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Haines v Herd

Haines v Herd

Case [2019] NZHC 342 5 March 2019

Civil Litigation & Procedure

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IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE

CIV-2014-488-187

[2019] NZHC 342

BETWEEN RODNEY DAVID HAINES and KATHLEEN ANNE NORMAN
Plaintiffs

AND

ROBERT JOHN HERD

First Defendant

RHUMBA HOLDINGS LIMITED

Second Defendant

Hearing: 18-22, 25 February 2019 (Heard at AUCKLAND)

Appearances:

N Gedye QC and R C Mark for Plaintiffs J W Maassen for Defendants

Judgment:

5 March 2019

JUDGMENT OF LANG J

HAINES v HERD [2019] NZHC 342 [5 March 2019]

Contents
The issues.............................................................................................................. [9]

Are the two contracts rendered inadmissible by the stamp duties legislation in Vanuatu?............................................................................................................................. [10]

Did the parties reach agreement regarding all essential terms of the contract?
............................................................................................................................. [21]
Principles relating to the interpretation of contracts [26]
This case [35]

Did the VBSA satisfy s 40 of the Law of Property Act 1925 (UK)?............... [47]

Was Mr Haines entitled to issue the notice of default on 26 August 2013?.. [50]
Did Mr Haines repudiate the VBSA on 1 September 2013?.......................... [61] Did the VBSA require Mr Haines to exercise the right of sale under Rhumba’s mortgage before seeking to recover any shortfall from Mr Herd?
............................................................................................................................. [71]

Did the plaintiffs take adequate steps to mitigate their loss?......................... [76]

The period between 17 October 2013 and March 2015  [78]
The period between April 2015 and August 2017  [92]
What remedies are available to the plaintiffs?.............................................. [102] Is the VBSA subject to the Sale of Goods Act 1893 (UK)?                   [103] Does the VBSA provide an exclusive range of remedies for breach of contract by Mr Herd?  [107]
Does Clause 6.11 of the VBSA provide a separate right of recovery? [114] What sums are the plaintiffs entitled to recover from Mr Herd under the VBSA?............ [120]
Shortfall between the consideration payable under the VBSA and the ultimate sale price  [120]
The interest payable under Clause 6.8 of the VBSA  [123]
Amounts payable under Clause 9.7(c)  [128]
Claim for consequential losses at common law  [132]

To what extent is Rhumba liable under its guarantee?................................ [150] Summary........................................................................................................................... [154]

Leave reserved................................................................................................. [159]
Interest.............................................................................................................. [160]
Costs.................................................................................................................. [161]

[1] The plaintiffs in this proceeding, Mr Haines and his partner Ms Norman, were the owners of a 65 foot Hatteras game fishing vessel named “It’s Time” (the vessel). In 2011 the boat was registered in Vanuatu but moored in Auckland.

[2] In October 2011 the plaintiffs entered into a contract with the first defendant, Mr Herd, under which they agreed to sell the vessel to Mr Herd (the original contract). In exchange for the vessel Mr Herd was to transfer ownership of 50 per cent of the shares in a company called Seascape 4 Ltd. That company owned four islands in Vanuatu known as Urelapa, Elia, Urenaheupe and Ureanarave.

[3] On 5 May 2012 the parties entered into an agreement varying the terms of the original contract. This was headed “Deed of Variation of Boat Sale Agreement” (VBSA). The VBSA required Mr Herd to purchase the vessel for the sum of AUD$400,000 in cash. Mr…

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.

Continue reading Haines v Herd

Details

AGLC: Haines v Herd [2019] NZHC 342
Case: [2019] NZHC 342
Decision Date: 5 March 2019

CaseChat Overview and Summary

Haines v Herd was a proceeding in the High Court of New Zealand in which Rodney David Haines and Kathleen Anne Norman, the plaintiffs, sought to recover losses they claimed to have suffered following a breach of contract by Robert John Herd, the first defendant. Rhumba Holdings Limited, the second defendant, guaranteed Mr Herd's obligations under the contract. The plaintiffs claimed to have been the owners of a vessel called "It's Time" which was registered in Vanuatu but moored in Auckland. In October 2011 the plaintiffs entered into a contract with Mr Herd under which they agreed to sell the vessel to him. In May 2012 the parties entered into an agreement varying the terms of the original contract. This was headed "Deed of Variation of Boat Sale Agreement" (VBSA). The VBSA required Mr Herd to purchase the vessel for the sum of AUD$400,000 in cash. He was also required to transfer to Mr Haines or his nominee land in Vanuatu having a value of AUD$400,000. The date of settlement was approximately twelve months later, and is now agreed to have been 19 May 2013. Mr Herd duly took possession of the vessel and moved it to Queensland as he was permitted to do under the VBSA. Ultimately, however, Mr Herd never paid Mr Haines the sum of AUD$400,000 and he did not transfer land to Mr Haines as required by the VBSA. On 26 August 2013, Mr Haines issued a notice under the VBSA requiring Mr Herd to remedy his default within 30 days. Mr Haines claims Mr Herd failed to comply with the notice. On 17 October 2013 Mr Haines retook possession of the vessel in Queensland. After he was unable to sell the vessel in Australia, he arranged for it to be sailed to New Zealand in March 2015. The vessel was ultimately sold in New Zealand in October 2017 for the sum of NZ$600,000. In this proceeding the plaintiffs seek to recover the shortfall between the price ultimately obtained for the vessel and the amount payable under the VBSA (AUD$240,980). In addition, they seek to recover the interest payable under the VBSA for the period during which Mr Herd had possession of the vessel up until 19 May 2013 (AUD$40,000). Finally, they seek to recover costs they say they incurred in maintaining and selling the vessel between October 2013 and the date on which it was sold (NZ$375,526.78). The court held the VBSA was admissible in the proceeding. The parties had agreed to all essential terms of the contract and the VBSA satisfied s 40 of the Law of Property Act 1925 (UK). Mr Haines was entitled to issue the notice of default on 26 August 2013. Mr Haines did not repudiate the VBSA on 1 September 2013. The VBSA did not require Mr Haines to exercise the power of sale under Rhumba's mortgage before seeking to recover any shortfall from Mr Herd. The plaintiffs took adequate steps to mitigate their loss. The VBSA did not provide an exclusive range of remedies for breach of contract by Mr Herd. Clause 6.11 of the VBSA did not provide a separate right of recovery. The plaintiffs were entitled to recover the shortfall between the consideration payable under the VBSA and the ultimate sale price of the vessel (AUD$240,980) and the interest payable under Clause 6.8 of the VBSA (AUD$40,000). The plaintiffs were also entitled to recover the costs of obtaining the report from Mr Lockyer dated 13 February 2014 (AUD$1200) and the fee for the valuation produced by Ranger Marine in July 2014 (NZ$747.50). The plaintiffs were also entitled to recover the costs incurred by them in reselling the vessel. These were to be reduced by $6,500 to reflect the costs incurred by Mr Hannam in cleaning up the vessel following its return to Australia and $2,300 to reflect the costs of administration incurred by Mr Haines. The plaintiffs were also entitled to recover the balance of the items claimed by them as set out in the amended schedule produced by Mr Gedye in his closing submissions. These were to be reduced by the sum of any GST input tax claimed by Haines House Haulage Ltd on invoices that form the subject of claims in this proceeding. The plaintiffs were also entitled to recover damages at common law for the losses they suffered in consequence of Mr Herd's breach of the VBSA. Rhumba was liable to pay the same damages as Mr Herd.

Orders