Ruling On House Sale Contract

Press, Volume CI, Issue 29932, 20 September 1962, Page 14

Ruling On House Sale Contract

(Neto Zealand Press Association)

WELLINGTON, September 19.

The words “subject to satisfactory mortgage finance,” although quite widely used in house sale contracts, were, he thought, unfortunate, but were not meaningless to the extent of being unenforceable, Mr Justice McCarthy said in a judgment delivered in the Supreme Court at Wellington today.

The onus was clearly on a house purchaser to show that the decision that the finance available u'ac not satisfactory, was a reasonable and fair decision and he must not act capriciously, his Honour said. The judgment allowed £6OO damages, less £4OO deposit paid, to John Gleeson Knotts, a builder, of Upper Hutt, against Colin Gray, a personnel officer, of Pet-one. for breach of an agreement to purchase a house built by Knotts in Ngaio Gorge road. Reviewing the facts, his Honour said t'he house was being built by Knotts, and Gray, in answer to a newspaper advertisement, inspected it with a view to purchase. An agreement to purchase for £9200 was signed, a condition being that Gray was able within seven days to arrange satisfactory mortgage finance Gray later sought to be

relieved of the agreement because of his inability to raise the finance. Knotts then resold the house after reducing the price to £B5OO. “The defendant took Into account and was swayed materiaHy, I believe, by his opinion that it would be necessary to convert the property, and especially the building, into something better than that which he had contracted to buy.” said bis Honour. '"Hie matters which he took into account were not only expenditure, which might be said inevitably to follow a purchase, but also embraced improvements of a material kind to the house itself. “I am not satisfied that, in being influenced as he was by such matters, he acted reasonably and that his decision to abandon the purchase was justified. “If I am wrong in that, then there is another ground in which I would hold against the defendant I consider that insufficient efforts were made by him to secure the finance which he wanted. "When the plaintiff said he was not prepaired to increase his mortgage to £ 1000. the defendant immed'rately sought to abandon the contract No effort at all was made to secure this money from other sources It may be that it would have been difficult. It may even have been impossible to raise this amount, but in the state of the evidence I cannot say that the defendant has shown that the failure to secure what he finally thought was satisfactory occurred, notwithstanding reasonable efforts on his part ”