MA v Li
[2021] NZHC 792
•14 April 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-001944
[2021] NZHC 792
UNDER The Property Law Act 2007 IN THE MATTER OF
An order for specific performance
BETWEEN
CONGMEI MA
Plaintiff
AND
YANG LI
Defendant
Hearing: 23 February 2021 and 26 March 2021 Appearances:
Plaintiff in Person (23 February 2021) T Rea for Plaintiff (26 March 2021) D M Hickson for Defendant
Judgment:
14 April 2021
JUDGMENT OF ASSOCIATE JUDGE P J ANDREW
MA v LI [2021] NZHC 792 [14 April 2021]
Introduction
[1] The plaintiff, Ms Ma, seeks by way of summary judgment, specific enforcement of an agreement for sale and purchase of land at Karaka.
[2] Ms Ma was the purchaser. Both she and the defendant, Ms Li, signed an unconditional agreement for the sale and purchase of the property with a purchase price of $1,140,000. Ms Ma has paid a 10 per cent deposit.
[3] Ms Li listed the property for sale with L J Hooker, real estate agents, Ponsonby, and with a list price of $1.35m. She says she has an arguable defence to the summary judgment application on the basis that the real estate agent had no authority to present Ms Li’s initialled counter-offer to Ms Ma. It was intended to be a “ploy” to get future buyers to present offers.
Background
[4] Ms Li is the registered proprietor of 241 Bremner Road, Karaka, Auckland (the property). Ms Li holds the property on trust for Fuwa Melodi Ding as tenants in common as to a one-half share.
[5] The property is presently rented. The tenants are paying a rental of $850 per week.
[6] The property consists of a subdivisible 1,542 square metre site. It has a current Auckland Council valuation of $1.1m.
[7] On 19 May 2020, Ms Li entered into a residential agency agreement with L J Hooker Ponsonby, authorising the marketing and sale of the property. The specified asking price was $1.35m.
[8] Ms Li subsequently dealt with the agent, Mr Eric Fang, with whom she says she has been close friends for almost ten years.
[9] Ms Li says that her clear instruction to Mr Fang was that the list price was to be $1.35m and that she would not consider any offers below that sum. She says that although the list price was $1.35m, she and her co-owner, Ms Ding, were actually hoping to get as much as $1.4m for the property.
[10] On 29 July 2020, Ms Li received a WeChat message from Mr Fang which said that he had found a buyer, namely Ms Ma. He asked Ms Li to call him after work. Mr Fang sent Ms Li a WeChat a photo of the first page of the agreement for sale and purchase which showed an offer purchase price of $1.03m from Ms Ma. Ms Li did not reply to Mr Fang on WeChat. She says the offer was far too low and she felt there was no point in responding to it.
[11] On 19 August 2020, Ms Li met with Mr Fang. He presented to her a signed agreement for sale and purchase of the property from Ms Ma (the ASP) (a different version of the one that had been sent to her on WeChat on 29 July 2020). The ASP was a standard ADLS agreement for sale and purchase (10th edition 2019(2)). The offer price was still $1.03m. Ms Li says that Mr Fang told her that the buyer, Ms Ma, would be prepared to pay $1.08m or possibly as much as much as $1.09m but no more than that. Mr Fang said (so Ms Li says) that he knew that that would not be enough and that he had already found another property for the buyer.
[12] Ms Li says that she then countersigned the ASP for the sum of $1.14m. She signed as vendor in the execution section of the ASP and initialled the amended purchase price of $1.14m on page 1. She says she did so in the knowledge (so she thought) of Mr Fang’s assurances that the buyer, Ms Ma, would never agree to that price. The respective understanding of this position is said to be recorded in WeChat messages copies of which, together with translations, were filed in support of the Notice of Opposition.
[13] Ms Li says that Mr Fang told her that the reason he wanted her to make a counter-offer was so that he could show it to future buyers and use it as a means of encouraging them to make offers themselves. In her affidavit dated 26 November 2020, Ms Li says it was “just a ploy to get future buyers to present offers”. That is said to be the basis for Ms Li counter-signing the ASP at $1.14m. Ms Li says that she never intended to sell at that price.
