Black Diamond Technologies allege vendor of a property in Lower Hutt deliberately went bush to prevent completion of due diligence causing its $1.5 million purchase to fall over, all because the vendor had a better offer. Vendors cannot use their own default as grounds to escape a contract, the Supreme Court ruled.
In December 2019, Black Diamond agreed to buy a neighbouring property in Parliament Street from Anthony John Hall. Black Diamond had until 9 January 2020 to complete due diligence. The intervening Christmas/New Year break caused complications. At Mr Hall’s direction, his lawyer did not respond to requests for a due diligence extension. The contract came to an end when Black Diamond did not either complete its due diligence before the deadline or waive the requirement for due diligence, the High Court ruled. Black Diamond appealed.
Evidence was given during the High Court trial of Mr Hall cancelling at the last minute Black Diamond’s access for a proposed engineering inspection scheduled for 8 January. He would be tramping in the Tararua Ranges he said, out of phone contact. Telephone records established that Mr Hall was in contact with a second buyer prior to this cancellation. This buyer offered a better price.
Black Diamond registered a caveat over title to Parliament Street, blocking any sale to the second buyer. This caveat remains. Black Diamond is entitled to return to the High Court and argue the original $1.5 million contract still stands, the Supreme Court said. As a general rule, vendors cannot through their own behaviour prevent purchasers from carrying out their part of the contract, the court ruled.
Mr Hall complains that if the original $1.5 million contract is enforced, Black Diamond would have had two years without payment before getting Parliament Street at a price below its current market value.
The court was told the second buyer was offering to pay an extra $100,000.
Melco Property Holdings (NZ) Ltd v. Hall – Supreme Court (12.05.22)
22.084