Feng v Wang
[2024] NZHC 482
•8 March 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-2342
[2024] NZHC 482
BETWEEN WEIQIANG FENG
(also known as BRIAN FENG) Plaintiff
AND
KAI WANG (also known as TONY WANG) Defendant
Hearing: 13 February 2024 Appearances:
A Ho for the Plaintiff
C Holland or the Defendant
Judgment:
8 March 2024
JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR
[Application for summary judgment]
This judgment was delivered by me on 8 March 2024 at 3:00pm
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
Solicitors:
Righteous Law Limited (C Holland), Auckland, for the Defendant
Copy for:
Mr Brian Feng
FENG v WANG [2024] NZHC 482 [8 March 2024]
Introduction
[1] Weiqiang Feng, also known as Brian Feng (Mr Feng) seeks summary judgment against Kai Wang, also known as Tony Wang (Mr Wang).
Background
[2] On or around 18 October 2021, Mr Feng entered into an unconditional agreement to purchase the Property at 22 Manapau Street, Meadowbank, Auckland (the Property) from David Lawrence Mills and Fiona Eileen Mills in their capacity as trustees of the Mills Family Trust (the vendors). The purchase price of the Property was $2,600,000 and the settlement of the Property was due on 4 May 2022.
[3] By a deed of nomination dated 23 April 2022, Mr Feng nominated Mr Wang as a purchaser under the agreement.
[4] On 4 May 2022, Mr Feng and Mr Wang failed to settle the purchase of the Property. As a result, the vendors took steps to mitigate its loss and resold the Property at a lower price on 14 September 2022. The vendors obtained judgment against both Mr Feng and Mr Wang for the price difference and other expenses, in a sum of
$756,579.31.
[5] Mr Feng seeks judgement against Mr Wang for the above sum, as well as a declaration that he is entitled to full indemnity for any liabilities to the vendors. Mr Wang, however, opposes the claim and alleges that there was a “Development Arrangement” between the parties under which both parties agreed to contribute financially to the purchase and development of the Property and share profits.
[6] Mr Wang counterclaims against Mr Feng alleging misrepresentation and seeks to set aside the deed of nomination.
Mr Feng’s application for summary judgment
[7]Mr Feng seeks the following orders:1
1 Interlocutory application by plaintiff for summary judgment against defendant dated 2 December 2022 at [1].
a. A declaration that the plaintiff is entitled to recover from the defendant a full indemnity towards any liability which the plaintiff may be held to have to David Lawrence Mills and Fiona Eileen Mills in their capacity as trustees of the Mills Family Trust in respect of their alleged loss and damage.
b.Judgment against the defendant for $756,579.31.
c. Interest from date of judgment until payment is made in full pursuant to s 10 of the Interest on Money Claims Act 2016.
d.Indemnity costs pursuant to clause 2 of the Deed.
The grounds on which the orders are sought are:2
a. The defendant has no arguable defence to plaintiff’s claim.
Affidavit of Weiqiang Feng dated 12 December 2022
[9] Mr Feng has made an affidavit in support of his application. In his affidavit, he says that he is a project manager at Helio Consultants Ltd (Helio) which provides services related to subdivision of properties. He says that Mr Wang engaged Helio to obtain resource consent for one of his developments. He says that their common interest in developing properties was the reason they became friends.
[10] He states that Mr Wang would approach him for his views on the development potential of properties that he was interested in. One of these properties was 22 Manapau Street, Meadowbank.
[11] Mr Feng deposes that Mr Wang was really interested in purchasing the Property, however, he had issues with purchasing the Property as he had not been in New Zealand long enough to do so. Mr Feng states that Mr Wang asked for his assistance by entering into the sale and purchase agreement to purchase the Property himself and then nominate Mr Wang as the purchaser. Mr Feng says he agreed to help Mr Wang.
[12] Mr Feng deposes that on or around 18 October 2021, he entered into an agreement to purchase the Property from the vendors. He states that he did not take legal advice and was not aware that he would be personally liable if Mr Wang was not
2 At [2].
able to settle. He also says that he had no involvement in the negotiations with the vendors.
[13] He deposes that the deed of nomination states that Mr Wang agrees to indemnify him from and against all actions, claims, demands, costs, and other liabilities arising out of his obligations as purchaser under the agreement.
[14] Mr Feng further states that Mr Wang was relying on funds from the sale of his Property at 20 Riddell Road, Glendowie, Auckland, to settle the purchase of the Property. He states that Mr Wang was unable to sell his property, and thus, unable to settle the purchase with the vendors. He says that this led to the vendors issuing a settlement notice and terminating the agreement.
[15] Mr Feng concludes his affidavit by stating that Mr Wang agreed to indemnify him pursuant to the deed and he wants to enforce the terms of the deed against Mr Wang.
