Murphy v Grunden [2014] NZHC 1465 (27 June 2014)

Last Updated: 16 July 2014

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2014-485-2215 [2014] NZHC 1465

BETWEEN	JOHN DESMOND MURPHY, PETER LEE MURPHY and JUDITH ANN MURPHY Plaintiffs
AND	BRIAN REID GRUNDEN Defendant

Hearing:	13 June 2014
Counsel:	M Freeman for Plaintiffs No appearance for Defendant
Judgment:	27 June 2014

_{RESERVED JUDGMENT OF ASSOCIATE JUDGE SMITH}

[1] On or about 25 October 2013 the defendant (Mr Grunden) signed an agreement for the purchase from the plaintiffs of a property at Marua Palms Grove, Upper Hutt (the property). The form of agreement provided for the payment of a deposit of $100,000 by Mr Grunden, a purchase price of either $1,150,000 or

$1,100,000 (there is a dispute as to which), and a settlement on either

22 November 2013 or 29 November 2013 (again, there is a dispute over which date, if either, was agreed). The deposit was never paid, and Mr Grunden failed to comply with a formal settlement notice issued by the plaintiffs’ solicitors. The plaintiffs subsequently cancelled the agreement.

[2] The plaintiffs now seek summary judgment against Mr Grunden for:

_{(1) the unpaid deposit of $100,000,}

JOHN DESMOND MURPHY, PETER LEE MURPHY and JUDITH ANN MURPHY v BRIAN REID GRUNDEN [2014] NZHC 1465 [27 June 2014]

(2) interest on the alleged purchase price of $1,150,000 from

22 November 2013 to the date on which the plaintiffs cancelled the agreement; and

(3) costs.

[3] Although Mr Grunden failed to appear in opposition to the application, he had earlier filed a formal notice of opposition and an affidavit. In his affidavit, he described how he inspected the property in company with the real estate agent, Krissy Allen, and advised her that he was interested in it. She later brought him a written form of contract, in duplicate, with a typed purchase price of $1,150,000 and a settlement date of 29 November 2013. Mr Grunden says that he told Ms Allen that he was not prepared to buy at that price, but would be prepared to pay $1,100,000. His evidence is that he wrote $1,100 on one of the contract forms by mistake, and then crossed that out and added his initials “BG” before re-writing “$1,100,000” and also initialling the revised figure. For reasons which he did not make clear, Mr Grunden said that he also then placed his initials beside the typed settlement date of 29 November 2013 (notwithstanding that he had made no alteration to that date).

[4] Mr Grunden’s evidence was that Ms Allen made it clear to him that the plaintiffs were unlikely to accept his counter-offer. He stated that he never spoke to her again, and never agreed to reinstating the original $1,150,000 purchase price which is handwritten on the form of agreement (both copies). He also denied initialling a later alteration to the 29 November 2013 settlement date bringing that date forward to 22 November 2013. Mr Grunden stated that the handwritten

“$1,150,000” was not in his writing, nor was the “22^nd”.

[5] The next step, according to Mr Grunden’s evidence, was that a solicitor who he described as “not my normal solicitor” emailed him saying that he had received from Ms Allen an agreement for sale and purchase for the property. Mr Grunden stated that he was extremely surprised by this, as he had understood from his conversations with Ms Allen that he would have to initial any alterations to the contract, and that he was not aware that the plaintiffs had accepted his counter-offer.

[6] Nevertheless, Mr Grunden proceeded to commission a building report on the property, and his evidence was that he emailed a copy of the report, and the agreement that his solicitor had emailed to him, to the BNZ, who had given him some form of pre-approval for finance to purchase.

[7] Mr Grunden stated that he told Ms Allen on 1 November 2013 that he had received verbal confirmation of finance from the bank, but wanted to wait for written confirmation before doing anything further. He said that he was then surprised when he heard from his solicitor on the following Monday saying that the solicitor had heard from Ms Allen that Mr Grunden had secured finance for the purchase. Mr Grunden’s evidence was that he reported to his solicitor what he had told Ms Allen, namely that he had verbal confirmation from the bank, but wanted to have written approval first.

