GOOD REAL ESTATE LTD TRADING AS LJ HOOKER PONSONBY V LIU AND XHAO HC AK CIV 2009-404-6078

GOOD REAL ESTATE LTD TRADING AS LJ HOOKER PONSONBY V LIU AND XHAO HC AK CIV 2009-404-6078 16 February 2010IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2009-404-6078UNDER s 72 District Courts Act 1947 IN THE MATTER OF an appeal from the decision of the Auckland District Court given on 26 August 2009 BETWEEN GOOD REAL ESTATE LTD TRADING AS LJ HOOKER PONSONBY Appellant AND JUN LIU AND JOY XHAO Respondents Hearing: 10 February 2010 Appearances: Richard Connell for Appellant John Waymouth for Respondents Judgment: 16 February 2010JUDGMENT OF HARRISON JIn accordance with R11.5 I direct that the Registrar endorse this judgment with the delivery time of 2:15 pm on 16 February 2010_________________________________________________________________________________ SOLICITORS Connell & Connell (Auckland) for Appellant Sue Stodart (Albany) for Respondents COUNSEL John WaymouthIntroduction[1] This appeal from a decision of the District Court at Auckland raises a narrow point. There is no argument about the legal principles. The question is whether the District Court Judge correctly decided that a factual dispute about liability for payment of a real estate agent's commission was sufficient to establish that the defendants had an arguable ground or grounds of defence to the agent's claim.Background[2] The relevant background circumstances are set out fully in the judgment of Judge Joyce QC dated 26 August 2009. It is unnecessary to replicate his summary here. I can set out the material facts shortly. [3] In November 2007 Mr Jun Liu and Ms Joy Xhao, who are both themselves real estate agents, listed their property at 1403 Great North Road, Waterview for sale with Good Real Estate Ltd. Good's appointment was under a sole agency to terminate on 6 December 2007, with a general agency running until written cancellation. The asking price was listed at $470,000-$520,000. Shortly afterwards a representative of the Crown, The Property Group Ltd (TPG), contacted Good and arranged a meeting. The New Zealand Transport Agency (NZTA) was interested in purchasing the property for inclusion in its proposed Waterview connection for the North-Western Motorway. [4] TPG then submitted an offer at $480,000 in accordance with a valuation prepared by Gribble Churton Taylor. The document was in standard form and was described as a memorandum of agreement pursuant to the Public Works Act 1981. The purchase price was described as "compensation". The document recorded the Crown's agreement to acquire the land on the open market on a willing buyer/willing seller basis through Good's agency. [5] Mr Liu and Ms Xhao rejected the Crown's offer, advising that they would not accept less than $521,000. Various exchanges followed between the parties, culminating in Good's advice to TPG on 15 December 2007 that the vendors hadwithdrawn the property from the market and arranged for its tenancy. All communications between Good and the Crown concluded at this point. Mr Liu and Ms Xhao assert that they cancelled the general agency on 6 December 2007. [6] In early April 2008 TPG contacted Good to advise that Transit NZ, the NZTA's successor, wished to maintain contact with Mr Liu and Ms Xhao. The purpose was inform them of important dates and upcoming meetings regarding the Waterview connection project. Shortly afterwards Good wrote to Mr Liu and Ms Xhao advising of the Crown's continued interest. The solicitors for Mr Liu and Ms Xhao wrote to Good on 4 August 2008 advising that the property was not on the market but that Transit was now purchasing it pursuant to s 17 Public Works Act. [7] Mr Liu and Ms Xhao signed an agreement for sale and purchase with Transit on 17 October 2008 at a price of $510,000, again described as compensation. The agreement was also described as being prepared pursuant to the Public Works Act but its terms and conditions were different from its predecessor.District Court[8] Judge Joyce, applying authority in this Court, held that Good was not entitled to recover commission simply on account of the fact that it introduced Mr Liu and Ms Xhao and the Crown in November 2007. He held that Good was still obliged to prove that its work was an effective, not necessarily the exclusive, cause of sale. In this respect he rejected Good's argument that evidence of Good's attempts to maintain the momentum of the original introduction was sufficient to establish liability. He expressly recorded Mr Liu and Ms Xhao's defence, based on contested facts, that Good's performance of its contractual obligations was inept and its work was materially inconsequential to the transaction signed in October 2008. He found that the vendor's evidence to the effect that Good's efforts had ceased to be causatively effective in October 2008 was