Weine v Tadd Management Limited - [2024] NZCA 323

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA239/2023
[2024] NZCA 323

BETWEEN	RUTH RENTON WEINE AND MICHAEL DAVID HOFMANN-BODY AS TRUSTEES OF THE RUTH WEINE FAMILY TRUST Appellants
AND	TADD MANAGEMENT LIMITED Respondent

Hearing:	7 March 2024 (further memorandum received on 14 March 2024)
Court:	Ellis, Gault and Cull JJ
Counsel:	M Freeman and R A Bull for Appellants F B Q Collins and J M Perry for Respondent
Judgment:	17 July 2024 at 11.00 am

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe judgment in the High Court is set aside.
CThe respondent must pay the appellants’ costs for a standard appeal on a band A basis and usual disbursements.
DCosts in the High Court are to be fixed in that Court in light of this judgment.

____________________________________________________________________

REASONS OF THE COURT

(Given by Gault J)

Table of contents

Para no

Factual background

High Court judgment

Approach on appeal

Issues

Misrepresentation

Mistake

Contractual misrepresentation

Applicable principles
The context
ISA — “60% NBS”
Mere conduit?

Information Memorandum — “Good NBS rating”

Representations in totality

Common mistake

Applicable principles

Discussion

Result

The trustees of the Ruth Weine Family Trust (the Trustees) appeal against the High Court’s decision that they made an actionable misrepresentation to Tadd Management Ltd (Tadd) in respect of the seismic capacity of a building for sale and, in the alternative, that the parties were induced into the contract for sale and purchase of the building on the basis of a common mistake that the seismic capacity of the building was 60%.[1]

Factual background

[1]Tadd Management Ltd v Weine [2023] NZHC 764, (2023) 24 NZCPR 1 [High Court judgment].

The factual background is not in dispute.
The Trustees owned a three-storey commercial property at 134 Queens Drive, Lower Hutt (the building) which they decided to sell. They engaged an entity from the Bayleys Realty Group (Bayleys) to market the building. A representative from Bayleys advised the Trustees to obtain an Initial Seismic Assessment (ISA) of the building to provide to potential purchasers.
On or about 15 August 2017, the Trustees obtained an ISA from a firm of chartered engineers, New Zealand Consulting Engineers Ltd (NZCE). The ISA gave the building a seismic rating of 60% New Building Standard (NBS), placing it within a band category identified as “earthquake risk” but not “earthquake prone”, as indicated in the Initial Evaluation Procedure (IEP) Assessment used to prepare the ISA. In particular, the Assessment Outcomes section in the ISA report stated:

4. Assessment Outcomes

Assessment Status

(Draft or Final)
Final

Assessed %NBS Rating 60%NBS (IL2)

Seismic Grade and Relative
Risk (from Table A3.1) Alpha rating C
5 to 10 times the risk of a new building

For an ISA:

   Describe the Potential
   Critical Structural
   Weaknesses

Torsional behaviour of the building will attract forces in the front columns.

Heavy spandrel beams along front increase introduced shear forces in column, this needs to be investigated further. It has not been taken into account and…

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.

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Details

Case: [2024] NZCA 323
Decision Date: 17 July 2024 at 11.00 am

CaseChat Overview and Summary

The Court of Appeal considered an appeal by the trustees of the Ruth Weine Family Trust against a High Court decision that they had made an actionable misrepresentation to Tadd Management Ltd regarding the seismic capacity of a building they intended to sell, and in the alternative, that the parties entered into the contract under a common mistake that the building had a seismic rating of 60%. The Court of Appeal allowed the appeal and set aside the High Court's judgment. The Court found that the trustees' statements about the building's seismic rating were not actionable misrepresentations but rather statements of opinion, as they were based on an expert engineering assessment. The Court also concluded that there was no common mistake influencing both parties to enter into the contract regarding the building's seismic rating, as the initial seismic assessment was correctly prepared and there was no indication that the parties were unaware of the uncertain nature of the rating. The Court of Appeal's decision means that the trustees are not liable for misrepresentation or common mistake, and the High Court's judgment is set aside. Tadd Management Ltd must pay the trustees' costs for the appeal, while costs in the High Court will be fixed in light of this judgment.

Orders