Wensley Developments the Marina Limited v Lawlor HC Invercargill CIV 2009 425 542
[2010] NZHC 1733
•23 September 2010
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
CIV 2009 425 000542
BETWEEN WENSLEY DEVELOPMENTS THE MARINA LIMITED
Plaintiff
ANDMICHAEL LAWLOR Defendant
ANDDUNCAN COTTERILL Counterclaim Defendant
Hearing: 10 September 2010
Appearances: S N McKenzie for Plaintiff
N Till QC for Defendant
Judgment: 23 September 2010 at 2.30PM
JUDGMENT OF ASSOCIATE JUDGE OSBORNE
Background
[1] Wensley was developing an apartment complex on Lake Wakatipu to be known as “The Marina Baches”. Mr Lawlor in 2007 agreed to buy one three bedroom apartment. Around that time other companies associated with the Wensley family were promoting other developments at Queenstown. A feature of the marketing of at least some of the developments was that their apartments had a two- key or dual-key option, whereby portions of the apartment could be separately let. The marketing indicated variously that this arrangement produced extra income or maximised income. Before making his decision to purchase the apartment, Mr Lawlor had a discussion with a member of Wensley’s staff who confirmed his ability
to occupy part of the apartment and to let out the other part.
WENSLEY DEVELOPMENTS THE MARINA LIMITED V MICHAEL LAWLOR AND ANOR HC INV CIV
2009 425 000542 23 September 2010
[2] When the time arrived that Wensley was able to give title, Mr Lawlor did not settle his purchase. He says that on 27 May 2009 he cancelled the contract under the Contractual Remedies Act 1979 for misrepresentation. In the alternative, he says that the conduct of Wensley was in breach of the Fair Trading Act 1986. He seeks return of his deposit and damages.
[3] Wensley says it cancelled the contract on 2 June 2009. It seeks damages for the difference between sale price and resale value, together with penalty interest.
[4] Wensley sued Mr Lawlor. Mr Lawlor filed a defence and counterclaim.
The applications before the Court
[5] Mr Lawlor seeks summary judgment in relation to his counterclaim. He also seeks summary judgment on Wensley’s claims. If the substantive proceeding goes ahead Mr Lawlor seeks an order transferring the proceeding from the Invercargill Registry to the Dunedin Registry. Alternatively, Mr Lawlor seeks an order transferring the proceeding to the Christchurch Registry if his summary judgment application is granted.
[6] I will examine Mr Lawlor’s case first in relation to the purported cancellation under the Contractual Remedies Act and then in relation to the Fair Trading Act claim.
Cancellation under the Contractual Remedies Act
Approach to discussion
[7] I approach Mr Lawlor’s claims under the Contractual Remedies Act under the following headings:
a. Was there a representation (as pleaded)?
b. Was the representation a misrepresentation?
c. Does it matter that a representation in part or in whole refers to the law?
d.Did Mr Lawlor enter into the contract in reliance on a misrepresentation?
e. Was it impliedly agreed that the truth of a representation was essential to Mr Lawlor?
f. Was the effect of a representation to substantially reduce the benefit of the contract to Mr Lawlor?
g. Was Mr Lawlor’s cancellation in the circumstances valid?
h.What losses are properly recoverable by Mr Lawlor for misrepresentation?
Was there a representation?
[8] Mr Lawlor says that Wensley represented that the apartment could be used on a divided basis. In particular, he pleaded this:
2.1In marketing the Property to the defendant the plaintiff represented that:
i.the Property had consent to be used and leased as a single bedroom apartment and a two bedroom apartment or, if the doors to the single bedroom were unlocked, as a three bedroom apartment;
ii.inferentially that the apartment could be used and leased as two units of a total 56 unit complex as opposed to one unit of a total 28 unit complex.
(“the Representations”) Particulars of the Representations
(a) The plaintiff advertised the Property in a promotional shop in Queenstown on the basis that it would be similar in all material respects, including such permitted use and letting, to other similar developments by the plaintiff and by
showing promotional videos of such other developments in which such use and letting was permitted.
(b) The plaintiff provided the defendant with an advertising brochure headed “The Marina Baches” which contained the statements that the Property could be rented through the management scheme and that part of it could be used by friends and family.
(c)The furniture package provided by the plaintiff to the defendant listed the single bedroom part of the Property as separate “STUDIO APARTMENT” with its own furniture for lounge and dining area.
(d)The plaintiff, by its agent Christine Anderson, represented that the defendant could from time to time occupy one part of the Property and the balance be rented under a Management contract.
(e) The plaintiff failed to disclose that Resource Consent RM050651 was to the effect that the Property could only be used as one three bedroom apartment.
[9] This evidence of Mr Lawlor was summarised in his interlocutory application for summary judgment where it was recorded that:
(i)The plaintiff made express and implied representations in respect of the use of the Property; and
(ii)The plaintiff represented that the Property had consent to be used and leased as a single bedroom apartment and a two bedroom apartment or, if the doors to the single bedroom were unlocked, as a three bedroom apartment.
[10] This being Mr Lawlor’s summary judgment application, to date there has been no defence pleaded by Wensley. Rather, Wensley’s notice of opposition says there is a genuine dispute as to this and other allegations.
[11] I turn then to the evidence.
[12] Mr Lawlor deposes to having become interested in The Marina Baches and having then received or observed promotional material. In summary, that promotional material included:
i.A single page announcement by “Wensley Development Group” in relation to The Marina Baches, noting that there would be 27 spacious three bedroom baches with the option for a “management program” – Christine Anderson was identified as the sales manager to contact.
ii. A brochure and furniture package, in which it was stated under
“Management Questions” –
Can friends and family use my apartment?
Yes – you can allow anyone you wish to use all or part of your entitlement.
In the “furniture package” portion of the brochure there was reference to the “studio apartment” which, when it is read in its context, clearly refers to a single (king) bedroom “apartment” as distinct from the remaining area which contains a master and a second bedroom.
iii.Mr Lawlor was shown promotional films of other Wensley Group developments which were said to be similar to and on the same basis as that proposed at The Marina Baches. He says that the advertisements referred to the “double-keying” of the premises, meaning that they could be let as a whole or they could be let as two separate units where the inter-connecting door could be locked. Mr Lawlor produced a CD of what he said was typical advertising copied from the plaintiff’s website. The Court has viewed the advertisements. The first (for “The Club”) refers to “two-key apartments offering separate letting for extra income”. A second video refers to the bedroom set-up “if you want to split your income”. A third clip refers to “a dual-key option which maximises income”. A fourth clip refers to a five bedroom unit with four keys – “a wonderful letting situation”. Mr Lawlor says that while he was negotiating the purchase of The Marina Baches apartment it was being marketed on the same model as the other existing Wensley developments with Derek Bulman and Greg Wensley
as the Wensley agents promoting the concept of multi-key arrangements.
iv.Mr Lawlor says this in relation to his contact with Christine Anderson, the person who had been identified as the Wensley sales manager to contact:
6.
