IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2015-404-000647 [2015] NZHC 2106

BETWEEN	AUGUSTINE LAU AKA EE KUOH
LAU Plaintiff	

AND	
DALUN LI First Defendant	
	
LIPING CHEN Second Defendant	
	
BARFOOT & THOMPSON LIMITED Third Defendant	
	
CHARLES HSU Fourth Defendant	

Hearing:	1 September 2015	

Appearances:	
A Lau, the Plaintiff in person
DLC Liu for the First and Second Defendants
S Lucas for the Third and Fourth Defendants	

Judgment:	
1 September 2015	

ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

A LAU v D LI, L CHEN, BARFOOT & THOMPSON LIMITED AND C HSU [2015] NZHC 2106 [1 September
2015]

Introduction

[1]	The first and second defendants apply for orders for security for costs and requiring the plaintiff to provide initial disclosure.

[2]       The third and fourth defendants apply for orders for security for costs.

[3]       The plaintiff who is self represented has responded with applications for orders for security for costs against all defendants and to strike out their applications against him.

Background

[4]       The proceeding concerns a series of agreements for the sale and purchase of

219 Flatbush School Road, Manukau (the property).

[5]	The third defendant is a real estate agency, and the fourth is a real estate agent engaged by the third defendant.

[6]       The plaintiff and the fourth defendant met in June 2012.  In around October

2012 the fourth defendant showed the plaintiff the property.

[7]	On or about 15 October 2012 the plaintiff (acting under the power of attorney from Ms Dong Feng Lin):

(a)       Entered into an  agreement for purchase of the  property (the  First Agreement).  Under the terms of the First Agreement, the deposit was payable when the agreement became unconditional.  Settlement was to occur by 31 March 2015.

(b)	Entered into an agreement to purchase the neighbouring property, 423

Orminston Road, Manukau (the Second Agreement).

(c)       The First and Second Agreements required the concurrent purchase of both properties.

[8]       On or about 28 October 2012, the First Agreement was varied.  The vendor agreed to give Ms Lin a first interest to purchase the property within 18 months.

[9]       In early 2014 the vendor gave Ms Lin consent to on-sell the property, prior to the settlement of the First Agreement.

[10]     During  February  and  March  2014  the  third  defendant  was  engaged  to investigate the possibility of an on-sale.

[11]     On 10 March 2014 the plaintiff (exercising his power of attorney from Ms Lin), entered into a sale and purchase agreement with a Mr Jazbani (the first on-sale agreement).  The first on-sale agreement was subject to conditions, including a due diligence condition.

[12]     Then the fourth defendant approached the first defendant about the property.

[13]     On 22 March 2014 Mr Jazbani verbally advised the fourth defendant he was unable to satisfy the due diligence condition.

[14]     On 27 March 2014 the fourth defendant sent a text message to the plaintiff advising that:

(a)       Mr Jazbani would decide whether to go ahead with the first on-sale agreement by 31 March 2014; and

(b)       If Mr Jazbani decided not to, then the backup offer with the first defendant  (through  his  company  Wanda  Developments  Limited) would “kick in”.

[15]     On 2 April 2014 the fourth defendant sent a text message to the plaintiff advising that Wanda Developments Limited may go unconditional if the conditions are satisfactory to the first defendant’s lawyer.   The plaintiff instructed the fourth defendant to prepare the vendor’s offer for the property and to present that to Wanda Developments Limited.

[16]     On 3 April 2014 a vendor’s offer of sale was given to the first defendant (the backup on-sale offer).

[17]     On or about 8 April 2014:

(a)     The first defendant advised the fourth defendant that Wanda Developments Limited would not proceed with the backup on-sale offer;

(b)	The backup on-sale offer was destroyed by the first defendant; and

(c)       The plaintiff met with the first defendant and the first defendant told the plaintiff directly that he was not going to proceed with the backup on-sale offer;

[18]     In summary the plaintiff had purchased the property for, it would appear, the purpose of on-selling the property.  The plaintiff sues the first and second defendants on the basis that they had contracted to purchase the property.  The third and fourth defendants are sued because of an alleged breach by them of duties to the plaintiff as the plaintiff’s sales agents.

[19]     The plaintiff alleges the backup on-sale offer had been signed by the first and second defendants.  The first and second defendants deny there is any enforceable agreement and say they never accepted the terms of the backup on-sale offer.

