Sutich v Granich
[2022] NZHC 698
•6 April 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-00007/8 [2022] NZHC 698
UNDER the Land Transfer Act 2017 BETWEEN
IGOR GEORGE SUTICH
Applicant
AND
TERENCE JAMES GRANICH
Respondent
Hearing: 17 March 2022 Appearances:
K J Crossland for the Applicant T Allan for the Respondent
Judgment:
6 April 2022
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 6 April 2022 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Shieff Angland, Auckland McElroys, Auckland
SUTICH v GRANICH [2022] NZHC 698 [6 April 2022]
Introduction
[1] Mr Sutich attended the public auction of a residential property at 38 Hattaway Avenue, Bucklands Beach owned by Mr Granich on 8 December 2021. The property was passed in; but Mr Sutich claims that he reached a binding agreement with Mr Granich shortly afterwards to buy the property for $1.85 million. Mr Granich denies that they reached a binding agreement. He has signed a contract to sell the property to another individual, with settlement on 7 April 2022.
[2] Mr Sutich claims a right to specific performance of his claimed contract with Mr Granich. He lodged a caveat against the title of the property.1 Mr Granich applied to the Registrar-General of Land for the caveat to lapse. Mr Sutich applies to this Court for an order that the caveat not lapse. Mr Granich opposes the application.
[3] Mr Sutich must demonstrate that he has a reasonably arguable case for an interest in the property sufficient to support the caveat. Mr Sutich makes two arguments. First, he claims he made an oral agreement with Mr Granich through Mr Granich’s real estate agent shortly after the auction ended. He says that this oral agreement was recorded in a partly signed written agreement that night. Further, he sought to partly perform this agreement by paying the deposit. Second, Mr Sutich contends that Mr Granich is estopped from refusing to sign the written agreement under the doctrine of equitable estoppel because the real estate agent represented to him that they “had a deal”.
[4] Mr Granich rejects that any oral agreement was reached on the night of the auction, maintaining that only Mr Granich, or the auctioneer, could reach a binding agreement to sell the property under auction. Further, when the real estate agent presented an unsigned agreement to Mr Sutich on the night after the auction, and again the following morning, it was an “invitation to treat” and not binding on Mr Granich. Mr Granich denies that the elements for equitable estoppel are made out, especially as it was made clear to Mr Sutich that there was no binding agreement until a written sale and purchase agreement was signed by both parties.
1 Caveat 12331680.1 against record of title NA57C/609.
[5] To decide whether Mr Sutich has demonstrated a reasonable argument to support the caveat, I must consider these issues:
(a)Was a binding contract formed?
(b)If so, is the contract enforceable because it meets the requirements of s 24 of the Property Law Act?
(c)If not, is the contract saved by the doctrine of part-performance?
(d)Is Mr Granich estopped from refusing to sign the contract? That raises three questions:
(i)Did Mr Granich, by words or conduct, encourage a belief or expectation by Mr Sutich that they had an agreement?
(ii)Did Mr Sutich reasonably rely on that representation to his detriment?
(iii)Would it be unconscionable for Mr Granich to depart from that belief or expectation?
Background
[6] On or about 10 November 2021, Mr Granich signed an agency agreement with JT Realty Limited (Ray White Mount Eden) to market and sell the property (Agency Agreement). He decided to sell the property by auction. The real estate agents involved were Matthew Phillips and Ricki Mozessohn.
[7]The Agency Agreement provided:
1.0 Appointment
Terence Granich [“the Client”] appoints J T Realty Limited, a licensed real estate agent, REAA 2008 [“the Agent”] as the Client’s real estate agent for the sale of the property described in the following Property Description [“the Property”]. Pursuant to this Appointment, the Agent is authorised to market the Property, conduct negotiations and to prepare any Sale and Purchase
Agreements, Auction or Tender documents and do all other things as may be necessary or required to give effect to a sale of the Property.
…
4.1 Auction Authority
The Client appoints the Agent to offer the Property for sale by public auction on the Auction Date (8 /12/ 21). If the Property for sale by auction is subject to a reserve price, this must be notified to the Agent in writing prior to the auction. If the Property is sold by public auction, the Client authorises the agent to sign on its behalf the agreement that forms part of the particulars and conditions of sale used by the Agent for conducting the sale by auction.
