Ngoi v Wen [2014] NZHC 3027 (1 December 2014)

Last Updated: 4 December 2014

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2014-404-1999 [2014] NZHC 3027

BETWEEN	KOK ANN NGOI First Plaintiff SUNLINE ESTATE LTD Second Plaintiff
AND	GUIRONG WEN Defendant

Hearing:	19 November 2014
Counsel:	I F Williams and K T Glover for Plaintiffs D Bigio and J M May for Defendant
Judgment:	1 December 2014

_{JUDGMENT OF HEATH J}

This judgment was delivered by me on 1 December 2014 at 2.00pm pursuant to Rule

11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

Churton Hart & Divers, Auckland

Pidgeon Law, Auckland

Counsel:

I F Williams/K T Glover, Auckland

_{D Bigio, Auckland}

NGOI v WEN [2014] NZHC 3027 [1 December 2014]

The application

[1] Dr Ngoi applies for summary judgment against Mrs Wen. His application arises out of an agreement for the sale and purchase of a property (the Agreement) situated at 36 Oakland Road, Karaka. Dr Ngoi asserts that while Mrs Wen agreed to sell that property to him for $5.28 million, she has refused to settle.¹

[2] Dr Ngoi seeks specific performance of the Agreement. The application is opposed by Mrs Wen. She contends that no binding agreement exists on which specific performance can be ordered.

Summary judgment applications: legal principles

[3] The application for summary judgment is made in reliance on r 12.2 of the

High Court Rules:

12.2 Judgment when there is no defence or when no cause of action can succeed

(1) The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

...

[4] A summary judgment application is determined on affidavit evidence, without the benefit of cross-examination of any of the deponents. The Court’s function is to determine whether any reasonably arguable defence put forward by a defendant has been excluded. That follows from the r 12(1) requirement that the Court must be satisfied that no defence to a plaintiff’s exists.²

[5] The summary nature of the procedure means that it is “wholly unsuitable for

the determination of disputed questions of fact”.³ Nevertheless, in assessing the strength of a claim, a Court need not accept uncritically evidence that is inherently

¹ The second plaintiff, Sunline Estate Ltd, was the entity nominated by Dr Ngoi to take title to the land: see Hurrell v Townend [1982] 1 NZLR 536 (CA). It is unnecessary to refer to that entity, as it was not a contracting party.

² _{Pemberton v Chappell [1986] NZCA 112; [1987] 1 NZLR 1 (CA).}

³ In the analogous caveat jurisdiction see Sims v Lowe [1988] NZCA 253; [1988] 1 NZLR 656 (CA) at 659–660 per

Somers and Gallen JJ, with whom Bisson J agreed.

lacking in credibility;⁴ for example where evidence is put forward that is inconsistent with undisputed contemporary documents, or inherently improbable in itself. Having said that, the Court should take a relatively robust approach to the determination of summary judgment applications, lest their utility be inappropriately undermined.⁵

Background

[6] In late 2013, Dr Ngoi was investigating the possibility of acquiring land in the Papakura and Karaka area, for development purposes. After consulting a website operated by Barfoot & Thompson, Dr Ngoi located a property that might be suitable. As a result, he contacted the agent, Mr Ngai, through the website. When they spoke, Mr Ngai suggested that Dr Ngoi may be interested in another property, the one in issue in this proceeding.

[7] Dr Ngoi and Mrs Wen, the owner of the property, have never met. Save for her alleged involvement in a telephone discussion that Mrs Wen says did not happen, negotiations for the possible acquisition of the property were conducted directly between Dr Ngoi and Mr Ngai, as Mrs Wen’s agent.

[8] An initial offer to purchase the property was made by Dr Ngoi on

2 December 2013. A contract was prepared by Mr Ngai. The offer was signed and returned to Mr Ngai that day. Dr Ngoi offered to purchase the property for

$3.90 million, with settlement to be effected on 12 December 2014 and a “due diligence” period of 120 working days. The reason for the deferred settlement was that Dr Ngoi was completing the development of another property in Takanini, from which he needed to extract funds to pay the purchase price.