[20]     The plaintiff has, recently, provided copies of mobile phone texts in support of a claim that on the evening of 3 April 2014 he met with the fourth defendant and the first and second defendants when an agreement was signed.  The plaintiff does say however that the purchaser took both copies of the agreement because he had little understanding of English and needed to consult with other parties on whose behalf the purchase offer was to be made.

[21]     The plaintiff says the fourth defendant’s email to him on 22 April 2014 confirms the agreement was signed by and on behalf of the purchaser when the fourth defendant wrote:

…The  other  agreement  was  given  to  the  buyer  who  cannot  understand
English so he has to discuss with his partners…

[22]     The plaintiff alleges the third and fourth defendants have breached a duty of care by failing to keep a copy of the (allegedly) signed backup on-sale offer.  The third and fourth defendants say they did not receive a signed backup on-sale offer from the first and second defendants.

[23]     It does not appear to be an issue that the plaintiff held a power of attorney on behalf of Ms Dong Feng Lin.

The statement of claim

[24]     The plaintiff has filed his own statement of claim.  The statement of claim is a very brief document.  It describes him as having been involved in negotiation of an agreement with the first and second defendants that had been arranged by the third and fourth defendants at about 8:30pm on 3 April 2014 “at Botany junction in my mobile text record that will present to the Court during the hearing”.

[25]     The plaintiff said it was an unconditional agreement that “had been stated in my mobile text record that will present to this Court during the hearing”.

[26]     The plaintiff then pleads:

3.         Unfortunately   [the   fourth   defendant]   may   given   the   original agreement to the [first defendant] as stated in the email correspondence in Document Marked “A” where [the fourth and third defendants] acknowledged all parties his/their lack of duty of care and negligence as well as [the second and third defendants] in breach of contract.

[27]     In essence it appears the plaintiff is relying on things said to him or to have been texted to him as proof of his claim that a binding agreement was concluded with the first and second defendants.

[28]     The plaintiff seeks orders from the Court that the first and second defendants pay damages in the sum of $500,000 to him.

[29]     The plaintiff’s claim against the third and fourth defendants is expressed:

The third and fourth defendant  as the plaintiff’s sales consultant should always kept signed agreement for the plaintiff at all material times.   Only photocopy agreement allowable to be taken away by any purchaser [first and second defendant].

[30]     Losses of $500,000 are also sought from the third and fourth defendants. When the plaintiff filed his claim he also filed an affidavit he swore.   Largely it contains copies of a text correspondence between the plaintiff and others [including the fourth defendant] at about that time the plaintiff claims a binding agreement was entered into for the purchase of the property.

[31]     At the core of the plaintiff’s claims is that he was sent a texted message from the third defendant advising him the first defendant had signed the backup on-sale offer, as the second defendant attorney.

The defendant’s applications for security for costs

[32]     Rule 5.45 enables a Judge to require security to be paid if there is reason to believe a plaintiff will be unable to pay those costs if unsuccessful in the proceeding.

[33]     If satisfied a plaintiff is unable to meet costs if unsuccessful then the Court may order the giving of security and if of the view security ought to be given then the Court needs to consider in what amount and whether also a stay of proceeding should be ordered pending payment of any security ordered.

[34]     On behalf of both the first and second and the third and fourth defendants it is submitted there is clear evidence to support the requirement for payment of security.

[35]    Both sets of defendants have communicated with the plaintiff and have undertaken their own enquiries regarding his means to meet any adverse costs award.

[36]     In the mix of those the Court notes:

(a)	The plaintiff told the fourth defendant that he has been blacklisted by all New Zealand banks;

(b)       The plaintiff appears to have no assets of any value in New Zealand other than shareholdings in companies that do not appears to be actively trading;

(c)       The plaintiff has failed to pay an earlier award of costs of $8,786.42 that was made against him in Lau v ACP Media Limited and Chisholm1;

(d)       The  plaintiff  has  been  invited  to  provide  evidence  to  confirm  he would  be  able  to  meet  an  adverse  costs  award  but  he  has  not responded to that request.

[37]     To the Court the plaintiff advised he was no longer blacklisted by New Zealand banks; and has recently entered into an agreement regarding the payment of costs awarded against him in 2013.

[38]     In the Court’s discussion with the plaintiff it is clear he expects a significant return from the residential development underway in that area, in which the property is a part.  Otherwise it appears he is without assets or any regular income.

