the identity of the principal was made plain to the other party to the contract.

[21]   The issue which I need to decide here is not whether RBC was in fact acting as an agent for the Syndicate as principal. It is whether RBC made the existence of that purported agency relationship and the identity of the Syndicate plain to Lion.

7      Stephen Todd “Privity and agency” in Jeremy Finn, Stephen Todd and Matthew Barber (eds) Burrows, Finn and Todd on the Law of Contract in New Zealand (LexisNexis, Wellington, 2018) 615 at 629. See also: Peter Watts and FMB Reynolds (eds) Bowstead and Reynolds on Agency (22nd ed, Thomson Reuters, London, 2021) at 9–012 and 9–016; Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199, 207 (PC) as cited in Diamond Stud Ltd v New Zealand Bloodstock Finance Ltd [2010] NZCA 423 at [15]; and Re Farmers’ Co-operative Organisation Society of New Zealand Ltd (1991) 5 NZCLC 67,293 (HC) cited in Walters v Taylor Marine Ltd [2010] 2 NZLR 656 at [33].

8      Chiswick Investments v Pivats [1991] NZLR 169 HC, at 173.

[22]   Turning to the SPA first, it does not, anywhere, indicate that RBC entered into the contract merely as an agent for the Syndicate. The purchaser is recorded as being “Robert Bell Consultants Limited” on the first and final pages of the soft SPA. There was nothing in the SPA itself to make the purported agency known to Lion, much less the identity of any principal.

[23]   RBC maintains that Mr Chong informed Mr Barragar of the agency relationship and of the identity of one of the members of the Syndicate in a text message on 19 June 2018. Mr Chong said:9

As our syndicate is majorly composed in Macau and Hong Kong, one of our syndicate member has been involved of a well known Macau construction company named Resoma Construction Ltd. And it has been a major government contractor in the past 15 years.

[24]In response Mr Barragar replied:

I think there’s a deal to be done here subject to your syndicate approval.

[25]   Mr Barragar says that he did not understand Mr Chong to mean that RBC was an agent for the Syndicate and not buying the property itself. Rather, he understood that RBC was the purchaser and would undertake the development of the Property. He understood that the Syndicate was a source of funding for RBC to undertake the development and that is why Mr Chong needed to discuss matters with them.10

[26]   Mr Hutcheson for RBC submits that this is relevant extrinsic evidence that the Court must consider. He submits that Mr Barragar’s evidence establishes that he knew that an overseas syndicate was involved, that it was at least funding the deposit, that Mr Chong required the approval of the syndicate, that the syndicate was in Hong Kong and the name of one of the members. Mr Hutcheson submits that this evidence sets out a dispute of fact as to what RBC told Lion and what Lion knew, that cannot be resolved in a summary proceeding.

9      Affidavit of Koc Kei Chong sworn 21 October 2020, at [14] and annexure B.

10     Affidavit of Reese Barragar sworn 8 December 2020.

[27]   I disagree. Mr Chong’s evidence is that he informed Mr Barragar of the agency relationship in the text message set out above.11 Mr Chong does not point to any other communication. Therefore, the focus is on the text message and whether that text message, viewed objectively, constituted clear notice to Lion of the (alleged) agency arrangement and the identity of the principal. I can reach a view on that issue in a summary judgment hearing.

[28]   I find that the text message is a long way from plainly communicating the fact of the purported agency and the identity of the principal, to Lion. A brief reference to a “syndicate” in a text message, which does not refer to the syndicate as principal and could simply mean the syndicate is funding the transaction, is not enough to disclose the fact of an agency to Lion. Mr Barragar’s response, and his reference to “syndicate approval”, does not elevate this message to the sufficiently plain disclosure of agency required at law.

[29]   Even if this text message was enough to disclose the fact of the agency to Lion, RBC has not disclosed the identity of the alleged principal, namely who the syndicate is. There are, in my view, two ways of interpreting past the acknowledged “language issue” in the text:

(a)As our syndicate is majorly composed in Macau and Hong Kong, one of our syndicate[’s] member[s] has been involved of [with] a well known Macau construction company named Resoma Construction Ltd.

(b)As our syndicate is majorly composed in Macau and Hong Kong, one of our syndicate[’s] member[s] [that] has been involved of [is] a well known Macau construction company named Resoma Construction Ltd.

