Biscuit Creek Forest Ltd v Vallance - [2021] NZHC 640

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

I TE KŌTI MATUA O AOTEAROA TE PAPAIOEA ROHE

CIV 2018-454-56

[2021] NZHC 640

BETWEEN
BISCUIT CREEK FOREST LTD

Plaintiff

AND

SIMON FREDERICK VALLANCE and ROSA VALLANCE

Defendants

CIV 2019-435-15

BETWEEN

SIMON FREDERICK VALLANCE and ROSA VALLANCE
Plaintiffs

AND

ANDREW PHILIP VALLANCE

Defendant

Hearing: 7-11 September 2020

Counsel:

W A McCartney and N R Eilenberg for Biscuit Creek Forest Ltd M G Colson and M C McCarthy for Simon and Rosa Vallance

Judgment:

26 March 2021

JUDGMENT OF MALLON J

Table of contents

Introduction

[1]

The evidence [7]

The parties and the farm [7]

Ownership of farm [9]

The Forestry Right [12]

2003 negotiations [17]

2016 agreements [24]

Sale to others [68]

The outcome for Andrew [91]

BISCUIT CREEK FOREST LTD v VALLANCE [2021] NZHC 640 [26 March 2021]

Ownership of the Owner’s Share as at April 2016 [93]

The issue [93]

A forestry right [94]

The Partnership’s forestry right [98]

The Owner’s Share [107]

Conclusion [129]

Construction of the OS Agreement [130]

The issue [130]

The principles [131]

The OS terms [132]

Conclusion [143]

Common mistake [144]

The issue [144]

The law [145]

Application to the facts [147]

Conclusion [158]

Other issues [159]

Misrepresentation [160]

Interdependence [166]

Failure of finance clause [187]

Property Law Act [192]

Uncertainty [195]

Frustration [196]

Termination by effect of law [197]

Failure to tender settlement [198]

Andrew’s claimed loss [199]

Counterclaim [207]

Result [218]

Introduction

[1] This proceeding arises out of the sale of Te Kanuka Station, a Wairarapa farm, and related forestry interests. Te Kanuka Station was owned by Simon and Rosa Vallance and later by their family trust, the Vallance Winkeleer Trust (the Trust). They had created a forestry right (the Forestry Right) over the land which was held by the Te Kanuka Station Partnership (the Partnership). Simon and Rosa also held a share in the Partnership (the Partnership Share). Under the terms of the Forestry Right, Simon and Rosa or their Trust had the right to receive 44.7 per cent of the forestry proceeds (the Owner’s Share). It is a contract for the sale and purchase of the Owner’s Share that is in issue.

[2] Ultimately the Trust sold the farm to a third party and the Partnership sold the Forestry Right to another third party in 2017. However, Andrew Vallance, a cousin of Simon and his neighbour at the relevant time, claims that he, through his company Biscuit Creek Forest Limited (BCF), had entered into an earlier agreement in 2016 (the OS Agreement) to purchase Simon and Rosa’s rights to the Owner’s Share. Andrew says Simon’s failure to settle the OS Agreement caused BCF loss. BCF brings this proceeding to recover that loss.

[3] In broad terms, the issues concern whether the OS Agreement was valid and enforceable and, if it was, whether Simon and Rosa should be granted relief from its effect, or whether Andrew suffered any loss because Simon and Rosa failed to perform their obligations under it.

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: [2021] NZHC 640
Decision Date: 26 March 2021

CaseChat Overview and Summary

This proceeding arose out of the sale of Te Kanuka Station, a Wairarapa farm, and related forestry interests. The Vallance Winkeleer Trust (the Trust) owned the farm and Simon and Rosa Vallance (the Vallances) held a share in the Trust. The Trust created a forestry right (the Forestry Right) over the land which was held by the Te Kanuka Station Partnership (the Partnership). Under the terms of the Forestry Right, the Vallances or the Trust had the right to receive 44.7 per cent of the forestry proceeds (the Owner’s Share). Biscuit Creek Forest Limited (BCF), a company owned by Andrew Vallance, claimed that he, through BCF, had entered into an earlier agreement in 2016 (the OS Agreement) to purchase Simon and Rosa’s rights to the Owner’s Share. BCF brought this proceeding to recover its loss because Simon and Rosa failed to settle the OS Agreement. The Vallances argued that the OS Agreement was of no effect because it was entered into with them, not the Trust, and they had been induced to enter into it by a misrepresentation made by Andrew or due to a unilateral or common mistake. They also brought a counterclaim contending that Andrew breached the Fair Trading Act 1986 by representing that the OS Agreement and the Te Kanuka Station agreement were interdependent and advising them that they did not need legal advice. Andrew denied that he made any misrepresentations or that there were any mistakes. He said the OS Agreement was not tied to the sale of Te Kanuka Station. He said the OS Agreement was enforceable and it only did not proceed because Simon refused to accept settlement when it was tendered in accordance with the OS Agreement and repudiated the agreement. The court held that the Trust had the right to the benefit of the Owner’s Share. The Vallances had been induced to enter into the OS Agreement by a misrepresentation made by Andrew about this or due to unilateral or common mistakes. Simon and Rosa also intended that the sale of the Owner’s Share was to be tied to an agreement for the sale of Te Kanuka Station to Andrew and, when Andrew was unable to complete that sale, any agreement they had with him about the Owner’s Share came to an end. The Vallances also argued that the OS Agreement did not comply with s 24 of the Property Law Act 2007. The court held that the material terms of the contract were present and the court would do its best to interpret those terms to give effect to their intention. The court held that BCF had failed in its claim against the Vallances. Judgment was entered for the Vallances on that claim. The Vallances’ claim against Andrew also failed. Judgment was entered for Andrew on that claim.

Orders