[9] Mr Ngai advised Dr Ngoi that Mrs Wen was overseas. The offer was not presented to her until she returned to New Zealand in early January 2014. On

12 January 2014, Dr Ngoi received an email from Mr Ngai indicating that Mrs Wen

_{had rejected his offer, but had made a counter offer for $5,600,000.}

⁴ _{See Krukziener v Hanover Finance Ltd [2010] NZAR 307 (CA) at para [26].}

⁵ For example, see Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA) at 86.

[10] Mr Ngai then acted as a go-between to convey several counter offers to and from Dr Ngoi and Mrs Wen. On each occasion, the single physical copy of the Agreement was amended and initialled. All of the documents contained the same settlement and due diligence dates. On 14 January 2014, Mr Ngai presented to Dr Ngoi an offer from Mrs Wen to sell the property at $5.30 million.

[11] Dr Ngoi and Mr Ngai met at McDonalds, in Botany, to discuss this offer. Dr Ngoi told Mr Ngai that he would pay anything below $5.30 million. Mr Ngai said that he would speak to Mrs Wen to ascertain “her lowest selling price”. Dr Ngoi signed the Agreement in a blank space in which it was possible for Mrs Wen to insert a lower price and to strike out her earlier offer. Dr Ngoi deposes that he believed there would be a binding contract if that were to occur.

[12] Mr Ngai took the signed contract to Mrs Wen. Up to this point, Mr Ngai

corroborates Dr Ngoi’s version of events.

[13] Mr Ngai deposes that he met with Mrs Wen at about 4.30pm on 14 January

2014. He says that he advised her that Dr Ngoi had offered to pay any price below

$5.3 million. He states that, at “approximately 5.09pm” he telephoned Dr Ngoi, in

Mrs Wen’s presence. Mr Ngai continues:

4. ... I had my phone on speaker phone and put it on the coffee table in front of Ms Wen so that she could hear my discussion with Mr Ngoi and Mr Ngoi could hear Ms Wen. This conversation was in Mandarin, in which I am fluent. Together we discussed the previous offers which had been made, and Mr Ngoi then asked Ms Wen whether she would accept any price below $5 million for the property. Ms Wen said that she would not. This call lasted for 4 minutes.

5. I then suggested that the parties take a break so that Ms Wen could consider her options. During this break I again told Ms Wen that Mr Ngoi would buy the property for any price under $5.3 million.

6. A second conference call between me, Mr Ngoi and Ms Wen took place at approximately 5.16pm. Ms Wen said that as Mr Ngoi said he would buy the property for any price under $5.3 million, she would reduce the price to $5.28 million. Mr Ngoi said that this was okay and the conference call ended. This call lasted for 2 minutes.

7. At the conclusion of this call (at approximately 5.22pm) Ms Wen signed the agreement at $5.28 million.

8. I then left Ms Wen’s house. I drove away and then stopped on the road in front of Ms Wen’s house, and while stopped I contacted Mr Ngoi by phone at approximately 5.30pm. I told Mr Ngoi that Ms Wen had accepted the final price of $5.28 million and signed the agreement. This call lasted for 2 minutes.

...

10. After I had spoken to Mr Ngoi and confirmed that the agreement was signed, Ms Wen contacted me at approximately 5.37pm and told me that her son was not happy with the long due diligence and settlement period. She suggested a variation to the due diligence period of 30 working days. She made no mention to me of changing the price or the settlement date during this conversation. I told her that I would discuss the due diligence issue with Mr Ngoi.

[14] Mrs Wen deposes that her command of English is poor. She states that she was reliant on Mr Ngai to represent her interests. She presents herself, in evidence, as someone who is not familiar with property transactions, who cannot read in English, and did not want to sell the land. On a number of levels, some of that evidence is problematic. But, nothing turns on it for the purpose of the present application.

