SUNNYVALE PROPERTY TRUST LTD v LIU [2015] NZHC 2804

SUNNYVALE PROPERTY TRUST LTD v LIU [2015] NZHC 2804 [11 November 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2015-404-891[2015] NZHC 2804BETWEEN SUNNYVALE PROPERTY TRUSTLIMITEDPlaintiffAND JIAN LIANG LIUFirst DefendantLU ZHENGSecond DefendantHearing: 21 September 2015Appearances: M C Black and S Perese for the PlaintiffNo appearance by or for the First DefendantSRG Judd for the Second DefendantJudgment: 11 November 2015JUDGMENT OF WOODHOUSE JThis judgment was delivered by me on 11 November 2015 at 5:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.Registrar/Deputy RegistrarParties / Solicitors / Counsel: Mr M C Black, Barrister, Auckland Mr P Attewell (Plaintiff's solicitor), Osborne Attewell Clews, Solicitors, Whakatane Ms Jia Liang Liu, Mr SRG Judd, Barrister, Auckland Ms Mei Liu (Second Defendants' solicitor), Liu Lawyers, Solicitor, AucklandIntroduction[1] The second defendant, Mr Zheng, seeks summary judgment on the claimsagainst him of the plaintiff (Sunnyvale).[2] The issue arises out of a standard form agreement for sale and purchase ofland. This records the first defendant, Mr Liu, as the purchaser, but it is Mr Zheng'ssignature under the printed words "Signature of purchaser(s)". The agreement wasnot completed and Sunnyvale cancelled. Sunnyvale now sues both Mr Liu and MrZheng for damages for breach of contract. There is also a claim against Mr Zhengon a contention that he and Mr Liu were in partnership.[3] Mr Zheng says he has no liability because he signed solely as attorney for Mr Liu and the fact that he signed solely in that capacity was made known to Sunnyvalethrough Sunnyvale's real estate agent. The agent has confirmed, in an affidavit, thathe was informed that Mr Zheng signed solely as agent for Mr Liu.Summary judgment principles[4] Mr Zheng's summary judgment application was made under High Court r 12.2(2) which is as follows:12.2 Judgment when there is no defence or when no cause of action can succeed(2) The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff's statement of claim can succeed.[5] The principles were stated by Elias CJ in Westpac Banking Corporation vM M Kembla New Zealand Ltd as follows:11 Westpac Banking Corporation v M M Kembla New Zealand Ltd [2001] 2 NZLR 298 (CA).[60] Rule 136(2) permits a defendant who has a clear answer to the plaintiff which cannot be contradicted to put up the evidence which constitutes the answer so that the proceedings can be summarily dismissed. The difference between an application to strike out the claim and summary judgment is that strike out is usually determined on the pleadings alone whereas summary judgment requires evidence. Summary judgment is a judgment between the parties on the dispute which operates as issue estoppel, whereas if a pleading is struck out as untenable as a matter of law the plaintiff is not precluded from bringing a further properly constituted claim.[61] The defendant has the onus of proving on the balance of probabilities that the plaintiff cannot succeed. Usually summary judgment for a defendant will arise where the defendant can offer evidence which is acomplete defence to the plaintiff's claim. [62] 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 only able to be properly arrived at after a full hearing of the evidence. Summary judgment is suitable for cases where abbreviated procedure and affidavit evidence will sufficiently expose the facts and the legal issues. [64] The defendant bears the onus of satisfying the Court that none of the claims can succeed. It is not necessary for the plaintiff to put up evidence at all although, if the defendant supplies evidence which would satisfy the Court that the claim cannot succeed, a plaintiff will usually have to respond with credible evidence of its own. Even then it is perhaps unhelpful to describe the effect as one where an onus is transferred. At the end of the day, 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 made by the Court on interlocutory application is not one to be arrived at on a fine balance of the available evidence, such as is appropriate at trial.[6] If there is a "theoretical possibility" on the evidence that the plaintiff's claimcould succeed then the defendant will not be entitled to summary judgment.2The facts[7] There is no dispute on the relevant facts. Also, neither Mr Black for Sunnyvale, nor Mr Judd for Mr Zheng, has suggested that there is further evidence, or that there may be further evidence, requiring full assessment at trial.2 Jones v Attorney-General [2003] UKPC 48, [2004] 1 NZLR 433 at [10].The agreement[8] The agreement was made in July 2007. It is recorded in the standard form REINZ/ADLS agreement for sale and purchase of real estate (7th ed (3)). The mostrelevant provisions are what amount to two defined terms – "Vendor" and"Purchaser". The vendor is named as "Sunnyvale Property Trust Ltd". Thepurchaser is named as "Jia Liang Liu and/or nominee". This information is repeatedon the back of the last page and Liu Lawyers are recorded as the vendor's solicitor. Isuggested to counsel that the addition of the words "and/or nominee" added nothingin respect of the present issues and neither counsel took issue with that proposition.Those words can therefore be left to one side. The named purchaser, Jia Liang Liu,is the first defendant.