Armishaw v Huang
[2022] NZHC 2484
•29 September 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-2461
[2022] NZHC 2484
BETWEEN GRANT PAUL HOWARD ARMISHAW
Plaintiff
AND
DE SHAN HUANG
and
XIU FENG HUANGDefendants
Hearing: 26 July 2022 Appearances:
A J Woodhouse for the Plaintiff K Sun for the Defendant
Judgment:
29 September 2022
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
This judgment was delivered by me on 29 September 2022 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
Woodhouse Law, Auckland, for the Plaintiff
ARMISHAW v HUANG [2022] NZHC 2484 [29 September 2022]
Introduction
[1] Grant Armishaw applies for summary judgment against De Shan Huang and Xiu Feng Huang for transfer of a property in central Auckland.1 Mr Armishaw entered into a binding agreement with Mr and Mrs Huang to purchase an apartment at Metropolis Apartments on Courthouse Lane, Auckland. He says that he was ready, willing and able to settle the transaction. However, Mr and Mrs Huang refused to do so, without valid excuse. Mr Armishaw says that they have no arguable defence to his claim and they should be compelled to complete the transfer of the property.
[2] Mr and Mrs Huang oppose the application. They say that they only understand Mandarin Chinese and cannot read or speak English. They assert that the real estate agent omitted to insert a condition into the agreement which they had specifically instructed her to insert. As a result, they claim that the agreement ran contrary to their express intentions. Mr and Mrs Huang claim that they have arguable defences, under which they are entitled to cancel the agreement or the agreement was void ab initio.
[3]The issues in relation to this application are:
(a)Has Mr Armishaw satisfied the Court that Mr and Mrs Huang have no arguable defence to his claim?
(b)If so, should the Court exercise its residual discretion not to order summary judgment?
Factual background
[4] Mr and Mrs Huang are a retired couple residing at Metropolis Apartments, 1 Courthouse Lane, Auckland Central. They are the registered owners of Apartment 1707. The property is described on the Record of Title as consisting of Principal Unit 17G (the apartment) and Accessory Units C41 and 4F (the carpark and storage area) (the Property).
1 High Court Rules 2016, r 12.2.
[5] Mr Armishaw is an international airline pilot currently living in Doha, Qatar. His mother, Heather Armishaw — who, along with her son, has sworn an affidavit in support of this application2 — and his father own three apartments at Metropolis Apartments. Mr Armishaw’s sister owns one apartment. All are leased to the hotel operating in the complex, Avani, which pays a fixed rate of return.
[6] Intending to invest in an apartment himself as a “hands-off” investment, Mr Armishaw was immediately interested in the Property when it was advertised for sale. He deposes that, from memory, the Property had been advertised without a carpark or storage unit. During negotiations, the agent asked whether he would be interested in buying the carpark and storage unit for the further $150,000 sought by Mr and Mrs Huang. Mr Armishaw declined.
[7] On 5 March 2021, Mr Armishaw entered into a written agreement for the sale and purchase of the Property (the Agreement). Under the Agreement:
(a)the purchase price was $552,500;
(b)the deposit was 10 per cent of the purchase price, payable on the day the sale became unconditional;
(c)the sale was conditional on finance being obtained 10 working days from the settlement date;
(d)the settlement date was 20 working days from the date of the sale becoming unconditional;
(e)the Property was leased to Avani;
(f)the general terms of the sale were as per the ADLS/REINZ form of Agreement for Sale and Purchase of Real Estate (tenth edition); and
2 See the affidavit of Grant Paul Howard Armishaw sworn 20 December 2021 and the affidavit of Heather Jeanette Armishaw affirmed 16 December 2021.
(g)under cl 20 of the further terms of sale, the Accessory Units currently on the title of the Property were not included in the sale and would be removed from the title at the vendor’s cost prior to settlement.
[8] On 16 March 2021, Mr Armishaw paid the deposit of $55,250 to Mr and Mrs Huang’s real estate agent, City Sales Ltd. On 19 March 2021, Mr Armishaw’s solicitors confirmed the finance condition had been fulfilled.
[9] Mr and Mrs Huang’s solicitors, SJ Lawyers, confirmed by email three days later that settlement would take place on 20 April 2021. They advised Mr Armishaw’s solicitors of the steps they would take to remove the Accessory Units from the title and obtain new titles (for the Property being sold and for the property to which those Accessory Units would be transferred). It is not disputed on the evidence that Mr and Mrs Huang intended to transfer the Accessory Units to Unit 2303, the apartment they owned with their son, Gang Huang.
[10] On 15 April 2021, in line with cl 3.17(1) of the Agreement, Mr Armishaw’s solicitors emailed Mr and Mrs Huang’s solicitors advising that settlement would be scheduled for 10 working days following the issue of the new title for the Principal Unit. Mr and Mrs Huang’s solicitors replied by email confirming their agreement.
