Bergman v Bergman
[2014] NZHC 555
•24 March 2014
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
CIV-2012-488-830 [2014] NZHC 555
BETWEEN CHRISTIAAN DIEDRICK BERGMAN
Plaintiff
AND
ARTHUR THEODORUS BERGMAN Defendant
Hearing: 2,3, 4 December 2013 Appearances:
R C Mark for Plaintiff
D James for DefendantJudgment:
24 March 2014
RESERVED JUDGMENT OF ELLIS J
This judgment was delivered by me on Monday 24 March 2014 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Counsel/Solicitors:
R C Mark, Barrister, Kerikeri
D James, Palmer Macauley, Kerikeri
BERGMAN v BERGMAN [2014] NZHC 555 [24 March 2014]
[1] Christiaan (Chris) Bergman and Arthur (Arty) Bergman are brothers. They, together with three other brothers (Johannes/John, Benedict/Ben and Dirk/Derek) have, for some time, been involved in the business of selective rimu logging. In general terms, this involves locating blocks of land on which rimu are present, negotiating with the owners for access and cutting permission, identifying which trees can be felled, obtaining logging permits from the Ministry of Forestry, cutting down the trees, and milling, drying and selling the wood.
[2] The brothers’ rimu businesses have largely been undertaken through entities owned and controlled by them, including two companies that assume particular significance in this litigation, namely:
(a) Northland Kauri Ltd (NKL), which was incorporated in 2002 and was originally owned and controlled equally by John, Ben and Arty but which, since August 2011, has been solely owned and controlled by Arty;1
(b)Wild Life Properties Ltd (WLP) which was incorporated in 2001 and has always been equally owned and controlled by Chris and Dirk.2
[3] Chris and Arty are embroiled in a dispute about whether or not Arty has discharged a debt of $159,549.65 owed to Chris as a result of his transfer to Arty of shares in another family company, Mahoe Farm Kerikeri 1978 Ltd (the share debt).3
[4] The acknowledgement of debt signed by both brothers at the time of the share transfer in April 2009, stipulated that Chris would not demand payment for the shares until 2019 and that such demand could be made “in timber in part or in full satisfaction of the debt, of rights at a value (GST inclusive) to be agreed between us”. Failing such agreement, it said, payment would be “made in money by cleared
funds”.
1 Arty has fallen out with John and Ben.
2 Chris and Dirk have also fallen out.
3 That company was placed in liquidation and its place effectively taken by Mahoe Farms 2009
Ltd. All eleven of the Bergman siblings (together with two of their spouses) are shareholders in that company.
Chris’s claim, Arty’s defence and the litigation history
[5] In Chris’s statement of claim dated 29 November 2012 he acknowledges that he has accepted, in part payment of the share debt, a transfer by Arty of logging rights to two blocks at Ohura owned by Joanna and David Loft (the Loft blocks). These rights are said to be valued at $27,428.4 But Chris says that no other payments have been made and no other timber rights have been transferred to him. Accordingly, in these proceedings Chris seeks a declaration that the remaining
$132,161.65 has not been paid, and that it will be due when demand is made in
2019.5
[6] On 22 January 2013 Arty filed a statement of defence and counterclaim. In it, he pleaded that:
(a) as well as the Loft blocks (whose value of $27,428 was at that point admitted) he had “caused various rights to harvest logs to be made available from … NKL … to WLP” including log harvesting rights to the properties known to the parties as the “Maori Blocks, Maxwell and Black”.
(b)there was a verbal agreement that if Arty provided WLP “the benefit of logs to which NKL had license to harvest”, Chris would acknowledge that the share debt had been paid. He averred that the value of the logs “was agreed to be calculated at one half of the conventionally, or trade accepted, net value … of harvested logs” and that this one half proportion represented Chris’s one half shareholding in WLP.
(c) by means of such transfer WLP had received $199,500 and that
Chris/WLP therefore owed him $39,950.35.
4 By “logging rights” and “timber rights” is meant the licences granted by landowners to carry out selective logging. Such rights may be traded.
5 An amended statement was filed in June 2013, but it was materially identical to the first. All figures are from the statement of claim. In fact $27,428 plus $132,121.65 is $159,58 9.65, although the original debt was for $159,549.65.
[7] Arty applied for summary judgment against Chris. Chris then applied for summary judgment against Arty, although this application was later abandoned. In both Arty’s application for summary judgment and his notice of opposition to Chris’s application he refers to having “an available set-off against the debt and the counterclaim for an amount greater than the alleged debt”.
