They thought they were buying houses, but in court it was legal argument about sale of goods when New Plymouth-based Tiny Town Projects Ltd went into liquidation insolvent leaving partly finished relocatable houses in its yard. The High Court ruled buyers were secured creditors having an equitable lien over each of their incomplete houses.
Tiny Town went into liquidation in November 2022. Director and sole shareholder James Cameron is bankrupt. Six customers were left in the cold; three had paid in full for relocatable homes with construction complete but awaiting a council code of compliance certificate and three had partly paid for houses under construction. Tiny Town sold custom-built relocatable homes constructed on a steel trailer ready for transport to a site of the buyer’s choice. Prices started at just under $156,000.
Tiny Town liquidators asked the High Court for a ruling on each house buyer’s status. If treated as unsecured creditors they would get nothing; no house and no refund.
Justice Venning ruled buyers could not claim ownership of the house each had signed up for. Being built on a trailer meant it was a sale of goods. Ownership of each house did not pass until the house was ‘completed.’ The build contract stated completion did not occur until a code compliance certificate was issued.
But an equitable lien gave each purchaser the status of a secured creditor, Justice Venning ruled. Each house under construction was clearly identifiable as being built for a specific customer. Each instalment payment by each customer gave that customer an equitable claim over their house.
As a result, each was allowed to uplift their house from the yard after paying for any extra work done by Tiny Town not covered by payments previously made.
re Tiny Town Projects Ltd – High Court (14.03.23)
23.030