Official Assignee v Kingston Developments Group Limited - [2015] NZHC 1416

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-000240 [2015] NZHC 1416

BETWEEN
THE OFFICIAL ASSIGNEE

Plaintiff

AND

KINGSTON DEVELOPMENTS GROUP LIMITED

Defendant

FLOURISHING PROPERTY COMPANY LIMITED

Counterclaim discontinued

Hearing: 25-29 May 2015

Counsel:

J B M Smith QC and R S May for the Plaintiff
N R Campbell QC, M H L Morrison and
R M Cederwall for the Defendant

Judgment:

25 June 2015

JUDGMENT OF FOGARTY J

This judgment was delivered by me on 25 June 2015 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Counsel: J B M Smith QC, Wellington
N R Campbell QC, Auckland

Solicitors: Luke Cunningham Clere, Wellington
Lowndes Jordan, Auckland

THE OFFICIAL ASSIGNEE v KINGSTON DEVELOPMENTS GROUP LIMITED [2015] NZHC 1416 [25
June 2015]

Introduction

[1] The defendant, Kingston Developments Group Ltd (Kingston), had acquired a property in Albany, north of Auckland. Kingston had mortgaged the property to ASAP Limited (ASAP), the debt being in the order of $14m. The property was valuable because of its suitability for development. A company, BC Corporate Administration Limited (BCCA), had an option to buy back the property from Kingston for the purchase price paid by Kingston of $16,686,000 plus third party costs, including interest (the charges). This option is called the “buy back option” and the right to exercise it, the First Option Agreement.

[2] If BCCA did not give notice to exercise the buy-back option on or before

12 January 2015, then the Official Assignee (OA) had the right to exercise the First Option Agreement. The OA’s right to exercise BCCA’s buy-back option was called the “Second Option” and was granted under a “Second Option Deed” entered into by BCCA and the OA. The OA had the right to exercise BCCA’s option between
13 January and 15 January 2015 (settlement being by the next day, 16 January).

[3] If the buy-back option was exercised, the purchase was on terms known as the “agreement for sale and purchase” or “the Agreement”. The buy-back option provided strict terms as to settlement:

The settlement date under the agreement shall be 16 January 2015 or such earlier date as the parties may mutually agree. Time being of essence. (emphasis added)

[4] BCCA did not exercise its option before 12 January. On 13 January, the OA gave notice to Kingston that she would exercise the option. To finance the purchase the OA had on-sold the property to Flourishing Property Company Ltd (Flourishing) for $25m. 1

[5] When the OA’s solicitors, GRC, advised Kingston’s solicitors, S&P, that the

OA would exercise the option, they suggested settlement by way of bank cheque. As

1 Nominated as purchaser by Shanghai Zhengchang International Machinery and Engineering
Company Limited.

will be described in this judgment, there were considerable difficulties arranging the settlement on 16 January. The settlement did not occur on that working day. At 5.15 p.m. on 16 January, S&P, as solicitors for Kingston, sent an email to GRC, as solicitors for…

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 Official Assignee v Kingston Developments Group Limited

Details

AGLC: Official Assignee v Kingston Developments Group Limited [2015] NZHC 1416
Case: [2015] NZHC 1416
Decision Date: 25 June 2015

CaseChat Overview and Summary

In Official Assignee v Kingston Developments Group Limited, the High Court of New Zealand considered a dispute between the Official Assignee (OA) and Kingston Developments Group Limited (Kingston) regarding the sale of a property in Albany, north of Auckland. The dispute centred on whether Kingston was entitled to cancel the sale and purchase agreement on 16 January 2015. The OA had the right to exercise a buy-back option granted by BC Corporate Administration Limited (BCCA) to purchase the property from Kingston for $16,686,000 plus charges. If BCCA did not exercise the buy-back option by 12 January 2015, the OA had the right to exercise the option between 13 January and 15 January. The OA exercised the option on 13 January and intended to settle the purchase by bank cheque at Kingston's solicitor's office. However, the settlement did not take place before 5.00 pm on 16 January 2015. The OA sought declarations equivalent to the remedy of specific performance of the contract by Kingston. The Court found that the OA had not proved that tender would have been futile, and therefore, Kingston was justified in cancelling the contract at 5.15 pm on 16 January 2015. The Court refused to declare that Kingston breached its obligations under the general terms of sale and repudiated the First Option Agreement and the Agreement for Sale and Purchase. The Court also found that Kingston validly cancelled the First Option Agreement and granted declarations in terms of the Deed of Partial Settlement.

Orders