Ngoi v Wen [2016] NZHC 1621 (18 July 2016)

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Ngoi v Wen [2016] NZHC 1621 (18 July 2016)

Last Updated: 23 August 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-001999 [2016] NZHC 1621

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

Hearing:	26-29 April 2016
Counsel:	I M Gault and A M Glenie for the Plaintiffs D R Bigio and H M Z Ford for the Defendant
Judgment:	18 July 2016

_{JUDGMENT OF EDWARDS J}

This judgment was delivered by Justice Edwards on 18 July 2016 at 3.30 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Counsel: D R Bigio, Auckland

H M Z Ford, Auckland

_{Solicitors: Bell Gully, Auckland}

NGOI v WEN [2016] NZHC 1621 [18 July 2016]

Introduction

[1] Dr Ngoi and Ms Wen are parties to a written agreement for sale and purchase of a 4.35 ha property in Karaka, Auckland for $5.28m. Both parties have signed the agreement and both have initialled next to the price.

[2] Dr Ngoi’s initial was placed on the agreement next to a blank space prior to the price of $5.28m being inserted. Ms Wen’s initial was placed on the agreement after the price of $5.28m was inserted.

[3] Dr Ngoi says a binding agreement was formed by the parties and he seeks specific performance of the written agreement.

[4] Ms Wen denies that an agreement was formed. She says that she only intended to make a counter-offer at the time she initialled the agreement, and she only intended to become bound once Dr Ngoi had initialled the agreement after the price had been inserted. Ms Wen says she withdrew the counter-offer before it could be accepted in any event.

[5] The key issue is whether an enforceable agreement for sale and purchase was formed between the parties.

Background

[6] Ms Wen is a successful businesswoman with extensive experience in selling and purchasing property. She is the director of companies which own and operate the Formosa golf course.

[7] In 2007 Ms Wen engaged Mr Ngai, a real estate agent with Barfoot & Thompson, to market the Karaka property. It was marketed with a price range of $5

– $6m.

[8] There was little interest in the property for a number of years, but in late

2013, Dr Ngoi contacted Mr Ngai and indicated he wanted to make an offer.

Dr Ngoi is a developer based in Singapore and was interested in a number of properties being marketed by Barfoot & Thompson at the time.

[9] Dr Ngoi indicated he would be prepared to pay $3.9m for the property. His offer was made on the standard REINZ/ADLS agreement and was conditional on Dr Ngoi being satisfied that the property was suitable for intended use after undertaking a due diligence investigation. The deadline for satisfaction of that condition was 4.00 pm, 120 working days after the date of the agreement. The proposed settlement date was 12 December 2014.

[10] Mr Ngai presented Dr Ngoi’s offer to Ms Wen on 12 January 2014. Mr Ngai verbally translated the terms of the agreement into Mandarin, although there is a dispute about whether he translated all, or only some, of the terms of the agreement.¹

Ms Wen decided to counter-offer with a price of $5.6m. Mr Ngai crossed out the

$3.9m, and inserted $5.6m. Ms Wen initialled next to that change. She also signed the back page of the agreement, initialled each page, and initialled each condition, including the due diligence condition.

[11] Further counter-offers were exchanged over the following days. Dr Ngoi offered $4.28m; Ms Wen countered with a price of $5.35m; Dr Ngoi offered $4.5m; Ms Wen countered with a price of $5.3m. In each case the offer was made by Mr Ngai striking out the previous price, inserting the new price offered, and getting the offeror to initial next to the new price. The only change made during the exchange of these counter-offers was to the price.

[12] The key conflict in the evidence concerns events following Ms Wen’s counter-offer of $5.3m on 14 January 2014. The plaintiffs’ case is that on presentation of Ms Wen’s offer, Dr Ngoi told Mr Ngai that he would pay any price below $5.3m. Dr Ngoi then initialled to the left of a blank space in the agreement so that any price below $5.3m could be inserted. Mr Ngai told him that he would arrange a telephone conference call with Ms Wen to ensure there was no

_{miscommunication about this offer.}

¹ Ms Wen’s first language is Mandarin. She gave her evidence at trial via an interpreter. Dr Ngoi

and Mr Ngai speak both English and Mandarin.

[13] Mr Ngai says he then took that agreement to Ms Wen and informed her of Dr Ngoi’s offer. There were three phone calls placed from Mr Ngai’s phone to Dr Ngoi’s phone at 4.38 pm, 5.09 pm and 5.16 pm. Mr Ngai says the first call at

4.38 pm was to ensure Dr Ngoi was ready for the conference call.

[14] Both Mr Ngai and Dr Ngoi say that Ms Wen participated in the phone calls at

5.09 pm and 5.16 pm which were conducted in Mandarin for her benefit. They say that Ms Wen was told during these calls that Dr Ngoi had pre-initialled next to a blank space in the agreement, and that he would accept anything less than $5.3m. They also say that some time during the second call, Ms Wen offered to sell the property for $5.28m, and Dr Ngoi accepted. Mr Ngai says he then inserted the price of $5.28m into the agreement, asked Ms Wen to initial it, dated the agreement and told her that the agreement was “all done”. He says that he is certain Ms Wen understood a concluded agreement had been reached.

