M R and C a Munroe Trustee Limited v Wang
[2024] NZHC 210
•19 February 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-1614
[2024] NZHC 210
BETWEEN M R and C A MUNROE TRUSTEE
LIMITED as Trustee of the Munroe Family Trust
PlaintiffAND
DABIN WANG
Defendant
Hearing: 11 December 2023 Counsel:
J M Skinner for the Plaintiffs
M C Brugeyroux and K L Chiu for the Defendant
Judgment:
19 February 2024
JUDGMENT OF ASSOCIATE JUDGE BRITTAIN
This judgment was delivered by me on 19 February 2024 at 2 pm.
Pursuant to Rule 11.5 of the High Court Rules.
…………………..
Registrar/Deputy Registrar
MUNROE v WANG [2024] NZHC 210 [19 February 2024]
[1] The plaintiff, MR and CA Munroe Trustee Limited (Munroe) was formerly the owner of a property at 55 Richards Avenue, Forrest Hill, Auckland. On 14 July 2021, Munroe as vendor and the defendant, Dabin Wang, as purchaser entered into an agreement for sale and purchase of the property.
[2] Mr Wang failed to settle the agreement. Munroe cancelled the agreement and re-sold the property to a third-party.
[3] Munroe retained Mr Wang’s deposit and now claims against Mr Wang for loss of bargain damages, penalty interest under the agreement and costs associated with the re-sale. Munroe claims $1,077,743 and applies for summary judgment. Mr Wang opposes the application.
A summary of Mr Wang’s defences
[4] It is common ground that the agreement includes clauses that entitle Munroe to recover loss of bargain damages, penalty interest and costs associated with the re- sale.
[5] Mr Wang is from the People’s Republic of China, and his written and spoken English are poor. He was introduced to the property by a real estate salesperson, Kai Deng. Mr Deng works for Barfoot & Thompson Milford (B&TM), the real estate agents acting for Munroe. Mr Deng and Mr Wang communicated in Mandarin.
[6] Mr Wang made his offer to purchase the property as part of a tender process. Mr Wang says that he was misled by Mr Deng during the tender process, when Mr Deng overstated the price level of competing offers before Mr Wang submitted his offer. This caused Mr Wang to offer a price of $2,960,000, which was accepted, when he would otherwise have offered in the range of $2.4–2.5m.
[7] Mr Wang claims that this entitles him to relief based on either: pre-contractual misrepresentation; misleading or deceptive conduct; or a unilateral mistake by Mr Wang regarding the price level of other offers, which was a mistake known to Mr Deng as Munroe’s agent.
[8] Further, and despite having purchased and sold other properties in New Zealand, Mr Wang says that he did not know the terms in the agreement that he signed, because he cannot read English. Mr Wang says that he did not know that he could be held liable under the agreement for the vendor’s losses on a resale if he failed to settle. He claims that Mr Deng should have explained to him that the consequences of failing to settle a purchase in New Zealand are different to the consequences in China, where liability would be limited to loss of the deposit.
[9] On that basis, Mr Wang makes a plea of non est factum. Alternatively, Mr Wang says that he was influenced to enter into the agreement by his mistake regarding the legal consequences if he failed to settle, and his mistake was known to Mr Deng as Munroe’s agent.
[10] Finally, Mr Wang argues that Munroe failed to exercise reasonable care when re-selling the property, which resulted in Munroe achieving a price on the re-sale that was less than market value.
[11] For Munroe to be granted summary judgment, Munroe must establish that none of Mr Wang’s defences can succeed. Therefore, I will first deal with the defence that I consider has the most merit, which is the claim of pre-contractual misrepresentation during the tender process.
The tender process
[12] Marketing of the property commenced on 6 July 2021, and emphasised the potential for development of the property. The property was advertised to be sold by tender, with tenders due by 30 July 2021. Mr Barfoot, of B&TM, confirmed in his evidence that tenders were to be submitted on a confidential basis.
[13] Mr Deng had previously worked with Mr Wang on other transactions. Mr Wang had purchased at least three properties through Mr Deng, and they had dealings regarding other properties which Mr Wang had attempted to purchase, unsuccessfully.
[14] Mr Wang says that Mr Deng approached him about the property on about 9 July 2021, suggesting that Mr Wang should view the property because of its development potential. Mr Wang worked out that he could build six town houses and a stand-alone dwelling on the property, so he was very interested in purchasing it.