[8] Through his solicitor, Mr Granich approved the ADLS/REINZ standard form “Particulars and Conditions of Sale of Real Estate by Auction” (Auction Terms). The front page records the details of the auction, the particulars of the property, conditions of sale (including settlement date) and terms relating to the conduct of the auction:
2.0 Conduct of auction
2.1 The property is offered for sale subject to a reserve price and, subject to the reserve price being met, the highest bidder whose bid is accepted by the auctioneer shall be the purchaser.
…
2.6 The vendor may withdraw the property at any time before it has been sold and without declaring the reserve price.
…
2.8 The purchaser shall immediately on the completion of the Auction:
(a) sign the Memorandum of Contract, failing which the auctioneer may sign on behalf of the purchaser;
(b) pay to the vendor’s licensed real estate agent the deposit being 10% of the purchase price unless otherwise agreed; and
(c) complete its GST information in Schedule 1, if applicable.
[9]The Auction Terms contains the following relevant clauses:
19.0Counterparts
19.1 This agreement may be executed and delivered in any number of counterparts (including scanned and emailed PDF counterparts).
…
19.3 This agreement shall not come into effect until each person required to sign has signed at least one counterpart and both vendor and purchaser have received a counterpart signed by each person required to sign.
…
20.0Agency
20.1 If 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.
20.2 The scope of the authority of the agent under subclause 20.1 does not extend to making an offer, counteroffer or acceptance of a purchaser’s offer or counteroffer 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.
…
[10] The penultimate page of the Auction Terms is headed “Memorandum of Contract”. It has space to record the date, purchaser’s name, purchase price and deposit. It has signature blocks for the purchaser or auctioneer and vendor or auctioneer.
[11] The final page has a section headed “Before Bidding at the Auction” which includes the following explanation:
If you are the successful bidder or you sign this agreement before or after the auction this sale will be legally binding on you.
If you are the successful bidder, the auctioneer may sign the Memorandum of Contract on your behalf if you should fail or refuse to do so.
[12] On or about 4 December, Mr Sutich and his partner visited the property with Mr Phillips. They decided they wished to purchase the property.
[13] On 6 December, Mr Sutich requested in writing the right to bid on the property on the Auction Terms, with variations to the deposit amount and settlement date. Mr Granich agreed to these variations on 7 December (the Side Agreement).
[14] On 7 December, Mr Granich also completed and signed the “Auction Reserve Setting Form” (Auction Reserve Authority). He set the confidential reserve at
$1.90 million and authorised John Bowring, the auctioneer, to bid on his behalf. There
is a space on the form for the vendor to specify the vendor(s) who will be present at the auction with authority to amend the reserve and sign any amendment on behalf of the vendor(s). That part of the form was not completed by Mr Granich.
[15]In this form Mr Granich also agreed:
In accordance with the Auction Terms and Conditions and subject to meeting or surpassing the written reserve the Auctioneer may sign and therefore create a binding contract on behalf of the vendor/s.
[16] On 8 December 2021, the auction took place. Mr Sutich attended by phone from a restaurant with Mr Phillips on the phone at Ray White’s offices. By about 7 pm, Mr Sutich was the highest bidder at $1.65 million, but this did not meet the reserve. Mr Bowring paused the auction to enable the real estate agents to talk to Mr Sutich. Following this, Mr Sutich increased his bid to $1.80 million. Mr Bowring resumed the auction and advised the attendees that Mr Sutich had increased his offer to $1.80 million and called for new bids. There were no further bids and the property was passed in without meeting the reserve.
[17] Negotiations continued between Mr Granich and Mr Sutich, through the real estate agents. Mr Sutich deposes that after the auction ended, at 7.30 pm, Mr Mozessohn called him and introduced himself as Mr Phillips’ colleague. Mr Sutich deposes that he informed Mr Mozessohn, or Mr Phillips, that he increased his offer to $1.82 million, on the proviso that the price remained confidential.
[18] Mr Granich deposes that Mr Mozessohn conveyed this offer to him. He rejected it, but informed Mr Mozessohn that he would be willing to sell the property for $1.85 million.
[19] According to Mr Sutich, at 8.46 pm, Mr Mozessohn called and advised him that Mr Granich was willing to lower reserve to $1.85 million and if he would agree to pay that amount “we would have ourselves a deal”. Mr Mozessohn disputes that he said this. Mr Sutich deposes that he verbally “accepted this vendor’s decreased reserve and accepted $1.85 million.”
