Settlement failure costs couple $3m

SARAH HARVEY
Last updated 10:53 17/11/2012

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An Auckland couple has paid almost $3 million for a house they don't own after a failed purchase agreement. 

The couple had agreed to buy the almost $6 million house in Milford in 2006, but after disagreements over when the settlement date was, and subsequent High Court and Court of Appeal hearings, they are now being forced to part with the cash despite new owners living in the house.

The money is to make up for the shortfall in the cost of the house when its original owners were forced to put it back on the market.

The Court of Appeal decision, released recently, outlines the case. June and James Messenger were selling their Muritai Rd, Milford home and property to John Goodman and Deborah Rattray.

The couples entered into a contract in December 2006. Under the agreement the purchase price of $5,995,000 was to be paid by Goodman and Rattray in instalments: $2.75 million on December 18, 2006, seven quarterly instalments of more than $60,000 and finally the balance of more than $2.8m on December 18, 2008.

But, shortly after the agreement there was a dispute about whether the settlement date was in 2006 or 2008.

The Messengers argued settlement date was December 2008 and all they had to do in December 2006 was hand over the vacant property.

Goodman and Rattray argued the settlement date was the possession date - December 2006.

The first payment date came and went without a payment being made. 

In December 2008, there had still been no payments from Goodman and Rattray so the Messengers sent a settlement notice, meaning the transaction needed to be settled in 12 days. It was not.

Settlement never took place, so in March 2009 the Messengers cancelled the agreement and resold the property for $1.56 million less than the original agreement. 

They then sued Goodman and Rattray in the High Court for damages for breach of contract.

The Messengers lost the claim and so appealed to the Court of Appeal.

The Court of Appeal dismissed the earlier High Court decision and upheld the Messenger's appeal.

"In our view the loss suffered by the Messengers on the resale of the property was as claimed a direct consequence of Mr Goodman and Ms Rattray's failure to settle," the judgement said.

Goodman and Rattray, who chose not to participate in the appeal, are required to pay $2,881,708 to the Messengers, including interest and legal costs. 

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