MATAKANA ISLAND.

Stratford Evening Post, Volume XXXIII, Issue 25, 27 May 1912, Page 2

MATAKANA ISLAND.

CLAIM FOR SPECIFIC PERFORMANCE. ROJ3ISON V. SANSON. Following is the judgment of the Hon. Mr Justice Sim in the ease Robison v. Sanson, heard in the Supreme Court, New Plymouth and Wellington, on March 9th, 11th and 12th, and May 3rd. This is an action for the specific performance of a contract, made October 9th, 1911, for the sale by way of exchange of certain freehold properties. The property to be sold by plaintiff consisted of part of Matakana Island, Bay of Plenty, containing 8418 acres. The price to lie paid was £3 10s per acre, and the property was to be transferred to defendant subject to a mortgage for about £5130, payable November Ist, 1917. The properties to lie sold by defendant consisted of certain land in the town of Stratford, the price for which was fixed at £2500, and a farm near Stratford containing 1589 acres, which was to be taken over at £l2 per acre, subject to a mortgage for £9500. The sum of £12,205, which was payable by the defendant by way of equality of exchange, was to 1 e sccur el by a second mortgage over Matakatia Island. Plaintiff was ready and willing to carry out the agreement, but defendant refused to carry it out, and on November 2nd his solicitor, Mi Spence, formally repudiated it on his behalf.

The grounds on which, in the end, defendant resisted the claim for specific performance were these : (a) The non disclosure by plaintiff of the existence in the mortgage over Matakana Island of an onerous covenant, and the fact thai this covenant :l;ad not been performed by the plaintiff at the date of the contract. (b) The contract to sell to defendant was at such an unconscionable price, and was made i?i such circumstances of surprise and unfair dealing that the, Court ought to refuse to specifically enforce the contract. (c) The contract involved at the time it was made such hardship on the defendant that a Court of equity ought not to enforce it.

The statement of defence alleged that plaintiff had induced defendant to enter into the contract by making certain false representations,and some evidence was given at the hearing in New Plymouth in support of this defence. * iAt the argument in Wellington. Mr Skerrett said lie did not rely on any of these alleged representations save two, namely, that as to the tests of the soil said to have been made by Bayly, the former owner, and that as to the swamps on the property being dramable. I propose to deal with these defences in the above-stated order. The mortgage from Plaintiff to Bayly, the former owner of Matakana Island, contained a covenant by tlie mortgag.or that he would in each and every year whilst any money should remain 1 owing by virtue of the security, lay ;dov.n: in good and. permanent pasture an area of not less, on the average, than 400 acres. This covenant imposed on the : mortgagor the obligation of having at' least 400 acres laid 'down in permanent pasture at the. end of thj=t ftfstj year from the date of the mortgage, viz., November Ist, 1910, and a similar area at the end of every succeeding year. Plaintiff, when he sold to defendant, had not done anything in the way of carrying out this covenant. He had, he said, a verbal agreement with Bayly that tire latter would not enforce' the; 1 coventmt.: On November ,'h-d,-1911, he. obtained from Bayly a letter, in which, .the latter agreed to waive the covenant for the year from November 191 t) to November 1911. On November 24th, 1911, Bayly executed a deed by which lie released the covenant, and waived the fulfilment by the mortgagor of the obligation thereunder. Plaintiff swore that lie told defendant of the existence of the covenant. This was denied by defendant, who contended that the covenant amounted to a restriction upon the user of the property, and constituted such a defect in the title as to justify the rescission of the contract. Assuming in favour of the defendant that the existence of the covenant was not disclosed to him, it seems to me that its existence did not constitute such an objection to the title as justified rescission, according to the principles laid down in Pearce v. Stevens, 24 N.Z.L.R. .Sj7, and the English eases upon which the decision in that ease is based. Under section 70, subsection 2, of the Property Law Act, 1908, plaintiff was entitled to pay off Bayly's mortgage at any time, although the time for redemption had not arrived, and this section affords an answer to any objection to title based on the existence of such a mortgage: Crump v. Reynell, 29 N.Z.L.R. 360. If, therefore, plaintiff could not have obtained, before the date for completion, a release from Bayly such as he did obtain, he could have paid Bayly's mortgage off, and tpken a transfer of it to a nominee under section 71, Property Law Act, 1908, so as to keep it alive until defendant himself desired to pay it off. 1 cannot set any reason for accepting Mr Skerrett's argument that section 71 does not ap ply to a case of redemption under subsection 2of section 70. A mortgage)! who redeems under that subsection is. I think, a mortgagor who is entitled to redeem within the meaning of section 71. If h< v takes a transfer to a trustee for himself, and then transfers the mortgaged property to a purchaser subject to the mortgage then as between the purchaser, on tin 1 one hand, and the mortgagor and his trustee, on the other, the principle and interest would be payable in terms of the mortgage, and the purchaser could be released from the performance of any onerous covenant in the mortgage. ' Plaintiff was in a position, therefore, to make a good title to the land by acts the performing o!' which rested with himself alone. If he was able to do that defendant war; not entitled to respond: Williams on V. and P. (2nd ed.), p. lot. _ On this view of the matter it is unnecessary to determine whether, in fact, defendant was told of the existence of the covenant during the negotiations before the contract was made. ft is unnecessary, also, to consider Mr Bell's argument that if defendant was not told of the existence of the covenant during the negotiations he must be taken to have waived any objection on this grotrh'd by his conduct subsequent to October 23rd. the date on which, according to his own evidence, he was told of the existence of the covenant by Mr Foolers' clerk.

