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New Zealand Trustee Services Limited v A J McPherson & Associates Limited [2008] NZCA 113 (5 May 2008)

Last Updated: 17 May 2008


IN THE COURT OF APPEAL OF NEW ZEALAND

CA341/07 [2008] NZCA 113

BETWEEN NEW ZEALAND TRUSTEE SERVICES LIMITED
Appellant


AND A J MCPHERSON & ASSOCIATES LIMITED
Respondent


Hearing: 23 April 2008


Court: Baragwanath, Randerson and Priestley JJ


Counsel: G D Jones and A L Shakespeare for Appellant
T W Evatt for Respondent


Judgment: 5 May 2008 at 11 am


JUDGMENT OF THE COURT

A The appeal is dismissed.

  1. The respondent is entitled to costs against the appellant of $4,000.00 and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Randerson J)


[1] This is an appeal against a judgment of Associate Judge Christiansen delivered on 19 June 2007 in which he granted summary judgment against the appellant in favour of the respondent in the sum of $76,885.29 plus costs: HC CHCH CIV-2006-409-2715.
[2] The appellant is the trustee of the Montgomery Trust which owned and developed a residential property in Papanui Road, Christchurch. The respondent is a real estate firm which claimed commission on the sale of the property under an exclusive agency agreement dated 2 June 2005.
[3] The sole issue raised on appeal is whether the Associate Judge was right to conclude that there was no fairly arguable defence available to the appellant. It was alleged by the appellant that there was an oral collateral term of the agency agreement. The term alleged was that commission would not be payable if the property were sold to a party with whom the appellant claimed to have been in discussion before the agency agreement was signed.
[4] In the absence of any such oral term, it is common ground that the commission would be payable in terms of the agency agreement. The amount awarded includes interest and is not in dispute.

The background facts

[5] The principal witness for the appellant was a Mr A J O’Neil, the property manager for the Montgomery Trust. He deposed that in early 2005, the Trust was engaged in building seven residential apartments on the subject property. Mr O’Neill owned and managed the company responsible for building the apartments.
[6] According to his evidence, there were discussions between February and May 2005 with representatives of a company named K T Acquisitions Limited which owned a property opposite the subject land on the other side of the road. It is not in dispute that K T Acquisitions Limited or its nominee ultimately agreed to purchase the subject land for $2.73 million. The respondent’s claim for commission derives from this sale.
[7] The appellant and respondent signed the agency agreement on 2 June 2005. The respondent was appointed as an exclusive agent for the sale of the property for a period of 35 days commencing on 2 June 2005. Clause 2 of the agency agreement provided:

Ray White [the Respondent] will be entitled to be paid fees and commission as set out below if the Property or any part of it is sold or exchanged in the event of:

- our entering into a binding contract to sell the property; or
- an exchange of the property being effected; or
- a sale is made privately by us or any other real estate agency;

either

- during the period of this agency, whether or not the purchaser has been introduced to the property prior to this agency; or
- to a purchaser introduced to the property during the period of this agency even if that purchaser does not enter into a binding contract until this agency has ended.
[8] The fee payable on any sale was amended in handwriting to $10,000 plus GST for each unit. It was agreed that the respondent would not be entitled to recover the costs of a marketing programme although another clause of the agreement provided that the agent could recover the cost of marketing if the property were withdrawn during the period of the exclusive agency.
[9] After the agency agreement was signed, the respondent, through its sales agent Mr Ryder, set about the task of selling the property. As far as the respondent was then aware, the property was not sold during the period of the agency although Mr Ryder had been in discussion during that period with representatives of K T Acquisitions Limited. Towards the end of the agency period, it was agreed between the appellant and the respondent that the appellant would nevertheless pay the marketing expenses incurred by the respondent of $1,864.71. The appellant was invoiced for this sum which was paid.
[10] Some time in the latter half of 2005, the respondent learned that the property had been sold to K T Acquisitions Limited. An important and undisputed fact relied on by the Associate Judge was that the agreement for sale and purchase of the property was signed at the offices of the purchaser’s solicitors on 16 June 2005, during the period of the respondent’s agency. Mr O’Neil signed the agreement on behalf of the Montgomery Trust. It is also undisputed that, at the request of Mr O’Neil, the agreement for sale and purchase was not dated at that time. Instead, it was later dated 8 July 2005, immediately after the expiry of the respondent’s agency period.
[11] After it became known to the respondent that the property had been sold to K T Acquisitions Limited, the respondent’s solicitors wrote to the appellant’s solicitors on 23 January 2006 claiming commission on the basis that the property had been sold to parties introduced by the respondent. At this stage, the respondent was still unaware of the date of the agreement for sale and purchase or that it had been signed during the period of the agency. A copy of the agency agreement was sent to the appellant’s solicitors at this time.
[12] The appellant’s solicitors responded on 27 January 2006 with a letter advising that the correspondence had been sent to Mr O’Neil for his comment. The first paragraph of the substantive part of the response stated:
  1. The Agreement for Sale and Purchase was executed on 8 July 2005. By our calculations your client’s agency appointment expired on Wednesday 6 July 2005.