[15] On 11 July 2021, Munroe received an offer from another party and the closing date for tenders was brought forward to 14 July 2021. Mr Wang does not mention this change in the closing date for tenders in his affidavit evidence. He says:
Mr Deng told me that the Property was being sold by tender and that there was a lot of interest in the Property. I told him that I wanted to offer around
$2,400,000 to $2,500,000 for the Property, but he told me that I would need to offer around $3,000,000 to have a realistic chance of buying the Property. Mr Deng said he had received information that tender offers of around
$2,700,000 to $2,900,000 would be submitted by other prospective buyers.
[16] In his affidavit, Mr Deng acknowledges that he had discussions with Mr Wang about price before Mr Wang submitted his tender. Mr Deng says that he told Mr Wang that he did not know the price of any other offer. He says:
… I have no memory of advising Mr Wang that other buyers were likely to submit tenders of $2.7 – 2.9m.
[17] On 14 July 2021, Mr Wang submitted his offer of $2,960,000 for the property. Mr Deng completed the particulars of price and other variables on the front page of the agreement.
[18] Munroe’s representatives met at the offices of B&TM at 4 pm on 14 July 2021 to consider the offers. Nine offers were presented in sealed envelopes. The lowest offer was $1.9m. The highest was Mr Wang’s offer of $2.96m. The second highest was $2.356m. There were five offers in the range of $2.31m to $2.356m.
[19]Munroe accepted Mr Wang’s offer, and Mr Wang paid a deposit of $148,000.
[20] In March 2022, Mr Wang obtained a registered valuation of the property for mortgage purposes. The valuation was $2,960,000, consistent with the price that Mr Wang was due to pay under the agreement.
[21] In March 2022, the parties agreed to vary the agreement. The settlement date was extended to 30 September 2022. Mr Wang paid an additional deposit of $148,000, and the purchase price was increased to $2,996,000.
[22] Shortly before settlement was due, Mr Wang sought a further extension of the settlement date. The parties negotiated but failed to reach agreement. Mr Wang failed to settle on 30 September 2022.
[23] Munroe served a settlement notice and further negotiations ensued. The parties did not agree to vary the agreement and Munroe cancelled the agreement on 8 November 2022.
[24] Following a second tender process, Munroe entered into an agreement to sell the property to a third-party on 12 January 2023, for a price of $1,780,000. That transaction settled on 14 February 2023.
The issues
[25] The issues raised by Mr Wang’s claim of pre-contractual misrepresentation include:
(a)Was Mr Deng acting as Munroe’s agent?
(b)If so, was Mr Deng acting within his actual or apparent authority when he made the alleged misrepresentations?
(c)What words were used by Mr Deng, and what meaning would they have conveyed to a person in Mr Wang’s situation?
(d)If a misrepresentation is established, would a reasonable person in Mr Wang’s situation have been induced by it to enter into the agreement?
(e)If a pre-contractual misrepresentation is established, what remedy is Mr Wang entitled to?
Summary judgment principles
[26] The Court may give judgment against a defendant if satisfied that the defendant has no defence to a cause of action in the statement of claim.
[27] The leading authority on applications for summary judgment is Krukziener v Hanover Finance Ltd.1 The Court of Appeal set out the following principles:2
(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, there is no real question to be tried. The Court must be left without any real doubt or uncertainty.
(b)The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.
(c)The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as, for example, where the evidence is not consistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable. In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it.
[28] The defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the notice of opposition.3
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162.
2 At [26].
3 Middleditch v New Zealand Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.
Was Mr Deng acting as Munroe’s agent?
[29] Section 35(1) of the Contract and Commercial Law Act 2017 (CCLA) relevantly provides:
35 Damages for misrepresentation
(1)If a party to a contract (A) has been induced to enter into the contract by a misrepresentation, whether innocent or fraudulent, made to A by or on behalf of another party to that contract (B),—
(a)A is entitled to damages from B in the same manner and to the same extent as if the representation were a term of the contract that has been breached; and
…
[30] A party to a contract will be bound by a misrepresentation made by that party’s agent acting within the agent’s actual or apparent authority.4
[31] Counsel for Munroe argued that Mr Deng was acting as a buyer’s agent and not as Munroe’s agent, relying on the form of the agency contract between Munroe and B&TM.
[32] Mr Deng was engaged by B&TM, although the legal form of the underlying contract is not in evidence. Mr Barfoot describes his role as manager of B&TM, and he says that he supervised Mr Deng.
[33]The agency contract included the following relevant terms:
(a)B&TM was defined as “the Agent”;
(b)cl 1.0 provided:
… the Agent is authorised to market the Property, conduct negotiations and to prepare any Sale and Purchase Agreements, Option or Tender documents and do all other things as may be necessary or required to give effect to a sale of the Property. Such work may be conducted by the Agent or through a Branch Manager or Salesperson of the Agent and those persons conducting such work are referred to as Licencees in this agreement.
