A New Zealand man has been ordered to pay over $1.1 million in damages and legal fees after backing out of a property purchase agreement.

In November 2021, Paljeet Singh successfully bid for Robert and Margaret Smallridge’s family home at auction for $1.925 million. The property, located in the Auckland suburb of Avondale, was set for settlement a year later.

However, six weeks before the agreed settlement date, Singh withdrew from the purchase. He claimed the sellers breached a critical term of the contract by not granting him reasonable access to the home, which he needed to market and resell the property.

Following Singh’s withdrawal, property values in the area declined sharply. The four-bedroom house eventually sold for $1.13 million, a significant drop of nearly $800,000 from the original sale price 18 months earlier.

By then, property values had plummeted and the four-bedroom house later sold at $1.13million – almost $800,000 less than what it initially sold for 18 months prior.

The Smallridges launched a claim for damages for wrongful cancellation, prompting a counterclaim from Singh for the return of his $96,250 deposit, according to High Court documents.

The couple denied breaching the sales agreement and told the court last year that Singh had only once requested access, which they immediately co-operated with.

Their claim was refuted by a real estate agent engaged by Singh to on-sell the property, telling the court that he attended in March 2022 to ask if a potential purchaser could visit.

Robert and Margaret Smallridge’s home sold for $1,925,000 at an auction in November 2021

The Avondale home later sold for almost $800,000 less after initial buyer Paljeet Singh pulled out six weeks out from settlement

Agent Kapil Rana from Barfoot & Thompson claimed that he was told by Ms Smallridge that a visit could not happen until settlement – an allegation she denied.

Singh told the court that around the same time, a potential buyer offered $2.1m for the property but then backed out due to not being able to access or view it.

The court heard that Singh met the couple at the property in October 2022 to inform them he wanted to back out of the deal, and at that time said it was because he could not obtain financing. 

Singh rejected that claim and told the court the purpose of the visit was to express concerns regarding access.

Several weeks later, Singh declined to finalise the purchase on the settlement date and demanded the return of his deposit.

The court heard the Smallridges initially offered to settle at a much lower claim to avoid further stress and delays.

They launched legal action when Singh did not respond.

Justice Tracy Walker ‘had no difficulty’ in ruling that the Smallridges did not breach any agreement terms or deny access to their property.

Paljeet Singh must pay back at least $1.1million in damages and legal costs over the sale of the home (pictured)

A High Court judge sided with Robert and Margaret Smallridge over the sale of the Avondale property

‘They were straightforward witnesses who made appropriate concessions when they were called for and whose evidence was clearly their own given the slight, immaterial differences in detail between their accounts,’ Justice Walker wrote in her findings.

‘I also found their evidence more consistent with the overall chronology of events.

‘There is no evidence that Singh could settle the purchase without on-selling the Property. 

‘It was much more likely that settlement depended on that occurring despite his evidence that he intended to settle had there been no alleged breach and could do so through financing.

‘I am satisfied that Singh’s inability to on-sell was a product of a falling market and his own unreasonable price expectations and that the ‘access’ issue was no more than an attempt to find some reason to back out of the agreement to avoid settling.’

Singh was ordered to pay $753,803.25 in out-of-pocket costs to the couple.

He must also fork out an additional $99,604.48 at 14 per cent interest for the 17-month period between the original sale agreement and the date the property sold.

Singh must also pay contractual interest on the net loss of the resale at $268.01 per day from April 15, 2023, until it is paid. 

The figure currently stands at $270,958.