Dobson v Xia
[2019] NZHC 692
•4 April 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-002478
[2019] NZHC 692
UNDER Subpart 6 of the High Court Rules 2016 IN THE MATTER OF
An agreement for sale and purchase of real estate
BETWEEN
WENDY ELAINE DOBSON and SCO
TRUSTEES NO.4 LIMITED as trustees of the WE Dobson Family Trust
Plaintiffs
AND
JING XIA
Defendant
Hearing: 3 April 2019 Appearances:
A Fletcher for the Plaintiffs
No appearance for the Defendant
Judgment:
4 April 2019
JUDGMENT OF MOORE J
This judgment was delivered by me on 4 April 2019 at 10:00 am pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar Date:
DOBSON & ANOR v XIA [2019] NZHC 692 [4 April 2019]
Introduction
[1] The plaintiffs are Wendy Dobson and SCO Trustees No. 4 Ltd as trustees of the WE Dobson Family Trust (“the Trust”). The plaintiffs apply for summary judgment against the defendant, Jing Xia, in respect of an alleged breach of contract. To date, Ms Xia has filed no opposition to the proceeding and has not appeared at any of the hearings. For that reason, the plaintiffs seek summary judgment be entered in their favour by way of formal proof.
Background
[2] The Trust owned property located at 17/386 Richmond Road, Grey Lynn, Auckland (the Property). On 1 April 2017 Ms Dobson and Ms Xia entered into a sale and purchase agreement whereby the Trust would sell the Property to Ms Xia (“the First Agreement”). The relevant terms of the First Agreement were:
(a)The purchase price was to be $1,200,000;
(b)The deposit payable was 10% of the purchase price, being $120,000; and
(c)The settlement date would be 30 June 2017 or, if the Certificate of Code Compliance (“the CCC”) had not been issued by this date, five days after the CCC was issued.
[3] Ms Xia paid the $120,000 deposit in two instalments on 11 and 12 April 2017. She also signed the Agreement.
[4] The CCC was not issued until 18 January 2018. Settlement was therefore due on 26 January 2018.
[5]Ms Xia failed to complete settlement on 18 January. In accordance with cl
11.1 of the First Agreement, the plaintiffs immediately issued a settlement notice requiring settlement within 12 days. This notice was calculated to expire on 15 February 2018.
[6] Ms Xia failed to comply with this extended settlement date. On 15 February 2018, Ms Dobson instructed her solicitor to cancel the First Agreement pursuant to cl 11.4. That was done by letter to Ms Xia’s solicitors on the same day. Ms Xia’s deposit was surrendered to the plaintiffs.
[7] Ms Xia then contacted Ms Dobson privately informing that that she was still interested in purchasing the property. On 16 February 2018 Ms Xia’s solicitors wrote to the plaintiffs’ solicitors offering to purchase the Property for $1,250,000. The deposit paid under the First Agreement would be used as part of settlement funds.
[8] On 21 February 2018, the plaintiffs’ solicitors replied. They wrote that Ms Dobson would agree to sell the Property to Ms Xia for $1,250,000, but strictly on the following terms:
(a)The deposit paid under the First Agreement would be treated as a contribution to the deposit under the subsequent agreement; but Ms Xia would also be required to pay a further $25,000 as a deposit by 22 February 2018;
(b)Ms Xia is to pay $1,500 for Ms Dobson’s legal costs for the work incurred on the First Agreement and the subsequent agreement, with payment due on the date of settlement. Penalty interest would be waived in lieu of this.
(c)The date of settlement would be 28 February 2018. Failure to settle by this date would allow Ms Dobson to cancel the agreement immediately and Ms Xia would forfeit her deposit.
[9]That same day, 21 February 2018, Ms Xia’s solicitors replied as follows:
“Yes, our client agreed with the below terms. Please prepare an agreement. The extra $25,000 will be paid to your trust account accordingly.”
[10]The $25,000 deposit was paid on 22 February 2018.
[11] On 23 February 2018, the plaintiffs’ solicitors sent Ms Xia’s solicitors a revised agreement incorporating these terms (“the Second Agreement”). It had been signed by Ms Dobson.
[12] However, Ms Xia failed to settle by 28 February 2018. The plaintiffs sent her a letter purporting to cancel the Second Agreement and informing her that her deposit had been forfeited.
[13] On 9 April 2018 the plaintiffs entered into a sale and purchase agreement for the Property with a third party (“the Third Agreement”). The purchase price was
$995,000. Settlement took place on 17 May 2018.
The claim
[14] In their statement of claim, the plaintiffs sought the following amounts for Ms Xia’s failure to settle the Second Agreement:
(a)$110,000, being the difference between the sale prices of the Second and Third Agreements less both deposits forfeited;
(b)penalty interest under the First Agreement from the settlement date of that Agreement to the settlement date of the Second Agreement, being 33 days at a rate of 15% (as set out in the First Agreement), amounting to $14,652.48;
(c)outgoings in respect of the Property from 26 January 2018 to the settlement date of the Third Agreement, being $1,752.16;
(d)real estate agent’s advertising and marketing costs in the sum of $4,977; and
(e)real estate’s commission for the sale of the Property under the Third Agreement in the sum of $22,885.
[15] The matter came before Venning J on 5 February 2019. No appearance was made by Ms Xia. An issue was identified as to whether the Second Agreement was actually need to have been executed in order for it to be binding on the parties or whether the exchange of emails was sufficient to record such agreement. Counsel for the plaintiffs was directed to address the matter in submissions.
