Forced resale of prime residential sections forming part of a new subdivision in a depressed market following a buyer’s default will alert potential buyers to the extent market prices have fallen. Instead, Palmerston North developer Pacific Heights held off, retaining title and instead suing Elizabeth Jeff for the drop in market value after she defaulted on a 2021 purchase. The one benefit for Ms Jeff is that she was not liable to pay the fourteen per cent contractual interest as further damages for default, because there had been no resale.
But the High Court did add discretionary Contract and Commercial Law Act interest at ten per cent to her liability for the section’s drop in market value.
Ms Jeff paid a deposit to Pacific Heights Development Ltd on her October 2021 purchase of a $489,000 section, part of a new subdivision on Atlantic Drive, Aokautere.
The High Court was told she had vanished after it came to pay the balance three years later, when title to lots in the subdivision came available.
In April 2025, the High Court ruled she was liable to complete the contract.
Substituted service was needed to give her notice of the then pending case.
She made no appearance.
More than a year later, Pacific Heights returned to court, seeking to quantify damages.
Evidence was given that Pacific Heights still held title; it had tried to resell but could not find a buyer, it said. Market conditions were described as depressed.
A registered valuer appraised the $489,000 section as now having a market value of $350,000.
Associate judge Skelton ruled Ms Jeff is liable for the difference in value, less her deposit paid previously: a sum of $115,800.
Pacific Heights unsuccessfully claimed interest for late payment should run on the $115,800 debt at the rate set out in their contract: fourteen per cent.
Contract wording for payment of interest applies where a buyer defaults and there is a shortfall on resale, Judge Skelton ruled.
There has been no resale. Pacific Heights retained the property, claiming damages for the reduction in value.
Stating it would be unjust for Pacific Heights be paid no interest at all, Judge Skelton applied a Contract and Commercial Law Act discretion to award a reasonable rate of interest: assessed at ten per cent; running for the fifteen month period between Ms Jeff’s failure to settle and the subsequent court ruling holding her liable to pay $115,800 damages.
It was not clear whether Pacific Heights has been able to track down Ms Jeff.
Pacific Heights Development v. Jeff – High Court (5.05.26)
26.151