[9] At the end of the agreement there is provision for signatures under the words"Signature of vendor(s)" and "Signature of purchaser(s)". It is not in issue that Mr Zheng signed under the words "Signature of purchaser(s)" and his is the only signature under those words. There are no qualifying words to Mr Zheng's signature as to the capacity in which he signed. The claim against Mr Zheng is founded on thefact that it is his signature under the words "Signature of purchaser(s)".[10] There is a signature under the words "Signature of vendor(s)". There is nodirect evidence as to whose signature this is, but it appears clearly enough to be that of a Sunnyvale director, Dave Raj Fermah. Mr Fermah provided an affidavit in opposition to the summary judgment application. He says that he "was directly involved as the plaintiff's representative in the events which resulted in theagreement for sale and purchase". His signature to his affidavit appears fairly clearlyto be the same as the signature to the agreement for sale and purchase. Thissignature on the agreement also is unqualified. For example, there are no wordssuch as "director".[11] The real estate sales person engaged directly on the sale was Xiaolong Zhao. There is an affidavit from Mr Zhao, tendered for Mr Zheng. He said that he was approached by Mr Zheng, that he was told by Mr Zheng that he was attorney for Mr Liu, and that Mr Liu was interested in purchasing the land. Mr Zhao said:At all times during the negotiations I was aware that Mr Zheng was acting on behalf of the named purchaser, Mr Jian Liang Liu, and that the intention was that Mr Liu would be the purchaser. It was never intended that Mr Zheng would be a party to the sale and purchase agreement. Mr Zheng made clear to me and I understood that he was signing as attorney for Mr Liu only.I now see that on the signature page of the sale and purchase agreement, Mr Zheng has signed it without any express words stating that he signs as agent or attorney only. This was an oversight for Mr Zheng and me. Mr Zheng signed the agreement in front of me and the agreement was intended to be an agreement between the first defendant and the plaintiff only. It was alwaysintended and understood that Mr Zheng was signing as attorney for Mr Liu.[12] This evidence is unchallenged. Mr Fermah said that he was given information by Mr Zhao relating to a possible partnership or joint development between the purchaser and another person. This evidence does not give rise to anyreservation as to Mr Zhao's evidence as to the capacity in which Mr Zheng signed the agreement.[13] Mr Fermah's evidence about the agreement itself was as follows:I understood the completed agreement to have been signed by the named purchaser, Jian Liang Liu. There was no other indication at the time on the agreement telling me otherwise. A caveat was later lodged against the title by the purchaser.I later learnt that in fact the purchaser had not actually signed the agreement in his name. In fact, the second defendant (Lu Zheng) had handwritten andsigned as the named purchaser, Jian Liang Liu (first defendant).[14] Mr Zheng's evidence is consistent with Mr Zhao's evidence. The statementthat Mr Zheng "had handwritten and signed" does not mean that Mr Zheng's namehas been printed beside his signature, or anywhere else in the agreement. There isonly the signature. It is illegible, as Mr Fermah suggests.[15] Mr Zheng produced a copy of a power of attorney granted to him by Mr Liu. It is dated 10 March 2006, approximately a year before the date of the agreement. It is a document prepared by Liu Lawyers in Auckland and, on the face of it, signed bythe first defendant Mr Liu and witnessed by a lawyer.Events following the signing of the agreement[16] The stipulated deposit was paid and a caveat was lodged to protect the interests of the purchaser under the agreement. Although a copy of the caveat has not been produced it is obvious from other evidence that it was in the name of Mr Liu as purchaser.[17] The agreement made provision, in the vendor's interest, for the possibility that a caveat might be lodged by the purchaser. The clause commences with the words:If the purchaser lodge [sic] a caveat prior to the deposit of the vendor's planof subdivision the vendor will be entitled to require the purchaser to removethe caveat or (at the vendor's option) to consent to the registration of any instrument which the vendor is entitled to create or grant in terms of thisagreement.