Marlborough District Council v Wadsworth HC Blenheim CIV 2009-406-140

[2010] NZHC 1296

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

CIV-2009-406-000140

BETWEEN  MARLBOROUGH DISTRICT COUNCIL Plaintiffs

ANDGINA MARIE WADSWORTH AND NIGEL WILLIAM BOTHAM Defendants

Hearing:         24 June 2010

Appearances: RJB Fowler for Plaintiff

D J Clark for Defendants

Judgment:      24 June 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE BELL

Solicitors:

DLA Phillips Fox, PO Box 2791, Wellington 6140

Wisheart Macnab & Partners, PO Box 138, Blenheim 7240

MARLBOROUGH DISTRICT COUNCIL V G M WADSWORTH AND N W BOTHAM HC BLE CIV-2009-

406-000140  24 June 2010

[1]      This  is  an  application  by  the  defendants  for  an  order  that  one  issue  be determined separately as a preliminary question under r 10.15 of the High Court Rules.   The proposed preliminary issue is whether the defendants issued a valid requisition as to title in relation to the agreement for sale and purchase between the parties.

[2]      The litigation arises out of an agreement for sale and purchase of a lot in a subdivision near Blenheim. The District Council was the developer.  The subdivision was  called  Boulevard  Park  on  Taylors.  The  agreement  was  for  the  Council,  as vendor, to sell Lot 12 in stage 1 of the subdivision. The agreement is dated 8 October

2007.   At that stage, the Council had not obtained resource consents for the subdivision and title for each lot had still to issue.   The agreement for sale and purchase describes the title as Lot 12 of Stage 1, Boulevard Park on Taylor as shown on the scheme plan being a subdivision of the land contained in Certificate of Title NB 327925, new title identifiers to be issued under No. 358271 and 358276.

[3]      Attached to the agreement is a subdivision plan.  On this plan, lot 12 is shown as a panhandle lot behind lot 13. To the rear of lot 12 is an area identified as Wither Farm Park.  To the south of lot 12 the plan has an area marked as a walkway and it is also identified as accessway to vest in Marlborough District Council.

[4]      The agreement uses the Real Estate of New Zealand and Auckland District Law Society form of Agreement for Sale and Purchase, 8th  edition.  In addition, it has other special terms and it is clear from the agreement, clause 19.12 that the further terms prevail over the general terms where there is conflict.   One of the further terms provides that the land would be subject to land covenants.   Clause 18.7 lists the covenants.  There is one that is relevant for this case, and that is covenant

(j),which says:

The purchaser agrees not to erect or permit to be erected any side fence or road frontage fence or building as defined by Marlborough District Council by-laws within 2 metres of the road boundary being the title boundary adjacent to   the road and for the purposes of this subclause a fence shall include a live hedge.

[5]      When title issued, the area shown as walkway on the plan attached to the agreement was shown on the plan attached to the title issued by LINZ as a “road”, and the plan shows that it is 5 metres wide.   The significance of that is that the purchasers contended that because it was shown as a road on the title, then it was a road for the purpose of clause 18.7(j) of the agreement for sale and purchase.  That meant that they were now prohibited from building any fence within two metres of what they had believed would be an accessway – what they regarded as being a walkway only, not something that would be used for vehicle access.  Because this went to the covenant against their title, they said that this was a defect on the title. They requisitioned under general term 5.2 requiring the vendor to remove it.  I gather that the vendor did not agree to this and when the vendor did nothing, the purchasers cancelled under term 5.2(3) of the agreement for sale and purchase.

[6]      Later, the vendor issued the present proceeding seeking specific performance. It applied for summary judgment.  The purchasers filed a notice of opposition and affidavits in opposition.  The vendor then withdrew its application and the matter is now proceeding as an ordinary matter. The purchasers have now filed a statement of defence and counterclaim.

[7]      The purchasers now  want the requisition issue to be decided alone as  a preliminary issue.

[8]      In terms of the pleadings, the vendor’s proceeding is a simple claim for specific performance.  The statement of claim has a single cause of action.

[9]      The  purchasers’  statement  of  defence  pleads  the  requisition  and  the cancellation under clause 5.2(3) of the agreement.  There is also an alternative plea that, in the circumstances, an order for specific performance is not appropriate. Presumably, that invokes the Court’s discretion not to order specific performance in the particular circumstances of the case.

[10]     The counterclaim by the purchasers seeks the return of the deposit and there are additional claims made as well.  There is a claim that there was a term of the agreement that the land to the south of the property would be a walkway rather than

a road and that the southern boundary of the property would be able to be fenced.  It is claimed that the breaches of the terms are matters essential to the contract and the breach gives rise to cancellation and cancellation is sought as relief.

[11]     There is another cause of action claiming damages of approximately $22,000. That is said to be for diminution in the value of the property arising from the breach of contract.

