Nie v Chen

[2017] NZHC 1635

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV 2017-404-000976

[2017] NZHC 1635

BETWEEN

XIAOFANG NIE

Applicant

AND

YUAN CHEN

Respondent

Hearing:	17 July 2017
Appearances:	I M Hutcheson for the Applicant MSP Pang for the Respondent
Judgment:	17 July 2017

ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

XIAOFANG NIE v YUAN CHEN [2017] NZHC 1635 [17 July 2017]

[1]    The respondent (Mr Chen) owns a property at 36 Taikata Road, Te Atatu Peninsula (the property). The applicant (Mr Nie) has registered a caveat against the title to the property. His application to this Court seeks an order that caveat remain.

Background

[2]    The parties entered into an agreement for sale and purchase dated 19 January 2015. Relevant details included:

(a)Mr Chen was the vendor and Mr Nie was the purchaser.

(b)The address was 36A Taikata Road, Te Atatu Peninsula.

(c)The purchase price was $445,000 and a deposit of $30,000 was paid by Mr Nie.

(d)The balance of the purchase price was to be paid or satisfied on 15 April 2015 or five working days whichever is later.

(e)The purchase was subject to a new title issuing.

(f)Clause 9.8 provided that if the agreement was subject to any conditions then unless otherwise expressly provided any condition not fulfilled by the date for fulfilment entitled either party to avoid the agreement by giving notice to the other and Mr Nie was entitled to the immediate return of the deposit.

(g)Clause 18 provided that if notice of satisfaction of the condition on title issue was not given by 4:00pm on 31 July 2015 then Mr Nie may cancel the agreement and would then be entitled to repayment of his deposit.

(h)Clause 19 provided that Mr Chen, upon receipt of a building consent application from Mr Nie, should forthwith submit the same in order to obtain a building consent.

(i)The deposit was to be held in the Barfoot and Thompson’s trust account until title issued.

(j)Mr Chen warranted not to put any covenants on the title to the property.

[3]    Mr Nie paid the deposit. On 3 June 2015 he registered a caveat over 36 Taikata Road.

[4]    Letters from Auckland Council dated 17 and 19 February 2016 regarding the proposed subdivision of 36 Taikata Road, advised:

(a)On 17 February 2016 an engineering plan had been approved for a shared driveway; and

(b)On 19 February 2016 an exemption from obtaining a building consent had been approved.

[5]    On 6 March 2017 Mr Chen’s solicitors wrote purporting to cancel the agreement, and by letter dated 22 March 2017 those solicitors proposed the return of the deposit and the removal of the caveat. Mr Nie’s solicitor responded advising that Mr Nie considered the agreement still to be valid and that he would not withdraw his caveat.

Mr Chen’s case opposing the caveat being sustained

[6]    Mr Pang for Mr Chen submits clause 18 of the agreement does not override clause 9.8 which provided either party could, before a sale condition was fulfilled, void the agreement by giving notice to the other – which notice Mr Chen says was given. Mr Chen says he was not able to comply with the clause 18 deadline [of satisfying the condition on title issue by 31 July 2015] and therefore was entitled to give notice voiding the agreement.

[7]    Mr Pang relies upon the authority of McDonald v Isaac Construction Co Ltd1 wherein the Court held that a caveatable interest may be lost if a contract is lawfully cancelled or if otherwise it is lost due to non fulfilment of a contract condition. In Mr Pang’s submission that because title did not issue by 31 July 2015 as required, the contract then was able to be cancelled, as occurred by the notice given by Mr Chen’s lawyers.

[8]    Also, Mr Chen deposed to having informed Mr Nie that he no longer had the financial capability of subdividing the land after entering into the sale agreement. However and even if Mr Chen did breach clause 9.8.2 which required him to do all things which may reasonably be necessary to enable the fulfilment of a condition, a breach of that provision does not, Mr Pang submits, support a caveatable interest in favour of Mr Nie.

[9]    Mr Pang’s alternative submission is that the agreement is void ab initio because it fails to satisfy the requirements of the Property Law Act 2007 (the Act). Section 24 of the Act provides:

A contract for the disposition of land is not enforceable by action unless –

(a)the contract is in writing or its terms are recorded in writing; and

(b)the contract or written record is signed by the party against who the contract is sought to be enforced.