[11] Mr Armishaw became concerned about the timeframe for settlement and instructed his solicitors to email Mr and Mrs Huang’s solicitors for an update on the removal of the Accessory Units from the title. By email on 8 May 2021, Lucia Gao of City Sales stated that there was a “legal issue impeding the vendor from transferring the carpark and storage locker to the other title” and asked Mr Armishaw if he was able to explore other options for settlement. Later, on 14 May 2021, Mr and Mrs Huang’s solicitors advised that progress was slow due to “unexpected family issues” outside Mr and Mrs Huang’s control, and this meant they would be unable to remove the Accessory Units from the title prior to settlement.
[12] Over June and July 2021, Mr Armishaw’s solicitors followed up with Mr and Mrs Huang’s solicitors. When settlement did not occur, Mr Armishaw’s solicitors told
Mr and Mrs Huang’s solicitors by email on 23 June 2021 that their clients were in breach of contract and this gave Mr Armishaw the right to seek specific performance and compensation under cl 10 of the Agreement. They required Mr and Mrs Huang to settle the transaction with the title “as is”.
[13] Mr and Mrs Huang took no action. Mrs Armishaw deposes that on 16 July 2021, she phoned LINZ to inquire whether any application had been made to transfer the Accessory Units from the Property to another title. LINZ informed her that no application was made but it was a relatively simple process to transfer the Accessory Units from one Principal Unit to another in the same development. She says that this was confirmed by the Body Corporate when she contacted them by email in December 2021. They informed her that there had been multiple instances in recent years of Accessory Units being sold and transferred to the owners of other Principal Units at Metropolis Apartments.
[14] On 19 July 2021, SJ Lawyers advised that Mr and Mrs Huang were unable to settle the transaction. They also stated that they were no longer instructed by Mr and Mrs Huang and Mr Armishaw’s solicitors should contact Mr and Mrs Huang directly in future.
[15] Mr Armishaw sought advice from Mr Woodhouse of Woodhouse Law, a litigation firm. On 8 September 2021, Mr Woodhouse issued a settlement notice. On 19 September 2021, Mr Huang emailed Mr Woodhouse asking for an extension of time to respond to the notice as they were having difficulties seeking advice in Mandarin during the COVID-19 lockdown. Mr Armishaw’s solicitors replied on 21 September, agreeing that no further steps would be taken in pursuance of the settlement notice until the following week.
[16] The parties engaged in further communications with little progress. On 12 October 2021, Mary Amodeo of City Sales emailed Mr Armishaw, explaining that Mr Huang claimed that he could not settle the sale because Auckland Council would not permit transfer of the Accessory Units. She said Mr Huang had told Ms Gao that Mr Armishaw should consider buying another apartment at Metropolis Apartments and referred to paying compensation to Mr Armishaw.
[17] On 20 October 2021, Mr Woodhouse was emailed a letter from Mr Huang (translated from Mandarin). The letter summarises Mr and Mrs Huang’s argument in opposition to this application — that they were misled by Ms Gao and exploited due to their age and language difficulties.3 They say they told Ms Gao on 5 March 2021 that:
(a)they only wished to sell the apartment;
(b)the sale of the apartment had to be conditional on the carpark and storage area being successfully transferred from the title of the Property to the title of Unit 2303; and
(c)they, as vendors, were to be entitled to cancel the sale if the carpark and storage area could not be removed from the title.
[18] Mr Huang deposes that Ms Gao confirmed that she understood their instructions and would insert a condition into the Agreement to the effect of (c) above. However, she did not do so. She also failed to explain the effect of cl 20 to Mr and Mrs Huang in Mandarin. Clause 20 imposes an obligation on Mr and Mrs Huang to remove the Accessory Units and means that settlement would be 20 working days after the Agreement became unconditional, irrespective of whether the Accessory Units could be removed. In the event, Gang Huang refused to authorise the transfer. Mr and Mrs Huang said that they then told their lawyer that they no longer wished to sell the Property.
[19] On 23 December 2021, Mr Armishaw filed his statement of claim in this proceeding. He applied for summary judgment the same day.
3 See the affidavit of De Shan Huang affirmed 12 May 2022 (translation by Yue Wei dated 13 May 2022).
Hearsay evidence objection
[20] Mr Kenneth Sun, for Mr and Mrs Huang, submits that certain aspects of Mr Armishaw’s evidence are hearsay and accordingly should not be admitted to the Court file. These are:
(a)evidence given by Mr Armishaw on behalf of Ms Mary Amodeo (who is not a deponent) as to the existence of a clause similar to cl 20 of the Agreement for sale and purchase in an earlier contract of sale of the Property; and
(b)evidence of Ms Walia that alleges Ms Amodeo asserted the Agreement was reviewed by Mr and Mrs Huang’s solicitor prior to signing — again, Mr Sun says this is hearsay evidence given by Ms Walia on behalf of Ms Amodeo.
[21] In my view, Mr Sun’s objections to this evidence are valid and it will not be taken account of in the judgment.
Legal principles
[22] Rule 12.2(1) of the High Court Rules 2016 provides that the Court may give judgment against a defendant if the plaintiff has satisfied the Court that the defendant has no defence to a cause of action in statement of claim or a part of any cause of action.
[23] The relevant principles governing a summary judgment application are well established:4
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents.
4 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].