Mr Wang’s opposition
[16]Mr Wang opposes the application on the following grounds:3
a. The respondent has arguable defences against the claims by the applicant:
i.The applicant and the respondent were in a joint venture for the purchase and development of 22 Manapau Street, Meadowbank, Auckland (Record of Title NA31B/1319, legally described as Lot 22 Deposited Plan 41497) (the Property);
ii.The Agreement for Sale and Purchase of Real Estate entered into on 18 October for the Property (the Agreement) was entered into with the mutual understanding that the parties would invest funds equally for the purchase and the later development, and to share the profits thereafter (the Development Arrangement);
iii.The applicant reneged from the agreement between the parties after entering into the Agreement and later misled the respondent into entering into a Deed of Nomination to nominate the Agreement in the sole name of the respondent in that the applicant informed the respondent that the execution of the Deed of Nomination is a mere formality, that did not interfere or alter the Development Arrangement. In reliance on such, the respondent executed the Deed
3 Notice of opposition to the interlocutory application by plaintiff for summary judgment against the defendant dated 29 May 2023 at [3].
of Nomination with no real intention to be personally liable for the purchase of the Property; and
iv.The applicant is instrumental in the entry into the Agreement with the vendor and the formation of the Development Arrangement, and the respondent relied significantly on the representations and promises of the applicant for the execution of the Deed of Nomination and the agreement to the Development Arrangement.
Affidavit of Mr Kai Wang dated 08 June 2023
[17] Mr Wang has made an affidavit in support of his application for security cost and his opposition to Mr Feng’s application for summary judgment.4
[18] Mr Wang deposes that he only initially agreed to enter into a Development Arrangement with Mr Feng to purchase and develop a Property together, and then to share the profits together. He says that he never intended to purchase the Property otherwise.
[19] On or about 23 April 2022, he states that Mr Feng approached him and asked him to sign a document which was to nominate the purchase from Mr Feng to him. He deposes that, upon asking Mr Feng about the document, he informed him that it was a mere formality. He also states that he was never told that the document was to be presented to the vendors, nor was he given any advice on the consequences of signing the document.
Reply affidavit of Mr Weiqiang Feng dated 07 December 2023
[20]Mr Feng has made an affidavit in reply to Mr Wang’s affidavit.5
[21] He deposes that the Development Arrangement was never agreed and signed between him and Mr Wang.
[22] Mr Feng states that Mr Wang’s liability rests on the deed of nomination which Mr Wang claims to have been misled to. He says that this is inconsistent with the fact that Mr Wang did not dispute liability under the deed in the proceeding brought by the
4 Affidavit of Kai Wang dated 8 June 2023.
5 Affidavit in reply to affidavit of Kai Wang dated 07 December 2023
vendors against Mr Feng and Mr Wang. He says it is recorded in the judgment given in those proceedings that the only defence raised is that the vendors did not mitigate Mr Wang’s loss.6
Leave to file counterclaim
[23] Ms Holland for Mr Wang sought leave for Mr Wang to file his counterclaim against Mr Feng out of time. She submitted that the judgment of Campbell J was delivered on 21 September 2023 and Mr Wang filed his counterclaim on 3 November 2023, a delay of only five weeks.7
[24]Mr Feng opposed the granting of leave.
[25] I granted leave to Mr Wang to file his counterclaim out of time as I did not regard the delay as excessive.
Legal principles
[26]Rule 12.2(1) of the High Court Rules 2016 provides:
12.2 Judgment when there is no defence or when no cause of action can succeed.
(1)The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[27] The relevant principles governing a summary judgment application are well established:8
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. 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. The Court will not normally resolve material conflicts of evidence or assess the
6 Mills v Feng [2022] NZHC 3278.
7 Mills v Feng [2023] NZHC 2641.
8 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26] (citations omitted).
credibility of deponents. 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. 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.
[28]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:9
(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.
Analysis
[29] The issue to be determined in this judgment is whether Mr Wang has any arguable defences to Mr Feng’s application for summary judgment. Ms Holland sets out the three defences put forward by Mr Wang as:
(a)there was no valid deed of nomination;
9 Andrew Beck and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at [HR12.2.11].
(b)Mr Wang was induced to enter into the deed of nomination with Mr Feng as a result of Mr Feng’s misrepresentation; and
(c)Mr Feng repudiated the Development Arrangement.
Development Arrangement
[30] Ms Holland submits that Mr Feng represented himself to Mr Wang as being well established in the property development field and was acquainted with Mr Wang via previous social and business dealings. She submits that there had been a history of discussions regarding potential investment opportunities between Mr Feng and Mr Wang, and re-affirmations of the parties’ intention to purchase and develop properties in the form of a partnership.
[31] Ms Holland submits that a development arrangement (Development Arrangement) was established between Mr Feng and Mr Wang comprising various WeChat messages and oral acknowledgments between the parties, the essential terms of which were:
(a)Mr Feng would be named as purchaser on the sale and purchase agreements as he will be the main driving force in the developments;
(b)Mr Feng, as a silent partner, would invest in the shares of the purchase and development of any project with Mr Wang;
(c)All costs, losses and profits of any development would be shared equally between Mr Feng and Mr Wang.