[20] At about 9.19 pm, Ray White sent Mr Sutich the approved Auction Terms with the price of $1.85 million inserted and the deposit according to the Side Agreement, by Docusign. Mr Granich states that neither Mr Phillips or Mr Mozessohn liaised with him before sending Mr Sutich this document, and he did not view it. Mr Sutich, meanwhile, says he opened the document but could not download it by Docusign to sign it that night.
[21] Mr Phillips called Mr Sutich at 9.47 pm to ask if he had signed the Auction Terms. Mr Sutich says that he explained his difficulty downloading and reassured him that he would do so in the morning.
[22] The next morning Mr Phillips and Mr Sutich spoke on the telephone. Mr Phillips deposes that Mr Sutich informed him that he had by then viewed the document sent the night before and that he wanted a confidentiality clause included. There is a dispute about whether Mr Sutich mentioned this to Mr Mozessohn the night before, but that does not matter.
[23] At 9.14 am, Ray White sent Mr Sutich an ADLS/REINZ standard form “Agreement for Sale and Purchase of Real Estate” recording the purchase price of
$1.85 million and deposit as per the Side Agreement (the Sale and Purchase Agreement) with the confidentiality clause inserted as Further Term 29.0. At 11.32 am, Mr Sutich signed the document via Docusign and returned it to Ray White.
[24] At 12.17 pm Mr Phillips emailed Mr Sutich’s “unconditional offer” to Mr Granich’s solicitor, Roxanne Stevenson at Dawsons Lawyers. Mr Granich was copied into the email. He deposes that he did not read the offer as he was waiting for Ms Stevenson to review it and advise him.
[25] In the meantime, another interested party introduced to Mr Granich through a friend, Mr Fadida, visited the property. Mr Fadida made Mr Granich an offer for
$1.95 million. After taking legal advice, Mr Granich accepted this offer. Mr Granich and Mr Fadida signed an unconditional agreement for sale and purchase prepared by Mr Phillips that night at around 6.45 pm.
[26] Prior to that, at 6.05 pm, Mr Phillips called Mr Sutich to advise him that Mr Granich was not going to sign the agreement as he had decided to accept another offer.
[27] On 13 December 2021, Mr Sutich, by his solicitors, required Mr Granich to notify the later purchaser of the property of his claim on it.
[28] On 15 December 2021, Mr Sutich registered the Caveat over the Property worded as follows:
Pursuant to a partially signed written agreement recording the terms of oral agreement formed by the caveator accepting the registered owner's offer made on the registered owner's behalf by his agent Ray White Realtor (Mt Eden office) on 8 December 2021 and for which the caveator sought to perform by payment of the deposit stipulated in the written sale and purchase agreement sent to the caveator which he signed to confirm his acceptance of the offer made by the registered owner's agent and, further pursuant to a claim for equitable estoppel arising from the registered owner unconscionably seeking to abnegate his represented offer by Ray White to sell the property to the caveator which the caveator reasonably and detrimentally relied on.
Legal principles
[29] An application to sustain a caveat is determined on summary basis in which the Court has regard to the following principles:2
(a)The applicant caveator bears the onus of demonstrating that they have an interest in the land sufficient to support a caveat. However, they need not establish that definitively. It is enough if they present a reasonably arguable case.
(b)The process by which these applications are determined is ill-suited to resolving disputed questions of fact. An order for a caveat’s lapse will only be made if it is patently clear it cannot be maintained — either because there was no valid ground for lodging it in the first place or, alternatively, that such ground has now ceased to exist. A conflict
2 Botany Land Development Ltd v Auckland Council [2014] NZCA 61, (2014) 14 NZCPR 813. See also Philpott v Noble Investments Ltd [2015] NZCA 342.
between affidavits will generally be resolved in the caveator’s favour.3 However, the Court is not bound to accept uncritically statements in an affidavit that are equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable.4
(c)Where the applicant has discharged its burden, the Court retains a residual discretion to remove the caveat. The Court will exercise this discretion cautiously and must be satisfied removal would not prejudice the caveator’s legitimate interest.5
[30]I will now consider each of the issues raised.
Was a binding contract was formed?