[14] Ms Ma accepted the counter-offer on 27 August 2020 by initialling the price of $1.14m. She had of course previously signed the ASP. On the same day, the deposit was paid to the real estate agent.
[15]Clause 18.0 of the ASP reads:
Agency
18.1If the name of a licensed real estate agent is recorded on this agreement, it is acknowledged that the sale evidenced by this agreement has been made through that agent whom the vendor has appointed as the vendor’s agent according to an executed agency agreement.
18.2The scope of the authority of the agent under subclause 18.1 does not extend to making an offer, counter-offer, or acceptance of a purchaser’s offer or counter-offer on the vendor’s behalf without the express authority of the vendor for that purpose. That authority, if given, should be recorded in the executed agency agreement.
[16] Ms Ma says that she and her husband wanted to buy the property as a long- term family investment for their daughter. A key factor in their decision to purchase was the one-year fixed-term tenancy which runs until August 2021. Ms Ma said that she and her husband had sold their rental property of 17 years and had been looking forward to receiving rental income from the property at issue here.
[17] On 27 August 2020, Ms Li received a WeChat message from Mr Fang advising that the buyer had accepted her counter-offer of $1.14m.
[18] The next day, and in accordance with Ms Li’s instructions, her solicitor emailed Ms Ma’s solicitor contending that there was no concluded agreement for sale and purchase. The letter stated:
Our client [Ms Li] advises that the purchase price appearing on the agreement,
$1,140,000 has never been agreed by our client. There has never been a concluded agreement between the parties. So this agreement cannot proceed.
[19] Ms Ma’s solicitor responded by email dated 1 September 2020, contending that there was a binding agreement. Ms Ma’s solicitor also forwarded an email from L J Hooker Ponsonby dated 1 September 2020 setting out the factual background (as L J Hooker Ponsonby saw it). Ms Li says that she never authorised L J Hooker to send the email to Ms Ma’s solicitors. That email stated, amongst other things:
Our [L J Hooker Ponsonby] considered opinion is that our client [Ms Li] had plenty of time to withdraw or increase her counter-offer, under the circumstances the agreement is legally binding and the property is sold unconditionally.
[20] Ms Li’s solicitors wrote to L J Hooker Ponsonby by letter dated 3 September 2020. L J Hooker’s authority to deduct its fees, commissions and expenses was
revoked and the agency was instructed to immediately return the deposit to the “purported purchaser”. Ms Li’s solicitor complained that L J Hooker Ponsonby had emailed Ms Ma’s solicitor on 1 September 2020, without obtaining the authority of Ms Li.
Relevant procedural history
[21] In none of her first three affidavits (there are four in total) filed in support of her application for summary judgment, did Ms Ma comply with the requirements of r 12.4(5) of the High Court Rules. In none of those three affidavits did she attest to her belief that the defendant has no defence to the allegations contained in the statement of claim or set out the grounds for such belief.
[22] In the defendant’s Notice of Opposition of 26 November 2020 and the memorandum of counsel for the defendant of 30 November 2020, Ms Ma was alerted to this defect.
[23] On 25 February 2021, and subsequent to the hearing before me on 22 February 2021, I issued a minute addressing the issue of Ms Ma’s obligations, as plaintiff, under r 12.4(5) of the High Court Rules.1
[24] In that minute I gave Ms Ma a further opportunity to comply with the requirements of r 12.4(5) and directed that she file a further affidavit. In making that direction I recommended that Ms Ma obtain legal advice. I also recorded the case law is clear that a defect of this kind can be remedied by a supplementary affidavit.2
[25] In response to that minute, the Court received from the parties the following documents:
(a)A supplementary affidavit of Ms Ma, affirmed 4 March 2021; and
(b)Two memoranda of counsel for the defendant, dated 4 March 2021 and 5 March 2021.
1 Ma v Li HC Auckland CIV-2020-404-1944, 25 February 2021 (Minute of Andrew AJ).
2 Foodstuffs (Auckland) Ltd v Schweiger [1986] 1 NZLR 463 at 464-465; Thomson v Woolford
[1987] 1 NZLR 604 at 607.