[13] The letter from the appellant’s solicitors went on to detail contacts which Mr O’Neil claimed to have had with the representatives of K T Acquisitions Limited in February and April 2005. It was asserted that those representatives were not introduced to the property by the respondent.
[14] The Associate Judge correctly observed that there was no assertion in the solicitors’ letter of a collateral oral agreement to the effect that commission would not be payable in the event of a sale to K T Acquisitions Limited.
[15] The respondent then made further enquiry and obtained statements from two representatives of K T Acquisitions Limited (a Mr Reinke and a Mr McGoverne). These statements confirmed, amongst other things, that the agreement had been signed on 16 June 2005 but not dated until 8 July.
[16] Armed with this information, the respondent’s solicitors wrote again to the appellant’s solicitors asserting that commission was payable on the basis that the sale was concluded during the period of the agency. Copies of the statements obtained from Mr Reinke and Mr McGoverne were attached to the letter.
[17] There was no substantive response to this further approach so the respondent filed summary judgment proceedings on 14 November 2006. It was not until a notice of opposition was filed on 16 January 2007 that any assertion of an oral collateral term was made.

The affidavit evidence

[18] The Associate Judge was confronted with a significant number of affidavits. Many of the affidavits had no direct bearing upon the issue of whether there was an oral collateral term as Mr O’Neil asserted and which Mr Ryder firmly denied. Messrs Reinke and McGoverne filed affidavits maintaining they had had no discussions with the appellant about a possible sale of the property until after the agency agreement was entered into.
[19] For its part, the appellant filed several affidavits from its own representatives deposing to contacts with Messrs Reinke and McGoverne over a period from February to May 2005, prior to the signing of the exclusive agency agreement on 2 June 2005. The Judge found, correctly we consider, that there were discussions between Mr O’Neil and the K T Acquisitions Limited’s representatives regarding the subject property over that period. This finding is of some assistance to the appellant since the appellant relied on it to support Mr O’Neil’s assertion that he excluded any sale to K T Acquisitions Limited from the agency agreement because his discussions with that company as a potential purchaser had begun before the agency period commenced. It might also be said to offer some support to his credibility.
[20] The only deponents who could directly address the allegation of an oral collateral term were Mr O’Neil and Mr Ryder. Their evidence on this point conflicted strongly. Mr Ryder denied any discussion about exclusion of commission in the event of a sale to K T Acquisitions Ltd. He deposed that after the exclusive agency agreement was signed, he marketed the property in a variety of ways. He was contacted on 14 June by Mr Reinke who expressed interest in the property. He met with Mr Reinke and other representatives of K T Acquisitions Limited and provided them with relevant information. He advised Mr O’Neill that Mr Reinke and Mr McGovern were interested in purchasing all seven apartments. Shortly afterwards, on 15 or 16 June 2005 Mr Ryder had a further conversation with Mr O’Neil in which Mr O’Neil told him he had “gone cold” on any possible sale to Messrs Reinke and McGovern. Mr Ryder said he was told not to have any further discussions with Messrs Reinke and McGovern. Mr Ryder expressed his surprise since Mr O’Neil had seemed very interested in a sale to them only a day or two before. We note here that this conversation between Messrs O’Neil and Ryder coincided with the signing of the agreement for sale and purchase about which Mr Ryder was unaware at the time.
[21] Mr Ryder deposes to a further conversation with Mr O’Neil on or about 23 June 2005 in which Mr O’Neil advised him that he no longer wished to sell the property. It was at that time that Mr O’Neil agreed to pay the respondent’s marketing expenses. It was not until early September 2005 that Mr Ryder learned that the property had been acquired by K T Acquisitions Limited or its nominee.
[22] In his affidavit, Mr O’Neil said that, at the time the agency agreement was signed, he advised Mr Ryder he was already dealing with Messrs Reinke and McGovern over a possible sale of the property and Mr Ryder was not to deal with them. He said it was agreed that any sale to the Reinke/McGovern interests would fall outside the respondent’s authority to sell. He maintained that he then continued discussions with Mr McGovern and advised Mr Ryder that unless he had other interested parties ready to present an offer, he would sign an agreement with the Reinke/McGovern interests. When Mr Ryder was unable to present any other interested parties, Mr O’Neil said it was agreed that marketing expenses would be paid and that no commission would be payable.
[23] Notably absent from Mr O’Neil’s affidavits is any denial that the agreement for sale and purchase with K T Acquisitions Limited was signed on 16 June 2005. Nor was there any denial that Mr O’Neil had requested the agreement be left undated at that time. At no time did Mr O’Neil provide any explanation for the delay in dating the agreement until after the expiry of the agency agreement.
[24] In a second affidavit Mr Ryder denied any oral agreement of the kind alleged and denied he had been informed by Mr O’Neil of the possible sale to the Reinke/McGovern interests. He also deposed that if there had been any agreement to exclude any purchaser from the agency agreement, he would have recorded that in writing in the agreement.
[25] Mr O’Neil also filed a second affidavit in which, amongst other things, he responded to Mr Ryder’s account of the conversation which Mr Ryder said had occurred on or about 23 June 2005. Although Mr O’Neill denied Mr Ryder’s assertions about the content of that conversation, he did not dispute the date the conversation occurred.