[31] Mr Sutich claims that a binding contract was reached between he and Mr Granich at 8.46 pm on 8 December. That was when he orally accepted Mr Mozessohn’s advice that Mr Granich was willing to lower his reserve to
$1.85 million and that if Mr Sutich agreed to pay that price there would be a deal.
[32] Mr Sutich contends that all other terms were already agreed through the signed Side Agreement which amended the Auction Terms he had accepted before participating in the auction. Further, the Auction Terms sent by Ray White later that night recorded the oral agreement he and Mr Granich had reached, through Mr Mozessohn.
[33] Mr Sutich claims that the property is deemed to have been sold at auction by virtue of s 36ZA of the Fair Trading Act 1986. This section provides that if the auctioneer accepts an offer from a person who attended the auction after the bidding is closed before the end of the first working day after the day of the auction, the
3 Bethell v Rickard [2013] NZCA 68 at [22]. See also MacRae v Rapana HC Auckland M633/94, 17 June 1994.
4 Barrett v IBC International Ltd [1995] 3 NZLR 170 (CA) at 175, citing Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331 (PC) at 341; and Xie v 126 Waimumu Ltd [2020] NZHC 1109 at [8].
5 Pacific Homes Limited (in rec) v Consolidated Joineries Ltd [1996] 2 NZLR 652 (CA) at 656.
property is treated as having sold at auction. As such, and consistent with the Auction Terms, Mr Granich was obliged to sign the written agreement that recorded the contract for sale, or Mr Bowring the auctioneer could do so.
[34]Quoting from Mr Crossland’s written submissions:
4.9 Consistent with an agreement being reached, Mr Phillip sent to Mr Sutich the auction form agreement with his name in it and the price of $1.85m. The agreement provided that the auctioneer could sign for both or either of the vendor or purchaser.
…
4.13 …What is clear though is that there cannot at law have been any valid “private treaty” based negotiations on the night of the auction or the following day by reason of s 36ZA of the Fair Trading Act 1986. It cannot be contracted out from or otherwise avoided.
…
4.16 Section 24 [of the Property Law Act 2007] might at first blush preclude the enforceability of the agreement by reason of the auctioneer or Mr Granich’s failure to sign.
4.17 But that would be wrong for two reasons: First, Mr Granich under the Auction Terms was obliged to sign the agreement or Mr Bowring as auctioneer had the power to do so…
…
b. Likewise, if the property did not sell under the hammer but oral agreement over price was nonetheless reached within one working day of the auction then the above analysis follows. The vendor and purchaser are bound by the auction terms and the auctioneer would be entitled to sign in their stead.
4.23 Therefore, by operation of s 36ZA of the Fair Trading Act 1986, the sale was deemed to have been made at the auction. As such, Mr Granich and the auctioneer was thus not free to repent the bargain struck and sell later to the higher offeror who had not attended the auction.
[35] For the proposition that Mr Granich was obliged to sign the written agreement that recorded the oral agreement, or that the auctioneer could in his stead, Mr Crossland relies on Nguyen v SM & T Homes Ltd.6 In that case, the property sold under hammer at auction having met the reserve price, but one of the vendors refused to sign the memorandum of contract. The Court of Appeal upheld the High Court decision, which had granted specific performance to the purchaser. It found that a
6 Nguyen v SM & T Homes Ltd [2016] NZCA 581, [2017] 3 NZLR 281.
binding contract for sale was formed between the vendor and purchaser at the auction, the terms of that contract were recorded, and in regards to the vendor who refused to sign after the auction, he had signed his agreement before the auction, in the Auction Conditions and Reserve Authority.
[36] I consider that Mr Sutich’s argument that a binding agreement was formed suffers from a fundamental flaw.
[37] As described, his case is firmly that the property sold at auction, by operation of s 36ZA, pursuant to an oral agreement reached at 8.45 pm on the evening of 8 December. He expressly rejects Mr Granich’s submission that the post-auction negotiations between Mr Mozessohn and Mr Sutich were for a sale by private treaty.
