Signal v Berry
[2017] NZHC 2466
•6 October 2017
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA
TE WHANGANUI-Ā-TARA ROHE
CIV-2015-031-35 [2017] NZHC 2466
BETWEEN ALLAN PHILLIP SIGNAL AND
PRUDENCE LEA SIGNAL AS TRUSTEES OF THE SIGNAL PROPERTY TRUST
Plaintiffs
AND
GEORGE LATHAM BERRY, DAVID RICHARD TRAVERS SALTER, MICHAEL JOHN DE BUYZER AND DAVID MICHAEL JACKSON TRADING AS BERRY & CO SOLICITORS
First Defendants
AND
MICHAEL JOHN DE BUYZER Second Defendant
Hearing: 21-25 November 2016 and 2 February 2017 Appearances:
A R Shaw for Plaintiffs
M E Parker for DefendantsJudgment:
6 October 2017
JUDGMENT OF CLARK J
Pursuant to r 11.5 of the High Court Rules I direct that the delivery time of this judgment is 4:45 pm
on 6 October 2017
SIGNAL and SIGNAL v BERRY and ORS, and DE BUYZER [2017] NZHC 2466 [6 October 2017]
Introduction
[1] This is a claim by the plaintiff against its solicitors for the loss said to be caused by their negligence and breach of contract. Allan Signal and his wife are trustees of the Signal Property Trust, the plaintiff. The Trust is engaged in property development and subdivision. In 2006 the Trust purchased a property in Foxton (the subdivision) with the intention of subdividing it into eight separate lots and selling the lots at a profit.
[2] The Horowhenua District Council (the Council) granted resource consent to create the subdivision in January 2008. On 17 June 2008 the Council certified the survey plan was approved pursuant to s 223 of the Resource Management Act 1991. Time started to run from this date. The certificate would expire three years later, that is, on 11 June 2011.
[3] On 7 November 2008 Mr Signal engaged Berry & Co, the first defendant, to provide legal services relating to the subdivision. On the same day, Berry & Co received an approval notice from Land Information New Zealand (LINZ) notifying it had “approved as to survey” the survey plan relating to the subdivision which had been approved by the Council.
[4] Berry & Co accepts it was on notice as a result of its receipt of this advice that the certificate issued by the Council would expire three years from its issue, namely, on 17 June 2011. Unfortunately, Berry & Co did not seek to obtain titles for the subdivision until 18 July 2011. The application for new titles for the lots was rejected because the Council’s approval had lapsed. Berry & Co had omitted to lodge consents of all adjoining property owners. Nor had the names and addresses of all adjoining owners and the required fees been provided.
[5] Certificates of title did not become available until 15 August 2013 with adverse consequences for the Trust. The plaintiff sues the defendants in negligence and for breach of contract. The defendants admit they breached their duty of care to the plaintiff and the first defendant admits breach of contractual terms but the defendants deny liability for any loss. Causation and quantum are disputed.
Background
[6] The chronological narrative is largely agreed. In particular, a Mr and Mrs Rehu owned a property adjacent to the subdivision and in 2006 entered into a sale and purchase agreement with the Trust to purchase Lot 3. Settlement did not take place until September 2013.
[7] The facts that are in dispute, and which the plaintiff has the burden of establishing if it is to succeed in its claim, are the following:
(a) In 2008, Allan Signal, on behalf of the Trust, entered into an oral agreement with Kevin Gunther whereby Mr Gunther would enter into a written sale and purchase agreement to purchase Lot 6 of the subdivision for $240,000 once the title for Lot 6 was available.
(b)Around August/September 2011 Kevin Gunther cancelled the oral agreement to enter into a written agreement to purchase Lot 6 because the title for Lot 6 was not available and because the timeframe for obtaining title was uncertain.
(c) In 2010 Allan Signal, on behalf of the Trust, entered into an oral agreement with Ray Bailey and Bryan McEwen that they would enter into a written agreement to purchase Lot 5 of the subdivision for
$240,000 once the title for Lot 5 was available.
(d)In July 2013 the title for Lot 5 was still not available and in September 2013, because of changes in their bank’s lending rules, Ray Bailey and Bryan McEwen cancelled the agreement to purchase Lot 5.
(e) In June 2015 Lot 5 sold for $203,000, some $37,000 less than the
$240,000 sum originally agreed between the Trust and Ms Bailey and
Mr McEwen.
Plaintiff ’s claim
Late amendment to claim
[8] It is appropriate at this point to deal with a pleadings issue that arose on the fourth day of trial when counsel for the plaintiff, Mr Shaw, applied to amend the statement of claim to plead loss of opportunity as part of the special damages which the plaintiff seeks. After considering oral and written submissions from Mr Shaw and counsel for the defendants, Mr Parker, I granted the application1 for reasons to be addressed in my final judgment. My reasons are set out in the following paragraphs.
[9] The proposed amendment to the pleadings was said to be primarily for the purpose of ensuring compliance with r 5.33 of the High Court Rules which requires a plaintiff seeking special damages to specifically plead and particularise the damages sought. Mr Shaw candidly submitted he was unaware that loss of opportunity was in the category of special damages until very recently. The amendment was categorised as a refinement of the statement of claim to assist the Court in addressing the issue of the plaintiff’s damages. Mr Shaw contended it was in the interests of justice to grant leave; the amendment would not significantly prejudice the defendants and nor would it cause significant delay.
[10] Mr Parker filed a full and helpful notice of opposition in which the following grounds for opposing the amendment were emphasised:
(a) The application, made on the fourth day of trial, was made after numerous witnesses had given evidence and been cross-examined on the basis of the then current pleading, the second amended statement of claim dated 3 November 2016.
(b)The plaintiff had had ample opportunity to plead the matters sought to be introduced by the amendment.
1 Signal v Berry HC Wellington CIV-2015-031-35, 2 December 2016 (Ruling No 2). While the ruling is dated 2 December 2016 it was given on the same day Mr Shaw applied to amend.
(c) The issues raised in the proposed amendment are not necessary for the Court to determine the real controversy between the parties namely whether loss has been suffered as a result of the defendants’ acts or omissions and, if necessary, the extent of that loss.
(d)The defendants are significantly prejudiced by the nature of the proposed amendments “because the basis for the claim has been substantially changed in relation to the negligence cause of action”. Mr Parker particularised the nature of the prejudice claimed.
(e) The matters sought to be pleaded did not emerge in the course of trial but could and should have been pleaded well in advance of trial.
(f) Inordinate and undue pressure is placed on the defendants “to comprehend the unparticularised amendments and whether to obtain further evidence” by the late application.