[15] Ms Wen denies participating in these calls. She denies talking directly with Dr Ngoi, denies being told that he had pre-initialled the agreement, and denies being told that a binding agreement had been formed.

[16] However, Ms Wen does not deny initialling next to the price of $5.28m in the agreement. The plaintiffs’ case is that a binding agreement was formed at this time. Ms Wen says she was making a counter-offer only.

[17] Mr Ngai then made a phone call to Dr Ngoi at 5.30 pm as he was leaving

Ms Wen’s home. He told Dr Ngoi that Ms Wen had initialled next to the price of

$5.28m and he congratulated him on the purchase. His evidence was that he was driving to meet with Dr Ngoi to show him the agreement and discuss other properties that Dr Ngoi was interested in.

[18] At 5.37 pm, Ms Wen telephoned Mr Ngai. Again, there is a conflict in the evidence about what was said during this call. Ms Wen says she asked Mr Ngai where he was going and then told him that she did not want to go ahead with the sale and asked him to return the agreement. Mr Ngai says Ms Wen said she wanted to change the due diligence period as it was too long and her son was not happy with it.

Mr Ngai says he told Ms Wen that he was going to meet with Dr Ngoi and he would raise the change to the due diligence period with him then.

[19] Mr Ngai and Dr Ngoi then met at the Botany McDonalds and Mr Ngai presented Dr Ngoi with the signed copy of the agreement. Dr Ngoi says that he asked Mr Ngai whether he needed to initial again, and Mr Ngai answered no because there was already a binding agreement. Mr Ngai raised the prospect of a shorter due diligence period. Dr Ngoi said Ms Wen would have to contact his lawyer about that. During this meeting, Mr Ngai placed seven phone calls to Ms Wen between 6.26 pm and 7.18 pm.

[20] Mr Ngai’s evidence is that he spoke to Ms Wen on two of these occasions and told her that Dr Ngoi would not change the due diligence period at this time. Mr Ngai says that Ms Wen then proposed that the due diligence clause be changed to

45 days or that an “escape clause” be inserted in the agreement by which Ms Wen might be able to cancel if another buyer was found prior to the agreement becoming unconditional.

[21] Ms Wen says she repeated to Mr Ngai that she did not want to sell, and she was so upset with him that she refused to answer the phone on the other occasions. She denies suggesting a 45 day escape clause and says that it was Mr Ngai who suggested such a clause.

[22] On the following day, 15 January 2014, Mr Ngai gave the original agreement to his branch manager who arranged for copies to be sent to Ms Wen and Dr Ngoi. Mr Ngai then met with Ms Wen at her home. He says he prepared two variations to the agreement at her request. The first proposed an escape clause valid after 45 working days. The second proposed a change to the settlement date, bringing it forward from 12 December to 31 July 2014. Ms Wen signed both variations. However, before Mr Ngai left Ms Wen’s home, she retrieved the variation regarding the escape clause from him and tore it up.

[23] Mr Ngai took the settlement variation to Dr Ngoi later that day. After seeking legal advice, Dr Ngoi did not accept that variation but indicated that he would be willing to agree to a revised settlement date of 30 November 2014.

[24] On 16 January 2014, Ms Wen telephoned Mr Ngai at 9.15 am. Mr Ngai says Ms Wen indicated that she wanted to cancel the agreement on the basis that she would pay compensation to Dr Ngoi, and she would give Mr Ngai another property to sell to compensate him for the lost commission. He responded by saying that there was a binding agreement but he would speak to Dr Ngoi. At 9.50 am that day, Mr Ngai sent a text message to Dr Ngoi saying “she changes mind again, wants to cancel and proposes to compensate you!”

[25] Ms Wen telephoned Mr Ngai a number of times that day. Part of the telephone conversations was recorded and the transcript of that call was adduced in evidence (Transcript). That telephone call was made from the offices of Ms Wen’s legal advisers and was recorded without Mr Ngai’s knowledge or consent. Both parties rely on the Transcript to support their respective versions of events.

[26] Solicitors for both parties subsequently became involved. Ms Wen filed a complaint about Mr Ngai which resulted in a finding of unsatisfactory conduct by the Real Estate Agents Authority Complaints Assessment Committee. An appeal to the Real Estate Agents Disciplinary Tribunal is pending.

[27] Dr Ngoi continued to maintain that there was an enforceable agreement. On

12 June 2014, Dr Ngoi declared the agreement unconditional and a deposit of

$528,000 was paid to Barfoot & Thompson. Dr Ngoi subsequently nominated the second plaintiff, Sunline Estate, to complete the purchase.

[28] Following Ms Wen’s refusal to settle, the plaintiffs commenced this proceeding. An application to sustain a caveat lodged by Dr Ngoi was granted pending resolution of the proceeding. An application for summary judgment was

_{declined in a judgment dated 1 December 2014.}²

² Ngoi v Wen [2014] NZHC 3027.

