Gu v Du - [2011] NZCA 577

IN THE COURT OF APPEAL OF NEW ZEALAND

CA867/2010
[2011] NZCA 577

BETWEEN MING GU
Appellant

AND XING HUA (DAVID) DU
Respondent

Hearing: 27 September 2011

Court: O'Regan P, Randerson and Stevens JJ

Counsel: G P Blanchard for Appellant
C T Patterson and A E M Reid for Respondent

Judgment: 16 November 2011 at 10.30 am

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe High Court judgment is set aside.
CA finding is made that the appellant was entitled to avoid the joint venture agreement referred to in the Reasons of the Court due to the respondent’s failure to comply with ss 63 and 64 of the Real Estate Agents Act 1976.
DLeave is reserved to either party to apply for a formal order to give effect to the finding made in C.
EThe matter is remitted to the High Court for resolution of the issues remaining outstanding between the parties.
FThe respondent must pay the appellant costs for a standard appeal on a band A basis and usual disbursements.
GCosts in the High Court should be determined by that Court in light of this judgment.

_______________________________________________________________

REASONS OF THE COURT

(Given by O’Regan P)

Table of Contents

Para No
Introduction  [1]
Issue on appeal  [6]
Factual background  [8]
Sections 63 and 64 of the Real Estate Agents Act  [16]
The listing agreement  [19]
Was the agency agreement in force on 25 February 2009?             [26]
      Was the agency an exclusive/auction agency appointment?          [29]
      Was the listing agreement nevertheless for a 90 day term?           [34]
      Could Ray White Albany terminate the listing agreement
      on reasonable notice and, if so, was there reasonable notice?     [36]
Result  [54]
Costs  [55]

Introduction

This is an appeal against a judgment of Ellis J dealing with a property dispute between the appellant, Ms Gu, and the respondent, Mr Du.[1]
[1] Du v Gu HC Auckland CIV-2009-404-5577, 7 December 2010.
The dispute between the parties concerns a property in Albany of which Ms Gu is the registered proprietor. Mr Du and Ms Gu were parties to an agreement which provided that Ms Gu and Mr Du would jointly develop the Albany property (which was, at the relevant time, a vacant section) by building a house on it.[2] The joint venture agreement provided that a 50 per cent share in the property would be transferred to Mr Du in the event that he asked for a transfer to be effected, and that the parties would have 50 per cent ownership of the land and 50 per cent of the benefits and related risks of the development on the land.
[2]The agreement was referred to in the High Court judgment as the joint venture agreement and we will use the same terminology.
The joint venture agreement provided that the value of the land was equal to the amount owed on the mortgage over the land, and that after the joint venture agreement was signed the parties would be equally responsible for the servicing of this loan. In addition…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Gu v Du

Details

AGLC: Gu v Du [2011] NZCA 577
Case: [2011] NZCA 577
Decision Date: 16 November 2011

CaseChat Overview and Summary

Gu v Du involved a dispute between Ming Gu and Ray White Albany concerning the termination of an agency agreement for the sale of a property. The case was heard by the High Court, which had to determine whether the agency agreement could be terminated without the consent of Ming Gu. The central legal issue was whether the agency agreement could be lawfully terminated by Ray White Albany without the explicit agreement of Ming Gu, particularly in light of the terms of the listing document and the applicable principles of agency law. The High Court considered the nature of the agency agreement, the terms of the listing document, and the conduct of the parties relevant to the termination of the agency.

In reaching its decision, the Court examined the principles of agency law, particularly the concept of reasonable notice for termination. The Court concluded that the agency agreement could be terminated by either party without the need for the other party's consent, provided that the termination notice was reasonable under the circumstances. The Court found that Ray White Albany's conduct and the joint venture proposal were inconsistent with the continuation of the agency, thereby effectively terminating the agency relationship. The Court further determined that the 11-day period between the conduct indicating termination and the execution of the final joint venture agreement was sufficient notice under the particular circumstances.

