Jerry's Home (2013) Limited v Wu

[2024] NZHC 2552

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-366

[2024] NZHC 2552

BETWEEN

JERRY’S HOME (2013) LIMITED

Plaintiff

AND

YANG WU

Defendant

Hearing:	2 September 2024 (AVL)
Appearances:	P J Dale KC for Plaintiff K Sun for Defendant
Judgment:	6 September 2024
Reissued:	16 September 2024

JUDGMENT OF ASSOCIATE JUDGE LESTER

(application for summary judgment)

This judgment was delivered by me on 6 September 2024 at 2:30 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar

……………………………………..

This judgment has been reissued under the slip rule on 16 September 2024, following changes to [5], [36] and [38]

JERRY’S HOME (2013) LIMITED v WU [2024] NZHC 2552 [6 September 2024]

[1]    On 19 October 2021, the defendant Mr Wu, purchased a property in Hobsonville off the plans from Jerry’s Home (2013) Limited (Jerry’s). Mr Wu did not settle the purchase and Jerry’s cancelled the contract and now seeks summary judgment against Mr Wu for damages, being the loss on re-sale of the property.

[2]    It is necessary to set out the timeline of the transaction in more detail to understand Mr Wu’s defence.

Timeline

[3]The timeline is set out below:

19 October 2021:	Date of contract.
2 November 2021:	Mr Wu confirms purchaser’s conditions and deposit paid. There was no finance condition.
4 March 2022:	Variation Agreement recording extension of date  to   conditions   relating   to   obtaining  s 224C(c) Certificate under the Resource Management Act 1991, issue of Title and sunset clause.
13 April 2022:	Mr Wu re-lists the property with real estate agent with intention of on-selling for profit.
12 December 2022:	What Mr Wu alleges to be the original date of the sunset clause.
21 September 2023:	Code Compliance Certificate issues.
11 October 2023:	Title issues.
18 October 2023:	Settlement date.
19 October 2023:	Settlement notice issues as Mr Wu does not settle.
31 October 2023:	Sunset clause date — either that originally recorded in contract or in variation agreement dated 4 March 2022.
18 November 2023:	Jerry’s cancels agreement.
24 December 2023:	Property on-sold.

12 February 2024:

Re-sale settles. Jerry’s claims loss of just over

$350,000.

Summary judgment principles

[4]    There was no dispute between counsel as to the relevant summary judgment principles. They are well known. The onus is on the plaintiff to satisfy the Court that the defendant does not have a defence, but where the plaintiff’s unchallenged evidence is sufficient to convince the Court that there is no defence, the defendant will obviously have to respond in order to defeat the application.1   The Court is entitled to take     a robust and realistic approach where the facts warrant it.2 A defendant wishing to resist an application for summary judgment must give reasonable particulars of the matters which he claims ought to be in issue.3 Ultimately, if the Court is satisfied that there is an arguable defence then summary judgment should be declined.

[5]    In Pemberton v Chappel, Hillyer J said it was not sufficient for a defendant to defend an application for summary judgment on the basis of the facts which have not been deposed to by or on behalf of the defendant.  Ultimately, that is a factor which  I consider will be relevant to this case.

What was the original sunset clause date?

[6]    The sunset clause, as it appears in the contract of 19 October 2021 produced by Mr Li, the sole director and shareholder of Jerry’s, is as follows:

31 October 2023  [YWDS 4

Sunset Date mans the date on 12 December 2022.  In the event a Code Compliance Certificate for the Property has not been issued by the Sunset Date then either party may cancel this Agreement by a written notice to the other. Following the cancellation pursuant to this clause, the Purchaser shall be entitled to a return of the Deposit, and neither party shall have any right, claim or action against the other in respect of this Agreement.

[7]    Clause 22 of the Special Conditions of the agreement under “Vendor Conditions” provided:

22.1This Agreement is conditional upon the Vendor at its own expense doing all things necessary for and procuring the issue of the Section

1      McLean v Stewart (1997) 11 PRNZ 66 (CA).

2      Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307.

3      Pemberton v Chappel [1987] 1 NZLR 1.

4      Note: Chinese characters inserted beside initials “YW” and which are the initials of the vendor.

224(c) Certificate under the Resource  Management  Act  1991  by 12 December 2022.