But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[24]The wording of r 12.2 (“may give judgment”) indicates a residual discretion.
Having regard to the various authorities, the position appears to be as follows:5
(a)The discretion implied by the use of the word “may” is to be restrictively applied. In a great majority of cases, once the court is satisfied the defendant has no defence, there is no room for the exercise of discretion.
(b)The residual discretion may be invoked to avoid oppression or injustice to the defendant where:
(i)The proceeding involves the actions or possible liability of a third party which is not before the court;
(ii)The proceedings are such that the opportunity should be given to allow discovery or other interlocutory applications to be concluded;
(iii)The circumstances of the case disclose very unusual features, the presence of which leads the court to conclude that the entry of summary judgment would be oppressive or unjust; or
(iv)The combination of complex issues of fact and law justify the dismissal of the application for summary judgment, either as a matter of discretion or because the court cannot be satisfied that the defendant has no defence.
(c)Even where the court is not satisfied that a defence has been made out, in exceptional circumstances the application may be adjourned to allow for other processes to be followed.
Contract and Commercial Law Act 2017 (CCLA)
[25]Section 24 of the CCLA provides:
24 Relief may be granted if mistake by one party is known to another party or is common or mutual
(1)A court may grant relief under section 28 to a party to a contract if,
(a)in entering into the contract,—
5 Andrew Beck and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at [HR12.2.11].
(i)the party was influenced in the party’s decision to enter into the contract by a mistake that was material to that party, and the existence of the mistake was known to the other party or to 1 or more of the other parties to the contract; or
(ii)all the parties to the contract were influenced in their respective decisions to enter into the contract by the same mistake; or
(iii)the party and at least 1 other party were each influenced in their respective decisions to enter into the contract by a different mistake about the same matter of fact or of law; and
(b)the mistake or mistakes resulted, at the time of the contract,—
(i)in a substantially unequal exchange of values; or
(ii)in a benefit being conferred, or an obligation being imposed or included, that was, in all the circumstances, a benefit or an obligation substantially disproportionate to the consideration for the benefit or obligation; and
(c)in a case where the contract expressly or by implication provides for the risk of mistakes, the party seeking relief (or the party through or under whom relief is sought) is not obliged by a term of the contract to assume the risk that that party’s belief about the matter in question might be mistaken.
(2)The relief may be granted in the course of any proceeding or on application made for the purpose.
(3)For the purposes of subsection (1)(a)(i) and (iii), the other party or other parties must not be a party or parties who have substantially the same interest under the contract as the party seeking relief.
[26]Section 28 of the CCLA provides:
28 Nature of relief
(1)If, under sections 24 to 26, the court has power to grant relief, the court may make any order that it thinks just.
(2)In particular, but without limiting subsection (1), the court may do 1 or more of the following things:
(a)declare the contract to be valid and subsisting in whole or in part or for any particular purpose:
(b)cancel the contract:
(c)grant relief by way of variation of the contract:
(d)grant relief by way of restitution or compensation.
(3)The court may, by an order made under this section,—
(a)vest the whole or any part of any relevant property in a party; or
(b)direct a party to transfer or assign the whole or any part of any relevant property to any other party; or
(c)direct a party to deliver the whole or any part of the possession of any relevant property to any other party.
(4)In subsection (3), —
party means a party to the proceeding
relevant property means real or personal property that was the subject of the contract or was the whole or part of the consideration for the contract.
(5)An order may be made on the terms and conditions that the court thinks fit.
[27]Section 37 of the CCLA provides:
37Party may cancel contract if induced to enter into it by misrepresentation or if term is or will be breached
(1)A party to a contract may cancel it if—
(a)the party has been induced to enter into it by a misrepresentation, whether innocent or fraudulent, made by or on behalf of another party to the contract; or
(b)a term in the contract is breached by another party to the contract; or
(c)it is clear that a term in the contract will be breached by another party to the contract.
(2)If subsection (1)(a), (b), or (c) applies, a party may exercise the right to cancel the contract if, and only if,—
(a)the parties have expressly or impliedly agreed that the truth of the representation or, as the case may require, the performance of the term is essential to the cancelling party; or
(b)the effect of the misrepresentation or breach of the contract is, or, in the case of an anticipated breach, will be,—
(i)substantially to reduce the benefit of the contract to the cancelling party; or
(ii)substantially to increase the burden of the cancelling party under the contract; or
(iii)in relation to the cancelling party, to make the benefit or burden of the contract substantially different from that represented or contracted for.
(3)Subsection (1) is subject to the rest of this subpart, but does not limit section 36.
The application
[28] Mr Armishaw asserts that summary judgment should be granted because Mr and Mrs Huang have no arguable defence to his claim. He seeks:
(a)an order for specific performance that Mr and Mrs Huang transfer the Property, comprising the Principal Unit and excluding the Accessory Units, to him;
(b)in the alternative, an order for specific performance that Mr and Mrs Huang transfer the Property, comprising the Principal Unit as well as the Accessory Units, to him on his undertaking to re-transfer the Accessory Units to Mr and Mrs Huang (or to their direction) or to account to Mr and Mrs Huang for the proceeds of their sale;
(c)compensation from Mr and Mrs Huang in accordance with cl 3.13(5) and (6) of the Agreement; and
(d)costs.