…
(f) I called into the Queenstown sales office of the plaintiff several times before making the decision to purchase. I got
to know the plaintiff’s staff including Christine Anderson. I
informed one of those staff, Christine Anderson that I lived in Mosgiel, visited Queenstown from time to time to work
as required and that I wanted, if I purchased, to be able to
go to Queenstown and stay in part of the Unit whilst the balance was let through the management scheme. In response to a question from me, Christine Anderson confirmed that I could occupy from time to time one unit and rent out the other. This was said by Christine Anderson before I signed the agreement….
v.Mr Lawlor says the double-keying, with its versatility and income, was one of three key reasons which persuaded him to enter the contract.
[13] The main evidence filed in opposition for Wensley was that of Julie Raewyn Wensley Jack who described herself as the manager of Wensley. A short affidavit was filed by Gregory Ross Keown Wensley, who describes himself as “Sales and Marketing Manager” of Wensley, but that affidavit deals with discussions with Mr Lawlor from December 2008, well after the agreement had been signed on 30 May
2007. Ms Anderson has not given evidence in relation to the applications before the
Court.
[14] There is no denial by any witness on behalf of Wensley as to the conversation which Mr Lawlor deposes he had with Christine Anderson.
[15] Rather, under a heading “Unit sold as one apartment” Ms Jack focuses on the marketing material and the agreement. Her evidence makes these points:
•There is no reference in either to splitting the unit into separately marketable apartments.
• The references to three bedroom units and the fact there are to be 27 of them.
•There is a warning in the marketing brochure in relation to reliance on financial information given - I will return to that below at ([71]).
•The marketing material contained on the CD related to different developments undertaken by Wensley’s related entitities and “do not relate to The Marina Baches”.
•The reference to the studio apartment, in the furniture package referred to by Mr Lawlor, is not intended as confirmation of the way in which the unit could be marketed, but merely identifies the items included in the separate tea and coffee cabinet unit.
[16] Ms Jack then adds:
Having said the above, Wensley believed the Resource Consent allowed the use of the units as either the full 3 bedroom apartment or as two separate 1/2 bedroom apartments with separate keys.
She then amplifies that comment by reference to Wensley’s related entities having used parallel wording in their resource consent applications on five other developments, with no resource consent issues having been raised.
[17] Mr Lawlor filed reply evidence. He correctly observed that he cannot comment on Wensley’s intention in its reference to “Studio Apartment” and the listing of its “furniture for lounge and dining area” but he says that he took those references to be consistent with the other representations made to him concerning the ability to use and let the apartment as two separate apartments.
[18] Finally, moving beyond the discussion of exactly what was said or represented at the time of the contract, Ms Jack observed (with implicit questioning of Mr Lawlor’s credibility) that at no time during his extensive discussions with Ms Jack had Mr Lawlor raised the two-key system as essential to him. Ms Jack added that in fact Mr Lawlor had not raised the issue at all until 6 May 2009. On that day his solicitor, Mr Alloo, had emailed Wensley’s solicitors, Duncan Cotterill, with a
query in relation to the resource consent position surrounding the units. Mr Alloo stated that it appeared that The Marina Baches were not being operated according to the resource consent obtained and that Civic Corp had or would be issuing an Abatement Notice. The issue was noted as revolving around whether the resource consent provided for one key units only or allowed the units also to be marketed and sold as two-key units. Clarification was requested.
[19] In his reply evidence, Mr Lawlor accepts that he did not in his discussions (approaching settlement) discuss the two-key system with Ms Jack. He says that there was no call for him to do so. He says that his discussions were concerned primarily with financial difficulties that he had been having prior to becoming aware of an issue as to the apartments being used on a two-key system. He says that as soon as he became aware of that issue it was raised by Mr Alloo in the 6 May 2009 email.
[20] That is the evidence before the Court on the issue of representation.
[21] There is no evidence from Wensley to contradict Mr Lawlor’s evidence as to his discussion with the Wensley sales manager, Ms Anderson. Mr Lawlor was speaking to Ms Anderson against a background of marketing information which he had received or seen from Wensley. Mr Lawlor’s intent, as explained to Ms Anderson, was to be able to go to Queenstown and stay in part of the unit whilst the balance was let through the management scheme. Mr Lawlor states that Ms Anderson confirmed that Mr Lawlor could occupy one unit from time to time and rent out the other.
[22] On the basis of this uncontradicted evidence alone I find that there is no reasonably arguable answer on the part of Wensley to the allegation that this representation was made.
[23] When the evidence as to the specific Lawlor/Anderson conversation is put against the background of Wensley’s deliberate publicity of the two-key or dual-key option, the evidence of representation is, quite simply, overwhelming. I find on the uncontradicted evidence that Wensley marketed The Marina Baches in part by
reference to the similarity of the two-key option in other Wensley developments. The identification of the “Studio Apartment” within the marketing material reinforces with specific reference to The Marina Baches as having a dual-key operation. Finally, there is the candid concession by Ms Jack that Wensley throughout believed that the resource consent for The Marina, just as it believed the resource consent for existing developments, allowed dual-key operation. There was a flexibility with commercial benefit of having and promoting apartments which could function as two or more units. The video clips of typical advertising compiled by Mr Lawlor on his CD leave the viewer with the clear impression that apartments developed by Wensley uniformly have dual-key options.
[24] The representation alleged by Mr Lawlor is established.
Was the representation a misrepresentation?
[25] Mr Lawlor alleges that the representations were misrepresentations as:
i.On or about 16 January 2006 the Queenstown Lakes District Council issued land use and sub-division Resource Consents RM050651 subject to conditions, including Condition 1 to the effect that the development be carried out in accordance with the plans and application as submitted, with the exception of amendments required by the Further Conditions of Consent. (‘the Resource Consent’)
ii.The plans, application and Resource Consent were for the use of 28 three bedroom units not 56 one and two bedroom units.
[26] It is Mr Lawlor’s case that these alleged representations together constitute a “misrepresentation” as that term is used in s 7 Contractual Remedies Act which specifies the circumstances in which a contract may be cancelled for misrepresentation, repudiation, and breach.
[27] The resource consent was in evidence. It came in the form of a decision of David W Collins, a Hearings Commissioner appointed pursuant to s 34A Resource Management Act 1991.
[28] The decision includes the following:
a. It records that Wensley’s application was for land use and subdivision consents to permit development of a site at 875 Frankton Road as a 27 unit Comprehensive Residential Development, and for use of the units for visitor accommodation and a manager’s residence.
b.Land Use Condition 1 required that the development be carried out in accordance with the plans as submitted to the Council (subject to amendments required by following conditions) – the decision identifies that the detailed architectural plans provided showed twenty-seven three bedroom apartments.
c. Land Use Condition 16 defined “development” as meaning “the proposed development of 875 Frankton Road, Queenstown comprising of 27 units and related facilities”.