[18] In or about March 2009 Sunnyvale exercised its right under this caveat provision. In a letter dated 3 March 2009 Liu Lawyers for the purchaser wrote toSunnyvale's solicitors, obviously in response to a request for the caveator's consent to registration. The recorded subject matter of the letter from Liu Lawyers is"Sunnyvale Property Trust to Liu". They enclosed a consent to registration in the name of Jia Liang Liu. This was signed by Mr Zheng "as attorney of Jia Liang Liu". Mr Zheng's signature is witnessed by Xiaomei Liu of Liu Lawyers. Also enclosed was a certificate of non-revocation of power of attorney signed by Mr Zheng, and a copy of the power of attorney itself.[19] It is apparent that Mr Liu did not settle on the specified date. There is no direct evidence on this, but the detail does not matter. What is directly in evidence is a settlement notice issued by Sunnyvale in May 2009. It is a notice directed to "JiaLiang Liu or nominee c/o Liu Lawyers". In the recital it states, amongst otherthings, that "the vendor agreed to sell and you agreed to purchase" and that "youhave failed to complete settlement on 15 May 2009". The requirements are directed to "you" and this can only be requirements directed to Mr Liu.[20] No notice was given to Mr Zheng. Mr Black submitted that notice was effectively given to Mr Zheng because he had power of attorney for Mr Liu andbecause there is evidence that Liu Lawyers were also the solicitors for Mr Zheng. I am satisfied that neither proposition provides any foundation for a conclusion that notice was given to Mr Zheng or, more particularly, that Sunnyvale considered or intended that Mr Zheng had liability under the agreement.[21] Mr Liu did not settle. On 9 June 2009 Sunnyvale's solicitors gave notice ofcancellation to Liu Lawyers as solicitors for Mr Liu. As with the letters from Liu Lawyers, the subject matter of the letter from Sunnyvale's solicitors is "Sunnyvale Property Trust Ltd to Jia Liang Liu". The letter records cancellation and forfeiture ofthe deposit. No notice of cancellation was given to Mr Zheng.[22] Sunnyvale commenced proceedings against both defendants on 24 April2015. There were separate causes of action against Mr Liu and Mr Zheng, eachalleging liability for breach of contract and each claiming $520,680 in damages forthe loss said to have been sustained following cancellation. It was expressly allegedthat Mr Zheng as well as Mr Liu contracted personally.[23] An amended statement of claim was filed on 20 August 2015. This added a second cause of action against Mr Zheng founded on a contention that he was in partnership with Mr Liu to develop and sell the land being purchased from Sunnyvale.Evaluation[24] For Mr Zheng to get summary judgment he must satisfy the Court that neither of the two claims against him can succeed. The claims are appropriately considered separately because they are quite different and some different issues arise. I will refer to the first cause of action against Mr Zheng as the "contract claim" and the second cause of action as the "partnership claim".The contract claim[25] Mr Judd submitted that Sunnyvale's claim, that Mr Zheng assumed liability under the contract by signing it, cannot succeed in fact or in law. Mr Judd relied onthe following general statement in Article 99 of Bowstead & Reynolds on Agency,directed to written contracts:3The question whether the agent is to be deemed to have contracted personally, in the case of a contract in writing other than a deed, bill of exchange, promissory note or cheque, depends upon the intention of the parties, as appearing from the terms of the written agreement as a whole, the construction of which is a matter of law. The party concerned may act as agent in some respects and as principal (including as a trustee) in others.[26] Mr Judd submitted that the intention as contended by Mr Zheng is established by consideration of the terms of the agreement coupled with the evidence fromSunnyvale's agent Mr Zhao.[27] The heart of Mr Black's submission for Sunnyvale was that Mr Zheng'ssigning of the agreement, without any qualification as to the capacity in which he signed, establishes that Mr Zheng is liable as a contracting party. It is unnecessary for Sunnyvale to establish this on the balance of probabilities. The onus is on Mr Zheng to establish the contrary. Mr Black put it in his written submissions as follows:There is nothing on the written agreement to indicate, qualify or confirm,that the second defendant signed only as the agent or only on behalf of thefirst defendant. There was no exclusion of any personal liability in signingas the purchaser, which the agreement could otherwise have recorded.(emphasis in the original)[28] Mr Black submitted, in effect, that Mr Zheng's signature withoutqualification written on the agreement is determinative against him. He cited a number of authorities, but relied in particular on a decision of the Court of Appeal of England and Wales in The Elikon.4 The Elikon, and other authorities referred to in that case and cited by Mr Black, provide a foundation for the submission at a general level. However, as noted in a comment in Bowstead & Reynolds:53 Peter Watts (ed) and FMB Reynolds Bowstead & Reynolds on Agency (20th ed, Sweet & Maxwell, London 2014) at [9-036]. Footnotes omitted.4 Internaut Shipping GmbH v Fercometal SARL (The Elikon) [2003] EWCA Civ 812, [2003] 2 Lloyd's Rep 430. The relevant issue is discussed at [25]-[56], including a discussion of earlier authorities. These and other cases are discussed in Bowstead & Reynolds on Agency, above n 3, in the comment on Article 99 and in the illustrations that follow, at [9-037]-[9-038].5 Bowstead & Reynolds on Agency, above n 3, at [9-037]. Footnotes omitted.The cases on this topic should only be treated as single instances exemplifying the application of a rather imprecise principle; much turns onthe particular context of each contract generalisations about particularformulae are dangerous.