Golden Homes lodged caveats against a Christchurch project alleging developer North Ridge was fabricating excuses for not proceeding with an agreed contract, trying to freeze it out and then resell in a rising market.
The High Court was told developer North Ridge Living Ltd purchased in 2020 a Bayswater Crescent site in Bromley with plans for subdivision. Nineteen lots were then on-sold to Golden Homes franchisee, NDM Construction Ltd. North Ridge undertook to get Council resource consent for the subdivision. Meanwhile, Golden Homes sold off eighteen of its sites in land and building packages with on site progress dependent on North Ridge getting titles issued for each lot.
In October 2021, North Ridge advised Golden Homes that Council consent required conditions to be registered against all titles warning of potential sea level rises and with that the possibility of managed retreat with dwellings removed. This would be unpalatable to homebuyers North Ridge told Golden Homes, with an implication Golden Homes should back out of its purchase. North Ridge then cancelled its sale to Golden Homes; not only because of the sea level condition but also because of its claimed inability to obtain all Council consents for subdivision within the six month time frame required in its Golden Homes contract.
Golden Homes made enquiries. It found the sea level condition, while initially required by Council, had been dropped as a consent requirement three weeks before the North Ridge letter using this as an excuse to cancel. Golden Homes also found North Ridge had made little progress in seeking Council consent for the first ten weeks of its six month time frame. Further time was lost by North Ridge delays in paying required Council consent fees.
Associate judge Paulsen ruled North Ridge failed to take reasonable steps to progress its resource consent application. Golden Homes was justified in lodging caveats to protect its interest. The sale to Golden Homes has a ‘no caveat’ clause, prohibiting Golden Homes from registering any caveat against the land. Such clauses are common, enabling a subdivider to complete legal steps necessary to issue separate titles without legal interference. Judge Paulsen ruled Golden Homes registration of a caveat over top of the ‘no caveat’ clause was a valid response to what it considered North Ridge’s wrongful repudiation of its contract. The caveat prevents North Ridge selling to another buyer without Golden Homes prior agreement.
NDM Construction Ltd v. North Ridge Living No. 3 Ltd – High Court (1.03.22)
22.049