GRP Management Limited v VP Nominees Limited
[2022] NZHC 71
•2 February 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-1675
[2022] NZHC 71
BETWEEN GRP MANAGEMENT LIMITED
Plaintiff
GRP HOLDINGS LIMITED
Second PlaintiffAND
VP NOMINEES LIMITED
Defendant
Hearing: 15 November 2021 Appearances:
G Blanchard QC, C Jiang and G Morrison for the Plaintiffs M O’Brien QC and A Steel for the Defendant
Judgment:
2 February 2022
JUDGMENT OF FITZGERALD J
This judgment was delivered by me on 2 February 2022 at 2.30pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date……………
Solicitors: Tompkins Wake, Auckland
Forest Harrison, Auckland
To:M O’Brien QC, Auckland G Blanchard QC, Auckland A Steel, Auckland
GRP MANAGEMENT LIMITED v VP NOMINEES LIMITED [2022] NZHC 71 [2 February 2022]
Introduction
[1] These proceedings concern a property in Whenuapai (the Property) and a dispute over whether the defendant (vendor) validly cancelled an agreement to sell the Property to the second plaintiff (as the first plaintiff’s nominated purchaser) (the Agreement). The defendant has since sold the Property to a third party and settlement of that transaction is due to take place on 1 April 2022.
[2] The plaintiffs commenced these proceedings in September 2020, and the parties later sought a priority five day fixture. Such a fixture was granted, with the substantive hearing due to commence on 15 November 2021. Putting aside COVID-19 related issues, the parties had substantially underestimated the time needed to complete the trial fixture. The plaintiffs served 11 briefs of evidence, including those of four experts. The defendant proposed to call six witnesses of fact, four experts and one or two further witnesses by way of subpoena. Some witnesses would have required an interpreter.
[3] The issue of trial duration was addressed by Wylie J in a conference with the parties on 4 November 2021. At the conclusion of the conference, his Honour vacated the November fixture and directed the Registry to allocate a new 10 day fixture on the next available date. The substantive hearing has now been allocated a 10 day fixture commencing on 19 June 2023.
[4] In his minute vacating the trial fixture, Wylie J noted that there were a number of outstanding issues on the admissibility of aspects of the parties’ respective briefs of evidence. He accordingly made timetable directions that those admissibility objections be heard at a half day hearing on 15 November 2021 (that is, what would have been the first day of the trial). This judgment determines those admissibility objections.
[5]I make three points by way of preliminary observation:
(a)First, through discussion with counsel at the hearing, agreement or concessions were reached/made on a number of the objections. I encourage parties to civil litigation more generally to discuss
admissibility objections in advance of hearings such as this, as many admissibility issues are relatively straightforward and ought to be able to be resolved by counsel without the need for formal court involvement (and the use of scarce court hearing time).1
(b)Second, many of the objections in this case were fairly minor, and would have been readily identified and dealt with by the trial Judge as the evidence was given.2 As such, while it is of course each party’s right to object to evidence it considers inadmissible, consideration should be given to whether any such objections ought to be dealt with at the pre-trial stage or whether they can await trial. A pre-trial hearing might be appropriate where significant aspects of the proposed evidence are challenged, or whole statements are in issue, and determination of the challenges may materially affect the length or scope of the substantive hearing. In other cases, however (for example, where the objections are primarily directed at “random” sentences or paragraphs within a larger brief of evidence), the issues are likely to be more efficiently dealt with at the outset of trial, or the outset of each relevant witness giving his or her evidence.
(c)Finally, and with reference to factual evidence in civil litigation more generally, briefs of evidence that are limited to what the particular witness saw, did, heard and the like, and thus limited to admissible evidence, will be far more persuasive to the Court than more broad-ranging briefs of evidence that seek to tell “the whole story” or to provide a full chronology of events even if that witness was not involved in some of those events. In addition, it is increasingly common for factual witnesses to provide what is ultimately a subjective and one-sided commentary on contractual and other contemporaneous documentary materials. This is usually unhelpful and should be avoided. Such documentary materials inevitably speak for themselves,
1 As is regularly the case, for example, in the criminal jurisdiction.
2 In terms of being alive to and “filtering out” any inadmissible material. For example, isolated sentences framed around a witness’s belief, suspicion or general thoughts.
and the issue will most often be what that material objectively conveyed to the other party at the time. In a similar vein, evidence of what a witness believed at the time, his or her thoughts as to why the other side was doing what they were doing, or his or her suspicions and the like, are rarely admissible.
(d)Ultimately, greater attention to limiting factual briefs of evidence to admissible evidence, which will generally be events about which the witness has personal knowledge or in which they were personally involved, and which is relevant to the issues to be determined at trial,3 will result in more persuasive evidence being put before the Court, and efficiencies in the trial process more generally.
Overview of factual background and pleaded claims
Introduction
[6] Evidence is only relevant and thus admissible “if it has a tendency to prove or disprove anything that is of consequence to the determination of the proceeding”.4 In the context of civil proceedings, relevance is assessed by reference to the issues arising on the pleadings. I therefore first summarise the parties’ respective pleadings (and in doing so, the factual background to their dispute).
Pleaded factual background
[7] The second plaintiff owns the property immediately adjacent to the Property. Ms Lillian Liu is the sole shareholder of the second plaintiff and the majority shareholder of the first plaintiff.
[8] The Property comprises a “Main House” and a “Minor Dwelling” (both being tenanted from time to time). The Property is owned by the defendant as trustee of the Bristol 2017 Family Trust (the Trust). The Trust is the family trust of Mr Ming Ma and his wife. From 23 November 2017 to 12 September 2018, the defendant’s sole
3 Determined by reference to the issues arising on the pleadings.
4 Evidence Act 2006, s 7(3).
director was Mr Bruce Wang. Mr Ma has been the defendant’s sole director since 12 September 2018.
[9] Both the Property and the neighbouring property owned by the second plaintiff are zoned “future urban” by Auckland Council. I proceed on the assumption that the broader context to the present dispute over the Property is its future development potential.
[10] The plaintiffs allege that in 2017 Ms Liu met with Mr Ma and he told her that Mr Wang was the accountant, trustee and authorised representative of the Trust. This is denied in the defendant’s statement of defence.
