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Zhou v Watson

Zhou v Watson

Case [2023] NZHC 2328 24 August 2023

Contract Formation

Breach of Contract

Unconscionable Conduct

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IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2021-485-000435

[2023] NZHC 2328

UNDER THE Contract and Commercial Law Act 2017

IN THE MATTER OF

A claim for relief under the Contract and Commercial Law Act 2017 and for breach of contract

BETWEEN

LEI ZHOU AND QIUYING ZHANG

Plaintiffs

AND

ALAN GORDON WATSON AND ELIZABETH WATSON

Defendants

Hearing: 13 – 23 June 2023

Appearances:

J T Wollerman and D A Fry for the Plaintiffs

D M Fraundorfer and A G Needham for the Defendants

Judgment:

24 August 2023

JUDGMENT OF GENDALL J

ZHOU v WATSON [2023] NZHC 2328 [24 August 2023]

Table of contents

Introduction [1]

Background [8]

The Parties [8]

The property, and its marketing [10]

Viewing of the Property [17]

The SPA and Subsequent events [26]

First cause of action – breach of contractual warranty in the SPA [33]

Upper deck [44]

Retaining wall [48]

Drainage work [49]

Analysis [67]

Second and third causes of action – oral misrepresentations and misrepresentation by
concealment  [73]
The oral and general misrepresentations here  [85]
Misrepresentation by concealment  [113]

Fourth and fifth causes of action – mistake [121]

Common mistake [126]

Unilateral mistake [150]

Relief and quantum [151]

Affirmative defences [173]

Contractual waiver [174]

Estoppel [180]

Failure to mitigate loss [184]

Betterment [190]

Result [194]

Costs [196]

Introduction

[1] In February 2020, the plaintiffs, Lei Zhou (Rocky) and Quiying Zhang (Veronica), recent immigrants to New Zealand from Singapore, purchased a house at 84 Dowse Drive, Maungaraki (the Property) as a family home for themselves and their two young children.

[2] The house on the property (the house) was around 51 years old at the time of sale. The defendants Alan Gordon Watson (now deceased) (Mr Watson) and Elizabeth Watson (Mrs Watson), (together referred to hereafter as “the Watsons”), had been its sole owners since they purchased the section at 84 Dowse Drive, and built the house in 1969. Although the house was largely in original condition, in February 2020 Rocky and Veronica say they thought they were buying a sound and weathertight house in reasonable condition for its age. In addition, they maintain that during a pre- purchase inspection at the property, Mrs Watson had been asked the question whether there were any leaks in the house and she answered “no”.

[3] Only around a week after their settlement of the purchase, Rocky and Veronica discovered significant leaks in the house. They say it is not in dispute that the house leaks and had leaked for some time prior to the time of sale.

[4] Rocky and Veronica maintain they want to carry out the substantial repairs required to the house and to remain living there as their family home. Financially, however, they say they are unable to repair or to sell the property, without recovering their losses.

[5] The plaintiffs’ case arises largely from the sale and purchase agreement between the parties dated 13 February 2020 (SPA). Their case is based on…

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 Zhou v Watson

Details

AGLC: Zhou v Watson [2023] NZHC 2328
Case: [2023] NZHC 2328
Decision Date: 24 August 2023

CaseChat Overview and Summary

Zhou v Watson was a case heard by the High Court of New Zealand. The plaintiffs, Lei Zhou and Quiying Zhang, claimed damages from the defendants, Alan Gordon Watson and Elizabeth Watson, for breach of contract and other claims arising from the purchase of a property. The plaintiffs alleged that the property had significant weathertightness issues and leaks, which were not disclosed by the defendants. The defendants denied the claims and raised several defences, including estoppel, waiver, failure to mitigate loss, and betterment. The court found that the plaintiffs had not established an actionable misrepresentation, but there was a common mistake about the condition of the property. The court granted relief to the plaintiffs for the common mistake and ordered the defendants to pay the plaintiffs $271,600, representing 70 per cent of the difference in value in March 2020 between the Property in its damaged state and its value if it had been in an undamaged state, plus interest. The court also ordered the defendants to pay the plaintiffs $15,000 for breach of vendor warranty, plus interest. The court rejected the defendants' defences and ordered the defendants to pay the plaintiffs' costs and disbursements.

Orders