[29] Mr and Mrs Huang say that Mr Armishaw’s application should be dismissed because they have several affirmative defences to his claim, specifically:
(a)misrepresentation under s 37 of the CCLA;
(b)mistake under ss 24 and 28 of the CCLA; and
(c)non est factum.
[30] Mr and Mrs Huang also argue that specific performance is unavailable in this case.
Submissions
Mr Armishaw
[31] Mr Anthony Woodhouse, for Mr Armishaw, submits that none of the defences raised by Mr and Mrs Huang are credible. With regard to misrepresentation, he says that s 37 requires Mr and Mrs Huang to show that Ms Gao was acting on Mr Armishaw’s behalf, when in reality she was engaged by City Sales to act for Mr and Mrs Huang. Mr Woodhouse further says that the evidence reflects that their intention was actually to remove the carpark and storage area from the title and sell it, meaning there could not have been any misrepresentation surrounding the insertion of cl 20.
[32] In terms of mistake, Mr Woodhouse submits that the evidence runs counter to Mr and Mrs Huang’s claims that they made a genuine mistake, and even if one had been made, there is no basis for concluding that Mr Armishaw had knowledge of that mistake.
[33] Mr Woodhouse further submits that Mr and Mrs Huang cannot rely on the doctrine of non est factum because the argument that what they signed was substantially different to what they intended is untenable for the reasons already outlined. He submits that Mr and Mrs Huang must have some English proficiency. They would be familiar with agreements for sale and purchase of land, having acquired their apartments and lived in New Zealand for about 20 years.
[34] Finally, Mr Woodhouse submits that no unfairness would arise from an order for specific performance in these circumstances, and it is the only real remedy available to Mr Armishaw.
Mr and Mrs Huang
[35] Mr Kenneth Sun, for Mr and Mrs Huang, submits the defence of misrepresentation is available to them because Ms Gao falsely represented to them
that the Agreement was drafted in accordance with their instructions, and that it is arguable that this misrepresentation was made by the agent on behalf of Mr Armishaw. Mr Sun submits that Mr and Mrs Huang were induced to enter into the Agreement by this misrepresentation and the burden of the Agreement (that is, that they would be unable to cancel if the Accessory Units could not be removed) was substantially different to what they had contemplated. Mr Sun submits that, as a consequence, Mr and Mrs Huang are entitled to cancel the Agreement under s 37.
[36] Mr Sun submits that ss 24 and 28 in relation to mistake apply: Mr and Mrs Huang mistakenly thought Ms Gao had inserted the condition they requested, Mr Armishaw knew or ought to have known about the mistake because no reasonable vendor would insert the removal of the Accessory Units as a term as opposed to a condition, and due to the mistake Mr Armishaw was able to obtain the carpark and storage area without paying the market price for those units (that is, the mistake led to a substantially unequal exchange of values between the parties).
[37] Mr Sun submits that Mr and Mrs Huang can plead non est factum to render the Agreement void because the contract was of a fundamentally different character from what they intended. He submits that the Court of Appeal decision Golden Garden Ltd v Zhao6 is applicable in this case. Mr Sun submits that, in line with the elements of the defence, Mr and Mrs Huang were not negligent in signing the Agreement as Mr and Mrs Huang were entitled to rely on Ms Gao’s assurance that the Agreement included the condition they asked her to include.
[38] Lastly, Mr Sun submits that specific performance is unavailable as it can only be granted to a plaintiff if the defendant is in a position to comply. Ms Sun submits that Mr and Mrs Huang cannot transfer the Accessory Units to Unit 2303 without Gang Huang’s consent and the Court cannot compel Gang Huang to comply because he is not a party to this proceeding. Further, Mr Sun submits that the Court should not order specific performance because it would be unfair in the circumstances. He submits specific performance would force Mr and Mrs Huang to sell the
6 Golden Garden Ltd v Zhao [2017] NZCA 227.
Accessory Units to a third party (at an unknown price) when they had always wished to remain owners of the Accessory Units.
Analysis
[39] The primary issues to be determined in this judgment are whether any of the affirmative defences put forward by Mr and Mrs Huang are arguable. The issues, therefore, are:
(a)Is the defence of misrepresentation arguable (s 37 of the CCLA)?
(b)Is the defence of mistake arguable (s 24 CCLA)?
(c)Is the defence of non est factum arguable?
(d)Should specific performance be ordered?
[40]I deal with each of these issues in turn.
Is the defence of misrepresentation arguable (s 37 CCLA)?
[41] The misrepresentation relied on by Mr and Mrs Huang,7 is to the effect that Ms Gao, acting on behalf of Mr Armishaw, induced Mr and Mrs Huang to enter into the Agreement, leading them to believe that the Agreement had been drafted in accordance with their instructions. They say it was essential to them that the Agreement had to be conditional on removing the Accessory Units from the title.