[29] Wensley in 2008 applied for a variation of the resource consent under s 127
Resource Management Act 1991. The decision of the Queenstown Lakes District
Council in relation to that application is dated 6 October 2008 and identifies that -
a.The Wensley proposal required a variation to Condition 1 of the subdivision decision and Condition 1 of the land use decision “in order to split unit 302 of the development into two separate residential units, provide for visitor accommodation for those resultant two units and amend the approved parking layout and unit title plans accordingly”.
b. The total number of residential units onsite would be brought to 28.
c. The total unit entitlement as recorded in the approved plans was 28 (comprising units 101 – 108, 201 – 208, 301 -306, and 401 – 406).
[30] The above summary is plainly what the relevant resource consent documents stated. Unsurprisingly, Wensley took no issue with the fact that those were requirements and statements of the resource consent (as amended).
The Abatement Notice
[31] The development proceeded and was completed. Units began to be occupied and let.
[32] The Queenstown Lakes District Council on 2 April 2009 issued an Abatement Notice under s 324 Resource Management Act. The Abatement Notice required Wensley and its directors to immediately cease using the 28 three bedroom units as one or two bedroom units. The enforcement officer stated in the notice that:
•Condition 1 of the resource consent had not been complied with in that the officer had reasonable grounds to believe that the apartments when operating as a visitor accommodation complex were operating a 56 unit apartment complex contrary to what was consented (28 three bedroom units).
•An internal door could be locked which in turn could create a separate one hotel room in addition to a two room apartment.
•In effect this was creating a one, two or three room visitor accommodation complex which when undertaken increased the total units at the subject site to 56 units.
• (From a timeline contained within the Abatement Notice) on 16 March 2009 the Council had received an allegation that the apartments were advertising the renting out of single hotel rooms and that when the Wensley website was viewed it was observed that the renting of one, two and three room apartments was being advertised.
• A site inspection of the apartments the following day, in which the officer was accompanied by the manager, indicated the way the separated rooms were operating. On the doors were numbers indicating different units. The manager (Russell) had confirmed that Wensley was operating a 56 unit visitor accommodation.
[33] There is no evidence to suggest that Wensley itself notified Mr Lawlor (or any other purchaser) of the issuing of the Abatement Notice or its consequences. It is Mr Lawlor’s evidence that the issuing of the Abatement Notice came to his attention on or about 2 May 2009, as a result of which he obtained a copy of the resource consent.
[34] On 6 May 2009 Mr Lawlor’s solicitor, Mr Alloo, sent his email to Wensley’s solicitors, Duncan Cotterill, seeking clarification in relation to the issuing of the Abatement Notice.
[35] On 7 May 2009 Duncan Cotterill advised that Wensley was aware of the Abatement Notice and that Wensley intended to dispute it. (There is no evidence as to whether an appeal was filed – such appeal had to be filed within fifteen working days after service of the notice).
[36] On 27 May 2009 Mr Alloo by letter to Duncan Cotterill gave notice of Mr Lawlor’s cancellation of the contract. Repayment of the deposit was demanded. The stated ground of cancellation was misrepresentation in relation to the use of the apartment as a two-keyed unit.
[37] On 28 May 2009 Duncan Cotterill notified Mr Alloo by letter that:
Our client has informed us that the Abatement Notice and infringement notices issued to our client by the Queenstown Lakes District Council have been withdrawn by the Council. On this basis, your client does not have grounds to assert misrepresentation and cancel the contract.
Settlement was demanded by 29 May 2009.
[38] The reference to withdrawal of the Abatement Notice by the Council was a less than complete summary. On 28 May 2009 Lakes Environmental Limited had written to Wensley and its directors. The letter was headed:
RE: WITHOUT PREJUDICE – WITHDRAWAL OF ABATEMENT NOTICE DATED 2 APRIL 2009 AND CANCELLATION OF INFRINGEMENT NOTICES…
Within the body of the letter Lakes Environmental Limited (on behalf of
Queenstown Lakes District Council) recorded:
•A meeting had taken place on 27 May 2009 in which Wensley had asserted that they did not believe that the basis on which the Council had served the Abatement Notice was correct. Wensley had asserted that the resource consent allowed Wensley to use the 28 three bedroom apartments for visitor accommodation in any configuration Wensley wished, that is as either one or two or three roomed apartments.
•Wensley would be aware from the meeting that the Council firmly did not agree and the letter recorded that Wensley did not present any argument or fact at the meeting that changed or altered the Council view of the resource consent. The Council’s position was that the resource consent was only granted for the purposes of 28 three bedroom apartments.
“Notwithstanding this, you requested that Mr Field exercise his discretion in cancelling the Abatement Notice dated 2 April 2009 for 2 months while you negotiated the sale of the units. You offered to Council that you would ensure that the 28 units would only be used are (sic) 2 or 3 bedroom units during this period acknowledging also that many were already let as 3 bedroom units during this period. You acknowledged and agreed that you would not let the (sic) any of the 28 apartments as a single (1) bedroom unit where 1 of the bedrooms is let independently of the balance of the apartment.” (Emphasis added)
•Mr Field had agreed to this temporary arrangement and granted relief for two months by cancelling without prejudice the Abatement Notice and the infringement notices on certain conditions. The first condition was that the Council did not concede any point that might imply or indicate that the 28 apartments could be used for any use other than as three bedroom residential/visitor accommodation apartments. It was anticipated that Wensley would during the two month period review their interpretation of the resource consent and might apply for a variation. A further condition of the withdrawal of the Abatement Notices was that if the Council declined any resource consent application (for variation) Wensley agreed to immediately comply with the existing resource consent by using the 28 apartments as three bedroom residential/visitor accommodation apartments only.
[39] Thus it was correct of Duncan Cotterill to state in its letter of 28 May 2009 that the Abatement Notice and infringement notices issued to Wensley had been withdrawn by the Council. However, the further statement that “[o]n this basis, your client does not have grounds to assert misrepresentation and cancel the contract” was not correct. As the above summary of the 28 May letter indicates, the Council’s withdrawal of the Abatement Notice was without prejudice, expressly reserved the Council’s assertion as to the use of 28 units only, and committed Wensley to using only 28 units for the time being and thereafter.
[40] In the event, Duncan Cotterill for Wensley wrote to Mr Alloo again on
2 June 2009. The withdrawal of the Abatement Notice was again recorded, without reference to the “without prejudice” nature or condition of that withdrawal. The letter stated that Wensley did not consider the issues raised by Mr Alloo were a legitimate basis for claiming misrepresentation. The letter then went on to state that Duncan Cotterill was instructed to cancel the contract which was accordingly now at an end. It was stated that the deposit was forfeited and all other rights reserved.
[41] The subsequent history is that Wensley then applied for consent to let the “twenty seven existing three bedroom units and one existing two bedroom unit for visitor accommodation purposes in a combination of configurations which allowed for the letting of one, two and three bedroom guest room and units within the complex for visitor accommodation”. That consent was granted on 2 July 2010.
