McArthur v Guerin - [2019] NZHC 500

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-485-639

[2019] NZHC 500

BETWEEN BRIDGET LOUISE MCARTHUR CRAIG RAYMOND FOSS
RICHARD PETER BAKER
Appellants

AND

PHILIP JAMES GUERIN JACQUELINE HELEN GUERIN

Respondents/Cross-Appellants

Hearing: 11 March 2019

Counsel:

P S J Withnall for Appellants

C J Tennet and F H G Low for Respondents/Cross-Appellants

Judgment:

20 March 2019

JUDGMENT OF CHURCHMAN J

Introduction

[1] On 26 June 2013, the respondents, Philip and Jacqueline Guerin, agreed to purchase a residential property that was occupied by two of the trustees of the Le Fericien Trust (the Trust), Mr Baker and Ms McArthur, as their family home.

[2] On 21 July 2013, about a fortnight before the specified date of settlement of 8 August 2013, an earthquake struck Wellington, damaging two chimneys on the property.

[3] The Agreement for Sale and Purchase was unconditional but the Guerins had not yet arranged insurance and, after the earthquake, potential insurers would not offer cover without a declaration from an engineer that the building had not been damaged

MCARTHUR & ORS v GUERIN & ANOR [2019] NZHC 500 [20 March 2019]

in the earthquake. The damage to the chimneys meant no such declaration could be given. It also led to a dispute as to whether the property has been rendered untenantable.

[4] Settlement did not take place on 8 August 2013. The Trust agreed that the property was, at that point, untenantable.

[5] However, once the damaged chimneys had been partially removed down to the level of the ceiling, this having been paid for by the Trust, the Guerins were able to get insurance cover and, on 26 August, they accepted that the property was no longer untenantable and indicated they were prepared to settle. Settlement took place on 2 September 2013.

[6] Various disputes remained, however, and a hearing was held at the Wellington District Court to determine them in June 2018. The following month, Judge Tuohy issued a decision:1

(a)fixing the diminution of value as a result of the earthquake damage at
$99,802.69;

(b)ordering that the Guerins pay the Trust $6,682.79 in penalty interest and $500 in reimbursement of legal expenses consequent on late settlement; and

(c)dismissing the Guerins’ various claims for damages.

[7] On 7 September 2018, Judge Tuohy issued a second judgment correcting an arithmetical error relating to diminution of value and dealing with interest and costs. 2 Correcting the arithmetical error changed the diminution of value figure from
$99,802.69 to $104,802.39.3

1 Guerin v McArthur [2018] NZDC 11837.
2 Guerin v McArthur [2018] NZDC 18306.
3 At [3].

[8] This judgment also provided that the penalty interest to be paid by the purchasers to the vendors for the period between settlement date originally specified in the contract (8 August 2013) and the actual settlement date of 2 September 2013 should be calculated on the balance of the purchase price after adjustment for diminution of value. The Court also awarded the Guerins the sum…

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 McArthur v Guerin

Details

AGLC: McArthur v Guerin [2019] NZHC 500
Case: [2019] NZHC 500
Decision Date: 20 March 2019

CaseChat Overview and Summary

In McArthur v Guerin, the High Court was asked to consider the sale of a residential property in Wellington. The sale was agreed upon on 26 June 2013, and the date of settlement was set for 8 August 2013. Two weeks before the settlement date, an earthquake struck the city, damaging two chimneys on the property. The Agreement for Sale and Purchase was unconditional, but the buyers had not yet arranged insurance and, after the earthquake, potential insurers would not offer cover without a declaration from an engineer that the building had not been damaged in the earthquake. The damage to the chimneys meant no such declaration could be given. It also led to a dispute as to whether the property had been rendered untenantable. Settlement did not take place on 8 August 2013. The Trust agreed that the property was, at that point, untenantable. However, once the damaged chimneys had been partially removed down to the level of the ceiling, this having been paid for by the Trust, the buyers were able to get insurance cover and, on 26 August, they accepted that the property was no longer untenantable and indicated they were prepared to settle. Settlement took place on 2 September 2013. The buyers claimed damages, which were dismissed by Judge Tuohy. The sellers then appealed and the buyers cross-appealed. The Court dismissed the cross-appeal and ordered the parties to attempt to settle their costs. The Court found that the sellers were entitled to penalty interest for the late settlement, but the buyers were not estopped from claiming it. The Court also found that the sellers were entitled to a deduction for betterment in the award of compensation under diminution of value.

Orders