[11] The plaintiffs say that in or around September 2018 Mr Wang contacted Ms Liu and advised her that the Property was for sale, and that from that point until 10 October 2018 Mr Wang negotiated the sale and purchase of the Property on behalf of the defendant. The defendant admits that Mr Wang acted in this role at that time.
[12] The plaintiffs allege that during these negotiations, Ms Liu advised Mr Wang that it was important that the Property be tenanted at the time of settlement, and able to be tenanted for several more years, in order to cover holding costs pending development of the adjoining properties. The plaintiffs further allege that Mr Wang made a number of representations to Ms Liu, including that the Property was in “good tenantable condition” and there were and had been no problems with the Property. The defendant denies these allegations.
[13] The plaintiffs say that relying on Mr Wang’s alleged representations, and at Mr Wang’s request not to disturb the tenants, Ms Liu agreed not to view or inspect the Property at that time. The plaintiffs say that the parties (the defendant acting through Mr Wang) reached an oral agreement that the first plaintiff would purchase the Property for $8.6 million with settlement in about a year’s time. Again, these aspects of the plaintiffs’ pleading are denied.
[14] Of key relevance to the plaintiffs’ claims is the allegation that Mr Wang, acting on behalf of the defendant, agreed that the first plaintiff would have a right of final
inspection of the Property prior to the settlement date. This is referred to in the statement of claim as the “Agreed Inspection Term”, though I will refer to it in this judgment as the “Alleged Oral Inspection Term”. While the defendant also denies this aspect of the statement of claim, I interpolate to note that during earlier interlocutory skirmishes between the parties, Mr Wang provided Ms Liu with a statement that supports the suggestion that he agreed to such a term. In this context, in her recent judgment on the plaintiffs’ application to sustain a caveat over the proceedings, Associate Judge Sussock recorded that “[t]he evidence of Ms Liu and Mr Wang confirms that Ms Liu and Mr Wang discussed and orally agreed a pre-settlement inspection term.”5
[15] Turning back to the pleaded case, on 10 October 2018 the parties entered into a written agreement for the sale and purchase of the Property (the Agreement). Key terms included that the purchase price was $8.6 million; the settlement date was to be 28 November 2019 (the Settlement Date); a $200,000 deposit was to be paid three working days following the signing of the Agreement; a further $1.3 million was payable upon the Agreement becoming unconditional; and the Agreement recorded that the Property was then tenanted under a fixed term tenancy until January 2019. A condition precedent to the Agreement was that the purchaser obtain a geotechnical report on or before 5 November 2018.
[16] Importantly, cl 3.2 of the Agreement required the defendant, if the Property was sold with vacant possession and without tenants in possession, to permit the first plaintiff on reasonable notice to conduct a pre-settlement inspection. Clause 22 of the Agreement provided that the purchaser agreed to accept either vacant or tenanted possession on the Settlement Date. I interpolate to note that it is not in dispute that the Property continued to be tenanted up to and including on the Settlement Date.
[17] The Agreement went unconditional on 5 November 2019. On the same date, the first plaintiff paid the further deposit referred to at [15] above, and the parties agreed that the Settlement Date would be deferred to 31 March 2020, consideration for which was an increase in the purchase price to $8.75 million.
5 GRP Holdings Ltd v VP Nominees Ltd [2021] NZHC 545, (2021) 21 NZCPR 915 at [138]. Any such evidence of Mr Wang would, of course, have to be given and tested at the substantive hearing.
[18] On 19 December 2019 the first plaintiff nominated the second plaintiff as purchaser under the Agreement.
[19] By the time of the (new) Settlement Date, COVID-19 had arrived in New Zealand and the country was in an Alert Level 4 lockdown. The plaintiffs requested that the Settlement Date be deferred again, said to be “primarily because Alert Level 4 lockdown meant that the plaintiffs could not carry out a final inspection”. The defendant, however, insisted that settlement occur as scheduled on the Settlement Date and issued a settlement statement on 30 March 2020.
[20] The statement of claim then traverses subsequent email correspondence between the parties’ solicitors about settlement and a pre-settlement inspection. It is sufficient to record the following:
(a)The plaintiffs allege that the defendant’s solicitors acknowledged on 31 March 2020 that the plaintiffs had a right of final inspection, though disputed that that allowed the plaintiffs to defer or refuse to settle.
(b)On 21 April 2020 the defendant’s solicitors issued a settlement notice requiring settlement on the Property within 12 working days.
(c)On 28 April 2020 the plaintiffs disputed the settlement notice, proposed that the Settlement Date be deferred to 11 May 2020 (being 10 working days after the country moved to Alert Level 3) so a final inspection could take place, and asked the defendant to confirm whether it was aware of any methamphetamine contamination at the Property.
(d)Also on 28 April 2020, the defendant allegedly agreed to defer settlement to 11 May 2020 (referred to in the statement of claim as “the Deferred Settlement Date”).
(e)The parties thereafter exchanged correspondence (through their solicitors) in which, among other matters, the defendant’s solicitors stated:
(i)the plaintiffs were not entitled to carry out a final inspection;
(ii)that the Property was maintained “in the same state of repair at the time of the agreement other than fair wears and tears [sic]”; and
(iii)that the former property manager for the Property had discovered methamphetamine contamination in 2016 and professional decontamination was undertaken immediately thereafter, but that had no relevance to or bearing on the plaintiffs’ obligation to settle.
[21] The defendant’s statement of defence unsurprisingly does not dispute the contents of the correspondence between the parties but:
(a)alleges that the plaintiffs were not ready, willing and able to settle on 31 March 2020;
(b)denies that the defendant’s solicitors acknowledged that the plaintiffs had a right of final inspection;
(c)denies that the deferral of settlement was to enable a final inspection; and
(d)denies that it agreed to the Deferred Settlement Date. Rather, it says it agreed not to take any steps on the settlement notice prior to that date.
[22] It is not in dispute that around this time, the tenants of the Main House at the Property sought a methamphetamine contamination report and provided the report to the plaintiffs. The report concluded that the composite methamphetamine contamination level at the Main House was 8.74µ/100cm2, which exceeds the acceptable level under New Zealand Standard NZS 8510:2017 (the Standard) of 1.5µ/100cm2.
[23] The parties remained in dispute by the (alleged) Deferred Settlement Date. The plaintiffs say that they remained ready, willing and able to settle the Agreement as at 11 May 2020, which the defendant denies.
