#17082 - Sale Of Land With Trespass - Property Law

Sale of Land with Trespass

• Situation in Question - trespass occurs at in-between stage

• With Standard Contract or contract with a cl 5-like clause - risk lies with the vendor until possession is given and taken

• Without cl 5 - default rules mean risk lies with the purchaser

• Issue - how does this work in practice?

• Cousins v Wilson

• Facts

• V and P had used earlier version of standard contract - stated that if property was not untenable, purchaser must purchase at the price minus ‘diminution in value of property’ (only concerned with market value, not concern with cost of reinstating)

• During the in-between stage, neighbour cut down and removed trees

• This was not discovered until after settlement occurred and purchaser took possession

• Purchasers attempted to sue trespasser for damages, vendors eventually added as plaintiffs

• Both lost in district court so appealed to high court

• Issue - could any party sue for damage?

• Judgment (purchasers suing trespasser)

• Purchasers were not in possession at the time of the trespass

• There was no reversionary interest in the property

• There wasn’t a ‘continuing trespass’ because nothing has been brough onto the land and left there

• Even if previous issues were satisfied, could not point to any damage to the property as is had not reduced in value

• Therefore, purchaser could not sue

• Judgment (vendors suing trespasser)

• Vendors did have possession so entitled to sue

• But could not point to any damage

• Therefore, only entitled so very small nominal and exemplary damages

• Judgment (purchasers suing vendor)

• Purchaser could not sue vendor to pay a reduced price as there was no damage to property (covered in the contract)

• Potential Expansion of this Law

• New Cl 5 in Standard Contract

• Measures diminution in value as the cost of putting property back the way it was

• If this was used in Cousin the vendor could have sued the trespasser and the purchaser could have bought the property at a reduced price

• Lockwood Buildings v Trust Bank Canterbury

• Took an expansive view of trespass to the reversionary interest - allowed the bank (mortgagee) to sue for damage to the reversion

• Raises the question - if mortgagee can sue, then why not the purchaser? (as the situation is analogous)

• English Authority (could suggest default rules have expanded)

• English cases Scutt v Lomax and Bryant v Macklin

• State that where trespass has caused damage to the claimant's land, the claimant may be entitled to the diminution in the value of the land or the reasonable cost of reasonable reinstatement (in some cases a...