[10]Section 25 provides:

A disposition of any of the following must be in writing and signed by the person making the deposition –

(a)an existing interest in land acquired by taking possession of the land;

(b)an existing legal or equitable interest in land; and

(c)an existing or equitable interest in a mixed fund consisting partly of land and partly of other property.

1 [1995] 3 NZLR 612, 619.

[11]   It is the case for Mr Chen that their agreement refers to a property address which was not the same as that owned by Mr Chen and therefore any address that is not 36A Taikata Road, must be excluded.

[12]   Mr Pang submits that neither Mr Nie nor Mr Chen can locate a section or plot of land that matches the description of 36 Taikata Road.

[13]   Mr Pang also submits that there is nothing in the agreement that makes a suggestion of any sort that 36A Taikata Road is to be subdivided from the property that is currently the subject of the caveat; that there are no plans attached to the agreement showing where the proposed subdivided property is, and there are no descriptions of any kind stating which lot or where the property is derived from.

[14]   Finally, it is the case for Mr Chen that Mr Nie’s purpose by this application, is not made in good faith. Although Mr Nie says he remains ready, willing and able to settle the purchase, Mr Pang submits that no evidence has been provided supporting that claim and therefore the Court should exercise its discretionary equitable jurisdiction to refuse Mr Nie’s application. Also, if an order is made sustaining the caveat that means the contract would remain in force until Mr Nie cancelled it – but that does not ensure any foreseeable outcome of the parties’ dispute.

Further evidence

[15]   A response affidavit was provided by Mr Chen although no Court direction had been made to permit it. That evidence is opposed by counsel for Mr Nie. By that additional evidence Mr Chen disputes claims that it was the 36 Taikata Road property that was to be subdivided.

[16]   In the Court’s view Mr Chen’s additional affidavit can be read although the Court does not consider it adds any significant value to the matters for consideration.

Considerations

[17]   There is no doubt a purchaser of land to be subdivided can lodge a caveat over the land to be subdivided to protect the interest created by a sale and purchase

agreement. The clear evidence in this case is that Mr Nie was the direct purchaser from Mr Chen.

[18]   Considerable effort has been made on behalf of Mr Chen suggesting there are issues concerning the identity of the land it was agreed should be sold.

[19]   The clear evidence is Mr Chen was the registered proprietor of 36 Taikata Road, Te Atatu Peninsula. The Court does not accept therefore claims that the agreement for sale and purchase has “no nexus” to that property Mr Chen owned or that indeed “36A” Taikata Road, “does not exist and cannot be located or identified”.

[20]   The clear inference to be drawn is that the land in question agreed to be sold comprised part of that property at 36 Taikata Road. There is no requirement that the land be identified with clinical precision so long as it is adequately identified.

[21]   Acceptable evidence given by Mr Nie is that before entering into the agreement the agent took him to 36 Taikata Road and had told Mr Nie that the property was in the process of being subdivided. Mr Nie says he was given a draft plan showing the area he could purchase, although he no longer has that plan. Mr Nie said the area marked on the draft plan was the rear of the property at 36 Taikata Road; that he would not agree to purchase some other unknown piece of land elsewhere.

[22]   Also the Court has evidence of letters from Auckland Council granting various consents relating to 36 Taikata Road and referring to the subdivision of the rear section of that property.

[23]   The Court agrees there is ample evidence to satisfy the Court of the intention of the parties and that the land intended to be conveyed pursuant to the agreement for sale and purchase was the rear portion of the property at 36 Taikata Road, Te Atatu Peninsula.

Summary

[24]   In this case the rights of the parties’ ought not be determined upon an application for removal of a caveat.

[25]   The Court is satisfied there is a reasonably arguable case to sustain the caveat; that Mr Nie’s rights would be prejudiced by the removal of that caveat; and therefore it ought to be sustained pending further order of the Court.

Judgment

[26]   The application to sustain Caveat 10082924.1 over 36 Taikata Road, Te Atatu Peninsula is granted.

[27]   Mr Chen shall pay Mr Nie’s costs calculated on a 2B basis, together with disbursements approved by the Registrar.

[28]   The Court directs Mr Nie to file a proceeding in the High Court by 27 October 2017 by which he seeks orders to enforce his claims of a right of the transfer of the property he has, by this application, secured his right of a caveatable interest.

Associate Judge Christiansen