(g)The hearing time was likely to be significantly impacted if the issues pleaded were to be addressed.
(h)The defendants had queried a potential claim for loss of chance in correspondence in February 2016 and yet the plaintiff took no action to amend its claim.
(i) The application was an attempt to patch up the plaintiff’s case and
should not be permitted.
Assessment
[11] The first point is that damages calculated on the basis of loss of opportunity are special damages within r 5.33 and consequently should be pleaded.2 Secondly, it is well-established where an application to amend pleadings is brought at such a late
stage in the proceeding the application must “surmount the three formidable hurdles”
of showing the amendment:3
(a) is in the interests of justice;
(b) will not significantly prejudice the defendant; and
(c) will not cause significant delay.
[12] Notwithstanding Mr Parker’s comprehensive and forceful submissions opposing the application to amend I was persuaded that the application should be granted.
[13] First I accept that loss of opportunity effectively formed part of the plaintiff’s
case from the outset for the following reasons:
(a) In his written brief of evidence Mr Signal explained his plans in 2010 when, “knowing that the Trust would sell three sections which would bring in some $530,000 once titles were issued” he decided to purchase and place relocatable houses on the vacant lots in the subdivision. When titles for the lots did not come through in June
2011 as expected the Trust did not have access to the $530,000 anticipated.
(b)There was other evidence addressing the placement of relocatable homes to make the vacant sections more marketable in the brief of evidence of Stephen Attwell.
(c) Mr Parker cross-examined Mr Signal regarding a letter of demand sent from Mr Signal’s solicitors to Berry & Co. Mr Parker put to Mr Signal:
[Mr Signal’s solicitors] seek to rationalise [claims for damages] by saying that it’s compensation for loss of
opportunity interest … but there’s no figure put against each
of those three items.
(d)As well, counsel’s written synopsis of opening submissions outlined a loss of opportunity cost reflecting Mr Signal’s evidence about his plans to place relocatable homes on the lots to make them more marketable.
[14] In circumstances where the defendants have admitted breach of contract and duty of care and the quantum of the plaintiff’s claim would be materially impacted by omitting to particularise the “loss of opportunity” aspect of its damages, the interests of justice warrant the grant of leave to amend. That is particularly so where this head of damage has been foreshadowed in the evidence and in the opening submissions and where, as I come to discuss, there is no material prejudice to the defendants in allowing the amendment.
[15] As to prejudice, at the time the application was made the defendants had not led any evidence-in-chief. I indicated that any request to recall witnesses to cross- examine on the point would be granted. At the point when I heard counsels’ submissions on this application, that is on the morning of 24 November 2016, it had become apparent that the trial would not be completed in the 5 days allocated and that time in February 2017 would need to be scheduled for the hearing of closing arguments. The upshot is that there was both time and the opportunity to accommodate any request made by the defendants to recall any witness, in particular Mr Signal.
[16] I accept that amendments to pleadings at the eleventh hour frequently create an annoyance for counsel who, if the amendment is opposed, must take time to review the amendments and possibly take instructions from clients. That said, there was no sufficient risk of injustice to the defendants to cause me to reject the application. The plaintiff does not seek to introduce a new cause of action. I regard the amendments to the pleadings as more in the nature of bringing the pleading into line with the claims which Mr Signal made as early as 2013 and certainly in his written brief of evidence. Loss of opportunity was very much a head of damage for which compensation was sought and due to the oversight of counsel had not been
pleaded. The effect of that oversight would be to create an irreparable injustice to the plaintiff when no serious prejudice is caused to the defendant by the amendment.
Third amended statement of claim
[17] The plaintiff’s third amended statement of claim (which, from this point, I refer to as the statement of claim) pleads two causes of action: breach of duty of care and breach of contract. The particulars of breach are, unsurprisingly, different for each cause of action but the damages claims are formulated identically. I set out below paragraph 33 of the statement of claim relating to the negligence cause of action.
33.As a result of the first defendant’s breach of their duty of care that they owed to the plaintiff, the plaintiff has suffered loss, including losses of opportunity, in an amount to be ascertained, but not less
$279,513.72, being calculated as:
33.1.$198,000, or such other amount to be determined, being the loss of value of the Subdivision to the plaintiff as a result of titles for the Subdivision not being available on 17 June
2011 including the sum of $95,652.17, being made up of:
33.1.1.The sum of $37,000 (less GST of $4,826.09), being the difference between the sale price of $240,000 (Inc GST) had Lot 5 sold to Ray Bailey and Bryan McEwen on or about June 2011 (as pleaded in paragraph 15 above) and the actual sale price of Lot 5 of $203,000 (Inc GST) in June of 2015 (as pleaded previously in paragraph 29); and
33.1.2.The sum $73,000 (less GST of $9,521.74), being the difference between the sale price of $240,000 (Inc GST) had Lot 6 sold to Kevin Gunther as pleaded in paragraph 6 above and the current market value of
$167,000 (inc GST).
Loss of Opportunity
33.2.Or in the alternative to paragraph 33.1 above, a loss of opportunity, to sell lots 5 and 6 of the Subdivision for
$240,000 each in June 2011 (as previously pleaded in
paragraphs 6 and 15), such opportunity costs being calculated as $240,000 for Lot 5 plus $240,000 for Lot 6 less such discount for risk as this Court may determine appropriate less GST; and
33.3.The sum of $26,956.52, being the loss of opportunity for the plaintiff to place relocatable homes on Lots 1, 2, 4, 7 and 8 and sell those properties before 31 August 2013 with such
opportunity costs calculated as being the difference between the value of those lots on or before 31 August 2013 and their current market value (less GST) as follows:
Loss of Interest
33.4.The sum of $144,558.94, being the total interest incurred by the plaintiff on all of its overdraft and/or loan facilities between 17 June 2011 and 31 October 2016 which would not have been incurred but for the fact that the plaintiff was unable to apply the anticipated proceeds of the sale of Lot 6 to Kevin Gunther (as pleaded in paragraph 6 above) and Lot 5 to Ray Bailey and Bryan McEwen (as pleaded in paragraph 15 above) to its overdraft and loan facilities;
Loss of Opportunity
33.5.Or in the alternative to the paragraph above, a loss of opportunity to apply the proceeds (or part thereof) of the sale of Lot 6 to Kevin Gunther (as pleaded in paragraph 6 above) and Lot 5 to Ray Bailey and Bryan McEwen (as pleaded in paragraph 15 above) and to reduce the interest of the plaintiff’s overdraft and loan facilities incurred between
17 June 2011 to date of $144,558.94.
33.6.$10,286.09 (GST exclusive) or such other amount to be determined, being legal costs incurred by SPT regarding advice and assistance needed relating to the defendant’s breach of duty of care.