[26] The supplementary 4 March 2021 affidavit from Ms Ma, while verifying the allegations in the statement of claim, still did not attest to her belief that the defendant has no defence to the summary judgment application.
[27] On 15 March 2021, I issued a further minute, re-convening the hearing to provide Ms Ma with an opportunity to give evidence on oath before me addressing the requirements of r 12.4(5) of the High Court Rules 2016. In that minute I also referred the parties to the relevant Court of Appeal decision in Ngoi v Wen,3 not cited by either party. I discuss that decision below.
[28] Ms Ma then instructed solicitors and swore and filed a further affidavit (affirmed 22 March 2021) in which she squarely addressed the requirements of r 12.4(5) of the High Court Rules. She expressly stated her belief that the defendant has no defence to the allegations made in her statement of claim and set out the grounds for that belief.
[29] At the re-convened hearing on 26 March 2021, I ruled that I would accept Ms Ma’s further affidavit of 22 March 2021, and she was not required to give oral evidence. In any event, Mr Hickson did not seek to cross-examine her. I then heard brief oral submissions from counsel on the application of Ngoi v Wen (counsel had on the previous day filed written submissions on that case).
Relevant legal principles
(a)Summary judgment principles
[30]Rule 12.2(1) of the High Court Rules provides:
The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
[31]The principles are summarised in Krukziener v Hanover Finance Ltd:4
[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The
3 Ngoi v Wen [2017] NZCA 519 [CA judgment]. I note the Supreme Court declined leave to appeal in [2018] NZSC 18.
4 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307.
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: MacLean v Stewart (1997) 11 PRNZ 66 (CA). 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 inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). 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: Bilbie Dymock Corporation Ltd v Patel (1987) 1 PRNZ 84 (CA).
(b)Specific performance
[32] Equitable principles generally govern the exercise of the discretion to grant a decree of specific performance. The authors of The Laws of New Zealand, refer to the doctrine as follows:5
… Equity treats as done that which ought to have been done so that the equitable remedy of specific performance is intended to put both parties in the same position as if their respective contractual obligations had been performed. The Court looks to the substantial justice of the case. It is for a party seeking specific performance of a contract to establish to the satisfaction of the Court that the contract is one which on equitable principles ought to be enforced. A plaintiff must come with “clean hands” when seeking the remedy. So, for example, a vendor is not permitted to take advantage of his or her own breach of contract to defeat a purchaser’s suit for specific performance. The claim is to be judged in relation to the relief sought; the Court does not deny relief if one party’s hands are not entirely clean.
(citations omitted)
[33] A plaintiff who seeks specific performance must prove that he or she is ready and willing to perform his own obligations under the contract.6 In Hurrell v Townend, the Court of Appeal held:7
Whether or not a plaintiff is so ready and willing is a question of substance and not one to be determined in any technical or narrow sense … What is necessary by way of proof will depend upon the circumstances of the case.
[34]In Butts v O’Dwyer, the High Court of Australia held:8
If the plaintiff is entitled to any specific relief, it should be directed to the specific enforcement against the appellants of any promise express or implied on their part to do all such acts and execute all such documents as may be
5 The Laws of New Zealand: Specific Performance (online ed, LexisNexis NZ) at [5].
6 Hurrell v Townend [1982] 1 NZLR 536 (CA) at 550.
7 Hurrell v Townend, above n 7, at 550.
8 Butts v O’Dwyer (1952) AC 487 CLR 267 at 279.
reasonable and proper to remove any obstacles preventing the plaintiff from becoming the registered proprietor.
[35] The courts will imply a duty to co-operate to facilitate the performance of contract if it is supported by the intention of the parties as manifest by the contract itself. In Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd, Mason J held: 9
It is easy to imply a duty to co-operate in the doing of acts which are necessary to the performance by the parties or by one of the parties of fundamental obligations under the contract. It is not quite so easy to make the implication when the acts in question are necessary to entitle the other contracting party to a benefit under the contract but are not essential to the performance of the parties’ obligations and are not fundamental to the contract.