[15] More importantly, there are significant disputes between Mr Ngai (on the one hand) and Mrs Wen (on the other) about what occurred when Mr Ngai attended at her home to discuss what had occurred at his meeting with Dr Ngoi in Botany. Mrs Wen deposes:⁶

14. Just before 5pm on 14 January 2014, the Mr Ngai came door knocking at my house. He asked me to reduce the price a bit so that the purchaser will probably buy. I was instantly astonished. This happened too suddenly and I became very afraid because I absolutely had no consideration to sell and all this while I held on the idea of counter offering to test the market. I then realised that this matter was not the same as I thought of. After due consideration, I asked him to leave behind the agreement for consideration. He refused. He also did not leave. While Mr Ngai was still in my house shortly after 5pm, he made a phone call, but I do not know who he called and I did not speak with the person who was on the phone. I did not have phone conversation with the purchaser. I only spoke with Mr Ngai in my house. I did not have any reason to speak with the First Plaintiff, all my discussions were with the agent Mr Ngai.

⁶ I have quoted Mrs Wen’s evidence from an English translation of an affidavit which she has made in the Chinese language. A duly qualified translator has confirmed the accuracy of the English version.

15. I had an appointment at 5.30pm. As I did not have any alternative at that time, I just said then I will reduce by $20k on condition that the settlement date be in half a year and due diligence. Actually I intended to use these conditions to make the purchaser drop the deal. (The agent had never taken out the agreement during the whole time). Because of this, I countered $5.28million. Mr Ngai did not say anything about the purchaser having initialled a gap for me to complete, and did not say that an agreement had now been reached.

16. At that moment, I assumed the condition as to the settlement date had altered as I had asked and I did not realise this had not changed as I cannot read English. After signing, I even asked him to leave the agreement behind. Throughout this when signing and initialling counter offers, the agreement never left Mr Ngai’s hands. Wherever he asked me to sign again, I signed again. I told him that I ought to discuss such a big matter with my son. He would not leave the agreement and refused to let me discuss with my son. Being a female, I really had no way out. In a hurry, he left with the agreement. I was then very worried, having no peace of mind.

17. After Mr Ngai left, a friend of mine came to my house. In his presence, I phoned Mr Ngai at 5.37pm as show on my phone account ... and asked, “Mr Ngai, where are you?” He replied, “I am on my way to the purchaser”. I said, “You don’t have to ask the purchaser to sign. I don’t want to sell. Do not proceed with taking the agreement to the purchaser. You take back the agreement”. He asked, “Why?” I said, “I am not at all satisfied with all the conditions in the agreement. I have no interest to sell”. I said I was not satisfied with all the unfair conditions in the agreement. I mentioned about the due diligence condition and the settlement dates. But these were just my excuses in order to get out of this matter due to his continuous persuasion. He replied, “I can help work out the conditions”. I said, “I can’t accept. I just don’t want to sell. My son does not agree”. (Actually I was compelled to speak the words that my son did not agree as I found it hard to stand up to Mr Ngai’s pressure). In fact, I did not phone my son who was in Australia at that time. Mr Ngai kept on trying to convince me to sell to such an extent that I became agitated. I said, “Don’t try to convince me. I just don’t want to sell”. So I hung up the phone.

[16] A comparison of the evidence given by Mr Ngai⁷ and Mrs Wen⁸ demonstrates some areas of agreement, and some of disagreement. While some of the differences between them may appear slight, they reveal nuances that have importance in the context of the specific performance claim I am considering. In particular:

(a) Mr Ngai and Mrs Wen are in agreement that she told him that she would reduce the sale price to $5.28 million. The difference between

⁷ _{See para [13] above}

⁸ See para [15] above.

them lies in Mrs Wen’s evidence that she was unaware that that was responding to an offer from Dr Ngoi; on her view she was making a counter offer. That assumes significance. If Mrs Wen knew that she was accepting an offer for $5.28 million a concluded agreement would have been reached. On the other hand, if a counter offer were made it would be open to Mrs Wen to withdraw the offer at any time up to the point that Dr Ngoi accepted it. Her evidence is that she did withdraw.