[8] Mr Grunden stated that he learned later in the day that the verbal approval he had earlier received from a BNZ staff member had not been confirmed by the staff member’s superior. He said that he passed that advice on to his solicitor, and was surprised to be told that the solicitor had already written to the plaintiff’s solicitors confirming compliance with all purchaser conditions, and that the agreement was unconditional. Mr Grunden stated that he told Ms Allen immediately that he was unable to raise finance.

[9] Settlement did not take place on 22 November 2013. A settlement notice was issued on 25 November 2013 by the plaintiffs, requiring Mr Grunden to settle within

12 working days. That did not happen, and on 11 February 2014 the plaintiffs cancelled the agreement.

[10] In a reply affidavit Ms Allen stated that she presented Mr Grunden with two originals of the form of contract in which the plaintiffs’ asking price of $1,150,000 was typewritten. Mr Grunden said that he wanted to “start at” $1,075,000. The price was then changed to that figure by handwritten amendment on one of the originals. After some further discussion, Mr Grunden agreed to move his offer up to

$1,100,000, and handwritten changes to amend the price to that figure were then made on both of the forms of agreement. Ms Allen confirmed that on one of them

Mr Grunden mistakenly wrote “$1,100” Mr Grunden then crossed this out, and wrote in the correct figure of $1,100,000. Her evidence was that both originals were initialled, showing a purchase price of $1,100,000.

[11] Ms Allen stated that she then presented Mr Grunden’s counter-offer to the plaintiffs, who crossed out Mr Grunden’s $1,100,000 and reinstated their original asking figure of $1,150,000. Ms Allen then spoke to Mr Grunden’s partner on the telephone. Mr Grunden was present with his partner during this conversation. Ms Allen’s evidence is that Mr Grunden and his partner then agreed to the price of

$1,150,000, on the proviso that the settlement date be moved forward. She explained that Mr Grunden told her that he had children arriving from the United States, and wanted the agreement to be settled prior to their arrival. Ms Allen says that she duly altered the contract to show the earlier settlement date of

22 November 2013, and had the plaintiffs initial that amendment. She then went back to see Mr Grunden, and got him to initial the changes – the new settlement date of 22 November 2013, and the reinstated original purchase price of $1,150,000.

[12] Ms Allen produced copies of both forms of the agreement which the parties signed. One of the forms, copied in black and white, shows Mr Grunden’s initial price of $1,075,000. This figure has been crossed out, and Mr Grunden’s initials appear immediately beside it. Immediately below the crossed out “$1,075,000”, the figure of “$1,100,000” has also been written and crossed out. Mr Grunden did not place his initials immediately beside this figure. The handwritten price “$1,150,000” appears immediately above both of the crossed out figures. Mr Grunden’s initials appear immediately beside this figure.

[13] The other original of the agreement was reproduced in colour. It shows Mr Grunden’s “$1,100” purchase figure written in black ink and crossed out in black ink. Immediately below it, also written in black ink, was the figure of $1,100,000”, with Mr Grunden’s initials (in black ink) immediately beside it. The figure of

$1,100,000 has been crossed out in blue ink on this copy, and immediately above both crossed out figures is the price, in a mixture of blue and black ink, “$1,150,000”. Mr Grunden’s initials appear (in blue ink) immediately below the last three zeros in $1,150,000.

[14] The coloured copy of the agreement also shows that the settlement date “29^th” was crossed out in blue ink, and “22^nd” written in blue immediately above it. Mr Grunden’s initials appear in blue immediately to the right of this amendment.

[15] In her affidavit, Ms Allen explained that the different coloured inks show that different pens were used on the two different occasions she met with Mr Grunden. The blue pen was used on the second occasion, when he initialled the change to the settlement date and the reinstated purchase price of $1,150,000.

Discussion: principles applicable to summary judgment applications

[16] The general principles to be applied in considering an application for summary judgment have been clearly established through decisions of the Court of Appeal.¹

[17] In summary:

(1) The plaintiffs must satisfy the Court that the defendant has no arguable defence to the claim brought against it. The issue is whether there is a real question to be tried.

(2) It is generally not possible to determine disputed issues of fact based on affidavit evidence alone, particularly when issues of credibility arise. Issues of law, even though they may be complex, can, however, be determined in an application for summary judgment.