[24] The parties’ solicitors continued to correspond on 11 May 2020 about settlement and a possible retention (broadly, the plaintiffs suggesting a retention of
$500,000, the defendant suggesting $100,000, though on condition settlement take place that day), but no agreement was reached. The plaintiffs say they put the defendant on (further) notice of various claims, including those said to arise from methamphetamine contamination. In response, the defendant says that the plaintiffs never invoked the procedure under cl 8 of the Agreement for serving notice of a claim for compensation.
[25] Settlement did not occur on 11 May 2020. Given the impasse, on 14 May 2020 the defendant notified the plaintiffs that it intended to cancel the Agreement and forfeit the deposit if settlement did not occur by 4.30 pm that day. It reiterated the proposed
$100,000 retention pending resolution of liability in relation to any methamphetamine contamination. Settlement did not occur and the defendant accordingly purported to cancel the Agreement at 4.38 pm on 14 May 2020. Whether that cancellation was valid is a key issue for determination.
First cause of action
[26] In the context of the above factual background, the plaintiffs advance six causes of action.
[27] The first is for breach of contract. The plaintiffs say that the defendant breached the Agreement in a number of respects:
(a)The plaintiffs first say that the Alleged Oral Inspection Term is binding on the parties and/or forms a part of the Agreement as:
(i)it forms a part of the Agreement by rectification (as pleaded in the fourth cause of action); and/or
(ii)the defendant is bound by, and estopped from resiling from, the Alleged Oral Inspection Term.
The plaintiffs say that the Alleged Oral Inspection Term was material to the parties’ agreement and the defendant breached the term by refusing to permit a final inspection of the Property prior to settlement.
(b)The plaintiffs further say that prior to settlement, the Property was damaged by methamphetamine contamination6 and the defendant failed to remedy that damage prior to settlement, or to negotiate or settle with a deduction to the purchase price to cover the resulting diminution in the value of the Property or remedial costs required. The plaintiffs say that the defendant’s conduct breached cls 5.2(2) and 5.2(4) of the Agreement (the warranty provisions), and cl 8.4 (the process for determining any dispute as to an interim amount to be deducted from the purchase price at settlement pending resolution of a compensation claim made by the purchaser). In this context, the plaintiffs say that their correspondence with the defendant in the lead up to the Deferred Settlement Date amounted to proper notice of a compensation claim under cl 8 of the Agreement (if such notice was required). The plaintiffs further say that it would have been “futile” to tender settlement in circumstances where the defendant would not negotiate or settle with a deduction to the purchase price and/or where the plaintiffs could not ascertain with certainty the amount that would constitute a proper deduction.
[28] The plaintiffs say that because of the defendant’s breaches, together with its alleged misrepresentations as to the tenantability of the Property, the defendant was not ready, willing and able to settle at the time of its settlement notice and/or its purported cancellation of the Agreement, and thus the purported cancellation was invalid and the Agreement remains operative. The plaintiffs seek specific performance of the Agreement, together with damages for misrepresentation and/or compensation
6 It is alleged that the Main House was untenantable and the Minor Dwelling was tenantable, though the Property was “as a whole, not untenantable”.
under the Fair Trading Act 1986 (the FTA), or alternatively contractual damages (said to be in a sum to be quantified prior to trial).
[29]The defendant generally denies the first cause of action and further says that:
(a)even if the Alleged Oral Inspection Term had any contractual effect, any failure by the defendant to allow a final inspection was immaterial;
(b)while there was some contamination in one of the dwellings on the Property, the defendant was unaware of that fact at the time of the Agreement and scheduled settlement;
(c)any contamination could have been remedied for well below any of the sums suggested by the plaintiff as a retention, that the Property has subsequently been remedied in any event (for a cost of just over $4000), and was re-tested in January 2021 and found to be no longer contaminated; and
(d)any diminution in value from the suggested methamphetamine contamination was negligible or insignificant in any event.
Second cause of action
[30] The plaintiffs’ second cause of action is brought pursuant to s 35 of the Contract and Commercial Law Act 2017, on the basis of those representations alleged to have been made by Mr Wang and referred to at [12] above. The plaintiffs say that the misrepresentations induced their entry into the Agreement, and have caused and will cause them loss, being the amount necessary to remedy the methamphetamine contamination at the Property.
[31]The defendant denies the second cause of action.
Third cause of action
[32] The third cause of action is essentially the same as the second, but brought pursuant to ss 9 and 14 of the FTA, and alleging that in addition to alleged
misrepresentations having been made as to the tenantability of the Property immediately prior to the Agreement, the defendant continued “over the course of the Agreement” to represent that the Property was in good tenantable condition, save for fair wear and tear.
[33]Again, the defendant denies the third cause of action.
Fourth cause of action
[34] The plaintiffs’ fourth cause of action is for rectification of the Agreement. The plaintiffs say that the parties’ mutual intention was that the Alleged Oral Inspection Term form part of the Agreement, but it did not do so by mistake. The plaintiffs seek rectification of the Agreement to include the Alleged Oral Inspection Term.
[35] The defendant denies the fourth cause of action, and says that even if the grounds for relief by way of rectification were made out, it would be inequitable to grant such relief because:
(a)the Property was purchased for redevelopment;
(b)the value of the dwellings was minor compared to the overall value of the Property;
(c)the Agreement contained an express provision concerning pre-settlement inspection (cl 3.2) and it “is the usual and standard provision”;
(d)the Alleged Oral Inspection Term is inconsistent with cl 3.2;
(e)shortly after cancelling the Agreement, the defendant entered into an agreement to sell the Property to a third party; and
(f)the value of the Property has risen significantly since then, such that if the Agreement with the plaintiffs is enforceable in priority, the defendant would be exposed to a significant claim for damages.
Fifth cause of action
[36] The plaintiffs’ fifth cause of action is equitable estoppel, essentially alleging that the parties agreed to and accepted that the Alleged Oral Inspection Term would form part of their binding agreement, and that it would be unconscionable for the defendant to resile from that agreement.
[37]Again, the defendant denies the pleaded cause of action.
Sixth cause of action
[38] The final cause of action is contractual mistake. The plaintiffs say that they were induced to enter into the Agreement by a mistake and the existence of the mistake was known to the defendant, or alternatively the parties were influenced in their respective decisions to enter into the Agreement by the same mistake. The mistake is said to be that the Main House was in good tenantable condition, when it was in fact untenantable due to methamphetamine contamination.