[12]     There is also a claim for breach of the Fair Trading Act and the relief sought there is to void the agreement, or alternatively damages under s 43 of the Fair Trading Act.

[13]     Another cause of action pleads that the vendor owed the purchasers a duty of good faith which has been breached by changing the walkway into a road.

[14]     And finally, there is a claim for relief under the Contractual Mistakes Act.

[15]     At  this  stage,  discovery  has  not  been  completed.    I  also  note  that  the purchasers have not applied for summary judgment themselves.

[16]     Rule 10.15 allows the Court to order that a preliminary question be decided separately from other questions that arise in a proceeding.  However, the courts have learnt from experience that a cautious approach is required.  Sometimes at the outset it can seem very attractive to isolate one issue and have that determined, but experience often shows that down the track problems emerge.   What might have seemed a shortcut has in fact created greater expense and delay.

[17]     Accordingly, with that experience, the attitude of the courts is that someone proposing that a matter be determined as a preliminary issue has a heavy onus to discharge and I note that the commentary in McGechan at HR10.15.062 lists cautionary considerations.   I note, for example, the citation of Tilling v Whiteman [1980] AC1 where Lord Scarman said at 25:

Preliminary points of law are too often treacherous shortcuts. Their price can be, as here, delay, anxiety, and expense.

[18]     This is a fairly straightforward vendor/purchaser dispute.   The number of issues are not large overall.  There are problems with trying to single out a single issue and have that returned in isolation from the rest.

[19]     For the defendants, Mr Clark proposed that his requisition issue would be a clinching issue which would decide matters finally.   He relied on the decision of O’Regan J in Walton Mountain Ltd v New Zealand (2004) 5 NZCPR 241, which suggests that where there is a prima facie defect, and the vendor does not attend to that defect and simply denies the matter, then there is a right to cancel and the matter is conclusive from that point onwards.  Mr Fowler for the plaintiff, contended that what was required was a two-step process and the matter was not to be dealt with simply on a prima facie basis but there could be further inquiry once the prima facie position  had  been  asserted  so  that  simply  saying  that  there  was  a  prime  facie followed by cancellation was not the end of them matter.

[20]     In the time available, I have not considered the Walton Mountain issue fully and it would be inappropriate in a case like this for me to give any opinions on it.  I simply note that it is in issue and that both counsel have put forward arguments on the issue as to how the defects issue should be addressed.  The possibility that I need to address is that Mr Fowler’s contentions could be accepted and in that event there would be further inquiry.  That inquiry would go, firstly, to the interpretation of the provisions of the agreement and what was meant by “road” in clause 18.7(j).  To that extent, Mr Fowler drew my attention to other provisions in the contract and in related documents and adverted to the modern approach to interpretation contracts which allows these matters to be taken into account as context.

[21]     Those matters would also bear on other issues in the case: in particular on the defendants’ claims for breach of contract and under the Fair Trading Act.    They could also be relevant to a claim of contractual mistake.

[22]     There is therefore an overlap between the issue raised under the requisition point, particularly if Mr Fowler’s approach is taken and other issues that might arise.

[23]     My view is that in vendor/purchaser disputes such as this, it is more efficient to deal with all issues in one hearing, rather than to divide matters up and have issues decided discretely.   If anything, in a vendor/purchaser case where the purchasers have defaulted, it can even be more efficient for a vendor to make an early election and to cancel the agreement itself and seek monetary relief, rather than to divide matters  up  by  claiming  specific  performance,  finding  continuing  default  by the purchasers and then having to elect cancellation afterwards with further inquiry into damages at that stage.  That tends to produce more expense and delay for the parties as well.

[24]     Mr Clark raised the point that under r 18.1(c) of the High Court Rules it is possible to have originating application proceedings for requisition issues.  I accept that it is possible to make an application to the Court for an originating application under  that  provision,  but while  that  is  available  under  the  rules  and  equivalent provisions have been there ever since the Code of Civil Procedure, they are rarely used and more commonly vendor/purchaser issues, including requisition issues, are decided in ordinary proceedings.  They arise typically in cases such as the present one where there are other claims on foot.  The fact that there is special reference to requisitions under r 18.1(c) does not mean that the Court should now separate that issue off for separate determination.

[25]     Generally,  when  all  issues  are to  be dealt  with  in  a single hearing,  that encourages the parties to consider the issues as a whole and when issues as a whole are considered, that tends to encourage the parties to look at the matter constructively and settlement can often result.

[26]     For these reasons, I decline the application for specific determination under r 10.15.   Counsel  have advised me  that they have discussed  the question of costs.

Costs will go in favour of the plaintiff but the parties are agreed that on this issue costs will be in the cause and can await final determination and I am not required to

fix costs today.

R M Bell

Associate Judge