Parties’ submissions

[29] The plaintiffs contend that a binding contract was formed between the parties in one of the following ways:

(a) Characterisation One: Dr Ngoi made a counter-offer to pay any price below $5.30m, and ‘pre-initialled’ next to a space for Ms Wen to nominate a price. Around 5pm, Mr Ngai conveyed that counter-offer to Ms Wen. At 5.16pm, Ms Wen accepted that counter-offer during the second call. She nominated a price of $5.28m, which was communicated to Dr Ngoi, instructed Mr Ngai to insert the new price into the Agreement, and initialled the change. At 5.30 pm, Mr Ngai confirmed that had occurred to Dr Ngoi by telephone.

(b) Characterisation Two: Dr Ngoi asked Ms Wen to revise her counter- offer of $5.30m, and ‘pre-initialled’ next to a space for Ms Wen to nominate a price. Around 5pm, Mr Ngai conveyed that request to Ms Wen. At 5.16pm, Ms Wen revised her counter-offer to $5.28m during the second call. It was communicated to Dr Ngoi by telephone. Dr Ngoi accepted that revised counter-offer. Ms Wen then instructed Mr Ngai to insert the new price into the Agreement, and initialled the change. At 5.30pm, Mr Ngai confirmed that had occurred to Dr Ngoi by telephone.

[30] Mr Gault, on behalf of the plaintiffs, suggested a further sub-category to characterisation two in closing submissions. That is, if I found that the initialling of the $5.28m by Ms Wen was a counter-offer, then the offer was accepted by Dr Ngoi in the phone call at 5.30 pm, and Mr Ngai communicated that acceptance to Ms Wen in the phone call at 5.37 pm. He submitted that the pre-initialling by Dr Ngoi was sufficient to meet the requirements of s 24 of the Property Law Act 2007.

[31] Ms Wen disputes that a legally binding contract was formed. She says that the plaintiffs cannot discharge their burden in proving that she agreed to change the manner in which she became bound. She claims that when she initialled next to the sum of $5.28m she was making a counter-offer which was withdrawn in the phone call to Mr Ngai at 5.37 pm. Ms Wen further says that the agreement is not enforceable because it does not meet the requirements specified in s 24 of the Property Law Act.

An oral agreement?

[32] The plaintiffs assert that an oral agreement was reached during the telephone calls at 5.09 pm and 5.16 pm.

[33] The legal principles relevant to formation of a contract are not in dispute. What is required is an intention to be immediately bound and an agreement, or means of achieving agreement, on essential terms.³ A contract may be established by identifying offer and acceptance in the traditional way or by considering whether the parties’ communications as a whole show a concluded agreement.⁴

[34] To prove that an oral agreement was reached between the parties, the plaintiffs must first prove that Ms Wen participated in both telephone calls. That finding depends on the credibility and reliability of each witness’ account concerning these calls.⁵

[35] Ms Wen denies participating in either call and denies ever speaking to

Dr Ngoi whom, she says, she thought was a woman.

[36] I found much of Ms Wen’s evidence regarding the events on 14 January 2014 to be implausible. Ms Wen said she never had any intention to sell the property. That is evidence of subjective intent which is irrelevant to the dispute, but is nevertheless at odds with the objective evidence establishing her engagement in the negotiations. Whilst Ms Wen may well have made the first offer only intending “to test the market”, she continued to engage in an exchange of offers and counter- offers. Given her experience in buying and selling property, she must have known

_{that any one of those offers could have been accepted by Dr Ngoi. I consider her}

³ Electricity Corp of New Zealand Ltd v Fletcher Challenge Energy Ltd [2001] NZCA 289; [2002] 2 NZLR 433 (CA)

_{at [53].}

⁴ DW McMorland Sale of Land (3rd ed, Cathcart Trust, Auckland 2011) at [3.10]; Burrows, Finn and Todd The Law of Contract in New Zealand (5th ed, LexisNexis, Wellington, 2016) at

_{[3.2.1]; and Boulder Consolidated Ltd v Tangaere [1980] 1 NZLR 560 (CA) at 563.}

⁵ Because a court may accept part of a witness’ evidence and reject other parts (see for example, Jay v Jay [2014] NZCA 445, 2015 NZAR 861 at [24]–[25]), I have made findings on an issue by issue basis, rather than a wholesale acceptance or rejection of the evidence of a particular witness.

engagement in this process suggests she did in fact have an intention to sell the property contrary to what she now asserts.

[37] Similarly, Ms Wen’s evidence that she only signed next to $5.28m because she wanted Mr Ngai to leave her alone, and wanted to ensure the agreement did not go ahead, is also implausible. If she truly had no intention of selling the property, then she could have simply refused to engage in the process at all.

[38] Finally, I do not accept Ms Wen’s evidence that she asked Mr Ngai to leave the agreement with her and he refused to do so. I consider it highly unlikely that a real estate agent in Mr Ngai’s position would risk alienating an influential principal like Ms Wen by flatly refusing to do as she asked.

[39] The implausibility of Ms Wen’s evidence about the negotiation process raises doubts about the credibility of her denial of having participated in the telephone conference calls that day.

