Otago Station Estates Ltd v Parker - [2005] NZSC 16

IN THE SUPREME COURT OF NEW ZEALAND

SC CIV 6/2004 [2005] NZSC 16

BETWEENOTAGO STATION ESTATES LIMITED Appellant

ANDJOHN ROBERT PARKER First Respondent

ANDDAVID JOHN PARKER AND LORRAINE MAREE PARKER Second Respondents

Hearing: 15 March 2005
Court: Elias CJ, Gault, Keith, Blanchard and Tipping JJ Counsel: A R Galbraith QC and S A Grant for Appellant
N R W Davidson QC and D M Lester for Respondents

Judgment: 19 April 2005

JUDGMENT OF THE COURT

A. The appeal is dismissed.

B.Costs in favour of the respondents are to be fixed following receipt of memoranda of counsel.

REASONS

(Given by Blanchard J)

[1] The issue on this appeal is whether a purchaser can remedy a default in paying a deposit due under an agreement to sale and purchase of land on the REINZ
– ADLS form by tendering a personal cheque if the vendor objects to that mode of

payment.

OTAGO STATION ESTATES LIMITED V PARKER And Anor SC SC CIV 6/2004 [19 April 2005]

Facts

[2] On 22 November 2000 the respondents, D J & L M Parker (jointly) and J R Parker entered into contracts to sell two parcels of rural land in North Otago for purchase prices of $2,950,000 and $600,000 respectively. The purchaser companies, Willowbank Holdings Ltd and Livingstone Properties Ltd, had express rights of nomination of a purchaser. Each contract was on the form approved by the Real Estate Institute of New Zealand and the Auckland District Law Society.1 Each was conditional upon confirmation by the directors of the purchaser company within 60 working days (i.e., by 1 March 2001, later extended to 6 March). The J R Parker/Livingstone agreement was also conditional upon the obtaining by the vendor of a resource consent for a subdivision to enable a separate title to be issued for the subject land. No date was fixed by the agreement for fulfilment of that condition.

[3] Each agreement provided for a deposit of 10% of the price “upon confirmation of this Agreement”, with the balance of the price being payable “in cash” on the date of possession, which was fixed for 1 March 2001.

[4] The printed conditions of sale contained the following requirements concerning a deposit:

2.1 The purchaser shall pay the deposit to the vendor or the vendor’s agent immediately upon execution of this agreement by both parties and/or at such other time as is specified in this agreement time being of the essence as to each such time.

2.2 The vendor shall not be entitled to cancel this agreement for non- payment of the deposit unless the vendor has first given to the purchaser three working days’ notice of intention to cancel and the purchaser has failed within that time to remedy the default. No notice of cancellation shall be effective if the deposit has been paid before the notice of cancellation is served.

[5] On 6 March the agreements were confirmed by the purchaser companies. The deposits were not, however, paid. There is no material before the…

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: [2005] NZSC 16
Decision Date: 19 April 2005

CaseChat Overview and Summary

The case of Otago Station Estates Ltd v Parker involved a dispute between the parties over the mode of payment for a deposit under a land sale agreement. The vendor, Parker, objected to the purchaser, Otago Station Estates, tendering a personal cheque to pay the deposit, arguing that it was not legal tender as required by the contract. The purchaser had tendered the cheque in response to a notice from the vendor to remedy a default in payment. The High Court and Court of Appeal both found in favour of the vendor, ruling that the personal cheque did not constitute good tender and that the vendor was entitled to cancel the agreement. The Supreme Court of New Zealand dismissed the appeal, agreeing with the lower courts that a personal cheque is not legal tender for the payment of a deposit and that the vendor was entitled to reject it. The Court held that the requirement for legal tender or its equivalent must be strictly adhered to unless the vendor explicitly agrees to accept a personal cheque. The decision underscores the importance of certainty in payment for the vendor and the need for the purchaser to comply with the contractual requirements for payment of the deposit. The Court also rejected arguments that the practice of accepting personal cheques implied a waiver of the requirement for legal tender or that the vendors were required to specify that personal cheques would not be accepted.

Orders