[38] When a property is sold under auction, the parties commit to the bidding process.7 In an auction with a reserve, any bid at the auction is an offer to buy; the auctioneer, by calling for bids, is not making an offer.8 As the bid is an offer, it can be withdrawn at any time before the end of the auction.9 The sale is complete when the auctioneer accepts the offer, indicated by the fall of the hammer at the auction10 or by the auctioneer otherwise indicating that the offer is accepted by the end of the following working day.11
[39] The auctioneer has a duty as the vendor’s agent to ensure that the contract is enforceable under s 24 of the Property Law Act 2007.12 It is therefore part of the auctioneer’s duty to the vendor to ensure that the contract is sufficiently evidenced in writing.13 For the purpose of signing the written record, the auctioneer has implied authority to act as agent of both the vendor and the purchaser.14 As regards the purchaser, this authority is made explicit in the ADLS/REINZ “Particulars and
7 Nguyen v SM & T Homes Ltd [2016] NZCA 581, [2017] 3 NZLR 281 at [23].
8 DW McMorland Sale of Land (Cathcart Trust, Auckland, 2011) at [3.22(d)].
9 Fair Trading Act 1986, s 36ZE.
10 McMorland, above n 8, at [3.22(d)].
11 Fair Trading Act 1986, s 36ZA; and SM & T Homes Ltd v Nguyen [2015] NZHC 3228 at [66].
12 McMorland, above n 8, at [3.22(e)].
13 At [3.22(e)].
14 At [3.22(e)].
Conditions of Sale of Real Estate by Auction” which the purchaser agrees to when registering to bid at an auction. 15
[40] This is reiterated in the warning to bidders on the final page of the Auction Terms (set out at paragraph 11 above).
[41] As regards the vendor, the Reserve Authority gives the auctioneer express authority to sign the Memorandum of Contract on their behalf.
[42] A new sub-part concerning the conduct of auctions was inserted into the Fair Trading Act 1986 in 2014. The sub-part applies to auctions conducted by a registered auctioneer or any other person who carries on business as an auctioneer within the meaning given in the Auctioneers Act 2013.
[43]Section 36ZA addresses the start and end of an auction. It provides:
36ZA Start and end of auction
(1) An auction starts when the auctioneer invites the first bid from potential participants.
(2) An auction ends when the auctioneer makes it clear that bidding is closed.
(3) However, property that is offered for sale by auction must be treated as having been sold at auction, even if the bidding ceased without the property being sold, if—
(a) the auctioneer accepts a subsequent offer from a person who attended the auction; and
(b) that offer is accepted before the end of the first working day following the day of the auction.
[44]The following section is also relevant:
36X Definitions
(1) In this subpart, unless the context otherwise requires, —
auction means a process in which property of any kind (including goods, services, and interests in land) is offered for sale by an auctioneer on behalf of a vendor, and—
15 Clauses 2.1 and 2.8.
(a) bids for the property are placed with the auctioneer in real time, whether in person, by telephone, via the Internet, or by any other means; and
(b) the property is sold when the auctioneer so indicates.
registered auctioneer means an auctioneer registered as an auctioneer under the Auctioneers Act 2013
vendor means the person whose property is offered for sale at an auction by an auctioneer.
[45] Therefore, there are two ways in which Mr Sutich could have formed a binding contract for the sale and purchase of the property at auction. First, by being the highest bidder above the reserve at the auction and the auctioneer accepting his bid/offer by the fall of the hammer. There is no suggestion that occurred.
[46] Second, by the auctioneer lowering the reserve and accepting a bid/offer above the reserve from Mr Sutich over the next working day. There is no evidence that happened either.
[47] Mr Sutich does not claim to have spoken to Mr Bowring after the auction. He does not present any evidence that Mr Bowring lowered the reserve to $1.85 million or accepted Mr Sutich’s offer of $1.85 million. There is no evidence of any correspondence between Mr Sutich and Mr Bowring. There is no suggestion that Mr Bowring was involved in the post-auction negotiations at all. One would expect Mr Sutich to have given evidence of interactions with Mr Bowring if any took place. Rather, Mr Sutich’s evidence is that Mr Mozessohn indicated that Mr Granich was willing to lower the reserve and would accept $1.85 million and he accepted that.
[48] This is fatal to Mr Sutich’s case. Section 36ZA is clear that a property will be treated as sold at auction when an offer is accepted by “the auctioneer”. Mr Mozessohn was not the auctioneer. It is not correct to conflate the real estate agent with the auctioneer. The auctioneer has a distinct role at law as described above. The auctioneer was the only individual with authority to commit Mr Granich to a binding agreement under the auction, besides Mr Granich himself.