[42] The 2 July 2010 consent was not retroactive. The consented use of The Marina apartments up to 2 July 2010, as it affected Mr Lawlor’s apartment, is therefore to be determined by reference to the resource consents in place previously. I must do that on the evidence before the Court in this proceeding.
What did the resource consents permit?
[43] In considering whether Wensley misrepresented the permitted use of the apartments, I first focus on the resource consents themselves.
[44] Wensley filed (relatively late) evidence from a planner, Christopher Bruce Ferguson. Ms McKenzie explained in her submissions (in response to objection by Mr Till to Mr Ferguson’s evidence) that Mr Ferguson’s evidence was not being relied on as the evidence of an expert but, rather, his evidence was relied on as indicating a basis for Wensley’s belief that The Marina Baches could be used on a dual-key basis. His evidence was as to the previous practice of Wensley in relation to other developments and as to his perception of the permissible use of the apartments on a two-key or dual-key basis. That was his view based on his experience. I note, given Ms McKenzie’s concession in submissions, that his evidence was not being put forward as an expert in the sense that it was evidence of the matters he was addressing. I note that similarly, the Court had the evidence as to the position taken by the Queenstown Lakes District Council and its enforcement officer, in the form of the Abatement Notice which was issued. That again was the view of the Council and its enforcement officer.
[45] I am satisfied on the evidence before the Court that the resource consent for The Marina Baches as issued on 16 January 2006 and varied on 6 October 2008 was for a number of residential units, available for visitor accommodation, limited to 28. The plans submitted by Wensley (which became incorporated into the consent) showed (initially) 27 three bedroom apartments and thereafter (through the variation) one additional residential unit bringing the total number on site to 28.
[46] The application and the resource consent dealt with the number of “units” and the use of those units. The Oxford English Dictionary gives as one of the standard meanings of “unit” (with reference to usage in the United States, Australia and New Zealand) as:
An accommodation unit in a larger building or group of buildings, especially in a block of flats or a motel.
[47] It is this concept of “unit’ which is clearly used in the present context. The applicant presents its plans and explains the number of units; affected parties are able to make their submissions; and the consent authority considers the application in relation to all its aspects, including the number of units. This complex was presented by the applicant as a 27 (and by variation 28) unit complex and was
consented to on that basis. The reference in relation to the variation application to “splitting unit 302 of the development into two separate residential units” is entirely consistent with what I consider to be the clear meaning of “unit” as used in the application and the resource consent.
[48] Purchasers or affected neighbours of this complex were entitled to read the application and the resource consent and to understand its terms according to the natural and ordinary meaning of the words used.
[49] This approach is reinforced by considering the existing rights which were before the Commissioner in January 2006. The site in question was entitled to have
12 (larger) residential units without the need for consent. The site is in the low density residential zone within the Queenstown Lakes District Council District Plan. Visitor accommodation is a discretionary activity under the District Plan. Wensley was faced with making an application for consent to use the site for visitor accommodation. The Commissioner then had to consider an application which was put forward on the basis that it would contain 27 residential units (to be occupied probably, but not necessarily, exclusively) by visitors. I do not consider that the resource consent when read against that background could be taken as implicitly permitting the letting of 54 residential units (by partitioning the 27 units to create 54 units).
[50] The justification of an alternative or contrary view was not initially developed by or for Wensley. When Mr Alloo first raised the concern over the Abatement Notice the response was that Wensley “intend to dispute it”.
[51] Ms McKenzie in oral submissions invited the Court to view Wensley’s proposal as to the development, as notified, as focussing on the use of the development for visitor accommodation. She accepted that the proposal identified
27 residential apartments which were also referred to as “units” but submitted that because each of the units was a three bedroom unit, the owners were entitled to use all three bedrooms in any configuration. She observed that the use of a dual-key system did not alter the size of the development. She noted that neither the proposal
nor the resource consent say in terms that Wensley (or subsequent owners) were only to be permitted 28 sets of activity in 28 visitor accommodation units.
[52] For his part, Mr Till referred the Court to the District Plan requirements in relation to discretionary activities. He noted the specific requirement in relation to visitor accommodation that the location, nature and scale of activities on site (his emphasis) be considered. He submitted that a development containing 56 units for visitor accommodation, each housing separate occupiers, is of a different nature and scale to a development containing separate occupiers in 28 units only.
[53] Mr Till submitted that the emphasis of Ms McKenzie’s submission was to invite the Court to find the representation of double-key entitlement correct because nothing in the resource consent prevents double-key use. Mr Till submitted that that is the wrong approach – the issue is rather whether the resource consent permits the use because, as a discretionary activity, consent to any particular use was required.
[54] Against the background of the plain meaning of “unit” as I have explored it above, I consider Mr Till’s approach correct. Wensley never sought to construct and use 54 (or 56) residential apartments for visitor accommodation. I consider the Council correctly summarised the proposal when it said in its public notification on
2 August 2005 that:
The proposal includes constructing 27 units with 26 to be used for visitor accommodation activities and the remaining unit used for residential purposes.
[55] Use was necessarily part and parcel of the application. At no point in the Council’s consideration and determination of the consent was the concept of 54 (or later 56) units identified.
[56] In Bartley v Beale (1997) 3 NZ ConvC 192,601, at 192,602, Fisher J
summarised that case as raising an interesting question, namely:
In what circumstances will a vendor be taken to impliedly represent that a room or building designated for a particular purpose satisfies the legal requirements applicable to that purpose?
[57] The vendors (respondents) through their agents had advertised and presented their home as a three bedroom dwelling. The provisions of the Council’s bylaws meant that one of the “bedrooms” did not qualify as a “habitable” room. The District Court Judge had concluded that for the present purposes the expression “bedroom” described merely the physical characteristics of the room and did not extend to legal requirements. Fisher J upheld the judgment in the District Court.
[58] Bartley v Beale is not authority for the proposition that a misrepresentation must be a wrong statement of fact rather than of law. In my view, the headnote to the New Zealand Conveyancing Cases Reports accurately summarises the ratio of the case in relation to alleged misrepresentation, and I adopt it:
1. There was no misrepresentation about the physical attributes of the third bedroom. The room was a bedroom, even though adjustments were required before its continued use conformed with the bylaws.
2. There was no implied misrepresentation for which the vendor should be liable.
(i)Both parties made a mistake in assuming the room's use as a bedroom complied with the law. However, the bylaw requirements were a matter of public record and were as accessible to the purchaser as they were to the vendors. The burden of an implied representation as to the law would normally be imposed upon a lay vendor only if there were a particular reason for doing so, for example, if the vendor had personally obtained a building permit.
