Perry v O'Neills Building Removals Ltd (in Liquidation)
| Jurisdiction | New Zealand |
| Judge | Gordon J |
| Judgment Date | 22 March 2018 |
| Neutral Citation | [2018] NZHC 503 |
| Court | High Court |
| Docket Number | CIV-2017-404-856 |
| Date | 22 March 2018 |
[2018] NZHC 503
CIV-2017-404-856
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA
TĀMAKI MAKAURAU ROHE
Contract, Fair Trading — Claim for breach of contract, breach of s9 Fair Trading Act 1986 (“FTA”) (misleading and deceptive conduct) — the plaintiff had contracted to purchase a property and have it moved to Waiheke Island to be re-sited — the property suffered damage prior to removal due to construction work on site — whether general damages for distress available for breach of contract
G Grant for the Plaintiff
No appearance by or on behalf of the Defendants
JUDGMENT OF Gordon J
The plaintiff, Brenda Perry, worked hard and saved hard in order to make her dream of having a modest home on land she owned (the property) on Waiheke Island, a reality.
On 16 July 2016, Ms Perry entered into a contract with the first defendant, O'Neills Building Removals Ltd (O'Neills), for the sale of a house at 80 Anzac Street, Takapuna (the house) by O'Neills to Ms Perry, for O'Neills to transport the house across Auckland Harbour to the property on Waiheke Island, and for O'Neills to re-site the house there. This was going to be Ms Perry's dream home.
The house (along with three others) was situated on land in Takapuna owned by the third defendant, Auburn Developments Ltd (Auburn). Auburn had plans to build an apartment block on the site (the development site) and therefore needed to clear the houses off the land. Auburn sold two of those houses to O'Neills. One of those was the house purchased by Ms Perry from O'Neills.
Ms Perry's case is that O'Neills committed numerous breaches of the contract she signed with them. She also says that O'Neills misled her, as did the second defendant, Jeremy O'Neill, a director and shareholder of O'Neills. She says Auburn misled her as well.
As a result of O'Neills' alleged breaches, Ms Perry cancelled the contract. The house was never delivered to the property on Waiheke Island.
The hearing proceeded before me by way of formal proof, the three defendants having been debarred from defending the proceeding by failing to comply with unless orders made in relation to discovery.
In her amended statement of claim, Ms Perry pleads five causes of action:
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(a) Breach of contract by O'Neills;
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(b) Misleading and/or deceptive conduct in breach of s 9 of the Fair Trading Act 1986 ( FTA) by Mr O'Neill;
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(c) Misleading and/or deceptive conduct in breach of s 9 of the FTA by O'Neills;
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(d) Party to misleading and/or deceptive conduct in breach of s 9 of the FTA by Mr O'Neill; and
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(e) Misleading and/or deceptive conduct in breach of s 9 of the FTA by Auburn.
There is a preliminary matter.
O'Neills was placed into liquidation on 17 November 2017 by special resolution of its two shareholders, Mr O'Neill and Ms Joyce. In fact, O'Neills has not traded since July 2017, although that fact was not disclosed to Ms Perry until the liquidator published his first report on 24 November 2017.
The liquidator is James Hogg. Ms Grant, who appeared for Ms Perry, wrote to Mr Hogg on 12 February 2018 to seek his consent as liquidator to Ms Perry continuing her proceeding against O'Neills for the formal proof hearing. Ms Grant followed up that letter with an email dated 20 February 2018. Mr Hogg replied on 26 February 2018 by email stating that he did not give consent. His email continued:
… There are no resources from which to get proper legal opinion on the matter and therefore I cannot commit to further expenditure and it would be unfair on other unsecured creditors.
It is most likely that there will be no distribution and thus far there are no substantial realisable assets. I would not like to give Ms Perry false hope.
In the absence of consent from the liquidator, Ms Perry seeks an order from the Court granting her leave to continue her proceeding under s 248(1)(c) of the Companies Act 1993, which provides:
248 Effect of commencement of liquidation
(1) With effect from the commencement of the liquidation of a company,—
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(c) unless the liquidator agrees or the court orders otherwise, a person must not—
(i) commence or continue legal proceedings against the company or in relation to its property; or
…
Ms Grant submits that a judgment of the Court will constitute proof of the amount of Ms Perry's claim as an unsecured creditor in the liquidation. Her status as an unsecured creditor in the liquidation will not change; the advantage is merely that she will have crystallised her losses.