Then the question arises whether the contract imposes a duty to co-operate on the first party or whether it leaves him at liberty to decide for himself whether the acts shall be done even if the consequence of his decision is to disentitle the other party to a benefit.
Analysis and decision
[36] The critical issue for determination is whether Ms Ma has demonstrated Ms Li has no defence to the allegations in the statement of claim: is it reasonably arguable that the agreement is unenforceable because Mr Fang acted without authority in presenting Ms Li’s counter-offer of $1.14m to Ms Ma?
[37] Ms Li contended at the first hearing on 23 February 2021 (and as recorded in her Notice of Opposition), that the summary judgment proceedings should be dismissed on the basis that Ms Ma had failed to comply with the mandatory requirements of r 12.4(5) of the High Court Rules, as noted above.
[38] This is no longer a live issue, but it is important I record briefly my reasons for accepting the fourth affidavit of Ms Ma (i.e. the affidavit in which she has met the requirements of r 12.4(5)). I address that issue first, and then turn to consider the decisive issue of whether there is an arguable defence.
(a)Failure to verify allegations or to attest to belief that there is no defence
[39] One of the principal reasons I decided to grant an indulgence to Ms Ma and give her a further opportunity to comply with the requirements of r 12.4(5), was the
9 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd 144 CLR 596; (1979) 26 ALR 567 at 557.
view I take of the merits of this case. They are addressed below. It was very clear from Ms Ma’s submissions that she was contending that Ms Li had no defence, and that was her genuine belief and in the circumstances it would not have been a fair and efficient determination of the proceedings (r 1.2 High Court Rules) to dismiss them on the basis of a failure to follow requirements readily capable of being rectified.
[40] In accepting Ms Ma’s fourth affidavit (which meets the r 12.4(5) requirements), I also find that her previous failures to do so arose from a genuine misapprehension as to the requirements; the earlier failures were not deliberate or in any way calculated to prejudice the defendant or to delay the proceedings.
[41] In reaching these conclusions, I acknowledge, as Mr Hickson submitted, that r 12.4 is not to be regarded as some technical or procedural rule of little moment. The requirements in r 12.4(5) are directed at the integrity of the process and the accompanying affidavit addressing the twin requirements in 12.4(5)(b) is intended to provide the Court with the assurance and certainty that is essential to the fair disposition of proceedings on a summary basis.
[42] I also reject Mr Hickson’s submission that Ms Ma has failed to provide a clear and unequivocal confirmation that the ASP referred to in Ms Li’s affidavit is the document that she sues on and in respect of which she seeks specific performance. In my view, it is abundantly clear from Ms Ma’s submissions and her proceedings generally that that is the ASP she is suing on and seeks orders compelling its performance. In any event, Ms Ma has clarified the position in her latest affidavit of 22 March 2021.
(b)Has Ms Ma established that Ms Li has no defence?
[43] In support of his submission that Ms Li has an arguable defence, Mr Hickson contended that the agent, Mr Fang, acted outside the scope of his authority; he had no authority to present the counter-offer of $1.14m (which Ms Ma accepted) if there was even the remotest possibility (as plainly there was), that she would accept it. It is argued that the ASP is unenforceable on that basis.
[44] Mr Hickson also contended that, for these same reasons, Ms Li had no intention to be bound by the agreement or to create any legal relations with Ms Ma. Mr Hickson says the ASP is therefore unenforceable on that basis, too.
Legally binding and enforceable contract
[45] It is clear that in a summary judgment application the Court will not normally resolve material conflicts of evidence or assess the credibility of deponents.10 For the purposes of this summary judgment application therefore, I proceed on the basis that Ms Li’s account of the negotiations – in particular, that her counter-offer of $1.14m was simply a “ploy” – is an arguable one. Having said that, and for the reasons submitted by Ms Ma, there may well be good reason to be sceptical of Ms Li’s account. In particular, if as Ms Ma claims, Ms Li has considerable experience in buying and selling residential properties, she would likely have a good understanding of the legal consequences of signing and countersigning an agreement for sale and purchase.