[30]   If the text message was supposed to convey (a), it merely discloses an entity with which unidentified Syndicate members have been involved. And if the text message was supposed to convey (b), it conveys the identity of one of the Syndicate members, but not the identity of the other members, or the Syndicate as a whole. A text message capable of at least two possible interpretations, only one of which comes

11 Affidavit of Koc Kei Chong sworn on 21 October 2020 at [14].

close to, but does not, plainly disclose the identity of the purported principal, does not meet the threshold required by law.

[31]   Accordingly, I accept Lion’s submission that at best, this text message informed RBC of the agency but did not identify the principal. In that case, cl 1.4(2) of the SPA applies, which says:

Where the purchaser executes this agreement with provision for a nominee, or as agent for an undisclosed or disclosed but unidentified principal, or on behalf of a company to be formed, the purchaser shall at all times remain liable for all obligations on the part of the purchaser.

[32]   Therefore, at best, RBC remains liable for all obligations on the part of the purchaser under the SPA, including its failure to settle.

[33]   Notably, RBC has not disclosed in these proceedings who the members of the alleged Syndicate are. Lion would presently be unable to make a claim against the Syndicate directly, which is precisely what cl 1.4(2) is designed to address.

Issue 2 – did Lion misrepresent the amount it spent on the property?

[34]   RBC says that if it is liable, then it has a set-off and/or counterclaim arising out of a misrepresentation by Lion (through its agent, Mr Barragar), as to the expenditure on resource consents, building consent and advertising, relating to the Property.

[35]   The courts’ approach to ascertaining the meaning of a representation was recently summarised by the Court of Appeal in Ridgway Empire Ltd v Grant:12

Whether there has been a misrepresentation of fact is not determined merely by considering the literal meaning of the words used without regard to the context. The enquiry is what a reasonable person would have understood from those words in all the circumstances. Relevant considerations will often include the nature and subject-matter of the transaction, the respective knowledge of the parties, their relative positions and the words used.

12 Ridgway Empire Ltd v Grant [2019] NZCA 134, (2019) 20 NZCPR 236 at [11] (footnotes omitted); cited with approval in Southern Response Earthquake Services Ltd v Dodds [2020] NZCA 395, [2020] 3 NZLR 383 at [114].

[36]   RBC points to a text message from Greg Liggins, director of Lion, forwarded to Mr Chong by Mr Barragar on 15 June 2018, which said:13

Hi Reese, in answer to questions raised –

1)   Land area is 1113m/2

2)   Property purchased June 2016

3)     Property purchased for $5,500,000 with over $2,000,000 spent to date. These costs covered – Architect fees, Consultant fees for Resource Consents, Marketing costs (including advertising, showroom and brochure production), Resource Consent fees and finance fees etc.

4)   Resource Consent No 2 (for 51 Apartments and 2 Commercial spaces) issued June  2017  and  Resource  Consent  No  3  (for  47  Apartments  and 2 Commercial spaces) issued May 2018.

5)    Refer below.

6)    40 units were sold off plans and deposits paid to solicitors.

7)     The deadline date for price increase was 12th June. So far 5 apartments have confirmed price increase and some still deciding.

Many thanks, Greg Liggins [emphasis added]

[37]   RBC contends that this was a misrepresentation. In support of this, Mr Chong says that he spoke to various people from around September 2018 who advised him of the likely costs that Lion would have incurred in relation to the building consent, resource consents and marketing.14 Based on these conversations, Mr Chong maintains that what Lion spent on these items would have been closer to $1.2 million. This is said to give rise to a set-off and counterclaim for at least $800,000, which is the difference between what Lion said it spent, and what RBC says it is likely to have spent.

[38]   Mr Chong’s evidence is no more than descriptions of conversations he says he had with various people in late 2018. None of those people have given affidavits. This evidence carries no weight and is in any case inadmissible hearsay.

13     Affidavit of Koc Kei Chong sworn 21 October 2020, annexure A (emphasis added).

14 Affidavit of Koc Kei Chong sworn 21 October 2020 at [23].

[39]   However, RBC also relies on evidence filed by  Lion’s  own  accountant, Alan Reichelmann, specifically a schedule summarising all costs and expenses incurred by Lion from its inception on 7 September 2015 to the date of the representation (15 June 2018).15 The figures in the schedule are derived from Lion’s signed financial statements for the year ended 31 March 2018, and its financial statements for the year ended 31 March 2019. This schedule shows that total development costs and other costs and expenses over that period were $2,117,839.