[39]Again, the defendant denies this cause of action.
[40] With that background in mind, I provide a brief summary of the applicable legal principles, before turning to each aspect of the disputed evidence.
Legal principles concerning admissibility
[41] Section 7(2) of the Evidence Act 2006 (the Act) provides that evidence that is not relevant is not admissible in a proceeding. Section 7(3) states that evidence is relevant “if it has a tendency to prove or disprove anything that is of consequence to the determination of the proceeding”. The Supreme Court has confirmed that the threshold for relevance is low.7
[42] Pursuant to s 8(1) of the Act, a Judge must exclude evidence if its probative value is outweighed by the risk that the evidence will needlessly prolong the proceeding.
7 Wi v R [2009] NZSC 121, [2010] 2 NZLR 11 at [8].
[43] Some of the admissibility objections in this case are made on the basis that the relevant evidence is inadmissible hearsay evidence. Section 18 of the Act provides:
18 General admissibility of hearsay
(1)A hearsay statement is admissible in any proceeding if—
(a)the circumstances relating to the statement provide reasonable assurance that the statement is reliable; and
(b)either—
(i)the maker of the statement is unavailable as a witness; or
(ii)the Judge considers that undue expense or delay would be caused if the maker of the statement were required to be a witness.
[44] Sections 23 to 25 of the Act, concerning opinion evidence, are also relevant. They provide:
23.Opinion rule
A statement of an opinion is not admissible in a proceeding, except as provided by section 24 or 25.
24.General admissibility of opinions
A witness may state an opinion in evidence in a proceeding if that opinion is necessary to enable the witness to communicate, or the fact- finder to understand, what the witness saw, heard, or otherwise perceived.
25 Admissibility of expert opinion evidence
(1)An opinion by an expert that is part of expert evidence offered in a proceeding is admissible if the fact-finder is likely to obtain substantial help from the opinion in understanding other evidence in the proceeding or in ascertaining any fact that is of consequence to the determination of the proceeding.
(2)If an opinion by an expert is not inadmissible simply because it is about —
(a)an ultimate issue to be determined in a proceeding; or
(b)a matter of common knowledge.
[45] The references in s 25(1) to the “fact-finder” and ascertaining “any fact” highlight that expert opinion evidence on legal issues is generally not admissible and is properly addressed through counsel’s submissions.8
8 See for example Wang v Y & P NZ Ltd [2019] NZHC 2112, (2019) 20 NZCPR 253 at [35].
[46]I turn now to the disputed evidence.
Plaintiffs’ challenges to defendant’s evidence
Brief of Timothy Jones
[47] Mr Jones is an experienced legal practitioner specialising in property and conveyancing law and practice. Among other appointments, Mr Jones was a member of the Auckland District Law Society (ADLS) Property and Business Law Committee for some 14 years, and also served as a member of the ADLS Forms Committee (now known as the Documents and Precedents Committee). Mr Jones was a member of that Committee’s sub-committee responsible for the revision of the ADLS/REINZ agreement for sale and purchase (the standard agreement) since 2017, producing the 10th edition in 2019 (and the latest edition).9 There is no dispute as to Mr Jones’ expertise in relation to these and related matters.
[48]Mr Jones’ brief of evidence traverses five main topics:
(a)the role of the pre-settlement process under the standard agreement and how that process is typically undertaken;
(b)whether it is common to make a provision for inspection if a property is sold without vacant possession (that is, it will remain tenanted at settlement);
(c)the process under the standard agreement for a purchaser to make a claim for compensation for any breach of the standard agreement, and how any related disputes are resolved;
(d)Mr Jones’ opinion on “the events which unfolded in this case, and on what should have occurred, assuming there was, or was not, a special contractually binding oral agreement to allow a pre-settlement inspection”; and
9 The Agreement in this case was based on the 9th edition of the standard agreement.
(e)the background to the introduction of the new toxicology report condition in the 10th edition of the standard agreement.
[49] The plaintiffs object to the entirety of Mr Jones’ brief of evidence. I address each of the above aspects of Mr Jones’ brief of evidence in turn.
[50] The first part of Mr Jones’ brief (paragraphs 19 to 29) sets out the background to the drafting of cl 3.2 of the standard agreement (relating to pre-settlement inspections) and provides a commentary on what cl 3.2 requires and allows. Mr Jones also explains how a pre-settlement inspection would ordinarily be carried out and why the standard agreement does not contain a standard clause for pre-settlement inspection of a property that will be tenanted at settlement.
[51] The plaintiffs say that evidence of the drafters’ intention in relation to cl 3.2 is irrelevant, being subjective evidence which is inadmissible when interpreting a contract. Moreover, the plaintiffs say that the interpretation or operation of cl 3.2 is not in issue in any event, as the plaintiffs rely on the Alleged Oral Inspection Term, rather than any express term in the Agreement itself. The plaintiffs also say that Mr Jones’ evidence amounts to inadmissible legal submission.
[52] The defendant says that the standard agreement’s clause on pre-settlement inspection is at the heart of the dispute and it will be “useful, if not critical” for the Court to be aware of its general application and use. The defendant further says that as it disputes the existence of the Alleged Oral Inspection Term, any right of inspection falls to be determined under cl 3.2. In his oral submissions, however, Mr O’Brien QC, counsel for the defendant, did acknowledge that some aspects of Mr Jones’ brief of evidence “may go a little far in places”.
[53] I agree with the plaintiffs’ submission that this part of Mr Jones’ brief of evidence is inadmissible. It is simply not relevant. The plaintiffs do not rely on cl 3.2 of the Agreement as conferring a right to a pre-settlement inspection, and instead rely on the Alleged Oral Inspection Term. Mr Jones’ evidence as to the meaning of and usual application of cl 3.2 is not relevant to whether the Alleged Oral Inspection Term was agreed between the parties and if so, what it required/permitted. Further and in
any event, even if the interpretation and application of cl 3.2 of the standard agreement were in issue, Mr Jones’ commentary on cl 3.2 is properly the domain of legal submissions.
[54] Paragraphs 19 to 29 of Mr Jones’ brief of evidence are accordingly inadmissible.
