Forest Holdings Limited v Mangatu Blocks Incorporation

[2019] NZHC 3501

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV-2018-470-000084

[2019] NZHC 3501

BETWEEN

FOREST HOLDINGS LIMITED

Appellant

AND

MANGATU BLOCKS INCORPORATION

Respondent

Hearing:	On the papers
Judgment:	23 December 2019

JUDGMENT OF DOWNS J

(Permission to appeal)

This judgment was delivered by me on Monday, 23 December 2019 at 11.30 am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Harkness Henry, Hamilton. MinterEllisonRuddWatts, Auckland.

FOREST HOLDINGS LTD v MANGATU BLOCKS INCORPORATION [2019] NZHC 3501 [23 December 2019]

[1]    Forest Holdings Ltd1 seeks permission to appeal to the Court of Appeal in relation to a question of law. Mangatu Blocks Incorporation2 resists. The application his history.

[2]    In 2003, Mangatu granted Forest Holdings a forestry right on land owned by Mangatu. In 2013, Mangatu terminated the right. However, Mangatu failed to give Forest Holdings 120 days’ notice of its intention to do so. The case went to arbitration.

[3]    On 8 June 2016, the Hon B J Paterson QC concluded Mangatu had repudiated the contract by failing to provide Forest Holdings notice. On 29 July 2016, the Arbitrator found the prospect of Forest Holdings “obtaining other than a normal damages award on its capital loss claim appear to be minimal”. Forest Holdings sought permission to appeal to the High Court. Heath J granted permission. The Judge later granted the appeal. Heath J emphasised damages must be tailored to the loss suffered by the injured party. On these facts, “this must be done by identifying the nature of the asset in the hands of the injured party at the time at which damages for the breach are to be assessed”.3

[4]    The case returned to the Arbitrator. He concluded Forest Holdings had not suffered loss despite Mangatu’s breach. He found Mangatu was very dissatisfied with Forest Holdings’ performance and would have terminated, with notice, in any event. Among other things, Forest Holdings had illegally logged some trees, a source of tension between it and Mangatu, and between Forest Holdings and others. The Arbitrator found Forest Holdings would not have been able to persuade Mangatu to withdraw its notice given Forest Holdings’ poor performance. The Arbitrator also found there was little possibility third parties would have acted to create an opportunity of value.

[5]    Forest Holdings sought permission to again appeal to the High Court. Courtney J granted permission. I heard the appeal, but dismissed it. It is this decision Forest Holdings seeks to appeal to the Court of Appeal.

1      Forest Holdings.

2      Mangatu.

3      Forest Holdings Ltd v Mangatu Blocks Incorporation [2017] NZHC 448 at [35].

[6]    The case before me was largely about the burden and standard of proof in a loss of chance situation. Forest Holdings contended the Arbitrator erred in treating Mangatu’s hypothetical actions as those of a party rather than a third party. On this argument, Forest Holdings need only have established there was a real prospect Mangatu would have withdrawn the termination notice; Forest Holdings did not need to prove it was more likely than not Mangatu would have done so.

[7]    I rejected the argument. I held the Arbitrator applied the correct test when concluding Forest Holdings had failed to prove it could have persuaded Mangatu to withdraw the notice.

[8]    Forest Holdings wishes to argue I erred. It says the case raises a question of law about the standard of proof to be applied to a defendant in a loss of chance case, and in turn two issues:

What is the plaintiff required to prove to establish causation in a contract based loss of chance case; and

If causation is established, then are the defendant’s actions in valuing the value of the loss to be assessed on a balance of probabilities basis or a possibilities basis?

[9]    Forest Holdings contends this mix meets the test for a second appeal in an arbitration context: a matter of law of sufficient importance to outweigh the cost and delay of a further appeal.4 Forest Holdings also contends its reasoning is supported by the recent decision of the Court of Appeal in Strack v Grey.5

[10]   I accept it is possible to identify a question or questions of law in relation to the Arbitrator’s assessment of loss, focused on the burden and standard of proof in a loss of chance situation. That was also Courtney J’s view in granting permission for the appeal to the High Court. I accept also this is a difficult area. However, I am satisfied leave should not be granted for two reasons.

4      Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd HC Auckland CIV-2005-404-6800, 11 July 2006.

5      Strack v Grey [2019] NZCA 432.

[11]   First, the Arbitrator’s factual conclusions leave no realistic prospect of reversal. The Arbitrator found Mangatu was determined to terminate the forestry right, and entitled to do so because of Forest Holdings’ deficient performance as a forester. I repeat what I said when I dismissed the appeal: “These bedrock conclusions leave little room for the existence of a valuable chance in a four-month notice period irrespective of who had to prove what, and to which standard, if any”.6

[12]   Second, this case is now old. Mangatu terminated the right in 2013. The Arbitrator’s original awards were in 2016, so, more  than  three  years  ago.  The High Court has been involved repeatedly. Yet another appeal (to the Court of Appeal)—in 2020 or perhaps even 2021—would involve more delay and cost. In all probability, the outcome would not change.

Result

[13]   I decline Forest Holdings permission to appeal my judgment to the Court of Appeal.

……………………………..

Downs J

6      Forest Holdings Ltd v Mangatu Blocks Inc [2019] NZHC 2258 at [44].