Decided 22 March 1988 | End date March 22, 1988 | |
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Full case name C R Field (appellants) v D A Fitton (First Respondents) & B Paulin (Second Respondent) Ruling court Court of Appeal of New Zealand | ||
Field v Fitton [1988] 1 NZLR 482 is a cited New Zealand case regarding privity of contract.
Contents
Background
The Fields were trustees of an estate that had a property for sale. In 1987, they entered into a sale agreement with Brent Paulin, with the buyer being referred to in the sales agreement "Brent Paulin or nominee". It was done this way, as Mr Paulin thought he could onsell this property to a 3rd party for a profit before the settlement date.
Within 2 days, Fitton came along, who purchased Paulin's right to purchase for $15,000.
However, when Fitton's solicitor informed the trustees that he was now the nominee for the purchase, they refused to deal with them directly, as they were worried that by dealing with a nominee, rather than Paulin, they might be liable for 2 separate amounts of stamp duty.
The trustee's continued to deal with Paulin directly, however as Paulin had sold his interest, he ignored their requests to continue with the sale process, resulting in no settlement on settlement day. As a result, the vendors cancelled the sale.
Mr Fitton, not happy with this development, sued the trustees, challenging the cancellation, claiming that under sections 4 and 8 of the Contracts (Privity) Act, he had all the legal rights to the sales agreement that Paulin had.
Held
Section 4 required a nominee to be "designated by name, description or reference to a class", and here this requirement was not met, as "or nominee" was not specific enough, as all that base nominated was a "bare nominee".
Bisson J stated "It is difficult to treat a bare nominee not designated by name, as a person identified by description or as being within a designated class of persons. The nominee could be anyone at all. In the context of s 4 designated means specified or identified so that if the nominee is not named, the word nominee in the contract should be qualified by the addition of a descriptive phase or the addition of the particular class within which the nominee falls so as to specify or identify the nominee in the manner required by s 4"
This meant that the Contracts (Privity) Act did not apply here.
But the argument was mute, as due to the fact that neither Paulin or Fitton settled the sale on the date of settlement, the trustees were able to cancel the sale contract anyway.
Footnote: The Fitton's not happy with the outcome of the court case, erected billboards and a sign on their ute that had derogatory comments about the Field, which unfortunately for the Fitton's, were both practicing solicitors, and in 1989 applied to the High Court orders to have these signs taken down.