4 Wakelin v RH & EA Jackson Ltd & Ors (1984) 2 NZCPR 195 (CA) at 198.
(c)the terms “Branch Manager” and “Salesperson” are not defined;
(d)cl 16.0 is as follows:
16.0 Licensee Details
Listing agent Mark Caisley Code………… Office Milford Joint listing agent……………. Code………… Office…………
Listing number………….……
Pending date………… Live date…………
[34]Counsel for Munroe submitted that the effect of entering “Mark Caisley” in cl
16.0 was to displace the general definition of Licensee in cl 1.0, so that the only person authorised by Munroe to complete B&TM’s work and act as Munroe’s agent was Mark Caisley.
[35] I reject that submission. Under cl 1.0 of the agency contract, the branch manager and any salesperson engaged by B&TM were authorised by Munroe to complete work. If Munroe’s argument is correct, then the authority of B&TM’s branch manager was also extinguished, which was not the case.
[36] The purpose of entering Mark Caisley’s name in cl 16.0 was to record that he was the listing salesperson, and no more than that. Mark Caisley may have been the listing salesperson, but that did not prohibit other salespeople and the branch manager from B&TM from carrying out B&TM’s work.
[37] This conclusion is supported by other evidence. The back page of the agreement for sale and purchase records that the licensed real estate agent was B&TM. The salesperson is listed as “Mark Caisley/Kai Deng”. Mr Deng appears to have added his name. This indicates that Mr Deng considered that he was acting as a representative of B&TM, the vendor’s agent.
[38] There is no evidence of a written agency agreement between Mr Wang and Mr Deng, as required by r 11.2 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012. Rule 11.2 requires the agency agreement to include the conditions under which the buyer will pay a commission to the buyer’s agent. There is no evidence that Mr Wang paid, or was liable to pay, a commission to Mr Deng.
[39] On the above evidence it is arguable that Mr Deng was acting as Munroe’s agent.
Was Mr Deng acting within his actual or apparent authority when he made the alleged misrepresentations?
[40] The extent of a real estate agent’s authority was classically stated by Bacon V-C in Mullens v Miller:5
A man employs an agent to let a house for him; that authority, in my opinion, contains also an authority to describe the property truly, to represent its actual situation, and, if he thinks fit, to represent its value… I think the principal does thereby authorize his… agent to state any fact or circumstance which may relate to the value of the property.
[41] This principle applies equally to a sale of land and has been applied in New Zealand.6 It is arguable that Mr Deng had actual authority or apparent authority to make representations about facts relevant to the value of the property.
[42] The evidence of Mr Barfoot is that it was a confidential tender process and offers were placed in sealed envelopes before presentation to Munroe. It is standard practice to maintain the confidentiality of competing offers in a multi-offer situation.
[43] Munroe did not argue that any disclosure by Mr Deng of other buyers’ confidential offers would be outside Mr Deng’s actual or apparent authority. This point may be arguable. It may ultimately depend on a consideration of what words were used by Mr Deng in his discussions with Mr Wang, and whether Mr Wang knew or ought to have known that he was receiving confidential information, even if misrepresented, in breach of a duty of confidence.
[44] There is insufficient evidence presently before the Court to determine that Mr Deng was acting outside of his actual or apparent authority if he made the statements attributed to him by Mr Wang.
5 Mullens v Miller (1882) 22 Ch D 194 at 199.
6 401L Ltd v Chhin HC Auckland CIV-2011-404-0046, 5 May 2011; McAlpine Snowline Ltd v Wethey (1986) 2 NZCPR 388 (HC).
What words were used by Mr Deng, and what meaning would they have conveyed to a person in Mr Wang’s situation?
[45] Misrepresentations can be expressed or implied by the words and conduct of a party.7
[46] An important question in all misrepresentation cases is: what was the meaning of the misrepresentation? Was the statement made fairly capable of the meaning alleged?8
[47]The meaning relied upon must be reasonable in all the circumstances.9
[48] It is common ground that on 14 July 2021, before Mr Wang submitted his offer, Mr Wang and Mr Deng had a conversation about the price that Mr Wang would offer. Apart from that, their evidence is in direct conflict.
[49] I am cognisant of the role that translation will play in respect of the evidence of Mr Wang and Mr Deng. To resolve the conflict in their evidence, it may be necessary to carefully consider the words attributed to Mr Deng in Mandarin, and the translation of those words into English. That may assist in determining the meaning that Mr Deng’s words would have conveyed to a person in Mr Wang’s situation.