[46] In addressing this central issue of whether there is a legally binding and enforceable contract, it is necessary to have regard to and apply some fundamental principles of contract.
[47] The Court of Appeal in Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd11 held that the question of whether negotiating parties intended the product of the negotiation to be immediately binding upon them, either conditionally or unconditionally, cannot sensibly be divorced from a consideration of the terms expressed or implicit in that product.12 The prerequisites to formation of a contract are an intention to be immediately bound, and an agreement, express or implied, or the means of forming an agreement (e.g. an arbitration clause) on every term legally essential to formation of a contract or manifested by the parties as essential to their bargain.13
[48] In determining the existence of intention and agreement, the orthodox approach is to adopt an offer and acceptance analysis.14
10 Krukziener v Hanover Finance Ltd, above n 4, at [26].
11 Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd, [2002] 2 NZLR 433 (CA).
12 Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd, above n 11, at [50].
13 Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd, above n 11, at [53].
14 Burrows Finn & Todd on the Law of Contract in New Zealand (6th ed, LexisNexis), at 3.2.
[49] The test of whether the parties intended to enter into a contract is an objective one. In determining whether objectively the parties intended to enter into a contract, it is permissible to look at the words of the agreement, background facts including (unlike contract interpretation) the parties’ written and oral statements in negotiations, contract drafts and subsequent conduct towards each other.15
[50] Applying those principles to the undisputed facts of the present case, I first note that both parties signed what is, on its face, an unconditional agreement for the sale and purchase of land. The standard form agreement expressly states on its covering page that, once signed, the agreement will be a binding contract with only restricted rights of termination. Secondly, the counter-offer of $1.14m was initialled by both parties and the 10 per cent deposit subsequently paid by Ms Ma. Third, at no stage was Ms Ma advised by either Ms Li or her agent that the offer to sell at $1.14m was anything other than a genuine offer which, if accepted, would give rise to a binding contract.
[51] I further note that the agency agreement signed by Ms Li specifically authorised Mr Fang to conduct negotiations, to prepare any sale and purchase agreement and to “do all other things as may be necessary or required” to effect a sale of the property. Upon the initialling of the counter-offer by Ms Ma, and the payment of the deposit, there were no other outstanding conditions that had to be performed.
[52] Therefore, it is clear that when Ms Li countersigned the ASP and initialled the purchase price of $1.14m, she was making an offer to Ms Ma as purchaser capable of conversion into a binding agreement upon acceptance by Ms Ma. Ms Ma gave her acceptance by initialling the price of $1.14m (as is customary in negotiations for sale of land) on the ASP she had already signed.
[53] Ms Ma’s acceptance was communicated to both Mr Fang and Ms Li, and the agreement itself undoubtedly contains a clear and definite statement of the terms by which the parties should be bound.
[54] Where there is doubt cast on the interpretation of a communication,, it will be interpreted from the perspective of the reasonable person who is observing the
15 Fletcher Challenge Energy Ltd v Electricity Corporation of New Zealand Ltd, above n 11, at [54] and [55].
communication, and not the subjective point of view of the communicator or their subjective intention.16 That is clear from the judgment of Blackburn J in Smith v Hughes:17
… If whatever a [person]’s real intention may be, [they] so conduct [themselves] that a reasonable [person] would believe that [they] were assenting to the terms proposed by the other party, and that other party upon the belief enters into the contract with [them], the [person] thus conducting [themselves] would be equally bound as if [they] had intended both to the other party’s terms.
[55] Therefore, on an objective assessment, the only tenable interpretation of the agreement is that Ms Li made a definite promise to be bound provided that the specified terms (ie, the price) were accepted by Ms Ma.18 There was a clear offer and acceptance and Ms Ma had no reason to believe or understand that Ms Li was not making a genuine offer.19
[56] I also reject Mr Hickson’s submission that the agreement for sale and purchase is unenforceable because Ms Li, as the vendor, had no intention to be bound by it. Ms Li’s contention that she did not intend to enter into a binding contract and that she simply initialled the counter-offer at $1.14m as a “ploy” is at best a subjective intention. Here, there was agreement on every term legally essential to the formation of a bargain for the sale of land. At the advanced stage in negotiations the only outstanding issue was price and on the undisputed evidence, the only tenable interpretation (in applying the objective test) was that the parties, and including Ms Li, intended to be bound immediately when Ms Ma initialled the amended price and thereby accepted Ms Li’s counter-offer.