[8] Arty’s summary judgment application proceeded to a hearing before Associate Judge Bell, who dismissed it.6 In doing so, the learned Judge noted the significant factual disputes and the background of family disharmony. He cautioned against relying on evidential material that related to, or arose out of, other disputes between the Bergman brothers7 and the uncertain provenance and self-serving nature of a number of the documents relied upon by Arty.
[9] At [50] he concluded:
Arty’s application falls a long way short of showing a watertight defence to Chris’s claim. Summary judgment is appropriate when it can be said that no useful purpose would be served by requiring the case to go to a full hearing after going through all the interlocutory procedures, because the answer is clear-cut already. However, that is not this case. At this stage, before he has obtained discovery, Arty’s case is piecemeal and patchwork. It may be that after a full hearing, when witnesses on both sides have been fully cross- examined and when all the documentary record has become available, Arty may be able to make out his case that he has discharged his debt to Chris. However, faced with so much factual uncertainty, gaps in Arty’s case and factual differences between the parties, I cannot make that finding on this summary judgment application.
Subsequent events
[10] Two important things occurred following Judge Bell’s decision. First, the pleadings were amended. Although Chris’s claim against Arty remained unchanged,
Arty’s defence was amended (twice). In his defence dated 24 June 2013, Arty
6 The onus was on Arty to establish that Chris had no tenable claim
7 There is other litigation between a different company owned by Chris and NKL in the District
Court. Although I was advised that that litigation was unrelated to this, my own view (which is reflected in the conclusions I have reached in this case) is that both that litigation, and this, form part of a much bigger picture involving the historical intermingling of the brothers’ business affairs. Due to the brothers’ failure to record agreements reached between themselves and to keep adequate records of any kind, these dealings can only be untangled with the utmost difficulty.
pleaded for the first time that there had been, a joint venture between WLP and NKL
between 2007 and 2010.8
[11] As well, the existence of a verbal agreement with Chris that the share debt could be repaid by way of benefits he received through WLP was repeated and amplified. The pleading is that:
(a) particular blocks “which were at one point earmarked to the debt repayment…. were and have been listed since 2008 as” Maori Blocks, Maxwell, Blacks and Lofts;
(b)all five brothers (as owners of NKL and WLP respectively) agreed that harvest returns for these blocks would be credited to Chris to extinguish Arty’s share debt;
(c) WLP was given sole credit for harvest returns for these blocks and
that this was reflected in that company’s accounts which showed
$159,549.65 paid in and then credited to Chris’s current account;
(d)In reliance on the extinguishment of the share debt Arty had never required WLP to account for the joint venture harvest returns.
[12] Reference is made in the pleading to two documents that had been relied upon by Arty in the summary judgment proceedings which, on their face, indicate that (at one point) Chris had accepted that the share debt had been discharged through the transfer of logging rights.9 Lastly, the amended defence also asserts that Arty has overpaid Chris for the share debt by $70,225.
[13] The second development was the discovery by Arty’s accountant of a letter
signed by Chris, dated 13 September 2011. The acknowledgement was in the following terms:
8 This joint venture had, however, previously been referred to in the affidavits filed for the purposes of the summary judgment proceeding.
9 The significance of these documents will be discussed in more detail below.
TO: ARTI (sic) BERGMAN
I refer to the acknowledgement of debt attached, date 26th April 2009.
I acknowledge that I have received payment in full by way of Timber Rights
As per our letter to you dated 27th October 2010, I advise that in the financial year ended 31 March 2010 this debt has been recorded by way of Timber Rights Expenses Introduced into Wildlife properties Limited of which I am a shareholder.
No GST has been claimed as no GST invoice was supplied by Arti [sic].
[14] This letter resulted in a further amendment to the statement of defence, on 27
August 2013. In Chris’s reply he admitted to signing this letter but said that he was mistaken when he did so.
Jurisdiction
[15] It is necessary to record at this early point that Mr James did not seek to raise any issue about the Court’s jurisdiction to make declarations of the kind sought by Chris in these proceedings. But in my view the existence of jurisdiction is far from clear. In a nutshell, I have some doubt as to whether it is possible or appropriate for this Court to make a declaration that a debt that has not yet fallen due has not been discharged.10
[16] But as I have said, Mr James did not raise this issue, and I heard no argument on the point. Accordingly I am prepared to deal with the matter on the basis of the evidence and arguments before me.