(3) Although the Court should adopt a robust approach, nevertheless summary judgment may be inappropriate where the ultimate determination turns on a judgment that can only properly be reached

_{after a full hearing of all the evidence.}

¹ Pemberton v Chappell [1987] 1 NZLR 1; Grant v New Zealand Motor Corporation Ltd [1989] 1

NZLR 8 and Westpac Banking Corporation v M M Kembla New Zealand Ltd [2001] 2 NZLR

298.

[18] In this case, Mr Grunden has challenged two of the essential facts on which the plaintiffs rely, namely that there was agreement on both price and settlement date.

[19] In Pemberton v Chappell, Somers J said: ²

Where the defence raises questions of fact upon which the outcome of the case may turn it will not often be right to enter summary judgment. There may however be cases in which the Court can be confident – that is to say satisfied – that the defendant’s statements as to matters of fact are baseless. The need to scrutinise affidavits, to see that they pass the threshold of credibility, is referred to Eng Mee Yong v Letchumanan.

[20] In Eng Mee Yong, the Privy Council said: ³

Although in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents, or other statements by the same deponent, or inherently improbable in itself it may be.

Application of principles in this case

[21] Can it be said in this case that Mr Grunden’s contentions are clearly baseless? In my view it can. When the two forms of agreement are carefully considered, and Mr Grunden’s version of events is assessed in a robust way, I conclude that his evidence does not reach the “credibility threshold” referred to by Somers J in Pemberton v Chappell.

[22] Addressing the alteration to the settlement date first, there is no reason why anyone in Mr Grunden’s position would have placed his initials beside a type- written, unamended, settlement date in the agreement, as he claims to have done. He did not, for example, place his initials beside the type-written deposit of $100,000, which remained unchanged throughout The only plausible reason for Mr Grunden to place his initials in this part of the form is that he was signalling his agreement to the

_{change in the settlement date from 29 November to 22 November.}

² _{Pemberton v Chappell [1987] 1 NZLR 1 at 4.}

³ Eng Mee Yong v Letchumanan [1980] AC 331 at 341.

[23] Turning to the purchase price, the black and white copy of the agreement clearly shows Mr Grunden’s initials immediately beside the final price of

$1,150,000. There were two changes to the purchase price, and in such circumstances one would ordinarily expect to see a party’s initials appear twice, once for each of the two changes. That is exactly what the agreement shows in this case. Furthermore, the fact that Mr Grunden’s initials appear right beside the final figure of $1,150,000 is a strong indication that he was signalling his assent to that figure.

[24] The situation is shown even more clearly on the coloured copy of the agreement. It shows Mr Grunden assenting to the deletion of the price of

$1,100,000: the fact that his initials appear in blue ink and the crossing out was effected in ink of that colour makes it difficult to resist the conclusion that the initialling and the crossing out were done on the same occasion. The only reason Mr Grunden could have had to signal his assent to the deletion of the “$1,100,000” price would be that he was agreeing to some other price in substitution for that price. The only other possible price was the price of $1,150,000 for which the plaintiffs contend.

[25] Having regard to those considerations, Mr Grunden’s version of the events is not in my view consistent with the forms of agreement themselves. Nor do I regard his version of the events as credible when viewed in the context of the evidence as a whole.

[26] First, there was no supporting affidavit from Mr Grunden’s solicitor, notwithstanding that Mr Grunden said in his affidavit that he emailed “a copy of the report and agreement” that his solicitor had emailed to him, to the BNZ. This “agreement” could only have been the form of agreement which Ms Allen says she emailed to the plaintiff’s solicitor and Mr Grunden’s solicitor on 25 October 2013. On her evidence, it could only have showed the purchase price at $1,150,000. Mr Grunden apparently did not challenge that figure, simply sending the agreement and the building report through to the bank.

[27] Secondly, it is simply not credible, at least without clear supporting evidence, that Mr Grunden’s solicitor would have gone ahead and confirmed to the plaintiff’s

solicitor that the agreement was unconditional, without receiving some instruction to that effect from Mr Grunden.