[49] Mr Crossland submits that as there is no legal authority on s 36ZA, he should be allowed to develop an argument at trial that where the auctioneer and agents are
acting as a team, the provision applies. He submits that there is already some evidence for that by the fact that Mr Philips and Mr Mozessohn sent Mr Sutich the Auction Terms after the auction, demonstrating that they considered that they were still in the auction process.
[50] Had there been evidence that Mr Bowring was involved in the post-auction negotiations the case for this would have been stronger. But there is none. Further, the fact that Mr Philips and Mr Mozessohn might have considered that they were still in the auction process is irrelevant. The critical issue is: did the auctioneer, Mr Bowring, lower the reserve and accept a bid/offer from Mr Sutich? Mr Sutich has not presented any evidence that he did.
[51] Furthermore, there are some critical differences between Nguyen v SM & T Homes Ltd and this case. It is necessary to consider the issues before the Courts. In the High Court, the key issue was whether there was an enforceable sale and purchase agreement for the property capable of being specifically performed.16 Determining that issue involved two issues: whether a binding contract was formed between the parties; and if so, whether the agreement was enforceable under s 24 of the Property Law Act 2007.17 Edwards J found that by signing the Agency Agreement, the Reserve Authority setting the reserve price at $440,000 and the Auction Conditions, the vendors authorised the auctioneer to form a contract of sale on their behalf by accepting the highest bid at or above the reserve at auction.18 The auction proceeded; bidding surpassed the reserve and reached $450,000. The Judge found that a binding contact of sale was formed on the fall of the auctioneer’s hammer before either of the vendors indicated they did not wish to proceed with the sale.19 The vendors were bound to accept the price established at the auction by the successful bidder.
[52] Having found that a binding agreement was formed, the Judge went on to consider whether the contract was enforceable pursuant to s 24 of the Property Law Act 2007. This provides that contracts for the disposition of land are not enforceable unless they are in writing and signed by the party against whom the contract is sought
16 Above n 11, at [5].
17 At [45].
18 At [71].
19 At [84].
to be enforced.20 One of the vendors signed the memorandum of contract after the auction, so that did not present any difficulties. However, the other vendor refused to sign. Edwards J found that the version of the Auctions Conditions signed by the other vendor before the auction was sufficient to constitute a written record of the contract formed at auction for the purposes of s 24.21
[53] The Court of Appeal dismissed the vendor’s appeal. In oral submissions counsel for the vendors accepted that, once the auctioneer’s hammer descended on the final bid made at auction, there as a concluded contract for the sale of the property.
[54] There being no dispute that there was a concluded contract, the issue before the Court of Appeal was whether there was a sufficient written and signed record of its terms. The Court agreed with Edwards J that there was:
[23] … a sufficient written record signed by Mr Nguyen for the purposes of s 24 of the PLA. By signing the Reserve Authority and the Auction Conditions Mr Nguyen acknowledged all of the terms of sale as set out in the relevant documents other than the final price and the name of the successful bidder. He also committed himself to the auction process and agreed to be bound to accept any bid that equalled or exceeded the pre-auction offer of $440,000. While, as the Auction Conditions stated, the property could have been withdrawn from sale before the auction, that did not happen. The auction proceeded and the agreement for sale and purchase was concluded at the fall of the hammer before any indication by either of the Nguyens that they did not wish to proceed with the sale. Effectively, Mr Nguyen had committed to a process that provided the machinery to enable the final details of the price and purchaser to be included after the completion of the auction without the need for any further steps on his part.
[55] Nguyen v S M & T Homes Ltd does not assist Mr Sutich, because the Court of Appeal was concerned with the question of whether, there clearly being a binding contract of sale when the property sold under hammer, there was a sufficient written record of the contract. That is not the situation here. I have found that there is no tenable case that a binding contract of sale was formed under auction, because the property did not sell under hammer as in Nguyen. Nor is there any evidence to suggest that the auctioneer accepted an offer from Mr Sutich at or above the reserve over the next working day. As there is no binding contract, the issue of whether there is sufficient written record of the contract to comply with s 24 does not arise.