The evidence: some preliminary matters
[17] Before commencing my analysis of the evidence in this case, it is necessary to record my approach to two preliminary matters; the burden of proof and the
credibility of witnesses.
10 A declaration of that kind certainly does not appear to fall within those which are contemplated by s 3 of the Declaratory Judgments Act 1908. Chris’s claim also relied on the Court’s inherent jurisdiction in that respect.
Burden of proof
[18] Because of the schisms in the Bergman family (which I discuss further below) and the poor documentary record, the burden of proof necessarily assumes some importance in this case which I consider to be one of the sort that Lord Brandon had in mind when he said:11
... the Judge is not bound always to make a finding one way or the other with regard to the facts averred by the parties. He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden. No Judge likes to decide cases on burden of proof if he can legitimately avoid having to do so. There are cases, however, in which, owing to the unsatisfactory state of the evidence or otherwise, deciding on the burden of proof is the only just course for him to take.
[19] The point that I think needs to be made in this respect is that this is not, and could not be (until 2019), a debt recovery claim. Were it such, then the initial burden would be upon Chris to establish the basis for the debt and that demand had been made and no payment subsequently made. But the burden of showing that the debt had (long since) been discharged would then be on Arty. By contrast, however, Chris seeks a declaration that a debt which is not yet due has not been repaid.
[20] Whatever may be the difficulties in proving a negative, I consider that this is nonetheless the onus that Chris has assumed by bringing his claim in the present form and at the present time. I therefore proceed on the basis that it is not for Arty to establish that he has repaid the share debt but rather for Chris to satisfy me, on the balance of probabilities, that Arty has not repaid it.
Credibility
[21] The second preliminary matter that I need to record is that although I did have the benefit of seeing not only Chris and Arty, but their brothers give evidence (John for Chris, and Dirk for Arty) the internecine conflicts between them inevitably flavoured what they said and made it difficult to regard anything they said as objective or compelling. Although, in my assessment, Chris and John presented their
evidence in a more engaging, articulate and apparently frank way than did Arty and
11 Rhesa Shipping Co SA v Edmunds; The “Popi M” [1985] 1 WLR 948 at 955 (HL).
Derek, I am unable to place any significant weight on that. The general admonitions against a Court relying to any great extent on witness demeanour seem to me to apply with particular force in a case that is riven by a long-standing and deep-seated discord between all the witnesses. Moreover, it seems to me that the specific family dynamics (which were obvious during the trial) arising from the fact that Chris is the oldest of the eleven Bergman siblings, and Arty is (I think) the youngest, adds yet another level of unsafeness to any conclusions that might otherwise be drawn on the basis of the way in which they each presented their evidence.
[22] Accordingly I consider that it is the documentary record, with all its limits and defects, which must principally guide my decision in this case. So it is to that record that I now turn.
The evidence: analysis
[23] The starting point is, of course, that Chris’s farm shares were transferred to
Arty and the resulting debt from Arty to Chris was formally documented in April
2009. There can, therefore, be no debate that the debt was due at that date. Although demand could not be made until 2019 there was nothing to preclude early payment. It is also relevant that the acknowledgement of debt also expressly recognised (albeit in a way that was rather poorly phrased) that repayment could be made by a transfer of timber rights.
[24] It is also undisputed that during the period 2007 – 2010 the business affairs of Chris, Arty, John, Derek and Ben were intertwined, regardless of the duration and content of any formal joint venture between them. It was quite apparent from the evidence overall that their shared business endeavours were not only plagued with personal friction, but poorly recorded. There also appear to have been periodic attempts by some or all of the brothers to resolve historical differences between them and to formulate an agreed basis for moving forward. On occasion, attempts at mediating their disputes were made by others, including their sisters, spouses and friends.
[25] One example of these points in action was the negotiations over the redistribution of shares in the Mahoe Farm Kerikeri 1978 Ltd. Although I heard
little direct evidence about this, it was quite apparent that the negotiations were not straightforward and had gone on for some time prior to the signing of formal documents in April 2009.
[26] Another example of this pattern of behaviour is the dispute between Chris and Derek, as the owners of WLP. This resulted in the drafting of two of the documents that assume some importance in this litigation. The agreement between Chris and Derek dated 31 March 2010 records in its preamble:
B. The object of this agreement is to formalise and summarise the outcome of many meetings that have taken place recently between the shareholders their aides and advisors to allay historic and current disagreements between the parties concerning the operation of the company. Furthermore it is the understanding of both parties … that the purpose of this agreement is to conclude and finalise all issues historic and otherwise of the company up to and including the financial years 2010.