T proceed now to deal with the second ground of defence, viz., thai the contract to soil to defendant was at an unconscionable price, and was made in circumstances of surprise and unfair dealing. Matakana Island was bought bv Bayly on September 30th, 190!). for £2735, at the rate of Gs 6d per aero. After spending from £.'300 to £IOO

on the land Bayly .sold it, on November Ist, 1910, to plaintiff for £5261 os, or at the rate oi 12s 'id per acre. Of this tiic sum of £5128 10s remained on mortgage. Plaintiff spent, he said, about £7OO in making improvements on the land. On October 9t'h, 1911, he agreed to sell it to defendant lor £29,463, or at the rate of £3 10s per acre. jn view of the link- that luut been done on the island in the way of cultivation tin l price agreed to lie paid by defendant certainly was very high, ami the bargain was a foolish one for defendant to make in his then circumstances. His onlv chance

~of making enough out of rise Hand to pay even the interest for which he made himself responsible, was by getting a large part of the island laid down in grass as soon as possible. Defendant himself had not the requisite capital, and had no certainty of being able to raise it. One of the terms of the agreement between the parties was that defendant should be at liberty .at any time before October Ist, 1913, to raise £IO,OOO by a first mortgage of the island. 'Of this sum £5130 was to be applied in paying off Bayly's mortgage, and the balance of £4870 was to bo expended cither in effecting permanent improvements to the land or in the purchase of stock or other chattels for use in connection with defendant's farming operations on the land. If defendant could have raised £IO,OOO in this way he might have been aide to possibly make a.success of his venture, but if he was unable to borrow this sum then the purchase meant ruin for him. The chance of his being able to borrow anything like' £IO,OOO on the security of the island was remote indeed, for what capitalist would be likely to lend ,so large a sum on a property that had been bought for £5201 less than a year before,''and which had only been slightly improved in the meantime? The purchase, therefore, was one which, almost certainly, meant ruin for defendant. lint although this is so it is not clear that if defendant bad himself possessed the necessary capital he. might not have made a success of the venture. Defendant called a number of expert wit" nesses to prove that, in their opinion, the land was so poor that it would not pay for farming, and was not worth, at the outside, more than 10s pei' acre. These opinions were*based entirely on the view that the bulk of tiie island was not capable of being improved, and would not hold grass. It is not clear, however, that this view is well founded. The results of the cultivation done by Bayly, and afterwards by plaintiff, certainly suggests that the experts had not done justice to the possibilities of the island. Bayly laid down about 300 acres in grass. He thought at first that this was a failure, but when he went over the land just before the sale to defendant he was surprised, he said, at the improvement in the grass. Ho considered the grass took well, better than lie expected. Defendant saw this grass when inspecting the island before the purchase. ' and it looked, he said, very well, and was nice and fresh. On cross-exam-ination he said he was very pleased with the grass. Plaintiff after he bought the island put 160 acres into oats. Part at any rate or this prop was fairly successful. The fact that Bayly took from plaintiff a covenant to lay down not less than 400 acres every year in good and permanent pasture makes it reasonable to suppose that they