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White v Zadeh

White v Zadeh

Case [2020] NZHC 3221 8 December 2020

Misrepresentation

Contract Formation

Reliance

Inducement to purchase

Compensatory Damages

Contract Law

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IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2019-442-34

[2020] NZHC 3221

IN THE MATTER OF a property (residential dwelling) situated at 28 Blair Terrace, Richmond

BETWEEN

GLENDA LEIGH JOURDAIN WHITE

Plaintiff

AND

FIROOZ EFTEKHAR ZADEH and

BERNADETTE MICHELLE ZADEH

Defendants

Hearing: 27-30 October 2020

Counsel:

J C Ironside for plaintiff G J Praat for defendants

Judgment:

8 December 2020

RESERVED JUDGMENT OF DOBSON J

Contents

Introduction [1]

The background [3]

The evidence [39]

Contested factual matters [46]

Ms White’s first inspection, 7 December 2016 [46]

The second inspection, 8 December 2016 [68]

Legal effect of the representation [95]

Inducement to purchase? [106]

Reasonable reliance? [109]

Damages – cost of cure  [112]
Damages – general damages  [129]
Costs  [133]

WHITE v ZADEH [2020] NZHC 3221 [8 December 2020]

Introduction

[1] This case is yet another sad tale involving an attempt to resolve the consequences of a residential property that has developed weathertightness issues. Not unusually, it is a case in which damages sought on a “cost of cure” basis exceed the plaintiff’s original purchase price.

[2] As is generally the case where a claim is brought in reliance on an alleged representation by the vendor that the property was not a leaky home, the critical factual issue is determining the precise terms and meaning of the disputed representation.

The background

[3] There are a number of differences between the recollection of the plaintiff (Ms White) and the defendants (the Zadehs) as to the lead-up to the agreement (including, importantly, Ms White’s inspections of the property prior to purchase), the agreement itself and actions post-agreement. I will briefly summarise the background to the case, and then consider the contested facts.

[4] Ms White purchased the property from the Zadehs in December 2016. The property is situated in Richmond near Nelson. It was constructed in 1993 using monolithic cladding permitted pursuant to the relevant building standards. In 2002 and 2003, the then owners (the Kokcus) discovered weathertightness issues and achieved a mediated solution with the builder for remedial works to be undertaken. The local territorial authority, Tasman District Council (TDC) appears to have had some involvement in the settlement, and approved the extent of remedial work undertaken.

[5] The Zadehs purchased the property in 2012, having had what they considered was full disclosure from the Kokcus about the previous weathertightness problems. The Zadehs bought in the belief that the problems had been completely resolved.

[6] The Zadehs did not reside in the property. They rented it to a person who turned out to be a member of the Nomads gang, justifiably described as “the tenant from hell”. Apart from failing to pay rent, the tenant became seriously abusive and

threatening towards the Zadehs when they attempted to re-take possession. They complained that the letting agent who had arranged the tenancy and assured them of the good character of the tenant was “useless”, and the Police were limited in what they could do to…

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 White v Zadeh

Details

AGLC: White v Zadeh [2020] NZHC 3221
Case: [2020] NZHC 3221
Decision Date: 8 December 2020

CaseChat Overview and Summary

This case concerns a claim for damages for an alleged misrepresentation that a residential property was not a leaky home. The plaintiff, Ms White, purchased the property from the defendants, the Zadehs, in December 2016. The property had previously suffered from weathertightness issues, but these had been resolved by the previous owners. The Zadehs had purchased the property in 2012 and had been renting it to a problematic tenant, leading to significant damage and contamination from methamphetamine use. They had undertaken extensive repairs before listing the property for sale. Ms White claims that the Zadehs represented that the property was not a leaky home, and that she relied on this representation in deciding to purchase the property. The Zadehs deny making any such representation.

The court found that the Zadehs did make representations that the property was not a leaky home, and that these representations were material inducements for Ms White to proceed with the purchase. The court held that Ms White had reasonably relied on these representations, despite the Zadehs not being experts on the structural integrity of the property. The court awarded Ms White damages on a cost of cure basis, finding that a cost of cure measure was appropriate given the unique circumstances of the property and the difficulty in finding a suitable substitute property. The court reduced the estimated cost of repairs to account for betterment and the removal of the property's stigma as a leaky home, setting the damages at $420,000. The court declined to award general damages, finding that the stress and anxiety caused to Ms White were due to systemic failings rather than the specific actions of the Zadehs. The court also awarded Ms White costs on a 2B basis.

The final orders of the court are that the Zadehs are liable to pay Ms White $425,280 in damages, plus costs on a 2B basis and all reasonable disbursements.

Orders