Cartref Remuera Trustee Limited v Le
[2023] NZHC 256
•21 February 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-1341
[2023] NZHC 256
BETWEEN CARTREF REMUERA
TRUSTEE LIMITED, as trustee of the CARTREF REMUERA TRUST
Plaintiff
AND
AND
THATCH SON LE
First Defendant
HERMAN YU
Second Defendant
Hearing: 8 February 2023 Appearances:
P J Wright and J A R Barrow for Plaintiff S R G Judd for Second Defendant
No appearance for First Defendant (appearance not required)
Judgment:
21 February 2023
Reissued:
5 April 2023
JUDGMENT OF ASSOCIATE JUDGE LESTER
This Judgment has been amended under the Slip Rule By adding the name “Frances” Li to paras [7], [19] and [24].
CARTREF REMUERA TRUSTEE LIMITED v LE AND YU [2023] NZHC 256
[1] The plaintiff, Cartref Remuera Trust (the Trust), signed two contracts to sell to the second defendant, Mr Yu, a substantial property in Upland Road, Remuera, Auckland (the property).
[2] It is common ground that the first contract dated 20 September 2020 (the first contract), albeit conditional, was a valid contract, although it was not confirmed by Mr Yu under a due diligence clause. Mr Yu, having not confirmed the contract, subsequently sought to enter a second contract to buy the property.
[3] The issue in this proceeding is whether a second contract came into force between the Trust and Mr Yu.
[4] A complicating factor is that shortly after Mr Yu’s first contract was entered, the Trust on 24 September 2020 entered a back-up contract to sell the property to Mr Le, the first defendant. Mr Le’s contract was subject to Mr Yu’s first contract not proceeding. With Mr Yu not confirming his first contract, Mr Le’s contract became unconditional on 25 September 2020. However, Mr Le did not pay the deposit under his contract, leading to it being cancelled on 2 October 2020. Mr Le took no steps in respect of this proceeding for his unpaid deposit and judgment was entered against him by Gault J in a Minute dated 11 October 2023.
[5] In the meantime, having had second thoughts about the property, on 26 September 2020 (a Saturday), Mr Yu made a second offer to buy the property through a real estate agent, who I will refer to below (the second offer). The trustee says it accepted the second offer. Whether the trustee’s acceptance resulted in a binding contract is the key issue. As set out below, Mr Yu says his second offer did not result in a contract. As the trustee submits it is a binding agreement, it seeks summary judgment against Mr Yu for his unpaid deposit and other issues.
[6] Mr Yu submits that when he tabled the second offer with the real estate agent he orally advised the real estate agent that the offer was open for three working days. Therefore, Mr Yu says the trustee’s purported acceptance on 1 October 2020 (the date
on the agreement) was a day late. Mr Yu says the second offer to purchase lapsed on 30 September 2020 and thereafter was incapable of acceptance.
[7] The trustee says it was not aware of the oral time limit claimed to apply to the second offer and says the agent Mr Yu communicated with was acting for him and not the trustee and as such the trustee is not affected by what Mr Yu may have told his own agent. The trustee says Mr Yu’s agent, a Ms Liu, did not communicate the three working day time limit to its agent, a Ms Frances Li. Further, Ms Liu did not advise Mr Snedden, solicitor for the trustee, of the three working day limit when she sent the second offer to him. In any event, the trustee says Mr Yu’s evidence in respect of the second offer only being open for three working days is unreliable and can be dismissed at this stage.
[8] As I will develop below, a difficulty in unravelling issues in this case is that both Ms Liu and Ms Li are sales people with the same real estate company engaged by the trustee. I should add, a Ms Frances Li was one of the joint listing agents. Ms Maggie Li is a salesperson with the same real estate company. All subsequent references to Ms Li are to Ms Maggie Li, unless otherwise stated.
