The proposed purchaser of a Dunedin property is at least $150,000 out of pocket after improperly cancelling his agreement. The outcome in the recent court case Strack v Grey1 warns buyers to take a diligent approach to conditions in an agreement for sale and purchase of property.
Mr Grey signed an agreement which included conditions allowing him to cancel the purchase if he was dissatisfied with a written building report or unable to obtain sufficient finance. Last year, the High Court found that Mr Grey breached this agreement when he cancelled it on the basis that he was dissatisfied with the building report. Mr Grey’s concerns about the property’s retrofitted insulation were, in fact, founded in his own research, not the building report.
In September, the Court of Appeal ordered Mr Grey to compensate the Stracks $150,000 for his breach (being the difference between Mr Grey’s offer and the offer of the property’s eventual buyer). In reaching its decision, the court rejected Mr Grey’s argument that he should not have to pay given he would have cancelled the agreement anyway under the finance condition. Mr Grey was unable to prove to the court that he would have been unsuccessful in obtaining finance as he only made preliminary enquiries with one bank.
This latest decision in Strack v Grey reiterates that it is essential that your reasons for cancelling an agreement are properly linked back to any conditions in the agreement and that you do ‘all things that might reasonably be necessary’ to meet the agreement’s conditions before cancelling.
1 Strack v Grey [2019] NZCA 432.
