Yardley v Sharp HC Wanganui CIV 2006 483 65

[2007] NZHC 1586

IN THE HIGH COURT OF NEW ZEALAND WANGANUI REGISTRY

CIV 2006 483 65

BETWEEN  ANNE ELIZABETH YARDLEY AND DAVID LESLIE WILLIAMS Appellants

ANDCHRISTOPHER MARLOW SHARP AND SHARON ANN SHARP

Respondents

Hearing:         5 February 2007 (Heard at Wellington)

Counsel:         G J Thwaite for Applicants/Appellants

M A Gordon for Respondents

Judgment:      7 February 2007

JUDGMENT OF WILD J

[1]      By application under s67 Judicature Act 1908, the appellants seek leave to appeal to the Court of Appeal.  Their application was filed on 1 September 2006.

[2]      In a judgment I delivered on 4 August 2006, I dismissed an appeal from a summary judgment entered by Judge Clapham in the District Court at Wanganui on

3 February 2006, following a hearing on 17 October 2005.

[3]      With  the  exception  of  the  first  proposed  ground  of  appeal,  Mr  Thwaite accepted that the principles outlined by the Court of Appeal in Snee v Snee (1999) 13

PRNZ 609 govern this application.  The appellants must establish that they have a case raising some question(s) of fact or law which is capable of genuine and serious argument, and is of sufficient public or private interest to outweigh the costs and

delays of a second appeal i.e. of a third hearing of the case.

YARDLEY AND WILLIAMS V SHARP AND SHARP HC WANG CIV 2006 483 65  7 February 2007

[4]      This proceeding arises out of the appellants’ default as purchasers under an Agreement for Sale and Purchase they entered into on or about 14 August 2003 (the Agreement) for the purchase of the Kakaramea Hotel between Patea and Hawera in South Taranaki.  Following the appellants’ default, the respondents re-sold the hotel to a third party at a lower price, and then sued the appellants for their resulting losses.   I will refer to the appellants as the purchasers and the respondents as the vendors.

[5]      The judgment sought to be further  appealed  is  a summary judgment  for

$57,000, being the loss on the re-sale, plus interest pursuant to the Agreement.

[6]      The Agreement contained two conditions relating to the purchasers’ finance for the purchase.  The first was clause 8, which I set out in [20] of my judgment.  It provided:

FINANCIAL CONDITIONS:

Lender:  TO BE ADVISED BY BROKER

LAST     DAY     FOR     ARRANGING FINANCE:  25th August 2003

Amount required:  $    Finance satisfactory to the purchaser

8.0      Financial and other conditions

8.1If particulars of any financial condition(s) are included on the front page of this agreement then the contract shall be subject to the condition that the purchaser shall on or before the last day for so doing arrange finance in terms of the particulars.

8.2In relation to every financial condition, and if this contract is expressed to be subject to any other condition(s) then in relation to each such condition the following shall apply unless otherwise expressly provided:

(1) The condition shall be a condition subsequent.

(2) If the condition is not fulfilled by the date for fulfilment (time being of the essence) either party may at any time before the  condition  is  fulfilled or  waived  avoid this contract by giving notice in writing to the  other  and upon avoidance of the contract the purchaser shall be entitled  to  the  return  of  the  deposit  and  any  other moneys paid by the purchaser and neither party shall have any right or claim against the other.

(3) If  by  agreement  between  the  parties  the  time  for fulfilment  of  any  condition  is  extended  the  extended time shall be of the essence.

(4) The purchaser may at any time before this contract is avoided waive any financial condition or waive any condition inserted for the benefit of the purchaser.

…

[7]      The second was clause 18, which I set out [41] of my judgment.  Its terms were:

18.       Approval of accounts

This agreement is conditional upon the purchaser’s nominated accountant being satisfied in the accountant’s sole judgment on or before 4 p.m. on the 25th August 2003 as to the financial viability of the  business  as  disclosed  by  the  books  of  account  or  other information concerning the business and the vendor will upon execution   of   the   agreement   give   to   the   purchaser   full   and unrestricted  access  to  all  records,  documents  and  other  papers relating to the business including but not limited to GST returns, financial records, tax records and returns and will allow the purchasers to take copies of any of the aforesaid and the vendor warrants the accuracy in all material respects of such records, documents and papers.  This condition is inserted for the sole benefit of the purchaser and may be waived by them.

