Chandler Properties Limited v Yu

[2020] NZHC 753

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-571

[2020] NZHC 753

UNDER

the Contract and Commercial Law Act 2017

IN THE MATTER

of an application for specific performance

BETWEEN

CHANDLER PROPERTIES LIMITED

Plaintiff

AND

HONGYING YU

Defendant

Hearing:	On the papers
Appearances:	DJG Cox for the Plaintiff
Judgment:	16 April 2020

JUDGMENT OF GAULT J

This judgment was delivered by me on 16 April 2020 at 3:00 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors:

Mr DJG Cox, Rennie Cox, Auckland

CHANDLER PROPERTIES LTD v YU [2020] NZHC 753 [16 April 2020]

[1]    The plaintiff, Chandler Properties Ltd (CPL), is the registered proprietor of a section of bare land on Potters Hill Drive in Queenstown.1 CPL has obtained an  order against the defendant, by way of summary judgment, for specific performance of the defendant’s obligation to purchase the section under an agreement for sale and purchase (the Agreement). The defendant has failed to comply.

[2]    CPL now seeks further orders of the Court declaring that the Agreement remains on foot and that the summary judgment may be enforced by way of a sale order in respect of a separate unencumbered property owned by the defendant at      9 Sunset Lane in Queenstown (the Property).2

[3]The defendant has taken no steps in relation to the further orders sought.

Factual background

[4]    On 24 September 2018, the parties entered into the Agreement whereby the defendant agreed to purchase the section on Potters Hill Drive. On 15 October 2018, the Agreement became unconditional and on 17 October 2018 the defendant paid the deposit (being 10 per  cent  of  the  purchase  price).  Settlement  was  to  occur  on 17 December 2018 but was deferred to 1 February 2019, on the condition that the defendant pay $200,000 (as part of the settlement balance) on or before 17 December 2018. The defendant failed to pay the  $200,000  and  made  no  other  payments. The defendant refused to settle, despite CPL issuing a settlement notice. The balance of the purchase price outstanding was $616,515.

[5]    CPL brought proceedings seeking specific performance of the Agreement by way of summary judgment. On 30 July 2019, I entered summary judgment against the defendant, ordering specific performance of the defendant’s obligations under the Agreement by no later than five working days of the making of the order, by paying to CPL:

1      Lot 17 DP490069, Certificate of Title 706720.

2      Lot 16 DP20478 and Lot 33 DP 23371, and 1/8 share of Lot 22 DP20478, Certificate of Title OT15B/937.

(a) $616,515; and

(b)interest at the contractual rate of 12 per cent per annum, being

$202.69 per day on $616,515 from 18 December 2018 to the date settlement is completed; and

(c)costs on a schedule 2B basis of $10,927 and disbursements of $1,650.

[6]    Upon receipt of the above payments, CPL was to do all things necessary to perform its obligations pursuant to the Agreement (in particular, to transfer legal title to the defendant).

[7]    The  defendant  failed  to   comply   with   the   summary   judgment   order. In accordance with paragraph [3] of the summary judgment order, CPL was thus entitled to:

… within 12 working days of such default, give the defendant written notice in accordance with the Agreement of its intention to cancel the Agreement within a further 12 working days of such notice being given, and  upon giving notice of such cancellation upon expiry of that further 12 working days, then the parties shall be released from compliance with those parts of this order requiring settlement of the Agreement, unless before such notice of cancellation is given, the defendant applies to the Court for an order declaring that the plaintiff is not entitled to cancel the agreement.

[8]    On 19 August 2019, CPL applied for a charging order against the Property by way of an interlocutory application without notice. A charging order was granted on 26 August 2019, with the total amount charged being $629,092 (the amounts payable to CPL under [5(a) and (c)] above).

[9]    On 19 September 2019, CPL applied for a sale order over the Property. However, in an affidavit dated 16 August 2019 in support of the application for charging order, Mr Cox had stated that CPL had given notice of its intention to cancel the Agreement, and thereafter notice of cancellation of the Agreement. Accordingly, on 11 October 2019, the registry sought clarification from CPL as to the legal basis on which a sale order could be sought where there is an  order  for specific performance and in particular where it appeared notice of cancellation had been given.

