Liu v Future Sustainable Development Limited - [2021] NZHC 2909

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2201

[2021] NZHC 2909

BETWEEN
WENJING LIU

Plaintiff

AND

FUTURE SUSTAINABLE DEVELOPMENT LIMITED

Defendant

Hearing: 11–13 October 2021

Appearances:

D K Wilson for the plaintiff

J S Langston for the defendant

Judgment:

29 October 2021

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 29 October 2021 at 3.30pm.
Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:
D K Wilson, Barrister, Auckland Churton Hart & Divers, Auckland Shieff Angland, Auckland

LIU v FUTURE SUSTAINABLE DEVELOPMENT LTD [2021] NZHC 2909 [29 October 2021]

[1] By this proceeding, the plaintiff (“Ms Liu”) seeks a declaration a June 2020 agreement with the defendant (“FSD”) for the sale and purchase of land in Auckland’s Henderson was validly cancelled, and removal of FSD’s consequent caveat over the land. FSD counterclaims for a declaration the purported cancellation was invalid, and seeks the caveat be retained pending Ms Liu’s specific performance of the agreement.

Background

[2] Ms Liu is the registered proprietor of the property at 45 Woodford Avenue in Auckland’s Henderson. She acquired it on 9 April 2020.

[3] Ms Liu is married to Wangliang Li (“Mr Li”). Mr Li is the sole shareholder and director of Xinda International Group Ltd (“Xinda”). Mr Li says, in November 2019, Xinda agreed to buy the property from a third party at a purchase price of $910,000, for settlement in April 2020. Mr Li and Ms Liu agreed the property would be acquired in her name, with the assistance of a loan from the ANZ Bank secured by first mortgage over the property, but he would conduct all dealings with it. He intended to develop the property from its single dwelling to eight townhouses. He says those dealings included two friends’ interests in investing in the property, one of whom had contributed $150,000 to its purchase price and another who intended to contribute to its development costs but died on 28 May 2020.

[4] FSD’s sole shareholder and director is You Hou (“Ms Hou”). Ms Hou is married to Xiaojiang Chen (“Mr Chen”). Mr Chen is FSD’s chief executive officer. Mr Li and Mr Chen knew each other from previous involvements. Mr Li asked Mr Chen to assist with financing purchase of the Henderson property. After its acquisition by Ms Liu, the two men discussed its purchase by Mr Chen. The discussions included if the purchase would be by Mr Chen or FSD directly or by an overseas investor he had “in mind”, and if the price was acceptable to Mr Li’s “friends”, with whom Mr Li said he needed to consult.

[5] Ultimately, on 17 June 2020, Mr Li provided Mr Chen with a draft sale and purchase agreement in standard form as between Ms Liu and FSD, supplemented by further terms drafted by a legally trained acquaintance of Mr Li. That ADLS/REINZ 4 June 2020 standard form (10th edition) includes on its…

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.

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Details

Case: [2021] NZHC 2909
Decision Date: 29 October 2021

CaseChat Overview and Summary

The case of Liu v Future Sustainable Development Limited before the High Court of New Zealand involved a dispute regarding the validity of a contract for the sale and purchase of a property located in Auckland's Henderson. The plaintiff, Wenjing Liu, sought a declaration that the contract dated June 2020 with the defendant, Future Sustainable Development Limited (FSD), was validly cancelled and demanded the removal of FSD’s caveat over the property. In response, FSD counterclaimed for a declaration that the purported cancellation was invalid and sought to retain the caveat pending Liu's specific performance of the agreement.

The central legal issue the court had to address was whether clause 20.3 of the contract, which required the purchaser to obtain Overseas Investment Act (OIA) consent, could be unilaterally waived by FSD. This required an objective interpretation of the contract terms, considering the language of the agreement, the context in which it was made, and the surrounding circumstances. The court had to determine if the clause was for the sole benefit of FSD, as this would determine whether it could be waived unilaterally.

The High Court, in delivering judgment, found that clause 20.3 was not capable of being waived unilaterally by FSD. The court reasoned that the clause was not solely for the benefit of FSD and had implications for both parties, particularly concerning potential OIA obligations. Consequently, the court concluded that Liu's notice of avoidance of the contract on 2 October 2020 was valid. The court declared that Liu validly avoided the contract and ordered the removal of FSD’s caveat over the property. Pending any agreement on costs or if the parties could not agree, the court reserved the right to determine the costs on the basis of short memoranda to be filed within specified timelines.

Orders