Park Homes Ltd v Miah - [2022] NZHC 1352

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-001961

[2022] NZHC 1352

BETWEEN
THE PARK HOMES LIMITED

Plaintiff

AND

ABDDUR RAHIM MIAH

Defendant

Hearing: 19 May 2022

Appearances:

R J Thompson for Plaintiff R J Hooker for Defendant

Judgment:

9 June 2022

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on 9 June 2022 at 3.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar

Date …………………………….

THE PARK HOMES LTD v MIAH [2022] NZHC 1352 [9 June 2022]

Introduction

[1] The Park Homes Ltd1 seeks summary judgment in the sum of $730,434.78 against Mr Miah for an alleged breach of a GST warranty he provided to Park Homes. The warranty was contained in a variation to an agreement for sale and purchase2 of a property on Park Estate Road, Rosehill, Auckland,3 sold by Mr Miah to Park Homes.

[2] The issue I must determine is one of contractual interpretation. Has Park Homes established that Mr Miah has no defence to the claim; or is there a tenable defence that the warranty was not breached, and that Park Homes has suffered no recoverable loss?

Factual background

[3]Mr Wong is the director of Park Homes.

[4] On 13 November 2020, Mr Wong, as purchaser, entered into the ASP with Mr Miah, as the vendor. The sale price was $6.5m, including GST, and set a settlement date of 15 March 2021.

[5] The ASP was in the 10th edition 2019(2) format approved by the Real Estate Institute of New Zealand Incorporated and the Auckland District Law Society Incorporated. The particular terms of the agreement included:

(a)(On the front sheet) “the vendor is registered under the GST Act in respect of the transaction evidenced by this agreement and/or will be so registered at settlement: … Yes”;4

(b)(On the front sheet) “purchase price: $6,500,000.00 incl GST” / “inclusive of GST (if any)”;

1      Park Homes.
2      ASP.
3      The Property (115 Park Estate Road, Rosehill, Auckland, Record of Title NA67C/103).
4      The line crossing out ‘No’ does extend somewhat into the ‘Yes’ column, but it seems clear on the face of the document that the question is being answered in the affirmative.

(c)(On the front sheet) the settlement date is recorded as 15 March 2021 (with other dates, including 25 November 2021 and 30 September 2021 crossed out);

(d)Schedule 1 (GST information) records that vendor’s GST registration number as 117-283-291.5 The remainder of Schedule 1 has not been completed.

[6] On 18 November 2020, Mr Wong and Mr Miah entered into a written variation agreement which reduced the purchase price of the Property to $5,750,000 inclusive of GST if any. The variation agreement also included the following warranty, at cl 3:

The Vendor warrants that they are not registered for GST as at the date of this agreement, and that they will not be registered for GST at settlement. If the vendor…

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: [2022] NZHC 1352
Decision Date: 9 June 2022

CaseChat Overview and Summary

Park Homes Ltd initiated proceedings against Mr Miah seeking summary judgment in the sum of $730,434.78, alleging breach of a GST warranty. The warranty was part of a variation to an agreement for sale and purchase of a property in Rosehill, Auckland. Mr Miah denied liability, arguing he was never registered for GST and the warranty only applied until the day before settlement. The court had to determine whether Mr Miah had a tenable defence that the warranty was not breached and whether Park Homes suffered no recoverable loss.

The court held that the warranty's purpose was to assign risk regarding GST registration. Since Mr Miah was deemed to be registered for GST at settlement under the GST Act, he was in breach of the warranty. The court found that the warranty's reference to "settlement" meant the actual settlement date of 16 March 2021, not the originally specified date of 15 March 2021. As such, Mr Miah's contention that the warranty only applied until 15 March was rejected. The court further held that Park Homes was denied an input tax credit for the GST component of the purchase price, constituting a loss arising naturally from the breach of warranty.

The court granted summary judgment in favour of Park Homes, awarding the claimed sum of $730,434.78 plus interest from 15 August 2021, and ordered Mr Miah to pay Park Homes' costs on a 2B basis plus disbursements.

Orders