Mason v Magee - [2017] NZHC 51

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2014-485-9907 [2017] NZHC 51

BETWEEN
STEVEN PHILIP MASON

KATHARINE MARY MASON Plaintiffs

AND

ANDREW HAMILTON MAGEE SHARON LEE MAGEE Defendants

Hearing: 9-11 February 2016

Counsel:

D J S Parker and J W Wollerman for Plaintiffs
M M Freeman and A A McCubbin-Howell for Defendants

Judgment:

31 January 2017

JUDGMENT OF WILLIAMS J

Table of Contents

The issues ..............................................................................................................[1] Introduction ..........................................................................................................[5] The house [5] The Magees [6] The Masons [9] The purchase of 13 Karekare Road ..................................................................[14] The McLeods’ dinner party – 28 October 2011 [16] The visit to 13 Karekare Road, 29 October 2011 [20] Open home – 30 October 2011 [25] The Seaview Road agreement and further visits to Karekare Road [27] Conditional agreement [30] Property inspection [31] Building defects ..................................................................................................[37] Remediation and damages.................................................................................[39] The basics of misrepresentation ........................................................................[41] Submissions – misrepresentation ......................................................................[45] The Masons [45] The Magees [50]

MASON v MAGEE [2017] NZHC 51 [31 January 2017]

Analysis ...............................................................................................................[55] What was said? [55] Fraudulent? [62] Inducement [64] The correct measure of damages – loss of value or cost of cure?...................[75] ABI’s acceptance of liability ..............................................................................[88] Disposition...........................................................................................................[91]

The issues

[1] It is common ground that the plaintiffs, Steven and Katharine Mason, were the unwitting purchasers from Andrew and Sharon Magee (the first defendants) of a leaky home at 13 Karekare Road, Raumati.1 Although liability is contested, it is also common ground that the total loss they suffered as a result was $536,550.21 on a loss of value basis or alternatively $939,528,81 on a cost of cure basis.

[2] Shortly after entering into the agreement with the Magees (and while the agreement was still conditional) the Masons obtained a builder’s report from All Building Inspections Ltd (‘ABI’, the second defendant). The report did not identify any of the weathertightness issues from which the building suffered. ABI subsequently accepted liability and reached an out-of-court settlement with the Masons for the sum of $68,000.

[3] The Masons say that during the course of negotiations leading to the purchase, Mr and Mrs Magee told them that the house was not leaky. They say this statement was false and therefore a misrepresentation in terms of s 6 of the Contractual Remedies Act 1976.

[4] Section 6 provides that if such misrepresentation can be shown to have induced the Masons to enter into the purchase, then this misrepresentation will itself be treated as a term of the contract entitling the Masons to damages for breach of contract accordingly. But if they invoke s 6, the Masons are precluded from suing in
tort.2 The issues therefore are:

1 I refer to the parties by their first names as they themselves did during the hearing.
2 Section 6(1)(b).

(1)Did the Magees falsely represent that 13 Karekare Road was not a leaky home? I have concluded that Katharine Magee did make that representation, albeit innocently, believing the same to be true.

(2) Did the misrepresentation induce the Masons to purchase 13 Karekare

Road? I have concluded that it did.

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 Mason v Magee

Details

AGLC: Mason v Magee [2017] NZHC 51
Case: [2017] NZHC 51
Decision Date: 31 January 2017

CaseChat Overview and Summary

The Masons purchased 13 Karekare Road from the Magees for $785,000. The house turned out to be a leaky building. The Masons sought damages for misrepresentation, claiming that the Magees falsely represented that the house was not leaky. The parties were agreed on the total loss suffered by the Masons, but disagreed on the basis for damages and whether All Building Inspections Ltd’s acceptance of liability for missing the defects should reduce the damages awarded. The issues before the Court were: 1) Did the Magees falsely represent that 13 Karekare Road was not a leaky home? 2) Did the misrepresentation induce the Masons to purchase 13 Karekare Road? 3) Are the Masons entitled to loss of value or cost of cure damages? 4) How does ABI’s acceptance of liability affect the quantum that the Magees are required to pay? The Court found that the Magees falsely represented that 13 Karekare Road was not a leaky home, that the misrepresentation induced the Masons to enter into the contract, and that the measure of damages should be loss of value, not cost of cure. The settlement with ABI should be deducted from the damages awarded. The Court granted judgment to the Masons in the sum of $468,550.21.

Orders