(ii) There was no justification in this case in imputing knowledge about the non-compliance with the bylaws to the vendors. The purchaser could not assume the vendors were advising him as to the legal position. The conversion to a bedroom was not visibly recent; the vendors did not hold themselves out as knowledgeable on building bylaws in general; they had not implied that they had checked the position with respect to this particular room. (Souster v Craig (1986) 2 NZCPR 404 and Laurence v Lexcourt Holdings Ltd [1978] 2 All ER 810 distinguished.)
[59] Considering the approach taken in Bartley v Beale in relation to the present case, I find these distinguishing features:
a. The present is not a case of implied misrepresentation, it is a case of express misrepresentation. The Wensley representations that the units could be operated on a two-key basis and let on that basis were clearly
intended to encompass not merely physical characteristics but also regulatory characteristics. Any purchaser in the context of the publicity being generated and of the statements made would have reasonably understood that the “could be used” reference was both to physical and to regulatory ability.
b.The present was a case in which the vendor assumed the responsibility for ascertaining the rights of use by publicising and volunteering that information to the public and to individual purchasers.
c. The present was a case in which the purchaser was entitled to assume that the vendor was advising him as to the legal position, the vendor having been the owner of the bare land and the developer of the complex, including through its planning stages. The statement as to what could be done with the units carried the clear implication that the matter had been checked by the vendor and established as a right.
Bartley v Beale is therefore distinguishable. The present case is, in turn, parallel to the facts in Souster v Craig (1986) 2 NZCPR 404, which Fisher J had cause to distinguish in Bartley v Beale.
[60] I have noted Ms McKenzie’s summary of her proposition in this regard, namely that (assuming there was a misrepresentation) the only misrepresentation was to a matter of law in terms of the legality of operating the two-key system pursuant to the resource consent held.
[61] Ms McKenzie began her submission in this regard with the proposition, by reference to the discussion in Burrows, Finn & Todd Law of Contract in New Zealand (3rd ed, LexisNexis, Wellington, 2007) at 11.2.1(d), that a misrepresentation must be a wrong statement of fact rather than of law. This, she submitted, was because a statement of law is really only a statement of opinion as to what the law is. As such, as long as the opinion of the law is genuinely held by the representor, such a statement is not a misrepresentation of law.
[62] It is appropriate that I cite the full passage relied upon by Ms McKenzie, which is this:
(d) Fact not law
It is clear that a representation of law cannot found an action merely because it is wrong. But a representation of law is basically a statement of the representor’s opinion as to what the law is and it follows that if the representor does not in fact hold this opinion he or she misrepresents his or her state of mind and liability should accrue under the principle in Edgington v Fitzmaurice. It might further be argued that, as with other statements of opinion, there will be cases where the representor implicitly represents that he or she has reasonable grounds for belief. In any case it is difficult to distinguish between representations of fact and of law. A representation, for instance, that the drains of a house are sanitary is obviously of statement of fact. It is equally obvious that to state an abstract proposition of law, as for instance, that an oral contract of guarantee is not enforceable by action, is a representation of law. The distinction becomes intractable when a statement of fact is coupled, expressly or implicitly, with a proposition of law. It is evident that in practice contracts are much more likely to be induced by mixed statements of this kind than by abstract propositions of law. Suppose that, as in Solle v Butcher, a person states that a flat is not an old but a new flat and is therefore outside the Rent Restriction Act, is this to be regarded as a statement of fact or of law? The boundaries are not clear.
(Footnotes omitted).
[63] I endorse the conclusion reached by the learned authors, namely that the boundaries (between fact and law) are not clear. Given the wording of the provisions of s 7 Contractual Remedies Act I am not persuaded that any quest for a clear distinction between matters of law and fact is justified. The distinction is not one which Parliament itself has provided within the express terms of s 7. If it is a distinction to be observed, that must be because it is derived from the common law.
[64] Mr Till submitted that on any approach the representation in this case (that the apartment could be used on a dual-key basis) was if not a statement of fact at the very most a statement of mixed fact and law. I accept his submission. Regardless of the statutory and regulatory provisions which govern the use and development of land in the area, there remains a factual issue as to what consents Wensley obtained.
[65] Statements will not be statements of law if law and fact are inseparably interwoven: Spencer Bower, Turner and Handley Actionable Misrepresentation (4th ed, Butterworths, London, 2000) at [38], page 18. The current author of Spencer
Bower, Turner and Handley illustrates that proposition by reference to a judgment of Jessel MR in Eaglesfield v Marquis of Londonderry (1875) 4 ChD 693 at 702 – 703 in which his Lordship demonstrated that many statements of fact involve some proposition of law. The authors illustrate as situation involving statements of fact the following taken from case law:
•a statement that the representee took no interest under a will, those his heir might;
• a statement as to the powers of companies under private Acts of Parliament;
•a statement that War Regulations applied to premises to prevent the rent being raised.
[66] The case referred to in relation to the last proposition (the War Regulations statement) was the New Zealand decision in Oudaille v Lawson [1922] NZLR 259, upon which Ms McKenzie relied for a different proposition, to which I will return below (at [70]).
[67] In my view, the case of Bartley v Beale, on which Ms McKenzie initially relied, contains through the judgment of Fisher J a helpful consideration of the need to consider representations in their full context and to avoid black and white categorisations.
[68] Ms McKenzie cited Bartley v Beale for the proposition that the High Court declined to award damages because there was no misrepresentation of fact.
[69] Bartley v Beale is authority for the proposition that representations caught by s 7 Contractual Remedies Act may at least in part refer to legal matters. The representation made by Wensley encompassed both the ability and the right of the purchaser to use the apartment on a two-key basis. Having assumed responsibility for the accuracy of that representation, there is nothing which requires this Court to absolve Wensley from that responsibility.
[70] Ms McKenzie, moving away from reliance on Bartley v Beale, referred the Court to two other decisions in particular. These were relied upon as indicating that when a representation refers to a matter of law, and to that extent might be considered an opinion, the representation may lead to cancellation only if the representor does not hold an honest belief in the representation or opinion. Neither case Ms McKenzie relied on is of assistance on this point. Oudaille v Lawson was a claim brought for fraudulent misrepresentation. A fraudulent mind was established. McAlpine Snowline Ltd v Wethey (1986) 2 NZCPR 388 was a case in which the plaintiff sued for misrepresentation in relation to statements that finance could easily be obtained and that there would be no difficulty finding tenants. Henry J expressed himself as far from satisfied that the agent was not expressing a genuine opinion reasonably held on both matters. But that is not a suggestion that a genuinely held opinion in some way defeats a claim of misrepresentation. The relevance of the honestly held opinion was in the context of an opinion as to future events, which is in a different category of case (cases where the representor is held to have represented that an opinion as to future events is honestly held).
Did Mr Lawlor enter into a contract in reliance on a misrepresentation?
[71] Ms Jack referred in her evidence to a disclaimer in one of the marketing brochures which Mr Lawlor had seen. The disclaimer, inside the back cover, above “contact information”, said:
All the information herein is given in good faith. The financial information is given as a guide only. Clients are advised to seek their own independent advice before purchasing to verify the information supplied.
