It was a speculative Auckland townhouse off-the-plan 2021 purchase with an intention to on-sell before settlement. The market tanked. Values dropped by some thirty per cent. The developer held them to their contract, with the High Court ordering Li Zhang and Stephen Cowell pay the $1.02 million balance due.
Property developers dread a distressed sale in a falling market following a purchaser’s default; a low sale price is fixed as the new benchmark, with other apartments still unsold. Forcing defaulters to cough up is preferred.
In 2021, Ms Zhang and Mr Cowell signed up to purchase a townhouse in the Park Ave development on Great South Road in Ellerslie, paying a $180,750 deposit.
Payment of the $1.02 million balance fell due in March 2024.
The High Court was told they refused to settle. They claimed a sales agent acting for the Park Ave developer told them before signing that they would never be called to pay; the property could be on sold at a profit in the intervening three years. This was a misrepresentation, they alleged. They were excused payment, they claimed.
The developer could keep their deposit, then cancel the contract, they said.
Associate Judge Brittain ruled the sales agent never guaranteed property market values would keep rising. There was no misrepresentation. The agent’s comments about potential future property price movements and the possibility of on-selling at a profit were no more than a statement of opinion.
Genuinely held statements of opinion do not amount to a misrepresentation when later proved wrong.
Judge Brittain ordered the two pay up and complete their purchase.
Separately, Ms Zhang was ordered to pay a further $1.02 million to complete purchase of a second Park Ave townhouse she purchased in her own name.
Finsbury Trustee Ltd v. Cowell & Zhang – High Court (10.10.24)
25.009