SALE OF A HOUSE

Otago Daily Times, Issue 20316, 26 January 1928, Page 3

SALE OF A HOUSE

A LOOSELY-DRAWN AGREEMENT. PLAINTIFF RECOVERS HER DEPOSIT. At the Magistrate's Comt yesterday, before Mr J. It. Bartholomew, S.M., Jean Shepherd claimed £SO from Margaret Holley, a deposit paid on the purchase of a house situated at 36 Hope street, The purchaser was to pay £7OO for the freehold of the property, and £SO for the furniture. The contract set out that £SO was to be paid as the deposit, £SO on the date of possession, and the balance to be arranged on mortgage at the current rate of interest, reducible; principal and interest to be not more than 35s per week, the purchaser to pay more if possible. It was alleged that the prospective purchaser was unaware that there were to he three mortgages, and that the contract itself did not support this view, Mr E. J. Anderson appeared for the plaintiff and Mr R. A. King for the defendant.

Mr Anderson said that the plaintiff was a young single woman, and had come out from Scotland under the Government immigration scheme. She was a domestic, and had only been out here 12 months. She had seen an advertisement in the papers offering the house for sale, and had got into touch with the agent, Mr J. W. Clarke. The advertisement stated that the place was a money-maker frmo a boarding house point of view. It was only of five rooms. The plaintiff had visited the house with a friend (Mrs Saunders). It was stated that the owner of the place, Mrs Holley, was ill, and was to undergo an operation, and that that was the reason for selling. Counsel alleged that the plaintiff was quite ignorant of business. She had told the agent she had only £BO, but the agent had taken her to his office and told her it would be all right, and had prevailed on her to sign the agreement for sale and purchase. Subsequently the plaintiff was told that she would have three mortgages on the property. She maintained that this was not in terms of the contract, and that she had never been told this position during the negotiations. The Plaintiff said that there were four i rooms and a bathroom in the house in Hope street. Mr Clarke said that the house was worth another £IOO, but that Mrs Holley would not hear about asking for another £IOO. Mrs Holley said she had made a lot of money since she had been in the house. Witness told Mr Clarke she had only £BO, and Mr Clarke suggested she should borrow enough to bring the amount to £IOO. but she said she could not do this. They said it was a pity for her to miss the chance —she would not get the opportunity again. Mr Clarke said that Mrs Holley wanted £l5O deposit. They want to Mr Clarke’s office after leaving the house, and witness signed the contract form and gave Mr Clarke an lOU for the £SO deposit. Nothing definite was told her that day about* the finance. She had not been told that there were to be three mortgages. She really did not know whiat a mortgage was. After seeing Mr Lousley, of Messrs Smith and Lousley, Mr Clarke took her to Mr Moore, but he also declined to finance the purchase. Mr Clarke then took her back to Mr Lousley, who said that she was strong and hmlthy, and he did not see why she would not do well in the house. She told Mr Lousley that she did not know where she was going to get £25 for titles, transfer, etc., and he said it would be all right. Witness than realised that she could not go on with the transaction, and saw Mr cTmike. Mr Clarke subsequently rang her up, and asked her to come to his office and pay the £SO. She understood that she was to pay two sums of £SO, and the balance at 35s per week, for principal (and interest. Cross-examined, Witness denied that she had told Mrs Hollev that she was satisfied with the house. She said, however, that she would buy the house and the furniture. She was to pay 35s per week as payment of principal and interest of th-’ £650 outstanding. Mr Clarke had never told her that she would have to get mortgages. Her friend (Mrs Saunders) nad been with her at the house and at Messrs Smith and Lousley’s office. After she had learnt the position she saw Mr Clarke, and told him that the place was in disrepair and the chimney was falling down. Mr Clarke said that the birds must have been eating the mortar, and that the chimney could easily be repaired. Catherine Saunders said that she had accompanied the plaintiff to the hoase when she was looking it over. It was a very old house. She was positive that Mr Clarke had never said that the plaintiff would have to take out three mortgages. Shortly after they came from the visit of inspection, and when in Mr Clarke’s office the plaintiff gave an lOC fur the £SO deposit. Mrs Holley told witness that she was not in good health and was undergoing an operation. Alya Holley was now living in a bigger house in the North End. Cross-examined, Witness said that she advised the plainliff not to buy the place from the beginning. Mr Clarke had suggested that witness should lend plaintiff the money to enable her to pay a deposit of £IOO, but the plaintiff would not agree to this. The plaintiff had decided not to go on with the transaction when she discovered about the mortgages. John William Clarke, licensed land agent, said he thought that the plaintiff was a young woman wanting to make money. It was a four-roomed house with an annexe in the bath room—there was a curtain in the bathroom, and a boarder in this part. Witness told the plaintiff that a certain amount of the money would be arranged on the first mortgage, but that lie could not say how much would be required for the other mortgages. He was then ignorant of the mortgage on the place. He did not know that Mrs Holley bought the place at £525 two years ago. The defendant might have purchased the place at a low figure. The plaintiff was purchasing the furniture, and there was a certain amount of goodwill. Mr Anderson: What, for . e boarder who slept in the bathroom?