both thought the land capable of being cultivated and laid down in permanent pasture. If there was a possibility of doing that, then the price agreed to be paid by defendant was not so unreasonably high as —to use the words of Lord Eldon in Coles v. Trecothick, 9 Yes. 246—t0 shock the conscience, and to amount in_ itself to conclusive and decisive evidence of fraud in the, transaction. Was there, then, anything in the nature of surprise or unfair dealing in the transaction? I have not been able to find in the circumstances any evidence of either surprise or unfair dealing. Defendant is a man of 56 years of age, and lias been engaged in farming for the last 20 or 21 years. He had placed his Stratford farm in the hands of Hodge, a commission agent in Stratford, for sale or exchange. About the end of September last Hodge brought ,to him particulars of Matakana island ami asked defendant if .he would go up and inspect the property. Defendant said he would try and get up. The particulars given to defendant were those contained in a letter from Kemp and Sawde to Hodge of September 24th, 1911 (Exhibit No. 7). Defendant knew, therefore, that the price asked by plaintiff was £3 10s per acre. On October 2nd, P. Kemp and Hodge called to see defendant in Stratford, and they arranged to leave that evening to visit the island. During the course of the journey to Tauranga defendant was told by Kemp that the island had been bought by plaintiff at 12s Od per acre. Defendant spent the best part of two days—viz., October 4th and sth—in inspecting tlie island. On the afternoon of October sth defendant had a conversation with Hodge about the purchase of the island. Hodge was called as a witness for the defence. He gave his evidence very fairly, and i accept his account of this conversation as being substantially correct. "On the afternoon of the second day after lunch," he said," "1 strolled down to the clover field, ami Sanson followed me, and we had a discussion there. He said : 'Well, wdiat do you think of this property?' 1 said: 'Well, Mr Sanson, I am not a practical man, and this property is a huge concern, and needs careful consideration. You are a practical man, ami should know wdiat you are doing.' J said: 'What do you think about it?' He said: 'lt is a property that ! have been looking for for thirty years.' J said: 'Are you perfectly satisfied with fids property at the £3 Ids and yours at the price already quoted?' He said: 'Yes, 1 am more than satisfied.' I said: 'Well, there's no road to this property,' and 1 suggested something- alone the launch. Do said: 'Oil, it's no good your going to the old man about that. 3 1 said: 'You leave that to me.' 1 did not try to get reduction in price of £3 10s because bauson would not hear about it. 1 couldn't held Sanron

back from buying the property. .Re was very anxious to got the thing sottied up. Ho was afraid Robison would not deal." Sanson's account of this is 'somewhat different, but he admitted that he did say, "This is what 1 have been looking for for 30 years." During the conr::e of the afternoon a written offer of exchange was ore parse! bv F. Kcoip and signed by defendant (Exhibit 15). This offer was 'not accepted then by the plaintiff, for the reason thai before doing so he desired to inspect the defendant's properties. Defendant returned to Tauranga the same afternoon and spent the following dav in or about Tauranga. While in Tauranga, defendant, according to Hodge, asked him to try to get olaintiff to sign there and get the whole thing finished. Hodge spoke to Kemp about it, and Hodge says thai plaintiff insisted on delav, : o that :io might inspect the Stratford properties." Defendant returned to Stratford on Oet-