What the trustee must show to obtain summary judgment
[9] The summary judgment principles are well settled and not in dispute. They are:
(a)Common sense, flexibility and a sense of justice are required.1
(b)The onus is on the plaintiff seeking summary judgment to show there is no arguable defence. The Court must be left without any real doubt or uncertainty on the matter.
(c)The Court will not hesitate to decide questions of law where appropriate.
1 Haines v Carter [2001] 2 NZLR 167 (CA).
(d)The Court will not attempt to resolve genuine conflicts of evidence or to assess the credibility of statements and affidavits.
(e)In determining whether there is a genuine and relevant conflict of facts, the Court is entitled to examine and reject spurious defences or plainly contrived factual conflicts. It is not required to accept uncritically every statement put before it, however, equivocal, imprecise, inconsistent with undisputed contemporary documents or other statements, are inherently improbable.2
(f)In assessing a defence, the Court will look for appropriate particulars and a reasonable level of detailed substantiation.
(g)The Court will take a robust approach and enter judgment even where there may be differences on certain factual matters if the lack of a tenable defence is plain on the material before the Court.3
(h)Where a last-minute, unsubstantiated defence is raised and an adjournment would be required, a robust approach may be required for the protection of the integrity of the summary judgment process.
(i)Once the Court is satisfied there is no defence, the Court retains a discretion to refuse summary judgment, but does so in the context of the general purpose of the High Court Rules which provide for the just, speedy and inexpensive determination of proceedings.
The real estate agents involved in the sale
[10] The agreement dated 1 October 2020 records on its front page in type, that it was a sale by “Barfoot & Thompson Pt Chevalier”. Also in type in the same part of the agreement next to the words “Manager”, is the typed name “Tony Worsp”. Next to “Salesperson”, is the typed name “Mr Worsp” but it has been struck through in ink
2 Eng Mee Yong v Letchumanan [1980] AC 331.
3 Bilbie Dymock Corp Ltd v Patel (1987) 1 NZPC 84.
and below his name there appears: “[mobile number] Amy Liu & Maggie Li [mobile number]”.
[11] I am not told who made the handwritten changes to this part of the agreement or when they were made. The changes to the real estate agent panel in the agreement are not initialled, but then again, not all changes to the agreement have been initialled.
[12] On Mr Yu’s first contract, in the same section of the contract, the same details as to the real estate agents involved appear, save that where Mr Worsp’s name is typed next to the name “Salesperson”, it has not been struck through. However, in handwriting below his name, are added “Amy and Maggie”.
[13] Clauses 18.1 and 18.2 of both the first contract and the contract dated 1 October 2020 provide:
18.1If the name of a licensed real estate agent is recorded on this agreement, it is acknowledged that the sale evidenced by this agreement has been made through that agent whom the vendor has appointed as the vendor’s agent according to an executed agency agreement.
18.2The scope of the authority of the agent under subclause 18.1 does not extend to making an offer, counteroffer, or acceptance of a purchaser’s offer or counteroffer on the vendor’s behalf without the express authority of the vendor for that purpose. That authority, if given, should be recorded in the executed agency agreement.
(emphasis added)
[14] I note here that there is no evidence from Barfoot & Thompson or the salespersons involved. Mr Sneddon, director of the plaintiff, says Ms Liu is unwilling to give evidence, which he infers is “because she believes she is [Mr Yu’s] agent”.
The Real Estate Agency Agreement with the trustee
[15] The Real Estate Agency Agreement between the trustee and Barfoot & Thompson is dated 29 July 2020 and continued in force until 18 November 2020 (the Listing Agreement). The Listing Agreement records Barfoot & Thompson are appointed as the trustee’s real estate agent for the property. The
Listing Agreement then provides the type of work the agent can do, pursuant to the Listing Agreement and says:
Such work may be conducted by the Agent or through a Branch Manager or Salesperson of the Agent and those persons conducting such work are referred to as Licensees in this agreement.
