Nopera Log House Ltd v Godsiff - [2014] NZHC 639

IN THE HIGH COURT OF NEW ZEALAND BLENHEIM REGISTRY

CIV-2014-406-000008 [2014] NZHC 639

BETWEEN
NOPERA LOG HOUSE LIMITED

Applicant

AND

MICHELLE ELIZABETH GODSIFF Respondent

STUART LEONARD GODSIFF Second Respondent

Hearing: 25 March 2014

Appearances:

N R Campbell QC for Applicant
Q A Davies and D P Neild for Respondents

Judgment:

2 April 2014

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

Background

[1] On 29 November 2013 the respondents, Mr and Mrs Godsiff (the Godsiffs) agreed to sell their property in the Marlborough Sounds to Mr K Radzik. The agreement was subject to one condition only, in the following terms:

18.0 Due Diligence

This agreement is entirely conditional on the Purchaser approving (in the Purchaser’s sole and unfettered discretion) all matters that the Purchaser considers may touch, concern or affect the property or the commercial viability of the transaction within twenty (20) complete working days after the date of this agreement being signed by both parties.

[2] The agreement was later varied in three material respects:

NOPERA LOG HOUSE LTD v M E & S L GODSIFF [2014] NZHC 639 [2 April 2014]

(a) On 6 December the parties agreed to the contract being subject to consent being granted under the Overseas Investment Act 2005 (OIA) by 31 March 2014.

(b) On 18 December 2013 the parties agreed to the date for confirmation under the due diligence condition being 31 January 2014.1

(c) On 20 January 2014 Mr Radzik nominated Nopera Log House Limited

(Nopera), the applicant, as purchaser under the agreement.

[3] Nopera did not confirm the due diligence condition by 5.00 pm on 31 January

2014. At 5.15 pm that day the Godsiffs cancelled the contract, on the ground that the due diligence condition had not been confirmed. By that point, Nopera had not lodged an application for consent under the OIA. Nor had it paid the deposit which was required to be paid on 31 January.

[4] On 12 February 2014 Nopera lodged a caveat against the titles to the property claiming an interest in the land as nominated purchaser pursuant to the agreement for sale and purchase which I have described. On 25 February Land Information New Zealand gave notice to Nopera that the Godsiffs had applied to lapse the caveat. On
10 March Nopera filed this application for an order that the caveat not lapse.

The issues

[5] It is common ground that, depending on the circumstances, a purchaser under a conditional agreement for sale and purchase of land may have an equitable interest in that land capable of sustaining a caveat prior to confirmation.2 The test is whether equity can compel a vendor to transfer the estate or interest to the purchaser. If so, this gives that purchaser the equitable estate or interest which will support a caveat.
The equitable interest obtained, however, is always conditional upon the purchaser

1 This was a working day as defined in clause 1.1(29) of the contract. A working day is defined to end at 5pm (1.1(29)(c)).
2 Bevin v Smith

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.

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Details

Case: [2014] NZHC 639
Decision Date: 2 April 2014

CaseChat Overview and Summary

Nopera Log House Ltd sought to sustain a caveat over property it had agreed to purchase from the Godsiffs. The parties had agreed to the sale of the property on 29 November 2013, and varied the agreement on several occasions. The final variation was that the contract was conditional on the purchaser obtaining consent under the Overseas Investment Act 2005 by 31 March 2014. Nopera did not obtain that consent by the due date, nor did it confirm the due diligence condition by the required date of 31 January 2014. The Godsiffs cancelled the contract and Nopera lodged a caveat against the property. The Godsiffs sought to have the caveat removed.

Nopera submitted that the Godsiffs had wrongly cancelled the contract, and that the contract passed an equitable interest to Nopera which supported the caveat. The Godsiffs submitted that they were entitled to cancel the contract as Nopera had not confirmed the due diligence condition by the required date. Further, they submitted that a contract conditional on the grant of consent under the Overseas Investment Act 2005 did not pass an equitable interest capable of supporting a caveat.

The Court found that the Godsiffs were entitled to cancel the contract. Nopera had not confirmed the due diligence condition by the required date, and it had not sought an extension of time for doing so. The delay in providing information to Nopera by the Godsiffs did not cause Nopera’s failure to confirm the due diligence condition. The Court further found that the contract passed an equitable interest to Nopera on entering into the contract, and that equitable interest was held subject to consent being granted. It was capable of supporting a caveat. However, because the Court had found that the Godsiffs were entitled to cancel the contract, it dismissed the application to sustain the caveat.

Orders