Verboeket v Seaview Road Limited HC Wellington CIV-2010-032-190 [2011] NZHC 1378 (22 August 2011)

Last Updated: 6 November 2011

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

_{CIV-2010-032-190}

BETWEEN PETER CHARLES ROBERT VERBOEKET

Plaintiff

AND SEAVIEW ROAD LIMITED Defendant

Hearing: 17 August 2011

Counsel: P S J Withnall for Plaintiff

S M Dwight for Defendant

Judgment: 22 August 2011

JUDGMENT OF ROANLD YOUNG J (on Discovery)

[1] The plaintiff and defendant entered into an agreement for sale and purchase of a commercial property at Seaview. It was intended that the plaintiff be the purchaser buying the defendant’s property, known as Apex House. The agreement did not proceed to settlement. The reasons behind that is the essence of the dispute between the parties.

[2] Seaview has made an application for discovery, opposed by the plaintiff, that the plaintiff discover documents relating to any application he made to obtain finance in relation to the purchase of Apex House.

[3] The basic facts are that in October 2009 the plaintiff and defendant signed a contract for the purchase of Apex House for $1.65 million. The agreement was subject to a number of conditions including Mr Verboeket obtaining a suitable registered valuer’s report by 21 December and satisfactory mortgage finance by

_{8 January. All of the conditions up to 21 December were confirmed.}

PETER CHARLES ROBERT VERBOEKET V SEAVIEW ROAD LIMITED HC WN CIV-2010-032-190 22

August 2011

[4] However, on 21 December Mr Verboeket did not confirm the special condition relating to the registered valuer’s report. On 23 December 2009 Seaview’s solicitors sent a facsimile to the plaintiff giving notice of Seaview’s intention to cancel the agreement because of that failure. On 24 December Mr Verboeket wrote to Seaview’s solicitors confirming the special condition as to the registered valuer’s report.

[5] On 8 January Mr Verboeket wrote to Seaview confirming the special condition as to finance and making payment of the deposit of $165,000. On

11 January Seaview’s solicitors wrote acknowledging the payment of the deposit and confirming settlement for 1 February. At that stage they sent a settlement statement. On 1 February Mr Verboeket did not settle the agreement. A settlement notice was served on Mr Verboeket but before its expiry Mr Verboeket’s solicitors wrote to Seaview’s solicitor’s advising that, in their view, there was no contract on foot from

23 December 2009 and seeking a return of the deposit paid, they said, by mistake.

[6] As a result Seaview’s solicitors wrote to Mr Verboeket’s solicitors giving notice of cancellation on the basis of Mr Verboeket’s failure to comply with the settlement notice or on the basis that his solicitor’s letter was repudiation of the agreement. Mr Verboeket’s solicitors in turn wrote to Seaview’s, advising that Seaview had wrongly purported to cancel the agreement and gave their notice to cancel the agreement for wrongful repudiation.

[7] The plaintiff opposes the making of the order because:

(a) the application for discovery is in breach of timetable orders made by the Associate Judge in this case;

(b) the orders sought are oppressive;

(c) the orders sought are not necessary; and

(d) none of the documents sought in discovery relate to a matter in question in the proceedings.

[8] Rule 8.25 of the High Court Rules entitles this Court to make an order for particular discovery. An applicant for particular discovery, therefore, must establish:

(a) grounds for belief that the party from whom the discovery is sought is or has been in possession of the documents;

(b) the documents are relevant (the Peruvian Guano test);

(c) the documents relate to matters in question in the proceedings.

[9] Given obtaining finance was a condition of the contract there was reasonable grounds to believe that the plaintiff would be in possession of documents relating to finance. The real issue, therefore, will turn on relevance and whether the documents relate to a matter in issue.

[10] I consider initially the first two grounds of opposition. I then turn to consider the pleadings and the issues in this litigation as background to resolving grounds of objection (c) and (d)

[11] Dealing firstly with the timetable breaches, the first ground of opposition to discovery. It is clear the defendant is in breach of the timetable order made by Associate Judge Gendall that any interlocutory application should be made and served by 29 March 2011. This application was filed 16 days later on 14 April. While failure to obey timetabling orders is to be discouraged the application is not so late that I am prepared to refuse the application on this basis. Although the delay was regrettable it does not, in my view, imperil the trial. The lateness of the application is relevant to costs.

