West End Property Developments Limited v Prescott - [2022] NZHC 560

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA

KIRIKIRIROA ROHE

CIV-2020-419-000253

[2022] NZHC 560

BETWEEN
WEST END PROPERTY DEVELOPMENTS LIMITED

Plaintiff

AND

RYAN PRESCOTT AND PAUL PRESCOTT

Defendants

Hearing: 8 March 2022

Appearances:

A R Gilchrist for Plaintiff K I Bond for Defendants

Judgment:

24 March 2022

JUDGMENT OF ASSOCIATE JUDGE P J ANDREW

This judgment was delivered by Associate Judge Andrew on 24 March 2022 at 3.00 pm
pursuant to r 11.5 of the High Court Rules Registrar / Deputy Registrar Date…………………………

WEST END PROPERTY DEVELOPMENTS LTD v PRESCOTT [2022] NZHC 560 [24 March 2022]

Introduction

[1] West End Property Developments Ltd1 is a property development company based in the Waikato. It owns the property at 91 Avenue Road, Morrinsville.2 The defendants, Mr Ryan Prescott and Mr Paul Prescott,3 are the directors of Pat Prescott Ltd, a licensed motor vehicle dealer trading as Prescott Toyota Morrinsville.

[2] Throughout 2014, the parties were engaged in negotiations for a lease and option to purchase the Property. The Prescotts were interested in acquiring the Property for their Toyota franchise business. No formal lease or option to purchase was ever signed and the Prescotts have never been in possession nor paid any rent.

[3]The amended statement of claim contains two causes of action:

(a)A claim by West End that the Prescotts breached a contract with West End for a lease and an option to purchase the Property for $1.8m; and

(b)On the basis of representations that were made by the Prescotts that they were committed to leasing and/or purchasing the Property, the Prescotts are estopped from resiling from their agreement to lease/buy the Property.

[4] In the present interlocutory application, the Prescotts seek summary judgment against West End, contending that neither of the causes of action can succeed. In addressing that ultimate issue, I need to determine the following:

(a)Is it reasonably arguable that there was a binding mutual intention to be bound and, based on an agreement recorded in an email of July 2014, that the purchase price for the option to purchase would be $1.8m?

(b)Is the estoppel claim incapable of success?

1      West End.
2      The Property.
3      The Prescotts.

Factual background

[5] The Property was purchased by West End in 2013 as an undeveloped piece of land.4

[6] On 17 December 2013, West End and Ryan Prescott signed an agreement to lease, including an option to purchase the property, for $1.6m. One of the key terms was a commitment by West End to construct a building on the Property for the Prescotts’ Toyota dealership.5 That original agreement was conditional and came to an end in May 2014 when the relevant conditions were not satisfied.

[7] Negotiations continued between the parties throughout 2014 and into 2015 on both the lease and an option to purchase. This included negotiations on the critical issue of a maximum build price. That was the key determinant of the maximum purchase price under the option to purchase.6

[8]In…

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: [2022] NZHC 560
Decision Date: 24 March 2022

CaseChat Overview and Summary

West End Property Developments Limited brought an action against Ryan and Paul Prescott seeking a declaration that the Prescotts breached a contract for a lease and an option to purchase property at 91 Avenue Road, Morrinsville, and that they were estopped from denying that they had agreed to lease and/or purchase the property. The Prescotts applied for summary judgment, contending that neither of the causes of action could succeed. The court was required to determine whether it was reasonably arguable that there was a binding mutual intention to be bound and, based on an agreement recorded in an email of July 2014, that the purchase price for the option to purchase would be $1.8m, and whether the estoppel claim was incapable of success. The court found that there was no reasonably arguable case that a binding contract was formed. The clear and undisputed evidence was that the parties engaged in extensive negotiations throughout 2014 on both a lease and an option to purchase and both parties were legally represented at the critical stages of that negotiation process. Despite that, no formal lease or option to purchase was ever signed. The court also found that the second cause of action, namely estoppel, could not succeed. The aim of the estoppel remedy was not to satisfy the claimant’s expectation but to satisfy the equity that had arisen in the claimant’s favour. There was no arguable equity that had arisen in West End’s favour here. The defendants' application for summary judgment was granted. These proceedings were now at an end.

Orders