[42] Mr Woodhouse submits that an essential element of this defence is Mr Huang’s assertion that Ms Gao was acting for Mr Armishaw in making the alleged representation and Mr Huang would have to assert that Ms Gao was the plaintiff’s agent in order to meet the criteria in s 37.
7 Notice of opposition by the respondents to the applicant’s interlocutory application for summary judgment dated 23 December 2021 (dated 22 April 2022) at [3(p)]).
[43] Mr Woodhouse submits that Mr Huang’s evidence on this point8 is simply not credible. Mr Huang’s affidavit ([7] and [8]) states that in early March 2021, Ms Gao called the Huangs to see if they were interested in selling the apartment. Mr Woodhouse submits this evidence is completely at odds with the facts and contemporaneous evidence as shown in Mr Armishaw’s affidavit in reply:
(a)the apartment was advertised for sale by City Sales in February 2021;
(b)Mr Armishaw answered that advertisement and first dealt with James Maires, another City Sales agent; and
(c)James Maires’ emails from late February to early March show that he/City Sales were acting as agents for Mr and Mrs Huang, including his email to Mr Armishaw where he mentions Mr Maires’ (30 minute) discussion with Mr and Mrs Huang.
Mr Woodhouse submits that all of the above occurred before Ms Gao became involved on behalf of City Sales in the final negotiation price with Mr Armishaw.
[44] Mr Woodhouse submits that Mr Armishaw’s affidavit in reply confirms that City Sales was not engaged as his agent and Ms Amodeo, City Sales compliance manager, also confirmed that Mr Armishaw only contacted them as a customer.
[45] Mr Woodhouse submits that it is extremely improbable that City Sales/Ms Gao would act for both vendor and purchaser in the same transaction. For this proposition, he relies on the affidavit of Mr Jones.9 Mr Woodhouse submits the obvious conclusion is that Ms Gao/City Sales is the vendor’s agent, and that alone is sufficient to dismiss the misrepresentation defence under s 37 of the CCLA.
[46] Mr Woodhouse then casts further doubt on the credibility of Mr Huang’s evidence. He points to Mr Huang’s evidence at [9] of his affidavit, where Mr Huang states that:
8 Affidavit of De Shan Huang in support of the defendants’ notice of opposition dated 22 April 2022 at [9]–[19].
9 Affidavit of Timothy Alexander Jones in reply affirmed 16 June 2022 at [54]–[58].
(a)the Huangs explicitly instructed Ms Gao that they only wanted to sell the apartment and not the carpark and storage unit;
(b)the Huangs explicitly instructed Ms Gao that the Agreement had to be conditional on the carpark being successfully transferred from the title for Apartment 1707 to Unit 2303’s title, and that they must be entitled to cancel the agreement if the Accessory Units could not be excluded from the title; and
(c)Ms Gao prepared the Agreement and explained to the Huangs that it included the right to cancel the Agreement if the Accessory Units could not be excluded. Mr Huang says that Ms Gao (on behalf of the purchaser) had “lied to us about the sale of the property … and just told [them] what [they] wanted to hear”.
[47] Mr Woodhouse submits that these assertions by Mr Huang are contrary to the evidence and:
(a)communications from James Maires of City Sales a week or so earlier were that the defendants wanted to sell the carpark (and presumably storage unit) — for $150,000; and
(b)Mr Huang’s evidence that Ms Gao prepared the Agreement after her meeting with the Huangs is incorrect because the Agreement was sent to Mr Armishaw by James Maires a week or so before Ms Gao’s involvement and it already had the clause in the Agreement which Mr Huang now asserts Ms Gao lied to them about.
[48] Mr Woodhouse submits that this evidence cannot be accepted by the Court because by early March the parties were already well advanced in negotiations. The notion of a detailed discussion with Ms Gao which Mr Huang asserts occurred on 5 March 2021 (as set out at [5]–[18] of his affidavit) therefore lacks credibility. Mr Woodhouse also points out the argument relating to affirmative defences was not
raised until Mr and Mrs Huang instructed their present counsel, and that they had earlier given inconsistent explanations for their failure to settle the Agreement.
[49] My conclusion on this point is that the misrepresentation defence is not arguable by Mr and Mrs Huang. It is clear that Ms Gao/City Sales were acting as their agent, not as Mr Armishaw’s agent. Evidence from Mr Huang as to how the Agreement was drafted relating to the removal of the Accessory Units lacks sufficient credibility to make this an arguable defence.
Is the defence of mistake arguable (s 24 CCLA)?
[50] Mr and Mrs Huang assert that they were induced to enter into the Agreement pursuant to a mistake. Mr and Mrs Huang say the mistake was that they thought the Agreement was conditional upon them removing the Accessory Units from the title.
[51] Mr Woodhouse submits that in order to meet the criteria in s 24, Mr and Mrs Huang assert that:
(a)Mr Armishaw knew about the mistake; or
(b)the mistake was known by Mr Armishaw because no reasonable vendor would unconditionally agree to alter the title within a short and fixed period (20 working days).10
[52] Mr Woodhouse submits that the assertion that Mr and Mrs Huang were genuinely mistaken as to the content of the Agreement lacks credibility because:
(a)In their evidence, they assert that Ms Gao lied to them about the Agreement’s context in early March. In fact, the form of the Agreement had been presented to Mr Armishaw by Mr Maires a week or so earlier and included the same clause that they now say they were effectively tricked into signing.