33.7.$2,060.00 (GST exclusive), or such other amount to be determined, being the costs incurred by the plaintiff for obtaining a registered valuer’s valuation of the Subdivision at the time titles should have been available in 17 June 2011 and the current market value of the Subdivision to evidence the plaintiff's losses to the defendants.
Defendant’s position
[18] The defendants accept there is no material difference between them: the first defendant being the partners of Berry & Co, the firm, and the second defendant, Mr De Buyzer, the individual partner who oversaw the relevant work.
[19] The defendants’ key arguments are that, for the following reasons, the
plaintiff has suffered no loss:
(a) There was no market for the lots in the relevant period because the property market was depressed. There was an oversupply of similar lots and the lots were overpriced. Apart from the agreement to sell Lot 3 the only genuine arm’s length sale was that of Lot 5 in 2015 and the plaintiff’s failure to achieve any other sale for any other lot underlines the “deeply unattractive” nature of the subdivision which had little or no market.
(b)There was no discernible change in the value of the lots in the relevant period and therefore no loss had been suffered.
(c) The only written, firm and enforceable agreement for sale of any of the lots was that relating to Lot 3. The defendants maintain the purported oral agreements to sell to Mr Gunther and Ms Bailey were never seriously intended to be enforceable. That is supported by Mr Gunther and Ms Bailey’s evidence and the fact that no efforts were made by the plaintiff to hold either Mr Gunther or Ms Bailey to their alleged bargains.
[20] Finally, the defendants’ position is that the plaintiff is unable to demonstrate the interest costs claimed relate directly to the subdivision and the plaintiff has failed to mitigate any loss.
Issues
[21] In closing submissions Mr Shaw addressed the issues for the Court’s determination in an order which I find useful. Mr Parker took no issue with their formulation. Accordingly, I address the following issues in the order in which the plaintiff addressed them in closing submissions:
(a) whether the plaintiff would have sold Lot 5 to Mr Gunther for
$240,000 on or about June 2011 if title had been available at that time;
(b)whether the plaintiff would have sold Lot 6 to Ms Bailey and Mr McEwen for $240,000 on or about June 2011 if title had been available at that time;
(c) whether the plaintiff would have incurred its interest costs, or a portion of its interest costs, to date had the sales of Lots 5 and 6 proceeded in or about June 2011 to Mr Gunther and Ms Bailey;
(d)whether the plaintiff would have been able to sell the remaining lots of the subdivision by 31 August 2013 avoiding any loss in value since that time due to the depreciation in the market. This issue requires the Court to determine whether the plaintiff would have been able to proceed with its plan to place relocatable homes on the remaining lots to make them more marketable using the anticipated proceeds of sale of Lots 5 and 6.
(e) whether the valuation of the subdivision by the expert valuers for the parties is correct with respect to:
(i)the value of the subdivision as at June 2011 when titles should have become available;
(ii)the value of the subdivision as at August 2013 when titles became available; and
(iii) the value of the subdivision as at the date of hearing.
In effect these questions relate to whether the value of the subdivision continued to fall past June 2011.
The law
[22] Causation is an essential element in the recovery of damages both in contract and in tort.4 It is not enough for a plaintiff to merely assert liability on the part of a defendant. The plaintiff must show a defendant is liable for the loss which the plaintiff claims and that the defendant’s conduct caused the loss. The commonly posed “but for” test requires the Court to determine whether the plaintiff would have suffered the loss “but for” the defendant’s wrong doing. “This guideline principle is concerned to identify and exclude losses lacking a causal connection with the wrongful conduct”.5
[23] In this case the defendants have admitted their negligence and their breach of contract but I must ask whether “but for” the defendants’ wrongful conduct, the plaintiff would have suffered the particular loss claimed. An aspect of this inquiry is a subsidiary question: would the loss have arisen even without the wrongdoing?
[24] On occasions the courts award damages “not for an outcome but for a loss of a chance of a benefit or of a better outcome, whether in actions founded upon statute, or for breach of contract, or for tort”.6 Similarly, causation is key although the plaintiff is only required to establish on the balance of probabilities that the defendant caused the loss of that opportunity. Loss of a chance, although a well-recognised head of damage, presents particular difficulties associated with
proof and evaluation of future and past hypothetical fact situations. If the plaintiff is able to establish loss of a real, not speculative, chance then the inquiry is into the
value of that loss:7
4 Sew Hoy & Sons Ltd (in rec and in liq) v Coopers & Lybrand [1996] 1 NZLR 392 (CA) at 399.
5 Kuwait Airlines Corp v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 (HL(E)) at [72]
per Lord Nicholls.
6 Stephen Todd “Causation and Remoteness of Damage” in Stephen Todd and others The Law of
Torts (7th ed, Thomson Reuters, Wellington, 2016) at 1113.
7 At [194] citing Allied Maples Group v Simmons & Simmons (a firm) [1995] 1 WLR 1602 (CA)
at 1614.
… the plaintiff must prove as a matter of causation that [s]/he has a real or substantial chance as opposed to a speculative one. If [s]/he succeeds in doing so, the evaluation of the chance is part of the assessment of the quantum of damage, the range lying somewhere between something that just qualifies as real or substantial on the one hand and near certainty on the other. … [I]t is [un]helpful to seek to lay down in percentage terms what the lower and upper ends of the bracket should be.
[25] This contrasts with proof of historical facts.8 The question whether damages are to be awarded for lost opportunity does not involve proof of historical fact but, rather, an analysis of risk and whether the plaintiff has proved on the balance of probabilities that certain hypothetical facts would have occurred.
[26] In Benton v Miller & Poulgrain (a firm) the Court of Appeal recognised that the dividing line between circumstances in which courts should adopt an “all or nothing” approach and circumstances in which they should adopt a “loss of chance” approach, is not well defined and “[t]he cases are not easy to reconcile”.9
[27] Benton v Miller & Poulgrain (firm) involved an action against solicitors for their negligence. One of the questions that arose required the Court of Appeal to decide which of the two approaches — “all or nothing” or “loss of a chance” — was to be applied. The Court of Appeal adopted the approach which Stuart-Smith LJ explained in Allied Maples Group Ltd v Simmons & Simmons in the following
terms:10
In these circumstances, where the plaintiffs’ loss depends upon the actions of an independent third party, it is necessary to consider as a matter of law what it is necessary to establish as a matter of causation, and where causation ends and quantification of damage begins.