[27] And clause 3 of the agreement includes as “Special Conditions” the following:
3.1 It is agreed that all company issues prior to 31st March 2010 have been amicably settled and that there shall be no further discussion or recourse relating to any issue covered by this document
[28] Notwithstanding these stated aims and resolutions, however, the agreement quite clearly did not resolve matters between Chris and Derek at all. This is plain from a later document that was prepared by Chris in 2011, entitled “Wild Life Properties Ltd: The Forgotten Truth”. I shall return to both these documents later.
[29] In any event, the short point is that the evidence establishes that the business relationships between all five brothers were fractious, at best. It seems that their periodic attempts to resolve their disputes sometimes took the form of an agreement to “wipe the slate clean” and start again. But equally, it seems that the “clean slate” approach did not necessarily endure. Second thoughts intruded and old grievances resurfaced.
[30] This wider context has some bearing on my assessment of the more specific evidence about the “repayment” of the share debt and, in particular, of the group of documents which, on their face, evidence some form of settlement of the share debt,
and an acceptance by Chris in 2010 and 2011 that he would treat the debt as having been repaid. I discuss these documents in the paragraphs that follow.
[31] First, there is the agreement dated 31 March 2010 between Chris and Derek which was executed by them in the context of an ongoing and rancorous dispute between them over the running of their company, WLP. I have already referred to its stated objects above. But of more direct relevance is what is contained in clause
2, under the heading “It is agreed as follows”. There, it says:
Both parties agree to accept non-payment of $159,000 of Rimu Permits to Wildlife Properties by Chris Bergman in exchange for Derek Bergman accepting no repayment due to losses to Wildlife Properties relating to the Helicopter whilst in Wildlife Properties Books.
[32] This clause is, on its face, a little obscure. But Mr James submitted that it meant that the parties were agreeing that Chris would bring into WLP the $159,000 worth of logging rights that he had obtained from Arty in payment of the share debt, in exchange for Derek not requiring the repayment of any losses accruing to the company as a result of the purchase of a helicopter.
[33] Mr James’ interpretation is borne out by a letter written on 27 October 2010.
Whitelaw Weber (WLP’s accountants) wrote to BDO (NKL’s accountants) stating:
We refer to the agreement dated 26th April 2009 between Chris Bergman and Arti [sic] Bergman for the transfer/sale of shares in Mahoe Farm Ltd for Rimu Blocks to the value of $159,549.65.
This is just to advise that we have been instructed to bring the above transaction into Wildlife Properties Ltd as at 31st March 2010.
[34] It can reasonably be assumed that “instruction” to which this letter refers here
came from Chris.
[35] But as I have noted at [29] above, it seems that the March 2010 agreement that all issues between Chris and Derek had been resolved was honoured in the breach. This is apparent from the “Forgotten Truth” document which was authored by Chris and is dated 3 August 2011. The document appears to have been prepared in response to something written by Derek, in the context of the resurfacing of a difference of opinion between the two brothers about their respective contributions
to the operation of WLP. Thus, in the course of detailing his own contribution to the company, Chris said:
I sold 159,000 of my personal farm shares to Arty Bergman in exchange for some of the rimu cutting rights. These blocks were returning approximately
$300,000 of timber revenue which has remained part of WLP.
[36] The cost to WLP of the helicopter was apparently a continuing sore point with Derek. It was in that respect that Chris said (in the same document):
The money for the helicopter has come mainly from the Rimu logging rights
I personally bought from Arty in exchange for my shares in Mahoe Farm …
[37] In the meantime (during 2010 and the first half of 2011) it seems that Ben and John (who were still at that stage co-owners with Arty of NKL) were expressing concerns about the way in which NKL had been operating.12 My understanding is that at around this time they instigated what Arty referred to as a “forensic audit” of that company’s affairs. And in the context of a much longer document prepared by them detailing the reasons for their disquiet, they noted that Arty’s repayment of the
$159,000 share debt out of NKL’s timber rights had not been reflected in his NKL Current Account for the year ending 31 March 2010. They said :
$159,000 traded to Chris Bergman for shares in the Mahoe farm in exchange for native timber product belonging to NK. Steven has the paper work for this. What has been done about it?