10 Notice of opposition by the respondents to the applicant’s interlocutory application for summary judgment, above n 7, at [3(r)(ii)].
(b)If there was a genuine mistake, this would have been the first thing that Mr and Mrs Huang’s conveyancing lawyers would have said when (or if) they first encountered difficulty with removing the Accessory Units. They did not, and instead stated that Mr and Mrs Huang had experienced some “unexpected family issues” .
(c)Subsequently, in the communications received direct from Mr and Mrs Huang (or reported to Ms Walia by their agent City Sales in October/November 2021), Mr and Mrs Huang themselves did not say the Agreement ought to have been conditional. They instead changed tack to say that Auckland Council was preventing the transfer of the Accessory Units.
[53] Mr Woodhouse submits that these factors indicate a lack of credibility in relation to Mr and Mrs Huang’s assertion that they made a genuine mistake as to the content of the Agreement.
[54] Mr Woodhouse then submits that even if the lack of credibility as to whether Mr and Mrs Huang made a mistake in the first place does not dispose of this defence, the defence is not available to them for the following reasons:
(a)there is simply no basis for the assertion that Mr Armishaw “knew” about the mistake;
(b)the assertion that the mistake was known to Mr Armishaw as “no reasonable vendor” would agree to be bound by such an agreement is not credible because:
(i)as pointed out in Mr Jones’ affidavit, there is nothing unusual about cl 20. It could have been satisfied by Mr and Mrs Huang within 20 working days, had they gone about attempting to achieve that satisfaction with reasonable speed; and
(ii)in any event, if satisfaction could not be achieved within the 20 working days, then cl 3.17 of the Agreement provided for the settlement date to be extended to 10 working days after the issue of new title.
[55] Finally, Mr Woodhouse submits on this point that even if Mr and Mrs Huang’s mistake was genuine and Mr Armishaw knew about it or ought to have known about it, there is “no substantially unequal exchange of values” or any obligation that is “substantially disproportionate to the consideration”. The purchase price of the unit was negotiated on an arm’s length basis and excluded the Accessory Units, so an argument that Mr Armishaw would acquire the Accessory Units for no value is not tenable.
[56] My conclusion on the affirmative defence of mistake is that Mr and Mrs Huang’s evidence is not sufficiently credible for the defence to be made out. The evidence of Mr and Mrs Huang as to whether they made a genuine mistake lacks credibility and there is no evidence that Mr Armishaw knew of the mistake. According to Mr Jones’ evidence, cl 20 is not an unusual clause, and with the ability to defer the settlement date, if necessary, was reasonably achievable by Mr and Mrs Huang. The submission by Mr Sun that Mr Armishaw ought to have known of the mistake because cl 20 was not something any reasonable vendor would agree to is not tenable.
[57] Consequently, I am of the view that the affirmative defence of mistake is not arguable by Mr and Mrs Huang.
Is the defence of non est factum arguable?
[58] The common law doctrine of non est factum, expressly preserved by s 59(1)(c) of the CCLA, allows a party to seek to set aside a written contract if that party signed the contract due to an erroneous explanation of its contents and meaning by another party. The relief of non est factum is available if:11
11 Saunders v Anglia Building Society [1970] UKHL 5, [1971] AC 1004.
(a)the contract is very different in effect or character from that intended by the signatory; and
(b)the signatory was not negligent in executing the contract.
[59] Mr Sun submits that, based on the doctrine of non est factum, the Agreement is void ab initio because the Agreement is substantially different from what Mr and Mrs Huang intended.
[60] Mr Sun relies on Golden Garden Ltd v Zhao,12 where the Court of Appeal held that a non-English speaker who signed an English sale and purchase agreement was entitled to rely on a plea of non est factum to defeat a summary judgment application.
[61] In Golden Garden Ltd v Zhao, the vendors asserted that the purchaser entered into an unconditional agreement for sale and purchase of a property in Kumeu for
$7.3 million. Mrs Liang (sole director of the purchaser, Golden Garden Ltd), was a Mandarin speaker who could not understand English. Mrs Liang contends that the real estate agent knew that Golden Garden was only prepared to purchase the property subject to conditions as to finance and due diligence, and the agent misled Golden Garden into believing that the English agreement she presented for signing contained these conditions.
[62]The Court of Appeal concluded:13
It follows that if all of Golden Garden’s evidence is accepted, it could provide an arguable defence to the claim based on the plea of non est factum: the document was of a fundamentally different character from that intended by Golden Garden; Ms Liang was arguably not negligent in signing the agreement because she was entitled to rely on the agent’s explanation of it …
[63] Mr Sun submits, applying the Golden Garden decision to the facts of this case, that:
(a)Mr and Mrs Huang are Mandarin speakers who cannot understand English;
12 Golden Garden Ltd v Zhao, above n 6.
13 At [45].
(b)they were misled by the real estate agent into believing that the Agreement was conditional on removing the Accessory Units; and
(c)they could have relied on the condition for removal of the Accessory Units to cancel the Agreement, because it was impossible to transfer the Accessory Units to Unit 2303 without Gang Huang’s consent.