(1) What has to be proved to establish a causal link between the negligence of the defendants and the loss sustained by the plaintiffs depends in the first instance on whether the negligence consists of some positive act or misfeasance, or an omission or non-feasance. In the former case, the question of causation is one of historical fact. The court has to determine on the balance of probability whether the defendant’s act, for example the careless driving, caused the plaintiff’s loss consisting of his broken leg. Once established on the balance of probability, that fact is taken as true and the plaintiff recovers his damage in full. There is no discount because the judge considers that the balance is only just tipped in favour of the plaintiff; and
8 Powerbeat Canada Ltd v Powerbeat International Ltd [2002] 1 NZLR 820 (HC) at [188].
9 Benton v Miller & Poulgrain (a firm) [2005] 1 NZLR 66 (CA) at [44].
10 Allied Maples Group Ltd v Simmons & Simmons (a firm), above n 7, at 1609–1611.
the plaintiff gets nothing if he fails to establish that it is more likely than not that the accident resulted in the injury.
Questions of quantification of the plaintiff ’s loss, however, may depend upon future uncertain events. For example, whether and to what extent he will suffer osteoarthritis, whether he will continue to earn at the same rate until retirement, whether, but for the accident, he might have been promoted. It is trite law that these questions are not decided on a balance of probability, but rather on the court’s assessment, often expressed in percentage terms, of the risk eventuating or the prospect of promotion, which it should be noted depends in part at least on the hypothetical acts of a third party, namely the plaintiff’s employer.
(2) If the defendant’s negligence consists of an omission, for example to provide proper equipment, [or to give] proper instructions or advice, causation depends, not upon a question of historical fact, but on the answer to the hypothetical question, what would the plaintiff have done if the equipment had been provided or the instruction or advice given? This can only be a matter of inference to be determined from all the circumstances. The plaintiff’s own evidence that he would have acted to obtain the benefit or avoid the risk, while important, may not be believed by the judge, especially if there is compelling evidence that he would not. In the ordinary way, where the action required of the plaintiff is clearly for his benefit, the court has little difficulty in concluding that he would have taken it. …
Although the question is a hypothetical one, it is well established that the plaintiff must prove on the balance of probability that he would have taken action to obtain the benefit or avoid the risk. But again, if he does establish that, there is no discount because the balance is only just tipped in his favour.
…
(3) In many cases the plaintiff’s loss depends on the hypothetical action of a third party, either in addition to action by the plaintiff, as in this case, or independently of it. In such a case, does the plaintiff have to prove on the balance of probability … that the third party would have acted so as to confer the benefit or avoid the risk to the plaintiff, or can the plaintiff succeed provided he shows that he had a substantial chance rather than a speculative one, the evaluation of the substantial chance being a question of quantification of damages?
Although there is not a great deal of authority, and none in the Court of Appeal, relating to solicitors failing to give advice which is directly in point, I have no doubt that … the second alternative is correct.
[28] More recently, in Macalister Mazengarb v Annan Law,11 the Court of Appeal adopted the same analytical approach taken by the Court in Benton v Miller & Poulgrain which in turn followed Stuart-Smith LJ’s approach outlined immediately
above.
11 Macalister Mazengarb v Annan Law [2014] NZCA 554, [2015] 2 NZLR 525 at [45].
[29] Before turning to consider the plaintiff’s claims in light of these principles it is important to describe precisely the nature of the wrongful conduct constituting the breaches of duty and contract, which the defendants admit. The defendants’ breach was in failing to ensure all documents necessary for LINZ to issue titles for the subdivision were lodged with LINZ before the expiry of the certificate on 17 June
2011. The plaintiff must demonstrate a causal relationship between this failure, or omission, and the loss allegedly suffered.
[30] Applying this approach I turn to consider whether the plaintiff has established a causal connection between the defendants’ wrongdoing, and the losses the plaintiff says it has sustained.
Would Lot 6 have sold if title were available?
[31] Mr Signal’s evidence is that around January 2008, once the resource consent for the subdivision had been granted he began to prepare the lots by fencing them. His friend, Kevin Gunther who lived in a neighbouring property, assisted with the fencing. Mr Signal said that being struck by the 360 degree view available by Lot 6
Mr Gunther decided he wanted to buy the Lot. The two men agreed they would enter into a formal sale and purchase agreement for Lot 6 once the title became available.
[32] In his evidence, Mr Gunther said he was excited about his decision to purchase Lot 6 and throughout 2008 and later he spent a few thousand dollars making improvements to it. He bulldozed a track which he intended to become his driveway. He installed a culvert so the track could pass over a drain and he planned where his house would sit and assessed the directions of the light and its effect on Lot 6 at different times of the day.
[33] Despite Mr Gunther’s enthusiasm for the Lot, and notwithstanding the money he had invested, he said he unfortunately had to walk away from the purchase. He contacted Mr Signal regularly throughout 2010 and 2011 to ask when titles for the subdivision would be available and each time Mr Signal informed him “the title shouldn’t be too far away”.
[34] After learning in August or September 2011 that the titles, expected in June 2011, were not available and Mr Signal could not say when they would be, Mr Gunther made what he described as the difficult decision in late 2011 that the title had simply taken too long to obtain. He wanted to move on with his life and not wait for an indeterminate period of time to move into a new home.
[35] The defendants’ case is that there was no real intention by Mr Gunther to be bound to purchase Lot 6. By June 2011 the purchase price of $240,000 was wildly optimistic. Mr Parker submitted:
Mr Gunther purported to agree to purchase Lot 6 on the basis of a gentleman’s handshake with Mr Signal in 2008, when the property market had an entirely different complexion. … He further conceded that he was able to walk away from the purported agreement to purchase Lot 6 because there was no written contract.
[36] Having heard Mr Signal and Mr Gunther give evidence and after observing their responses to Mr Parker’s vigorous cross-examination of each, I have no hesitation in concluding that had title become available the sale of Lot 6 to Mr Gunther for $240,000 would have quickly followed. Although no formal documentation was created to evidence the agreement I found the explanations given by Mr Signal and Mr Gunther to be consistent with their approach to friendship and doing business with friends. I was struck by the credibility of each.
[37] The testimony of independent witnesses corroborates Mr Signal’s and Mr Gunther’s evidence that upon receipt of title Mr Gunther would have purchased from Mr Signal Lot 6 for $240,000.
