Sofinowski v Makan

[2023] NZHC 1193

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-2076

[2023] NZHC 1193

BETWEEN

MARC EDWARD SOFINOWSKI and

KATHERINE ELIZABETH SOFINOWSKI
Plaintiffs

AND

PIYUSH MAKAN

Defendant

Hearing:

17 May 2023

Appearances:

C Patterson for the Plaintiffs

No appearance for the Defendant

Judgment:

18 May 2023

JUDGMENT OF GORDON J

This judgment was delivered by me

on 18 May 2023 at 10.30 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors/Counsel:

Home Transfer Centre Property Lawyers, Dunedin C Patterson, Barrister, Auckland

SOFINOWSKI v MAKAN [2023] NZHC 1193 [18 May 2023]

[1]        The plaintiffs Marc Sofinowski and Katherine Sofinowski (together the Sofinowskis) have brought a claim against the defendant Piyush Makan for breach of contract and resulting damages. The total sum sought is $553,386.45.

[2]        The Sofinowskis also seek scale costs on a 2B basis totalling $12,903.50 together with disbursements totalling $1,584.28.

[3]        The claim arises from Mr Makan’s failure, as purchaser, to settle the purchase of the Sofinowskis’ family home.

[4]        Mr Makan did not file a statement of defence or otherwise engage with the proceeding. There is satisfactory affidavit evidence that Mr Makan was served with the notice of proceeding, statement of claim and initial disclosure. The hearing before me accordingly proceeded on a formal proof basis. Evidence was in the form of an affidavit sworn by Mr Sofinowski.

Liability

[5]The claim is a straightforward one.1

[6]        The Sofinowskis were the registered proprietors of a residential property at 59 Simpson Road, Ranui, Auckland (the property).

[7]        On or about 17 September 2021 the Sofinowskis signed a written agreement (the Agreement) for the sale of the property to Mr Makan for the purchase price of

$1,400,000. That price was subsequently negotiated down to the sum of $1,385,000 on 28 September 2021 (the purchase price). The Agreement was in the standard form of the ADLS/REINZ Tenth Edition 2019 (2) Agreement for Sale and Purchase of Real Estate.

1      Mr Patterson, counsel for the Sofinowskis properly raised one issue. The date in the statement of claim on which it is alleged Mr Makan sought an extension for payment of the purchase price was pleaded to be 12 August 2022. The evidence is that the date was in fact 25 August 2022. The difference is immaterial to the claim. I direct that an amendment be made accordingly, but I do not require the amended claim to be served.

[8]        The real estate  agents  involved  were  JK  Realty  Group  Ltd  (Harcourts  Mt Albert). The commission was 5 per cent of the purchase price and was payable upon any sale and purchase of the property being declared unconditional.

[9]        Under the terms of the Agreement: the only condition was a due diligence condition; and the settlement date was to be eleven months after the Agreement was declared unconditional.

[10]      On 28 September 2021 the Agreement was declared unconditional. Eleven months from 28 September was 28 August 2022, a Sunday. Settlement was accordingly brought forward under the terms of the Agreement to 26 August 2022 (the settlement date).

[11]      On or about 11 August 2022 Mr Makan advised that he was not able to secure finance for the purchase price and requested that it be reduced by $265,000 to

$1,120,000. The Sofinowskis did not agree to the price reduction and their lawyer advised Mr Makan of this on 12 August 2022.

[12]      On or about 25 August 2022 Mr Makan’s solicitors sought a two week extension (without penalty) on the settlement date for Mr Makan to arrange finance to pay the purchase price on the proposed settlement date.

[13]      The Sofinowskis did not agree to this request. They had a bridging loan which was costing them financially and any delay in settlement would cost them by way of interest in repayment obligations. Their lawyer accordingly advised Mr Makan’s solicitors on 25 August 2022 that they did not agree to the extension.

[14]      Mr Sofinowski’s evidence is that he and his wife were ready and able to settle on the settlement date of 26 August 2022.

[15]      On or about 26 August 2022 the Sofinowskis’ solicitor, on their behalf, issued a settlement notice under clause 11.1 of the Agreement requiring Mr Makan to remedy the breach and complete settlement on or before 5 pm on Thursday 13 September 2022. Mr Makan failed to do so.

[16]      In the hope that Mr Makan would obtain the necessary finance and settle the purchase the Sofinowskis agreed to extend the date for settlement under the settlement notice to 30 September 2022. Mr Makan did not complete settlement despite the extension. At 5.36 pm  on  30  September  2022  the  Sofinowskis  gave  notice  to Mr Makan that they had cancelled the Agreement and reserved all rights.