The conclusions of the Associate Judge

[26] The Associate Judge reminded himself that summary judgment is seldom appropriate to deal with claims where there is a significant dispute as to material facts. However that general approach is not without qualifications as the Associate Judge observed. He cited the judgment of Lord Diplock in Eng Mee Young v Letchumanan [1980] AC 331 at 341 (PC):

Although in the normal way it is not appropriate for a judge to attempt to resolve conflicts of evidence on affidavit, this does not mean that he is bound to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking precision, inconsistent with disputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.

[27] The Judge concluded that Mr O’Neil had acted to deprive the respondent of commission and had also concealed the fact of the sale. He decided that Mr O’Neil’s evidence as to the existence of an oral collateral agreement with the respondent was inadequate, inconsistent and could not reasonably be supported in all the circumstances.
[28] The Judge’s reasons included:

Discussion

[29] We accept the submission made on behalf of the appellant that it is not normally appropriate for a Judge to attempt to resolve material conflicts of evidence on affidavit in summary judgment cases. We also accept counsel’s submission that the plaintiff has the burden of satisfying the Court that there is no defence. The Court must be left without any real doubt or uncertainty: Pemberton v Chappell [1987] 1 NZLR 1 at 4 (CA).
[30] However, as counsel also properly acknowledged, the need for judicial caution does not preclude the Court taking a robust and realistic approach when called for by the facts of a particular case. In the end, the decision of the Court is a matter of judgment on the facts of the case: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 at 86 (CA).
[31] Counsel also referred to the following passage from the decision of this Court in Doyles Trading Co Ltd v West End Services Ltd [1989] 1 NZLR 38 at 41 – 42:

While the desirability of eliminating the frustration and delays which can be caused by unmeritorious or tendentious defence needs no emphasis, it is important to pay proper regard to the defendant's interest and to be wary of allowing the rule to become an instrument of oppression or injustice in the laudable interest of expediting litigation. It is true that "justice delayed is justice denied", but not at the expense of a fair hearing for both parties, unless the Court is sure there is no real defence. It is unlikely to reach this conclusion if the affidavits disclose disputed questions of fact, the resolution of which depends on an assessment of credibility or reliability of witnesses. There may be cases in which the answer clearly emerges from the material before the Court, or where the credibility of one party is shown to be so suspect that his evidence can be rejected without the need to assess him as a witness or to listen to any further explanation he may wish to make.

