Property developer Neville Mahon’s claim for five million dollars damages against property investor Tim Edney alleging breach of a Queenstown real estate warehousing deal was dismissed in the High Court. There was never any agreed deal. Mr Mahon was entitled to compensation for project work prior to their falling out.
The High Court was told Mr Mahon transferred to Mr Edney in January 2016 five properties on Park Road, Queenstown he had agreed to purchase seven months previously. Mr Mahon was struggling to find sufficient finance to settle his five million dollar purchase. The two were on good terms. It was recognised Mr Edney could access cheaper finance for a planned redevelopment of Park Road as a retirement village. This required a transfer of ownership to a company Mr Edney owned. The possibility was floated that Mr Mahon would later buy back in. Mr Mahon was to later allege he had been shut out. There was evidence of subsequent discussions between the two over terms for a buy back. This included a proposal for Mr Edney to sell at $5.45 million: $5.1 million for the land and $350,000 for a 1906 Alldays and Onions vintage car. Mr Mahon alleged in court that bundling a car into the deal was a blatant tax dodge intended to generate, in part, a non-taxable capital gain.
Justice Whata ruled that at no time was there any precise agreement over terms of a possible buy back. There was no agreement as to a fee Mr Edney should receive for warehousing Park Road, or for the duration of any warehousing agreement. Clarity of these terms would be expected in a commercial contract between two experienced businessmen, Justice Whata said. Mr Edney afforded Mr Mahon a genuine, commercially reasonable opportunity to repurchase Park Road over a six month period, said Justice Whata. Nothing firm came from their discussions. There was no contract. No damages were due.
Justice Whata ruled Mr Mahon was entitled to compensation for his eight months’ work getting engineering reports, architectural drawings and resource consent for a retirement village at Park Road. Mr Edney knew about and encouraged this preliminary work. The value of this work has not been decided.
Mahon v. Edney – High Court (20.06.18)
18.125