[72] I accept Mr Till’s submission that the disclaimer in its express terms refers to financial information as being a guide only and that no reservation is made in relation to representations concerning the use to which the unit could be put. Furthermore, it is a disclaimer in relation to the information contained in the brochure itself. It does not apply to representations made (as they were) directly by Ms Anderson to Mr Lawlor in response to his specific concerns. For those reasons I find the disclaimer clause irrelevant. Had it been necessary, I would have also
inclined to the view that s 4 Contractual Remedies Act was applicable - it would not have been fair and reasonable, in the light of Ms Anderson’s specific representation, to treat the disclaimer as conclusive between the parties.
[73] Reliance is a question of fact. It is clear on the evidence of Mr Lawlor that key to his reliance upon the representation that his apartment could be operated on a dual-key basis was his discussion with Ms Anderson and her confirmation of that fact. Against that background Ms McKenzie for Wensley responsibly did not develop any submission that Mr Lawlor did not rely on the representations made.
[74] I do not overlook a comment by Ms Jack in her evidence in which she noted that the applicable resource consent was available to Mr Lawlor and could have been considered as part of the due diligence process prior to entering the agreement. I adopt the observation of the English Court of Appeal in Redgrave v Hurd (1881) 20
ChD 1 which found favour with the New Zealand Court of Appeal in Buxton v The
Birches Time Share Resort Ltd [1991] 2 NZLR 641 at 647, per Hardie Boys J:
It is not enough that he could have discovered it had he searched; or even that he was invited to verify the position from a source that was made available to him.
[75] There is something inherently unworthy in Ms Jack’s comment as to what Mr Lawlor should have found out in due diligence when it remained the position of Wensley through the subsequent months and years that the content of Wensley’s representation had been accurate.
[76] I find that it is beyond argument that Mr Lawlor relied upon the representations made to him.
Was it impliedly agreed that the truth of the representations was essential to Mr
Lawlor?
[77] Mr Lawlor does not assert that the truth of the representation made to him was expressly agreed to be essential to him. His case is put (adopting the alternative provision of s 7(4)(a) Contractual Remedies Act) upon the basis that such was impliedly agreed.
[78] Counsel had common ground on the approach this Court must adopt in relation to implying essentiality. The approach to be adopted is that of Jordon CJ in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd (1938) 38 SR (NSW) 632 at
641, as adopted by the Supreme Court of New Zealand in Mana Property Trustees
Ltd v James Development Ltd [2010] NZSC 90 at [23]:
You look at the stipulation broken from the point of view of its probable effect or importance as an inducement to enter into the contract.
[79] The Supreme Court viewed as helpful the approach taken by Dawson and McLauchlan (Francis Dawson and David W McLauchlan The Contractual Remedies Act 1979 (Sweet & Maxwell (NZ) Ltd, Auckland, 1981) at 110:
We consider that, as in the old law, the question whether a term is an essential term will fall to be decided by ascertaining the intention of the parties to be collected from the terms of the whole contract and the subject matter to which it relates. Since the question is one of the express or implied agreement of the parties, it will be the intention of the parties at the time of entering into the contract and the effect likely to be produced on the foundation of the adventure that is relevant. Strictly speaking, therefore, the consequences of the breach that have in fact taken place are immaterial to the question whether a term is essential. One useful indicator of whether a term has been agreed by implication to be essential is to ask whether the term is of such importance that it may reasonably be supposed that without such term the party not in default might never have entered into the contract at all.
[80] Ms McKenzie placed emphasis on the fact that the term relied upon by Mr Lawlor was not an express stipulation as to double-keying, but is alleged to have become a term through operation of the Contractual Remedies Act. She submitted that it weakens the argument as to an implication of essentiality where the term alleged to be essential does not even appear in the contract as an express term.
[81] As a part of the Court’s overall assessment of the objective intention of the parties the Court might consider that in most cases it will be more likely that the parties have in mind essentiality for an express term rather than for an unexpressed term. That is not to say that an implied term is incapable of being essential. The essentiality of an implied term as of an express term, is to be determined in accordance with the approach taken in Tramways Advertising Pty Ltd v Luna Park (NSW) Ltd and in Mana Property Trustees Ltd v James Development Ltd.
[82] I ask first whether the stipulation as to double-keying was important as an inducement to enter the contract. The answer is clearly “yes”. It was viewed by Wensley both in relation to its other developments and this development as such an important feature that it was given prominence in marketing material in relation to the developments. It was portrayed as the feature which maximised income. Its importance to Mr Lawlor was reinforced by his specific questioning of the Wensley sales manager, Ms Anderson.
[83] It is then appropriate to adopt the “useful indicator” of Dawson & McLauchlan, by asking whether the term was of such importance that it may reasonably be supposed that without it the party not in default might never have entered into the contract at all. The test is again objective. The Court determines this issue in the light of the conduct of the parties. Ms McKenzie criticised Mr Lawlor’s case as to essentiality partly on the basis that Mr Lawlor did not in his evidence depose that he would never have entered the contract if he did not have the benefit of a term as to double-keying. Given that the Court is concerned with objective construction of the intention of the parties, I do not consider it a valid criticism of the Lawlor affidavit evidence that he did not deal with this specific point as to his subjective approach. In any event, he did say in his affidavit that this particular point was one of the key aspects of the contract.
[84] Objectively the Court must have regard to the nature of Mr Lawlor’s specific discussion with Ms Anderson on the subject of dual key rights; his discussion with her of the use of the apartment both for himself for accommodation when in Queenstown and for letting; and the recognition and marketing which Wensley itself gave to the economic advantages of the dual-key operation. These circumstances lead objectively to the reasonable supposition that without the dual key right Mr Lawlor would never have entered into the contract at all.
Was the effect of a misrepresentation to substantially reduce the benefit of the contract to Mr Lawlor?
[85] In order to justify the Court’s intervention under the Contractual Remedies Act, Mr Till as an alternative to essentiality relied upon a substantial reduction of benefit.
[86] Mr Till and Ms McKenzie agreed that a useful formulation of the test of substantiality under s 7(4)(b) Contractual Remedies Act is contained in the judgment of Richardson J in MacIndoe v Mainzeal Group Ltd [1991] 3 NZLR 273 (CA) at 284
– 285 where his Honour said:
Substantiality in that statutory context is a matter of fact, degree and impression.
It has the same flavour as "significantly" and "considerably". It is equally incapable of any kind of arithmetical analysis. One must stand back and, assessing the matter objectively, determine whether the effect of the breach will be, to take the most obvious provisions subparas (i) and (ii), substantially to reduce the benefit of the contract to Mainzeal or substantially to increase the burden on Mainzeal under the contract.