22.2This Agreement is conditional upon a Record of Title for the Lot being issued by the Relevant Authority by 12 December 2022.

22.3The conditions in the clause 22 are inserted for the sole benefit of the Vendor. If any of the conditions in the clause 22 are not satisfied by the due date, the Vendor may cancel this Agreement by a written notice to the Purchaser. Following the cancellation pursuant to this clause, the Purchaser shall be entitled to a return of the Deposit, and neither party shall have any right, claim or action against the other in respect of this Agreement.

[8] Clause 9.10 of the Tenth Edition of the ADLS Agreement for Sale and Purchase of Real Estate was deleted. That clause provides that if the agreement is expressed to be subject to a condition, then if the condition is not fulfilled by the date for fulfilment, either party may at any time before the condition is fulfilled or waived, avoid the agreement. Clause 22.3 above, which applies to the 224(c) Certificate and Title conditions, only permits the vendor to cancel. That can be compared to the sunset clause at [6] above which entitles either party to cancel.

The Variation Agreement — what did it change?

[9]    The parties on 4 March 2022 entered into the following variation agreement which I set out in full below.

Variation to the Agreement – sale of Lot 7 (G),being the subdivision of 105-107 Hobsonville Road

The parties have agreed to vary the following terms to the agreement:

1.Clause 22.1 – This Agreement is conditional upon the Vendor at its own expense doing all things necessary for and procuring the issue of the Section 224(c) Certificate under the Resource Management Act 1991 by 31 October 2023; and

2.Clause 22.2 – This Agreement is conditional upon a Record of Title for the Lot being issued by the Relevant Authority by 31 October 2023; and

3.Clause 20.1 – Sunset date means the date on 31 October 2023; and

4.The Vendor may at its sole direction extend the due date in the clause 22.1 and 22.2 and the sunset date in the clause 20.1 via written notice to the purchaser for a period of 6 months.

Each party shall obtain its own independent legal advice prior to the execution of this variation.

Signed by the Vendor: “Chinese characters – Vendor’s signature” Date: 28/02/2022

Signed by the Purchaser: “Yang Wu” Date: 04/03/2022

Confusion as to variation

[10] It is clear there has been confusion by Jerry’s about the sunset clause date. The statement of claim pleads the original sunset date was 12 December 2022 and it pleads the variation agreement extended the sunset clause to 31 October 2023. Mr Li, in his evidence in reply, identifies that in the agreement for sale and purchase he produces, the sunset clause date was 31 October 2023 from the outset, as shown in the variation to the clause set out at [9] above. Mr Li notes that the parties have initialled the change. In his view, the variation agreement, to the extent that it purported to record a change to the sunset clause date, was of no affect as the sunset clause date was already 31 October 2023.

[11]   That there is an error in the claim as originally pleaded is confirmed by Jerry’s real estate agent, Mr Huang. He confirms the agreement for sale and purchase produced by Mr Li, from which the above clauses are taken, was the final agreement, that is, the agreement as originally reached. Mr Huang describes the process by which the sunset clause date was amended, saying it was at the request of Mr Wu’s solicitor

— that is disputed by Mr Wu and I address this further below.

The relevance of the variation issue to Mr Wu’s defence

[12]   Mr Wu refers to the process by which the variation agreement came about. He says that on 1 March 2022, Mr Huang told him that Jerry’s was requesting an extension to the sunset clause date. Mr Wu says:

9.At this stage, I could’ve cancelled the Agreement. I was not sure  if  I could obtain a loan from the bank a year later (i.e. 31 October 2023) if I entered into a variation agreement with the applicant, as the original conditions in the Agreement were set down for satisfaction in 2022. Thus, I asked Mr Huang if there were any traps associated with varying the Agreement.

10.Mr Huang assured me that there were no traps and that extending the sunset date was good for me. Accordingly, on reliance on the assurance form Mr Huang, I was under the impression that there will be not issues obtaining finance to complete the purchaser. I trusted him because he was very experienced with  property  investment  (Mr Huang is an experienced real estate agent).

[13]   Mr Wu does not say he told Mr Huang about his concerns about obtaining finance if settlement was deferred for approximately one year.

