Strack v Grey [2019] NZCA 432 vs. Madhava Corp Ltd v Austin [2024] NZHC 975
Whether you’re a first home buyer, an investor, or upsizing for your growing family, you’ve found the perfect place—and your offer’s been accepted. But after signing the agreement, something doesn’t sit right. Maybe your finance hasn’t come through, the building report flags concerns, or you’re simply having second thoughts.
Pulling out of a property deal is a big decision—and it’s not as easy as just changing your mind. One of the biggest misconceptions is that you can walk away by saying a condition hasn’t been met, no matter the reason. In reality, you must approach the situation carefully and act in good faith.
When Is It Not Okay to Cancel?
In Strack v Grey, Mr Grey cancelled his agreement, claiming the building report was unsatisfactory—even though his builder found no issues and no report was ever supplied. Instead, Mr Grey relied on his own online research. He later argued he would not have secured finance due to potential building problems, but he hadn’t even spoken to a bank or broker.
The Court found that Mr Grey never genuinely intended to complete the purchase and ordered him to pay $150,000 in damages (the difference between his offer and the eventual sale price).
You can’t just rely on personal opinions or “what-ifs” to cancel. A valid, professional basis is required.
When Is It Okay to Cancel?
In Madhava Corp Ltd v Austin, Mr Austin received a building report that raised genuine concerns. He asked the seller to fix the issues. The seller refused but offered a price reduction. Mr Austin declined and cancelled the agreement. The High Court sided with him, noting he had acted reasonably and in good faith.
Key points from the case included:
- Even seemingly minor issues in a building report may justify cancellation if the buyer has genuine concerns.
- Buyers are entitled to take a cautious approach.
- A buyer can request repairs instead of accepting a reduction—and doesn’t have to accept the seller’s alternative offer.
Because Mr Austin had followed the process properly and relied on a professional report, his cancellation was upheld and the appeal was dismissed.
How to Protect Yourself from the Start
Buying a home is exciting—but it’s also one of the most important legal agreements you’ll ever sign. That’s why getting legal advice before signing a sale and purchase agreement is strongly recommended.
A lawyer can help you:
- Understand your obligations
- Spot potential risks
- Make sure the terms reflect your intentions
- Negotiate changes if needed
Getting advice early can help you avoid costly misunderstandings and move forward with confidence.
Want to know more? Contact [email protected] or call (07) 929 4300 to book a time to discuss how we can support you through the process.
References
Strack v Grey [2019] NZCA 432.
Madhava Corp Ltd v Austin [2024] NZHC 97
