The delays were caused by external factors beyond the defendant’s control: court
The High Court dismissed claims by one property development company against another regarding delays and payments for subdivision projects in Flat Bush, Auckland, concluding that delays were caused by external factors beyond the defendant’s control.
The case involved a dispute between Murphys Park Development LP (MPD) and Green City Developments Ltd (GCD). The companies had entered into agreements for land sales and infrastructure work, which later led to claims and counterclaims totalling millions of dollars.
The case centred on MPD’s obligation to use "all reasonable commercial endeavours" to complete enabling works, including roads and services, to a piece of land referred to as the Boundary Adjustment Land (BAL). These works were essential for GCD to obtain a separate title and complete an on-sale of the BAL to a third party, Yuhai Zhou. The on-sale was delayed for several years, leading GCD to seek damages of $2.1m, claiming MPD had breached its contractual obligations.
The High Court dismissed GCD's claims, finding no breach of the obligation to use reasonable commercial endeavours. The court concluded that much of the delay in completing the enabling works, which were finished in August 2021, stemmed from factors outside MPD’s control. These included regulatory complexities, unforeseen issues with contaminated landfill remediation, and delays caused by Transpower’s underground cabling work.
GCD also alleged MPD failed to keep it informed about the delays. While the court noted that MPD’s written updates were sparse, it found GCD failed to demonstrate that earlier communication would have prevented the delays or changed the outcome.
The court rejected GCD’s damages claims, including assertions of lost interest payments due to delayed settlement with Zhou. The court ruled that the losses claimed were not sufficiently linked to MPD’s actions and emphasized that GCD bore the burden of specifying alternative steps MPD could have taken to avoid the delays.
Ultimately, the court upheld MPD’s claims for unpaid amounts related to additional earthworks and construction costs, including $550,930.03 plus interest. It also ordered the release of $1.5m held in trust to MPD.