[38] Warren Webb owns and manages a quarry in Levin. Mr Webb has a contracting business, Webb Contracting Ltd. Mr Gunther had engaged Webb Contracting Ltd many times over the years for various projects. In 2008, Mr Webb’s crew delivered about four truck loads of metal to Lot 6 which Mr Webb understood was to be used by Mr Gunther in forming the driveway to the location where Mr Gunther intended to build. As well, Mr Webb’s crew formed part of what became the driveway on the side of the hill to the intended building site. On completion of the work Mr Gunther was invoiced approximately $1,000 for the
work. Mr Webb said his truck operators complete diary entries for each day’s work. In evidence was a diary entry for 1 October 2008 showing the delivery of a crushed metal product to Mr Gunther at Ridge Road (where Lot 6 is located). Mr Webb’s evidence that the delivery was to Mr Gunther at Lot 6 was not impeached in cross-examination.
[39] Anthony Hooper is the owner and operator of Power-On, a company in
Levin, providing access to power to property sections and building sites.
[40] Mr Hooper’s evidence was that on 8 November 2008 Mr Gunther asked Mr Hooper if he would cost a power connection to a property he intended to purchase. Mr Hooper went with Mr Gunther to visit the property in respect of which the quote was to be provided. At the time he gave evidence Mr Hooper knew that property to be Lot 6 of a subdivision at 125 Hickford Road. The site was a fair way from the nearest power pole and Mr Hooper estimated to Mr Gunther a cost of around $5,000 to provide power to the site.
[41] Mr Hooper was asked in cross-examination whether the property he visited with Mr Gunther was land that Mr Gunther had purchased.
A.
Q.
He was hoping to purchase, yes.
And did he give you any indication what he was planning to do with
it? A.
Okay, well we went up to where he was going to put his house and put a driveway up around the hill and up to the house site.
Q.
His house for him to live in?
A.
Well that’s what he told me yes, as far as I know, yeah.
[42]
Other
evidence supports Mr Signal’s position. A sign erected by
Professionals Real Estate agent, Ellen Graham, advertised for sale “LIFESTYLE BLOCKS – $POA” under which was a sketch of the eight lots in the subdivision and details of their size. Over Lot 6 was a yellow oval sign: “I’m Sold!”. A similar oval notification appeared in Lot 2. It said “under contract”.
[43] It was put to Mr Signal in cross-examination that the advertisement was misleading in both respects. Mr Signal accepted Lot 6 was not actually sold and there was no written agreement in respect it and Lot 2 had not ultimately proceeded to a contract.
[44] While it was put to Mr Signal that the descriptions were misleading I accept the sincerity of Mr Signal’s belief that Lot 6 was, to his mind, sold. He accepted there was no written agreement but in Mr Signal’s world he was less concerned with formality and form than the truth of the matter and the truth of the matter was that Mr Gunther had agreed to buy, and Mr Signal had agreed to sell, Lot 6. Beyond that fundamental fact Mr Signal paid little attention. I make no observation about Mr Signal’s indifference to legal niceties. The sole question is whether Mr Signal would have sold Lot 6 to Mr Gunther on or about June 2011 if title had been available.
[45] Mr Signal’s lack of diligence around paper work and documentation also
characterised how he engaged with documentation from his lawyers.
A. I just took their word for it because I’d written clearly on my piece
of paper.
Q. So if they send you documentation you don’t really look at it you just go back to them and say, “Yes, that’s all right?”
A. I rely on people, well especially Legal to do the job right and I just
sign it, yes, that’s what I employ people for.
Q. … you do understand, don’t you, that when you sign your name to a document you’re deemed to have read and understood it and not just abdicated your responsibility to whoever your advisors are, do you understand that?
A. Yes, and that’s the risk I guess I take [I am] from the old school.
[46] While I may have found Mr Signal’s approach to business matters lax, the unavoidable fact is that he is genuinely “old school”. Consequently, the fact that some documents from Bayley’s Real Estate suggesting Lot 6 was included in the agency listing of the subdivision from 2009 and into 2010 did not diminish the strength of all of the other evidence pointing to the agreement between Mr Gunther and Mr Signal. I accept Mr Signal’s explanation that when he discovered a “sold”
sticker had not been placed on the Bayley’s sign relating to Lot 6 he contacted the
agent straight away and the agent said he would deal with the error.
[47] The defendants adduced other evidence purporting to show Mr Gunther had no intention to buy Lot 6. Ms Graham, in her evidence-in-chief, said Mr Gunther had told her in November 2015 that he had never agreed to buy Lot 6. This proposition was put to Mr Gunther in cross-examination. He said it was untrue. I accept Mr Gunther’s evidence. It is consistent with all of the other evidence that points to his intention to buy Lot 6.
[48] Mr Gunther did not see the need to enter into a written agreement with Mr Signal. Importantly, his evidence was that he would have walked away even had there been a written contract. It was put to Mr Gunther that he had waited three years, between 2008 to 2011. Title issued “just a mere two years later … but for some reason [he] chose not to wait to see what happened to the title. [He] just walked away because [he] could”. I regard as credible and reasonable Mr Gunther’s answers to the unreasonable proposition that waiting another couple of years, or more, would not have meant his life was in the balance. As Mr Gunther said, the two years could have been five years. It may have been never. “The bottom line [was] there was no title so [he] couldn’t buy”.
[49] Mr Gunther’s decision to walk away from the purchase of Lot 6 strikes me as rational and predictable in the circumstances. The purchase had been afoot since
2008; some three years after the agreement titles were still not available and no timeline could be given as to when they would become available; the lack of titles meant there was uncertainty around the subdivision and, as Mr Shaw submitted, Mr Gunther’s decision to walk away from the agreement was vindicated given titles did not become available for another two years.
[50] I find the defendants’ failure to take the necessary steps before the expiry of the certificate, and the consequent inability to obtain title until 2013, was the direct cause of the loss to the plaintiff of Mr Gunther’s intended purchase of Lot 6. The lack of title was not simply a contributing factor. It was the decisive factor in Mr Gunther’s decision to abandon his plan to build his ‘dream home’ on Lot 6,
forego the money he had spent on the property, and end the ambiguity and uncertainty which attended the lack of title and lack of knowledge as to when the title would become available.
[51] The end result is that the plaintiff lost the very real prospect of sale to Mr Gunther and with it, the purchase price of $240,000. The law requires the plaintiff to show it had a substantial chance of sale. That is more than established. It follows that I see no basis for discounting the risk. As as June 2011 when title was expected to be available, Mr Gunther and Mr Signal were expecting to, and would have, executed the agreement for sale and purchase in accordance with their earlier agreement. Beyond the defendants’ wrongful conduct, no other event intervened to contribute to loss of sale. In those circumstances the quantification of damages is the full loss to the plaintiff of the $240,000 purchase price which would have been paid.
Would Lot 5 have sold if title were available?
