A Queenstown couple may be bankrupted over an apartment they’ll never own or live in.
Philip and Julie Tomkins have been ordered to pay an $861,665 penalty for backing out of their $1.23 million purchase of a Marina Baches unit on Frankton Road.
High Court Justice Lang awarded the money as compensation to the developer – the Tompkins get nothing in return. The former Christchurch couple in their 50s signed to buy the three-bedroom Apartment 403 off the plans in December 2007 – then cancelled in February 2009 alleging misrepresentation.
In July 2010 the developer, one of apartment king Ross Wensley’s companies, had the completed unit valued – at just $615,250 – and sold it for that price to a Wensley-associated firm. The Tomkins now owe Wensley’s firm $616,000 for the shortfall – plus interest.
“We’re determined to appeal,” Philip Tomkins tells Mountain Scene.
They have to appeal – the Tomkins’ say they don’t have $861,000 and will go broke if obliged to pay.
“It’s been hell for the last three years, an absolute nightmare,” Tomkins says.
He expects a hearing later this year and says their lawyer is confident.
Allegations of misrepresentation will feature heavily in the appeal, Tomkins says.
Justice Lang’s judgment last July dismissed other Tomkins allegations, yet found Wensley’s made two misrepresentations:
A pricelist said Apartment 403 would be 168 square metres – yet that included 40sq m for two carparks. Relating to this aspect, Justice Lang says: “Given Wensley was never intending the apartment to have that floor area, the statement amounted to a misrepresentation.”
A brochure also stated Queenstown’s council was “committed” to spending $700,000 on beautifying marina reserve land – that was “a misrepresentation of fact”.
However, the judge downplayed the significance of the misrepresentations:
“The losses the Tomkins’ suffered as a result of Wensley’s [firm’s] misleading or deceptive conduct are not sufficient to justify the court making an order declaring the [purchase] agreement void.”
In effect, Justice Lang ruled the Tomkins’ simply had the tough luck to buy in a plummeting market.
In January 2009, the month before they cancelled, the Tomkins’ commissioned a valuation which came in at $840,000 – 32 per cent less than the $1.23m they’d signed up for.
Justice Lang: “[This] meant the Tomkins’ were certain to face very real problems in completing the purchase.”
With the couple putting in $382,000, the drastic reduction “meant they would not be able to borrow sufficient funds”, the judge said.
When the Tomkins’ told Wensley’s of their predicament, the developers suggested getting another valuation – this subsequently came in lower again, at just $700,000.
Justice Lang: “I’m satisfied [the Tomkins’] decision to cancel the agreement was driven primarily by the fact an apartment for which they’d agreed to pay $1.23m in December 2007 was apparently worth just $700,000 a little over a year later.”
The Tomkins’ nevertheless hold out hope, citing another Marina Baches buyer who won against Wensley’s over misrepresentation in 2010 and was awarded $260,000.
Conversely, in an unrelated matter, the Appeal Court has recently ordered an Auckland couple to pay $2.8m for the shortfall on the sale price caused by backing out of a $6m purchase in 2006.