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Whakaruru v Bath

Whakaruru v Bath

Case [2023] NZHC 2474 11 September 2023

Breach of Contract

Duty to Mitigate Loss

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-2387

[2023] NZHC 2474

BETWEEN
ANNA KATARAINA WHAKARURU and SONNY MARUPO WHAKARURU as
trustees of the SONNY AND ANNA WHAKARURU FAMILY TRUST

Plaintiff

AND

JAY BATH

Defendant

Hearing: 14 June 2023

Appearances:

J Loh for the Plaintiffs

T Nelson for the Defendant

Judgment:

11 September 2023

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 11 September 2023 at 10 am pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Inder lynch Solicitors, Manukau Bankside Chambers, Auckland

WHAKARURU v BATH [2023] NZHC 2474 [5 September 2023]

Introduction Table of Contents
[1]

Issues [6]

Legal principles [8]

Summary judgment [8]

Duty to mitigate loss [10]

Factual background [19]

Is it reasonably arguable the plaintiffs unreasonably declined Mr Bath’s offer?

[41]

Is it reasonably arguable that the plaintiffs should have revisited Mr Bath’s offer? [55]
Is it reasonably arguable that the plaintiffs did not follow a reasonable resale process? [62]

Listing period too short [65]
Plaintiffs’ appraisal and real estate advice not before the Court [74]

Expert evidence [85]

Are the circumstances appropriate for summary judgment? [87]

Conclusion on alleged failure to mitigate loss on resale [91]

Further amounts [93]

Result [103]

Costs and interest [105]

Introduction

[1] The plaintiffs seek summary judgment for losses arising from the defendant’s breach of an agreement to purchase a residential property for $1,160,000 entered into on 14 September 2021.

[2] The sale and purchase agreement was on the ADLS/REINZ – Particulars and Conditions of Sale of Real Estate by Auction form (5 ed, 2020). Clause 12.4(1) provides that if the purchaser does not comply with a settlement notice then the vendor may either sue the purchaser for specific performance or cancel the agreement by notice and pursue the remedies set out. The remedies are that the purchaser forfeit the deposit paid (but not exceeding 10 per cent of the purchase price) and/or for the vendor to sue the purchaser for damages. Clause 12.4(3) then provides that the damages claimable by the vendor include all damages at common law or equity plus any loss incurred by the vendor on any bona fide resale contracted within one year, and interest and costs.

[3] The property was resold for $378,500 less than the original purchase price. The plaintiffs claim the net loss of $320,500, after deducting the original deposit of
$58,000, plus further amounts by way of penalty interest, costs and expenses on the resale, outgoings and maintenance, and interest and costs.

[4] The defendant does not contest liability but opposes summary judgment on quantum on the grounds that, by reselling the property for approximately 30 per cent less than the original price, the plaintiffs failed to act reasonably to mitigate their loss on resale. The defendant relies on three particular aspects:

(a)the plaintiffs failed to accept the defendant’s offer on the settlement date to complete the purchase at a reduced purchase price of…

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.

Continue reading Whakaruru v Bath

Details

AGLC: Whakaruru v Bath [2023] NZHC 2474
Case: [2023] NZHC 2474
Decision Date: 11 September 2023

CaseChat Overview and Summary

The case of Whakaruru v Bath [2023] NZHC 2474 was heard in the High Court of New Zealand Auckland Registry, where Anna Kataraina Whakaruru and Sonny Marupo Whakaruru, as trustees of the Sonny and Anna Whakaruru Family Trust, sought summary judgment against Jay Bath for losses arising from his breach of a property purchase agreement. The sale and purchase agreement for a residential property was entered into on 14 September 2021, with a settlement date of 17 May 2022. Bath failed to comply with the settlement notice, leading the plaintiffs to cancel the agreement, forfeit his deposit, and pursue damages. The primary issue for determination was whether the plaintiffs had failed to act reasonably to mitigate their loss on the resale of the property.

The court examined three aspects of the plaintiffs' actions that Bath argued constituted a failure to mitigate loss: (1) the plaintiffs' refusal to accept Bath's offer to purchase the property at a reduced price of $1,000,000 six months after the original settlement date, (2) the plaintiffs' failure to revisit Bath's offer after the auction failed, and (3) the plaintiffs' alleged unreasonable resale process. The court found that Bath had not established a reasonably arguable defence in any of these aspects. Regarding the first aspect, the court held that it was reasonable for the plaintiffs to decline Bath's offer due to the long settlement period and the risk of another default. For the second aspect, the court noted that Bath had not provided sufficient evidence to show that his offer remained open or that he could afford to settle sooner. Concerning the third aspect, the court found that the plaintiffs had acted reasonably in marketing and selling the property within a short period, given the urgency of their financial situation and the declining property market.

The court concluded that the circumstances were appropriate for summary judgment, as Bath had not provided sufficient evidence to establish a reasonably arguable defence that the plaintiffs failed to mitigate their loss. Summary judgment was granted for the net loss on resale of $320,500, penalty interest of $72,822.30, costs and expenses of $36,080.75, and Auckland Council rates of $1,200.64. The application for interest under the Interest on Money Claims Act 2016 was adjourned for further submissions. The plaintiffs were awarded costs on a 2B basis, subject to agreement between the parties or further submissions if necessary.

Orders