Alleged lack of authority by agent, Mr Fang
[57] In contending that Mr Fang had no authority to present the counter-offer to Ms Ma if there was even the remotest possibility that she would accept it, Mr Hickson relied upon the following principle adopted by Sim J in Shortal v Buchanan:20
16 Burrows, Finn and Todd, above n 14, at [3.3.1]. See also Paulger v Butland Industries [1989] NZLR 549.
17 Smith v Hughes [1871] LR6 QB 597.
18 Jeremy Finn, Stephen Todd and Matthew Barber Burrows, Finn & Todd on the Law of Contract in New Zealand (6th ed LexisNexis, Wellington, 2015) at [3.2.3].
19 See Paulger v Butland Industries Ltd, above n 16.
20 Shortal v Buchanan [1920] NZLR 103 (SC) at 105.
Before the principle of holding out can apply, the act relied on as binding the principal must be of that particular class of acts which the agent is held out as having a general authority on behalf of his principal to do: Russo-Chinese Bank v Li Yau Sam. But, as pointed out by Cooper J, in, no land agent as such is ‘held out’ as having a general authority on behalf of his client to sell on any terms or at any price. If a person, without inquiring into the agent's authority, chooses to enter into a contract made by a land agent purporting to be made by the agent for his principal, then, as Cooper J, has said, that person takes the risk of the contract being one which the agent is authorized to make, and if it is in excess of the authority the principal is not bound.
(emphasis added; footnotes omitted)
[58] In Shortal, a land agent, whom the plaintiff vendor had informed of his willingness to sell the property for £900, obtained an offer of £825 and telegraphed it to the plaintiff. However, through a mistake in transmission as delivered to the plaintiff vendor mentioned £925 as the amount of the offer. The plaintiff telegraphed his acceptance to the agent without naming an amount. The offer was then withdrawn and the agent subsequently agreed to sell the property to the defendant, Buchanan, for
£825. On the tender of the formal contract to the plaintiff vendor for execution a month later, he learned for the first time about the mistake in the telegram and refused to complete the transaction. Sim J held that the specific authority originally given to the agent by the vendor did not authorise the sale of the plaintiff vendor’s property for less than £900. No land agent as such is “held out” as having a general authority on behalf of his client to sell on any terms or at any price.
[59] The facts of Shortal are distinguishable and quite different from the facts of this case. Here, Ms Li made a counter-offer of $1.14m and initialled the agreement for sale and purchase, confirming her commitment to that offer. With that specific authority Mr Fang, the agent, then presented it to Ms Ma, who accepted it. There was no refusal by Ms Li to sign the contract, as was the case with the vendor in Shortal v Buchanan. In that case, the vendor’s agent purported to enter into an agreement on behalf of the vendor. Here, however, Ms Li had signed and initialled a legal document which expressly states “once signed, this agreement will be binding”.
[60] Mr Fang was acting both within his general authority in presenting the counter- offer (as conferred by the agency agreement) and the specific authority of Ms Li as to price (she initialled the $1.14m price on the ASP and did so on an already signed (by both parties) ASP. Mr Fang did not make a counter-offer on her behalf but presented
to Ms Ma the countersigned offer within the confines of his general authority under the agency agreement and in accordance with cl 18.1 of the ASP (discussed further below). It was Ms Li who made the counter-offer; Mr Fang, as the agent, simply presented it to Ms Ma (i.e. he acted as the intermediary).
