Some things should not and must not be done. Theft, for example, is illegal, and everyone should be able to recognise this without consulting a lawyer.
But when something appears perfectly ordinary, such as a property sale where the buyer and seller have an agreement that is both lawful and mutually beneficial, cultural backgrounds may influence the entire transaction and how it is conducted.
This issue's case concerns a property transaction between friends. Without consulting lawyers, the parties drafted a written agreement in China for the sale of a New Zealand property, setting out a lengthy list of clauses before signing it. What they did not anticipate was that this simple agreement would almost become an international dispute!
The case:
Mr Wang and Mr Li, both from China, had been close friends for many years before immigrating to New Zealand. Both were successful in their respective fields.
After arriving in New Zealand, Mr Wang bought a property. Once he obtained permanent residence with indefinite travel rights, he planned to return to China. Just then, Mr Li secured New Zealand residence and was preparing to move to this beautiful country. Buying a home was naturally part of Mr Li's immigration plans, while Mr Wang naturally wanted to sell his home before returning to China.
Given their close friendship, the transaction seemed an ideal fit.
For Mr Wang, selling privately without a real estate agent would save a substantial commission. Mr Li could buy a home for slightly less than market value. Why not? Because of their relationship, Mr Wang also agreed that Mr Li could move in before settlement.
As the subject of their negotiations was real estate, they put their agreement in writing. Three points deserve particular attention:
- Any dispute between the parties over money would be resolved under Chinese contract law;
- Any dispute arising from the performance of the agreement would fall under the jurisdiction of the courts where the property was located, namely New Zealand.
- The parties would separately sign a New Zealand sale and purchase agreement, but if its terms differed, their Chinese-language contract would prevail.
Life is unpredictable. Complications did indeed arise as Mr Wang and Mr Li carried out their agreement, preventing the property from settling smoothly. As time passed, property prices rose, and kept rising.
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These complications left each party convinced that he was in the right. Both wanted to protect their own interests, and ultimately they had little choice but to go to court.
Which country's courts had jurisdiction? New Zealand's. Yet during the hearing, the judge raised several questions about the contract they had signed in China. The most important was: which courts had jurisdiction over this contract, China's or New Zealand's?
Why did the judge ask this? Because the judge had to respect the intentions of the parties who signed the agreement. Yet the contract expressly stated:
1) Chinese contract law applied to disputes over money;
2) The courts where the property was located had jurisdiction over contractual disputes;
3) The Chinese-language contract took precedence over the signed English-language property sale and purchase agreement.
With a contract like this, can you tell whether China's courts or New Zealand's courts have jurisdiction? Was their agreement effectively two contracts, with money matters falling under Chinese jurisdiction and property disputes under New Zealand jurisdiction? Or had they simply added layer upon layer, making a straightforward matter unnecessarily complicated?
The parties ultimately settled the case. The lesson, however, is that the issues at the heart of Mr Wang and Mr Li's dispute were entirely avoidable. They could have avoided them by consulting their own lawyers beforehand, as your lawyer will give professional advice based on your needs.
For example, Mr Wang and Mr Li could simply have signed a New Zealand property sale and purchase agreement together. There was no need for a lengthy collection of confusing, tangled clauses. If a dispute later arose, the property was in New Zealand, so the courts here would naturally have jurisdiction.
A friendly reminder from YIJU: while respecting cultural differences, remember that the terms of a property sale and purchase agreement you sign are legally binding. When the agreement is carried out, an inadvertent oversight caused by not consulting a lawyer before signing may create even more trouble for you.
About the author
Gan Zhenyu, lawyer
Gan Zhenyu is the only criminal lawyer in New Zealand's Chinese community approved by the Ministry of Justice at the highest level, level four. He is also currently New Zealand's only Chinese criminal defence lawyer who independently handles jury defence and litigation, appears throughout proceedings, and can accept Ministry of Justice assignments to represent defendants in serious criminal cases.