[8]      The vendors agreed to extend the time for fulfilment of these conditions from

25  to  29  August  2003.     The  purchasers  had  sought  a  longer  extension,  to  3

September 2003.

[9]      On 29 August the purchasers’ solicitors faxed the vendors’ solicitor a letter stating:

I refer to your letter of 26th August 2003.  I am instructed by Ms Yardley and Mr Williams that the conditions in the above contract are either waived or fulfilled and that the contract is to be regarded as unconditional in all respects. The purchaser does not wish to make any title requisitions.

Mr Dave Williams will contact your client direct to make arrangements for a later settlement date because the earlier settlement date was appropriate for the original condition dates but may no longer be so.

I will forward a transfer and notices of sale shortly.

[10]     The parties agreed between themselves, to settle on 8 October 2003.

[11]     On 8 October the purchasers, through their solicitor, advised they “have been unable to arrange finance and will be unable to settle the transaction …”.   After making some other points, the purchasers’ solicitor continued:

…

(4)The vendor failed to comply with my clients’ reasonable request to extend the time for arranging finance.  This left my clients with little choice  but  to  declare  the  agreement  unconditional  on  the  29th August 2003.

…

[12]     In an effort to circumvent the effect of the purchasers’ solicitor’s 29 August letter declaring that conditions 8 and 18 were either waived or fulfilled, and the Agreement unconditional in all respects, Mr Thwaite had, in the High Court, put to me that:

a)       The hearing before the District Court Judge was fundamentally flawed because  the  Judge  was  either  biased  against  the  purchasers,  or appeared to be biased, and ought to have accepted counsel’s invitation (in a memorandum of 19 October 2005, after the hearing before the Judge  on  17  October  2005,  but  well  before  he  gave  summary judgment on 3 February 2006) to disqualify himself.

b)The   purchasers   have   defences   and/or   counterclaims   such   that summary judgment  ought  not  to  have  been  entered  against  them. These were:

i)Breach of clause 18 of the agreement, which breach entitled the purchasers to cancel the Agreement and/or seek damages.

ii)Breach of an (implied) term of the Agreement, relating either to good faith generally, or specifically to the provision of assistance by the vendors to the purchasers in the obtaining of finance, which breach  entitled the purchasers  to  cancel  the Agreement and/or seek damages.

iii)Misrepresentation  as  to  the  provision  of  financial  records which, in terms of the Contractual Remedies Act 1979, entitled the purchasers to cancel the agreement and/or seek damages.

iv)Deceptive  or  misleading  conduct  as  to  the  provision  of financial records which, in terms of the Fair Trading Act 1986, entitles the purchasers to seek damages.

[13]     In my judgment, I considered, but dismissed, each of these arguments.

[14]     Mr Thwaite submitted that each of these arguments justified leave being granted to the purchasers for a second appeal.  He contended that the first argument meant that the Snee test did not apply here, and therefore did not need to be met. Alternatively, if the Snee test applied, Mr Thwaite submitted it was met.

[15]     Elaborating  on  his  first,  proposed  ground  of  appeal,  Mr  Thwaite  again submitted that the District Court Judge ought properly to have disqualified himself when counsel alleged bias in his 19 October 2005 memorandum.   In that memorandum counsel referred to the Judge’s criticisms of Ms Yardley’s affidavit evidence, as “uncorroborated”.  Counsel said that those criticisms, which the Judge had indicated were based on his own knowledge of and involvement in the hotel industry, amounted to an “ambush” and invited the Judge to disqualify himself sua sponte from further involvement in the case, asserting it would need to be re-argued before another Judge.  The memorandum did not expressly allege bias on the Judge’s part, or even refer to bias.