[16]Under the heading “Licensee Details”, the following is set out:
Listing agent Jan Thornhill Code TIJ Office Epsom Joint listing agent Frances Li Code L79 Office Epsom
[17] Under the “Viewing instructions” there is handwritten: “please don’t call Trustee. All communication go through Listing agent only”.
The significance of the agency issue
[18] If it had been communicated to the trustee that Mr Yu’s second offer was only open for three working days, then the acceptance on 1 October 2020 would, on the face of it, came too late and the Trust would not be entitled to summary judgment. Just what Mr Yu said and the authority of the agent receiving that advice, would be a matter for trial.
[19] The trustee seeks to avoid that outcome by saying it was not fixed with knowledge of Mr Yu’s advice to Ms Liu because at the time Mr Yu asserts he imposed the three working day limit, Ms Liu was acting as agent for him. As noted, the trustee also says, Mr Yu’s evidence is so unreliable it can be rejected. There is no evidence that when Ms Liu passed on Mr Yu’s second offer to Ms Frances Li, that she advised Ms Frances Li the offer was only open for three working days. The trustee says the chain of communication was broken at that point and the trustee is therefore not fixed with the knowledge of Ms Liu when she was not acting as its agent.
Mr Yu’s evidence – can it be rejected?
[20]Mr Wright, counsel for the trustee, referred to the well-known passage from
Eng Mee Yong v Letchumanan.4 Mr Wright submitted that Mr Wu’s evidence, set out
4 Eng Mee Yong v Letchumanan, above n 2.
below, should not be accepted. The passage relied on by Mr Wright is found in
Attorney-General v Rakiura Holdings Ltd:5
In a matter such as this it would not be normal for a judge to attempt to resolve any conflicts in evidence contained in affidavits or to assess the credibility or plausibility of averments in them. On the other hand, in the words of Lord Diplock in Eng Mee Yong v Letchumanan [1980] AC 331 at 341 E, the Judge is not bound: ‘to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be’.
[21] The evidence relied on by a party resisting summary judgment must have an aura of credibility.6
[22] It is therefore necessary to consider whether Mr Yu’s evidence is equivocal, lacking in precision or, inconsistent with contemporary documents.
[23] Mr Yu’s evidence is that he did not have his own real estate agent and the only agent he dealt with was from Barfoot & Thompson who were also acting for the trustee. As far as he was concerned, the sales people were all working for the vendor.
[24]Mr Snedden’s hearsay evidence, in his first affidavit, was that:
Ms [Frances] Li has confirmed to me that she was never told there was a time limit on the offer. Nor did Ms Liu communicate any such condition to me when she sent me Mr Yu’s offer.
[25] Hearsay evidence will (even if admitted) rarely, if ever, be sufficient to reject a defendant’s sworn evidence.
[26] Mr Snedden’s first affidavit did not address who he thought Ms Liu was acting for. Mr Snedden says he received Mr Yu’s second offer from Ms Liu. Had Mr Snedden, as solicitor for the Trust, considered Ms Liu was acting as agent for Mr Yu, that would have been an obvious answer to the alleged three working day limit on the offer when that proposition was first raised with him after he sent the signed agreement to Mr Yu’s solicitor on 1 October 2020. In any event, authority depends
5 Attorney-General v Rakiura Holdings Ltd (1986) 1 PRNZ 12 at [14]).
6 Robert Osborne (ed) McGechan on Procedure (online ed, Thomson Reuters at [HR12.2.08].
on the actions of the alleged principal. What then is the evidence that Mr Yu appointed Ms Liu as his agent?
[27] Mr Snedden’s reply affidavit does not serve to clarify the issue. He acknowledges that Ms Ms Li was and is an agent at Barfoot & Thompson but says:
2.My understanding is that Ms Liu was instructed by Herman Yu and was acting as his agent for the purposes of finding him property, including the property involved in this proceeding.
3.I understand that Ms Liu does not accept that Herman Yu told her that there was a three working day time limit for acceptance of his written back-up offer to purchase this property. But she is unwilling to give evidence confirming this and I infer this is because she believes she is his agent.