[40] Both Dr Ngoi and Mr Ngai gave evidence on behalf of the plaintiffs. They both said that the telephone calls were conducted in Mandarin for Ms Wen’s benefit and Dr Ngoi recalled Ms Wen’s distinctive mainland accent. Dr Ngoi said that when he received Mr Ngai’s phone calls he was inspecting another property. He gave the following evidence about what was said during the first call:

I said “How are you? I am from Singapore. I am a developer. I am sincere about buying your property. I have already pre-signed to accept any reduced price from you. Please do your best to reduce your price. Development work involves a lot of risk. With a lower price, it will lower our risk.” I believe that I also casually inquired whether Ms Wen would accept any price below $5m, but she said she would not.

[41] As to what was said during the second call, Dr Ngoi’s evidence was:

Mr Ngai then called me back at around 5.16pm when I was inspecting the inside of the 157 Pah Road house, and the discussion continued. Mr Ngai told me that the vendor had agreed a $20k reduction to $5.28m million. Ms Wen then said to me in Mandarin: “I have already agreed to reduce by

$20k. That is the maximum. Anyway to you developers $20k is a small

amount ... $20k is insignificant to a development project.

I replied: “Okay ... understood, I accept your price. Thank you”.

[42] Mr Ngai’s evidence is that he rang Dr Ngoi at 4.38 pm on arrival at Ms Wen’s house to ensure Dr Ngoi was ready to participate in the conference call. He says he then met with Ms Wen, informed her of Dr Ngoi’s counter-offer to pay any amount below $5.3m, and she then agreed to speak to Dr Ngoi by speaker phone. His evidence about what was said during the calls is broadly consistent with Dr Ngoi’s evidence although he says Dr Ngoi told Ms Wen about the pre-initialling during the second call rather than the first.

[43] In contrast to Ms Wen’s evidence, aspects of Mr Ngai’s and Dr Ngoi’s evidence about the two telephone calls appear plausible. Ms Wen’s participation in the telephone calls is consistent with Mr Ngai’s concern to ensure no misunderstanding arose out of Dr Ngoi’s “offer” which Mr Ngai described as “dangerous”, “unusual” and “strange” at various times in his evidence.

[44] Similarly, Dr Ngoi’s enquiry about whether Ms Wen might reduce her price below $5m in the first call (which he described at trial as a “cheeky” offer) provides some explanation for the break between the two calls. It is also broadly consistent with Mr Ngai’s statements recorded in the Transcript that Dr Ngoi “would go for 5 million at most”. Dr Ngoi’s recollection of precise details such as where he was when he received the calls, and his recollection about Ms Wen’s tone and manner during the calls add credibility to his account.

[45] However, other aspects of Mr Ngai and Dr Ngoi’s accounts are inconsistent with the description of events given by them, or on their behalf, shortly after the events on 14 January 2014.

[46] First, there is no mention of the telephone conference calls in the Transcript. Mr Ngai is recorded as saying the following to Ms Wen:

In the end when you signed for 5.3 million, really I don’t know how to best put it, after the ‘5.3 million’, he met with me and said, “oh could you plead with the vendor to come down a bit”, because he would go for 5 million at most. So, his ‘5 million’ was based on the deal as a whole. Then when I met with him, he had actually already put his signature on the agreement. He said to plead with you, please, to come down a little bit, and he would accept. Therefore if you reduce a bit and you write it down, he would have no problem basically. I didn’t spell that out but – I didn't say that you have to reduce to 5.1 or 5.2, nothing like that – I meant, in other words, to open

up a bit, to show him some respect. Well, then you proposed a maximum of

20 thousands. I accepted your words. I never told him that you wanted 5 –

had wanted more than 5 million originally, otherwise it would be very hard to find yourself a way out. Get it? I was endeavouring to protect you, for you to get a bit more. OK. So he – later when I was leaving, I was driving, and I told him, “Hey, she is now at 5.28 million, say no more, you should understand.” In his mind, put it this way, he had already accepted ...

(emphasis added)

[47] That account suggests that it was Mr Ngai who was presenting Ms Wen with the offer, and that it was Mr Ngai who told Dr Ngoi about Ms Wen’s offer of $5.28m. Those statements are at odds with evidence that the parties spoke directly and reached agreement on price over the phone.

[48] The telephone conversation recorded in the Transcript took place two days after the events in question, when memories were still fresh. Mr Ngai and Ms Wen discussed what had happened on 14 January 2014. If there had been a direct telephone discussion where agreement had been reached, and Ms Wen had been told about the pre-initialling, then it is reasonable to expect that Mr Ngai would have referred to that in the course of a conversation some two days later. The fact that he did not do so casts doubt on the reliability, if not the credibility, of both Mr Ngai and Dr Ngoi’s evidence.

[49] Second, the early correspondence from the solicitors acting for Mr Ngai, and Dr Ngoi, does not mention any direct phone calls. I accept the solicitors may not have been properly briefed as Mr Gault submits. Nevertheless, the account given in those letters is broadly consistent with Mr Ngai’s account recorded in the Transcript. That is, Mr Ngai presented Dr Ngoi’s offer; Ms Wen agreed to reduce the price to

$5.28m; and Mr Ngai subsequently informed Dr Ngoi of Ms Wen’s reduced price.

