Sunnyside 2019 Limited v Li

[2025] NZHC 214

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1776 [2025] NZHC 214

BETWEEN

SUNNYSIDE 2019 LIMITED

Plaintiff

AND

SHENG LI

Defendant

Hearing:

13 February 2025

Counsel:

S Tee for the Plaintiff

J Phillips for the Defendant

Date of Judgment:

19 February 2025

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 19 February 2025 at 2 pm.

Pursuant to Rule 11.5 of the High Court Rules.

…………………..

Registrar/Deputy Registrar

Solicitors:

Morton Tee Limited, Auckland Tompkins Wake, Auckland

SUNNYSIDE 2019 LTD v LI [2025] NZHC 214 [19 February 2025]

Introduction

[1]    The plaintiff, Sunnyside 2019 Ltd (Sunnyside), subdivided a rural property in Coatesville into four lots. By a contract dated 12 July 2022 (the contract), Sunnyside sold one of the proposed lots to the defendant, Sheng Li (Mr Li), before titles had issued.

[2]    The lot was described in the contract as lot 4 with reference to a provisional plan of subdivision attached to the contract and by reference to its area (the property). There has never been any misunderstanding between Sunnyside and Mr Li regarding the land that was the subject matter of the contract.

[3]    When the subdivision plan was deposited with Land Information New Zealand, and titles issued, the property was designated as lot 3 on the deposited plan. The surveyors had altered the numbering of the lots. The property (now lot 3) otherwise remained the same.

[4]    The neighbouring property in the subdivision was lot 3 on the provisional plan attached to the contract. That neighbouring property was designated as lot 4 on the deposited plan.

[5]    In the lead-up to the settlement date, Sunnyside’s solicitors mistakenly assumed that the record of title for the neighbouring property, lot 4 on the deposited plan, was the relevant title for the property. It was not. The relevant record of title for the property was for lot 3 on the deposited plan.

[6]    Sunnyside’s solicitors issued a settlement statement which referred to “Lot 4”. That was a correct reference to the description of the property in the contract, but an incorrect reference to the lot on the deposited plan.

[7]    Mr Li did not settle. Sunnyside’s solicitors issued a settlement notice which incorrectly referred to the record of title for the neighbouring property, lot 4, on the deposited plan. Mr Li did not respond to the settlement notice. Sunnyside cancelled the contract and re-sold the property.

[8]    In these proceedings, Sunnyside seeks summary judgment for the loss on the re-sale and related losses. Mr Li applies for summary judgment for the return of his deposit, claiming that it was futile for him to tender the settlement sum and Sunnyside repudiated the contract.

[9]    The dispute between the parties arises from the mistake by Sunnyside’s solicitors in identifying the relevant record of title for the property. This raises two issues:

(a)Was Sunnyside ready, willing and able to settle the contract on the settlement date and when Sunnyside purported to cancel the contract?

(b)Did Mr Li make a valid objection to the title entitling him to cancel?

Summary judgment principles

Plaintiff ’s summary judgment

[10]   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.1

[11]   The leading authority on  applications  for  summary  judgment  is  Krukziener v Hanover Finance Ltd.2 The Court of Appeal set out the following principles:3

(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.

1      High Court Rules 2016, r 12.2(1).

2      Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162.

3 At [26].

(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.

[12]   To successfully oppose the application, the defendant must lay a proper evidential foundation for the defence in the affidavits filed in support.4

Defendant’s summary judgment

[13]   The Court may enter judgment against a plaintiff if satisfied that none of the causes of action in the plaintiff’s statement of claim can succeed.5

[14]The test is set out by the Court of Appeal in Stephens v Barron:6

(a)The defendant has the onus of proving on the balance of probabilities that the plaintiff cannot succeed. Usually this will arise where the defendant can offer evidence which is a complete defence to the plaintiff’s claim.

(b)An application for summary judgment will be inappropriate where there are disputed issues of material fact or where material facts need to be ascertained by the Court and cannot confidently be concluded from affidavits. It may also be inappropriate where ultimate determination turns on a judgment able to be properly arrived at only after a full hearing of the evidence.

(c)The Court must be satisfied that none of the claims can succeed. It is not enough that they are shown to have weaknesses. The assessment is not to be arrived at on a fine balance of the available evidence as would be appropriate at a trial.

(d)The residual discretion of the Court to refuse summary judgment would be properly invoked to avoid the oppression which would otherwise result if an application by a defendant for summary

4      Middleditch v New Zealand Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.

5      High Court Rules, r 12.2(2).

6      Stephens v Barron [2014] NZCA 82, (2014) 21 PRNZ 734 at [9], citing Westpac Banking Corp v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA) (footnotes omitted).

judgment would pre-empt a plaintiff exercising the right to amend the pleadings.

