New Generation Homes Limited v Lal HC Auckland CIV 2010-404-345

[2010] NZHC 551

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV-2010-404-345

BETWEEN  NEW GENERATION HOMES LIMITED

Plaintiff

AND  SATISH LAL

Defendant

Hearing:             27 April 2010

Appearances: P Moodley and K Morgan for Plaintiff M B Meyrick for Respondent

Judgment:          27 April 2010

JUDGMENT OF COOPER J

This judgment was delivered by Justice Cooper on
27 April 2010 at 3.30 p.m., pursuant to
r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:

Brookfields, PO Box 76 004, Auckland

Berman and Burton, PO Box 11171, Ellerslie, Auckland

NEW GENERATION HOMES LIMITED V LAL HC AK CIV-2010-404-345 27 April 2010

[ 1 ]  On 18 December 2009 the plaintiff commenced a proceeding seeking an

order for specific performance requiring the defendant to complete settlement of an agreement to purchase land situated at 123-125 Pah Road, Papatoetoe. By an application made on the same day, it sought summary judgment.

1. The defendant opposes the application for summary judgment, claiming that there was an agreement to cancel the agreement for sale and purchase on which the plaintiff relies.

Background facts

1. On 23 August 2007 the plaintiff and the defendant entered into an agreement for sale and purchase under which the plaintiff was the vendor and the defendant the purchaser of a property legally described as Lot 13 Deposited Plan 417695, contained and described in Certificate of Title 468308 (North Auckland Registry) (“the land”).

2. Under the agreement, the purchase price was stated to be $230,000, a deposit of $11,500 was payable by the defendant, the possession date was given as the date on which a certificate was to be issued under s 224(c) of the Resource Management Act and the settlement date was stipulated to be the fifth working day after the issuing of separate titles. The agreement was not made conditional on finance, or provision of a LIM report.

3. The defendant paid the deposit on 23 August 2007. The s 224(c) certificate was issued on 22 September 2009 and a copy of that was provided by the plaintiff’s solicitor to the defendant’s solicitor on 23 September. The Certificate of Title to the land was issued on 9 October 2009, and a copy of that was provided by the plaintiff’s solicitor to the defendant’s solicitor with a letter dated 9 October 2009. It followed from the terms of the agreement that settlement was required to be completed by 16 October 2009.

4. That did not occur. On 19 October, the plaintiff’s solicitor served a settlement notice on the defendant’s solicitors requiring the defendant to settle the

transaction within 12 working days from the date of service. The defendant did not comply with the settlement notice, and has not settled the transaction.

1. Those facts are not in dispute. The kernel of the defence, both to the substantive claim and to the summary judgment application, is an assertion by the defendant that prior to title becoming available he spoke with Mr Ha, the plaintiff’s principal, and it was mutually agreed that the agreement for sale and purchase would be cancelled.

The evidence

1. In support of his claim, the defendant swore an affidavit on 12 April 2010. In his affidavit, he recorded that he had been employed by Mr Ha to sell properties that he owned. I assume from the evidence as a whole that in saying that Mr Lal is treating Mr Ha as if he was in fact the plaintiff since it is clear that the sections that he was required to sell were in the same subdivision as the land which is the subject of the present agreement, and the plaintiff was stated to be the vendor. Nothing turns on that however.

2. In his affidavit, the defendant states that Mr Ha persuaded him to enter into the agreement in respect of the land, despite reservations that he expressed. He says that he discussed in some detail with Mr Ha what would happen if he agreed to buy one of the lots in the subdivision and was unable to proceed with the purchase in accordance with the agreement for sale and purchase. He then said:

   Mr Ha was quite clear. He said that if I signed the agreement for sale and purchase and paid a 5% deposit and was unable to proceed with the agreement he would “work it out”. I took from this that he would refund my deposit and cancel the agreement. I said to him in those words “would he refund my deposit and cancel the agreement”. His reply to that was yes we will work it out.