[50] For example, did Mr Deng merely offer an opinion or speculate on what other prospective buyers might offer? If so, his statements may not be actionable. Or did he convey that offers of a particular price from other prospective buyers had already been received by other salespeople? Did he do neither? The nuances of the language used are best assessed at trial.
[51] To avoid these difficulties, counsel for Monroe urged me to take a robust approach to summary judgment, and to reject Mr Wang’s evidence. Munroe argued that Mr Wang’s evidence of the statements attributed to Mr Deng was late invention and not credible.
7 Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (7th edition, LexisNexis, Wellington, 2022) at [11.2.1(a)].
8 Magee v Mason [2017] NZCA 502, (2017) 18 NZCPR 902 at [26].
9 West v Quayside Trustee Ltd [2012] NZCA 232 at [30].
[52] The communications between the parties’ lawyers following Mr Wang’s failure to settle in September 2022 do not mention any allegation by Mr Wang that he was misled during the tender process.
[53] Mr Wang learnt of the re-sale price of $1,780,000 in March 2023. Counsel for Munroe submitted that it was then that Mr Wang had cause to review what had happened during the tender process that led him to offer $2,960,000 for the property. Counsel suggests that from this premise the Court can infer that Mr Wang’s failure to raise the alleged misrepresentation until October 2023, after this litigation commenced, supports a finding of late invention.
[54] However, Mr Wang says that he only learnt of the prices offered by the other tenderers when he was served with the application for summary judgment. There is no evidence to the contrary. It is possible that Mr Wang had reservations regarding the tender process but elected to say nothing until he realised that he had offered significantly more than the other tenderers, which brought into focus the comments that Mr Wang attributes to Mr Deng during the tender process.
[55] The robust approach to summary judgment can only take a plaintiff so far. It is not enough to point to surrounding circumstances which may justify scepticism about a defendant’s evidence. To reject Mr Wang’s evidence, I must be satisfied that his evidence is contrived.
[56] Mr Wang’s evidence is not inconsistent with contemporaneous documents or other irrefutable evidence. It is not safe to reject Mr Wang’s evidence before it is tested by cross-examination. It is not possible to resolve the conflict between the evidence of Mr Wang and Mr Deng on their affidavits. The issue of what was said by Mr Deng to Mr Wang on 14 July 2021 must be resolved at trial.
[57] That is not to say that the argument of late invention advanced on behalf of Munroe has no merit. However, the facts relevant to the argument are part of a factual matrix that is best assessed at trial.
[58] I am satisfied that it is arguable that Mr Deng misrepresented to Mr Wang that other offers were pending in the range of $2.7m to $2.9m.
Would a reasonable person in Mr Wang’s situation have been induced to enter into the agreement by the misrepresentation?
[59]The concepts of inducement and reasonableness are intertwined. In the Court
of Appeal’s decision in Savill v NZI Finance Ltd, Hardie Boys J said:10
…I consider that it remains the law that it is not enough for a party to say that a representation caused him to act in a particular way. He must also show either that the representator intended him to do so, or that he “wilfully used language calculated, or of a nature to induce a normal person in the circumstances of the case to act as the representee did.
[60] It is open to a representor to argue that a representation was immaterial, on the basis that it would not induce a reasonable person to enter into the contract.11
[61] In Western Park Village Ltd v Baho, Heath J said that inducement is a specie of reliance.12 The reasonableness requirement was endorsed by the Court of Appeal in Vining Realty Group Ltd v Moorhouse.13
[62] In my view, reasonable reliance is best assessed once the Court has determined what words were used by Mr Deng and the meaning those words would have conveyed.
[63] Munroe may be able to make compelling arguments regarding reasonable reliance by a person in Mr Wang’s situation on the type of comments attributed to Mr Deng. This will require an examination of Mr Wang’s situation at the time, including his experience as a property buyer and developer, and any due diligence and costings that he had undertaken in respect of his proposed development of the property. There is little or no evidence on those matters.
[64]Munroe relies on cl 22 of the agreement, which provides:
10 Savill v NZI Finance Ltd [1990] 3 NZLR 135 (CA) at 145.
11 At 145.
12 Western Park Village Ltd v Baho [2014] NZHC 198, (2014) 15 NZCPR 180 at [67].
13 Vining Realty Group Limited v Moorhouse [2010] NZCA 104, (2010) 11 NZCPR 879 at [46].
22.1 Where the real estate agent passes over documents or information obtained from any other parties (including the Vendor), such passing over of documents is as a conduit only between the supplier and the Purchaser.
22.2 Purchasers are advised to obtain independent advice to verify the contents of such documents or information before they rely on the information contained therein. The Purchaser accepts that the contents of such documents or information do not create any warranty or representation.