In Hsu v Moore Stephens Markhams Ltd, 1 Cooper J set out the principles that are relevant to such an application by reference to an earlier judgment of Master Faire: 2
[25] … That company is now in liquidation and as such, proceedings may only be commenced with leave of the Court. In Fisher v Isbey, Master Faire identified six principles to be applied in deciding whether to grant leave, those principles are:
(a) Creditors should be treated equally;
(b) No creditor should, by the bringing of proceedings, be able to gain an advantage over other creditors;
(c) The assets of the company should not be dissipated in wasteful litigation;
(d) The onus is on the party seeking leave;
(e) The claim should not be clearly unsustainable; and
(f) The Court must determine whether it is appropriate to determine the claim under s 302 of the Companies Act 1993.
[26] Generally, claims that will be granted leave are claims that are necessary to establish parties entitlement under the liquidation, which cannot adequately be dealt with in any other way, which are meritorious and which do not waste the assets of the company unnecessarily.
(Citations omitted)
I consider that this is a case in which it is appropriate to grant leave to Ms Perry to continue her proceeding for the following reasons:
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(a) Ms Perry's claim is necessary to establish her entitlement under the liquidation and cannot adequately be dealt with in any other way;
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(b) Her claim is meritorious; 3
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(c) The assets of O'Neills will not be dissipated by wasteful litigation or even the cost of mounting a defence given that the hearing process is by way of formal proof. No costs will be incurred by the liquidator in defending the proceeding; and
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(d) Obtaining a judgment will allow Ms Perry to crystallise her claim as an unsecured creditor in the liquidation. A judgment will not give her any greater priority or change her status as an unsecured creditor. There is therefore no effect on other creditors in the liquidation.
Leave is accordingly granted to Ms Perry to continue with this proceeding.
I take part of the following summary of the key background facts from the submissions of Ms Grant. The submissions accurately summarise the three affidavits Ms Perry has filed. The first is a detailed affidavit sworn 20 June 2017 which annexes emails, other correspondence and photographs of the extensive damage to the house. The second and third are updating affidavits sworn 8 August 2017 and 27 February 2018 respectively.
O'Neills was a “husband and wife” company whose principal business was moving and relocating houses. The business was run and largely conducted by
Mr O'Neill, with back office tasks and communications carried out from time to time by Mr O'Neill's partner, Lois Joyce. At all material times, Mr O'Neill and Ms Joyce were the sole directors and shareholders of O'NeillsAuburn is a property developer. Auburn owned land and four houses located on that land at 74, 76, 78 and 80 Anzac Street, Takapuna. The four houses had been fully renovated in 2012, in the first season of “The Block”, a television series. Auburn intended to dispose of and remove the houses to make way for its construction of a 92-unit apartment complex on the development site.
To that end, Auburn contracted with O'Neills in May 2016 to allow O'Neills to sell and remove the two houses at 74 and 80 Anzac Street. O'Neills advertised the houses for sale on Trade Me. Ms Perry saw the advertisement in early July 2016 and went to view the houses on 5 July 2016. She liked the house at 80 Anzac Street.
Over the period of 10 days from 5 to 15 July 2016 (as she was due to leave New Zealand for business on 16 July 2016), Ms Perry set about doing due diligence. That included, on 7 July 2016, a visit with Mr O'Neill to the property on Waiheke Island to check the suitability of the section and access for possible relocation of the house.
Ms Perry also had a number of telephone conversations with Mr O'Neill to ask specific questions about the relocation of the house to Waiheke Island, including costs and possible temporary storage arrangements prior to the property being ready. Necessary Auckland Council consents were going to take some time to obtain.
Arrangements for temporary storage of the house was a key topic of discussion, as Ms Perry was told by Mr O'Neill subsequent to her first viewing of the house that it might have to be removed as soon as 1 August 2016, or at least sometime in August 2016, because development was due to start on the development site.
In other words, it was implicitly made clear to Ms Perry by O'Neills and Mr O'Neill that Auburn's position was that the house would have to be moved before work started on the development site and Ms Perry expected no less in terms of there being no risk of damage to the house.
During her viewings and discussions with O'Neills and Mr O'Neill, it was at...
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Perry v O’neills Building Removals Ltd (in Liq)
...HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE CIV-2017-404-856 [2018] NZHC 503 BETWEEN BRENDA MARGARET PERRY Plaintiff AND O’NEILLS BUILDING REMOVALS LIMITED (IN LIQUIDATION) First Defendant JEREMY O’NEILL Second Defendant AUBURN DEVELOPMENTS LI......