Xieyan Mao sold an Auckland property ripe for redevelopment supposedly free of any tenancy then argued it was the purchaser’s problem to remove a fixed term tenant. Legal argument that purchaser Hargun Singh was the one in breach of contract failed in the Court of Appeal.
The court was told Ms Mao sold her Te Atatu property on Yeovil Road for $1.55 million in August 2020. There was a tenanted dwelling on site. The property was advertised as ripe for development with resource consent for up to seven townhouses. Neither the sale agreement nor the real estate advertising made reference to a sale being subject to the existing tenancy. Mr Singh gave evidence that he was aware the property was tenanted when he viewed it, but assumed tenants would have vacated by settlement date. Ms Mao said the real estate agent was told there was a fixed term tenancy expiring in July 2021 and she claimed Mr Singh had been told.
Emails flew between lawyers on settlement date. Ms Mao said Mr Singh had to pay the full price and the tenancy was his problem. He said he had the money and was ready to settle, but would not pay until Ms Mao removed the tenants. Ms Mao said Mr Singh being ‘ready’ to settle was not enough; the contract required formal offer to pay and since Mr Singh had not done this he was in breach of contract and she was legally justified in cancelling the sale.
The Court of Appeal ruled it was futile for Mr Singh to formally tender payment; Ms Mao herself was not in position to transfer Yeovil Road free of the tenancy and had made it clear she was not going to do so. It was Ms Mao who was in breach of contract, the court ruled.
Ms Mao was ordered to perform the contract as agreed. There was evidence that the tenants might have packed up and left if paid $18,000 compensation for an early end to their fixed term tenancy.
Mao v. Singh – Court of Appeal (22.08.22)
22.148