[87] Each case is to be considered on its own facts, according to subject matter and context: Jolly v Palmer [1985] 1 NZLR 658 at 662, Hardie Boys J; Westpac Merchant Finance Ltd v Winstone Industries Ltd [1993] 2 NZLR 247 at 255, Anderson J.
[88] Substantiality in relation to the subject matter of this case may be usefully tested by contrasting the “one unit” and “two unit” situations. First, a situation where both units are let to outsiders through the management system. Mr Lawlor has given evidence of Wensley’s advertising of the apartments at The Marina Baches as follows:
3 bedroom $414.00 per day
2 bedroom $314.00 per day
1 bedroom $194.00 per day
Wensley has not produced details of its actual returns in other developments up to the point of the sale to Mr Lawlor. If one takes Wensley’s advertised rates, the two
“units” at The Marina Baches let for one night bring in 22% more rent than the apartment when let as one unit ($508.00 v $414.00). That is a substantial reduction.
[89] The second scenario is when Mr Lawlor comes to Queenstown and stays in the studio room of the apartment. He cannot on the one-key approach receive income for the unoccupied two bedroom unit. On the advertised rates the rental loss is $314.00 per night. That would affect particularly the one month per year to which Mr Lawlor’s automatic entitlement of personal use applied. Ms McKenzie noted that the management agreement allowed Mr Lawlor to have the personal use of his unit only 30 days per year without financial consequence. One cannot simply extrapolate the one month effect to a full year. In my judgment, therefore, while a substantial reduction of benefit in relation to the personal use scenario is arguable, the matter is not beyond argument in favour of Mr Lawlor.
[90] That leaves the situation (in the majority of the year) when the apartment is available, if two-keyed for two unit use.
[91] Ms McKenzie submitted that in relation to that scenario there is no evidence of substantial reduction for four reasons. I examine each of those:
1.Ms McKenzie noted that Wensley when faced with the Abatement Notice on 6 May 2009, had immediately disagreed with it and intended to challenge it. Wensley advised Mr Lawlor that it would reduce the purchase price by $86,032.00 in lieu of the guaranteed return, “thus removing any doubt as to whether it would be able to pay the guaranteed return”.
2.Ms McKenzie submitted that the guaranteed return of 8% was significantly more than the 2% - 4% which the defendant expected the unit to return in any event, and was substantially more than the unit was returning.
It is convenient to deal with these two submissions together. The
Wensley disagreement with the validity of the Abatement Notice
cannot assist it. The Court is examining the issue of substantiality of reduction precisely because it has found that there was a misrepresentation which continued in effect at the time Mr Lawlor purported to cancel the contract. I turn then to the guaranteed return. The guaranteed return applied to the first two years after purchase. In offering to reduce the purchase price by $86,032.00 in lieu of the guaranteed return, Wensley was responding to concerns raised by Mr Lawlor over Wensley’s solvency and ability to honour the guaranteed return. In doing so, it is arguable that Wensley’s agreement to reduction of the purchase price negated any impact from the “two- key” problem for the two years after purchase. It cannot be argued that the impact in year three and thereafter was in any way negated. Accordingly, the offered abatement of purchase price might arguably restore the level of benefit for the first two years but not thereafter.
3.Ms McKenzie noted evidence that The Marina Baches had performed very well comparatively during the year that each apartment was operated solely as one rentable unit (whether as one, two or three bedrooms). Reliance was placed on the evidence of Ms Jack who said:
Since the Abatement Notice was issued in May 2009 the Marina Baches, have been operating as one key units only. The apartments on the second level (where unit 205 is), have returned a monthly average of $2,197.65 to their owners (or
1.86% of Mr Lawlor’s purchase price).
By comparison, over the same period, the average monthly return for 3 bedroom units at “The Club” was $1,779.98 and at “The Shore” it was $2,144.25. The units in these developments were operating as 2 key units.
The returns across all Wensley related developments have been lower than anticipated due to the current world-wide recession.
Ms Jack’s evidence of what has happened since May 2009 is not of assistance. The Court must judge the question of substantiality in the light of the facts which were available when Mr Lawlor had to make his decision whether to settle or to cancel. The Abatement Notice
was issued in May 2009. Mr Lawlor purported to cancel the contract in May 2009. He did so at a time when Wensley was pressuring him to settle. Indeed Wensley itself purported to cancel the contract on
2 June 2009. Mr Lawlor was not offered the opportunity to defer the date of settlement while the parties awaited evidence of how the apartments would perform financially. On the evidence, what Mr Lawlor knew was that Wensley considered that the dual-key operation was a means of “maximising income” and letting for “extra income”. Ms Jack’s evidence suggests that the dual-key operation (at other complexes) did not produce extra income when compared with the single key regime which applied at The Marina Baches for a period. That subsequent experience cannot alter the understanding and expectation of the parties as it applied in May 2009.
4.Ms McKenzie noted finally that the variation to consent had subsequently been granted on 2 July 2010 so that The Marina Baches are now operating under the two-key system. Again, I do not find helpful a submission which focuses on an outcome achieved more than a year after Wensley demanded that Mr Lawlor settle.
[92] Standing back and assessing the matter objectively, and putting myself in that position at the date on which Mr Lawlor purported to cancel the contract, I find that the misrepresentation as to a dual-key operation substantially reduced the benefit of the contract to Mr Lawlor. At settlement, and for an indefinite period thereafter, Mr Lawlor would have no right to let his apartment on a dual-key basis. That approach to letting was commonly accepted by both parties as being the means of maximising or increasing rental income from the apartment. The removal of that benefit (even if it proved ultimately to have been a temporary removal) went to the very basis of Mr Lawlor’s purchase to a substantial, significant and considerable degree.
Was Mr Lawlor’s cancellation in the circumstances valid?
[93] Mr Lawlor cancelled the contract for misrepresentation as to the dual-key system. For the reasons I have set out above I find that Wensley has no arguable defence in relation to cancellation for misrepresentation.
[94] Ms McKenzie did not submit that there were any factors present in this case, other than those to which I have referred, which would cut across Mr Lawlor’s right to cancellation.
What losses are properly recoverable by Mr Lawlor for misrepresentation?
[95] Mr Lawlor has given evidence as to his losses through entering into the contract. He says his losses were:
a. Deposit (2 March 2009) $141,187.00 b. Valuation fees (four) $ 2,659.51 c. Loan application fee $ 37,500.00 d. Mortgage brokerage fee $ 18,750.00 e. Lender’s legal costs $ 3,418.31 f. Legal fees and disbursements $ 30,334.22
TOTAL $233,849.04
[96] Of the fees identified above, all but the solicitor’s fees are clearly referable to steps taken to complete the contract. In relation to the solicitor’s fees a portion is clearly referable to steps towards the completion of the contract, namely:
a. Fees and disbursements (4 March 2009) $ 747.07
b. Fees and disbursements (5 March 2009) $ 10,006.42 c. Legal fees and disbursements (12 June 2009) $ 20,517.57
TOTAL $ 31,271.06
(I find Mr Lawlor’s calculation of a fees and disbursements total of $30,334.22 to be an accidental error – the correct figure should be $31,271.06).