[28] This evidence is unsatisfactory as the basis for Mr Snedden’s “understanding” is unstated. The affidavit, however, adds a new twist to the story. Mr Snedden says:
4.However, I understand Frances Li, the vendor’s agent, texted Amy Liu on 30 September 2020 and told her that Herman Yu’s written back-up offer had been accepted by the vendor.
[29] A copy of that text message dated 30 September 2020 is produced. The translation provided is of a message sent to Ms Liu at 11:46pm on 30 September 2020 saying:
Please tell your buyer his back up has been signed and accepted. They are now brought the property.
[30] The above text message is some indication that Ms Frances Li saw Ms Liu as acting for the vendor. Mr Judd, counsel for Mr Yu, submitted I should not read too much into the expression “your buyer” as it may simply mean Ms Liu had introduced Mr Yu.
The significance of the late night text on 30 September 2020
[31] The statement of claim pleads that the contract on which the deposit was sought, was made “on or about 1 October 2020”. The contract is dated 1 October 2020. I am not told who put that date on the agreement.
[32]DW McMorland in Sale of Land says7:
A binding contract exists immediately the second party to sign has done so and the other party, or perhaps their agent, has been informed of that. The other party does not have actually to have received a signed copy of the agreement before being bound, unless it has been clearly stated by the offeror that acceptance is complete only on receipt of the signed contract.
[33] This twist in the timing of the making of the contract firstly, it re-emphasises whether Mr Liu was the agent of Mr Yu. Secondly, if she was the agent, whether her authority permitted her to receive notice of the acceptance of Mr Yu’s offer so that the second offer became binding upon that notification, that is, within the three working day limit.
[34]The issue is discussed in Sale of Land:8
… Whether the agent has authority to receive the communication with the result that the vendor is then bound, or has authority to merely receive the communication as the go-between and pass it on to the vendor so that the contract is not made until the vendor receives communication of the acceptance. The scope of the agent’s express authority depends today on the terms of the agency agreement…
[35] Here, we have no way of knowing the extent of Ms Liu’s authority, even assuming she was acting for Mr Yu.
[36] Subject to resolution of these points, it may be that Mr Yu’s second offer was accepted within the three working day limit.
[37] Further, the issue remains whether Mr Yu’s evidence as to his offer being open for three working days can be rejected. I am satisfied the evidence in this case does not approach the standard for rejecting Mr Yu’s evidence. I note Mr Yu’s solicitors, when Mr Yu’s solicitors received the second offer on 1 October 2022 from the solicitor, Mr Snedden, in their response sent the same day they raised that the offer was only open for three working days. This is not a situation of a defence being raised belatedly.
7 D W McMorland Sale of Land (4th edition, Cathcart Trust, Auckland, 2022) 106.
8 McMorland, above n 7 at [10].
[38] Mr Wright submitted there is no proof that Mr Yu imposed a three working day limit. The short point is, Mr Yu says he advised Ms Liu of the time limit orally. Absent any direct evidence from Ms Liu, I do not consider the brief hearsay evidence that has been provided, would warrant rejecting Mr Yu’s evidence. Mr Wright notes that in an email sent by Ms Liu on 6 October 2020 to Mr Yu’s solicitor, Ms Liu does not mention the offer being subject to a three working day limit. That is correct, but nor does she deny the existence of the three working day limit, her email is focused on another issue, which I will refer to at the conclusion of this judgment.
[39] Mr Wright also refers to an email from Mr Worsp to Ms Liu, copied to Mr Yu’s solicitor, in which he agrees with Ms Liu’s 6 October 2020 email but without mentioning the three working day time limit. That both these emails are silent on the three working day time limit does not mean Mr Yu’s position is: “… inconsistent with undisputed contemporary documents” in terms of the passage at paragraph [20].
