Cavell Leitch Pringle & Boyle v Thornton Estates Ltd - [2008] NZCA 191

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IN THE COURT OF APPEAL OF NEW ZEALAND
CA500/07
[2008] NZCA 191
BETWEENCAVELL LEITCH PRINGLE & BOYLE

Appellant

ANDTHORNTON ESTATES LIMITED

Respondent

Hearing:17 June 2008

Court:Glazebrook, Hammond and Baragwanath JJ
Counsel:C T Walker for Appellant

R A Osborne and S W Rollo for Respondent

Judgment:27 June 2008 at 11am

JUDGMENT OF THE COURT

A The appeal is allowed.
B Judgment is entered for the appellant.
CThe respondent is ordered to pay the appellant costs of $6,000 and usual disbursements.

____________________________________________________________________
REASONS OF THE COURT
(Given by Baragwanath J)
Table of Contents

Para No

BACKGROUND  [1]
THE WRITTEN CONTRACT  [4]
THE CLAIM BY THE VENDOR  [9]
THE PLEADINGS  [20]
THE HIGH COURT JUDGMENT  [23]
THE SUBMISSIONS ON APPEAL  [30]
DISCUSSION  [31]
Decision  [52]
Background
[1]       The respondent Thornton Estates Limited (Thornton) instructed the appellant Cavell Leitch Pringle & Boyle (Cavell Leitch) to act as its solicitors on the purchase of a marina complex under construction at Magazine Bay, Lyttelton. Cavell Leitch drafted an agreement for sale and purchase between Thornton as purchaser and Lyttelton Marina Limited (the vendor) as vendor. On 1 September 2000 the parties executed the agreement which provided for settlement on 31 October 2000.
[2]        The contract provided that property in the assets and responsibility for the liabilities should pass to Thornton on the settlement date. From that date Thornton would become the owner of the marina business.
[3]       On 12 October 2000 the marina was substantially damaged in a storm and Thornton refused to settle. The vendor sued Thornton for specific performance and damages. Following mediation that claim was settled by agreement under which Thornton paid the vendor approximately $1.1m. Thornton then sued Cavell Leitch, alleging negligence, breach of fiduciary duty and estoppel. In the High Court Venning J gave judgment in favour of Thornton for the amount of its payment to the vendor, primarily on the ground that Cavell Leitch should have included in the contract a specific clause dealing with risk: HC AK CIV 2005-409-001452 24 August 2007. Cavell Leitch now appeals to this Court.
The written contract
[4]       The contract began with Recitals:
AThe Vendor has partially completed a development of the Lyttelton Marina at Magazine Bay, Lyttelton.
BThe Purchaser wishes to purchase nominated assets and liabilities of the Vendor and associated companies in order to continue to develop the marina on the terms set out below.
CThe parties have agreed to enter into this Agreement to evidence the sale and purchase of the said assets and liabilities at the price and on the terms and conditions set out below.

[5] There followed the principal operative clause:
3.Purchase
The Vendor agrees to sell and the Purchaser agrees to purchase the Assets and assume the Liabilities at the price and upon the terms and conditions contained in this Agreement as at the Settlement Date.

[6] The assets to be purchased were listed in Schedule 1:
1. The marina development including…

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: [2008] NZCA 191
Decision Date: 27 June 2008

CaseChat Overview and Summary

Cavell Leitch Pringle & Boyle (Cavell Leitch) appealed against the High Court decision that found it liable for negligence, breach of fiduciary duty and estoppel in its advice to Thornton Estates Limited (Thornton) in relation to the purchase of a marina complex. The High Court held that Cavell Leitch failed to advise Thornton that the risk of loss of the assets had passed to Thornton before the settlement date, and that it should have included a specific clause dealing with risk in the contract. It also held that Cavell Leitch breached its fiduciary duty to Thornton by failing to advise it that if it settled without testing the legal position, then in any subsequent claim Cavell Leitch would take the point that the contract was correctly drafted. The High Court further held that Cavell Leitch was estopped from raising the defence that the contract correctly dealt with the passing of risk. The Court of Appeal allowed the appeal, holding that the contract clearly provided for the passing of property at settlement, which necessarily implied the passing of risk with property. The Court of Appeal held that there was no breach of duty and no liability in negligence. It also held that there was no breach of fiduciary duty or estoppel against Cavell Leitch arising out of its conduct in advising Thornton.

Orders