[55] In the second section of his brief of evidence (paragraphs 30 to 32) Mr Jones gives his opinion that it is uncommon for parties to make provision for pre-settlement inspection where the tenant is being retained at settlement. The parties make largely the same submissions on the admissibility of this evidence as those summarised at [51]–[52] above.
[56] This proposed evidence does not, in my view, infringe against the prohibition of expert evidence on matters of law. Rather, it records Mr Jones’ opinion, based on his experience and expertise. There is no suggestion he is not suitably qualified to give such evidence. The admissibility of this aspect of Mr Jones’ evidence accordingly turns on its relevance.
[57] I am not prepared to rule this aspect of Mr Jones’ evidence inadmissible at this stage. In my view, it is properly a matter for the trial Judge. He or she may permit Mr Jones to give this aspect of his brief of evidence on a provisional basis, pending a final ruling on admissibility. At least on the pleadings, the evidence may be relevant to the defendant’s suggestion that the Agreement contained an express provision concerning pre-settlement inspection and that it “is the usual and standard provision”. This is one of the reasons why the defendant says that even if the preconditions for rectification are made out, rectification ought not to be ordered (see [35](c) above).
[58] Mr Jones’ statement at paragraph 32 of his brief of evidence that it is “unwise” for a vendor to allow additional rights of inspection of a tenanted property without making such rights conditional on the rights of the tenants is however inadmissible. Whether it was wise or unwise for the parties to (allegedly) agree the Alleged Oral Inspection is not relevant, let alone substantially helpful to the Court.
[59] I accordingly decline to rule that paragraphs 30 and 31 of Mr Jones’ brief of evidence are inadmissible. However, paragraph 32 of Mr Jones’ brief of evidence is inadmissible.
[60] The third section of Mr Jones’ brief of evidence (paragraphs 33 to 39) provides a commentary on the standard agreement’s requirements in relation to the compensation process (cl 8 of that agreement) and what is required in terms of a valid notice of compensation from the purchaser.
[61] The plaintiffs say that these aspects of Mr Jones’ brief constitute inadmissible legal submission and Mr Jones’ opinions on these matters (of law) are not substantially helpful in any event.
[62] The defendant acknowledges that most of this part of Mr Jones’ brief of evidence “just says what the clause says”, but says that it is “not unhelpful” for the Court to have a brief summary. Ultimately however, Mr O’Brien accepted that most of the proposed evidence could be addressed through submissions.
[63] That must be right. A commentary on what is required by cl 8 of the standard agreement is not substantially helpful expert evidence and is properly the domain of counsel’s legal submissions. For completeness, I note that Mr Jones does address one aspect of the compensation provision from the perspective of his experience (namely what often happens when there is a dispute over the interim amount to be deducted from the purchase price for the purposes of cl 8.4(3)). But what often happens in other cases is not substantially helpful expert evidence as to whether and to what extent the parties followed the cl 8 process in this case.
[64] Paragraphs 33 to 39 of Mr Jones’ brief of evidence are accordingly inadmissible.
[65] In the fourth section of his brief of evidence (paragraphs 40 to 51), Mr Jones provides his opinion on whether there was any “contractual reason” settlement could not have occurred on 31 March 2020, in the context of the COVID-19 lockdown. He
says that settlement could have occurred by remote means, as face-to-face settlements have now largely been displaced by “remote settlement”.
[66] The plaintiffs say that these aspects of Mr Jones’ brief constitute legal submissions and are accordingly inadmissible. The plaintiffs further say that Mr Jones’ opinions are not substantially helpful in any event, for the purposes of s 25 of the Act.
[67] The defendant says that Mr Jones’ evidence is useful context for the Court as to how settlements proceeded in the COVID-19 environment, though again accepts that aspects of the evidence are likely inadmissible.
[68] Again, I consider these aspects of Mr Jones’ evidence to be inadmissible. Whether or not there was a contractual reason why settlement could not proceed on 31 March 2020 is a matter for legal submission. Further, the plaintiffs do not allege that the fact New Zealand was in a COVID-19 lockdown was itself an impediment to settlement (Mr Blanchard QC, counsel for the plaintiffs, confirmed that the plaintiffs accept that remote settlement could have taken place, it now being “the norm”). Rather, the plaintiffs rely on the inability to conduct a pre-settlement inspection. Expert evidence on how remote settlements took place generally in the COVID-19 environment is accordingly not substantially helpful.
[69] The final section of Mr Jones’ evidence addresses the process of and rationale for the introduction of the new toxicology clause (cl 9.5) into the 10th edition of the standard agreement.
[70] The plaintiffs say that this aspect of Mr Jones’ proposed evidence is irrelevant, including because the Agreement was based on the 9th edition of the standard agreement. The plaintiffs also say that the rationale for the drafting changes to the 10th edition is inadmissible subjective evidence as to the interpretation of a contract in any event.
[71] The defendant says that while the proposed evidence is of “minimal relevance”, the information is again helpful context for the Court and provides a “useful update” on how the standard agreement addresses methamphetamine contamination.
[72] This aspect of Mr Jones’ brief of evidence is also inadmissible. The background to and rationale for the introduction of cl 9.5 to a later edition of the standard agreement does not have a tendency to prove or disprove anything that is of consequence to the determination of this proceeding. Moreover, given the defendant’s acknowledgement that this aspect of Mr Jones’ evidence is of “minimal relevance”, it is difficult to see how it can also be “substantially helpful” for the purposes of s 25.
[73] As a consequence of my rulings, there is only one relatively minor aspect of Mr Jones’ brief of evidence that I have declined to rule inadmissible.10 Given Mr Jones’ undoubted expertise, that aspect of his evidence may well be something the parties could sensibly reduce to an agreed statement (or, more likely, an “agreed paragraph”). This would avoid the need to call Mr Jones, or any other expert in response. I should also observe that my rulings as to the admissibility of Mr Jones’ evidence involve no criticism of Mr Jones himself. He has simply provided his opinions on issues as requested by the defendant.
Brief of Chun Zhang
[74] Mr Zhang is a partner at Forest Harrison, the firm of solicitors acting for the defendant on the sale and purchase of the Property. His evidence is that he acted on Mr Ma’s instructions.