[40] Mr Wright relies on the email of 26 September 2020 forwarding to Ms Liu, Mr Yu’s second offer to Mr Snedden, noting that it does not refer to the three working day time limit. Mr Wright submitted that Ms Liu had every incentive to communicate the existence of the three working day time limit as she would only receive a share of the commission in respect of the sale to Mr Yu if his sale was locked in. Therefore, she had every incentive to communicate the existence of the three working day time limit to Mr Snedden.
[41] Mr Yu says the offer was only open for three working days because: “… so I don’t need to wait forever without a certainty”. Mr Wright submitted that Mr Yu’s second offer, if accepted within the three working day window, would not have meant Mr Yu had certainty because he would have to wait to see if the prior agreement (that of the first defendant, Mr Le), would settle and that was not due to occur until 10 December 2020. Mr Wright submitted this cast doubts on Mr Yu’s evidence for the reason of the three working day time limit.
[42] I accept the logic in Mr Wright’s points, but I do not consider they and the other points taken together, warrant me rejecting Mr Yu’s evidence and I decline to do so.
Decision
[43] I am satisfied this is not a case for summary judgment. The fact is that Ms Liu was named as the trustee’s agent on both the first contract and the second offer. Assuming at some point Ms Liu took on responsibility for communicating with Mr Yu, in what capacity she did so cannot be determined on the papers. I am not in a position to reject Mr Yu’s evidence that he did not appoint Ms Liu as his agent. Just when on the trustee’s case Ms Liu transitioned from being vendor’s to buyer’s agent is unstated.
[44] Mr Yu’s sworn evidence cannot, on the material before me, be disregarded. Nor are the circumstances such that it could be said Mr Yu is estopped from denying that Ms Liu was his agent. On the face of the agreement, Ms Liu was agent for the trustee and a point it does not answer. Mr Yu’s evidence is that his offer was only open for acceptance for three working days. Acceptance on 1 October 2020 was too late. Unless Ms Liu was acting for Mr Yu and had authority to receive advice of acceptance of his offer, the 30 September 2020 message was not effective communication of acceptance.
[45] I am satisfied this case is unsuitable for summary judgment and the plaintiff’s application is dismissed.
[46] I mentioned earlier that Ms Liu’s email of 6 October 2020 addressed matters other than the alleged three working day time limit on Mr Yu’s second offer. Mr Yu presented an alternative defence that prior to his offer being signed by the trustee, on 28 September 2020, Ms Liu informed him on 20 September 2020 that the existing contract, that is by the first defendant Mr Le, had become unconditional. Mr Yu refers to a WeChat communication with Ms Liu in which she passes on that advice. Mr Wright submitted that this advice was incapable of having any impact on Mr Yu’s second offer of 26 September 2020.
[47] While I need not express any final view on this point, I am inclined to agree with Mr Wright’s submission. Mr Yu’s second offer was expressly a backup offer which would become unconditional upon the prior contract with Mr Le being cancelled or terminated. Accordingly, Mr Yu’s second offer contemplated that the pre-existing contract may become unconditional and that Mr Yu’s second offer, if
accepted, would sit as a backup contract awaiting whether the prior contract with Mr Li settled.
[48] However, Ms Liu’s communication went further. Mr Yu replied: “Ok, thanks” and very shortly thereafter replied: “Yep, save money”. This could be seen as Mr Yu taking the view that his second offer on the property was at an end. Ms Liu then replies in a series of messages, “Yes, let’s find something else. There are some other good stuff” “Will send you a few and you can check out first”. “If you like (any of them), can go right now”. This communication is far from an unequivocal rejection of Mr Yu’s offer. When Ms Liu says, “Yes, let’s find something else” et cetera, it is hard to see how she was acting as the vendor’s agent at that time. In Mr Yu’s evidence, he suggests this means that Ms Liu told him that he could “move on to find other properties”.
[49] That is not what Ms Liu says in her WeChat message. Mr Yu considering other options is not of itself inconsistent with his backup offer (the second offer) still being on the table. It would simply mean that if Mr Yu found another property before his second offer was accepted, he would have to withdraw the second offer or make his alternative purchase subject to appropriate conditions.
