To v Huang - [2015] NZCA 446

IN THE COURT OF APPEAL OF NEW ZEALAND

CA262/2015
[2015] NZCA 446

BETWEEN	THI KIM PHUONG TO Appellant
AND	DONGLING HUANG AND ZHIGAO LU Respondents

Hearing:	13 August 2015
Court:	Miller, Courtney and Clifford JJ
Counsel:	M J Fisher and L H Hui for Appellant G P Blanchard for Respondents
Judgment:	16 September 2015 at 11.30 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe respondents are entitled to costs on a band A basis for a standard appeal.

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REASONS OF THE COURT

(Given by Courtney J)

The appellant, Mr To, was the purchaser under an agreement for the sale and purchase of a property in Takanini. The respondents, Ms Huang and Mr Lu, were the vendors. The agreement was conditional on the purchaser satisfying himself by 14 January 2015 that the property would be suitable for his requirements. Under this “due diligence” special condition the purchaser was entitled to avoid the agreement if the date for fulfilment of the condition passed without the due diligence condition being fulfilled. In addition, a standard printed condition permitted either party to avoid the agreement in those circumstances.
The date for fulfilment of the condition passed without the purchaser giving effective notice of its fulfilment. The vendors purported to avoid the agreement. The purchaser lodged a caveat and applied for orders for specific performance of the agreement or alternatively an order that the caveat not lapse. Associate Judge Doogue dismissed both applications, holding that the due diligence condition did not preclude the vendors from avoiding the agreement under the standard printed condition.[1] The purchaser appealed.

Background

[1]To v Huang [2015] NZHC 929.

The parties entered into the sale and purchase agreement on 12 December 2014. They used a standard form approved by the Real Estate Institute of New Zealand that contained the following clause 9.8:
Operation of conditions
If this agreement is expressed to be subject either to the above or to any other condition(s), then in relation to each such condition the following shall apply unless otherwise expressly provided:
(1) The condition shall be a condition subsequent.
(2)The party or parties for whose benefit the condition has been included shall do all things which may reasonably be necessary to enable the condition to be fulfilled by the date for fulfilment.
(3)Time for fulfilment of any condition and any extended time for fulfilment to a fixed date shall be of the essence.
(4)The condition shall be deemed to be not fulfilled until notice of fulfilment has been served by one party on the other party.
(5)If the condition is not fulfilled by the date for fulfilment, either party may at any time before the condition is fulfilled or waived avoid this agreement by giving notice to the other. Upon avoidance of this agreement the purchaser shall be entitled to the immediate return of the deposit and any other moneys paid by the purchaser under this agreement and neither party shall have any right or claim against the…

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.

Continue reading To v Huang

Details

AGLC: To v Huang [2015] NZCA 446
Case: [2015] NZCA 446
Decision Date: 16 September 2015 at 11.30 am

CaseChat Overview and Summary

To brought an action against Huang in the Supreme Court of New South Wales. The dispute concerned the validity of a sale and purchase agreement for a property. The agreement contained a due diligence condition, which if not fulfilled by a specified date, allowed the purchaser to terminate the agreement and receive a refund of their deposit. The central issue was whether the purchaser had validly waived the due diligence condition before the stipulated deadline. To argued that they had satisfied the due diligence condition by communicating with the vendors’ solicitor and proposing a new settlement date. Huang contended that the proposed settlement date was not acceptable and that the due diligence condition had not been met. The court had to determine whether the purchaser had effectively waived the due diligence condition, and if the vendors had validly avoided the agreement by not accepting this waiver.

The court examined the standard form contract's clause 9.8, which outlined the operation of conditions, including the mechanism for waiver and avoidance of the agreement. It noted that the due diligence condition was a condition subsequent, and both parties were required to act reasonably to enable its fulfilment. The court considered the communication between the parties and whether the purchaser had indeed waived the due diligence condition. It held that the purchaser had not effectively waived the condition because the proposed settlement date was not agreed upon by the vendors. Consequently, the court found that the vendors were entitled to avoid the agreement as the due diligence condition was not fulfilled by the specified date. The purchaser was not entitled to a refund of their deposit.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The parties entered into the sale and purchase agreement on 12 December 2014. They used a standard form approved by the Real Estate Institute of New Zealand that contained the following clause 9.8:Operation of conditionsIf this agreement is expressed to be subject either to the above or to any other condition(s), then in relation to each such condition the following shall apply unless otherwise expressly provided:(1) The condition shall be a condition subsequent.(2)The party or parties for whose benefit the condition has been included shall do all things which may reasonably be necessary to enable the condition to be fulfilled by the date for fulfilment.(3)Time for fulfilment of any condition and any extended time for fulfilment to a fixed date shall be of the essence.(4)The condition shall be deemed to be not fulfilled until notice of fulfilment has been served by one party on the other party.(5)If the condition is not fulfilled by the date for fulfilment, either party may at any time before the condition is fulfilled or waived avoid this agreement by giving notice to the other. Upon avoidance of this agreement the purchaser shall be entitled to the immediate return of the deposit and any other moneys paid by the purchaser under this agreement and neither party shall have any right or claim against the other arising from this agreement or its termination.(6)At any time before this agreement is avoided the purchaser may waive any finance condition and either party may waive any other condition which is for the sole benefit of that party. Any waiver shall be by notice.(emphasis added) The agreement contained a number of conditions, including the due diligence condition, cl 22:DUE DILIGENCEThis Agreement is entirely conditional upon the purchaser determining that the purchase of the property described in this Agreement comprises a commercially acceptable and viable project suitable to the Purchaser. It will be solely for the purchaser to make this determination and the Vendor will not require the Purchaser to justify or substantiate the Purchaser’s decision. Should this condition not be satisfied by 5.00 pm after 15 working days from the date of this Agreement signed by both parties, this Agreement shall be voidable at the option of the Purchaser. In the event of the cancellation pursuant to this clause, all monies paid shall be refunded in full and neither party shall have any further claim or action against the other.(emphasis added) It was common ground that the time and date for fulfilment of cl 22 was 5 pm on 14 January 2015. Before 5 pm on 14 January 2015 the purchaser’s solicitor emailed the vendors’ solicitor as follows:The due diligence is satisfied provided that the settlement date is fixed on 20 March 15.Please confirm.The other conditions are satisfied.I confirm that my client will take over the tenants and he will manage the tenancy himself. The vendors’ solicitor responded the following day, 15 January 2015:My instructions are that the vendors do not agree to the change in the settlement date and as the Agreement was not made unconditional they avoid the agreement.