[75] The plaintiffs object to the admissibility of a range of paragraphs, sentences, and in one case, a word (see (a) below) of Mr Zhang’s brief of evidence. It is useful to group these objections as follows:
(a)Mr Zhang’s reference to any agreed pre-settlement inspection term as being “unusual”;
10 See [57] and [59] above.
(b)Mr Zhang’s beliefs and/or suspicions as to actions or steps being taken by the plaintiffs/the plaintiffs’ solicitors;
(c)Mr Zhang’s commentary or views on the meaning of, or what he understood to being conveyed in, email correspondence between himself and the solicitor acting for the plaintiffs (Daniel Chang of DT Lawyers);
(d)Mr Zhang’s evidence of his view at the time of the reasonableness of the defendant’s compensation offer, and the validity of the plaintiffs’ compensation offer; and
(e)Mr Zhang’s evidence of what he would have done or advised the defendant to do in certain alternative scenarios.
[76]I address each in turn.
[77] As to (a) above, the plaintiffs say that Mr Zhang’s personal opinion on whether the Alleged Oral Inspection Term was “unusual” is irrelevant opinion evidence. The defendant, on the other hand, says that it is a statement of fact, namely it conveys that the alleged term is not the standard or ordinary inspection term with which Mr Zhang is familiar. Alternatively, if the statement is an expression of opinion, it is admissible pursuant to s 24 of the Act (see [44] above), being reasonably necessary for Mr Zhang to convey that he personally would have regarded such a term as unusual at the time.
[78] I accept the plaintiffs’ submissions. The statement is not a statement of fact. It conveys Mr Zhang’s personal opinion on the nature of the Alleged Oral Inspection Term. That is irrelevant to the issue of whether that term was in fact agreed between the parties. Further, to the extent expert opinion evidence on the usualness or otherwise of such a term may be relevant (see [57] above), Mr Zhang, while providing evidence of his experience in conveyancing matters, does not frame this aspect of his evidence as expert opinion evidence based on his experience in conveyancing transactions generally.
[79] Accordingly, at least in its current form, this aspect of Mr Zhang’s evidence (at paragraph 12 of his brief) is inadmissible.
[80] At paragraphs 15, 19, 24 and 26 of his brief of evidence, Mr Zhang expresses his “suspicion” or belief at the time of his correspondence with Mr Chang that the plaintiffs were trying to stall settlement given difficulties with finance. Mr Zhang does not say that he raised or discussed these matters with Mr Chang, or discussed or took instructions on them from Mr Ma.
[81] The plaintiffs say that these aspects of Mr Zhang’s evidence are irrelevant as Mr Zhang’s personal opinion at the time as to whether or not the plaintiffs were financially in a position to settle on 31 March 2020 is not relevant to the issues arising on the pleadings. The defendant says that these aspects of Mr Zhang’s evidence are not offered to prove that the plaintiffs were not in a position to settle on 31 March 2020,11 but rather to explain the rationale for the defendant’s refusal to defer settlement.
[82] Again, I accept the plaintiffs’ submissions. Mr Zhang’s personal beliefs or suspicions at the time as to why the plaintiffs sought to defer settlement are not relevant to whether they were legally entitled to do so. Nor do I consider the evidence relevant to matters such as rectification or estoppel. Specifically, none of the matters pleaded by the defendant as to why rectification ought not to be ordered (see [35] above) relate to the rationale for the defendant not agreeing to defer settlement.
[83] The challenged aspects of paragraphs 15, 19, 24 and 26 of Mr Zhang’s brief of evidence are accordingly inadmissible.
[84] At paragraphs 17, 21, 22 and 23 of his brief of evidence, Mr Zhang expresses his views as to what he meant when stating certain matters in his email correspondence with Mr Chang, and/or gives evidence of what he believed certain emails from himself or Mr Chang meant. The plaintiffs say that this is inadmissible opinion/commentary evidence, as the email correspondence speaks for itself. They further submit that if
11 Noting that Ms Liu says in her brief of evidence that “GRP Holdings did not have funds to settle on 31 March 2020.”
these aspects of Mr Zhang’s evidence remain, they will be forced to call Mr Chang to provide similar “counter” evidence on the solicitors’ correspondence.
[85] The defendant says that Mr Zhang’s evidence is relevant, in that it “explains the stance adopted by the defendant in relation to inspection”. The defendant further says that it is also relevant to the plaintiffs’ equitable estoppel claim, and in particular that “the parties conducted themselves, with each other’s knowledge or intention, on the basis that there was an orally agreed pre-settlement inspection term”. In his oral submissions at the hearing, Mr O’Brien submitted that the evidence was also a necessary response to similar “commentary” type evidence given by Ms Liu in her brief of evidence (“what is good for the goose is good for the gander”).12
[86] I do not consider these aspects of Mr Zhang’s evidence to be admissible. I agree with the plaintiffs’ submission that the written communications between the parties speak for themselves, and an “overriding commentary” on them by Mr Zhang, or for that matter, Ms Liu or Mr Chang, is not relevant and/or of assistance to the Court. Any such commentary will inevitably involve a degree of “spin” or advocacy as to how the party says the correspondence ought to be interpreted. One can readily see the difficulties if a witness’s (subjective) commentary on written correspondence was ordinarily admissible and led to the need for other witnesses to be called to provide a “counter-commentary” on the same matters (and particularly witnesses who were not personally involved in the relevant correspondence). To the extent Ms Liu provides similar “commentary” evidence, it too would be irrelevant and inadmissible.
[87] Further, I do not consider Mr Zhang’s evidence relevant to the plaintiffs’ equitable estoppel claim. Again, what will be relevant will be what was communicated between the parties, and what was reasonable or not reasonable for either party to have taken from that written correspondence, being an objective inquiry. Again, Mr Zhang’s personal, but uncommunicated, opinions on such matters are irrelevant.
[88]There are two exceptions to the above:
12 The defendant refers, for example, to paragraph 51 of Ms Liu’s brief of evidence, where she says, by reference to an email from the defendant’s solicitor, that “VP Nominees confirmed that I had the right of a pre-settlement inspection”. Whether or not that is so is not a matter on which Ms Liu can personally give evidence.
(a)At paragraph 17 of his brief of evidence, Mr Zhang refers to Mr Chang’s reference to a right of pre-settlement inspection and says that at the time, he assumed Mr Chang was referring to the inspection rights contained in cl 3.2 of the Agreement. It is not entirely clear how this is relevant to the pleaded issues, but it does reflect evidence of a factual matter – namely an assumption made by Mr Zhang at the time. I do not consider it appropriate to rule this inadmissible at this time. Rather, this is properly a matter for the trial Judge.