The Court rejected the argument that the agency agreement could only be terminated by agreement between the parties. It held that the agency could be terminated by notice, either by the principal or the agent, and that the reasonableness of the notice period would depend on the specific circumstances of the case. The Court found that Ray White Albany's conduct and the circumstances surrounding the joint venture proposal constituted a reasonable notice of termination. Consequently, the Court upheld the termination of the agency agreement.

In conclusion, the Court's decision clarified that agency agreements can be terminated by notice from either party, without the necessity of mutual agreement, provided the notice is reasonable. The Court found that Ray White Albany's conduct and the circumstances surrounding the joint venture proposal provided sufficient notice of termination, and the 11-day period was deemed adequate in this case.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The High Court Judge rejected the argument made on behalf of Ms Gu that the only way Ray White Albany could terminate the agency agreement was if Ms Gu agreed. Her reasoning was as follows:[46] Mr Blanchard submitted that the agency agreement could only be revoked by Ming Gu (by giving the notice required in the listing document) or by agreement between the parties. I do not agree with that submission. It cannot be correct that (where the relevant agreement is silent on the point) an agent can only terminate a listing if the principal agrees. As is stated at [49] of Luxford’s Real Estate Agency:[7][7] Luxford’s Real Estate Agency (Butterworths, Wellington, 1979).[49] Duration of the agency... Where no time limit has been fixed or where it is not specified that the agency is to continue until revoked in a manner which has been prescribed, it will be taken that the agency will continue in force for a reasonable time after its commencement or after the last occasion on which the principal, by words or conduct, recognises that it was still in force. The question of what is reasonable time is one of fact and must be determined in the light of all the surrounding circumstances. ...The general rule is that an agent’s actual authority comes to an end ... (v) by notice of revocation given by the principal to the agent or by the agent to the principal, it being immaterial whether it amounts to a breach of contract.[47]And similarly see Fridman The Law of Agency:[8]Since the relationship of principal and agent has been created by agreement between them, it follows that the relationship may be determined by both parties agreeing to the discharge of that relationship. It will also be determined if either party withdraws from his original agreement. This will occur where the principal gives the agent notice of revocation of the agency or the agent gives the principal notice of renunciation. Any such notice may be given in any form: a deed or document in writing is unnecessary, even if the original authority was contained in a deed...[48] The question therefore becomes whether the agency was renounced by Mr Du, either by words or by conduct, a reasonable time prior to the execution of the final joint venture agreement on 25 February 2009.[49] I have already indicated my acceptance that Mr Du did genuinely have concerns about Mr Bian’s authority to sign the listing agreement. Notwithstanding Mr Bian’s denial of this I consider it likely that Mr Du raised the issue with Mr Bian at some point just before or on 14 February.[50] Perhaps more importantly, Mr Bian did not deny that discussions occurred between them at that time about the joint venture proposal. The joint venture proposal was in itself inconsistent with the continued listing of the property with Ray White. The reality is that neither party ever acted as if the listing was in force. The property was never advertised by Ray White; no query was raised about this by Ming Gu or her daughter or son-in-law. There is no evidence to suggest that either Mr Bian or Mr Du considered the possibility of Mr Du receiving a real estate agent’s commission in relation to the proposed joint venture. And once the building of the house had commenced the listing with Barfoot and Thompson was also withdrawn by Ms Luo.[51] For these reasons I consider that it can on balance be concluded that by his words and/or conduct Mr Du impliedly gave notice of his intention to terminate the listing on or before 14 February. While I acknowledge that care must be taken in inferring revocation by conduct, Mr Du’s conduct here was unambiguous. Not only is there evidence that the steps he took (together with Mr Bian) were inconsistent with the continuation of the listing, but there is also no evidence that he took any steps whatsoever that were consistent with the continuation of the listing.[52] Bearing in mind that under the listing agreement Ming Gu was required to give 14 days notice of termination I consider that the 11 days between 14 and 25 February was an adequate period of notice in the particular circumstances of this case.[8] The Law of Agency (7th ed, Butterworths, London, 1996) at 389.