Harris v GTV Holdings Ltd - [2016] NZHC 3123

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2014-404-3037 [2016] NZHC 3123

BETWEEN
JOHN EVAN HARRIS AND SARAH

LOUISE JONES First Plaintiffs

JOHN EVAN HARRIS Second Plaintiff

AND

GTV HOLDINGS LTD First Defendant

MICHAEL ALAN HEINRICH CORDELL

Second Defendant

NICHOLAS HARVEY MURRAY Third Defendant

GREENSTONE TV LIMITED Fourth Defendant

Hearing: 13, 14, 15, 16, 17, 20, 21 and 23 June 2016

Counsel:

M A E Sullivan and M A Greenwood for Plaintiffs
A J Horne and A Simkiss for Defendants

Judgment:

19 December 2016

JUDGMENT OF HEATH J

This judgment was delivered by me on 19 December 2016 at 11.00am pursuant to
Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar

Solicitors:
Jackson Russell, Auckland
Minter Ellison, Auckland

HARRIS AND JONES v GTV HOLDINGS LTD [2016] NZHC 3123 [19 December 2016]

CONTENTS

The dispute      [1] Background  [3] The issues  [9] Interpretation issues
(a)      Introductory comments  [13]
(b)      Principles of interpretation  [14] (c)      The “entire agreement” provision  [24] Interpretation of the Highway Cops 2 Adjustment
(a)      Introductory comments  [33]
(b)      Factual context  [38]
(c)      Analysis
(i)       Interpreting the HC2 Adjustment  [59] (ii)     Implied term  [75] (iii)     Conclusion  [81]

The counterclaims
(a) The issues [82]
(b) The contractual warranties: the caretaker period [85] (c) The general warranties [100] (d) The Fair Trading Act claims [113] Result [121]

The dispute

[1] This proceeding is about an agreement for sale and purchase of shares in a company. The purchase price was fixed at $6,050,000. The sum of $4,800,000 was to be paid on settlement, with the balance being payable six months afterwards. The deferred portion of the purchase price ($1,250,000) was subject to an adjustment which, if applied in full, had the effect of reducing the amount payable by $554,750.

[2] The vendors of the shares contend that they were entitled to receive the whole of the deferred portion of the purchase price, whereas the purchasers assert that it should be reduced by the sum of $554,750, to reflect that adjustment. The vendors seek judgment for the balance of the purchase price, $554,750, which they contend is payable. Interest calculated in accordance with the contract is also sought. In response, the purchasers counterclaim for an amount that would extinguish or exceed the amount payable by them, if I were to hold that the adjustment did not apply.

Background

[3] Between 1994 and 2014, Mr John Harris operated a business known as “Greenstone Pictures”. From 30 March 1998, that enterprise was carried on by an incorporated entity, Greenstone Pictures Ltd. In 2011, its name was changed to Greenstone TV Ltd (Greenstone). The trustees of a family trust associated with Mr Harris owned 99 percent of the shares in Greenstone. Mr Harris held the remaining share. I refer to those shareholders collectively as the “Harris interests”. Mr Harris was the sole director of Greenstone until 9 December 2013.

[4] Greenstone operated in New Zealand as the largest producer of reality television shows, as well as some documentaries. Primarily, it received funding from “New…

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: [2016] NZHC 3123
Decision Date: 19 December 2016

CaseChat Overview and Summary

This case involved a dispute between the Harris interests and the GTV interests over the sale and purchase of shares in Greenstone TV Ltd. The purchase price was fixed at $6,050,000, with $4,800,000 paid on settlement and the balance of $1,250,000 deferred. The deferred portion of the purchase price was subject to an adjustment, which, if applied in full, reduced the amount payable by $554,750. The Harris interests contended that they were entitled to receive the whole deferred portion, while the GTV interests argued that the adjustment should apply, reducing the amount payable by $554,750. The GTV interests also counterclaimed for breaches of warranties and misleading or deceptive conduct under the Fair Trading Act 1986. The court found in favour of the Harris interests on their claim for the outstanding deferred payment amount, rejecting the GTV interests' interpretation of the adjustment provision. The court also dismissed the GTV interests' counterclaims based on breach of warranty and misleading or deceptive conduct, holding that the GTV interests were sophisticated commercial entities who could not be regarded as likely to be misled or deceived by the conduct alleged. Judgment was entered in favour of the Harris interests for the outstanding deferred payment amount plus interest, and against the GTV interests on their counterclaims. Questions of costs were reserved for a later determination.

Orders