[64] Mr Woodhouse submits that this defence does not have a credible basis. He submits that it is clear that Mr and Mrs Huang intended to sell the Property, as they had advertised it for sale through City Sales. He submits that even though Mr and Mrs Huang claim they have no English, including written English, they have now lived in New Zealand for approximately 20 years and were able to acquire two apartments at some point. They would be familiar with agreements for sale and purchase of land and the basics of such agreements through that process.
[65] Mr Woodhouse submits that Mr and Mrs Huang’s assertion is that the document they signed was substantially different in character from what they intended to sign, as the requirement to remove the Accessory Units from the title should have been inserted as a condition, not an obligation. Mr Woodhouse submits that had the requirement to remove the Accessory Units been inserted as a condition, Mr and Mrs Huang, under the general conditions of contract, would still have had the obligation to “do all things which may be necessary to enable the condition to be fulfilled”.14 He submits there is no evidence that Mr and Mrs Huang did all things reasonably necessary to fulfil the removal of the Accessory Units from the title. He submits that their assertion that their son refused to sign the required documents inherently lacks credibility, as Mr and Mrs Huang’s son, as a one-tenth owner of the intended transferee unit, was about to receive the benefit of the Accessory Units’ worth of potentially $150,000.
[66] Mr Woodhouse submits that even if the Huangs’ expectation had been that the Agreement was conditional on removing the Accessory Units from the title, and their son refused to accept the transfer of the Accessory Units to Unit 2303, then they ought
14 Clause 9.10(2) of the Agreement.
to have gone about marketing the Accessory Units for sale to other apartments in the complex. Consequently, in Mr Woodhouse’s submission, the Agreement signed is not in fact substantially different from what the Huangs intended to sign.
Were the defendants negligent in signing the Agreement?
[67] Mr and Mrs Huang say they were not negligent because it is quite normal for real estate agents to draft agreements for sale and purchase without involving lawyers.
[68] Mr Woodhouse submits that there are two problems with the issue of Mr and Mrs Huang’s negligence. The first is that they plead they do not speak or read English, but did not involve lawyers at the stage of drafting or signing the Agreement. He argues that they were negligent in failing to do so. Secondly, he submits that their pleaded lack of understanding of the document lacks credibility because:
(a)they have purchased real estate in the past (for example, their Apartments 1707 and 1202) and obtained mortgage finance to do so;
(b)engaged agents to market their Apartment 1707 for sale; and
(c)understood the basis of a hotel lease that applied to the apartment.
[69] Finally, on this point Mr Woodhouse submits that if there had been a genuine misunderstanding by Mr and Mrs Huang as to what they were signing, and that the document was substantially different from what their intention was, their lawyers would have brought this up from the outset. They did not.
[70] My conclusion on this point is that the defence of non est factum is not arguable by Mr and Mrs Huang. This is for the following reasons:
(a)I have found (at [49] above) that the evidence does not support their contention that they were misled by Ms Gao as to the nature of the Agreement they signed;
(b)the evidence does not support that the Agreement the Huangs signed was substantially different from what they had intended to sign. If removal of the Accessory Units had been inserted as a condition, as submitted by Mr Woodhouse, Mr and Mrs Huang would have had to take steps to fulfil the condition that are similar to the steps they should have taken to fulfil their obligation under cl 20;
(c)the Golden Garden decision can be distinguished, in my view, as in that instance Ms Liang immediately raised the issue that the contract did not reflect what she intended to sign. In the present case, Mr and Mrs Huang offered various explanations as to why they could not settle the sale and purchase under the Agreement. Accordingly, the non est factum defence lacks credibility; and
(d)as Mr and Mrs Huang assert they did not speak or read English, not engaging a lawyer at the time of signing the Agreement was negligent.
Should specific performance be ordered?
[71] Mr Sun submits that the Court should not order specific performance of what cannot be done. Specific performance will be ordered only if the defendant is in a position to comply.15 Mr Sun submits that in this case it is impossible for Mr and Mrs Huang to remove the Accessory Units from the Property because they are unable to transfer the Accessory Units to Unit 2303 without their son, Gang Huang’s consent. He submits the Court does not have jurisdiction to compel compliance by Gang Huang because Gang Huang is not a party to the Agreement. He submits therefore that specific performance must not be granted because performance by Mr and Mrs Huang is impossible.
[72] Mr Sun further submits that in considering whether to grant or withhold specific performance, the Court has to take account of the general fairness of the transaction.16 He submits that it would be unfair for the Court to order Mr and Mrs
15 Mortimer v Bayliss (1991) 1 NZConvC 190,846 at [10].
16 Jacobs v Bills [1967] NZLR 249 (SC) at 253.
Huang to transfer the Accessory Units to any other units, because they would be forced to sell those units (at an unknown price) to another party when they have always wished to remain owners of the Accessory Units.