3. Following that discussion, Mr Lal says that he signed the agreement for sale and purchase and paid the deposit of $11,500. Subsequently too he sold a number of sections in the subdivision, and also sold other properties. He was in fact a real estate salesman by profession. In early 2008, he realised that he was not going to be

able to proceed with the agreement. His wife and he separated, and he had considerable obligations with respect to child support. He realised that he would be unable to meet his commitments if he had to take out a loan to complete the purchase. At this stage, he spoke to Mr Ha about his problems. He asked him to refund the deposit and to cancel the contract, as had been agreed. He received in response what he described as Mr Ha’s standard reply of “yes we will work it out”. He explained:

This was a very common phrase that Mr Ha used and I took from his reply that he would refund my deposit and cancel the agreement as we had agreed.

[ 11 ] It was Mr Lal’s evidence that there were a number of discussions in the following months in which Mr Ha had continued to say “yes we will work it out”. He had sent a number of e-mails to him on the subject but could not get a response.

[ 12] When the s 224(c) certificate became available for the subdivision Mr Lal said he became aware that Mr Ha had issued proceedings against some people who had failed to complete their contracts. He did not receive any documents himself and presumed that this was because Mr Ha had agreed that the agreement would be cancelled and the deposit refunded. In the meantime, the market had changed and a number of others were having difficulty completing their agreements. He claimed that he sent Mr Ha an e-mail seeking confirmation that he would not be proceeding against him because the deposit was to be refunded and the agreement cancelled. The e-mail was not produced in evidence because both that and other e-mails that he sent were unavailable to him because he was subsequently dismissed from the plaintiff’s employment and the e-mails had been stored on his work computer.

[13] On 25 March 2010, having been served with the application for summary judgment, Mr Lal wrote to Mr Ha by e-mail in the following terms:

Hi Don ! How are you ? My buyer for lot 13 their finance didn’t stacked I am still working hard to fabricate some buyers, I have done the designing and organise the contracter his happy to help me, settling him when house and land package settling. I would like to request you for bit of time. I‘ve been derailed some serious health issues I need 6 month at least if I manage to wrap things earlier and we settle it earlier too. You know Don I did told you very long time ago that I may not be able to carry on with this section because my matrimonial issues and I brought to attention when you gave me Debrah place, and Hall ave to sell. And also I did reminded you couple of

time by email and you didn’t responded me. Last year you when were holding my commission and didn’t had any money to buy present for my boys on their birthday and on Christmas as well. God bless never happen to anyone. Don is any of yours sold yet. I look forward to hear from you. Cheers Satish.

[ 14] Mr Ha denied that he had ever agreed that the plaintiff would cancel the agreement and refund the deposit. He emphasised Mr Lal’s experience as a real estate agent, and the absence of any provision in the agreement for sale and purchase reflecting the alleged agreement to cancel. He also noted that the e-mail that Mr Lal had sent on 25 March 2010 referred to a purchaser that Mr Lal had evidently endeavoured to arrange for the property.

Discussion

[15] Mr Meyrick submitted that it is clear that the defendant believed that Mr Ha had agreed that the contract for the purchase of the section would be cancelled. He argued that there was plainly a factual dispute and that the issue came down to a question of credibility that could only be resolved after a substantive hearing in which there was an opportunity for cross-examination of Mr Ha and Mr Lal. In the circumstances, the summary judgment procedure was inappropriate.

[ 16] I accept that Mr Meyrick is right to contend that the issue turns on a question of credibility. However, I consider that there is sufficient in the facts before the Court for that issue of credibility to be resolved, with little difficulty, against the defendant. While, as a general rule, the Court will not attempt to resolve genuine conflicts of evidence in the context of a summary judgment application, or to assess issues of credibility on the basis of affidavit evidence, nevertheless the Court must scrutinise affidavits on which the parties rely to see if they pass what was described as the “threshold of credibility” in Eng Mee Yong v Letchumanan[1] quoted with approval by Somers J in Pemberton v Chappell.[2] In the former, Lord Diplock said, at 341:

[1] Eng Mee Yong v Letchumanan [1980] AC 331, 341.

[2] Pemberton v Chappell [1987] 1NZLR 1.

