The Auckland house that was in dispute. Photo / Nick Reed & NZ Herald
This is an interesting case on a number of fronts. It’s good to see the courts enforcing the ruling that a sale at auction (or unconditional sale) is a sale – there is no backing out, by either party.
It’s also good to see a party fronting up and committing to chasing through and going to court. Often the practicalities of enforcing a contract like this don’t stack up, so people let it go. It has cost this couple $150K just in legal costs, let alone the distraction for 2 years.
One thing that has been overlooked is that this property is Zoned as Terraced Housing under the Unitary Plan, so considering they own the neighbouring property, it’s no wonder they fought hard to have the contract honoured! Even at an extra $150K they will be winning when the Unitary Plan becomes active.
It’s really important to look at the Unitary Plan when confirming your values, even though it is still in notified stage at the moment. Some people are over looking this and it can have a very large impact on the value of your home. If you’d like to discuss how this will impact your home please feel free to give me a call – 021858483
5:11 PM Tuesday Dec 15, 2015 – By Lane Nichols. Credits to Lane and NZ Herald.
Two Vietnamese relatives who sold their Otahuhu house by auction then tried to back out of the deal by text message have been ordered to honour the sale and purchase contract.
Auckland academic Dr Marewa Glover and husband Steve Piner sued Thi Kim Chu Nguyen and Vinh Hgoc Nguyen after the stymied Church St cottage sale in late 2013.
During a hearing in October, the couple asked the court to enforce their unconditional sale and purchase agreement and award hefty penalty payments in relation to lost rental income and interest.
But the reticent vendors claimed there was no written sale and purchase agreement and that they were misled by their Vietnamese estate agent.
The court heard that Dr Glover and Mr Piner’s family-owned company SM & T Homes Ltd bought 42 Church St for $450,000 at auction in December 2013 as an investment nest egg.
They paid a $44,000 deposit and said they shook hands with vendors Mr and Ms Nguyen in Barfoot & Thompson’s downtown auction rooms before heading off to arrange insurance.
But the court heard that days later, Barfoot agent Ricky Yap, who handled the sale and rejected claims of any wrongdoing, received a text message in Vietnamese from the vendors which read: “Hi Ricky, I don’t want to sell my house any more. Please cancel.”
A reserved court decision released today by Justice Rebecca Edwards has sided with the buyers and ordered the Nguyens to “perform the terms of the sale and purchase agreement dated 3 December 2013”.
Leave is reserved for Dr Glover and Mr Piner to seek ancillary orders, including in relation to the calculation of interest, which amounted to more than $90,000 in their submissions.
“I believe a contract for sale was formed on the fall of the auctioneer’s hammer,” the decision states.
“The agreement represents the terms of the contract formed at auction, it is signed by the parties against which it is sought to be enforced.”
The decision also says that SM & T had remained “ready, willing and able” to settle.
“Settlement notices were served but were not complied with. Finance was arranged and could have been transferred to meet the purchase price had the Nguyens been ready and willing to settle the property at any time. An award of damages will not adequately compensate SM & T for the loss of this particular property.”
Mr Piner told the Herald tonight he and his wife had spent nearly $150,000 in legal costs.
There were no winners, he said.
“Technically, we are able to claim penalties as allowed for in the sale and purchase agreement, lost rental income and our costs. That’s almost the sale price of the house there. It’s obscene.
“This was not our ideal course of action. We possibly would have been able to come to an agreement much sooner had they not taken such an adversarial approach.”
Details of the case were outlined in the High Court at Auckland nearly two years after the out-of-pocket purchasers supposedly bought the house.
Their loaned deposit remained in a trust account while the case was settled and they said they had lost tens of thousands of dollars in rental income and interest payments as a result of the stymied sale.
The court heard the couple owned a number of rental properties, including the neighbouring Church St house.
When the next-door property came on the market they decided to buy the old railway cottage and renovate it, making a pre-purchase offer of $440,000.
The court heard the offer was accepted and the auction brought forward, where they bid another $10,000 to clinch the house.
“I did everything that was asked of me to complete the agreement,” Mr Piner told the court.
“As far as I was concerned I had bought the property.”
But days later it emerged the relatives had “changed their minds about selling”, he said.
Mr Piner said the couple put a caveat on the property and their lawyer wrote to Mr and Ms Nguyen but received no response.
As the settlement date came and went, the couple delivered a translated letter to the house where Ms Nguyen was still living.
“We still didn’t get a response so we issued these proceedings.”
Mr Piner said the couple wanted the court to enforce the sale agreement so they could take possession of their investment property.
Barfoot was named as second defendant in the proceedings. Barfoot’s lawyer Tim Rea told the court the firm had “no factual dispute” with Dr Glover and Mr Piner’s version of events.
It believed the couple had an enforceable contract.
Speaking through a Vietnamese translator, Ms Nguyen told the court she believed her agent had “conspired” with the buyers.
She added that she spoke little English and had not understood what the reserve price meant when her house, which she owned with a relative, went under the hammer.
Ms Nguyen told the court she asked Mr Yap twice to cancel the auction because the offer price was too low and that she was not told what the reserve price meant.
“I was not happy with that price but I signed because Ricky said it was only a starting price. He never explained to me that if no one bid then that is what the house would be sold for.
“I believe the agent and purchasers conspired to stop me from cancelling the auction and ensure the property was sold to them,” the court heard.
Ms Nguyen said she rang Mr Yap the night before the auction to call it off but he insisted it had to go ahead as he had four potential buyers.
On auction day she was shocked to learn her house had sold for only $450,000.
She felt “dizzy and faint” and recalls signing a document but said she did not know what it was.
“I can’t recall how I got home after the auction. I think I signed a piece of paper but I don’t know what kind of paper it was.”
However, Mr Yap disputed claims he was asked to call off the auction and said the first time he became aware the vendor no longer wanted to sell the house was a text message from Ms Nguyen several days after the hammer fell.
Mr Yap told the court he had presented the couple’s pre-auction offer to the vendors and clearly explained the $440,000 figure would be the reserve price.
“I certainly did not tell [Ms Nguyen] the Church St property would fetch much more than $440,000.”
He said Ms Nguyen also alleged he had colluded with the purchasers to ensure they bought the property.
“This is an astonishing allegation and is not true.
“I don’t know Mr Piner or his wife personally and have not come across them in the past.”