Jin House NZ Limited v Scott Point Estate GP Limited [2018] NZHC 3066 (23 November 2018)

Last Updated: 27 November 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-1085 [2018] NZHC 3066

BETWEEN	JIN HOUSE NZ LIMITED Plaintiff
AND	SCOTT POINT ESTATE GP LIMITED Defendant

Hearing:	23 November 2018
Appearances:	R S Pidgeon for the Plaintiff P Cogswell for the Defendant
Judgment:	23 November 2018

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 23 November 2018 at 4:00 p.m. pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

..........................................

Solicitors / Counsel:

Mr R S Pidgeon, Barrister, Auckland

Mr P Cogswell, Cogswell Law, Auckland

JIN HOUSE NZ LTD v SCOTT POINT ESTATE GP LTD [2018] NZHC 3066 [23 November 2018]

[1] The plaintiff (“Jin House”) seeks a declaration as to the correct interpretation of a contract for the sale and purchase of real estate, to the effect it is entitled to compensation from the defendant (“Scott Point”), by reference to a contended reduction in land area acquired under that contract.

Background

[2] On 20 November 2014, Union Development Limited “or nominee” as purchaser entered into an agreement with Scott Point as vendor, for the sale and purchase of real estate in a development at 17A/19 Scott Road in Auckland’s Hobsonville (the “SPA”). Jin House was the ultimate nominee.

[3] The property was described as Lot 49 of property comprised in certificates of title NA 5A/701 and 22B/18, “as identified on the attached Scheme Plan”. The SPA stipulated a purchase price of $425,217.00 (plus GST, if any).

[4] Although the standard form SPA’s front-page “Area (more or less)” was struck through, the SPA at that point bears the hand annotation “412m² more or less”. That same dimension formally is specified in the scheme plan attached to the SPA. The SPA’s clause 23, titled “Measurement and Area”, provided:

23.1 All measurement and area are subject to any variation required by a Relevant Authority, Land Information New Zealand, the Land Titles Office or the Vendor’s surveyor and neither party shall be entitled to bring any claim whatsoever against the other based on any such variation of measurements, nor shall either party be entitled to claim any compensation, damages, right of set-off or to make any objection or requisition based on such variation.

23.2 If the Property utilises a private accessway, an undivided share in the accessway lot may be included within the certificate of title for the Property.

[5] By agreement dated 19 November 2015 between Scott Point and Union Development, the parties agreed to vary the SPA. The variation agreement recited such was necessary because the development’s scheme plan had changed to comply with various local authority requirements. The variation agreement materially provided:

1. The scheme plan attached to the [SPA] is replaced with the New Scheme Plan, and all references in the [SPA] to the Scheme Plan shall

now be a reference to the New Scheme Plan as if it were originally attached at the date of signing the [SPA].

2. The Property being purchased is now Lot 139 as identified on the New Scheme Plan.

3. The address on the front page, and the definition of “Vendor’s Land” in clause 18.1, of the [SPA] is varied to include 17 Scott Road, being the land in certificate of title NA 117B/57.

...

5. As per previous correspondence the following variations to the Agreement are agreed:

...

(f) Measurement clause 23 – The Purchaser has the right to cancel if the area of the Property is smaller than the area shown in the [SPA] by 5% or more. In addition if the area of the Property is smaller by 5% or more then the purchase price can be adjusted by a reduction in the purchase price proportionate to the reduction in price.

...

6. All other terms of the [SPA] continue and remain enforceable.

[6] The new scheme plan specified the area of Lot 139 at 360m². The purchase price was unchanged. Accordingly, Jin House seeks a declaration it is entitled to compensation in the amount of $34,017.36 for reduction in land area from the 412m² of the original scheme plan’s Lot 49 to that of the new scheme plan’s Lot 139.

Applicable legal principle

[7] There is no material dispute about the principles applicable to contractual interpretation. They are generally to determine from construction of the documents:¹

... what a reasonable and properly informed third party would consider the parties intended the words of their contract to mean[,] ... aware of the commercial or other context in which the contract was made and of all the facts and circumstances known to and likely to be operating on the parties’ minds.

From that perspective, I turn to consider the documents.

1. Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [19] per Tipping J.

Discussion

[8] The entitlement to compensation, under the varied clause 23 of the SPA, rests on the area of the ‘Property’. The term is defined twice in the SPA: at clause 1.1(15) as meaning “the property described in this agreement”; and at clause 18.1 as meaning “the property acquired by the Purchaser as described on the front page of this agreement, being part of the Vendor’s land”.

[9] I construe the SPA’s “Property”, from the time of the parties’ entry into the variation agreement, to mean Lot 139. Clause 23’s varied entitlement to compensation for any reduction in area (whether to be read together with, or in substitution for, the SPA’s clauses 23.1 and 23.2) thus only is applicable to any reduction of that lot’s area.

[10] When I put that construction to Jin House’s counsel, Richard Pidgeon, he acknowledged (after some consideration) he “[did] not have an answer to overcome that issue”. I commend him for his considered but forthright response, which was made in the very best traditions of the bar: counsel’s overriding duty of fidelity to the Court.²

[11] For completeness, I see no basis on which the varied clause 23’s ‘Property’ could be construed to mean the former Lot 49, especially given the definitiveness of clauses 1 to 3 of the variation agreement. That is particularly the case when, prior to the variation agreement, clause 23 denied compensation for any variation of measurement or area required by relevant authorities, as I apprehend from the variation agreement’s recital the new scheme plan may be.

Result

[12] For the reason set out at [9] above, Jin House’s claim is dismissed.

Costs

[13] Scott Point’s counsel, Paul Cogswell, sought to be heard separately on costs. In my preliminary view, from what I presently know of it, nothing in the steps taken

² Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008, cl 13.1.

by Scott Point in this averagely complex proceeding required other than a normal amount of time, meaning it should be entitled to 2B costs and disbursements.

[14] If that is not accepted by either party, costs are reserved for determination on short memoranda of no more than five pages – annexing a single-page table setting out any contended allowable steps, time allocation, and daily recovery rate – to be filed and served by:

(a) Scott Point within ten working days of the date of this judgment;

(b) Jin House within five working days of service of Scott Point’s memorandum; and

(c) Scott Point strictly in reply within five working days of service of Jin House’s memorandum.




—Jagose J