£19,000 CLAIM ALLOWED

New Zealand Herald, Volume LXXI, Issue 21817, 4 June 1934, Page 12

£19,000 CLAIM ALLOWED

PROPERTY TRANSACTION AGREEMENT QUESTIONED SUPREME COURT JUDGMENT In a reserved decision given in the Supreme Court on Saturday, Mr. Justico Ostler gave judgment for £19,000, allegedly due undci an agreement for sale and purchase, in favour of Provincial Investments, Limited (Mr. McArthur), against the United Tobacco Corporation, Tauranga, Limited (Mr. Anderson). " The facts of the ease are that the Guardian Trust and Executors Company of New Zealand, Limited, sold a large block of land to plaintiff company, which in turn sold portion of the land, at a greatly increased price, to defendant company on September IS, 1932," His Honor stated. "Both agreements for bale and purehaso provided for tho payment of the purehaso price by instalments. Defendant company was unablo to meet the instalments due by* it to tho plaintiff company, and made various applications to plaintiff company for (1) a substantial reduction in the area purchased, and (2) postponement of the payment of the instalments." Plaintiff company became unable to meet its obligations under its contract with tho Guardian Trust and applied to the Guardian Trust for time, His Honor proceeded. In January, 1933, tho Guardian Trust' agreed to allow the payments to stand over until May 11, 1933, if plaintiff company assigned to the Guardian Trust the benefit of plaintiff's contract with defendant company. In pursuance of that arrangement a deed of assignment was drawn up and executed by all three companies. It contained an irrevocable power of attorney from plaintiff company to tho Guardian Trust, nud also a clause that the purchaser and the subpurchaser should not at any time without the consent of the vendor enter into any agreement which would vary or modify the terms of the agreement of September, 1932. That deed was dated May 6, 1933, but it was executed in accordance with an agreement made in January. Further Request For Time In February, 1933, defendant company again applied to plaintiff company for time, and tho parties, notwithstanding the claims mentioned, agreed to extend the time for payment of the sums due until August, 1934, in consideration of tho defendant company paying £6O a month. The agreement was not communicated to tho Guardian Trust. On default being mado by the defendant company in paying the instalments duo under the assigned agreement the Guardian Trust brought the action in the name of plaintiff company. Defendant company relied on its agreement of February, 1933, nnd denied liability. Instalments amounting to £19,000 were now owing by defendant company to plaintiff company. "The defence is an affirmative one, and the onus lies on defendant company to establish it," His Honor continued. "The defence can only be established by proving a good and enforceable contract between plaintiff company and itself for an extension of time for the payment of moneys duo by it to plaintiff company under tho agreement of sale and purchase between them of September 18, 1932. Defendant company has proved that tho contract was actually made, but in my opinion it' has failed to prove that the contract is good and enforceable, because it is clear that at the time that the contract was made, February 22, 1933, plaintiff company had already agreed to assign all its rights under its contract with defendant company to the Guardian Trust. "On Horns of Dilemma" "Defendant company, it seems to .me,' is on the horns of a dilemma. If the agreement to assign preceded tho contract to give time, the plaintiff company had no power to make the contract. It had agreed to assign all its estate, right, title, interest, claims and demands in, to and under its agreement with defendant company to the Guardian Trust. It is quite true that the assignment was by way of mortgage only, but all rights under the agreement were agreed to bo assigned. After that assignment plaintiff company had no moro right to grant defendant company further time in which to pay its debt than it had to forgivo the debt altogether. "If, on the other hand, the assignment must be considered as being dated after the agreement between tho parties to give time, the matter stands thus:—These two companies, having agreed to give the assignment to the Guardian Trust, made a secret agreement between themselves by which tho rights of plaintiff company under it 3 agreement with defendant compnny became less valuable, and then mado tho assignment to the Guardian Trust without informing it of the secret agreement and leading that company to assume that it was taking an assignment from plaintiff company of its .agreement with defendant company in its original form. "In my opinion defendant company is estopped as against the real plaintiff in tho action from raising tho doi fence of this secret agreement. If it could rely on such an agreement it could equally rely on an agreement to forgo half or. all tho moneys due. Moreover, the agreement, being in fraud of the rights, of tho Guardian Trust, is in my opinion illegal and therefore unenforceable. For theso reasons tho defenco fails. I think it would have been better for the Guardian Trust to have brought tho action in its own name, and it is not too lato to substitute it as plaintiff in tho action. If that is desired I nm propared to consider an application for that purpose." Costs wero allowed plaintiff company.