[29] The Elikon is not directly on point. The relevant issue in that case was whether Sphinx Navigation Ltd or Internaut Shipping GmbH in a charter-party was the owner of the vessel Elikon. The charter-party named the owner as "SphinxNavigation Ltd, Liberia c/o Internaut Shipping GmbH" followed by Internaut's address. In a printed box headed "signature/owners" at the foot of the front page was the stamp "Internaut Shipping" and its address with a signature over the stamp.There was no qualification to the signature. Internaut Shipping GmbH was held to be the party to the contract as owner. Sphinx Navigation Ltd, which was the owner in a general sense, was held not to be the "owner" for the purposes of that contact.[30] For The Elikon to be applicable on its facts to the present case, Mr Zheng would have to have been identified in the agreement for sale and purchase, by somemeans, as the purchaser; that is, the equivalent of the owner in the charter-party. ButMr Zheng is not identified anywhere as the purchaser. And there is no generalprinciple that emerges from The Elikon which, at the least, makes it arguable that MrZheng is a party as purchaser.[31] Mr Black submitted that The Elikon establishes that "the signature itself plays a predominant or dominant role". In the principal judgment of Rix LJ there is the following statement:6When one adds the long established principle that the characterisation of asignature plays, prima facie at any rate, a predominant or dominating role forthe purposes of this issue in the construction of the contract as a whole, or, toput the matter the other way round, that it must be clear from the body of thecontract that the person signing without qualification does not intend tocontract with personal liability, then, in my judgment, Internaut's liability isfirmly established.[32] This statement followed a detailed review of earlier authorities, holding liableas a contracting party a defendant who was in fact an agent but who had signedwithout qualification or, in some cases, with his name recorded followed by thedesignation "agent". I am not persuaded that the general conclusion in those earlier6 The Elikon, above n 4, at [51].cases or in The Elikon establishes a principle that prevails in this case in favour ofthe plaintiff. The critical aspect of the statement by Rix LJ is what he refers to as"the characterisation of a signature". That turns on the facts, and the facts here arequite different from the facts in The Elikon and in the cases discussed by the Judge.This is made clear in an earlier statement where he said:7What remains, however, is that in all three cases a party who was expresslysaid in the body of the contract to be an "agent" or to be acting on behalf of aprincipal was nevertheless adjudged to have personal liability in circumstances where, again in all three cases, the agent signed without qualification. This permits the extraction of a principle, which in my viewcan be found stated as at least part of the reasoning in those cases that theway in which a party named in the contract signs that contract may be ofparticular strength in the overall question of whether he is a party to thatcontract with personal liability under it.(emphasis added)[33] What is required is assessment of the relevant facts bearing on construction of this contract and which facts, in this case, are not in issue. These are the facts indicating on the intention of the parties, and starting with the terms of the contract itself.[34] This discussion is appropriately prefaced by stating a general rule recorded inBowstead & Reynolds on Agency, but not referred to by either counsel:8In the absence of other indications, when an agent makes a contract, purporting to act solely on behalf of a disclosed principal, whether identifiedor unidentified, he is not liable to the third party on it. Nor can he sue thethird party on it.[35] On the facts of this case there is no issue as to whether Mr Zheng acted solely as agent for Mr Liu. The vendor had unequivocal notice, in advance, not only that Mr Zheng was acting solely as an agent, and not assuming any personal liability, but that he was acting for a disclosed principal, Mr Liu. Sunnyvale is bound by theadvice given by Mr Zheng to Sunnyvale's agent, Mr Zhao.