[32] Counsel submitted that this was not a case where the conflicting evidence on the issue of the alleged oral agreement could or should have been resolved in the affidavits for summary judgment purposes. Not only was the evidence of Messrs O’Neil and Ryder in direct conflict but, he said, there was other circumstantial evidence supporting Mr O’Neil’s account including the evidence, which the Judge accepted, that there had been prior discussions between Mr O’Neill and the Reinke/McGovern interests.
[33] Counsel also asserted that the Judge had incorrectly found that it was Mr O’Neil who made the handwritten changes to the agency agreement (when there was no evidence to support this) and that there was no proper basis for the Judge to accept that the conversation referred to by Mr Ryder had occurred on 23 June 2005.
[34] Counsel accepted that there may have been grounds to justify reservations or doubts about Mr O’Neil’s veracity but submitted that the Associate Judge went too far in resolving the conflicts without the benefit of cross-examination at trial.
[35] We are unable to accept the submissions made on behalf of the appellant. While a Judge is not usually justified in resolving material conflicts of evidence on the affidavits in a summary judgment proceeding, the authorities are clear that the Judge is not bound to accept the evidence uncritically. Where there are material inconsistencies of such significance as to warrant the rejection of the evidence of a witness, the Judge is entitled to act accordingly. A Judge may, for example, feel sufficiently confident to reject the evidence of a witness where it is in material conflict with contemporaneous documents or where there is other written material from which unmistakable inferences can be drawn.
[36] This was such a case. The starting point is that there was a written agreement. There is a strong presumption that such a written document comprises the whole contract, even though the Court will give effect to an inconsistent oral term if satisfied as to its existence: Burrows, Finn & Todd Law of Contract in New Zealand (3ed 2007) at 157. The Judge was entitled to take into account that Mr O’Neil, as an experienced businessman, could reasonably have been expected to have any additional term noted in writing. He did not do so.
[37] Most significantly, when the claim for commission was made, the solicitors’ response made no assertion of an oral agreement. It is not a case of a letter being written by a solicitor without adequate instructions. The letter itself recorded that Mr O’Neil’s instructions had been obtained and the solicitors had a copy of the agency agreement. Far from asserting an oral agreement, a completely different defence was raised: that the agreement for sale and purchase had been signed after the expiry of the agency period. The solicitors’ letter specifically stated that the agreement for sale and purchase had been executed on 8 July when the uncontested evidence is that it had been signed on 15 July during the agency period.
[38] The Judge was also entitled to take into account the undisputed evidence that, when the agreement for sale and purchase was signed, Mr O’Neil requested that it be left undated. One might have thought that if there were an innocent explanation for this, it would have been offered in evidence. Significantly, Mr O’Neil has remained silent on this issue despite filing two affidavits. At no time has he contested the evidence on this point nor has he sought to provide an explanation . His failure to do so speaks volumes about the appellant’s bona fides and supports the finding by the Judge that the appellant actively sought to conceal from the respondent the fact that the agreement had been signed during the period of the agency.
[39] Next, we consider the Judge was justified in concluding that there was a conversation between Mr Ryder and Mr O’Neil on or about 23 June 2002. As already noted, Mr Ryder’s assertion as to the date of this conversation was not disputed by Mr O’Neil although the content of it was. Mr O’Neil’s evidence was that in this conversation, he told Mr Ryder that he was proposing to sell to the Reinke interests and asked Mr Ryder if he had received any other offers. The Judge was entitled to treat Mr O’Neil’s evidence on this occasion as further evidence of concealment since, by then, he would have been fully aware that he had already signed an agreement for sale and purchase about a week before.
[40] While there may have been room for debate about some aspects of the disputed evidence, the compelling inference the Associate Judge was entitled to draw was that if a collateral oral agreement had been made as alleged, it would have been asserted by or on behalf of the appellant from the very outset. If established it would have been a complete defence. The failure to assert this obvious defence from the beginning but instead to raise another defence on a different premise altogether, clearly places this case into the exceptional category where the Judge was entitled to reject the appellant’s evidence on the affidavits. In short, the defence so belatedly raised was wholly inconsistent with the appellant’s detailed response made through its solicitors at the time the claim for commission was first asserted.

Result

[41] The appeal is dismissed. The respondent is entitled to costs in the sum of $4,000.00 and usual disbursements.

Solicitors:
Lane Neave, Christchurch for Appellant
White Fox and Jones, Christchurch for Respondent

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