[12] The second ground of opposition is that the order sought is far too wide. At the hearing the defendant has more closely defined what it seeks. It essentially seeks any documentation relating to any application for finance made by the plaintiff in relation to the purchase of Apex House. In my view that request is now sufficiently narrow and focused. The orders now sought are not oppressively broad in scope.

[13] Next, grounds of objection (c) and (d). The plaintiff’s pleadings identifies five causes of action. The first cause of action pleads that the agreement was conditional (in part) on a satisfactory registered valuer’s report being confirmed by the plaintiff by 21 December 2009. No such confirmation was given by that date and on 23 December the defendant cancelled the agreement for failure to fulfil this condition. Thus the plaintiff says the agreement was then at an end and that the payment of the deposit in January 2010 was an error.

[14] The alternative causes of action all assume that the first cause of action fails. The first alternative alleges the defendant breached its obligations to the plaintiff as constructive trustee arising from the agreement when it entered into a new lease. The new lease relates to the lease of a room in Apex House for four years from March 2010.

[15] The third cause of action was also based on the assumption that the first cause of action fails. It alleges the defendant engaged in misleading and deceptive conduct in terms of the Fair Trading Act when it failed to tell the plaintiff about the new lease.1

[16] The fourth cause of action is also based on the proposition that the first cause of actions fails. This cause of action alleges false and misleading representations under the Fair Trading Act. It relates to an alleged false and misleading allegation by the defendant that part of the premises had been leased expiring in March 2010, when the defendant had granted a new lease with regard to that part of the premises from March 2010.

[17] Finally, again based on the assumption that the first cause of action failed the plaintiff alleges the defendant wrongly purported to cancel the agreement when there

_{was no unequivocal refusal by the plaintiff to perform the agreement.}

1 At [14].

[18] I am satisfied that with respect to one aspect of the claim, the question of Mr Verboeket’s application to obtain finance in relation to the purchase of Apex house is relevant and, therefore, the documents relating to any such applications are relevant and discoverable with a time limitation.

[19] Part of the defendant’s counterclaim is based on the proposition that if the agreement for sale and purchase signed in October 2009 had come to an end by

23 December 2009 then there was a new agreement entered into by the parties which essentially incorporated the provisions of the original agreement into the new contract.

[20] The plaintiff denies that there was any such contract. It will be for the trial Court on an objective analysis of the factual matrix to decide if there was indeed a new contract post 23 December 2009 (assuming the Court agrees that the contract of October 2009 ended on 23 December). It will have to decide, therefore, whether there was an offer and an acceptance and if so what the terms of the contract were. In doing so it will need to look objectively at the actions of the plaintiff and defendant and decide whether given those actions a new contract was entered into. It may well involve the Court, having reached a view as to the relevant facts, deciding what proper inferences can be taken from those facts.

[21] In my view one of the relevant facts from which inferences might be drawn is whether, after 23 December 2009, the plaintiff continued to seek finance to complete the purchase. If the evidence establishes that he did continue to seek finance after

23 December 2009 then that could be relevant, by way of inference, to the Court’s

assessment as to whether or not there was a new contract entered into.

[22] In those circumstances, therefore, I am satisfied that the plaintiff’s efforts to obtain finance and the documents relating thereto with respect to this transaction after 23 December 2009 are relevant and should be discovered.

[23] As to the period prior to 23 December 2009, in my view, the plaintiff’s actions with respect to obtaining finance are irrelevant to any matter in issue between the parties. The only question as at 23 December 2009 is whether or not the contract

was validly cancelled as at that date. Whether the applicant had applied for finance as at that date is irrelevant to the issue between the parties then. The sole issue will revolve around the condition relating to the registered valuer’s report; its confirmation (or failure to do so); the purported cancellation; the actions of the plaintiff on 23 December and the defendant’s subsequent action. None of which involve the finance condition. I have, therefore, restricted the order for discovery to the period after 23 December 2009.

[24] Should the parties be unable to agree on the exact form of the order then the matter can be referred to me but I expect, given my view expressed here, they will be able to agree upon the extent of the discovery available by the defendant of the

_plaintiff.

Ronald Young J

Solicitors:

P S J Withnall, Wellington, email: [e-mail]

S M Dwight, Cavell Leitch Pringle & Boyle, Christchurch, email: [e-mail]