New Zealand Home Bonds Limited v Gill
[2014] NZHC 1278
•6 June 2014
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2013-409-001585 [2014] NZHC 1278
BETWEEN NEW ZEALAND HOME BONDS
LIMITED Appellant
AND
BERNADETTE GILL First Respondent
AND
SANGEET GILL Second Respondent
AND
SURINDER GILL Third Respondent
Hearing: 26 May 2014 Appearances:
M Foley & E D Peers for the Intended Appellants
R W Raymond for the Intended RespondentJudgment:
6 June 2014
JUDGMENT OF PANCKHURST J [RE LEAVE TO APPEAL]
Introduction
[1] The respondents seek leave to appeal to the Court of Appeal against my judgment dated 27 February 2014. The test to be applied in granting leave pursuant to s 67 of the Judicature Act 1908 is whether the appeal raises a “question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the
further appeal.1
1 Waller v Hider [1998] 1 NZLR 412 (CA) at 2.
NEW ZEALAND HOME BONDS LIMITED v GILL [2014] NZHC 1278 [6 June 2014]
[2] This proceeding has something of a history. New Zealand Home Bonds Limited (Home Bonds) sought, and obtained, summary judgment in the District Court in June 2010. 2 The Gills successfully appealed to this Court with the result that the proceeding was remitted back to the District Court for a substantive hearing.3 The case was heard in late 2013 resulting in a judgment in favour of the Gills.4 Finally, I allowed Home Bonds’ appeal so that judgment was entered against the Gills for $86,240. The costs incurred in relation to the four hearings far exceed the amount of the claim.
[3] At the conclusion of the leave hearing I requested Mr Foley to file a memorandum containing the specific questions of law in relation to which leave was sought. The memorandum contained three questions of law. It is convenient to determine the leave application by reference to them.
Question one: were binding agreements for sale and purchase concluded?
[4] Mrs Bernadette Gill entered into sale and purchase agreements relating to two apartments in Auckland. She applied to Home Bonds for the issue of two homebonds whereby payment of the deposit to the vendor was guaranteed, should the purchaser default in making payment when the apartments were constructed and payment fell due.
[5] A New Zealand real estate agent, Mr Cutfield, negotiated the sales with Mrs Gill in Brisbane. She signed standard sale and purchase agreements. Mr Cutfield assured Mrs Gill that she would not have to settle the purchases, because he would arrange profitable on-sales before settlement, or failing this he would purchase the apartments himself. The first question concerns the relationship between the sale and purchase agreements with the vendor company on the one hand, and the on-sale/purchase arrangement on the other.
[6] The intended question of law is:
2 New Zealand Home Bonds Ltd v Gill DC Christchurch CIV-2009-009-2144, 22 June 2010.
3 Gill v New Zealand Home Bonds Ltd (No 2) HC Christchurch CIV-2010-409-1587,
1 December 2010.
4 New Zealand Home Bonds Ltd v Gill DC Christchurch CIV-2009-009-2114, 2 October 2013.
Can a binding Agreement for Sale and Purchase be found to come into existence when:
(i) the unchallenged findings of fact by the trial Judge were that that conditions of Mrs Gill’s offers were not communicated to the vendor despite the agreement of the vendor’s agent to do so, and that there was in fact no contract?; and/or
(ii) the vendor must be taken to have imputed knowledge of the vendor’s agent as to the terms of Mrs Gill’s offer? (emphasis added)
[7] With respect, the question is off point. The genesis of the on-sale/purchase arrangement was a letter signed by Mr Cutfield in his personal capacity, which stated:
This is to verify that should the unit you intend to purchase is not on sold [sic] before settlement is required in July 2008 that I personally will take the sale over at your purchase price that is reflected in the contract for the initial purchase.
Mrs Gill responded by a letter addressed to Mr Cutfield that included this:
… we understand that we are purchasing the units only on the condition that they are re-sold – or on-sold prior to settlement …
This second letter was countersigned by Mr Cutfield, alongside the word “agreed”.
[8] I determined that the two letters comprised an offer and an acceptance, giving rise to an agreement that if Mr Cutfield did not arrange on-sales, he would personally purchase the apartments before settlement fell due. This was characterised as a collateral contract, or side agreement, between Mr Cutfield and Mrs Gill.5
[9] I describe the intended question as “off point” because there were no “conditions” or an “offer” from Mrs Gill capable of being communicated to the vendor. The only offer was the one made by Mr Cutfield in his personal capacity, which matured into an agreement when Mrs Gill’s letter was signed by both parties the following day.
[10] The intended question is not directed to the essential issue, the terms of the on-sale/purchase arrangement, rather to a requirement of the collateral agreement –
5 Reference is made to Mrs Gill alone because the second and third respondents were joined only because they are parties to the homebonds.
namely that Mr Cutfield would append copies of the two letters to the sale and purchase agreements. Had this been done, the vendor would have been on notice as to the existence of the collateral agreement. But, in fact Mr Cutfield did not append the letters as he had agreed to do. Hence, the vendor, and Home Bonds, remained oblivious to the existence of the collateral arrangement until it was asserted some two years later that the agreements for sale and purchase had never become unconditional.
[11] In my view the intended question is misconceived, as it contemplates that somehow Mrs Gill’s letter contained an offer which Mr Cutfield was to communicate to the vendor, failing which knowledge of the “offer” was to be imputed to the vendor in any event. But there was nothing in Mrs Gill’s letter capable of amounting to an offer, or counteroffer, to the vendor. Her letter responded to Mr Cutfield’s personal proposal relating to on-sale or purchase of the apartments.