Witness said that the boarders had been dismissed owing to defendant’s illhealth. He did not know if Mrs Holley had gone under an operation. Mrs Holley now had an eight or ten-roomed house in Hanover steret. Witness could not say whether she was keeping boarders. Three mortgages were not mentioned at the first interview. The first application for finance was to Messrs. Smith and Louslcy, and they then went to Mr F. Z. Moore, where the request for finance was also declined. He considered that the land alone was worth £7OO. Mrs Saunders had offered to lend the plaintiff the extra money required. Mr King said he also intended to call Mr Clarke. His Worship said that counsel could examine him right away—there was no need to recall the witness. To Mr King, the witness Clarke said that he had explained the mortgages to the plaintiff. That was before they went to Messrs Smith and Lousley’s office. The plaintiff had no complaint to make about the property at this stage. Mr King said that, the case for the defence was that Miss Shepherd carefully examined the property, and then decided to buy it. When she entered into the negotiations the mortgages were definitely explained to her. When Miss Shepherd had told Mrs Holley Jiat she was a single woman, Mrs Holley had asked her if she knew what she was doing. Miss Shepherd replied that she could manage all right. Margaret Holley said that Miss Shepherd and Mrs Saunders were both satisfied with the house. Miss Shepherd also decided to take the furniture, but Mrs Saunders thought she was going to pay too much for it. Witness had va.atcd the property on September 2D. She cleared over £IOO a year from the boarders in the house after paying everything.

Cross-examined: As soon as Mr Clarke had got the contract signed for the sale of Hope street, witness had purchased the Hanover street property. She had now three boarders. She was not able to go into hospitlil as she had a sick child to look after. She quite understood the house in Hope street was an old house. To his Worship; She had no dealings with Mr Clarke at all, beyond naming the price she wanted for the place. She told Mr Clarke he would have to see Mr Lousley about the mortgages. Maurice V. Lousley said he had told Mr Clarke that his firm thought the deposit of £IOO was too small, but that if he could not finance the business outside his firm would consider the matter again. He was very careful to see that bliss Shepherd clearly understood the terms of the finance. Witness suggested a first mortgage of £3OO, a second mortgage of £250, and a third mortgage of £IOO at per cent. The interest on the three mortgages would amount to £46 per annum. The term was for three years. It was explained to Miss Shepherd that the 35s per week would pay all charges. At that stage the plaintiff was quite satisfied. Cross-examined, the plaintiff had not told him not to go on with the terms of the finance. She had stated that she would pay the £SO, and would call in later to have the terms explained. Miss Shepherd was to take over a first mortgage of £3OO on the property. This mortgage had one year to run, but his firm would have arranged for the further term. After the luncheon adjournment counsel addressed the court. His Worship, in giving judgment, said that this was one of those cases which frequently arose where litigation was brought about by the result of a looselydrawn agreement—drawn up by a land agent. The land agent in this case was not in a position to draw up a proper agreement, as he had no information with regard to the position of the mortgages. The agreement was so indefinite in its terms that it was not capable of being enforced. Such an agreement had to contain definite particulars as to term and rate of interest of the mortgage. The position therefore was that there was no agreement, and the plaintiff was entitled to repudiate, which she had done. There wag evidence that Miss Shepherd in matters of this sort was a quite ignorant woman. The solicitor would not take it on himself, quite properly, to say that she understood the matter, as he had explained it to her. He could quite under, stand that a woman like Miss Shepherd would be m a state of confusion in her first visit to a solicitor’s office when different types of mortgage were being explained to her. He quite believed that she did not know the position when she had left the office. But that was by the way. He was not concerned with her reasons for repudiating the purchase. All he was concerned with was whether the position in law was such as to enable her to. repudiate. For the reasons he had given she was clearly entitled to repudiate, and she was entitled to recover the amount of her deposit. He would give judgment for the sum of £SO, court costs £2, and solicitor’s fee £4 3s.