[14] Mr Wu does not address the fact that the original agreement for sale and purchase has the initialled amendment to the sunset clause set out at [9] above.

[15]   Mr Huang, in his evidence, says that prior to the agreement being finalised there was some back and forth in respect of certain clauses. He produces a document called “Agreement Summary” in respect of the Lot being purchased by Mr Wu, setting out the key aspects of the contract, including the dates for satisfying various conditions. It records the sunset date as being 31 October 2023. While Mr Huang says the Agreement Summary was produced by Mr Wu’s solicitor, that is denied by Mr Wu.

Mr Wu does not settle

[16]   Mr Wu’s solicitors were advised that the agreement for sale and purchase was unconditional and that settlement was due on 18 October 2023. Mr Wu’s solicitors replied: “We are still waiting from our client to confirming [sic] the settlement.”

[17]   There had been various communications relating to the mechanics of conveyancing prior to that email.

[18]   On 17 October 2023 at 12:00pm, Mr Wu’s solicitor contacted Jerry’s solicitor to say that Mr Wu was going to contact Mr Li to discuss an extension to settlement. Jerry’s solicitor advised at 12:41pm that Jerry’s would not agree to late settlement. At 1:07pm on 17 October 2023, Mr Wu’s solicitors passed on an email written by Mr Wu where he said:

… it’s getting extremely challenging for me to obtain a purchase price loan from the banks given under the market changes and my current financial circumstances.

[19]   The email went on to record Mr Wu saying that  some months before he had  a telephone conversation with the vendor outlining his present financial predicament a 10 day settlement extension was sought.

[20]   I note that in the lead up to settlement there is no reference by Mr Wu’s solicitor to the alleged variation to the sunset clause or how it came about.

[21]   Mr Dale KC, counsel for Jerry’s, in his submissions refers to the pleading in the statement of claim that the date of the sunset clause was 12 December 2022 being an error. He says an amendment is required to correct the date of the sunset clause in the original agreement in the statement of claim to 31 October 2023.

[22] In some respects it was unsatisfactory that the error in the pleading was only raised in the reply evidence. Mr Wu filed a second reply after receiving Jerry’s reply evidence. Mr Wu doing so was appropriate in the circumstances. However, Mr Wu only refers to the Agreement Summary document referred to by Mr Huang, referred to at [15] above. Mr Huang says that it was Mr Wu’s solicitor who sent the document to Mr Huang. Mr Wu denies this and says he did not instruct his solicitor to prepare the document.

[23] Mr Wu denies requesting the sunset clause in the original contract be changed from 12 December 2022 to 31 October 2023 — however, he does not deny the fact he signed the agreement with that date and initialled the change, as set out at at [6] above, or address how the change occurred.

[24]   Mr Wu’s affidavit in response to the explanation that the sunset date had always been 31 October 2023 is notable for what it does not address. Mr Wu does not expressly deny that the original contract had the sunset date of 31 October 2023. Mr Huang says that the sunset clause in the original agreement was changed as a result of the Agreement Summary document. Mr Wu says:

I deny this assertion, in combination of the absence of my knowledge to the preparing and sending of [the Summary document] I did not request the sunset date be changed.

Mr Wu says he did not receive independent advice in signing the variation document.

[25] Mr Wu does not raise any reasons why he should not be held to the original contract signed by him that was in the terms set out at [6] above. How the sunset clause date in the original contract was amended does not matter unless the circumstances in which the amendment occurred would mean Mr Wu could say the amendment was not binding on him. Given Mr Wu initialled the change, the basis for such a claim would have to be expressly pleaded and supported by evidence. Unless Mr Wu can say why he was not bound by the agreement as originally signed by him, the variation agreement did not affect his rights under the sunset clause as the date remained the same.

Mr Wu’s response to the original contract recording the sunset clause date as  31 October 2023

[26] Mr Sun, counsel for Mr Wu, submitted that the request to vary the sunset clause indicated that the parties had in fact agreed at the outset that the sunset clause date was to be 12 December 2022, the date struck through as shown at [6] above. Mr Sun submitted that the parties’ error was not in respect of the need for the variation but in the way the date was originally recorded. While not put this way by Mr Sun, this would mean that Mr Wu would be arguing that the original contract should be rectified to restore the struck through date. With that step completed, the variation would then become effective to amend the sunset date to 31 October 2023. Upon establishing the original amendment was an error, Mr Wu’s claim that he was induced to enter the variation by precontractual misrepresentation would then arise, as without that step, the variation did not alter his rights in a material way in respect of the sunset clause.