[50] That same account is also repeated in correspondence on behalf of Mr Ngai to the Complaints Assessment Committee for the Real Estate Agents Authority. In an interview with an investigator for that Authority, Mr Ngai did not mention any telephone calls in which Ms Wen reached agreement directly with Dr Ngoi. That would have been a key fact to mention in defence of an allegation that Mr Ngai did not act in Ms Wen’s best interests in my view. The fact that it was not mentioned

raises doubts about the credibility or, at the very least, the reliability, of Mr Ngai’s

evidence.

[51] Third, there was no mention of telephone conference calls in Dr Ngoi’s affidavit filed in support of an application that a caveat not lapse sworn 4 July 2014. In that evidence, Dr Ngoi deposed that Mr Ngai told him that he would ring him once the contract was binding; that Mr Ngai took the signed contract to Ms Wen; and that after Ms Wen had signed, Mr Ngai contacted him from his car and told him there was a binding contract.

[52] The first time Dr Ngoi mentioned a telephone call was in an affidavit sworn

11 August 2014 in support of an application for summary judgment. Dr Ngoi’s account in that affidavit was that there was only one phone call, and that Mr Ngai told him at the outset that Ms Wen had agreed to $5.28m. After seeing a copy of Mr Ngai’s phone log, Dr Ngoi filed a reply affidavit accepting that there were two separate calls but very close together.

[53] I agree with Mr Bigio’s submission that the evidence concerning the telephone calls appears to have evolved over time. The evolution of that evidence calls into question Dr Ngoi’s recollections about the two telephone calls.

[54] Overall, I consider the question of whether Ms Wen participated in the phone calls to be finely balanced. The implausibility of much of Ms Wen’s evidence casts a shadow over her denials that the calls took place. Yet, the fact that the conference calls were not mentioned in either the Transcript, solicitor’s correspondence, Real Estate Complaints Assessment investigations and early affidavit evidence filed in this proceeding, raises substantial doubt about whether they did in fact take place as Dr Ngoi and Mr Ngai assert.

[55] The plaintiffs bear the burden of proof on the balance of probabilities. In the face of significant doubts about Dr Ngoi and Mr Ngai’s evidence, I do not consider they can discharge that burden.

[56] I therefore find that Ms Wen did not participate in the phone calls on

14 January 2014, and an oral agreement was not reached between the parties at that time.

Acceptance of Dr Ngoi’s “offer”?

[57] Although I have found that an oral agreement was not reached directly by phone, a contract may nevertheless have formed if Ms Wen’s initials on the agreement signalled an acceptance of Dr Ngoi’s “offer” to accept any amount below

$5.3m.

[58] Although the plaintiffs’ analysis follows the traditional offer and acceptance model, the issue could be equally framed as one of intention, and in particular, Ms Wen’s intention at the time she initialled the agreement.

[59] An intention to create legally binding relations does not follow from an agreement on sufficiently certain terms. It is a separate element which must be proved in order for a contract to have formed.⁶

[60] The parties’ intention is to be determined objectively. Whether a contract has been formed involves considering the background circumstances from which it arose and the parties’ subsequent conduct.⁷ The events both pre- and post- Ms Wen’s initialling of the agreement are therefore considered below.

Pre-initialling events

[61] Up until the point that Dr Ngoi pre-initialled a blank space, the parties had been making offers and counter-offers by each party specifying a certain price in the agreement and initialling next to that price. Dr Ngoi’s pre-initialling of a blank space, accompanied by an oral offer, was a departure from the manner in which those

_{negotiations were conducted.}

⁶ _{Burrows, Finn and Todd, above n 4, at [5.1].}

⁷ Fletcher Challenge, above n 3, at [54]–[55].

[62] Whether Ms Wen intended to accept Dr Ngoi’s “offer” when she initialled the agreement therefore depends in large part on whether she knew that Dr Ngoi had pre-initialled the agreement, and whether Dr Ngoi’s offer was presented to her as an offer capable of acceptance. That issue turns on the credibility and reliability of the evidence given by Ms Wen and Mr Ngai.

[63] Ms Wen’s evidence in chief was limited to saying that Mr Ngai had not told her about the pre-initialling. However, during cross-examination she added that she had asked Mr Ngai whether the other party had signed or initialled anything and he said no. Those answers lack credibility in my view. A conversation on a significant issue in dispute is material evidence which could reasonably have been expected to have been disclosed before the trial commenced. There was no reference to such an important conversation until Ms Wen was cross-examined.

[64] Furthermore, it is implausible to suggest that Mr Ngai would have deliberately lied to Ms Wen about the pre-initialling had he been asked about it. It was not in his interest to do so. The lack of credibility in Ms Wen’s answers in cross-examination raise doubt about the truthfulness of her denial that she knew of the pre-initialling.

[65] In contrast, Mr Ngai’s evidence that he drew Ms Wen’s attention to Dr Ngoi’s initials is credible given the initials were very close to where Ms Wen eventually signed. However, the reliability of Mr Ngai’s evidence is again called into question by the conversation recorded in the Transcript. In response to Ms Wen’s claims that she had rung Mr Ngai and told him that she wanted to cancel, Mr Ngai says the following:

Uh, uh. Well, at that point of time I was driving almost into Botany, I knew I was about to meet with him in McDonald when I received your call, I am very sure of that. In fact you did not say you wanted to cancel. What you said was, “Hey, can’t do, my son is very upset. In other words, this is not enough.” As I sensed that the situation was not good as being in a stalemate, I told you that I would speak to the vendor – the purchaser straight away to change it – [to see] whether anything could be adjusted to address the issues. That was what I had meant. I didn’t go, “Oh, you are cancelling, so I will cancel it.” I didn't do that. Because my thoughts were that he – look, he had already signed on the side, [which] I didn't tell you, ok. Uh?