[52] In June 2010 Raewynne Bailey began renting 187 Ridge Road with her partner Brian McEwen. A few months after they had moved in Mr Signal, who was their landlord, advised the property they were renting was for sale. Ms Bailey and Mr McEwen were very interested in buying. They negotiated with Mr Signal adjustment of the boundary so that it included a lot within the subdivision. With that boundary adjustment Ms Bailey and Mr McEwen were even more interested in purchasing 187 Ridge Road.
[53] The couple agreed with Mr Signal that they would enter into a written agreement for the sale and purchase of Lot 5 once titles for the subdivision had been finalised. A purchase price of $240,000 was agreed. Ms Bailey’s evidence was that she had looked at similar properties being marketed in the area and concluded that
$240,000 was a fair price for Lot 5. The couple investigated their financing options with several banks. Three were prepared to proceed with a deposit of 10 per cent. Ms Bailey’s evidence was that if title had been available in June 2011 she and Mr McEwen would have bought Lot 5 for $240,000. They had sufficient savings at that point for a deposit of $24,000.
[54] In mid-2013 the purchase price for Lot 5 was renegotiated with Ms Bailey and Mr McEwen from $240,000 to $220,000. Mr Signal had advised the couple that titles were expected to be available shortly but they were no longer able to continue with the purchase even at the reduced figure of $220,000 because the bank had recently altered its lending rules to require a 20 per cent deposit. This was a reference to the loan-to-valuation ratio restrictions which the Reserve Bank put in place in 2013.
[55] The defendants do not doubt that Ms Bailey was genuine in her desire to purchase Lot 5. Rather, the defendants question Ms Bailey’s financial ability to have done so. The defendants point to the lack of any formal discussions with Ms Bailey’s bank regarding a mortgage despite what the defendants characterise as Ms Bailey’s “clearly limited finances”. The defendants’ case is that while Ms Bailey may have wished to purchase the lot the reality of the purchase was extremely unlikely and certainly not a real or substantial proposition. The defendants further submit that even if it is found that Ms Bailey had both the means and intention to purchase Lot 5 the reason she did not do so in 2013 when titles became available was entirely unrelated to the actions of the defendants. In fact, the defendants submit, it was Mr Signal’s own action in requiring the couple to vacate the property that scuppered the sale. I address each argument in turn.
Financial position
[56] I am satisfied from the evidence that Ms Bailey had the means, or access to the means, to pay the 10 per cent deposit that would have been required had the purchase been completed in June 2011 or thereabout. Ms Bailey was owed some
$24,000 from her sister. As it happens, the bank statements produced in evidence showed $14,000 of that loan being deposited in November 2011 and the remaining
$10,000 in September 2013. Ms Bailey was convincing, to my mind, in explaining why she would have had access to the money her sister owed her in June 2011. In brief, her sister had sold her house some six months earlier.
[57] In terms of meeting mortgage repayment obligations the evidence demonstrated that Ms Bailey’s and Mr McEwen’s combined income was sufficient to
service the mortgage. As well, Ms Bailey had been advised by her employer that she
“was in line for extra work”.
[58] Ms Bailey’s evidence was supported by the bank statements produced showing payments to Ms Bailey’s account between 1 June 2011 and 31 October
2013. As do many couples, Ms Bailey and Mr McEwen had identified ways in which they could “tighten their belts” and work towards paying off a mortgage within 10 years, in time for retirement.
[59] Ms Bailey was a credible witness and while her evidence was challenged by Mr Parker in cross-examination there is no respect in which I found myself unable to accept it.
Termination of tenancy
[60] The situation changed however for Ms Bailey and Mr McEwen in September 2013 when title became available. Ms Bailey contacted the bank but was told that from 1 October a 20 per cent rather than a 10 per cent deposit would be required. Ms Bailey’s evidence was that she was sure they could have acquired the deposit sum of $24,000 and sought an alternative funding source, or saved the deposit of 20 per cent, but they did not attempt to do so because in September Mr Signal gave notice he wished to sell the property as quickly as possible. Ms Bailey said if the couple had six months they probably could have saved the
20 per cent deposit but they did not have that time. Ms Bailey was cross-examined as to whether she attempted to discuss the matter with Mr Signal so that their opportunity to purchase Lot 5 remained live. Ms Bailey was asked whether she considered that Mr Signal had brought the matter to an end by giving Ms Bailey and her partner the impression they needed to move out. Ms Bailey did not accept that proposition. She said it was a “hard one” and she frankly described herself as being “more fiery” back then and that she had got her back up and essentially turned away from Mr Signal and the purchase.
[61] I have no hesitation accepting Ms Bailey’s description of their “devastation” when they learned they could not complete their purchase and that they had been very serious about the purchase from the beginning. The circumstances in which the
sale of Lot 5 failed are, however, different from the circumstances leading to the failed sale of Lot 6.
[62] There was no termination of sale in 2011 as for Mr Gunther. The agreement remained on foot for a further two years. But at the point when title became available an increased deposit was required and this made Ms Bailey pause. Mr Signal did not wish to pause. He wished to sell. Whether the parties might have renegotiated (once more) their agreement can only be a matter of speculation.
[63] I am satisfied that if title had been available in June 2011 the sale of Lot 5 would have proceeded at the agreed purchase price of $240,000. But in light of the parties’ renegotiation of their agreement the question arises as to whether mid-2011 is the only relevant time for the purpose of assessing damages. Whether one views Mr Signal’s termination of tenancy as a failure to mitigate, or the Reserve Bank’s new lending rules as an intervention, or Ms Bailey’s unwillingness to attempt to persuade Mr Signal to wait still longer, as at September 2013 the uncompleted sale cannot be attributed solely to the defendants’ wrongful conduct.
[64] But the claim is one for lost opportunity: because the sales of Lots 5 and 6 did not proceed in mid-2011, the Trust lost the opportunity, it is said, to fund the placement of relocatable homes on the subdivision by August 2013, thereby enhancing its marketability.
[65] The plaintiff has established there was a substantial chance of selling Lot 5 in mid-June 2011. But for the defendants’ conducted I find it was highly likely Lot 5 would have sold at the agreed purchase price of $240,000.
Loss of opportunity to apply proceeds to overdraft facilities
[66] Mr Signal’s evidence is that had Lots 3, 5 and 6 been sold in June 2011 when titles should have been available the Trust would have had access to cash of
$535,800.79 being made up of:
(a) the sale of Lot 6 to Mr Gunther for $240,000;
(b) the sale of Lot 5 to Ms Bailey and Mr McEwen for $240,000; and
(c) the settlement of Lot 3 to Mr and Mrs Rehu for $55,800.79 which had been held in the Trust Account of Berry & Co since it was paid on
15 November 2006.
[67] The sum of $535,800.79 would have been applied to repay all the moneys owed to ASB Bank leaving some $167,000 to purchase a relocatable home on at least one of the sections in order to make it more marketable.
