An
immediate paper profit of some $217,000 was at stake when a company controlled
by two chartered accountants with Gilligan Rowe and Associates failed in its
High Court claim that there was a binding contract for its quick-fire purchase
of an inner-city Auckland property from a cash-strapped family.
Living at the O’Neill
Street property in Ponsonby were Maria Hurt (who is on a benefit) and her
daughter Wendy (who is separated and sole breadwinner for her four children). The court was told they were in financial
difficulty. They were $3000 in arears on
mortgage repayments. Selling the O’Neill
Street property and buying a cheaper property was being considered.
Evidence was given
that Wendy Hurt approached a Mr Toilolo, a South Auckland accountant and
financial adviser who presents a radio programme on financial issues. By coincidence, they discovered they were
related. Mr Toilolo offered to help and
arranged to meet the family to discuss options.
He arrived late at O’Neill Street for their meeting, at a time when
Wendy Hurt was leaving for work. Mr
Toilolo had with him a pre-prepared offer for sale of the property at $790,000
to a company called Hokitika Property Ltd: a company controlled by two chartered
accountants with Gilligan Rowe, Mr Mathew Gilligan and Mr Salesh Chand. Their valuer had earlier estimated the
property’s value to be $872,000. The
court was told the then government valuation was approximately $900,000. An independent valuation was to later assess
the value as being $1.05 million at the time the sale was being negotiated.
Pressed as she was in
a hurry to get to work, Wendy Hurt signed at $790,000 but asked Mr Toilolo not
to tell the purchasers she had signed before he tried to get the price increased. Wendy left and her mother Maria also signed
after further discussions with Mr Toilolo.
He told Mr Chand the Hurts were looking for a better price. Mr Chand authorised a $5000 increase and Mr
Toilolo amended the agreement to $795,000.
Hokitika Properties thought it had a binding contract, but the Hurts
refused to initial the amended price at $795,000.
In the High Court,
Hokitika Properties said there was an agreed deal at $790,000 which had been
varied by agreement to $795,000.
Judge Doogue ruled
there had never been any binding contract in the first place. The Hurts signed at $790,000 but the
existence of their agreement was never communicated to Mr Chand at Hokitika Property. He had been told only they were looking for a
better price. Hokitika Property had
responded by offering $795,000 but this was never accepted by the Hurts. There was no sale.
Hokitika
Property Ltd v. Hurt – High Court (03.07.14)
14.029