(emphasis added)

[66] Later on in the conversation there is the following exchange:

KN [ Mr Ngai]: You still didn’t hear the explanation I gave you in relation to

what had happened in the process.

GW [Ms Wen]: In the process, even before you – before he signed, I had already told you that I disagree.

KN: I am telling you - earlier on I have told you that he had in fact already signed - had already signed. I am not lying to you.

GW: Didn’t you tell me that you were on your way?

KN: Beside where you put your signature, he had already written down his name. Get it? He had already given me the instruction, that he would accept any price you put down. That’s why I told you to reduce as much as you could. Later on you said ‘20 thousand’ so that was put down. In reality he had already accepted [it] in his mind.

GW: Mr [Ngai], in theory, after I signed off on my offer of 5.28 million,

shouldn’t he sign against that too?

KN: He didn’t. He – his name was already there, he had already signed.

[67] Mr Ngai states that the first statement he made in the Transcript (the italicised portion at [65]) has been translated inaccurately. A more accurate recording of what he said would be “I didn’t tell you, uh”. Mr Ngai says he said this to Ms Wen in surprise and that he was not agreeing with what she said; rather, he was challenging her statement.

[68] I do not accept Mr Ngai’s explanation of his first statement. A challenge to Ms Wen on this point is at odds with the general tenor of the conversation as a whole. At several points in the Transcript Mr Ngai says that he did not “spell out” the process to Ms Wen, and that she “didn’t know what I had done”. He blames himself for the misunderstanding which had arisen. Those statements are inconsistent with Mr Ngai challenging Ms Wen on this point. I consider the Transcript casts significant doubt on whether Mr Ngai did in fact point out the pre- initialling to Ms Wen, or, if he did so, whether she appreciated and understood the significance of the pre-initialling.

[69] The conversation recorded in the Transcript also suggests that the terms of Dr Ngoi’s “offer” may not have been presented to Ms Wen as an offer capable of acceptance. Mr Ngai refers to Dr Ngoi asking him to “plead with the vendor to come down a bit” and that “if you reduce a bit and you write it down, he would have no problem basically”. Mr Ngai is also recorded as saying that he wanted Ms Wen to “open up a bit, to show him [Dr Ngoi] some respect”, and later on as saying that he asked Ms Wen to “reduce as much as you could”. Those statements are consistent with Ms Wen’s evidence that Mr Ngai told her to “reduce her price a bit and he would probably buy”. This suggests that Ms Wen was being asked to revisit and restate the price at which she was prepared to sell. In other words, she was being asked to make a further counter-offer rather than accept an offer presented to her in clear and uncertain terms.

[70] On balance, and objectively assessed, I do not consider the evidence shows that Ms Wen knew about the pre-initialling or knew that Dr Ngoi had made an offer to accept anything below $5.3m. There is no proof of an offer capable of acceptance having been presented to Ms Wen, and so no agreement can have formed on the traditional model of contract analysis. The same conclusion is reached if the alternative model of analysis is followed. Objectively construed, the events leading up to Ms Wen’s signing of the agreement suggest she did not intend to become immediately bound, and only intended to make a counter-offer at the time she initialled the agreement.

Post-initialling events

[71] When considering whether or not a contract has been formed it is permissible to look at the subsequent conduct of the parties, including what they have said to each other after the date of the alleged contract.⁸

[72] Both parties rely on the 5.37 pm call from Ms Wen to Mr Ngai as supporting their version of events. Although precisely what was said during that call is in

_{dispute, there is no disagreement that Ms Wen indicated during the call that she}

⁸ Fletcher Challenge, above n 3, at [56].

wanted to change the due diligence clause. The plaintiffs characterise the call as a variation to the agreement earlier formed. Ms Wen characterises the call as a withdrawal of her counter-offer.

[73] The plaintiffs’ characterisation of the call is supported by Ms Wen’s various statements in the Transcript that she had told Mr Ngai that the “agreement” had to be “cancelled” during this call. For example, Ms Wen is recorded as saying the following:

I told you, from the start, that day when I asked you to cancel, I already told you that it was me who hadn’t contemplated thoroughly before action, that it was me who erred, I told you that repeatedly. There was nothing wrong with what you have just said before. You have gone back and forth to do a lot of work, I know of all that. However after my signing on that day, I immediately called you. I said that one of the issues, after discussion with my son, one of the issues was that the period being too lengthy; that the other issue was that the settlement day being too far away; that I didn’t want to sell the land any more. I raised all those issues to you didn’t I? Isn’t that true, Mr [Ngai]?

(emphasis added)

[74] And later in the conversation, Ms Wen (GW) and Mr Ngai (KN), have the following exchange:

GW: That day, after I have signed for 5.28 million I rang you on the spot.

