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Shen v Ossyanin (No 2)

Shen v Ossyanin (No 2)

Case [2019] NZHC 2430 25 September 2019

Mistake

Unequal Exchange of Value

Restitution

Compensatory Damages

Relief for Mistake

Civil Litigation & Procedure

Contract Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2015-404-00855

[2019] NZHC 2430

BETWEEN
ZHAOWU SHEN

Plaintiff

AND

ANDREY YURIEVICH OSSYANIN AND TATYANA OSSYANINA

First Defendant

HARRINGTON PROPERTY INSPECTIONS LIMITED

Second Defendant

Hearing: 28 June 2019

Counsel:

A Sharp and C Huang for Plaintiff

R J Macdonald and M Cherrington for First Defendant

Judgment:

25 September 2019

JUDGMENT (NO 2) OF WHATA J

This judgment was delivered by me on 25 September 2019 at 4.00 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date: ………………………….

Solicitors:Jesse & Associates, Auckland MBC Law Limited, Auckland

SHEN v OSSYANIN [2019] NZHC 2430 [25 September 2019]

[1] This is my second judgment in this matter. Mr Shen purchased an architecturally designed home from Mr Ossyanin. In a meeting prior to settlement, Mr Shen asked whether the house leaked. Mr Ossyanin said, in short, it did not. The house leaked. My first judgment determined whether Mr Ossyanin had made any actionable misrepresentation about the leaks. I found that he did not, because Mr Ossyanin honestly and reasonably believed the house did not leak. However, I tentatively found that he and Mr Shen may have been operating under a common mistake. Because the parties had not fully addressed common mistake, I reserved leave for them to bring that aspect back to Court.

[2] Mr Shen later advised the Court that he would pursue the issue of mistake.1 This judgment determines whether Mr Shen and Mr Ossyanin were operating under a mistake and, if so, what relief might be available.

Background

[3] The background is set out in some detail in my Judgment (No 1).2 I repeat the relevant parts of it here:

[3] Mr and Mrs Ossyanin purchased a Peter Bosley designed home at 3 Wairangi Street, Herne Bay, in 2003. It was their family home for about 10 years before they decided to sell it. The property was then advertised by Barfoot & Thompson on the following terms:

“Waterfront Work of Art” – Herne Bay, Herne Bay Invest in one of Auckland most iconic architecturally inspired residences.

The craftsmanship and attention to detail that has gone into all aspects of construction both external and internal will endure through the years and mark this home as a collector’s piece.

Designed by Pete Bosley, inspired by Frank Lloyd Wright in 1988 on a warm north facing 2049 square metre site provides; 4 x bedrooms, 3 x bathrooms, 4 x car garaging, an indoor spa pool and sauna complex, billiard room and various lounges/living spaces and a large swimming pool all orientated towards extensive inner harbour and Harbour Bridge views!

1 A hearing date suitable to both parties could not be fixed until 28 June 2019. An application to adjourn by the plaintiff was declined. (PER MY Minute dated 24 June 2019.)
2 Shen v Ossyanin [2019] NZHC 135.

In addition, there is a fully self-contained apartment above the 4-x car garage suitable 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 Shen v Ossyanin (No 2)

Details

AGLC: Shen v Ossyanin (No 2) [2019] NZHC 2430
Case: [2019] NZHC 2430
Decision Date: 25 September 2019

CaseChat Overview and Summary

Zhaowu Shen purchased a home from Andrey Yurievich Ossyanin. The property was found to be leaking after the purchase was complete. Mr Shen brought an action against Mr Ossyanin for relief on the grounds of mistake, alleging that they were both operating under the mistaken belief that the house did not leak. The court was required to determine whether the parties were operating under a common mistake and, if so, what relief might be available. The court found that the parties were operating under a common mistake about whether the house leaked. This was a material factor that influenced Mr Shen's decision to confirm the contract, making it a common mistake. The court also found that the contract did not expressly or by implication allocate the risk of mistake to Mr Shen. Therefore, he was not obliged to assume the risk of mistake. Additionally, the court determined that Mr Shen's conduct, while unreasonable, did not disentitle him to relief. Finally, the court found that there was a substantially unequal exchange of value, and relief should be granted to mitigate the arbitrary effects of the mistake. The court ordered that Mr Shen should receive $450,000, plus interest, and Mr Ossyanin should bear 30% of the burden of the mistake. The court also awarded Mr Ossyanin 50% of his costs and disbursements.

Orders