[61] I find that this case is rather more similar to the Court of Appeal decision in Ngoi v Wen,21 which approaches the issue from both a traditional offer and acceptance perspective, but also on the basis of an alternative “global approach”, namely the “acid test” of whether, viewed as a whole and objectively, the correspondence shows a concluded agreement.22
[62] In Ngoi v Wen, the Court of Appeal held that where a vendor is the offeror and provides his or her agent with authority to communicate the offer to the purchaser, a binding contract may be formed when the purchaser communicates acceptance of the offer to the vendor’s agent. The Court referred to its earlier decision in Powierza v Daley:23
Where an owner [of land] signs as vendor a sale and purchase agreement containing, not only all the terms of the proposed agreement and the names of both parties, but also a clause giving the agent authority to effect the sale, by delivering that document to the agent he ordinarily authorises the agent to conclude a contract by obtaining the signature of the other party.
[63] In Ngoi v Wen, both parties signed the sale and purchase agreement and their initials were next to the price. Dr Ngoi’s initials (i.e. the buyer) were, however, placed on the agreement adjacent to a blank space for the price before the price of $5.28m was inserted and subsequently initialled, by Ms Wen, the vendor.
[64] Dr Ngoi contended that a binding contract was formed when he confirmed to Ms Wen’s real estate agent, Mr Ngai, that he accepted Ms Wen’s offer to sell the property for $5.28m. Ms Wen, on the other hand, contended that she only intended to be bound if Mr Ngoi re-initialled the contract, and in any event, she withdrew her offer before it could be accepted.
21 Ngoi v Wen [CA judgment], above n 3.
22 See Meates v Attorney-General [1983] NZLR 308 (CA) at 377 per Cooke J.
23 Powierza v Daley [1985] 1 NZLR 558 (CA) at [60].
[65] Ms Wen also argued that it was not within the agent’s authority to “depart from the usual manner of dealing between Ms Wen and Dr Ngoi, which contemplated the acceptance of an offer by initialling, after an offer was made, particularly where that departure would result in a binding contract being formed”. The Court dealt with those arguments as follows:
[41] We are satisfied Ms Wen must have intended that Mr Ngai would convey to Dr Ngoi her offer to sell the property for $5.28 million. The only rational reason why Ms Wen would have placed her initials next to the sum of
$5.28 million at about 5.20 pm was to convey to Dr Ngoi her willingness to sell the property to him for that sum. When viewed objectively, Ms Wen clearly offered to sell the property for $5.28 million.
[42] We are also satisfied that by appointing Mr Ngai as her agent, and including a clause in the agreement giving Mr Ngai from Barfoot & Thompson the authority to effect the sale, Ms Wen authorised Mr Ngai to receive Dr Ngoi’s acceptance of her offer. This was done when, at about 5.30 pm, Dr Ngoi told Mr Ngai he agreed to purchase the property for $5.28 million. Ms Wen’s apparent “seller’s remorse” soon after Dr Ngoi had confirmed to Mr Ngai his acceptance of Ms Wen’s offer does not undermine Mr Ngai’s authority to have received, on behalf of Ms Wen, Dr Ngoi’s acceptance of her offer at about 5.30 pm.
[66] Here, as I have been emphasising, Ms Li initialled the counter-offer of $1.14m. In the context of a relatively orthodox negotiation, where the party making the counter- offer initials the new price, there is a clear indication to the other party that that is the price at which they will accept there is to be a legally binding contract (and, aside from price, all other terms and conditions in the agreement remain the same).
[67] I acknowledge that Heath J at first instance in Ngoi v Wen24 dismissed the application by Dr Ngoi for summary judgment. I find, however, that the approach of Heath J provides no support for Ms Li’s position. The complicating factors of Ngoi v Wen, namely Dr Ngoi’s pre-initialling of a space in the agreement and a material factual dispute, are not present in this case.
[68] I also agree with Mr Rea’s submission that there is a stronger case supporting summary judgment here than in Ngoi v Wen. Here, the ASP was signed by both parties and the final purchase price initialled by both. The formal and orthodox approach of buying and selling land was adopted (the failure to do so in Ngoi was a matter of
24 Ngoi v Wen [2014] NZHC 3027 [Judgment of Health J].
concern to Heath J)25 and the only tenable interpretation is that there was an offer and acceptance giving rise to a binding contract.