I said that, simply put, that agreement was unreasonable to me, and it needed to be voided. I clearly expressed my position to you that

day.

KN: But that night we were still in negotiation...

GW: What you are doing is equivalent to asking me to honour my original agreement. That is wrong, because at that time I had clearly expressed my position to you that I would not accept that agreement. The ’45 days’ - Why, if I were in acceptance of the agreement, would I need [to raise the issues about] ’45 days’ as well as the settlement date? Do you agree, Mr [Ngai]? In any event, help me to ...

KN: If you proposed ’45 days’, if you proposed ’45 days’ or putting in a cancellation clause, it meant the agreement was still being negotiated.

GW: ... I did not accept this agreement, isn’t that right, Mr [Ngai]? If I

had accepted, I wouldn’t have raised those conditions. Correct?

KN: But on the other hand, on the other hand if you were to cancel, then there would have been no need to discuss those. Dear me! I don’t want to offend your side again.

(emphasis added)

[75] Ms Wen is also recorded as offering to compensate Mr Ngai for his time, and indicating that negotiations for a new agreement can commence when she returns from her overseas trip.

[76] I accept that these passages in the Transcript, and the offers of compensation, suggest that Ms Wen knew and understood that an agreement was in force and that she was looking to re-negotiate its terms. But I consider little, if any, weight should be ascribed to the use of words such as “agreement” and “cancellation” when those words have been translated from Mandarin, and have legal significance in the English language. In my view, it is the substance of what is conveyed, rather than the labels which the parties use, which is important in assessing intention.

[77] Disentangled from their legal meaning, Ms Wen’s statements are equally consistent with an intention to alter the terms of a counter-offer, as they are with an intention to vary an agreement. The offer to pay compensation to Mr Ngai, and later Dr Ngoi, can also be construed as a means by which the current problem might be resolved. It does not necessarily mean that Ms Wen intended to be bound at the time she initialled the agreement.

[78] The fact that seven phone calls were placed from Mr Ngai to Ms Wen during the meeting with Dr Ngoi at the Botany McDonalds evidences some anxiety on Mr Ngai’s part in trying to meet Ms Wen’s requirements. But that would be so whether Ms Wen had made a counter-offer, or whether she had indicated a desire to alter the terms of an agreement recently formed. This subsequent conduct reveals little about Ms Wen’s intention at the time she signed in my view.

[79] What is clear from the Transcript is that Mr Ngai believed that a binding agreement had formed between the parties. But his subjective belief as to whether an agreement had been formed is irrelevant. What Mr Ngai did or did not believe

has no bearing on Ms Wen’s intention objectively construed, and no bearing on

whether an agreement between the parties had been formed.

[80] For the same reason, I consider little weight can be put on the fact that Ms Wen signed two variation forms the following day. I do not accept Mr Ngai’s evidence that it was Ms Wen who suggested an “escape clause” variation. Mr Ngai is recorded as saying that it was him who thought of the escape clause and it was him who proposed it to Ms Wen. Although other passages in the Transcript could be interpreted as Ms Wen suggesting it, I consider it much more likely that Mr Ngai did so. Although Ms Wen has bought and sold a number of properties, her evidence was that she did so using real estate agents, and in reliance on their advice. Mr Ngai’s experience in preparing sale and purchase agreements make it much more likely that he suggested the escape clause variation rather than Ms Wen.

[81] The use of a variation as the legal mechanism to give effect to Ms Wen’s desire to alter the settlement clause does not have any bearing on what she intended at the time she initialled the agreement. I do not consider the variations can be relied on as evidence of an agreement having been earlier formed between the parties.

[82] On balance, I consider the subsequent conduct of the parties has little probative value in the objective assessment of Ms Wen’s intention at the time she initialled the agreement. It is as equally consistent with an agreement having been formed, as it is with a counter-offer having been made.

[83] Considering the evidence in its entirety, there is insufficient evidence of an agreement having been formed. Rather, the weight of the evidence suggests that Sewn only intended to make a counter-offer at the time she initialled the agreement.

Acceptance of Ms Wen’s counter-offer?

[84] That does not dispose of the case. The third alternative posed by the plaintiffs is that a contract was formed by Dr Ngoi accepting Ms Wen’s counter-offer during the phone call with Mr Ngai at 5.30 pm, and Mr Ngai communicating that acceptance to Ms Wen during the 5.37 pm call.

[85] Whether an agreement was formed on that basis turns on whether the parties intended to become bound in that manner.⁹ In the case of sale and purchase of land, the usual inference is that the parties intend to only be bound by a formal document signed by both parties.¹⁰ To overcome the normal inference there must be a clear indication that this was the intention of the parties.¹¹ The policy reason behind such a principle is summarised in the oft-cited passage from Eccles v Bryant:¹²

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 to the terms of it.