[16]     The Judge did not disqualify himself:  he gave a written decision some 3½ months later.  I dismissed this ground on the basis that the allegations of an unfair procedure levelled against the Judge had not had, and could not have, any effect on the result of the case.   That is because the Judge held – and I agreed - that the purchasers’ solicitor’s letter of 29 August making the Agreement unconditional was an end of the matter, and determinative of the summary judgment application in the vendors’ favour.

[17]     Mr Thwaite relied on the Court of Appeal’s decision in E H Cochrane Ltd v Ministry of Transport [1987] 1 NZLR 146 at 153 as authority that, if upon an appeal bias or excessive questioning is established, then the case should ordinarily be sent back to the Court below for re-hearing by another Judge. I readily accept that. But the point is that bias, or improper process, was not established here, so the question of sending the case back did not arise.

[18]     As I made clear in my judgment, I did not accept the purchasers’ submission that they did not have a fair and proper hearing before the Judge.  The criticisms the Judge made of Ms Yardley’s evidence had no bearing on his reasons for giving summary judgment.   Paragraphs [13] and [23] of the Judge’s decision make that clear.  I agreed with the Judge’s reasons for entering summary judgment.

[19]     Mr Thwaite submitted that my judgment avoided a decision on whether the District Court hearing had miscarried, as a result either of the Judge following an improper procedure, or being biased or having recourse to factual matters not in evidence, or all of those things.  In one sense that is correct, but it is not correct in that I did not consider the various criticisms of the Judge’s conduct had any bearing on the outcome.

[20]     I do not consider this first proposed ground of appeal warrants the attention of the Court of Appeal.

[21]     In  terms  of  substantive  law,  Mr  Thwaite  elaborated  upon  each  of  the arguments I have set out in [12]b) above, submitting that they raised fundamental and important points meeting the Snee test.  I do not agree.  Although I considered and dismissed all these arguments in my judgment, it is worth considering again, briefly, the basis for them.

[22]     The relevant chronology runs from 7 to 20 August, and is set out in [14]-[18] of my judgment.   It is the fax sent by the vendors’ solicitor to the purchasers’ solicitor on 11 August (set out in paragraph [16] of my judgment) which is alleged to constitute the independent or separate enforceable contractual promise or deceptive or misleading conduct.   That letter was sent after the vendors’ solicitor had, on 7

August (see [14] of my judgment) sent the Agreement for Sale and Purchase, duly signed by the vendors, to the purchasers’ solicitor for signature and return.   The purchasers’ contractual rights, in terms of finance and financial records, were contained in clauses 8 and 18 of that Agreement.  I do not even begin to see the basis for an argument that there was some separate (from the Agreement) enforceable promise, let alone one which survived the waiver or fulfilment of all contractual conditions confirmed on 29 August.  Still less can I see how such arguments meet the Snee test.   I regarded them as untenable, and, notwithstanding Mr Thwaite’s submissions in support of this leave application, I still do.

[23]     Mr Thwaite sought to reinforce those arguments by pointing out that the 2003 accounts became available to the vendors on 6 October, and they had them by 8

October, the agreed extended settlement date.   Mr Thwaite submitted that those accounts either matched the GST returns earlier provided or they did not, in which event there was a misrepresentation.

[24]   But that argument is obviously also predicated on the 11 August letter constituting a  separate  enforceable promise  i.e.  on  there  being some  continuing obligation on 6 or 8 October to disclose those accounts.  As there was none, those points come to nothing.  After 29 August it is quite understandable that the vendors considered they had no obligation to provide any further financial material to the purchasers.

[25]     I summarise.  All the substantive law arguments Mr Thwaite suggests meet the Snee test are straightforward legal submissions about a routine Agreement for Sale and Purchase, and a routine exchange of correspondence between solicitors leading up to the agreed settlement of it.  I do not consider they come anywhere near meeting the Snee test.

[26]     Accordingly, I dismiss the purchasers’ application for leave to appeal to the

Court of Appeal.

[27]     The  purchasers  (appellants)  are  to  pay  the  respondents’  costs  of  the application on a 2B basis, together with disbursements to be fixed by the Registrar failing agreement.

Solicitors:

D J Thwaite, Manukau City, for the Appellants

Halliwells, Hawera for the Respondents