[38] The “Steven” referred to here was Steven Rundle, who was NKL’s accountant. He was too unwell to attend the hearing before me but did file an affidavit. His affidavit did not refer to or annex any “paper work” about the detail of this exchange, but he did confirm that NKL’s accounts were prepared on the basis that repayment had been made, and that there was further correspondence between Whitelaw Weber and BDO about the issue. Thus:
(a) on 12 September 2011, NKL’s accountants (BDO) responded to
Whitelaw Weber’s letter of October 2010. They said:
We refer to your letter to Northland Kauri dated 27 October
2010 …
12 As I understand it, these concerns culminated in their giving up their shareholding and resigning as directors in August 2011.
Arty has recently met with us and has asked whether you have a copy of the agreement dated 26 April 2009 referred to in your letter? If so can you please forward a copy to us.
Furthermore do you hold any supporting documents, GST invoices or calculations relating to this amount? Was GST claimed on this amount by Wildlife Properties Ltd?
(b)in December 2011, when NKL’s financial statements for the year ending 31 March 2010 were finalised, NKL’s accountants recorded a book entry sale of timber to WLP for $159,549.
[39] Notably, it was on the day immediately after BDO’s belated response to Whitelaw Weber’s 2010 letter (ie on 13 September 2011) that Chris signed the document acknowledging that the share debt had been repaid. I have set out its unequivocal terms at [13] above. The misspelling of Arty’s name and the tell-tale use of the first person plural in the third sentence suggest that the document was
drafted by Chris’s accountants, Whitelaw Weber.13 It must be assumed that they did
so on his instructions.14
[40] I am unable to accept Chris’s evidence that he was under some misapprehension, or was simply not thinking straight when he authored and/or signed the documents I have set out above. If there had just been one such document, read and signed in haste, I might be differently inclined. But there was a series of them, written for different audiences and different purposes. He is an intelligent, experienced businessman. I recognise that it may merely have suited Chris’s other interests (namely his dealings with Derek) to assert that repayment had been made, and that documents such as “The Forgotten Truth” must be viewed in that context. But I consider that his repetition of that statement, his instructions to his accountants and his signing a formal acknowledgment to that effect are acts that are inexplicable unless there was some foundation in reality for them.
[41] The simple point is that the documents discussed above make it impossible for me to grant the declaration sought by Chris. Rather than satisfying me that the
13 Arty’s name was misspelled in the same way in Whitelaw Weber’s letter of 27 October 2010.
14 It appears that Arty did not receive a copy of the signed acknowledgement, and it was located in
his accountant’s offices during the course of this litigation.
farm share debt has not been repaid, those documents form a fairly cohesive basis for concluding that it has. But I do not need to go so far as to make any affirmative finding in this respect.
[42] The issue that then arises is whether, having formed this view (that the documents discussed above make it impossible for me to grant the declaration sought by Chris) it is necessary for me to satisfy myself as to precisely how the repayment was effected and, in particular, precisely which timber rights were transferred by Arty to Chris.
[43] Even prior to the commencement of this litigation it has been Chris’s position that it is over to Arty to prove such matters. That might be the case if this was a debt recovery action brought in 2019, although the documents I have just canvassed must call even that into question. But this is not such a case. And for the reasons I have already given, I do not consider that the burden presently operates in that way.
[44] Nonetheless, I heard a considerable amount of evidence that focused on the joint venture between WLP and NKL in 2007 or 2008.15 That joint venture, which operated under the name of “Bergman Brothers”, was the means by which Arty said that the share debt had been repaid.
[45] If the joint venture evidence showed that there was no possibility that the debt could have been repaid in this way, then, I suppose, that might outweigh the evidential heft of Chris’s various acknowledgements and admissions that I have detailed above. For completeness, therefore, I briefly consider that evidence.
[46] The starting point is that there was, as I understood it, agreement between the parties that the terms of the joint venture were, in a general way, accurately captured in an undated and handwritten (by Arty) document entitled “Deal with Chris on
Rimu” which says:
15 Because of differences that had arisen between the directors and shareholders of NKL about the way in which that company was being operated, John, Ben and Arty agreed that NKL would participate in the joint venture through a new company, Sustainable Harvesting Ltd (SHL). SHL was incorporated in May 2008 and its shareholders and directors were the same as the shareholders and directors of NKL, namely John, Ben and Arty.
1. Both put effort into sourcing blocks
2. Arty responsible for - Forest Assessment (volume)
- Permits
- ALP (tree selection)
- GPS and mapping for cutters
3. WLP responsible for cross-cutting.
the above to balance equally – no charge
4. milling to be charged by WLP or logs split and we will mill our own.