(b)The last part of paragraph 21 of Mr Zhang’s brief states “[i]t is common practice in conveyancing matters to allow another party additional time, but without prejudice to a right that may then be exercised – which is what I did.” The reference to “common practice” is not strictly commentary on the correspondence but more akin to expert opinion evidence of customary conveyancing practice. Mr Zhang does give evidence of his experience in conveyancing matters. I consider the trial Judge may consider Mr Zhang qualified to express views as to common practice in conveyancing transactions (at least those in which he has been involved) and this may be substantially helpful to the Court for the purposes of s 25 of the Act. Again, therefore, I consider the admissibility of this part of Mr Zhang’s evidence best left for the trial Judge.
[89] Save for those two matters noted above, the challenged aspects of Mr Zhang’s evidence are inadmissible.
[90] As to [75](d) above, at paragraphs 34 and 41 of his brief, Mr Zhang gives his view as to the reasonableness of the compensation offers made by the respective parties and the validity of the plaintiffs’ compensation claim. The plaintiffs say that these aspects of Mr Zhang’s evidence are irrelevant and effectively amount to inadmissible submissions. Further, the plaintiffs submit that while they do not object to Mr Ma giving evidence as to why he did not accept the plaintiffs’ offer, Mr Zhang’s own views on such matters (as Mr Ma’s solicitor and acting on Mr Ma’s instructions) are irrelevant and unnecessary.
[91] The defendant says that the evidence responds to Ms Liu’s evidence recounting her solicitor’s requests for a “retention” and explains why the defendant did not accept the plaintiffs’ offer of interim compensation, which is relevant to the equitable remedies sought by the plaintiffs.
[92] Again, I do not consider this evidence admissible. Whether or not the plaintiffs complied with any relevant aspects of the cl 8 compensation process will need to be determined on the basis of the contemporaneous communications between the parties and any other relevant facts found by the trial Judge, against the applicable aspects of cl 8 of the Agreement (properly interpreted). Mr Zhang’s evidence as to (uncommunicated) views held by him at the time are not relevant to that issue. And whether the respective interim sums offered by the parties were “reasonable” in all of the circumstances will again be determined by the facts as found by the trial Judge, to which Mr Zhang’s personal views are not relevant. As the plaintiffs note, however, they do not object to evidence being given by Mr Ma as to why he did not accept the plaintiffs’ offer, without the need for Mr Zhang to “echo” that with his own views (given he was only the solicitor involved, acting on Mr Ma’s instructions in any event). I am also not persuaded that Mr Zhang’s (uncommunicated) views are relevant to any of the equitable remedies sought.
[93] Further, even if these aspects of Mr Zhang’s evidence had any probative value, it would be very limited and outweighed by the risk that the evidence would needlessly prolong the proceedings. Admitting the evidence raises the spectre of Mr Chang being called to give evidence of his (uncommunicated) views on why he considered the plaintiffs’ offer was reasonable at that time and the defendant’s offer unreasonable. Finally, I do not see this evidence as a necessary response to Ms Liu’s evidence. The relevant aspects of Ms Liu’s evidence (paragraphs 98 and 99 of her brief of evidence) are more limited to a broadly neutral summary of the solicitors’ correspondence (though with some unnecessary “spin” in parts).13
[94] The challenged aspects of paragraphs 34 and 41 of Mr Zhang’s brief of evidence are accordingly inadmissible.
13 For example, the defendant’s solicitor “continuing to ignore” various issues.
[95] Finally, in paragraphs 23, 42 and 43, Mr Zhang gives evidence of what he and his client would have done in alternative scenarios. The plaintiffs say the evidence is speculative and does not assist in resolving any of the issues arising on the pleadings. The defendant says that the evidence is relevant to the plaintiffs’ allegation that it would have been futile for them to have tendered for settlement (which is denied by the defendant). The defendant further says that the evidence is relevant to whether the defendant was ready, willing and able to settle on 11 May 2020.
[96] Other than paragraph 23, I am not prepared to rule this evidence inadmissible at this time. I consider it appropriately a matter for the trial Judge. In particular, I note the plaintiffs do not object to very similar evidence to be given by Mr Ma, namely that if the plaintiffs had actually offered to settle with a retention, he would have taken his solicitor’s advice about what to do, and if that advice was that the defendant should settle for less than the full purchase price, then he would have done so. Mr Zhang effectively gives the “flip side” of Mr Ma’s evidence, in terms of what his advice to Mr Ma would have been in such a scenario.14 Mr Ma’s and Mr Zhang’s evidence on this topic is very limited, and to the extent it has any probative value, I do not see that as being outweighed by the risk of it needlessly prolonging the proceedings.
[97] As to paragraph 23, this recounts Mr Zhang’s view on the proper interpretation of Mr Chang’s correspondence (which I have ruled as inadmissible, see [86] above), and then provides a statement as to what Mr Zhang would have done in certain circumstances regarding pre-settlement inspection (namely “I would have taken instructions from Mr Ma and I expect we would have consulted Mr Wang”). The latter part of this paragraph does not assist in ascertaining the facts in this matter and is hypothetical in any event. It is inadmissible.
[98] In light of the above rulings, it may be appropriate for the defendant to serve a revised brief of Mr Zhang, as some paragraphs may require “top and tailing” in light
14 I observe that the first part of paragraph 42 proceeds on the basis of Mr Zhang’s evidence as to the validity of the plaintiffs’ compensation offers, which I have ruled inadmissible (see [90] above). It is, however, a necessary introduction to what follows in the balance of the paragraph and may remain for that purpose. I have no doubt the trial Judge will be aware that the first part of paragraph 42 of Mr Ma’s brief of evidence is not admissible evidence as to whether the plaintiffs did validly engage with any relevant aspects of the cl 8 compensation process.
of material needing to be removed. I should emphasise this would not be an opportunity for further or changed evidence to be included in Mr Zhang’s brief.