[36] There is nothing in the written agreement which gives rise to anyinconsistency between the oral advice to Sunnyvale, through its agent, and the terms7 The Elikon, above n 4, at [46].8 Bowstead & Reynolds on Agency, above n 3, Article 97 at [9-001].of the agreement. The purchaser is recorded as Mr Liu. The fact that Mr Zheng has signed the agreement does not alter the identity of the purchaser. The clear intention of the parties, ascertained from the text of the agreement itself, was that the only person who would be liable (and have rights) as purchaser was Mr Liu.[37] If Sunnyvale's argument about the primacy of Mr Zheng's signature wascorrect, the conclusion in this case would have to be that there is no contract at all. This is because the identity of both contracting parties would be too uncertain. The agreement, construed as a whole, clearly contemplates only one vendor and one purchaser. In respect of both parties uncertainty would arise as to who the vendor isand who the purchaser is. The purchaser in one part of the document, and what onthe face of it appears to be the operative part with the definition, is Mr Liu. On MrBlack's argument, in another part of the document, the purchaser is identified as MrZheng because it is his signature, and notwithstanding the fact that the name isillegible. The same would apply to the vendor. The operative definition identifiesthe vendor as Sunnyvale. But there is an unqualified signature of Mr Fermahmaking him the vendor on Mr Black's argument.[38] The need for certainty was discussed by Lord Millett in The Starsin,9 in apassage cited in The Elikon:10The identity of the parties to a contract is fundamental. It is not simply a term or condition of the contract. It goes to the very existence of the contract itself. If it is uncertain, there is no contract. Like the nature and the amount of the consideration and the intention to create legal relations it is a question of fact and may be established by the evidence. Such evidence is admissible even where the contract is in writing, at least as long as it does not contradict its express terms, and possibly even where it does.[39] The extrinsic evidence from Mr Zhao makes the position clear. Because it isdeterminative by itself it is perhaps unnecessary to refer to other evidence. Butgiven the significance of this, on a summary judgment application, I will note somefurther points which emerge clearly from the previous factual narrative.9 The Starsin [2003] UKHL 12, [2003] 1 Lloyd's Rep 571 at [175]. Footnotes omitted.10 The Elikon, above n 4, at [55].[40] Mr Fermah's evidence for Sunnyvale as to whom he understood his company was contracting with (which would be admissible in the case of contractualuncertainty) is entirely consistent with Mr Zheng's case.11 The further evidence from Mr Fermah about a possible partnership involving the purchaser and another person, does not alter this primary evidence relating to the contract itself, in terms of the identity of the purchaser.[41] Mr Fermah's evidence is also entirely consistent with the way in which both parties dealt with each other after the agreement was made. This is admissible evidence.12[42] It is of significance that Sunnyvale did not at any relevant point, prior to issue of the proceeding in April 2015, suggest that Mr Zheng was a liable party, in anycapacity. This was the case notwithstanding clear notice that it was Mr Zheng'ssignature on the agreement.[43] There is an added difficulty for Sunnyvale, also adverted to in the factual narrative. This is that at no point was Mr Zheng given notice to complete or notice of cancellation.[44] Mr Zheng has established that Sunnyvale cannot succeed on its claim that Mr Zheng has liability as a contracting party.The partnership claim[45] The partnership claim could not succeed even if there were an arguable legal and factual foundation for it. This is because the claim would be unenforceable under the Limitation Act 1950. The limitation point has been expressly pleaded by Mr Zheng, in an amended notice of application for summary judgment. The limitation period is six years. This expired before this cause of action was brought on 20 August 2015, as Mr Black acknowledged.11 This is the evidence quoted above at [13].12 See Gibbons Holdings Ltd v Wholesale Distributors Ltd [2007] NZSC 37, [2008] 1 NZLR 277. And see the discussion in Burrows Finn and Todd Law of Contract in New Zealand (4th ed, LexisNexis, 2012) at [6.2.2](H), pp 203-204.[46] Apart from the limitation point I am satisfied that Sunnyvale could not succeed on this claim. Even if there was a partnership between the two defendants,there is no evidence of any relationship of a legal nature arising between Sunnyvaleand at least one of the defendants which would entitle Sunnyvale to sue both of themas partners.Result[47] The second defendant is entitled to summary judgment. The plaintiff'sclaims against the second defendant are dismissed.[48] The second defendant sought costs on a 2B basis. The second defendant isentitled to costs on a 2B basis, together with reasonable disbursements. If any issuearises as to quantum that issue is to be referred to the Registrar for determination.____________________________________Woodhouse J