[40]   RBC submits that the schedule provided by Mr Reichelmann supports its claim. Referring to the categories of expenditure referred to in the text message, RBC adds the cost for architect’s fees ($483,074), consultant fees ($171,659), marketing and advertising costs ($289,826), resource consent fees ($188,358), and finance fees (which RBC contends is a reference to bank fees) ($233), giving a total of $1,133,150. Hence, RBC claims that the reference to $2,000,000 was a misrepresentation.

[41]   I do not consider the text message to be misleading. The statement is not “$2,000,000 spent on architects, consultants, marketing and advertising, resource consents and bank fees.” It was “$2,000,000 spent to date” followed by a non- exhaustive list, concluding with the words “etc”. I do not accept therefore that a reasonable person apprised of the circumstances between these parties would construe this statement to mean that $2,000,000 had been spent on architects, consultant fees for resource consents, marketing costs, resource consent fees and bank fees alone.

[42]   At the hearing, Mr Hutcheson sought to draw a distinction between categories of expenditure spent on developing the property and thereby improving its value and other categories of Lion’s expenditure that related to the development. I understood Mr Hutcheson’s submission to be that a reasonable person would interpret the text message as referring to the former only. I don’t accept that submission. It reads into the text a distinction that is not present in the words. I don’t believe a reasonable person, with RBS’s experience in property development, dealing with an entity such as Lion, would interpret the text message in that way. I consider it more likely that a reasonable person in RBC’s shoes, apprised of the context, including the identity of

15     Affidavit of Alan Jay Reichelmann sworn 8 December 2020, annexure BR1-24.

the author, would conclude that the statement “Property purchased for $5,500,000 with over $2,000,000 spent to date…” referred to all costs and expenses incurred by Lion since it purchased the property. That interpretation is reinforced by some of the categories of expenditure in the subsequent list, such as marketing and advertising costs, and finance fees, which do not comfortably fall into the first category of expenditure articulated by Mr Hutcheson.

[43]   For these reasons I conclude that the text message is not a misrepresentation. It is unnecessary for me to consider whether RBC was induced to enter into the SPA by the statement of Mr Liggins.

Issue 3 – Did Lion suffer any loss and are the damages sought excessive?

[44]   RBC says that the original sale price agreed between RBC and Lion was excessive and well above market value. RBC points to the resale price achieved in October 2019 of $6,600,000 together with the registered valuation procured by Lion at 27 August 2019 of $5,250,000. Accordingly, Lion has not in fact suffered any loss.

[45]   RBC accepts that this is not in itself a reason to decline the application for summary judgment but contends that it is a factor that needs to be considered when considering the damages payable by RBC to Lion. RBC paid a deposit of 15 per cent (5 per cent more than the usual deposit) and this was retained by Lion on RBC’s default. This deposit substantially pays the difference between the original sale price (which RBC says was inflated) and the resale price. Against that background, RBC maintains that the claim to interest on the difference at the contractual rate of 14 per cent from the date of default until resale is excessive and punitive.

[46]   RBC relies on three cases. First, 127 Hobson Street Ltd v Honey Bees Preschool Ltd16 where the Supreme Court summarised the test to be applied to determine whether a clause in a contract is properly characterised as an unenforceable penalty. Mr Hutcheson highlighted the first principle:17

A clause stipulating a consequence for breach of a term of the contract will be an unenforceable penalty if the consequence is out of all proportion to the

16     127 Hobson Street Ltd v Honey Bees Preschool Ltd [2020] NZSC 53, [2020] 1 NZLR 179.

17 At [56].

legitimate interests of the innocent party in performance of the primary obligation… A consequence will be out of all proportion if the consequence can fairly be described as exorbitant when compared with those legitimate interests.

