R B Road 391 Ltd v Malcolm Alexander Johnstone

IN THE SUPREME COURT OF NEW ZEALAND

SC 97/2011
[2011] NZSC 141

BETWEEN R B ROAD 391 LTD
Applicant

AND MALCOLM ALEXANDER JOHNSTONE, HEATHER PATRICIA JOHNSTONE, HARTS GAULD TRUSTEES LIMITED AND JMAT HOLDINGS LIMITED (AS TRUSTEES OF THE JOHNSTONE INVESTMENT TRUST)
Respondents

Court: Elias CJ, McGrath and William Young JJ

Counsel: A J Sherlock for Applicant
G J Kohler for Respondents

Judgment: 18 November 2011

JUDGMENT OF THE COURT

The application for leave to appeal is dismissed with costs of $2,500 payable to the respondents.

REASONS

This application for leave to appeal arises out of an application for summary judgment on a vendor’s claim for wrongful cancellation of an agreement for sale and purchase of a section. At issue is whether the purchaser was able to cancel the contract under a condition that required that both parties be reasonably satisfied with the City Council’s conditions of consent to the subdivision. The Court of Appeal[1] decided in favour of the purchaser, reversing decisions of two Associate Judges.[2] The dispute centres on whether the Council’s condition, which required that if earthworks on the section disclosed contamination, work should cease and Council approval for remedial action sought, should have been anticipated by the purchaser and whether in any event it was burdensome.
[1] Johnstone v R B Road 391 Ltd [2011] NZCA 393.
[2]R B Road 391 Ltd v Johnstone HC Auckland CIV-2009-404-7048, 6 July 2010, R B Road 391 Ltd v Johnstone HC Auckland CIV-2009-404-7048, 28 June 2011.
In agreement with the Court of Appeal, we are satisfied that this is essentially a factual dispute. It raises issues that have to be resolved at trial where the purchaser can be cross-examined and, if thought necessary, contrary evidence called by the vendor. It was not an appropriate case for summary judgment and there is no other ground that would satisfy the statutory criteria for giving leave to appeal.
The application for leave to appeal is accordingly refused.

Solicitors:
Hesketh Henry, Auckland for Applicant
Dawsons, Auckland for Respondent

CaseChat Overview and Summary

The case of R B Road 391 Ltd v Malcolm Alexander Johnstone is an appeal against the decision of the Court of Appeal to grant summary judgment in favour of the respondents. The original dispute involved a vendor's claim for wrongful cancellation of an agreement for sale and purchase of a section. The key issue in this case was whether the purchaser was entitled to cancel the contract under a condition that required both parties to be reasonably satisfied with the City Council's conditions of consent to the subdivision.

The legal issues before the court were whether the purchaser should have anticipated the Council's condition, which required work to cease and Council approval for remedial action to be sought if earthworks on the section disclosed contamination, and whether the condition was burdensome. The Court of Appeal had previously decided in favour of the purchaser, reversing decisions of two Associate Judges. The Supreme Court was asked to determine whether the appeal should be allowed and if the statutory criteria for giving leave to appeal had been satisfied.

In dismissing the application for leave to appeal, the court agreed with the Court of Appeal that the dispute was essentially factual and required resolution at trial. The court held that it was not an appropriate case for summary judgment and found no other grounds that would satisfy the statutory criteria for giving leave to appeal. The application for leave to appeal was therefore dismissed with costs of $2,500 payable to the respondents. The final orders of the court were that the application for leave to appeal is dismissed with costs of $2,500 payable to the respondents.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established