Defendant’s challenge to plaintiffs’ evidence
[99] In the event, significant aspects of the defendant’s challenge to the plaintiffs’ evidence either were not pursued or were resolved at the hearing. In particular:
(a)The defendant had challenged the entirety of the expert brief of evidence of Dr Jacqueline Wright. Her evidence will address the tenantability of the Main House and what is considered the “safe” level of any methamphetamine contamination in residential homes. Dr Wright addresses the background to various methamphetamine standards (including the “Gluckman Report” and the Standard), as well as more recent studies and research on the basis of which Dr Wright’s evidence would have been that any contamination above the level of 0.5µ/100cm2 renders a residential dwelling untenantable (the Standard being anything more than 1.5µ/100cm2 in “high use areas”). The principle basis of the defendant’s objection to Dr Wright’s report is that the appropriate yardstick for whether the Property or Main House was untenantable is the Standard, and the more recent studies and reports referred to by Dr Wright are irrelevant.
(b)In the event, following the defendant confirming that it accepted that the Standard is the appropriate reference point for determining whether or not a property is damaged or untenantable as a result of methamphetamine contamination, the plaintiffs noted that they would not seek to rely on the lower threshold referred to by Dr Wright. Mr O’Brien accordingly confirmed in his oral submissions that paragraph 12 of the defendant’s written submissions on admissibility (which addresses the Standard as the relevant reference point) is accepted for the purposes of trial. In this context, no formal orders were required in relation to Dr Wright’s evidence. I proceed on the basis that an amended brief for Dr Wright may need to be produced.
(c)The defendant had also challenged the admissibility of evidence to be called by the plaintiffs from a number of real estate agents, confirming that in a number of earlier real estate transactions, Ms Liu had requested a final pre-settlement inspection (including in some cases where the property in question was tenanted at settlement), and for some of the agents, they were not aware that there was not an automatic right under the standard agreement to a pre-settlement inspection when a property is tenanted at settlement. In the event, Mr O’Brien confirmed that the defendant did not pursue its objection to the agents’ evidence (and may not contest the evidence, but may look to put some related questions to the witnesses). Again, therefore, it is not necessary to make any formal orders on the agents’ evidence. I observe that it may well be possible for the parties to reduce all or at least many aspects of the agents’ evidence to an agreed statement of facts pursuant to s 9 of the Act, or agree in advance that the agents’ evidence in chief may be taken as read. Either approach would lead to efficiencies in the trial.
[100] The remaining challenges to admissibility relate to aspects of Ms Liu’s evidence, and concern alleged inadmissible hearsay evidence. Again, through the objection process and hearing, the issues for determination narrowed significantly.
[101] The defendant objects to those parts of paragraph 67 of Ms Liu’s brief of evidence in which she recounts a discussion with the tenant of the Main House at the time, a Ms McPherson, who told Ms Liu she was concerned about methamphetamine as she had been unwell and her dog was unwell (and her other dog had died). To the extent such evidence is to be adduced for the truth of its contents, the defendant says that it is inadmissible hearsay, as there is no suggestion Ms McPherson is unavailable or that calling her would cause undue expense and delay to the proceeding.
[102] While the plaintiffs originally opposed the defendant’s objection, they confirmed that they would subpoena Ms McPherson so that she may be cross-examined by counsel for the defendant. In my view, that is the right approach. The mere fact that Ms McPherson told Ms Liu of the matters recounted in her brief of evidence does not strike me as relevant; rather the point the plaintiffs no doubt seek to
make is that Ms McPherson and her dog(s) were ill and she was concerned about methamphetamine, and therefore the evidence is being advanced for the truth of its contents. On that basis, Ms McPherson will need to be called at trial in order to give that evidence and to be cross-examined on it. In light of this, Mr O’Brien noted that the defendant reserved its position on the proposed evidence to be given by Ms McPherson (for example, to the extent Ms McPherson purported to give evidence that there was methamphetamine contamination at the Property, and the extent of any such contamination).
[103] The same comments and observations apply to paragraphs 70 and 73 of Ms Liu’s statement, which also relate to statements said to have been made to her by Ms McPherson.
[104] I observe for completeness that paragraph 73 of Ms Liu’s brief of evidence also recounts statements said to have been made to her by a Ms Cook, who I understand to be another tenant, about the state of the Property. If that evidence is to be relied on for the truth of its contents, Ms Cook will also need to be called to give that evidence at trial, so that she can be cross-examined on it.
[105] A similar approach applies to evidence contained in paragraph 90 of Ms Liu’s brief of evidence, namely that a Mr Lau from the Bank of China told her that she needed to have sufficient funds to meet the insured value of the Property. I apprehend this will be said to be relevant to whether the plaintiffs were ready, willing and able to settle on 11 May 2020. Again, in light of the defendant’s objection, the plaintiffs will subpoena Mr Lau to give this evidence at trial. That is appropriate. Formal orders are again not required.
[106] At paragraph 92 of her brief of evidence, Ms Liu recounts a conversation she had with a Ms Ning, a friend who is a real estate agent, who Ms Liu says told her that:
… from her experience, methamphetamine contamination was a very problematic issue. She said that if the contamination was not serious, then it could be cleaned. But if the contamination was serious, then even if you clean and paint over it, the contamination will still slowly seep out. Then the beam and walls need to be replaced, or [the] whole house needs to be rebuilt.
[107] To the extent such statements are relied on for the truth of their contents, they are plainly hearsay evidence. There is no suggestion Ms Ning is unavailable or that undue expense or delay would be caused by calling her to give such evidence. There is a more fundamental problem, however, in the event the evidence is relied on for the truth of its contents. The evidence expresses matters of opinion, and it is by no means clear that Ms Ning is a suitably qualified expert to give admissible evidence on remediation of methamphetamine contamination.
[108] To the extent the evidence is not relied on for the truth of its contents, it is not apparent why the fact that Ms Ning expressed concerns as to methamphetamine contamination to Ms Liu is relevant to any of the issues to be determined on the pleadings. No explanation is suggested. The evidence is therefore inadmissible.
Costs
[109] Each party has been successful on most of their objections, either through formal rulings by me, or through agreement and/or concessions as a result of the objection process and hearing. An appropriate outcome would seem to be that costs of the applications lie where they fall.
[110] Should either party seek costs, however, they are to file a memorandum within 15 working days of this judgment. The other party may file a memorandum in response within a further five working days. No memorandum is to exceed three pages in length. Unless I need to hear further from counsel, I will determine costs on the papers.
Fitzgerald J
0
3
0