[10]   CPL filed and served a second affidavit of Mr Cox sworn on 17 December 2019 which sought to correct the statement made in Mr Cox’s 16 August 2019 affidavit. In his 17 December 2019 affidavit Mr Cox explained that the notice of intention to cancel the Agreement was ineffective as notice had not been given in accordance with the Agreement. He said that CPL purported to give written notice  of intention to cancel the Agreement on 23 August 2019 by email to the defendant and by letter sent by courier delivery to the offices of Carson Fox (who CPL believed were representing the defendant). However, the defendant failed to acknowledge receipt of the email as required by cl 1.3(4)(d) of the Agreement. Carson Fox had also advised by letter dated 7 June 2019 that they no longer acted for the defendant. Consequently, CPL’s notice of cancellation on 12 September 2019, sent by the same means, in reliance on the notice of intention to cancel, was ineffective given the notice of intention to cancel was not served. Therefore, Mr Cox said the Agreement remained on foot.

[11]   Subsequently, the Registrar advised that the enforcement process would not be issued without further orders of the Court.

CPL’s position

[12]   Mr Cox acknowledges that CPL attempted to give notice of its intention to cancel the Agreement, and the subsequent notice of cancellation of the Agreement, but submits that notice was ineffective. He submits that the Agreement remains on foot. Accordingly, he submits it is open to CPL to enforce the summary judgment order by way of a sale order.3

Discussion

[13]   In relation to any cancellation, the summary judgment order expressly required CPL to give the defendant (or her lawyer) “written notice in accordance with the Agreement of its intention to cancel the agreement” before cancellation could occur.

3      I do not consider Mr Cox’s affidavit evidence is contentious and therefore there is no issue with his roles as witness and counsel.

[14]Clauses 1.3(3) and (4) of the Agreement provide as follows:

(3)All other notices, unless otherwise required by the Property Law Act 2007, must be served by one of the following means:

(a)on the party as authorised by sections 354 to 361 of the Property Law Act 2007; or

(b)on the party or the party’s lawyer:

(i)by personal delivery

(ii)by posting or ordinary mail; or

(iii)by facsimile; or

(iv)by email; or

(v)in the case of the party’s lawyer only, by sending by document exchange or, if both parties’ lawyers have agreed to subscribe to the same secure web document exchange for this agreement, by secure web document exchange.

(4)In respect of the means of service referred to in subclause 1.3(3)(b) a notice is deemed to have been served:

(a)in the case of personal delivery, when received by the party or at the lawyer’s office;

…

(d)in the case of email, when acknowledged by the party or by   the lawyer orally or by return email or otherwise in writing, except that return emails generated automatically shall not constitute an acknowledgment.

…

[15]   The requirements of cl 1.3(3)(b) and 1.3(4) were not met. The defendant did not acknowledge receipt of the email. Carson Fox no longer acted for the defendant at the time the  notice  of  the  intention  to  cancel  was  received  and  were  not  “the party’s lawyer” for the purpose of receiving the notice. Nor was the notice served on the defendant as authorised by ss 344 to 361 of the Property Law Act 2007 (an alternative method pursuant to cl 1.3(3)(a) of the Agreement).

[16]   As the notice of CPL’s intention to cancel was not served on the defendant in accordance with the Agreement, the cancellation of the Agreement cannot be effective. As Mr Cox submits, the Agreement remains on foot.

[17]   There remains the residual issue of whether a sale order can be sought where there is an order for specific performance. Mr Cox submits that as the Agreement remains on foot and the judgment requires the payment of a sum of money, it is open to CPL to enforce the judgment by way of a sale order.

[18]   In Tawanui Developments Ltd v Harnett, the plaintiff entered into an agreement with the defendants, whereby the first defendants agreed to purchase the plaintiff’s property.4 The defendants then purported to cancel the agreement. However, the plaintiff successfully applied for summary judgment seeking specific performance. Following the defendants’ continued refusal to perform the agreement, the plaintiff initiated a sale order process against the defendants and sold a number of the defendants’ properties through the Registrar of the Court.5 As Mr Cox acknowledges, the use of the sale order process was not directly in issue before the Court (the application being addressed sought an order for damages consequent upon cancellation), but the decision indicates the sale order process may be utilised here.

[19]   The orders CPL seeks will allow it to enforce the summary judgment, in circumstances which are similar to those described in  Tawanui  Developments Ltd.   I consider that, as the Agreement remains on foot, it remains open to CPL to enforce the summary judgment order. The parties are not released from compliance with the summary judgment order under paragraph [3] of the order. Under r 17.63 of the  High Court Rules 2016, an entitled party may issue a sale order at any time after a judgment for a sum of money is sealed. The summary judgment order is a judgment for a sum of money. In these circumstances, I conclude it is appropriate to make the orders CPL seeks.

4      Tawanui Developments Ltd v Harnett HC Palmerston North CIV-2008-454-949, 20 August 2010.

5 At [7].

Result

[20]   I make an order declaring that the Agreement remains on foot. I further order that my summary judgment, dated 30 July 2019, may be enforced by way of a sale order.

Gault J