[97] Mr Lawlor’s right to recover damages in respect of a misrepresentation or breach of contract is not precluded by his cancellation of the contract, but the value of any relief to be granted under s 9 Contractual Remedies Act is to be taken into account in assessing damages: see s 10 Contractual Remedies Act.
[98] On his counterclaim Mr Lawlor seeks judgment for a money sum in relation to the deposit and his expenditure (together with interest in relation to each). Mr Till’s case is that the Court may appropriately grant that relief either as damages (preserved under s 10 Contractual Remedies Act) or pursuant to the power to grant relief upon cancellation under s 9 Contractual Remedies Act.
[99] It is convenient to discuss the Court’s jurisdiction by reference to s 9. The
Court’s powers in this context arise because the contract has been cancelled.
[100] An order under s 9 may direct any party to the proceeding to pay to any other party such sum as the Court thinks just: s 9(2). This Court has previously analysed the extent to which losses are recoverable under s 9 Contractual Remedies Act. I refer particularly to the judgment of Fisher J in Newmans Tours Ltd v Ranier Investments Ltd [1992] 2 NZLR 68 at 86 – 92. His Honour adopted the analysis of Fuller & Perdue in their well-known article “The Reliance Interest in Contract Damages” (1936) 46 Yale LJ 52, 53 – 54. I adopt his Honour’s summary (at 86):
Following a breach of contract the innocent party may have:
(i) a restitution interest, namely the right to restoration of a valuable benefit conferred on the other party, the object being to prevent unjust enrichment;
(ii) a reliance interest, namely the right to compensation for loss due to steps taken by the innocent party in reliance upon the existence of the contract, the object being to restore the innocent party to the position which he or she would have occupied had the contract not been made; and/or
(iii) an expectation interest, namely the right to compensation for loss of the bargain, the object being to financially restore the innocent party to the position which he or she would have occupied had the contract been performed.
After an extensive consideration of the various damages an innocent party may suffer, Fisher J said this (at 92):
I conclude that all three forms of interest - restitution, reliance (in both senses) and expectation - are capable of supporting relief under s 9. Moreover, I see no reason why the cancelling party should not be free to choose any one of the three as the prima facie foundation for its claim so long as it is borne in mind that the claim may then be subject to various limitations….
[101] In the present case, the plaintiff pursues no expectation damages. His claim in all regards might be considered as a reliance claim or, in relation to the return of the deposit, restitutionary.
[102] Until Mr Lawlor learned that the dual-key operation of the apartment had been brought to an end by the Abatement Notice (which he learned on 2 May 2009) his payments (such as the deposit) and costs incurred (such as in relation to his finance and conveyancing) were beyond argument in reliance upon either the contract or the misrepresentation (which through the Contractual Remedies Act became a term of the contract) or both. A part of the solicitor’s attendances covered by the fee note dated 12 June 2009 (undefined in terms of value) relates to the continuing conveyancing attendances from 4 March 2009. A part also relates to attendances of the solicitors (not of Mr Till as counsel) in relation to achieving cancellation. In the context of this case, Wensley bears the responsibility for Mr Lawlor’s costs of effecting cancellation. While those costs may not be viewed as falling within a reliance or restitutionary head, the Court in relation to those costs should ultimately proceed in the interests of justice – rationally the costs associated up to and including cancellation should be recoverable. The Court of Appeal in Thomson v Rankin [1993] 1 NZLR 409 upheld an award of damages in the High Court which included the solicitors’ costs as a head of damage. The judgments in
the Court of Appeal emphasise the value of s 9 Contractual Remedies Act as an instrument for achieving justice, on declared and rational principles, but untrammelled by common law restrictions: see particularly Cooke P at 410 – 411.
[103] I find, beyond argument, that the just conclusion in this case is that there should be an order that Wensley pay to Mr Lawlor the sums that he has claimed.
[104] Mr Lawlor seeks interest in addition to the principal sums. The Court has evidence as to the payment of the substantial deposit ($141,187.00) on
2 March 2009. It also, through Mr Lawlor’s solicitor’s statement of account, has evidence of the dates of payment of some of the fees and disbursements constituting Mr Lawlor’s other claims. The latter appear generally to have occurred between January and May 2009, as the date for settlement drew close. The Wensley statement of claim was issued in October 2009; Mr Lawlor’s counterclaim in November 2009. The Court does not have clear evidence of an itemised demand for payment prior to the issue of Mr Lawlor’s counterclaim.
[105] Against this background, the just orders in relation to interest are that interest be paid on the deposit from 2 March 2009 and on the other aspects of Mr Lawlor’s damages from 23 November 2009 (the date of commencement of the counterclaim).
Claims under the Fair Trading Act
[106] The alternative formulation of Mr Lawlor’s claim was that the Wensley representations amounted to misleading and deceptive conduct or conduct which was likely to mislead or deceive.
[107] Having regard to the conclusions which I have reached in relation to the primary remedies sought under the Contractual Remedies Act, it is unnecessary that I reach a conclusion in relation to the Fair Trading Act claim. Wensley was clearly in trade, carrying on business as a developer. In the course of her submissions Ms McKenzie did not satisfy me that there was an arguable defence to the allegations of misleading and deceptive conduct or that that conduct had caused
Mr Lawlor’s losses. However, having reached the conclusions I already have, I do not put this judgment on that basis.
Change of venue
[108] Mr Lawlor applied for an order transferring the proceeding to the Dunedin Registry. In his submissions, Mr Till understandably indicated that that application was only pursued if the summary judgment application was refused. In the circumstances I am therefore in a position to dismiss the application for transfer to Dunedin.
[109] In his submissions Mr Till noted a request that if the summary judgment application were granted the proceeding should be transferred to the Christchurch Registry by agreement between Mr Lawlor and the counterclaim defendant, Duncan Cotterill. The basis of transfer is the convenience to the now remaining parties. Ms McKenzie did not suggest that transfer of the proceedings would not be appropriate if the remaining substantive issues were now as between defendant and counterclaim defendant.
Orders
[110] I order:
a. The plaintiff shall pay to the defendant $141,187.00 together with interest on $141,187.00 at 7.5% per annum from 2 March 2009 to date of judgment at 8.4%.
b.The plaintiff shall pay to the defendant the sum of $92,662.04 together with interest on $92,662.04 from 23 November 2009 to the date of judgment at 8.4% per annum.
c. The plaintiff shall pay the costs of and incidental to this proceeding on a 2B basis, together with disbursements to be fixed by the Registrar. The costs and disbursements shall not include any costs and
disbursements associated with the hearing initially scheduled for
10 August 2010.
d. All documents in the proceeding are to be transferred to the
Christchurch Registry which shall become the proper registry.
Solicitors:
Preston Russell Law, Invercargill
Albert Alloo & Sons, Dunedin
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