[47] The focus of the dispute was, rather:
(a) whether the blocks known as the Loft, Maxwell, Black and Mangapapa C1 and C2 (commonly referred to by the Bergmans as the “Maori” blocks) formed part of the joint venture; and, if so
(b) whether NKL’s share of the timber rights was retained by Chris/WLP
as payment for the share debt.
[48] Chris’s position was that the Maxwell, Black and Maori blocks were sourced and harvested by WLP prior to the commencement of the joint venture and never formed part of it. He accepted, however, that WLP had been given the logging rights over the two Loft blocks (which had been sourced by Arty/NKL) in part payment of the share debt.
[49] In my view the evidence indicates that the Loft, Maori, Black and Maxwell blocks were regarded by both brothers as part of a particular group. The nature of that grouping may well have been that it contained blocks that had been sourced by NKL and WLP separately and prior to the commencement of the joint venture. That said, there does appear to have been a combined effort involved in bringing some or all of those blocks to harvest. There are also apparently contemporaneous documents which suggest that Arty’s understanding, at least, was that the timber
rights in relation to the Loft, Maxwell, Black and the Maori blocks were in some way going to be used to pay off his farm share debt.16
[50] I accept that the documents relied on by Arty, and the harvesting dates for the relevant blocks, predate the formalisation of the farm share debt in April 2009. Although Mr Mark submitted that this timing engaged the rule that past consideration is not good consideration, I do not think that is of any particular relevance here. The joint venture was wound up in March 2010, when NKL sold its share in the joint venture to Mr George Houry. And it was at the end of the same month that Chris is first recorded as acknowledging that repayment had been made, in his agreement with Derek (above). It seems quite possible that it was in the ten or so months between the formalisation of the share debt and the cessation of the joint venture that some form of final division and reconciliation between the parties (probably via intermediaries) took place. And the existence of some form of agreement or understanding after the formalisation of the farm share debt is also consistent with Chris’s own acceptance that the harvest rights to the Loft blocks were transferred in partial repayment of that debt.
[51] In summary, there is nothing in the evidence about the joint venture that would cause me to alter the conclusion I have reached at [41] above. While (taken by itself) the joint venture evidence might not be clear or specific enough to satisfy a Court that repayment of the farm share debt has been made, that is not presently material. Rather, the point is, as I have said, whether the joint venture evidence was sufficiently compelling to tip the evidentiary balance in Chris’s favour and (thus) to satisfy me that repayment has not been made. In my view it is not. On the contrary, it is capable of being interpreted in a way that is consistent with repayment having occurred.
Consequential matters
[52] It follows from these conclusions that it is not necessary for me to address the legal submissions advanced by Mr James which sought to give the March 2010
agreement between Chris and Derek, and Chris’s acknowledgement of 13 September
16 The key aspects of the rather sparse and incomplete documentary record of the venture is set out
in Associate Judge Bell’s judgment.
2011 independent legal force.17 In my view those arguments had no merit. Ultimately they were merely a distraction from the real issue in this case which, in my view, is wholly factual in nature.18
[53] It also follows that Arty’s contention that he has in fact overpaid the farm share debt has no place in this proceeding. The form of the declaration sought by Chris does not permit a finding of that nature and there is no extant counterclaim. Nor, in my view, would it have been beneficial to Arty to have brought such a claim. Moreover, on the current state of the evidence it is tolerably plain that any settlement of the share debt that did occur did not involve some minute accounting exercise involving a precise valuation of the rights transferred. More likely is some kind of global arrangement whereby past all debts were forgiven in exchange for all the rights in relation to particular blocks.
Conclusion
[54] In summary, Chris has not discharged the onus upon him to establish that the farm share debt has not been repaid. There is, indeed, reasonably compelling evidence that, at this stage, points the other way. Accordingly and on the assumption that I had jurisdiction to make the declaration sought, I would nonetheless decline to do so.
[55] It follows that Arty is entitled to his costs on a 2B basis, in the usual way.
Rebecca Ellis J
17 The submissions were that (a) the 2010 agreement was binding as between Chris and Arty by virtue of the Contracts Privity Act 1982 and (b) the 13 September 2011 acknowledgement was binding on Chris by virtue of s 92 of the Judicature Act 1908.
18 Put briefly, it could not on any analysis be said that an agreement settling a quite separate dispute between Chris and Derek was made for the benefit of Arty. And the purpose of s 92 is to provide a statutory exception to the common law rule that part payment of a debt cannot operate to satisfy the whole. It is no part of Arty’s case that there has been accord and satisfaction as a result of Chris accepting part payment of the share debt.
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