[27]   Again, in order to submit that the printed amendment to the sunset clause initialled by both parties was not intended to record the parties’ agreement, Mr Wu would have to include this defence detailed in his notice of opposition and provide detailed evidence as to how the contract came to be amended. The amendment was

printed on the contract— not in handwriting so it could not be said it was some last minute or spur of the moment change.

[28]I also note the contract contains the following clause:

35.ENTIRE AGREEMENT

35.1This Agreement including the Specific Terms, the General Terms of Sale, Further Terms of Sale and the Schedules to this Agreement, constitutes the entire understanding and Agreement of the parties relating to this Agreement, and supersedes and extinguishes all prior agreements.

[29]Entire agreement clauses are not a bar to rectification but:5

Where a document contains a provision which states that the document sets out the entire agreement of the parties or which otherwise expressly negates the existence of terms not set out in it, that provision does not exclude rectification if rectification is appropriate under general equitable principles. However it may affect the actual operation of those principles because, for example, it may tend to show that in fact no inconsistent governing intention has subsisted, and that hence no basis for rectification has arisen, because the parties have intended to be bound by the documentation the material respects regardless of prior or other intentions.

(emphasis added)

[30]   Mr Huang notes that in his WeChat message to Mr Wu in relation to the Variation Agreement, he mistakenly referred to the Variation Agreement changing the sunset clause to December 2023 rather than to October 2023 as recorded in the Variation Agreement. Mr Huang says:

The sunset date was already recorded as 31 October 2023, having been changed prior to the agreement being finalised, on the advice of the defendant’s lawyer.

[31]   Mr Wu denies that the original change was at his request, but otherwise he does not address how the variation occurred.

5Equitable remedies, 9th ed, ICF Spry, 634 at 636, referred to in Depot Corporation Ltd v Hollis, [2018] NZHC 100 at [101].

[32] Accordingly, the position is this. Mr Wu does not dispute signing the agreement for sale and purchase dated 19 October 2021 recording the sunset clause date as 31 October 2023, the change from the original 12 December 2022 date being initialled by him and the vendor. Mr Wu does not give any evidence as to how that change occurred. Mr Wu does not plead any basis for saying that the date change itself was an error and the contract should be rectified to restore the original struck through date. Mr Wu did raise the alleged misrepresentation claim he asserts at [12] above, at the time he was called upon to settle.

Was there a misrepresentation at all?

[33] Mr Wu, prior to signing the Variation Agreement, in the passage set out at [12] above, said he asked Mr Huang if there were any traps with varying the agreement. That is not quite what the translation produced by Mr Wu says. The translation is that Mr Wu asked, “No pitfall, is there?”, and that Mr Huang replied, “There is no pitfall the extension is for your benefit”.

[34]   The  context  of  this   comment   is   that   Mr Wu   asked   Mr Huang   on   11 February 2022 how the project was progressing. Mr Huang replied that the foundation had been done. Mr Wu  commented,  “Behind  with  progress?”,  with  Mr Huang responding, “Isn’t being behind even better?”. Mr Wu responded, “Fair enough let me know of any updates”. These comments are in the context of Mr Wu having listed the apartment for on-sale.

[35]   Then on 1 March 2022, Mr Huang messages Mr Wu regarding the development saying that Jerry’s bank has asked for the sunset clause to be changed to December 2023 which Mr Huang said will not impact on “our settlement per usual”. Mr Huang said:

We are still on track with the original plan to complete the build early next year. Have a look at this and please sign and send it back to me.

[36]   Mr Huang’s comments of delay benefitting Mr Wu was  in  the  context  of Mr Wu thereby obtaining more time to find a purchaser for the on-sale of the property.