20 Property Law Act 2007, s 24.
21 At [94].
[56] Before proceeding, I note that I do not analyse the oral agreement claimed by Mr Sutich on the alternative basis as a contract for sale by private treaty. Mr Crossland did not advance this case and, as noted above, expressly excluded it. Had such a case been advanced that too would have failed. A real estate agent cannot bind a principal to a sale unless expressly authorised.22 Such express authority will not be lightly inferred from vague or ambiguous language.23 There is no evidence that Mr Philips and Mr Mozessohn were expressly authorised to bind Mr Granich to a contract for sale of the property. To the contrary, it is clear from clauses 17.3 and 18.2 of the Sale and Purchase Agreement (which mirror clauses 19.3 and 20.2 of the Auction Terms) and the Agency Agreement that they did not have this authority.
Is the contract enforceable because it meets the requirements of s 24 of the Property Law Act?
[57] It becomes unnecessary to consider this issue because I have found that no binding contract was formed.
If not, is it saved by part-performance?
[58] Mr Sutich also relies on the doctrine of part performance. Specifically, he contends that he attempted to pay the deposit but was thwarted by Ray White’s refusal to accept it.24
[59] An oral agreement for the sale and purchase of land, which is unenforceable by reason of s 24 of the Property Law Act 2007, may be sufficient to support a caveat if the circumstances are such that the purchaser may be entitled to specific performance of the contract by virtue of the equitable doctrine of part performance and thus may be regarded as the equitable owner of the land.25
22 McMorland, above n 8, at [1.07(a)]; Quirk v Winter [1920] NZLR 98 (SC); Hokitika Property Limited v Hurt [2014] NZHC 1536 at [51].
23 McMorland, above n 8, at [1.07(a)].
24 Email from Mr Sutich’s lawyer to Mr Granich’s lawyer dated 14 December 2022.
25 Neil Campbell Campbell on Caveats (LexisNexis, Wellington, 2019) at 10.009, citing McMorland, above n 7, at [4.22] and Westpac Banking Corporation v Russell HC Tauranga M43/98, 13 August 1998.
[60] The essential elements of the doctrine of part performance were stated by Tipping J in TA Dellaca Ltd v PDL Industries Ltd and approved by the Court of Appeal in Nguyen:26
(a) Is there a sufficient oral agreement such as would have been enforceable but for the PLA?
(b) Has there been part performance of that oral agreement by the doing of something that:
(i) clearly amounts to a step in the performance of a contractual obligation or the exercise of a contractual right under the oral contract; and
(ii) when viewed independently of the oral contract was, on the probabilities, done on the footing that a contract relating to the land, consistent with that alleged, was in existence?
(c) Do the circumstances in which that part performance took place make it unconscionable (fraudulent in equity) for the defendant to rely upon the PLA?
[61] The first limb of this test is not met because I have found that no binding contract, oral or otherwise, was formed.
[62] Although my decision does not depend on it, I also record that Mr Sutich’s attempt to pay the deposit does not amount to part-performance even if there had been a contract.
[63] Accordingly, there is no basis for a claim to specific performance by virtue of the equitable doctrine of part performance.
[64] For the above reasons, I find that Mr Sutich does not have a reasonable argument to an equitable interest in the property based on an agreement.
26 TA Dellaca Ltd v PDL Industries Ltd [1992] 3 NZLR 88 (HC); and Nguyen, above n 6, at [32]. See also Mahoe Buildings Ltd v Fair Investments Ltd [1994] 1 NZLR 281 (CA) at 287 and Fleming v Beevers [1994] 1 NZLR (CA).
Is Mr Granich estopped from refusing to sign the contract?
[65] Mr Crossland submits that in Wellesley Club Incorporated v Wellesley Property Holdings Ltd this Court recognised that successfully making out a claim for equitable estoppel can result in an equitable interest in land that can support a caveat.27
[66] Mr Allan submits that the facts in that case were very different. There, it was accepted that the parties had entered into a legally binding sale and purchase agreement. The issue was whether Wellesley Property had created and encouraged an expectation through the agreement and other actions and representations that was relied on by Wellesley Club such that it would be unconscionable to permit Wellesley Property to depart from that expectation.
