Family lose thousands in property deal
A Queensland family has lost tens of thousands of dollars on a New Zealand property deal that was "simply too good to be true".
In a judgment released last week, the High Court in Christchurch upheld an appeal by New Zealand Home Bonds to recover a home bond from Brisbane woman Bernadette Gill.
The court heard that in October 2006 New Zealand real estate agent Brian Cutfield was in Queensland selling apartments on behalf of Auckland-based property company Key2.
Gill agreed to buy two apartments in a development in Grey Lynn, Auckland, "off the plans" despite initially telling Cutfield she did not have the funds to invest in property.
But according to court records, Cutfield told her that finance would not be a problem if she had equity in other property.
He said the apartments were undervalued and a healthy profit would be available from on-selling them. Cutfield explained that the apartments could be secured by a home bond and the only upfront commitment by Gill would be the bond fees, the court records said.
When the apartments were built, Cutfield said he would on-sell them at a profit and Gill would not have to meet the purchase price. If for any reason an on-sale was not achieved before the settlement date, Cutfield said he would buy the apartments himself.
In March 2007 Home Bonds agreed to provide home bonds worth $86,240 to meet the 10 per cent deposits payable on the two apartments that Gill had agreed to buy.
Gill's children, Sangeet and Surinder Gill, provided additional security for the bonds, the court records said.
By late 2008 when the settlement date was approaching, Gill contacted Cutfield who said he would start on-selling the apartments early the following year.
In June 2009, when settlement was imminent, Gill's solicitor wrote to Cutfield. In a short email reply he denied personal liability and said the sale of the apartments looked "very unlikely in this market".
The next month Gill's solicitors told Home Bonds the two agreements for sale and purchase of the apartments had never become unconditional and that the deposits should not be paid.
But Home Bonds nonetheless paid the apartment vendor and later that month filed proceedings in the District Court seeking to recover the total amount it had paid.
In June 2010 the Christchurch District Court granted Home Bonds summary judgment for the full amount claimed.
Although the Gills successfully appealed to the High Court, which considered that Home Bonds should look to the apartment vendors for recovery of the deposits paid, Home Bonds filed a further appeal.
Allowing the appeal on the basis that the sale settlement was valid, Justice Graham Panckhurst ordered the Gills to pay Home Bonds $86,240 plus interest and legal costs. However he expressed "a real measure of sympathy" for the Gills in their predicament.
Justice Panckhurst said that Cutfield's assertions that there was "no element of risk because he would on-sell or purchase the apartments before settlement were simply too good to be true".
"Mr Cutfield was not to be trusted," he said.
"It was unfortunate that the respondents did not take legal advice before the agreements for sale and purchase were signed."