Peng v Chan - [2024] NZHC 554

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-2155

[2024] NZHC 554

BETWEEN
YAO WEI PENG also known as YAOWEI PENG

First Appellant

MACMURRAY INVESTMENT LIMITED
Second Appellant

AND

SHU-LI CHAN, CHI-LAUNG KO and

FEN-YING KUO KO as trustees of the Kofu Family Trust and LISA CHIA-CHUAN KO and JEREMY CHI-HUA TSAI as trustees of the Chihua Family Trust

Respondents

Hearing: 13 March 2024

Appearances:

C L Holland for Appellants K A K Koo for Respondents

Judgment:

15 March 2024

JUDGMENT OF O’GORMAN J

This judgment was delivered by me on 15 March 2024 at 11 am pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

…………………………………

Solicitors:
Righteous Law Ltd, Auckland KooTelle Lawyers Ltd, Auckland

PENG v CHAN [2024] NZHC 554 [15 March 2024]

[1] This is an appeal under pt 20 of the High Court Rules 2016 of an oral judgment of Judge M-E Sharp issued on 27 July 2023.1 The Notice of Appeal is dated 17 August 2023.

[2] In addition, on 20 October 2023, the appellants sought a stay pending appeal under r 20.10, seeking to stay execution of the District Court judgment. Those issues will now be superseded by the substantive determination of this appeal.

Approach on appeal

[3] General appeals from the District Court are by way of rehearing.2 On appeal, the High Court may “make any decision it thinks should have been made”,3 coming to its own conclusion on the merits of the case and, if appropriate, substituting its decision for that of the District Court.4 It can also direct the District Court to rehear the proceedings, to consider or determine any matter that the High Court directs or to enter judgment for any party that the High Court directs.5

Factual background

[4] The dispute relates to the failure by the appellants as purchasers to pay an agreed deposit instalment for the purchase of 4 MacMurray Road, Remuera, Auckland (the Property). Following an auction, on 7 October 2021 the first appellant signed the unconditional sale and purchase agreement (the agreement). On 13 June 2022 it nominated the second appellant as purchaser.6

[5] The purchase price under the agreement is $5,550,000. A five per cent deposit ($277,500) was payable immediately on the agreement becoming unconditional. That initial deposit was duly paid.

1      Chan v Peng [2023] NZDC 15963.
2      District Court Act 2014, ss 124 and 127.
3      Section 128(1)(a).
4      Austin, Nichols & Co Ltd v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].
5      District Court Act, s 128(1)(b).
6      Among other things, this would engage the obligation in s 136 of Companies Act 1993 not to agree to the company incurring an obligation unless the director believes at that time on reasonable grounds that the company will be able to perform the obligation when it is required to do so. Mr Peng is a director of the second appellant.

[6] The agreement was subsequently…

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: [2024] NZHC 554
Decision Date: 15 March 2024

CaseChat Overview and Summary

Peng v Chan involved an appeal by the appellants, Yao Wei Peng and MacMurray Investment Limited, against the District Court's judgment ordering them to pay a deposit instalment for the purchase of property. The dispute centred around the appellants' failure to pay a deposit instalment as per the sale and purchase agreement. The High Court was tasked with determining whether the appellants had a valid defence of impossibility or any other grounds that could prevent the enforcement of the District Court's judgment.

The court examined the legal principles regarding the enforceability of deposit payments in real estate transactions, including the distinction between the deposit as part payment and as an earnest. It also reviewed the appellants' argument that the terms of the agreement had become impossible to perform due to financial difficulties and the impossibility defence in the context of specific performance orders. The court found that the appellants had not provided sufficient evidence to substantiate their claims of impossibility or inability to pay the deposit sums. The court concluded that the appellants' actions, such as lodging a caveat over the property, contradicted their assertion of being unable to perform the contract.

The High Court dismissed the appeal and the application for a stay, affirming the District Court's judgment. It awarded the respondents costs on a 2B basis, allowing for negotiation between the parties. If the parties could not agree on the costs, the respondents could file a memorandum within 10 working days of the judgment, with the appellants having a further 10 working days to respond.

Orders