The appeal involved misrepresentation and common mistake claims
The Supreme Court dismissed an appeal involving misrepresentation and common mistake claims under the Contract and Commercial Law Act, stemming from a dispute over a commercial property's seismic rating.
The court denied Tadd Management Ltd’s application for leave to appeal a decision by the court of appeal concerning a dispute over the seismic rating of a commercial property in Lower Hutt. Tadd purchased the property at auction from the Ruth Weine Family Trust, relying on an Initial Seismic Assessment (ISA) conducted by New Zealand Consulting Engineers Ltd (NZCE). The ISA, provided before the auction, rated the building at 60 percent of the New Building Standard (NBS). However, two Detailed Seismic Assessments (DSAs) revealed much lower ratings of 10% and 30% NBS after the purchase. These findings led to a valuation considering the property as bare land.
Tadd argued the trustees misrepresented the property’s seismic strength and that both parties mistakenly believed the building had a 60% NBS rating when entering the sale contract. The trustees contended that the ISA reflected a reasonable expert opinion with appropriate caveats, and thus, there was no misrepresentation or mistake affecting the contract’s essential nature.
The high court found in Tadd's favour on both misrepresentation and common mistake. It ruled that the mutual mistake about the 60 percent NBS rating significantly influenced the parties’ decision to enter the contract. Tadd was awarded $592,000 in damages, plus costs for an additional seismic assessment and interest.
The court of appeal reversed the decision, holding that the ISA represented an opinion rather than a factual guarantee. It emphasised that the ISA contained clear warnings about its preliminary nature and limitations, which were disclosed to Tadd. Consequently, the court found no actionable misrepresentation or mutual mistake.
Tadd sought leave to appeal solely on the issue of common mistake, arguing that the court of appeal's decision set an undesirable precedent and improperly narrowed the doctrine's scope. Tadd claimed the true mistake was a shared belief that the building was not earthquake-prone, which led to a disproportionate exchange of value.
The trustees countered that no new legal issues were raised, and the case did not warrant further review. They asserted that the ISA was an opinion-based assessment and the claim was reframed inappropriately for the Supreme Court.
The Supreme Court dismissed the application, concluding that the case did not raise matters of general or public importance or demonstrate a substantial miscarriage of justice. The court emphasised the ISA’s disclaimers and the absence of legal grounds to revisit the court of appeal’s findings.