(b) Mr Ngai states that Dr Ngoi was involved in a telephone discussion in which he and Mrs Wen participated. He states that Dr Ngoi made it clear to Mrs Wen that he would buy the property for any price under

$5.3 million. On the basis of that evidence, Mrs Wen would have been aware that Dr Ngoi was putting forward an offer to which she would respond. She does not agree that happened. She denies any involvement in a telephone conversation in which Dr Ngoi participated. The evidence given by Mr Ngai to confirm Dr Ngoi’s evidence about that conversation is denied by Mrs Wen.

(c) Dr Ngoi and Mr Ngai state that Dr Ngoi had initialled the agreement for sale and purchase with the intention that his initials be used as evidence of acceptance of a contract price less than $5.3 million. Mrs Wen denies that Mr Ngai told her anything about the initialling, and deposes that he did not tell her that an agreement would have been reached if she were to countersign at $5.28 million.

Analysis

[17] If the Agreement were taken at face value, there would be little difficulty in finding that specific performance should be ordered. The problems identified by Mr Bigio, for Mrs Wen, are linked to the disputes that have been raised in her affidavit which, I accept, are not inherently implausible. For the purposes of the summary judgment application, I am obliged to proceed on the basis that her version

of what occurred when Mr Ngai came to her home on 14 January 2014 can be proved at trial.

[18] The primary question is whether Dr Ngoi can satisfy me that Mrs Wen has no reasonably arguable defence to his claim. The point in issue is whether there was a concluded agreement between the parties, having regard to the disputes about what occurred at Mrs Wen’s home on 14 January 2014.

[19] The problem for Dr Ngoi is that, in the absence of an agreed position between himself and Mrs Wen about what occurred, the fact that he may have initialled the agreement before Mr Ngai went to see Mrs Wen is not indicative of any offer being made by him to purchase at a lesser price. A person in the position of Mrs Wen, looking at the agreement in the form in which it was presented to her when Mr Ngai attended at her home, may not have appreciated that Dr Ngoi was making such an offer, in the absence of any explanation to the contrary.

[20] Mr Williams, for Dr Ngoi, submits that any differences in evidence between what is said by Dr Ngoi and Mr Ngai (on the one hand) and Mrs Wen (on the other) concern Mrs Wen’s relationship with Mr Ngai. Dr Ngoi’s position is that if Mr Ngai exceeded his authority, that is a matter between Mrs Wen and Mr Ngai. It should not, he submitted, affect Dr Ngoi’s ability to sue for specific performance.

[21] There appear to be two bases on which Dr Ngoi asserts he can establish offer and acceptance for summary judgment purposes:

(a) The first involves an offer being made by Dr Ngoi to settle for any sum under $5.3 million. It is contended that when Mrs Wen entered that figure onto the Agreement and initialled it, she accepted Dr Ngoi’s offer immediately.

(b) The second is that by initialling the change of purchase price to

$5.28 million, Mrs Wen made a counter offer which was accepted by Dr Ngoi when communicated to him orally by Mr Ngai after he left Mrs Wen’s home.

[22] It is necessary for Mr Williams to put the options in that way because, for summary judgment purposes, I cannot take into account anything that might have been said during the asserted telephone conference in which Mrs Wen denies participation.

[23] Mr Bigio took me through the evidence of Dr Ngoi and Mr Ngai, and also referred me to an earlier affidavit sworn by Dr Ngoi in proceedings taken to sustain a caveat which he has lodged against the title to the property. That caveat has been sustained pending determination of the present proceedings. Dr Ngoi did not refer, in that affidavit, to the telephone discussions that are now said to have involved Mrs Wen on 14 January 2014. Mr Bigio contends that the evidence of Dr Ngoi and Mr Ngai is not sufficiently reliable to enable me to find that a concluded agreement was reached, for summary judgment purposes.