[17]      Following the cancellation of the Agreement the Sofinowskis engaged the same real estate agent to put the property back on the market under a second agency agreement. The property was listed on 3 October 2022. Mr Sofinowski’s evidence is that Harcourts Mt Albert had advised him and his wife that property prices had dropped and that if they wished to have a quick sale they should list the property at

$899,000. The property was marketed accordingly and advertised through a number of online sites. There was also a social media campaign and a new sign was created, printed and placed outside the property.

[18]      On 5 December 2022 the Sofinowskis received four written offers ranging from $800,000 to $880,000 each with their own conditions and proposed settlement dates (except for the highest offer). That offer of $880,000 did not contain any details. The Sofinowskis, therefore, accepted the next highest offer of $871,800. The offer was unconditional and the settlement date was brought forward to 27 January 2023 (from the original date of 22 February 2023 proposed by the purchasers).

[19]      Mr Sofinowski says that before accepting the offer for $871,800 he and his wife consulted with Harcourts Mt Albert and accepted their recommendation that the Sofinowskis should accept the offer on the basis that it represented market value, with the market having dropped significantly since the Agreement had been signed with Mr Makan.

[20]      On the basis of Mr Sofinowski’s sworn evidence, I accept that the Sofinowskis have made out their claim for breach of contract against Mr Makan on the balance of probabilities.

Damages

[21]      I now set out the sums sought as damages. I accept that there is a proper evidential basis for the damages claims. They are in accordance with the Agreement. The contractual indemnity costs and expenses relating to both the resale of the property by the real estate agent, and maintenance and outgoings, are supported by invoices and documents annexed to Mr Sofinowski’s affidavit.

[22]The various sums sought are as follows:

(a)$443,950 being the net value in difference between the purchase price agreed with Mr Makan ($1,385,000) and the resale price achieved under the resale agreement ($871,800) less the full amount of the deposit paid of $69,250.

(b)Default interest under the Agreement at the rate of 14 per cent on the outstanding  settlement  sum  from  the   late   settlement   date   of   30 September 2022 to the settlement of the resale on 27 January 2023 totalling $60,055.88.

(c)Interest accrued on the unpaid portion of the purchase price owing at settlement being $507,504.70 from the resale agreement settlement date until the date of judgment (110 days) calculated on the Civil Debt Interest Calculator under the Interest on Money Claims Act 2016 amounting to $11,860.28.

(d)Contractual indemnity costs and expenses relating to the resale of the property by the real estate agents totalling $35,978.79, made up as follows:

(i)marketing costs and listing costs totalling $4,723.54;

(ii)Harcourts Mt Albert total commission of $27,922.25 (being

$32,309.25 less a discount of $4,387); and

(iii)home staging costs of $3,333.

(e)Contractual indemnity costs and expenses relating to the maintenance and outgoings for the property from 30 September 2022 until the date of settlement on 27 January 2023 being a total of $1,541.50 made up as follows:

(i)electricity – $102.06;

(ii)gate maintenance – $734.85;

(iii)insurance – $383.07;

(iv)lawn maintenance costs – $160; and

(v)Watercare costs – $161.52.

[23]All of the above sums are able to be claimed and are supported by evidence.

Costs

[24]      The Sofinowskis seek scale costs on a 2B basis. That claim is in order. The amount of $12,903.50 is properly claimed.2

[25]Disbursements totalling $1,584.28 are also properly claimed.

Result

[26]      Mr Makan is liable to the Sofinowskis for breach of the Agreement for sale and purchase dated 17 September 2021. Judgment is entered accordingly in favour of the Sofinowskis against Mr Makan.

2      At the hearing Mr Patterson accepted that in the schedule annexed to his submissions, preparation had been claimed twice. The amount referred to in [24] is the revised sum.

[27]      Arising out of that breach I make an order that Mr Makan pay to the Sofinowskis the sum of $553,386.45 as set out above in the judgment and as summarised in the Schedule of Damages attached and marked “A”.

[28]      I make a further order that Mr Makan is to pay costs to the Sofinowskis on a 2B basis and disbursements together totalling $14,487.78 (being costs of $12,903.50 and disbursements of $1,584.28).

Gordon J

“A”

SCHEDULE OF DAMAGES

Type of Damages Sought	Amount
Net difference in purchase price	$443,950
Default interest @14% under the Agreement (from breach until settlement of the resale	$60,055.88
Interest from resale settlement date until date of judgment under Interest on Money Claims Act 2016	$11,860.28
Contractual indemnity costs relating to the resale	$35,978.79
Contractual indemnity costs relating to maintenance and outgoings for the Property from breach until settlement of resale	$1,541.50
Total	$553,386.45