[67] The circumstances of this case are indeed very different to those in Wellesley Club. In that case, Gendall J accepted that two written agreements between the parties provided the Club with significant rights in respect of the property and that there was a strong argument that these were consistent with a significant part of the property continuing exclusively as the Club’s premises, from where it had operated since 1927. The Judge was satisfied that the Club had a reasonable argument that to satisfy the Club’s reasonable expectations, equity would grant relief against the property itself in the form of a lease or land covenant.28 On that basis, he found that the Club had established a reasonable arguable case to an equitable interest that justified the continued existence of the caveat. Of note, in so doing he concluded that as the doctrine of equitable estoppel gives rise to an equity that may be satisfied by the Court granting an estate or interest in land, a claim to an equitable interest in land based on this doctrine may support a caveat.29
[68]The relevant questions are:30
(a)Did Mr Granich by words or conduct encourage a belief or expectation by Mr Sutich that they had a binding agreement?
27 Wellesley Club Incorporated v Wellesley Property Holdings Ltd [2007] 8 NZCPR 421.
28 At [51].
29 At [38], [39] and [42].
30 Wilson Parking New Zealand Ltd v Fanshawe [2014] 3 NZLR 567 at [44], approved in Pollard v Pollard [2016] NZCA 186 (2016) 23 PRNZ 229 at [33].
(b)Did Mr Sutich reasonably rely on that representation to his detriment?
(c)Would it be unconscionable for Mr Granich to depart from that belief or expectation?
[69] Mr Crossland emphasises that Mr Sutich attended an auction run by a professional real estate firm. Reliance on the process and their words was inherently reasonable. The purpose of the auction was to effect the sale of Mr Granich’s property.
[70] I do not accept that the auction process and words of the real estate agents can seriously be said to have encouraged Mr Sutich to believe or expect that he and Mr Granich had reached a binding agreement on the evening after the auction.
[71]Mr Sutich relies on Mr Mozessohn’s statement to him that if he would pay
$1.85 million, they would “have a deal.” He also relies on the fact that Ray White then sent him the Auction Terms that recorded his name and that price.
[72] Mr Mozessohn disputes that he said this to Mr Sutich and deposes that he informed Mr Sutich that until there was a signed written agreement, the deal was not done. Plainly I cannot resolve this factual dispute in this summary setting.
[73] But even if Mr Mozessohn said what Mr Sutich alleges, I find that a reasonable person in Mr Sutich’s position would not have believed from this statement that he had a binding contract with Mr Granich. Furthermore, I find Mr Sutich’s assertion that he believed that he had a concluded deal lacking in credibility. Mr Sutich is an experienced property developer,31 and it defies belief that he would believe that he had a binding agreement based on a statement like this from a real estate agent, without an agreement signed by the vendor.
[74] Moreover, the Auction Terms and Conditions make it clear that there is no agreement until there is a written agreement signed by the purchaser and vendor.
31 Affidavit of Matthew James Phillips sworn 17 February 2022 at “MP1”, “MP2”, “MP3”, “MP4” and “MP5”.
[75] Even if Mr Sutich was unaware of these terms, his own conduct illustrates that he was aware that there was no binding contract until Mr Granich signed. Mr Sutich deposes that he received an update from Mr Phillips at 1.08 pm on 9 December that he was “getting [the] vendors signature shortly” and he would send him a copy of the signed agreement that afternoon.32 Mr Sutich deposes that he called Mr Sutich at
4.59 pm, but Mr Phillips did not answer.33 Then, Mr Sutich sent Mr Phillips a text “to ask where the signed agreement was”.34
[76] Additionally, Mr Sutich cannot reasonably say that he relied on Mr Mozessohn’s representation to his detriment. Less than 24 hours later, he was informed that his offer was declined by Mr Granich. There is no evidence of any detriment save for a short-lived emotional attachment to the property.
[77] For these reasons, I am satisfied that Mr Sutich does not have a reasonable argument that it would be unconscionable for Mr Granich to refuse to sign the agreement.
Result
[78] I have found that Mr Sutich does not have a reasonably arguable case for an equitable interest in the land to support the caveat.
[79]I order that:
(a)the caveat lodged against 38 Hattaway Avenue, Bucklands Beach, Auckland (Record of Title NA57C/609) shall lapse.
[80] As Mr Sutich has been unsuccessful, he will pay Mr Granich’s costs on a scale 2B basis, and disbursements as fixed by the Registrar.
Associate Judge Gardiner
32 Affidavit of Igor George Sutich supporting originating application for orders that a caveat not lapse dated 2 February 2022 at [19].
33 At [20].
34 At [21].
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