[37]   Mr Sun, during oral  submissions,  confirmed that  Mr Wu  understood what  a sunset clause was. Once that was accepted, Mr Wu must have understood that by agreeing to amend the sunset clause date (assuming such was required), he was giving up the ability to avoid the agreement as at the original sunset clause date — so much is an answer to the alternative submission made by Mr Sun that Mr Wu agreed to the variation by way of mistake. Such cannot be maintained when it is accepted Mr Wu understood what an extension of the sunset clause would mean.

[38]   As per the passage from Mr Wu’s evidence set out at [12], he says he was “under the impression that there will be no issues obtaining finance to complete the purchase”. Nothing Mr Huang said to  Mr Wu  in  the WeChat  exchange  prior  to the signing of the Variation Agreement related to finance. Absent any express discussion regarding finance between Mr Huang and Mr Wu, Jerry’s cannot be held responsible for the “impression” Mr Wu took from the “no pitfall” comment.

[39]   Mr Wu’s  contract was not subject to finance and he does not say he made  Mr Huang or Jerry’s aware that he would have to obtain a bank loan to purchase the property if he did not on-sell prior to being required to settle. Further, Mr Wu gives no evidence as to the efforts he took to organise finance.

[40]   A contractual misrepresentation is an untrue statement of present or past fact. However, a statement as to future events or a statement of opinion of the maker, may imply there is a reasonable basis for the statement so as to amount to a representation about a present fact.6

[41]   Mr Sun in oral submissions made reference to the fact that where a party with superior knowledge makes a representation without qualifying it, they will have to accept the consequences of being wrong. However, that submission begs the question of superior knowledge about what? This is not a situation where Mr Huang was making statements about something he had detailed knowledge about, that is, Mr Wu’s means of financing the purchase, nor is there any suggestion Mr Huang has superior knowledge in respect of the availability of finance. There was no finance condition in the agreement for sale and purchase. Mr Huang knew Mr Wu wanted to on-sell the

6      Weine v Tadd Management Ltd [2024] NZCA 323 at [29].

property for a profit, but there is no evidence he knew Mr Wu could not settle without obtaining finance.

[42]   The enquiry is what a reasonable person would have understand from the words used by Mr Huang in all the circumstances. Mr Huang’s words could not be reasonably understood to offer assurance to Mr Wu that he would not have any issue obtaining finance when the time came to settle. Mr Huang knew nothing of Mr Wu’s need to arrange finance or his financial position and finance was not discussed in the WeChat exchange.

Drawing the threads together

[43]   I am satisfied the contract as originally signed by Mr Wu contained a sunset date of 31 October 2023. I am also satisfied there is no basis for Mr Wu to suggest that he was not bound by the agreement he signed. If that conclusion is incorrect, then I am satisfied that Mr Wu  did not sign the variation agreement as a  result of     a misrepresentation by Mr Huang on behalf of Jerry’s.   Mr Huang was not making   a statement that could reasonably be understood to convey to Mr Wu that Mr Wu would have no problem arranging finance at some unspecified time in the future up to 31 October 2023. Mr Huang’s statement was, on its face, about the future by someone who did not know anything about Mr Wu’s financial position — save that Mr Wu had signed a contract without a finance condition.

[44]   Accordingly, I am satisfied that Jerry’s has demonstrated that Mr Wu does not have a defence to its claim.

[45]   I add here that Mr Sun submitted the variation was unenforceable on the basis Mr Wu received no consideration. There was no pleading that the variation was unenforceable for absence of consideration but in any event Mr Wu  did receive       a benefit from the variation because had the market risen the vendor could not have cancelled in December 2022.7

7      See Gloria Jeans Coffees International Pty Ltd v Daboko Ltd (2020) 2 NZLR 488.

[46]   Mr Dale pointed out that there is no challenge to the process by which the property was on-sold, nor any challenge to the quantum of the damages claimed.

[47]   Accordingly, there is judgment against Mr Wu in the sum of $351,453.79. Interest will run on that sum from 12 February 2024 to the date of payment, pursuant to the Interest on Money Claims Act 2016.

Costs

[48]There is no reason why costs should not follow the event on a 2B basis and

I order accordingly.

Associate Judge Lester

Solicitors:

Julia Xu Lawyers Limited, Auckland (for Plaintiff) Capstone Law Limited (for Defendant )

Copy to counsel:
P Dale KC (for Plaintiff)