(e)Summary judgment should not be applied for unless the substantive merits of the case are clear and capable of summary disposal.

Was Sunnyside ready, willing and able to settle the contract on the settlement date and when Sunnyside purported to cancel the contract?

Legal principles

[15]   In Bahramitash v Kumar,7 the Supreme Court confirmed the applicable principles when a court must assess whether it was futile for a purchaser to tender settlement to the vendor:

(a)The vendor’s obligation to convey the property is interdependent with the purchaser’s obligation to pay the price in accordance with the contract.8

(b)It is the purchaser who begins the process of settlement by tendering the settlement sum.9

(c)If there has been a proper tender by the purchaser, followed by the vendor exhibiting an inability or unwillingness to deliver the title and other documentation required to complete the conveyance, then the vendor can be shown to have breached the obligation to convey the property.10

(d)It is not always necessary for a purchaser to tender settlement. If the vendor, by words or conduct, indicates that a contractually proper tender by the purchaser would be futile then the vendor cannot treat the purchaser as being in default by failing to make such a tender. The vendor will be taken to have indicated that they are  not ready,  willing

7      Bahramitash v Kumar [2005] NZSC 39, [2006] 1 NZLR 577.

8 At [16].

9 At [17].

10 At [17].

and able in all material respects to perform the vendor’s settlement obligations.11

(e)A conclusion that tendering the settlement sum would have been futile is not one lightly drawn. It is for the purchaser to prove, judged objectively when tender was due.12

(f)The futility of the tender must be shown to have been a foregone conclusion. It must be shown that, without any real doubt, the vendor would either have refused to settle or was unable to do so.13

[16]   The Court of Appeal has confirmed that the underlying principle is estoppel, arising from a representation made by or on behalf of the vendor that a tender of settlement by the purchaser would be futile.14

[17]   In Karangahape Road International Village Ltd v Holloway,15 the High Court considered the issue of whether a vendor was ready, willing and able to settle in the context of an error in the contractual description of the property to be conveyed. The contract omitted to include reference to a strip of land contained within a discreet title (the strip of land) intended to be conveyed, together with the bulk of the land in another title which was referred to in the contract. The mistake was mutual to the vendor and the purchaser.

[18]   Chilwell J was satisfied that if the error in the contract had been discovered before settlement then the memorandum of transfer from the vendors to the purchaser would have been amended to reflect their common intention that the strip of land was included in the property to be conveyed. It was within the power of the vendors, if they had notice of the error, to transfer both unencumbered titles to the purchaser, including the title to the strip of land.16

11 At [18].

12 At [20].

13 At [20].

14     Official Assignee v Kingston Developments Group Ltd [2016] NZCA 415, (2016) 17 NZCPR 531 at [95].

15     Karangahape Road International Village Ltd v Holloway [1989] 1 NZLR 83 (HC).

16     At 105.

[19]   Chilwell J held that the vendors were ready, willing and able to settle at the material times. The vendors were willing to transfer title to the strip of land and there was no impediment to doing so. The physical title was available in the vendor’s solicitor’s office and the memorandum of transfer could have been amended.17

[20]   An error in a settlement statement or a settlement notice does not axiomatically require a finding that the party giving the settlement statement or the settlement notice is not ready, willing and able to settle. The Court must consider all of the circumstances.18

[21]   There is no prescribed form for a settlement notice making time of the essence for performance of a purchaser’s obligations. The notice must state with reasonable explicitness what is required to be done, give a reasonable time in which to do it, and make it clear that if it is not done then the party giving the notice will have the right to cancel the contract.19

Mr Li’s argument

[22]   Mr Li argues that Sunnyside was insisting on conveying the neighbouring property rather than the property that was the subject of the contract, and that Sunnyside persisted in doing so after the mistake in identifying the correct property was drawn to its attention on the settlement date. On that basis, it was submitted that: it was futile for Mr Li to tender settlement; Sunnyside was not ready, willing and able to settle; the settlement notice was invalid; and Sunnyside repudiated the contract.

Analysis

[23]   On 7 August 2023, Sunnyside’s solicitors, Armstrong Murray, emailed Mr Li’s solicitors, DAU Lawyers (DAU), confirming that title for the property had issued. Although not obliged to do so, Armstrong Murray attached a copy of Record of Title 1136293, which was the title for the neighbouring property, lot 4 on the deposited plan.

