Messenger v Stanaway Real Estate Limited

[2014] NZHC 2090

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-7205 [2014] NZHC 2090

BETWEEN

JAMES MESSENGER AND JUNE

MARY MESSENGER Plaintiffs

AND

STANAWAY REAL ESTATE LIMITED Defendant

GARY MESSENGER First Third Party

REALTY NZ LIMITED Second Third Party

SIMPSON WESTERN (AS A FIRM) Third Third Party

Hearing:	1 September 2014
Counsel:	RM Cederwell for Plaintiffs KM Buckhart for Defendants V Wethey for Third Third Party
Judgment:	1 September 2014

ORAL JUDGMENT OF FOGARTY J

Solicitors:           Lowndes Jordan, Auckland

Kennedys, Auckland

Jones Fee, Auckland

MESSENGER v STANAWAY REAL ESTATE LTD [2014] NZHC 2090 [1 September 2014]

[1]      This is a dispute which centres upon an agreement for sale and purchase of a luxury property.   The terms of the purchase included that the purchase price was

$5,995,000.    The  agreement  was  entered  into  on  or  about  30  November  or

1 December 2006.   The terms of the agreement also included the possession date would be on 18 December 2006. There was no settlement date specified.

[2]      On  18  December,  the  purchasers  were  to  be  paid  $2,750,000,  with  the balance  payable  by quarterly instalments  –  8  x  $61,875  followed  by  a  balloon payment of $2,750,000 on 18 December 2008.   The agreement also provided the vendors could lodge a caveat over the property prepared by the vendors at the purchasers’ expense.

[3]      There has been already quite a bit of litigation arising from this contract.  The original parties to the agreement have litigated this issue to the Court of Appeal.  The contract, it turns out, was essentially not performed at all and the property was resold at a loss.

[4]      In these proceedings now before the Court and a fixture is scheduled for 15

September, the plaintiffs are the original vendors.  The defendants are a real estate agency, Stanaway Real Estate Limited.  The son of the plaintiffs, Gary Messenger, was then joined as a first third party, together with the company he was working for, Realty NZ Limited.  Stanaway also joined Simpson Western,(a law firm) who had been acting for the vendors, as third third party.

[5]      The defendant’s claim against the third third party currently pleads, firstly, that  they were  the  solicitors  who  owed  a  duty  of  care,  which  I assume  is  not disputed.  The essential pleading is that Simpson Western breached its duty to the plaintiffs in exercising reasonable skill and care by failing to advise the plaintiffs that the settlement and possession date was 18 December 2006; that they failed to advise the plaintiffs to issue a settlement notice in January 2007, after the purchasers failed to make payment on 18 December 2006; and that if the terms of the settlement notice were not complied with, to cancel the agreement.  The claim pleads that Simpson Western advised the Messengers to pursue a costly claim in the High Court against the purchasers on the basis that the settlement date was 18 December 2008, rather

than advising them to cancel the agreement at any stage following 18 December

2006.

[6]      The case is set down for trial beginning Monday, 15 September, a fortnight from now.   The defendant, Stanaway Real Estate, has lodged further particulars. These particulars contend:

(a)       That, the possession date was 18 December 2006;

(b)That pursuant to the agreement, the settlement date was the same date as the possession date unless another settlement date was specified and repeats clauses in the agreement;

(c)      That although the agreement postponed payment of the purchase price until 18 December 2008, this was not specified as the settlement date;

(d)      That no other settlement date was specified in the agreement;

(e)       That in cl 15 of the agreement, the parties have stipulated for a caveat

to be lodged by the plaintiffs’ at the purchaser’s expense;

(f)      That  the  parties  could  not  reasonably  have  contended  the  caveat would   protect   any   interest   possessed   by   the   vendors   after

18 December 2006 unless, after that date, they would no longer be the registered proprietors of the property;

(g)That, in all the circumstances, the only reasonable inference was that the  parties  must  have  intended  that  the  caveat  would  protect  an interest possessed by the vendors after 18 December 2006 pursuant to an unregistered mortgage securing the unpaid balance of the purchase price  during  the  period  that  it  remained  outstanding  and  until

18 December 2008, being the due date for its payment in full.

[7]      Then  there  are  particulars  of  what  Simpson  Western  should  have  done, including:

(a)       Drafting a new unregistered mortgage,

(b)Sending the draft with a settlement statement and accompanying letter seeking confirmation that the terms of the mortgage were acceptable; and

(c)      If the purchasers did not settle, to serve a settlement notice setting them in the position to cancel the agreement.

[8]     Simpson Western, in the hearing today, opposed the amendment of the particulars.  The pleadings have closed.  Simpson Western, through counsel, argue that this is a new theory of the case.  That is the principal ground for the opposition. They are not seeking for the trial to be vacated, even if these particulars are allowed.

[9]      I am doubtful as to whether this is a new theory of the case.  The pleading seems to reflect on common ground that the original agreement for sale and purchase raised problems as to how it was to be performed.   Both parties have engaged conveyancers giving advice as to how they consider competent solicitors should have reacted to the agreement and advised the parties.

[10]     Some of the new particulars could be presented as a legal argument rather than new particulars of fact.  I refer particularly to the particulars of what they should have done.   I have approached  this issue against the overriding requirement of procedural law, which is that there be a just trial of the dispute between the parties and the imperative is to ensure that justice is done by the Court hearing every available argument that the parties want to present.  This is reflected in a dictum of

Bisson J in the case of Thornton Hall Manufacturing Ltd v Shanton Appare Ltdl1

where he says:

The parties should have every opportunity to ensure that the real controversy goes to trial so as to secure the just determination of the proceedings.

[11]     I am satisfied that the expert solicitors, who have been pondering over the challenges presented to the solicitors by this agreement for sale and purchase as

1      Thornton Hall Manufacturing Ltd v Shanton Apparel Ltd [1989] 3 NZLR 304 at 309.

signed by the parties, have been reflecting on these issues for some time.   I am satisfied that the experts will have time to consider the merits of these particulars. They have already seen them.  One of the experts is overseas and won’t be back until the day of the trial.

[12]     These issues, in respect of the issues, are not likely to be heard by the trial judge until towards the end of the trial.   The trial is set down for two weeks. Accordingly, I am of the view that the statement of claim should be allowed to be amended to include these particulars and that the appropriate order is to adjust the timetable for exchanging the briefs of evidence of the experts.  There is agreement to a timetable:

(a)      The   parties   have   agreed   that   Simpson   Western   is   to   serve supplementary briefs responding to the defendant’s added particulars by 10 September 2014.

(b)      Any  supplementary  briefs  from  the  defendant  is  to  be  served  by

12 September 2014.

[13]     I would invite the parties to arrange for the expert witnesses to meet in the early stages  of the trial  for the purpose of examining their respective  briefs  to identify the matters they agree upon, where they disagree and the reasons for their disagreement.    Such  a  memorandum  will,  I have  no  doubt,  be  of  considerable assistance for the trial judge in identifying the issues that need to be resolved and enabling the evidence given by those witnesses at trial to focus on the areas of disagreement and the reasons why they differ.

[14]     I reserve the question of costs to be decided by the trial judge at the hearing.

[15]     Leave is granted to the defendant to amend its statement of defence in respect of the claim the Messengers have made against Stanaway.  Ms Cederwell does not oppose, abiding the decision of the Court.