Although in the normal way it is not appropriate for a Judge to resolve
conflicts of evidence on affidavit, this does not mean that he is bound to

accept uncritically, as raising a disputed fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be.

[ 17]          The defendant’s evidence in this case is in my view both inconsistent with the documents and inherently improbable. The agreement for sale and purchase was executed on 23 August 2007. According to Mr Lal this was after he had had a discussion with Mr Ha in which the latter said that if he was unable to proceed with the agreement, then Mr Ha would “work it out”, and had agreed that the deposit would be refunded and the agreement cancelled. Given that Mr Lal was a real estate agent and therefore familiar with the rights and obligations arising under agreements for sale and purchase, it is inconceivable that if that was the arrangement of the parties, it would not have been stipulated in the agreement. Further, the defendant is unable to point to any written evidence, even independent of the terms of the agreement itself, which substantiate his allegation that there was any agreement that the agreement for sale and purchase would be cancelled and the deposit returned. This is so, despite the fact that the defendant had a solicitor acting for him in respect of the transaction and who received, on his behalf, a copy of the s 224(c) certificate (letter dated 23 September 2009), a copy of the Certificate of Title (letter dated 9 October 2009) and a settlement notice served on 19 October 2009. Proceedings were then issued in December 2009 and served early in the New Year. It was not until filing notice of opposition to the application for summary judgment on 12 April 2010 that the defendant raised the alleged agreement as to cancellation.

[ 18]          In the meantime, the defendant had written to Mr Ha in terms of the e-mail dated 25 March 2010. Once again, there is no mention of any agreement as to cancellation. Even if the absence of any other written record of the alleged agreement could in some way be explained, it is inconceivable, if there was such an agreement, that it would not have been referred to in the e-mail of 25 March. The terms of that e-mail are not expressed in perfect English, but the sense of it is easy enough to discern. It is plain that the defendant had been negotiating for the on-sale of the property, but his purchaser was not able to proceed. Rather than asserting that he had no need to settle the agreement with the plaintiff, Mr Lal sought more time in which he could complete the purchase. In alluding to the previous discussions,

Mr Lal mentioned not the agreement now alleged that the transaction would be cancelled, merely that he had indicated a long time ago that he might not be able to carry on with the purchase. It was of this that he had reminded Mr Ha “a couple of times” by e-mails to which he had received no response.

[ 19] Mr Meyrick submitted that, on the basis of Mr Lal’s evidence that Mr Ha used the expression “we will work it out” regularly. The question of whether Mr Lal was entitled to take from the use of those words that Mr Ha agreed that in the event of Mr Lal being unable to complete the purchase the agreement would be cancelled, was a matter, he argued, that could not be determined without cross-examination. However, even if those words are of uncertain ambit, the significant fact is that when Mr Lal wrote his e-mail to Mr Ha on 10 March 2010 the language he used was of having told Mr Ha “I may not be able to carrying on ...”. This falls well short of demonstrating a clear intention on the part of the parties to terminate the agreement of 23 August. As Mr Moodley pointed out, such an intention must be shown where it is sought to assert that a contract has been discharged by agreement.[3] Consequently, even if there had been discussions in which Mr Ha and Mr Lal used the words which Mr Lal now asserts were used, that would not in my view establish a mutual intention that the contract should be cancelled.

[3] Morris v Baron & Co [1918] AC 1; Shand v Gardner Hotels Ltd (2004) 5 NZCRP 467.

1. In all the circumstances, I am satisfied that the defendant has no defence to the plaintiff’s claim.

Result

1. The plaintiff’s application for summary judgment is granted and there is an order for specific performance requiring the defendant to complete settlement of the agreement to purchase the property described as Lot 13, Deposited Plan 417695 contained and described in Certificate of Title 468308 (North Auckland Registry).

2. I note that if that relief could not be granted the plaintiff sought as an alternative an inquiry into damages, and the application for summary judgment sought the entry of judgment “in terms of the statement of claim”. I assume that, having ordered specific performance, nothing further is required and I note that in his written submissions, Mr Moodley simply sought that the Court make an order for specific performance.

[23] The plaintiff is also entitled to its costs calculated on a Category 2 Band B basis.