Croser v Focus Genetics Ltd Partnership (2548500) - [2020] NZCA 367

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA107/2020
[2020] NZCA 367

BETWEEN	DAMIEN LEIGH CROSER and KIRSTEN LOUISE CROSER Appellants
AND	FOCUS GENETICS LIMITED PARTNERSHIP (2548500) Respondent

Hearing:	20 May 2020
Court:	Brown, Simon France and Mallon JJ
Counsel:	C M Stevens and T Mijatov for Appellants D H McLellan QC and L C Sizer for Respondent
Judgment:	26 August 2020 at 12.30 pm

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe question of costs is reserved. Leave is granted for further submissions on costs, a timetable for which is set out at [103].

____________________________________________________________________

REASONS OF THE COURT

(Given by Mallon J)

Introduction

This appeal concerns whether the parties are bound by a settlement they reached in correspondence where the agreed terms were “subject to documenting the various agreed terms”. The settlement was reached in the lead up to a trial on a claim by the appellants (the Crosers) and a counterclaim by the respondent (Focus), arising out of a contractual arrangement over which they had fallen out. The trial was vacated when the settlement was reached.
The Crosers brought a claim in the High Court seeking to enforce the settlement. Focus applied for summary judgment against the Crosers, contending it was not seriously arguable that the parties were bound by the terms recorded in the correspondence. Justice Doogue in the High Court granted summary judgment, finding that the phrase “subject to documenting” indicated that the parties did not intend to be bound unless and until they executed a formal deed.[1]
[1]Croser v Focus Genetics Ltd Partnership (2548500) [2020] NZHC 320 [Summary judgment].
The Crosers appeal the summary judgment. They contend the Judge failed to apply an earlier High Court finding in an interim injunction application that they had an arguable case,[2] reversed the onus of proof, overlooked matters which precluded summary judgment, and erred in her objective assessment of the effect of the correspondence.
[2] Croser v Focus Genetics Ltd Partnership (2548500) [2019] NZHC 2995 [Injunction judgment].
We consider the appeal should be allowed. We set out our reasons below.

Background

The Crosers own and operate a sheep farm called Kiranda in South Australia. The farm has some 3,000 breeding ewes.
Focus is a limited partnership based in Napier, New Zealand, specialising in livestock genetics. It commercialises its genetics by entering into arrangements to supply genetic material (through sire livestock, semen or embryos) to breeders of livestock and by participating in the sale of the progeny to third parties.
Focus supplies the genetic material from its New Zealand nucleus flocks (NZ Flocks). The NZ Flocks are comprised of two composite breeds of sheep — Highlander and FocusPrime — developed by interbreeding with other sheep and careful genetic selection over many years. Sheep that are the product of Focus’ breeding programme can be either elite sheep or multiplier (flock) sheep (commercial breeding stock).
Focus and the Crosers entered into a “multiplier agreement” on 18 December 2013. Their initial plan had…

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: [2020] NZCA 367
Decision Date: 26 August 2020 at 12.30 pm

CaseChat Overview and Summary

The appeal was brought by Damien Leigh Croser and Kirsten Louise Croser (the Crosers) against Focus Genetics Limited Partnership (Focus) in relation to the enforceability of a settlement agreement reached by the parties by correspondence. The Crosers argued that they were entitled to enforce the settlement agreement as it was binding on the parties. The Court of Appeal held that the appeal should be allowed and the summary judgment decision of the High Court should be set aside. The Court held that the parties had reached a binding agreement on the terms of the settlement. The Court found that the Judge had erred in her analysis by confining herself to the face of the correspondence and not considering the relevant context of the agreement. The Court also found that the Judge had erroneously put the onus of proof on the Crosers. The Court held that it was not seriously arguable that the parties had not intended to be bound at the time of the correspondence. The Court found that the parties had agreed on all the essential terms of the agreement and the agreement was comprehensive. The Court held that the parties had intended to be bound at the time of the correspondence and that the terms of the settlement agreement would be recorded in a formal document later. The Court held that it was a matter for trial whether the settlement agreement was reached in the correspondence. The Court reserved its decision on costs.

Orders