[32] Ms Holland submits that as part of the Development Arrangement between the parties, Mr Feng entered into an agreement for sale and purchase of the Property. She submits that Mr Feng induced Mr Wang to enter into the Development Arrangement by various misrepresentations, which were in summary:
(a)Mr Feng talked to Mr Wang about all the joint venture or other property development deals he had had with other friends or investors and presented himself as really experienced in this type of business module;
(b)Mr Wang told Mr Feng that he often signed several agreements at once and he does this because it gives him a short-term gain with no real intention to drag the investment to settlement. Mr Feng told Mr Wang that he pushes for long settlement dates so he can then flip the property either with the design plan prepared, resource consent or building consent applied for or obtained, to a new purchaser for profit. Mr Feng represented that this type of business module does not require a large amount of cash and often only 40 per cent of the total purchase price is sufficient;
(c)Mr Feng represented to Mr Wang that he was someone who was really experienced in this type of property investment area;
(d)on 14 October 2021 Mr Feng assured Mr Wang that he had the cash for a 5 per cent deposit in relation to the purchase of the Property;
(e)Mr Feng made it clear to Mr Wang that he had no intention of settling the purchase of the Property.
[33] Mr Feng denies that any such arrangement was agreed between himself and Mr Wang. Mr Feng asserts that Mr Wang purchased the Property for his mother to stay in the Property. Mr Feng submits that the following facts indicate that there was no Development Arrangement between him and Mr Wang:
(a)Mr Wang arranged payment of the deposit of $130,000. Mr Feng did not contribute any funds for any of the deposit;
(b)Mr Wang did all the negotiations of the sale and purchase agreement with the real estate agent;
(c)Mr Wang did not settle the purchase of the Property because he was not able to sell his own Property at Riddell Road, Glendowie, Auckland, and therefore, did not have sufficient funds to settle the purchase of the Property.
[34] Ms Holland submits that the conversation in the exchange of messages between Mr Wang and Mr Feng as set out at [49] of her submissions display Mr Feng’s intention to work together with Mr Wang on the purchase and development of the Property.
Deed of nomination -- misrepresentations
[35] Ms Holland submits that Mr Wang was induced to enter into the deed of nominations by misrepresentations made by Mr Feng. She submits these representations were as follows:
(a)When the deposit under the sale and purchase agreement was due on 19 October 2021, Mr Feng represented to Mr Wang that he was having personal financial issues and was temporarily unable to come up with the deposit as agreed between the parties;
(b)Mr Feng reassured Mr Wang that these issues would not affect the Development Arrangement, in particular, the payment of the 5 per cent deposit required in relation to the agreement. Mr Feng represented to Mr Wang that he was financially capable of contributing sufficient funds towards the purchase of the Property, that his financial hiccups were merely temporary and would not affect the otherwise agreed Development Arrangement;
(c)Mr Feng reassured Mr Wang that it would be a profitable investment opportunity;
(d)Mr Feng represented to Mr Wang that the deed of nomination was a mere formality and a procedural mechanism required due to the
unexpected hiccup by Mr Feng. It was represented to Mr Wang that the deed of nomination was to enable the parties to secure funding which would not affect the Development Arrangement and prolong the business relationship;
(e)Mr Feng reassured Mr Wang that he would continue to act for the benefit of the Development Arrangement for all intents and purposes, and Mr Feng would continue to be liable under the sale and purchase agreement.
[36] Ms Holland submits that Mr Feng had misrepresented his financial capability and showed no intention to fund and settle the purchase. Accordingly, Mr Feng reneged from the Development Arrangement and issued proceedings against Mr Wang with knowledge of the background regarding the Development Arrangement.
[37] Mr Feng denies making misrepresentations inducing Mr Wang to enter into the deed of nomination. He also points out that in the judgment of Campbell J Mr Wang did not dispute liability under the deed of nomination.10
Result
[38] I am of the view that Mr Feng’s application for summary judgment should be dismissed. The reasons for this are:
(a)there are serious questions to be tried on the evidence before the Court, being:
(i)was there a Development Arrangement between the parties?
(ii)is there a valid deed of nomination between Mr Feng and Mr Wang?
10 Mills v Weng, above n 7.
(iii)was Mr Wang induced to enter into the deed of nomination with Mr Feng as a result of Mr Feng’s misrepresentations?
(iv)did Mr Feng repudiate the Development Arrangement?
(b)There are material conflicts of evidence between the parties, with Mr Wang alleging that there was an agreed Development Arrangement in respect of the Property and Mr Feng denying this. A trial with evidence and cross-examination is required to resolve the conflict of evidence. In addition, the Court needs to make an assessment of the credibility of the parties.
Orders
[39]I make the following orders:
(a)Mr Feng’ application for summary judgment against Mr Wang for the sum of $756,579.31 and for a declaration that he is entitled to be indemnified by Mr Wang for any liabilities to the vendors is dismissed.
(b)As Mr Wang is the successful party, costs should follow the event. Counsel are directed to endeavour to agree costs and failing agreement being reached within a period of 20 working days from the date of this judgment counsel for Mr Wang will file a memorandum as to costs (not to exceed five pages) within five days after the expiry of the 20 working day period, and Mr Feng will file a memorandum (not to exceed five pages) in response within 5 working days of receipt of counsel for Mr Wang’s memorandum. A decision as to costs will then be made on the papers.
…………………………….. Associate Judge Taylor
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