DBCL Developments Limited v New Season Investments Limited

Written October 2009

Background

This case concerns a dispute between vendor and purchaser of a property over the time taken by the vendor to complete a subdivision. The dispute is before the Court on an application by the plaintiff vendor for summary judgment for damages after the defendant purchaser failed to complete the purchase. The defendant is to have cancelled the agreement prior to settlement on the grounds of unreasonable delay in completing the subdivision.

Agreement

DBCL was the owner of land at 1 Waiari Road, Takanini. New Season Investments Limited entered into an agreement to purchase the proposed subdivision of the land, but with special terms relating to completion of subdivision work. The effect of the subdivision work was that DBCL warranted to complete the subdivision plan and request issue of title promptly after obtaining all necessary subdivisional consents, and the parties agreed that settlement was to take place 5 working days after the subdivided title became available.

They started the subdivisional process prior to execution of the agreement. DBCL had stated the subdivional process prior to execution of the agreement, and they obtained the necessary resource consent in September 2007 and proceeded to carry out work in accordance with thta consent. Part way through work on the driveway the design for a retaining wall had to be changed and they encountered delays in finding a contractor familiar with an able to construct the particular form of driveway required by the building consent. New Season issued two notices to DBCL requiring settlement.

DBCL responded both times stating that the period after New Seasons may seek to rescind the contract if reasonable progress has not been made towards submission of the survey plan for deposit or deposit of the plan has not yet expired. It said that for the purposes of s225(2)(b) the later of the expiration of 2 years from the date of the resource consent or one year after the date of the agreement was the relevant date. New Season purported to cancel its agreement with DBCL on the grounds of non compliance with its notice of 3 July 2008 due to DBCL's breach of agreement. Sections 15 and 17 and 18 provide specifically for DBCL's obligations under the agreement.

Issue

Whether the whether s 225 of the Resource Management Act 1991 (expressly incorporated into the contract) can be construed as setting a time frame within which the vendor had to complete the subdivision and obtain issue of title for the property. If not, then the court has to decide whether there has been unreasonable delay by the vendor in completing the subdivision and whether this issue can be decided on a summary judgment application.

Decision

It was found that the parties have made express provision for performance of the obligations under clause 15.0 and 17.1 by their agreement to incorporate the conditions in s225 of the Resource Management Act. It would be artificial to separate out one aspect of the steps identified under clause 15 from the others when considering a time frame for undertaking those obligations. They all revolve around establishing and meeting local authority requirements for the subdivision. The facts of this case illustrate their interdependence as the original consent had to be varied as a consequence of ground conditions found when earthworks commenced.

It was further decided that even if it could be said that DBCL could have managed the work more efficiently, these facts do not allow an inference that DBCL did not intend to complete its obligations. The delays cannot be construed as repudiatory of the agreement even if the time taken to complete the driveway could be singled out from the time taken to complete all of the work required to complete the subdivision.

It was decided that New Season does not have an arguable defence, so summary judgment entered in favour of DBCL.