[69] Mr Hickson sought to distinguish Ngoi v Wen on the basis that in Ngoi there was no comparable agency clause, namely cl 18.2 of the ASP in this case. However, I do not accept that submission. The Court of Appeal expressly held that by appointing Mr Ngai as her agent and including a clause in the agreement giving Mr Ngai from Barfoot & Thompson the authority to effect the sale, Ms Wen authorised Mr Ngai to receive Dr Ngoi’s acceptance of her offer.26
[70] In any event, as Mr Rea submitted, cl 18.2 is essentially the same as the common law principle identified by Heath J in Ngoi, namely that no land agent is held out as having general authority on behalf of his client to sell on any terms or at any price as she instructed.
[71] I find that in presenting the signed counter-offer from Ms Li to Ms Ma, Mr Fang was acting consistently and in accordance with cl 18.1 (approved of course by Ms Li in signing the ASP) – and that in presenting the counter-offer, the sale was being made through Mr Fang as agent, having been appointed as Ms Li’s agent in accordance with the terms of an executed agency agreement. I conclude that Mr Fang acted in the manner contemplated by cl 18.1. That clause is in my view an express acknowledgement that it will be the agent who will present any signed offer or signed/initialled counter-offer from a vendor and that it will be the agent, not the vendor, who acts as the intermediary and generally deals directly with the purchaser in the absence of the vendor. The presentation of the counter-offer to Ms Ma was clearly one of a particular class of acts which the vendor, Ms Li, held out as an act that her agent, Mr Fang, was authorised to carry out.
[72] I therefore reject the contention that the ASP is unenforceable because Mr Fang acted outside the scope of his authority.
25 Ngoi v Wen, above n 24, at [27] with reference to Eccles v Bryant [1948] CH 93 at 99 and 104.
26 Ngoi v Wen [CA judgment], above n 3, at [42].
Alleged delay in acceptance
[73] I also reject Ms Li’s submission that the ASP is unenforceable on the basis that Ms Ma’s acceptance was some eight days after receiving the counter-offer of $1.14m (she initialled on 27 August 2020) meant that Ms Ma’s counter-offer had lapsed by the affliction of time. That contention is wholly without merit. The case relied upon, namely Kean v Dunfoy,27 which held that an offer lapses unless acceptance is communicated within a reasonable time, is a fundamentally different case. The purchaser’s acceptance in that case of the terms of the agreement was not communicated to the vendor until some 12 months later.
[74] For all these reasons, I conclude that Ms Ma, as plaintiff, has established that the defendant, Ms Li, has no defence to Ms Ma’s application for summary judgment. There was a binding legal contract enforceable at the suit of Ms Ma and she is entitled, in my view, to an order for specific performance.
Result
[75] I grant Ms Ma’s application for summary judgment and order that the defendant, Ms Li, is to perform the ASP between herself and Ms Ma dated 27 August 2020, within 30 days following this judgment.
[76] I further order that the settlement figure is to be calculated in accordance with cl 3.13(5) of the agreement for sale and purchase, with the defendant to provide to the plaintiff within 20 days, the necessary information to enable such calculation.
[77] Leave is granted to either party to apply to the Court for further directions, if necessary, in order to effect settlement of the agreement for sale and purchase.
[78] As to costs, I find that there should be no order as to costs. I accept that Mr Hickson’s submission that the defendant has been put to additional expense by the failure of Ms Ma to file an affidavit in accordance with r 12.4(5) in a timely fashion, but that does not, in my view, justify any decision to require Ms Ma to pay costs to Ms Li as the defendant.
27 Kean v Dunfoy [1952] NZLR 611 at [612].
[79] Ms Ma was self-represented throughout most of the proceeding and the best way to acknowledge the extra costs incurred as a result of the affidavit issues, is to decline to award any costs in relation to Mr Rea’s appearance and involvement.
[80] I do find, however, that Ms Ma is entitled to her disbursements and I order that the defendant, Ms Li, is to pay Ms Ma’s disbursements as fixed by the Registrar.
Associate Judge P J Andrew
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