Purchasers allege weathertightness issues and mistake, seek damages regarding a deck
In a case where the applicants discovered weathertightness issues in a home they purchased from the respondents, the court rejected the applicants’ grounds in their proposed appeal regarding oral misrepresentation, mistake, and damages claimed relating to a deck.
In Zhou v Watson, [2025] NZSC 89, the applicants commenced proceedings against the respondent in New Zealand’s High Court.
The applicants alleged an oral misrepresentation. Specifically, they claimed that the respondent answered in the negative when asked during the property inspection whether there were other leaks elsewhere in the property. The respondent denied making this representation.
Regarding the alleged misrepresentation, the High Court ruled that the applicants failed to prove on the balance of probabilities that the respondent made the statement allegedly amounting to misrepresentation. The High Court added that the supposed misrepresentation would not have made a difference.
The High Court then found a common mistake among the parties that the home was sound and not leaking. It also saw no reason to issue an award for the deck work.
The High Court deemed the respondent liable for breach of warranty relating to work on the property for a retaining wall, given that she had failed to obtain the necessary consent. The court rejected the other aspects of the applicants’ claim for contractual warranty breach.
The respondent appealed the High Court’s finding of a mistake under the Contract and Commercial Law Act 2017, or its quantum of damages of $271,600 plus interest.
The applicants cross‑appealed the High Court’s refusal to find an oral misrepresentation and its findings relating to the unsuccessful portions of their claim for contractual warranty breach.
New Zealand’s Court of Appeal dismissed the applicants’ cross‑appeal in connection with the oral misrepresentation and affirmed the High Court’s conclusion on the alleged misrepresentation. The appeal court found it hard to reconcile the applicants’ evidence with the contemporaneous documents.
The appeal court allowed the respondent’s appeal with respect to contractual mistake. The appeal court explained that:
The appeal court agreed with the High Court’s refusal to issue an award for deck work. However, the appeal court allowed and remitted the applicants’ cross‑appeal regarding the drainage work to determine the quantum of damages.
In the present case, the applicants requested leave to appeal. They alleged three appeal grounds concerning oral misrepresentation, mistake, and damages claimed for the deck.
The Supreme Court of New Zealand granted the application for an extension of time to apply for leave to appeal as it was not unmeritorious, dismissed the applications for leave to appeal and to adduce new evidence, and ordered the applicants to pay the respondent $2,500 in costs.
First, regarding the appeal court’s finding on alleged misrepresentation, the Supreme Court saw no appearance of a miscarriage of justice in the civil context, no question of general or public importance or commercial significance, and nothing in the evidence to justify revisiting the factual findings.
The Supreme Court noted that, while the applicants challenged these factual findings, the courts below made concurrent findings on the issue of whether the respondent had made the alleged misrepresentation and agreed that she did not.
Second, regarding the mistake claim, the Supreme Court did not find it likely that it would grant relief under s 28(1) of the Contract and Commercial Law Act, even if it had found a mistake on a different interpretation of the law.
Third, regarding the claim concerning the deck, the Supreme Court rejected the applicants’ argument that the appeal court should have awarded them damages.
The Supreme Court noted that the courts below made no definitive finding that a breach of the vendor warranty had occurred and instead found that the applicants failed to establish, on the balance of probabilities, that the deck work required a building consent.