[28] In all of the foregoing circumstances, I am satisfied that the defendant has no defence on liability. He entered into a binding agreement to purchase the property for $1,150,000, with settlement on 22 November 2013, and failed to settle.

[29] Turning to the amount for which the plaintiffs seek summary judgment, I am satisfied that they are entitled to recover the unpaid deposit of $100,000. The obligation to pay that sum had accrued prior to the cancellation of the contract, and in such circumstances the deposit is recoverable.⁴

[30] The plaintiff’s entitlement to interest as claimed is less clear. At the hearing, Mr Freeman referred to the default interest rate for late settlement in the agreement (14 percent per annum) and then referred to clause 10.4 of the agreement, which sets out the vendor’s remedies in the event of the purchaser not complying with the terms of a settlement notice. In relevant part, cl 10.4 of the agreement provides:

10.4 If the purchaser does not comply with the terms of the settlement notice

served by the vendor then...:

(1) Without prejudice to any other rights or remedies available to the vendor at law or in equity the vendor may,

(a) Sue the purchaser for specific performance:

(b) Cancel this agreement by notice and pursue either or both of the following remedies namely:

(I) Forfeit and retain for the vendor’s own benefit the deposit paid by the purchaser, but not exceeding in all ten percent of the purchase price: and/or

(II) Sue the purchaser for damages

...

(3) The damages claimable by the vendor under sub cl 10.4(1)(b)(2) shall include all damages claimable at common law or in equity and shall also include (but shall not be limited to) any loss incurred by the vendor on any bona fide resale contracted within one year from the date by which the purchaser should have settled in compliance with the settle notice. The amount of that loss may include:

⁴ Garratt v Ikeda [2002] 1 NZLR 577.

(a) Interest on the unpaid portion of the purchase price at the interest rate for late settlement from the settlement date to the settlement of such resale...

[31] It will be seen immediately that the provision for interest at cl 10.4(3)(a) relates only to the situation where the vendor has resold the property after cancellation. There is no evidence that that has occurred in this case.

[32] It is correct that when Mr Grunden failed to settle on 22 November 2013 he became liable for interest at the default rate on the purchase price.⁵ Mr Freeman submits that, as in Garratt v Ikeda, the obligation to pay interest for late settlement had accrued prior to cancellation, and the same principle should apply. But that is equally true of Mr Grunden’s obligation to pay the purchase price itself, and there is no question of the plaintiffs, having cancelled the contract, pursuing a claim for the purchase price.

[33] It seems to me that any claim for interest of the kind made by the plaintiffs is in effect a claim for common law damages or relief under s 9 of the Contractual Remedies Act 1979. It may yet be that the plaintiffs will sell the property within 12 months, and they may then be entitled to claim interest under cl 10.4(3)(a) of the agreement. But if, for example, they were able to sell the property for a price in excess of what Mr Grunden agreed to pay, I do not consider it beyond reasonable argument for Mr Grunden that the plaintiffs in that situation would have suffered no loss, or at least a smaller loss than the interest figure now claimed would reflect.

[34] In those circumstances, I do not think it appropriate to award summary judgment on the claim for interest.

[35] The claim for recovery of the unpaid deposit is in a different category. There is clear authority for a vendor to make such a claim following cancellation.⁶

Accordingly, there will be summary judgment for the plaintiffs in the sum of

_$100,000.

⁵ _{Agreement for sale and purchase, cl 3.12(1).}

⁶ Garratt v Ikeda, above n 3

.

[36] If the plaintiffs wish to pursue claims for damages, interest, or other relief against Mr Grunden beyond that sum, the additional claims will have to be tried in the ordinary way. They are not suitable for summary judgment.

Orders

[37] There will be summary judgment for the plaintiffs in the sum of $100,000, together with costs on a scale 2B basis and disbursements as fixed by the registrar.

[38] Under r 12.13 of the High Court Rules, the defendant must file and serve any statement of defence to the plaintiff’s claim for interest on the purchase price from the date of settlement to the date the agreement was cancelled, within ten working days after the date of this judgment.

Associate Judge Smith

Solicitors:

Thomas Dewar Sziranyi Letts, Lower Hutt for Plaintiffs

No appearance for the Defendant