[65] Counsel for Munroe argued that if Mr Deng provided information to Mr Wang regarding prices offered or to be offered by other tenderers, then that “information” was subject to cl 22.2 and Mr Wang could not rely on it.
[66]Section 50 of the CCLA relevantly provides:
50 Statement, promise, or undertaking during negotiations
(1)This section applies if a contract, or any other document, contains a provision purporting to prevent a court from inquiring into or determining the question of—
(a)whether a statement, promise, or undertaking was made or given, either in words or by conduct, in connection with or in the course of negotiations leading to the making of the contract; or
(b)whether, if it was so made or given, it constituted a representation or a term of the contract; or
(c)whether, if it was a representation, it was relied on.
(2)The court is not, in any proceeding in relation to the contract, prevented by the provision from inquiring into and determining any question referred to in subsection (1) unless the court considers that it is fair and reasonable that the provision should be conclusive between the parties, having regard to the matters specified in subsection (3).
(3)The matters are all the circumstances of the case, including—
(a)the subject matter and value of the transaction; and
(b)the respective bargaining strengths of the parties; and
(c)whether any party was represented or advised by a lawyer at the time of the negotiations or at any other relevant time.
[67] The application of cl 22 is not straight forward. First, it is arguable that the clause only applies to documents or other written information. Secondly, it is not clear whether B&TM passed over information to Mr Wang that Mr Deng had obtained from
“other parties”. It is arguable that Mr Deng passed on information obtained from other salespeople engaged by B&TM. The interpretation and application of cl 22 requires a full consideration of the factual matrix at trial.
[68] There are insufficient undisputed facts for arguments against reliance and inducement to be accepted at this stage of the proceeding.
If a pre-contractual misrepresentation is established, what remedy is Mr Wang entitled to?
[69]Section 37 of the CCLA relevantly provides:
37Party may cancel contract if induced to enter into it by misrepresentation or if term is or will be breached
(1)A party to a contract may cancel it if—
(a)the party has been induced to enter into it by a misrepresentation, whether innocent or fraudulent, made by or on behalf of another party to the contract; or
(b)a term in the contract is breached by another party to the contract; or
(c)it is clear that a term in the contract will be breached by another party to the contract.
(2)If subsection (1)(a), (b), or (c) applies, a party may exercise the right to cancel the contract if, and only if,—
(a)the parties have expressly or impliedly agreed that the truth of the representation or, as the case may require, the performance of the term is essential to the cancelling party; or
(b)the effect of the misrepresentation or breach of the contract is, or, in the case of an anticipated breach, will be,—
(i)substantially to reduce the benefit of the contract to the cancelling party; or
(ii)substantially to increase the burden of the cancelling party under the contract; or
(iii)in relation to the cancelling party, to make the benefit or burden of the contract substantially different from that represented or contracted for.
(3)Subsection (1) is subject to the rest of this subpart, but does not limit
section 36.
[70] Essentiality of the truth of any misrepresentation under s 37(2)(a), and substantiality of effect under s 37(2)(b), should be assessed at trial.
[71] I do not overlook that Mr Wang obtained a valuation report on the property in March 2022 that included a valuation that matched the original price in the agreement. However, there is no evidence from the valuer regarding that report. It is unlikely that the correlation between the valuation and the price in the agreement is a coincidence. Would the valuation be the same if the valuer had disregarded the price in the agreement and been appraised of the other tender prices?
[72] If Mr Wang can establish a pre-contractual misrepresentation, but not a right to cancel, he may still be able to set off a claim for damages. Damages are conventionally assessed as the difference between the market value of the property as represented (usually the contract price) and the market value of the property as received.14
[73] Evidence relevant to the issues in respect of a remedy needs to be adduced and tested at trial.
Decision and orders
[74] Mr Wang’s claim for pre-contractual misrepresentation is arguable and this is not a suitable case for summary judgment. It is unnecessary for me to consider the other defences raised by Mr Wang.
[75]The plaintiff’s application for summary judgment is dismissed.
[76] My preliminary view is that costs should be reserved. If the parties are unable to agree on costs, then:
(a)the defendant may file and serve written submissions on costs of no more than five pages by 1 March 2024;
14 Laird v Pim (1841) 7 M & W 474, (1841) 151 ER 852 (Ex); Harvey McGregor McGregor on Damages (21st ed, Sweet & Maxwell, London, 2021) at [27-037]; D W McMorland Sale of Land (4th ed, Cathcart Trust, Auckland, 2022) at 562.
(b)the plaintiff may file and serve submissions on costs by 8 March 2024; and
(c)I will determine costs on the papers.
Associate Judge Brittain
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