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Marr v Mills

Marr v Mills

Case [2020] NZHC 3004 12 November 2020

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1299

[2020] NZHC 3004

IN THE MATTER of an appeal against a decision of the District Court dated 10 July 2020 in CIV-2018-004-1028

BETWEEN

CAROLINE DESIREE MARR

Appellant

AND

KAREN ANN MILLS and GRAEME WILLIAM MILLS

Respondents

Hearing: 22 October 2020

Appearances:

S A Keall for the appellant

S A Grant for the respondents

Judgment:

12 November 2020

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 12 November 2020 at 3.30pm.
Pursuant to Rule 11.5 of the High Court Rules.

…………………………
Registrar/Deputy Registrar

Counsel:
S A Keall Barrister, Auckland S A Grant Barrister, Auckland

MARR v MILLS [2020] NZHC 3004 [12 November 2020]

[1] Caroline Marr appeals against the decision of Judge G M Harrison in the District Court at Auckland on 10 July 2020,1 holding her liable to the Mills in an amount equivalent to a GST refund argued claimable by them and associated expenses.

Background

[2] At auction, the Mills acquired a property – comprising a house, shop, workshop, and on-site parking in Auckland’s Royal Oak – from Ms Marr for $1.45 million (inclusive of GST, if any), on terms otherwise set out in a sale and purchase agreement dated 24 August 2014.

[3] The terms of the agreement included Ms Marr warranted the following statement regarding the vendor’s GST registration status in respect of the supply under the agreement was correct at the date of the agreement:

The vendor is registered under the GST Act in respect of the transaction evidenced by this Agreement and/or will be so registered at settlement.

~~Yes~~/No

In fact, Ms Marr was so registered. The warranty thus was breached, and judgment on liability entered against Ms Marr.

[4] The Mills contemplated operating a lamp manufacturing and sale business from the shop, and a toy museum business from the workshop. Their plans were, to use Ms Mills’ word, “rudimentary”: little more than the Mills’ thoughts to commence commercial use of part of the premises some months after settlement, and acquisition of some of the resources necessary to conduct the businesses. Still, in reliance on Ms Marr’s warranty, they anticipated becoming GST-registered, to use a refund of the GST paid on the purchase price as working capital in the businesses’ first months.

[5] But, if both Ms Marr and the Mills were GST-registered, supply under the agreement would be charged “at the rate of 0%”, meaning there would be nothing to be refunded. If the Mills were not GST-registered, they would not be entitled to any refund. Acting on professional advice, the Mills decided not to commence the intended

1 Mills v Marr [2020] NZDC 13200.

businesses. They did not register for GST. Subsequently, they subdivided the property, and sold the shop with its road frontage.

[6] The Judge referred to Court of Appeal authority (followed in this Court) to the effect the warranty was “to assign risk between the parties”, to…

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.

Continue reading Marr v Mills

Details

AGLC: Marr v Mills [2020] NZHC 3004
Case: [2020] NZHC 3004
Decision Date: 12 November 2020

CaseChat Overview and Summary

Caroline Marr appeals against the decision of the District Court, which found her liable to the Mills for damages equivalent to a GST refund and associated expenses, based on her breach of a warranty in a property sale agreement. The District Court ruled that the Mills were entitled to damages based on the anticipated GST refund, which they intended to use as working capital for a lamp manufacturing and toy museum business they planned to start. Marr argues that the Mills suffered no loss because they never registered for GST and did not commence their intended businesses. The High Court was tasked with determining whether the Mills' potential loss of the GST refund was foreseeable and recoverable as damages for the breach of warranty.

The High Court found that the GST refund was a foreseeable benefit to the Mills as it was intended to be used as working capital for their businesses, and the allocation of risk by the warranty meant this was within the contemplation of the parties at the time of the property's acquisition. The court rejected Marr's argument that the Mills' failure to register for GST and commence their businesses negated their entitlement to the GST refund as damages. The High Court concluded that the District Court did not err in awarding damages to the Mills.

The appeal is dismissed, and the Mills are entitled to 2B costs and disbursements on steps taken in the appeal. If the parties cannot agree on the costs, the Mills have ten working days to file short memoranda of no more than five pages, with any response and reply to be filed within five working day intervals after service.

Orders