[73] Mr Woodhouse submits, in opposition to Mr Sun’s submissions, that it is not impossible for Mr and Mrs Huang to commit to selling the Property excluding the Accessory Units. He submits that if the Court were to order specific performance of the Agreement as originally proposed, Mr and Mrs Huang would need to take steps to transfer the Accessory Units to another unit or sell them.
[74] Secondly, Mr Woodhouse submits that if the Court is concerned about the ability to transfer the Accessory Units, then it could order specific performance to transfer the Property with the Accessory Units attached, and for Mr Armishaw to undertake to transfer them back to Mr and Mrs Huang to the unit they own and live in, Unit 2303, or to sell them and account to Mr and Mrs Huang for the proceeds. He submits therefore that there is no impossibility on the part of Mr and Mrs Huang if specific performance is ordered.
[75] Finally, Mr Woodhouse submits there is no unfairness if specific performance is ordered. Mr Armishaw offered a price after an arm’s length negotiation on the price, which Mr and Mrs Huang accepted. If specific performance is ordered and complied with, Mr and Mrs Huang will receive the purchase price (subject to adjustment for late settlement) and Mr Armishaw will receive title to the Property, by one method or another, without the Accessory Units.
[76] Mr Woodhouse notes that, in the past, courts have expressed some hesitancy about ordering specific performance in the context of a summary judgment application due to its discretionary nature. He submits, however, that there are no real countervailing circumstances in the present case, and that specific performance should therefore be ordered. It is the appropriate (and only real) remedy available to Mr Armishaw. The Property, being in the “hotel pool”, is unique. He also submits that damages would be almost impossible to quantify at this juncture if specific performance is not ordered.
[77] Mr Woodhouse relies on the case of McLean Tower Ltd v Ash Road Investments Ltd.17 In that decision, specific performance was ordered by the High Court on a summary judgment application and confirmed by the Court of Appeal.
[78] My conclusion on this issue is that specific performance should be ordered on the following basis:
(a)Mr and Mrs Huang are given 20 working days from the date of this judgment to complete the transfer of the Property without the Accessory Units and must use reasonable endeavours to do so. (This is analogous to their obligation under cl 9.10(2) of the Agreement, had the requirement to remove the Accessory Units been inserted as a condition in the Agreement).
(b)If Mr and Mrs Huang are unable to do so within the 20 working days despite using their reasonable endeavours, the settlement date can be deferred at the request of Mr and Mrs Huang for a further 10 working days. If Mr and Mrs Huang are still unable to transfer the Property without the Accessory Units, despite using their reasonable endeavours, at the expiry of the 30 working day period, then the Property is to be transferred to Mr Armishaw with the Accessory Units attached. Mr Armishaw is to then transfer the Accessory Units for nil consideration to any apartment in the complex as directed by Mr and Mrs Huang as soon as reasonably practicable.
(c)If the Accessory Units are not able to be transferred in accordance with [78](b) above within 20 working days after Mr Armishaw acquires the Property, then Mr Armishaw will sell the Accessory Units to another purchaser in the complex at the best price reasonably obtainable and account to Mr and Mrs Huang for the proceeds of sale.
[79]I make orders below accordingly.
17 McLean Tower Ltd v Ash Road Investments Ltd [2007] NZCA 307.
Conclusion
[80] As a result of the conclusions I have reached at [49], [56], [70] and [78] above, I am of the view that Mr Armishaw is entitled to summary judgment and the remedy of specific performance on the terms set out below.
Result
[81]I make the following orders:
(a)An order for specific performance of the Agreement by Mr and Mrs Huang as follows:
(i)Mr and Mrs Huang transfer the Property, being Apartment 1707, Metropolis Apartments, 1 Courthouse Lane, Auckland Central, Auckland, consisting of the principal unit 17G (“the Property”) but exclusive of accessory units C41 and 5F (“the Accessory Units” on DP198348) to Mr Armishaw, within 20 working days of the date of this judgment;
(ii)if Mr and Mrs Huang, despite using their reasonable endeavours, are unable to remove the Accessory Units from the title to the Property within 20 working days of the date of this judgment, the settlement date can be deferred at the request of Mr and Mrs Huang for a further 10 working days. If Mr and Mrs Huang are still unable to transfer the Property without the Accessory Units despite their reasonable endeavours at the expiry of the 30 working day period, then the Property will be transferred to Mr Armishaw with the Accessory Units attached. Mr Armishaw will then transfer the Accessory Units for nil consideration to any apartment in the complex nominated in writing by Mr and Mrs Huang as soon as reasonably practicable; and
(iii)if the Accessory Units cannot be transferred to another apartment nominated by Mr and Mrs Huang within 20 working days after Mr Armishaw acquires the Property, then Mr Armishaw will sell the Accessory Units to any other purchaser in the apartments complex, at the best price reasonably obtainable, and account to Mr and Mrs Huang for the proceeds of sale.
(b)Mr and Mrs Huang pay compensation to Mr Armishaw in accordance with the provisions of cl 3.13(5) and (6) of the Agreement.
(c)Costs are awarded to Mr Armishaw on a 2B basis.
…………………………….. Associate Judge Taylor
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