[12] For these reasons the intended question is not capable of bona fide and serious argument. It fails at the first hurdle, and I need not consider whether the question is one worthy of a second appeal.
Was the finding that binding agreements for sale and purchase existed just and procedurally fair?
[13] The intended question reads as follows:
Is it just and procedurally fair for the High Court on appeal to overturn findings of fact by the District Court trial judge (as to the terms of Mrs Gills’ offer) which are admitted in the written submissions and not challenged in the notice of appeal by the then appellants (New Zealand Home Bonds Limited), where no leave is sought by the appellants to amend the Notice of Appeal and no leave by the appellant is sought to withdraw admissions made in the appellant’s submissions?
[14] This intended question reflects the circumstance that this proceeding involved multiple contracts. There were agreements for sale and purchase of the apartments between the vendor and Mrs Gill. There was also a collateral agreement between Mr Cutfield and Mrs Gill, being the on-sale/purchase arrangement (although Mrs Gill maintained that the terms of this arrangement somehow affected the terms of the underlying sale and purchase agreements). Thirdly, there were contracts
between Home Bonds and Mrs Gill and her daughters, whereby Home Bonds was bound to pay the deposits if these were not paid by Mrs Gill in response to a settlement statement.
[15] In the District Court, Judge O’Driscoll found that no sale and purchase agreements were concluded, because Mrs Gill’s letter addressed to Mr Cutfield was not communicated to the vendor company. This, despite the fact that sale and purchase agreements were completed by the vendor and Mrs Gill, copies of such agreements were provided to Home Bonds which on the strength of them issued two homebonds, and the parties proceeded on the basis of the contracts until Mr Cutfield defaulted in relation to his promise to purchase the apartments when they had not been on-sold. .
[16] Against this contractual background Home Bonds’ notice of appeal to this Court asserted various terms of the homebond agreements whereby it was obliged to pay the deposits, regardless of any dispute between the vendor and Mrs Gill concerning the validity of the sale and purchase agreements.
[17] Despite the terms of the notice of appeal, I thought it necessary to consider the prior question, whether agreements for sale and purchase were concluded. This was raised by me at an early stage of the hearing. I did not “overturn findings of fact” made by the trial Judge. The matter was dealt with as follows:6
I do not accept Mr Foley’s submission that Judge O’Driscoll’s finding of no contract is a finding of fact and necessarily determinative of this appeal. The finding was one of law from essentially undisputed facts derived from the documents and supplemented by Mrs Gill’s evidence. Further, I think it is necessary to decide whether the sale and purchase agreements were conditional or not, despite the much narrower approach taken by Mr Raymond.
[18] In all the circumstances it is not seriously arguable that the process was unjust, or procedurally unfair, given that the validity of the contracts was squarely raised and argued at the hearing. Even assuming for present purposes that there is a seriously arguable question of law, it is not one of general interest, or sufficient
importance, to justify a second appeal. Rather, the question is peculiar to the circumstances of this case.
Did Sim v Home Bonds apply?
[19] The third question is:
Can the Court of Appeal’s findings in Sim v New Zealand Home Bonds
Limited [2010] NZCA 192 be properly applied where:
(i) No valid Agreements for Sale and Purchase between the vendor and purchaser were entered into; and/or
(ii) The respondent (“NZHB”) did not have any contractual liability to make payment to the vendor under the Agreement to Market a Project using a Home Bond, entered into between the respondent and the vendor (a document not before the Court in Sim); and/or
(iii) The legal reasoning for NZHB’s alleged liability to pay out on the “home bond” to the vendor as if it were a cash deposit is fallacious in that NZHB’s evidence at trial established that the analogy between NZHB’s Home Bond and a cash deposit is false.
[20] Sim is authority for the proposition that Home Bonds is contractually obliged to pay the deposit to the vendor when:7
(a) a settlement notice has been served on the purchaser and has expired;
(b) the purchaser has failed to settle the agreement in response to the notice;
and
(c) [Home Bonds] has received a demand for payment of the bond and confirmation of the purchaser’s failure to settle, including a certified copy of the settlement notice and proof of its valid service on the purchaser.
[21] Further, in Sim the Court found that Home Bonds was not required to become “embroiled in disputes between the vendor and purchaser”, save where there was a challenge to the validity of the settlement notice because practical completion of the building, or the availability of title, was disputed. In allowing the present appeal I accepted Mr Raymond’s argument that here there was no challenge to the validity of the settlement notice as envisaged in Sim. Nor could Home Bonds be criticised for refusing to engage in the unfolding dispute between vendor and purchaser. To this extent the reasoning in Sim was applied.
[22] Turning to the proposed question, the first proposition that there were no valid agreements for sale and purchase is not seriously arguable, both because there were valid agreements (for the reasons already given), and because the validity dispute was not Home Bonds’ concern (as per Sim).
[23] With reference to the second proposition, based on the Agreement to Market a Project using a Homebond concluded between Home Bonds and the vendor, I do not understand the contention. Nor can I relate it to anything contained in Mrs Gill’s written submission in support of the leave application.
[24] The same applies in relation to the third contention concerning a false analogy. I think the proposition is directed to para [55] of the judgment, which contains a mere aside rather than forming part of the reasoning process.
Conclusion
[25] For these reasons leave to appeal is refused.
Solicitors:
R W Raymond, Barrister, Christchurch
Buddle Findlay, Christchurch
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