[86] The principle has been applied in a number of cases where agreement on essential terms was reached, but the manner in which the parties intended to be bound meant that no agreement was found to have formed.¹³

[87] In Smith v Taylor, the purchaser’s solicitor drew up an agreement in standard form for the sale and purchase of a farm.¹⁴ The purchasers initialled next to changes in the values for the refrigeration unit and the ice bank contained in a list of plant and chattels annexed to the agreement. The agreement was presented to the vendor, who decided that he did not want to include the ice bank in the sale, and so deleted it from the list, initialling the alterations made by the purchaser as well as his own. The

purchasers were informed of this by phone and indicated that they would be content to proceed with the sale on that basis. The purchasers’ solicitor informed the vendor’s solicitor of that by phone and asked for the agreement to be sent to him. The vendor subsequently instructed his solicitor to cancel the sale and the purchasers’ solicitor was informed by telegram that the vendor withdrew the counter-

_offer.

⁹ Wilmott v Johnson [2002] NZCA 309; [2003] 1 NZLR 649 (CA) at [37]; and Eccles v Bryant [1948] Ch 93 (CA) at

_104.

10. Carruthers v Whittaker [1975] 2 NZLR 667 (CA); Verissimo v Walker [2006] 1 NZLR 760 (CA); and Smada Group Ltd v Miro Farms Ltd (2008) 6 NZ ConvC 194, 588 (CA).

¹¹ _{McMorland, above n 4, at [3.11].}

¹² _{Eccles v Bryant, above n 8 at 99.}

13. See for example Smada Group Ltd, above n 9, at [34]; and Pascoe Properties Ltd v Attorney- General [2014] NZCA 616, [2015] NZAR 454 at [72].

¹⁴ Smith v Taylor CA 9/85, 16 December 1987.

[88] The Court held that parties might contemplate one method of being bound at the beginning of their negotiations but they are free to change to the other. But, if they start out by adopting the ordinary method of a completely written agreement there must be “a clear indication from both sides to settle for something else”.¹⁵ In that case the evidence did not go so far, and the Court found that the parties did not regard themselves as bound until all alterations had been initialled. As the

alterations had not been initialled by the purchasers before the offer was withdrawn, there was no concluded contract.

[89] In this case, the parties had been conducting their negotiations by the exchange of written offers initialled by each party. That form of negotiation contemplated an acceptance of an offer by the initial of the offeree. There is no evidence to suggest that Ms Wen intended to depart from the way the parties had been conducting themselves up until that point. In fact, Ms Wen’s statements in the Transcript suggest that she understood that Mr Ngai was taking the agreement to Dr Ngoi so that he could sign it for this very purpose. Dr Ngoi’s question to Mr Ngai about whether an initial after the price was still required suggests that Dr Ngoi may also have maintained an intention to become bound this way, despite his change in approach.

[90] I do not accept the plaintiffs’ submission that Mr Ngai had express, implied or apparent authority to modify the precise manner in which Ms Wen would become bound. The authority of a real estate agent does not extend to creating legal and binding contractual relationships unless there is express authority given in those terms.¹⁶ There is no evidence that Ms Wen authorised Mr Ngai to receive a verbal acceptance of her counter-offer from Dr Ngoi.

[91] It follows that Dr Ngoi’s acceptance of Ms Wen’s counter-offer during the phone call at 5.30 pm could not bind Ms Wen to an agreement. She did not intend to become bound until Dr Ngoi had signalled his acceptance of her offer by initialling next to the price inserted into the agreement. That did not occur and a binding

_{agreement was not formed.}

¹⁵ _{At 6.}

16. McMorland, above n 4, at [1.07(a)]; and Dong v Sun [2014] NZHC 208, (2014) 15 NZCPR 452 at [58].

Summary of findings

[92] In summary, I have found that an oral agreement was not formed between the parties because the plaintiffs cannot prove that Ms Wen participated in the telephone calls on 14 January 2016.

[93] I have also found that an agreement was not formed at the time Ms Wen initialled the agreement as she did know about Dr Ngoi’s pre-initialling of the agreement, and Dr Ngoi’s “offer” was not presented as an offer capable of acceptance. The scheme of the evidence pre- and post-Ms Wen’s initialling is that she intended to make a counter-offer when she initialled next to the price of $5.28m.

[94] Finally, I have found that an agreement was not formed by Dr Ngoi verbally

accepting Ms Wen’s counter-offer during the telephone call with Mr Ngai at

5.30 pm. The plaintiffs cannot prove that Ms Wen intended to become bound in this manner. Rather, the weight of the evidence suggests Ms Wen only intended to become bound upon Dr Ngoi initialling next to the price of $5.28m.

[95] It follows from these findings that a binding and enforceable sale and purchase agreement was not formed between the parties.

Section 24 of the Property Law Act

[96] My finding on the primary issue makes it unnecessary to make separate findings on Ms Wen’s claim that the agreement is unenforceable under s 24 of the Property Law Act.

[97] Nevertheless, for completeness, I record that had I found that a contract was formed, I would have found that it was enforceable under s 24 of the Property Law Act 2007. The terms of the contract were recorded in writing and it had been signed by the party against whom the contract was sought to be enforced.

Result

[98] The plaintiffs’ claim is dismissed.

[99] If costs cannot be agreed, then a memorandum of counsel in support of costs shall be filed within 20 working days of receipt of this judgment, and a memorandum in reply filed within 10 working days thereafter. Costs will be

_{determined on the papers.}

Edwards J