Quayside Trustee Limited v Atrium Management Limited HC Tauranga Civ-2010-470-455

[2011] NZHC 439

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV-2010-470-455

BETWEEN  QUAYSIDE TRUSTEE LIMITED Plaintiff

ANDATRIUM MANAGEMENT LIMITED First Defendant

ANDPORTUMNA INVESTMENTS LIMITED Second Defendant

Hearing:         4 April 2011

Counsel:         Mr P McPherson for Fkirst Defendant

Mr R A Smith for Plaintiff

Judgment:      2 May 2011 at 4:00 PM

JUDGMENT OF ASSOCIATE JUDGE DOOGUE

This judgment was delivered by me on

02.05.11 at 4 pm, pursuant to

Rule 11.5  of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Counsel:

Hesketh Henry, Private Bag 92093, Auckland - by email: [e-mail]

Anthony Harper Lawyers, Auckland – by email: [e-mail]

QUAYSIDE TRUSTEE LIMITED V ATRIUM MANAGEMENT LIMITED & ANOR HC TAU CIV-2010-470-

455 2 May 2011

Background

[1]       The  first  defendant,  Atrium  Management  Ltd  (“Atrium”)  has  filed  an application for summary judgment in these proceedings.  The proceedings arose out of an agreement which the plaintiff, Quayside Trustee Ltd (“Quayside”), and the defendants entered into dated 18 October 2006.   The agreement provided that the defendants were to purchase the manager‘s unit, Unit 104, in an apartment development at Whakatane which had been carried out by the plaintiff.   The consideration  for the purchase of the unit  was  $525,000  (GST  inclusive).   The plaintiff, as part of its claim is seeking an order for specific performance of that contract.

[2]      Atrium asserts that it is not required to perform the contracts further either on the ground that it gave a justified notice cancelling the contract or, alternatively, it is discharged from performing the contract by frustration.

[3]      In addition to the agreement for purchase of the unit, the parties entered into another agreement more or less contemporaneously.   Pursuant to the second agreement, the defendants contracted to purchase the management rights in respect of the Quayside development for the sum of $200,000 (plus GST).  By clause 5 of the agreement, it was provided that the purchase of the manager‘s unit and the management  rights  were  “completely  interdependent”  so  that  neither  would  be capable of completion independently of the other and default in respect of settlement of one would also be a default in respect of the settlement of the other.

[4]      There was annexed to the agreement a draft management agreement setting out the terms of an agreement which it was proposed the body corporate of the development and Atrium would enter into.  The agreement for the purchase of the unit provided as follows:

3.Upon payment in full of the purchase price for the management rights, Quayside shall hand to the Manager the Manager‘s original executed copy of the Management Agreement.

[5]      The key provisions of the draft management agreement for the purposes of the present application are to be found in part 12 of the draft which is headed

“Holiday Letting Service”.  In that part, it was provided that the body corporate was to grant the building manager the exclusive right to exercise “on the Property” the holiday letting service.   The building manager was to exercise the holiday letting service only with the agreement of the Proprietors…