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Caveat sustained after purported cancellation for real estate agent’s involvement in purchase

24 Mar 2023

| Author: Heidi Bendikson

Marsh v Goldline Properties Limited [2023] NZHC 281.

Land Transfer Act 2017 – Application that caveats not lapse – applicable principles – interpretation of s134(4) Real Estate Agents Act 2008 – whether contracts “made” or “brought about” in contravention of s 134 Real Estate Agents Act 2008 – application granted

Maree Dawn Marsh purchased four vacant sections from Goldine Properties Limited through real estate agent Ian Croft.

Some weeks after signing the agreements to purchase the sections, but while contracts were still conditional, Marsh found she was unable to arrange sufficient finance. She entered a joint venture arrangement with real estate agent Croft for the proposed development.

Marsh claimed that when she signed the contracts she did not plan on involving Croft in the development except as an agent to on-sell and his involvement came about only because of her problems obtaining finance.

Following Marsh’s entry into the JV arrangement with Croft, she and Goldline agreed on certain variations to the contracts.

Goldine’s solicitor later purported to cancel the agreements pursuant to  s 134(4) of the Real Estate Agents Act 2008 (the Act) by reason that Croft as real estate agent for the sale had a beneficial interest in the purchase when it was ‘made’ or ‘brought about’.

Marsh caveated the titles in December 2022 and Goldline applied to lapse the caveats.

Marsh submitted the focus of s 134(4) of the Act was on the agent’s actions leading up to and when the contract was entered into. As Marsh says she had not entered the JV with Croft until some weeks after the contracts were signed, Goldline had no right to cancel.

Goldline disputed Marsh’s assertion that she had no intention of involving Croft at the time the contracts were signed, but accepted it was a matter of fact and could not be determined by the current application.

Goldine submitted that although the contract was arguably compliant when signed, the contract was “made” by virtue of the later joint venture agreement.

Goldline further submitted the contracts were “brought about” by agency work carried out in contravention of s 134(2) when the contracts were varied (allowing cancellation under s134(4)(b)).

Applicable principles –  whether enough evidence to extend caveats – reference to Act not being a substitute for agents’ fiduciary obligations – noted alternative remedies available – timing of agent’s interest arising a question of fact – whether contracts “made” in contravention of Act – High Court applied narrow interpretation of s 134(4) – s 134(4) relates to contract, not transaction – whether contract “brought about” by variations, pursuant to s 134(4)(b) – 134(4)(b) cannot apply where s 134(2) not breached when contract “made”.

Held: Application to sustain caveats granted.

Marsh v Goldline Properties Limited

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