Considerations

[39]     Other relevant factors for consideration by the Court include:

(a)	Balancing the interests of the plaintiff and the defendants; (b)	The merits of the plaintiff’s claim.
(c)	Impecuniosity; and

(d)	Whether the plaintiff has an unsuccessful litigation history.

[40]     The merits of a claim are often not able to be assessed at an early stage in the proceeding.  In this case the plaintiff believes the first and second defendants signed

1 CIV 2013-404-658, 21 May 2013.

an unconditional offer for purchase.  His evidence relies on what he says he was told and what he says text communication provided.   However he has not provided in evidence the text he says he received confirming that the first defendant had signed the backup on-sale offer.

[41]     Also it seems that even if there was any signed or partially signed agreement that the first defendant elected not to proceed and subsequently destroyed the acceptance before there was any effective communication of same to the plaintiff or an agent.

[42]     There is apparently, no other evidence to indicate the existence of a signed and enforceable contract.

[43]     Even if the existence of a written agreement was provable it is clear that in order to prove loss caused by the defendants, the plaintiff would need to establish that he and his principal were in a position to settle the First Agreement.

[44]     There  is  evidence  of  the  plaintiff’s  previous  history  as  an  unsuccessful

litigant.

[45]     Finally of the matters for consideration the Court comments that it is unclear why the proceeding has been brought in the name of the plaintiff.   The property transactions which are the subject of this proceeding were entered into by Ms Dong Feng Lin for whom the plaintiff held power of attorney.  No explanation has been provided why Ms Dong Feng Lin is not a party to this proceeding.  It is unclear what authority the plaintiff has at all to bring this proceeding about.

[46]     In summary it appears to the Court the claim is not a very strong one; that there is  good  reason  to  believe  the  plaintiff  would  not  be  able to  pay costs  if unsuccessful with his claims.

[47]     The Court considers it just to fix orders for security.  In that regard the Court has considered counsels’ calculations of the proceedings costs on a 2B basis.

[48]     The plaintiff’s applications for security and strike out are misconceived.  No authority exists to enable the Court to consider either of those applications.   It is clear that even if the plaintiff had proceeded by way of a summary judgment application that he would have been unsuccessful.

Amount of security

[49]     The Court fixes security to be paid in the sum of $20,000 on account of the claims against the first and second defendants, and in the sum of $20,000 on account of the claims against the third and fourth defendants.  The total sum of $40,000 is to be paid into Court within 20 working days and until paid there will be a stay of this proceeding.

[50]     The sums have been calculated to provide security for costs to the stage of setting the proceeding down for trial.

[51]     Leave is reserved to the defendants to apply for further security for trial costs, when the matter is to be set down for trial.

First and second defendants’ application for order for initial disclosure

[52]     The plaintiff opposes this application.   He says all required disclosure has been provided by the affidavit he filed with his proceeding.

[53]     By a solicitors letter dated 13 April 2015 the first and second defendants requested further initial disclosure including:

(a)	A copy of the alleged sale and purchase agreement between Ms Lin and the second defendant;

(b)	All relevance correspondence between the parties;

(c)	Screen shots of the text messages referred to in the statement of claim;

(d)       A copy of the original sale and purchase agreement between Ms Lin and the head vendor; and

(e)	A copy of all correspondence between Ms Lin and the head vendor.

[54]     In the Court’s view the plaintiff’s affidavit does not provide that which the first and second defendants are entitled to because:

(a)       No  copy  of  an  alleged  agreement,  signed  or  unsigned,  has  been produced by the plaintiff;

(b)       The statement of claim refers to text messages stored on the plaintiff’s mobile phone that confirmed the existence of an unconditional agreement and it is not clear whether all of these have been produced;

(c)       Whilst the plaintiff deposes that although Ms Lin is not the registered proprietor of the subject property Ms Lin has nevertheless signed an agreement to purchase the said property and is therefore entitled to on sell the same.  Despite this the plaintiff has not produced the sale and purchase agreement between Ms Lin and the head vendor, or any of the correspondence between those parties.

[55]     The Court agrees it is appropriate to make the orders sought by the first and second defendants and directs accordingly that the plaintiff provide those documents within 20 working days of the date of this order.

Costs

[56]     The plaintiff shall pay the costs of the first and second defendants, and the third and fourth defendants on a 2B basis together with disbursements.

Associate Judge Christiansen