[50] However, as I have said, I need not express a concluded view on this alternative defence given my other conclusion.
[51] One matter Mr Yu does raise is that the first he knew of this proceeding was when he was served with the Court papers. The above events took place in late September/early October 2020 with this proceeding being issued in August 2022. There was no ‘letter before action’.
[52] In relation to proceedings being commenced before a ‘letter before action’. Associate Judge Osborne (as he then was) said:
[22] Except sometimes in situations of clear urgency, the Court expects plaintiffs and applicants, before issuing proceedings or making applications, to explore resolution informally. In relation to general proceedings, this is frequently done through a “letter before action”. A failure to pursue resolution through either a non-litigious approach or through a less expensive course of proceeding may attract the Court’s invocation of r 14.7. The Australian
commentary in Professor Dal Pont’s Law of Costs, in relation to the disallowance of costs in certain cases, includes the following:9
8.18 The court’s general costs discretion dictates that, where in accordance with its proper exercise, a court deems that costs should be disallowed to a litigant, even if he or she is ultimately successful, it may make an order to this effect. What costs should be disallowed depend on the circumstances of each case. For instance, Courts have disallowed costs incurred:
…
· that might fairly have been rendered unnecessary by a little forethought (see, for example, Re Commissioners for Railways (1902) 18 WN (NSW) 296 at 297 per A H Simpson CJ);
· as a result of an unnecessary application (see, for example, Re Ewer (1903) 4 SR (NSW) 240);
· where a less expensive course of effecting the same outcome was readily available (see, for example, Dore v Gormley (1962) 9 LGRA 187 at 190 p[er Gibb J (SC (Qld)); Commissioner of Stamp Duties v Edmunds [1989] 1 QdR 271 at 273 per Matthews J (FC));
…
[53] I raised this concern with counsel at the conclusion of the hearing. The absence of a ‘letter before action’ leads me to depart from the normal rule of reserving costs where an application for summary judgment is dismissed.
Costs
[54] Mr Wright submitted that Mr Yu’s evidence did not warrant the trustee giving up when it received his affidavit.
[55] I do not accept Mr Wright’s submission. The standard to be reached before the Court can properly reject sworn evidence, particularly concerning a defence raised when the issue arose is, as I have said, a high one. There needs to be, in practical terms, a ‘king hit’ on the credibility issue. The best the trustee could muster was hearsay evidence or reference to Mr Sneddon’s “understanding”.
9 Morrell v World Solar Ltd [2018] NZHC 518.
[56] The trustee’s submissions proceeded on the basis that Mr Yu’s alleged oral term contradicted the written agreement. Mr Wright referred to the high standard for the admission of extrinsic evidence to contradict a written contract.
[57] Here, Mr Yu in his defence was not attempting to argue an additional oral term to a contract rather, he asserts his second offer was subject to an oral condition preventing a contract coming into effect.
[58] While the above passage relating to “letters before action” concerns declining costs to a successful party, in the summary judgment context where proceedings are issued without a ‘letter before action’ that, in my view, is a factor in favour of an award of costs against a plaintiff if the application is unsuccessful. Correspondence before a proceeding allows the parties to set out their positions so that the issues are not being addressed blind when the claim is filed.
[59] Mr Yu, in his reply, raised that he had no prior notice of the claim. No explanation was offered as to why prior notice of the claim was not given.
[60] The trustee will pay Mr Yu’s costs in respect of the application on a 2B basis plus disbursements as fixed by the Registrar.
Associate Judge Lester
Solicitors:
Snedden & Associates, Auckland (for Plaintiff) Forest Harrison, Auckland (for Second Defendant)
Copy to counsel:
P J Wright and J A R Barrow, Barristers, Auckland (for Plaintiff) S R G Judd, Barrister, Auckland (for Second Defendant)
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