17 At 106.

18 For examples where a vendor settlement notice was valid despite a mistake, see Howe v Dempsey [2013] NZHC 2297, (2013) 15 NZCPR 682 at [58]; and Yu v Bradley [2020]  NZHC  1822, (2020) 21 NZCPR 220 at [75]–[78]. For an example where a vendor settlement statement was valid despite a mistake, see Johal v Stariha (2005) 6 NZCPR 230 (HC) at [24].

19 D W McMorland Sale of Land (4th ed, Cathcart Trust, Auckland, 2022) at [12.5].

The correct record of title for the property was RT 1136292, for lot 3 on the deposited plan.

[24]   The email called for settlement on 14 August 2023 in accordance with the contract. Although Armstrong Murray mistakenly identified the wrong record of title for the property, there is no evidence of any misunderstanding by Sunnyside regarding the property to be conveyed. Jacqueline Cross (Ms Cross), a legal executive employed by Armstrong Murray, supervised the conveyancing. She says that Armstrong Murray’s instructions were to convey the property that was the subject of the contract.

[25]   On 8 August 2023, Armstrong Murray emailed DAU the settlement statement. The settlement statement did not refer to the record of title. It referred to the property as “Lot 4, 94 Mahoenui Valley Road, Coatesville”, consistent with the description of the property in the contract. The settlement statement met the requirements prescribed in cls 3.5 and 1.1(32) of the contract.

[26]   Under the contract, the purchaser was responsible for creating the Landonline Workspace and preparing the electronic transfer instrument. DAU did not do so, and on 10 August 2023, Armstrong Murray and DAU agreed that Armstrong Murray would create the e-dealing number.

[27]   Mr Li’s evidence confirms that by 10 August 2023, he was aware that Armstrong Murray had forwarded the wrong title to DAU on 7 August 2023. However, Mr Li and DAU did not raise the issue.

[28]   DAU had not prepared the electronic transfer instrument, as required by the contract. On 10 August 2023, Armstrong Murray emailed DAU confirming the e-dealing number and asking DAU to enter the transferee details in the transfer instrument.

[29]   DAU did not do so. In the morning on the settlement date, 14 August 2023, Armstrong Murray emailed DAU advising that Armstrong Murray had entered the transferee details in the electronic transfer instrument, asking DAU to advise if they subsequently altered it. There is no direct evidence that Armstrong Murray inserted

the wrong record of title reference in the transfer instrument, but that inference can be drawn.

[30]   Later on 14 August 2023, Armstrong Murray emailed DAU confirming that Sunnyside was ready, willing and able to settle, and seeking an update on settlement. DAU responded that afternoon, by an email that appears to incorporate verbatim a communication from Mr Li to DAU, as follows:

1. Incorrect Section Identification in Settlement Document: The settlement document provided to us displays an incorrect section number, not in line with the section I originally signed the purchase agreement for.

[31]   The reference to a “Settlement Document” was not explained in Mr Li’s affidavit evidence. It may have been a reference to the settlement statement or the record of title for the neighbouring property, or both. Most likely, it was a reference to the settlement statement.

[32]   DAU’s email also raised an issue with the earthworks, and then concluded with the following comments, which also appear to be verbatim from Mr Li:

Due to substantial shifts in bank financial and lending conditions since the inception of the agreement, we are no longer in a position to proceed with the purchase.

Given the aforementioned reasons, we kindly request the cancellation of the Sale and Purchase Agreement.

[33]   Armstrong Murray responded by email serving the settlement notice, maintaining that the issues raised by Mr Li did not give him the right to cancel the contract, and confirming that Sunnyside remained ready, willing and able to complete settlement. The settlement notice stated:

THAT you have failed to settle the purchase from Sunnyside 2019 Limited (being all of the land comprised in RT 1136293) on 14 August 2023 pursuant to a written Agreement for Sale and Purchase made between the Vendor and you as the Purchaser dated 12 July 2022 (the Agreement”).

[34]   The settlement notice went on to state what was required to be done, gave a reasonable time in which to do it, and made it clear that if it was not done then Sunnyside had the right to cancel the contract. The reference to the wrong record of

title was in parentheses, denoting additional information, and did not render the settlement notice invalid.

[35]   On 15 August 2023, Armstrong Murray emailed DAU, stating that the earthworks had been inspected and approved by council engineers and again calling for settlement. Regarding the description of the property, Armstrong Murray said:

We are unsure what the “Settlement Document” you refer to is, but in any event, our client denies any suggestion that there has been any material misdescription of any kind.

[36]   DAU did not respond to Armstrong Murray’s emails late on 14 August  and 15 August 2023 or the settlement notice. No explanation was offered for the silence. It would have been a simple matter for DAU to advise Armstrong Murray of the particulars of the correct record of title and to have called for a conveyance of that title. DAU could have amended the electronic transfer instrument already set up in the e-dealing.

