Birnie v Outward Limited - [2023] NZHC 3008

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2020-485-759

[2023] NZHC 3008

BETWEEN
WILLIAM GEORGE PORTER BIRNIE

First Plaintiff

CHARLES GILBERT PEARCE
Second Plaintiff

AND

OUTWARD LIMITED

First Defendant

PRICEMAKER LIMITED
Second Defendant

ROB DACRE ROGERS

Third Defendant

PLAYMAKER LABS LIMITED

Fourth Defendant

Hearing: 20 September 2023

Appearances:

R Latton for Plaintiffs

T G H Smith for First, Second and Fourth Defendant Appearance of the Third Defendant excused

Judgment:

26 October 2023

JUDGMENT OF ASSOCIATE JUDGE SKELTON

[1] Before me is an application by the plaintiffs against the first, second, third and fourth defendants for summary judgment on liability in respect of the alleged breach by the defendants of a settlement agreement providing for the sale and purchase of shares.

[2]The first, second and fourth defendants oppose the application.

BIRNIE v OUTWARD LIMITED [2023] NZHC 3008 [26 October 2023]

[3] The third defendant has not filed a notice of opposition, but he has advised the Court that he adopts the position of the first, second and fourth defendants. In the circumstances, if the application for summary judgment on liability against the first, second and fourth defendants is successful, then it will also be successful against the third defendant. Mr Latton, for the plaintiffs, acknowledged that if the application for summary judgment on liability is unsuccessful against the first, second and fourth defendants, then it would also be unsuccessful against the third defendant.

Background

[4] The plaintiffs allege that they were induced to invest in convertible note agreements (CNA) issued by the first defendant, Outward Ltd (Outward), by misrepresentations made by Outward, the second defendant, Pricemaker Ltd (Pricemaker), and the third defendant, Rob Rogers.

[5] Since the commencement of the proceeding in December 2020, the plaintiffs’ CNAs have been converted into shares of Pricemaker. Subsequently, the shares in Pricemaker have been converted into shares of the fourth defendant, Playmaker Labs Ltd (Playmaker).

[6] In August 2022, the defendants approached the plaintiffs with an offer to settle the proceeding. After some negotiation, a settlement agreement was agreed on or about 5 September 2022 (Settlement Agreement).

[7]In summary, the Settlement Agreement provided that:

(a)The plaintiffs would transfer all of their shares in Playmaker to Playmaker and Mr Rogers in three tranches as follows:

(i)Playmaker would pay the sum of $100,000 on 20 October 2022 as consideration for a total of 222,704 shares in Playmaker;

(ii)Playmaker would pay the sum of $100,000 on 30 November 2022 as consideration for a total of 222,704 shares in Playmaker;

(iii)Mr Rogers would pay the sum of $100,000 on 23 December 2022 as consideration for a total of 200,000 shares in Playmaker.

(b)Once the share purchases had been completed, the plaintiffs would have no claim against the defendants, and they would instruct their lawyers to withdraw their claim and accept the $300,000 paid as full and final settlement of the proceeding.

(c)The plaintiffs undertook not to progress any legal action or proceeding of any kind regarding the plaintiffs’…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2023] NZHC 3008
Decision Date: 26 October 2023

CaseChat Overview and Summary

In Birnie v Outward Limited, the plaintiffs sought summary judgment against the defendants for breach of a settlement agreement. The settlement agreement was entered into to resolve a proceeding brought by the plaintiffs against the defendants for misrepresentations made in connection with the purchase of convertible note agreements. The settlement agreement provided for the plaintiffs to transfer their shares in a company to the defendants in return for payment. The plaintiffs alleged that the defendants had breached the settlement agreement by failing to make the payments required under it. The plaintiffs sought summary judgment on liability for breach of the settlement agreement, and alternatively, costs. The defendants opposed the application. The court considered the application in light of the principles governing summary judgment and found that the plaintiffs had not satisfied the court that the defendants had no defence to the claim. The court found that it was arguable that time was not of the essence under the settlement agreement and that the effect of the breach did not make the benefit or burden of the settlement agreement substantially different from that contracted for. The court also found that it was arguable that the plaintiffs had affirmed the settlement agreement. Finally, the court found that the two corporate defendants had an arguable defence that they were not parties to the settlement agreement and/or that they were not liable for the pleaded breach. The application for summary judgment was dismissed. Costs were reserved pending further submissions.

Orders