[68] Christopher Lusty, a Chartered Accountant gave evidence in his capacity as the accountant responsible for preparing the financial statements for the trustees of the Signal Property Trust for the 2014, 2015 and 2016 financial years.
[69] Mr Lusty quantified the additional interest costs incurred by the Trust as a consequence of the Trust not having available to it $530,000 in settlement funds by
17 June 2011. Mr Lusty calculated the interest incurred between 17 June 2011 and
20 August 2014 as $75,148.36. Mr Lusty was very clear that this was all additional interest accruing because the overdraft would have been, but was not, cleared in June 2011 had the $530,000 been received.
[70] Between August 2014 and 31 October 2016 the interest incurred by the Trust with all of its overdraft facilities with Nelson Building Society totalled $69,410.58. Accordingly the Trust’s total interest costs since June 2011 was calculated to be
$144,558.94 as at 31 October 2016.
[71] Had the lots sold in mid-2011 $530,000 in settlement funds would have been available to the Trust. As to whether the whole of that sum would have been applied to reduce the interest on the Trust’s overdraft facility the only evidence is that of Mr Signal who said the sum which should have been available “would have seen the Trust repay all moneys owed to ASB Bank”.
[72] Mr Parker described the plaintiff’s accounts, even with the input of an
accountant, as “woolly”. Mr Parker pointed to Mr Signal’s inability to recall or point
in discovered documents to details of how the various purchases, in particular, the lots, were financed. Mr Parker attributed to Mr Signal some difficulty in appreciating the difference between an overdraft and a loan. Ultimately the defendants’ case in respect of this point is that a mortgage over property may well have been a more economic method of financing the subdivision. The defendants also consider there is a risk that Mr and Mrs Signal intermingled their personal finances with those of the Trust and/or Mr Signal’s company SIGCO Developments.
[73] Mr Parker cross-examined Mr Signal extensively about the nature of the overdraft or loan facility Mr Signal had with his bank. It was never put to Mr Signal that personal finances may have been intermingled with the Trust’s or SIGCO. Nor was Mr Signal challenged as to whether or not the entire proceeds of the sales of the three lots would have been applied to eliminate the interest on the overdraft facility.
[74] I accept Mr Lusty’s evidence. Viewing the highly unprofitable accruing interest from the perspective of a party who gains no benefit from it, I also accept the high likelihood is that the Trust would have used the proceeds of sale to reduce or eliminate the facility attracting the interest. In consequence of the defendants’ wrongful conduct the plaintiff lost the opportunity to apply the sale proceeds to the facility.
Loss of opportunity to sell remaining lots?
[75] This aspect of the plaintiff’s claim is pleaded at [33.3] of its amended
statement of claim.12
[76] The proposition is that Lots 1, 2, 4, 7 and 8 would have sold by 31 August
2013, the date at which titles eventually became available. The plaintiff claims that as a result of the defendants’ breach it suffered the loss of the opportunity to place relocatable homes on those five lots and sell them before 31 August 2013. The opportunity cost is calculated as the difference between the value of the lots as at
31 August 2013 and their market value as at 18 September 2014. The calculation of
that difference in values is $26,956.52.
12 Set out above at [17].
[77] Mr Parker submitted this head of damage is remote and there is insufficient evidence to support any loss. Furthermore, Mr Parker submitted, it is inexplicable that this head of damage is claimed as well as, rather than alternative to, the difference in price in the lots. If the plaintiffs are entitled to the full amount of the difference in value of the lots between the relevant dates then they have been fully compensated for their loss.
[78] Mr Parker said the success under this head of damage requires the plaintiff to demonstrate there was a real and substantial prospect that Lots 1, 2, 4, 7 and 8 would have sold if relocatable homes had been placed upon them and no such evidence was adduced. Neither was evidence adduced as to the cost of arranging for relocatable homes to be placed on the sites. While the presence of a relocatable home upon one or more of the lots may well have made that particular lot more attractive, the price, condition and location of the lots was such that there was little, if any prospect, it would have made any discernible difference to a potential purchaser. And there was no evidence to that effect. The servient lots had covenants that prevented relocatable homes being placed on them which may have become an issue when new owners purchased the properties.
[79] Finally, Mr Parker submitted, if relocatable homes would have enhanced sales the plaintiff had a duty to mitigate its loss by placing relocatable homes on the lots and it failed in its duty to mitigate.
Assessment
[80] The scenario which the plaintiff hypothesises depends upon the hypothetical actions of third parties in addition to the actions of the plaintiff. What is postulated is that the Trust would have purchased relocatable homes and placed them on one or more of Lots 1, 2, 4, 7 and 8 and one or more would have sold.
[81] The plaintiff does not have to prove on the balance of probabilities that third parties would have purchased the Lots. The plaintiff will succeed if it shows there was a substantial chance (not a speculative chance) of third party purchases. The
evaluation of the chance becomes a question of quantification of damages.13 Once the duty of care is held to exist and the defendants’ negligence proved (here it is admitted) the plaintiff only has to show that by reason of that negligence it has lost a reasonable chance of selling the lots (and that chance has to be evaluated) and has thereby sustained loss. The plaintiff does not have to prove that, but for the negligence, third party purchasers would have purchased the lots.14
[82] Mr Signal’s evidence was that in 2010, knowing the Trust would sell three sections (Lots 3, 5 and 6) bringing in some $530,000 once titles were issued, he decided that in order to make more profit from the subdivision he would purchase and place relocatable houses on the vacant lots. Mr Signal determined he would need around $100,000 for each house he intended to relocate. Had it not been for the failure to obtain titles when expected, Mr Signal said, the Trust would have had the financial resources to carry out this plan.
[83] Mr Attwell’s evidence was that if the lots had dwellings on them they would be expected to sell within a year. Mr Attwell described his adoption of 50–52 weeks as “conservative”. This aspect of Mr Attwell’s evidence was not challenged in cross- examination nor in the evidence of the defendants’ valuer witnesses.
[84] I have no basis for second-guessing Mr Attwell’s expertise. I accept his evidence. I accept also the evidence of Mr Signal’s plan to develop the Lots with houses to make the Lots more marketable and that this plan was impeded.
[85] But the sum of $167,000 said to be available after payment of the monies owed to ASB Bank would have been insufficient to place more than one home on any of the remaining Lots. Mr Signal’s own evidence was that he had estimated approximately $100,000 which included the cost of purchasing a home relocating it, and connecting to utilities. In his evidence-in-chief Mr Signal said had the sales proceeded the Trust would have been in a position “to place at least one or possibly two relocatable homes onto the subdivision without being required to go into
overdraft.” I consider the plaintiff had a substantial chance to achieve that outcome.