I oher Dth. and afjov plaintiff had in j spected defendant's properties tho bar gain was concluded and the formal ag roement prepared and signed the sarin J day. The conclusion 1 draw iron J the evidence is thai defendant wu; very pleased with tne island after I Iris inspection of it, and was anxious Ico secure it. Ho did not desire to oh tain any independent advice or own ion about it, but was quit..' satisfied t( act on his observation and judgment If ho had desired to obtain an independent opinion as to valud lie co,uk; have obtained it after his first interview with Hodge iii, September, and before he arranged on October 2nd to visit the island, or be could easily ihave obtained such an opinion in Tauranga after the visit of inspection. Pie spent the night of October sth in Tanranga, and was in or about Tauranga tho whole of the next day until the steamer left for Auckland. The Suggestion that lie was shepherded so ;;,- to prevent him obtaining any independent advice or opinion is not supported in the least by the evidence, and is really too absurd to require serious consideration. The truth is that defendant had taken such a fancy to the islam!, and was so eager to secure it that he would not allow any haggling about the price, and lie did I not give proper consideration to the question of how he was to obtain the money required for improving it. The worst that, can be said/against plaintiff is that lie did not do anything to discourage defendant's eagerness, but that cannot bo regarded tis unfair dealing. The result of defendant's eagerness was that he made what, for him, was an exceedingly foolish bargain. When he. realised what lie had done he visited the island again with his son on October 25th. He met plaintiff afterwards in Tauranjjto. ilini told hi 1 ;,!, he says, that from what he in ad soon he comes to the conclusion that lie had been taken down badly. But at this time lie knew little, if anything, mora about the island than when :he made the agreement on October 9th. Plaintiff says that defendant t&ld him he couldn't take the place on; his wife didn't like the place and was very upset, and his son wouldn't go there to live. Tho misrepresentation relied on by defendant was in connection with the tests of tho soil made by Bayly, and with the draining of the swamps. A description of these tests was given by Bayly in his evidence. Ho told plaintiff, when inspecting the island in 1910, what he had done in that way, and it is probable, T think, that plain-

tie: repeated to defendant what Bayly had told. him. Plaintiff admits that ihe told defendant that in his. opinion the Swamps could be drained. That ap-

pears to have been bis honest opinion on the subject, but such an expressed opinion, although 'wrong, cannot be relied upon as a misrepresentation. I think that defendant, in deciding to purchase the island., was not influen-

ced by anything said to him fry plaintiff oi- anyone else. He decided to buy on his own observation and judgment. When he decided afterwards to repudiate the contract lie endeavoured to find as many grounds as possible for justifying his action. He accordingly set up in his statement of defence several misrepresentations al* leged to' have been made by plaintiff in connection with the property, but all these, except the two already mentioned, were abandoned by counsel. In these circumstances the onus lies on defendant of making it very clear that the property was misrepresented to him, and that lie was induced to purchase the property. This defendant has failed to do.

The last ground relied on by defendant is that the specific performance of the contract will inflict hardship on him. That hardship will arise from the fact that defendant has agreed to pay what is claimed to be an excessive price for the property. The Court may refuse specific performance of a contract on the ground of hardship or unfairness, but it is thought to bo settled at the present day that where the only evidence offered of hardship or unfairness is the inadequacy of the consideration, the Court will not withhold the remedy in question: Fry on specific performance (sth ed.), p. 223, S 414, 446; Williams on V. and i>. (2nd ed.), p. .849, 110!, Accepting this as a correct statement of the law, I must hold that tlie Court ir not entitled on this ground to refuse relief to plaintiff. It is very unfortunate for defendant that he nas burdened himself with such a disastrous contract. If, however, specific performance were refused on tho ground of hardship, defendant would st'll be liable for damages for the I) each of the contract, 'and th ■•:e damages would be very large if the lend is to lie taken to lie worth, as ■ iefemlant's experts say, not more than 10s per acre. I must make a decree, therefore, for specific performanee of the contract. Judgment aceoMrpgly with costs on the highest scale as on a

claim fo- i.50u0, with dis'uirsemonts and witness's expenses to be lived by the Registrar. I allow £ls 15s per day for'three extra days of the trial, and i certify for second counsel for four days. Mr H. I). Bell, K.C., with him Mr

J. B. Roy, appeared for plaintiff, and TAr C. P. Si-errett. K.C., with him Mr. R. Spence for defendants. Solicitors for Hie plain'iff wwc Messrs Roy and Nicholson, New Plymouth and for defendant Messrs Spence and Stanford, Stratford.