[24] I am not satisfied Mrs Wen has no reasonably arguable defence to the specific performance claim. Because the proceeding will go to a defended trial, it is undesirable that I say anything more than is absolutely necessary to dispose of the present application.

[25] While a real estate agent acting for a party who is selling a property has ostensible authority to do anything that arises in the ordinary course of that business, it is plain that an agent cannot bind a principal to a price, without authority.

[26] Although such cases are contextual in nature and depend upon findings of fact made at a trial, that general rule cannot seriously be disputed. In Carruthers v Whitaker⁹ Richmond J, delivering the principal judgment of the Court of Appeal, adopted the statement of principle enunciated by Lord Greene MR, in Eccles v Bryant:¹⁰

When parties are proposing to enter into a contract, the manner in which the contract is to be created so as to bind them must be gathered from the intentions of the parties express or implied. In such a contract as this, there is a well-known, common and customary method of dealing; namely, by exchange, and anyone who contemplates that method of dealing cannot contemplate the coming into existence of a binding contract before the

⁹ _{Carruthers v Whitaker [1975] 2 NZLR 667 (CA).}

¹⁰ Eccles v Bryant [1948] Ch 93 at 99 and 104.

exchange takes place. . . . When you are dealing with contracts for the sale of land it is of the greatest importance to the vendor that he should have a document signed by the purchaser, and to the purchaser that he should have a document signed by the vendor. It is of the greatest importance that there should be no dispute whether a contract had or had not been made and that there should be no dispute as the terms of it.

...

... but ultimately the matter comes down to this: Parties become bound by contract when, and in the manner in which, they intend and contemplate becoming bound. That is a question of the facts of each case, but in this case the manner of becoming bound which the parties and their solicitors must have contemplated from the very beginning was the ordinary, customary, convenient method of exchange.

....

(Emphasis added)

[27] Given the conflict in evidence about what occurred at the meeting on 14

January 2014, I cannot conclude that Mr Ngai had the necessary authority to bind Mrs Wen to a contract at that time. Normal practice involves the exchange of contracts with each party making either an offer or counter offer before the other accepts and creates binding legal relations. It is important to have firm evidence that price (and other terms) have been agreed before treating a contract for the sale of land as concluded. On the evidence, I cannot exclude a defence based on Mrs Wen’s lack of understanding that she was accepting a counter offer made by Dr Ngoi.

[28] Further, I have significant reservations about the proposition that an agent could bind a vendor to price in the circumstances disclosed in this case. Mr Bigio referred me to three elderly decisions of this Court which suggest no such power exists.¹¹ The point was put most succinctly by Sim J, in Shortal v Buchanan:¹²

Before the principle of holding out can apply, the act relied on as binding the principal must be of that particular class of acts which the agent is held out as having a general authority on behalf of his principal to do: Russo-Chinese Bank v Li Yau Sam. But, as pointed out by Cooper J, in, no land agent as such is "held out" as having a general authority on behalf of his client to sell on any terms or at any price. If a person, without inquiring into the agent's authority, chooses to enter into a contract made by a land agent purporting

¹¹ Ludwig v Schultze (1886) NZLR 4 SC 247 (SC), Rowe v Norrie (1913) 33 NZLR 274 (SC) and

_{Shortal v Buchanan [1920] NZLR 103 (SC).}

¹² Shortal v Buchanan [1920] NZLR 103 (SC) at 105.

to be made by the agent for his principal, then, as Cooper J, has said, that person takes the risk of the contract being one which the agent is authorized to make, and if it is in excess of the authority the principal is not bound.

_{(Emphasised added; footnotes omitted)}

Result

[29] For those reasons, the application for summary judgment is dismissed. Costs are reserved.¹³

[30] The Registrar is directed to list the proceeding for a case management conference before an Associate Judge as soon as practicable, for trial directions to be made.

_{[31] I thank counsel for their considerable assistance at the hearing.}

_{P R Heath J}

_{Delivered at 2.00pm on 1 December 2014}

¹³ See NZI Bank Ltd v Philpott [1990] 2 NZLR 403 (CA) at 406.