13 Allied Maples Group Ltd v Simmons & Simmons, above n 7, at 1611. Adopted in Benton v
Miller & Poulgrain, above n 9, at [44] and Macalister Mazengarb v Annan, above n 11, at [45].
14 At 1611.
There was a very good chance that one home would be relocated and that the lot on which the home was placed would have sold. I consider the chance of relocating more than one home to be speculative.
[86] Mr Attwell provided a table with each of the lots valued at the two relevant dates. This Court does not know upon which lot a relocatable home would have been placed. It would be no more than arbitrary of me to select one lot over another and therefore one valuation over another. Accordingly, I have taken the average valuation of all five lots. Where Mr Attwell’s calculation of the difference between the August 2013 value and the market value as at September 2014 totals $31,00015 the average difference is $6,200.
[87] Accordingly, I find this loss of opportunity claim is established but damages are quantified in the sum of $6,200.
Loss of value of subdivision
[88] In its statement of claim the plaintiff pleads the defendants’ breaches caused a loss in the value of the subdivision. In opening Mr Shaw described this loss of value claim as an allegation that the value of the subdivision decreased between the time when titles should have become available and when titles became available “and [continued] to fall into 2014/15”. This loss of value claim is quantified as $198,000 being the difference in value of the properties when titles should have been available (including the lost sales of Lots 5 and 6 for $240,000 each) and the current market value.
[89] Mr Parker signalled the defendants’ key arguments in his opening, on this
point, as challenging the proposition there was any change to the value of the lots.
[90] In his closing submissions Mr Parker observed the plaintiff had not explained why the damages claim is based upon the difference in the value of the lots between June 2011 and their current market value when the relevant date should be the date
that titles became available, that is, 31 August 2013. More than two days of the
15 See table in [17] at 33.3.
five-day trial (excluding a sixth day for closing arguments) was taken with the extensive, detailed evidence of valuers. The valuation evidence adduced on behalf of the plaintiff and defendants was hotly contested and subjected to extensive cross- examination by both counsel.
[91] The loss of opportunity claims and the loss of value of the subdivision claim are pleaded in the alternative.16 In light of the findings which I have made and the conclusions which I have reached in respect of the loss of opportunity claims this head of damage falls away. Damages for loss of value of the subdivision (were I to find any such loss and that it was caused by the defendants’ breaches) is not available to the plaintiff as well as its loss of opportunity claims.
[92] In the event that my approach is incorrect I record the very strong impressions I have of aspects of the valuation evidence. Because, as I have stated, this head of damage falls away it is unnecessary for me to engage with the actual detail of the valuation evidence adduced on behalf of the parties. My observations are confined to the contrasting methodologies and approaches of Stephen Attwell for the plaintiff and Mr Timmer-Arends for the defendants.
[93] The first point concerns the approach to “market value” with which valuers are expected to comply. The International Valuation Standards 2013 describes market value as:
market value
The estimated amount for which an asset or liability should exchange on valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgably, prudently and without compulsion.
[94] John Hancock, a registered valuer and past National President of the New Zealand Institute of Valuers was asked on behalf of the plaintiff to analyse and report on the brief of Mr Timmer-Arends and his valuation. In his valuation report dated 20 January 2015 Mr Timmer-Arends stated he was instructed to “assess a market value range” for seven sections of an eight section subdivision. In
Mr Hancock’s opinion Mr Timmer-Arends’ use of the description “a market value
16 Set out above at [17].
range” is a contradiction in terms as the definition of market value necessitates a
singular value (in this case, for each lot) to be given.
[95] Mr Timmer-Arends was cross-examined on his provision of a range of values. Although the IVS definition of market value was included in all their reports, and the requirement is to provide a singular value for each lot, Mr Timmer- Arends accepted instructions to do otherwise and to provide a range of values.
[96] Mr Timmer-Arends was cross-examined about the statement in his report that reads:
TA Valuation certifies that this valuation complies with the standards set in the International Valuation Standards Committee July 2013 …
[97] In cross-examination Mr Timmer-Arends accepted this statement was a reference to the IVS 2013. He accepted also he was certifying that he complied with those standards yet accepted that he had not adopted the IVS guidance because he “was specifically asked for a range”.
[98] Mr Timmer-Arends accepted the instruction to provide a range was “very unusual” and he did not question the instructions. When cross-examined about whether he was aware the valuation would be used potentially in litigation he refuted that. But when shown the front page of his report that stated the property had been inspected “for possible litigation purposes” he accepted he was mistaken.
[99] There were other aspects of the valuation report which Mr Timmer-Arends had prepared which persuaded me to the view that Mr Attwell’s evidence was to be preferred. For example Mr Timmer-Arends’ valuation overlooked that telephone and power services were available to the boundary of each section. Although Mr Timmer-Arends said in cross-examination he assumed there was power to the property his written report stated “services are available to the road front … ”.
[100] It is unnecessary that I detail the several further bases, unambiguously disclosed in the evidence, for preferring Mr Attwell’s valuation evidence. That is because the valuation evidence concerns issues that have been rendered peripheral in light of my determinations.
Result
[101] The plaintiff has succeeded in establishing the losses of opportunity pleaded at [33.2], [33.3] and [33.5] of its claim. It follows that the plaintiff is entitled to:
(a) the full amount of the purchase price of $240,000 it would have received in respect of the sale of each of Lots 5 and 6 but discounted by the
$203,000 which the plaintiff received from the eventual sale of Lot 5 ($277,000);
(b) $6,200 in respect of the claim at [33.3] of the statement of claim; and
(c) $144,558.94 being the amount of the interest claim at [33.5] of the statement of claim.
[102] The plaintiff has also entitled to:
(a) legal fees ($11,829.50) expended in obtaining legal advice and assistance
relating to the defendants’ breaches of duty; and
(b)valuation costs ($2,369) associated with Mr Atwell’s valuation which was necessary to evidence the plaintiff’s capital losses prior to the commencement of this proceeding.
[103] The plaintiff is entitled to costs which I incline to award on a 2B basis. If necessary counsel may file focussed memoranda. If memoranda are to be filed the defendants should file ten days following service of any memorandum filed on behalf of the plaintiff which should be filed by 10 November 2017. Counsel may also address the issue of interest which may be awarded under r 87 of the High Court
Rules.
Karen Clark J
Solicitors:
C & F Legal, Nelson for Plaintiffs
Parker Cowan, Queenstown for Defendants
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