[37]   There is no evidence that Armstrong Murray’s mistaken references to the wrong legal lot number in the settlement statement and the wrong record of title for the property in the settlement notice confused or misled Mr Li about the property that he had contracted to purchase. Mr Li had visited the property on 11 August 2023.

[38]   Mr Li’s case is that Sunnyside was insisting that he accept a conveyance of the neighbouring property, which he refused to do, and it was futile for him to tender settlement for the property that was the subject of the contract.

[39]   The emails from Armstrong Murray to DAU between 7 and 14 August 2023 cannot be construed as an indication by Sunnyside that it required Mr Li to purchase the neighbouring property so that it would be futile for Mr Li to tender settlement. There was no such representation, either express or implied, by Sunnyside or its solicitors.

[40]   Mr Li did not rely on any representation by Sunnyside or its solicitors that it would be futile to tender settlement. Mr Li’s comments in the email from DAU to

Armstrong Murray on 14 August 2023 confirm that Mr Li did not have funds to settle. He was seeking Sunnyside’s agreement to a mutual cancellation of the contract.

[41]   If Mr Li had tendered settlement, and Armstrong Murray’s mistaken reference to the wrong record of title had been unequivocally drawn to their attention, then I have no doubt that the e-dealing would have been altered to refer to the correct record of title for the property and Sunnyside would have settled. Ms Cross confirms that Sunnyside was in a position to settle, including a discharge of the mortgage on the property.

[42]   I find that Sunnyside was ready, willing and able to settle the contract by conveying the property on the settlement date, when the settlement notice was issued and when the contract was cancelled by Sunnyside on 1 September 2023.

Did Mr Li make a valid objection to the title?

[43]   The contract was on the ADLS/REINZ standard form agreement for sale and purchase20 and incorporated special conditions.

[44]   The standard form cl 6.2 gave Mr Li the right to give notice of objections or requisitions to the title on or before the fifth working day after receiving notice that title had issued. Special condition 26.3 qualified this right, by excluding any objections or requisitions arising from any alteration or variation to the subdivision plan.

[45]   In this case, the appropriate record of title for the property was RT 1136292. Mr Li did not give notice of any objections or requisitions in respect of that title. Therefore, Mr Li cannot argue that Sunnyside was unable or unwilling to remove or comply with any objection or requisition as to title for the property, which would have entitled Mr Li to cancel the contract under cl 6.2(3)(c) of the contract.

20     Auckland District Law Society and Real Estate Institute of New Zealand Agreement for Sale and Purchase of Real Estate (11th ed, 2022).

Conclusions on liability

[46]   Sunnyside was ready, willing and able to perform the contract on the settlement date, when it served its settlement notice and when it cancelled the contract. The settlement notice was valid and the cancellation lawful. There was no objection or requisition of the title for the property.

[47]   Under cl 11.4 of the contract, Sunnyside was entitled to forfeit and retain the deposit, and to recover loss of bargain damages on the re-sale and the other losses prescribed in cl 11.4.

[48]   Mr Li has raised no issue with the quantum claimed by Sunnyside. Sunnyside is entitled to recover $452,247, comprised of:

(a)$250,000, which is the difference of $335,000 between the price to be paid by Mr Li and the re-sale price, less the deposit of $85,000;

(b)legal costs on re-sale of $2,188.75;

(c)real estate agent’s commission on resale of $32,142.50; and

(d)penalty interest of $167,915.75 from 14 August 2023 to 23 April 2024, calculated at the rate prescribed in the contract on the sum of

$1,615,000 due from Mr Li on the original settlement date.

[49]   In addition, Sunnyside is entitled to interest  on the  sum of $452,247 from  24 April 2024 until the date of payment in full, pursuant to s 10 of the Interest on Money Claims Act 2016.

[50]My preliminary view is that an award of 2B costs is appropriate.

Orders

[51]The plaintiff’s application for summary judgment is granted.

[52]The defendant’s application for summary judgment is declined.

[53]   I enter judgment for the plaintiff against the defendant for the following amounts:

(a)       $452,247; and

(b)interest on $452,247 from 24 April 2024 until the date of payment in full, pursuant to s 10 of the Interest on Money Claims Act 2016.

[54]If the parties are unable to agree on costs then:

(a)the plaintiff may file a memorandum on costs of no more than three pages by 7 March 2025;

(b)the plaintiff may file a memorandum on costs of no more than three pages by 14 March 2025; and

(c)I will then determine costs on the papers.

Associate Judge Brittain