MGH Trah Ltd v Fox Mortimer Trustee Co Ltd - [2021] NZCA 59

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA164/2020
[2021] NZCA 59

BETWEEN	MGH TRAH LIMITED, LIONEL JOHN HART AND JUDEE LOUISE HART AS TRUSTEES OF THE ANDRE AND JOSHUA HART TRUST Appellants
AND	FOX MORTIMER TRUSTEE COMPANY LIMITED Respondent

Hearing:	2 December 2020
Court:	Goddard, Lang and Hinton JJ
Counsel:	A R B Barker QC and A Lenard for Appellants M A Keil for Respondent
Judgment:	11 March 2021 at 11.00 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellants must pay the respondent costs for a standard appeal on a band A basis, with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Goddard J)

Introduction

This appeal raises a short point about the construction of an agreement for sale and purchase of a residential property (the ASP) entered into by the appellants (the vendors) and the respondent (the purchaser). It concerns payment of interest for a proportion of the purchase price that the purchaser paid to a stakeholder, rather than to the vendor, in accordance with the mechanism set out in the ASP for dealing with disputed claims to compensation and equitable set-off made by a purchaser before settlement is due to take place.
The vendors were ultimately held to be entitled to receive the withheld amount, and (as a result) were also entitled to the interest earned on that amount. But the vendors say that under the ASP they are entitled to default interest at 14 per cent per annum on the withheld amount. In the High Court they made an unsuccessful claim for interest on that basis.[1] They now appeal to this Court.
[1]Fox Mortimer Trustee Co Ltd v MGH Trah Ltd [2020] NZHC 321 [High Court judgment].
We consider that the High Court was right to conclude that default interest was not payable by the purchaser to the vendors in these circumstances. Our reasons (which differ from those of the High Court Judge) are set out below. It follows that the appeal should be dismissed.

Background

The ASP was entered into on 29 March 2018. The purchaser agreed to purchase a substantial residential property in Coatesville. The property was Lot 2 in a four-lot subdivision that had been developed by the vendors. The purchase price was $5,600,000. Settlement was to take place 12 months after the date of agreement. That date was subsequently extended by agreement to 18 April 2019.
The vendors retained ownership of two lots in the subdivision, including Lot 1. The ASP included cl 21, a further term of sale negotiated by the parties, which read:
The vendor warrants that any future dwelling to be constructed on the proposed LOT 1 (as per the attached plan) will only be single level and will be positioned on the land so as to minimise any impairment to the view of the dwelling situated on LOT 2.
The relevant plan identified a 400 square metre area marked “X” where a single level home could be…

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.

Keep reading for free

Create a free CaseChat account to read MGH Trah Ltd v Fox Mortimer Trustee Co Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2021] NZCA 59
Decision Date: 11 March 2021 at 11.00 am

CaseChat Overview and Summary

This appeal concerns the construction of an agreement for sale and purchase (ASP) of a residential property, specifically the obligations of the parties in relation to payment of interest in the event that an interim amount is deducted from the purchase price and held by a stakeholder. The appellants (the vendors) sought to recover default interest under cl 3.12 of the ASP on the amount withheld on settlement and paid to the stakeholder. The High Court dismissed their claim, and the vendors now appeal to the Court of Appeal. The Court of Appeal finds that the High Court was correct to hold that the vendors were not entitled to default interest in these circumstances. The Court of Appeal's reasons differ from those of the High Court Judge. The Court of Appeal held that the obligation to pay interest under cl 3.12 turns on whether the purchase price was paid on the settlement date. Where the parties have proceeded under cl 8.0, which provides for payment of an interim amount to a stakeholder, the obligation to pay interest under cl 3.12 is displaced. The Court of Appeal found that the purchaser had paid the amount required to settle in full on the settlement date: it had been paid either to the vendors or to the stakeholder as required by cl 8.0 of the ASP. No portion of the purchase price remained unpaid. The appeal is dismissed, with the appellants ordered to pay the respondent's costs.

Orders