[47]   Second, the decision of this Court in Newmans Tours Ltd v Ranier Investments Ltd.18 Fisher J, in assessing relief to be granted under s 9 of the Contractual Remedies Act 1979, held that the relief upon cancellation of any given contract must ultimately be determined in a global exercise which considers all the performances, breaches, gains and losses of all the parties to that contract. Fisher J said that in the end, the exercise of the discretion under s 9 is discretionary, and that one would not normally expect the courts to allow either party to positively profit from the fact that the contract was cancelled. Generally, the object of relief should be to compensate for loss caused by cancellation, not to produce a windfall for the injured party.

[48]   Third, Turner v Superannuation and Mutual Savings Ltd,19 where the forfeiture of a deposit, in addition to vendor’s rights to recover full damages, led Smellie J to conclude that the forfeiture was a recovery beyond any loss suffered, and therefore amounted to a penalty.

[49]   RBC’s submission is that the Court should look at the claim to damages in the round. Clause 11.4(3) permits a vendor to claim interest on the unpaid portion of the purchase price, but a vendor need not do so. It submits that considering the alleged inflated sale price and forfeited 15 per cent deposit, the contractual rate of interest of 14 per cent on the difference amounts to an unenforceable penalty and results in a windfall for Lion.

[50]   This defence fails on three grounds. First, there is no evidence to support RBC’s claim that the price it agreed to pay for the property was above market value. Mr Chong himself deposes that the New Zealand property market declined from the date the SPA was executed, and that this was one of the reasons why the Syndicate decided not to proceed with the transaction.20 The valuation relied on by RBC is dated some 13 months after the price was agreed, in August 2019. That valuation, and the

18     Newmans Tours Ltd v Ranier Investments Ltd [1992] 2 NZLR 68 (HC).

19     Turner v Superannuation and Mutual Savings Ltd [1987] 1 NZLR 218 (HC).

20 Affidavit of Koc Kei Chong sworn 21 October 2020 at [22].

resale price in 2019, do not provide any accurate indication of the property value in June 2018.

[51]   Second, the Newmans v Ranier decision can be distinguished because there the Court was exercising its discretion to grant relief under s 9 of the Contractual Remedies Act 1979. The exercise of a discretion typically involves the Court considering all factors in the round. Here, the contract specifies the damages payable in the event of default, and the Court is simply being asked to enforce the contract.

[52]   Third, in terms of Honey Bee, I do not consider that interest of 14 per cent per annum can fairly be described as exorbitant when compared with the legitimate interest of Lion in securing performance of its bargain with RBC. The alleged inflated original  sale price can be disregarded for the reason I have given.   The  forfeited   15 per cent deposit, which reflected the 12 month settlement (at RBC’s request) only works in RBC’s favour, as it reduced the outstanding portion of the purchase price on the date of default and resale (and therefore the amount attracting the 14 per cent interest).

[53]In Honey Bee the Supreme Court also said that:21

A court will presume that commercial parties dealing with each other on equal terms are able to assess the appropriate proportion between the legitimate interests in performance of the primary obligation and the consequence of breach agreed to. The fact that a party was legally advised as to the nature and effect of the transaction will also weigh in favour of upholding the bargain.

[54]   This was an agreement between two sophisticated commercial parties who were legally advised. Mr Chong is a director, business consultant and through RBC has been involved in purchasing commercial properties for at least six years.22 An overseas syndicate of investors are said to have been involved. In the end, RBC did not proceed with settling the purchase for reasons including the changing landscape in New Zealand around restrictions on overseas buyers, the effect of those changes on the property market, and the impending global economy recession. Seen in that

21 At [89].

22 Affidavit of Koc Kei Chong sworn 21 October 2020 at [3].

context, the 15 per cent deposit and contractual interest rate of 14 per cent is not excessive.

[55]   There is no serious basis for denying Lion damages for late interest on the unpaid portion of the purchase price at the interest rate for late settlement from the date of default to resale, as expressly permitted by cl 11.4(3)(a) of the SPA.

Result

[56]   I am satisfied that RBC does not have a defence to Lion’s claim, and that summary judgment should be entered against RBC. I order that RBC pay to Lion:

(a)       damages of $496,510.18;

(b)interest pursuant to s 10 of the Interest on Money Claims Act 2016, from 10 October 2019 until the judgment sum is paid in full; and

(c)costs.

[57]   If the parties cannot agree on costs, Lion is to file a memorandum of not more than four pages within 15 working  days of the  date of this judgment, and RBC     10 working days thereafter.

Associate Judge Gardiner