plainly arguable. [9] Judge Joyce's cautionary observations, made as follows, merit particular respect:[43] My experience in dealing with these kinds of claims in the context of a summary judgment application is that, given that they require determinations not simply of fact but also of degree, it is only in the most clear cut situations that a summary remedy can safely be found justified. [44] To put it another way, experience has taught me to be particularly cautious in the determination in favour of the plaintiff of this kind of application.Decision[10] The agency authority signed by Mr Liu and Ms Xhao in favour of Good provided:If [Mr Liu and Ms Xhao] enter into a contract to sell or exchange the property or part thereof either (a) during the period of this agency or (b) after this agency has expired or been cancelled, and any agent appointed under this authority has introduced the purchaser to the property during the period of this agency and that contract becomes unconditional and binding on the parties, whether during or after the period of the agency then [Mr Liu and Ms Xhao] agree to pay commission (as stipulated) on the Sale Price or Consideration.[11] Mr Richard Connell for Good does not dispute that, as Judge Joyce found, these terms require the agent to prove that its efforts were an effective cause of sale. But he says there is ample evidence on the papers, including the affidavit signed by Mr Liu and Ms Xhao, to show Good's satisfaction of this obligation without needing to call evidence. He points to (1) Mr Liu and Ms Xhao's acknowledgement that they gave a sole agency to Good; (2) the parties' agreement that upon expiry on 6 December 2007 the sole agency became a general agency until cancelled in writing; (3) Good's introduction of the Crown to the property during the period of the sole agency; (4) the Crown's offer to purchase the property unconditionally at $480,000 which was in the range nominated by the vendors in the agency agreement but countersigned at a sum of $521,000 (above the agency range); and (5) the Crown's direct purchase from Mr Liu and Ms Xhao without any other agent being involved. [12] In summary, Mr Connell says, within the actual period of the sole agency Good presented to Mr Liu and Ms Xhao an offer from a willing and capable buyer which was in writing and capable of acceptance and introduced by the agent. Hesays that the vendor is not entitled to breach the terms of the agency agreement and countersign at a price higher than the agreed range nominated in the agency agreement and, when that counteroffer is rejected, decline to pay a commission when a sale at the listing agreement price could have been achieved. [13] I appreciate the force of Mr Connell's argument. But it has not persuaded me that Judge Joyce was wrong. Mr John Waymouth for Mr Liu and Ms Xhao has identified a number of areas of disputed fact which he says, if proven, are sufficient to establish a break in the chain of causation between Good's introduction and the ultimate sale. He identifies at least four alleged failures by the agent responsible for the listing to act within the terms of her contract of engagement. Each, he says, is of itself enough to show that Good was in breach of its legal obligations, disentitling it to commission. [14] Also I take particular account of Judge Joyce's informed opinion that caution was required before entering summary judgment where facts appear to be bona fide arguable, especially in the context of a causation dispute. [15] I wish to add two observations. First, Judge Joyce noted an assertion in an affidavit filed by Mr Liu and Ms Xhao that the Crown's ultimate acquisition of the property was "compulsory". He noted that this assertion was made as if it "were a matter of fact for them rather than the Court to determine". Apart from noting that the acquisition was not compulsory in law (although that may have been the eventual result if the parties had not agreed), I agree with the Judge that it is unacceptable for counsel to attempt to advance a submission or argument under the guise of a statement of fact from a witness. Like briefs, affidavits should be confined to recitals of facts, and I regret to observe that much of Mr Liu and Ms Xhao's affidavits were in the nature of argument. [16] Second, the amount at issue is $20,362.60. The parties must have expended most if not all of this amount in legal costs to date. It is marginally above the jurisdictional threshold of the Disputes Tribunal. Commercial and common sense dictate that the dispute is settled promptly, before further costs and resources are unnecessarily wasted.Result[17] The appeal is dismissed. In the normal course costs would follow the event. But I am satisfied that in this particular case costs should lie where they fall. ________________________________ Rhys Harrison J