[16] Submissions were filed on 11 February 2019, arguing that the email exchange could form the basis of an agreement between the parties. The plaintiffs’ position, broadly, was that:
(a)the email exchanges, viewed as a whole and objectively, showed a concluded bargain;1
(b)the agreement was in writing, satisfying s 24(1)(a) of the Property Law Act 2017 (the PLA);2 and
(c)the written record was signed by Ms Xia’s solicitors through email, thereby satisfying s 24(1)(b) of the PLA.
[17] However, in a Minute dated 12 February 2019, Edwards J identified a further potential issue with the plaintiffs’ claim. One of these was whether s 24(1)(b) of the PLA had in fact been complied with. That section provides that “a contract for the disposition of land is not enforceable by action unless the contract or written record is signed by the party against whom the contract is sought to be enforced”. Counsel for the plaintiffs was requested to file further submissions.
[18] Those submissions have now been received. To put the matter briefly, the plaintiffs now concede that the purported Second Agreement is not enforceable against Ms Xia. That is because she never signed it. Nor did she sign any of the email exchanges that discussed the terms of that agreement. The plaintiffs acknowledge that in order for the emails to found an agreement that is binding on Ms Xia, they would need to prove that her solicitors had actual, apparent, or ostensible authority to not
1 Carruthers v Whitaker [1975] 2 NZLR 667 (CA).
2 See also ss 223 and 225 of the Contract and Commercial Law Act 2017.
only accept the proposed terms of the second agreement but also to bind her to them sufficiently so as to enforce as sale and purchase of land.3 The plaintiffs accept that Ms Xia’s solicitors role was limited to communicating her instructions and that there is insufficient evidence to find there is an agreement between the parties resulting from the email exchange.
[19] The plaintiffs therefore seek to change track. They now claim a breach of contract in respect of the First Agreement, brought about by Ms Xia’s failure to settle on that agreement. They further say that they successfully cancelled the Agreement once the notice of settlement expired and that damages flowed from Ms Xia’s breach.
Law
[20] The objective of the procedure for formal proof is to achieve just, speedy and inexpensive determination of proceedings.4 At a formal proof hearing, the plaintiff must file evidence establishing each cause of action relied upon to the Judge’s satisfaction.5 If damages are sought, the plaintiff must file evidence providing sufficient information to enable the Judge to calculate and fix the damages.6
[21] The standard to which a Judge must be satisfied on formal proof is “much the same as it would be if the proceeding had gone to trial”.7 However, a Judge in a formal proof hearing is not required to engage with any matters of affirmative defences, set- off our counterclaim.8
Discussion
[22] I am satisfied on the evidence that Ms Xia breached the First Settlement Agreement by failing to settle:
(a)first, within five days of the CCC being issued, namely 26 January 2018; and
3 Savill v Chase Holdings (Wellington)Ltd [1989] 1 NZLR 257 (HC).
4 Kim v Cho [2016] NZHC 1771 at [5].
5 High Court Rules 2016, r 15.9(4).
6 Rule 15.9(4).
7 Ferreira v Stockinger [2015] NZHC 2916 at [35].
8 Lexall Ltd v Maruonz Construction Ltd (in liq) [2017] NZHC 599 at [14].
(b)secondly, within 12 days of the settlement notice being issued, namely 15 February 2018.
[23] The mere fact of that breach is sufficient to ground a claim for breach of contract. Unlike the Second Agreement, Ms Xia signed the First Agreement and there is no suggestion it was not a valid contract up until the point of cancellation.
[24] For these reasons I am satisfied that the plaintiffs have made out their case and that judgment on liability should be entered in favour of the plaintiffs namely that the defendant breached the First Settlement Agreement by failing to settle.
[25] The schedule of sought damages set out by the plaintiffs in their statement of claim was tailored to a breach of contract of the Second Agreement. The quanta of loss flowing from the (alleged) breaches are necessarily different. For a start, the sale price of the Property under the Second Agreement was higher. The discrepancy in the overall quantum of damages caused by that difference could be easily be calculated by the Court. But there is also the matter of the penalty interest that is said to have accrued as per the First Agreement. The accrual of this interest is said to have been waived by the Second Agreement and replaced by a lump sum payment towards solicitor costs. But now the plaintiffs acknowledge that the Second Agreement was never binding on the parties because Ms Xia never signed it. This necessarily has a bearing on quantum, as arguably, the plaintiffs would still be entitled to penalty interest under the First Agreement for the periods in which it was assumed that the Second Agreement was thought to be operative. Further, with the Second Agreement essentially failing as an enforceable instrument, it raises the question as to whether the plaintiffs are entitled to retain the further $25,000 deposit paid under that Agreement or whether it should be subtracted from an eventual costs award.
[26] I raised with Ms Fletcher, appearing for the plaintiffs, whether the appropriate course should be for me to enter judgment in respect of liability but leave the assessment of damages until further evidence, if that is necessary, and submissions. She agreed that was the appropriate course and, accordingly, I direct that such further evidence or submissions is to be filed within 10 working days of the date of this judgment. These submissions will need to cover the losses arising from the breach
of the First Agreement which will include the plaintiffs’ assessment of penalty interest, the relevant dates for that calculation, agency fees, commission, interest on money claims and costs in respect of these proceedings.
Moore J
Solicitors:
Schnauer and Co, Auckland
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