Harris v Morris - [2019] NZHC 3177

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-000356

[2019] NZHC 3177

UNDER the Contracts and Commercial Law Act 2017

IN THE MATTER

Of lifetime nomination rights to the stallion Highly Recommended

BETWEEN

MARK JAMES RAMON HARRIS and FRANCES RYMAN

First Plaintiffs

AND

STEWART MCGIFFERT and SUE MCGIFFERT

Second Plaintiffs

AND

KAREN GAYE PARSONS

Third Plaintiff

AND

LAURIE ROSS BECKETT

Fourth Plaintiff

AND

HEDWOOD THOROUGHBREDS LIMITED

Fifth Plaintiff

AND

MARK JAMES RAMON HARRIS

Sixth Plaintiff

AND

EDWINA MORRIS and ALAN JONES

trading as BERKLEY STUD Defendants

Hearing: 21 November 2019

Appearances:

M Bell and H G Max for Plaintiffs D Jackson for Defendants

Judgment:

4 December 2019

HARRIS v MORRIS [2019] NZHC 3177 [4 December 2019]

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

Background

[1] The owner of a stallion may sell rights to nominate mares to be covered by the stallion. These rights may be granted for so long as the stallion is able to cover mares and are called lifetime nominations.

[2] The defendants purchased a stallion called Highly Recommended. To finance the purchase, they sold lifetime nominations in the stallion to the plaintiffs on terms set out in lifetime nomination agreements. They later sold a 70 per cent interest in Highly Recommended whilst preserving the plaintiffs’ nomination rights.

[3] The plaintiffs argue that under the lifetime nomination agreements, upon the sale of Highly Recommended they became entitled to 2 per cent of the sale price for each lifetime nomination held. They seek summary judgment for those amounts. They also seek declarations that they are entitled to continue to nominate mares for so long as Highly Recommended stands at stud and to 2 per cent of any sale by the defendants of their remaining 30 per cent share in the stallion.

[4] The defendants contend that the plaintiffs are only entitled to payment if the sale of Highly Recommended extinguishes their nomination rights and this has not occurred.

[5] The case, therefore, primarily concerns a narrow issue of interpretation of the lifetime nomination agreements.

The facts

[6] The defendants trade in partnership as the Berkley Stud. They purchased Highly Recommended in 2013 intending to put him to stud. To finance the purchase, they sold lifetime nominations in Highly Recommended for $10,000 plus GST. In some cases, an additional sum was paid for infertility insurance provided via NZ Bloodstock Ltd.

[7] The lifetime nominations were offered to persons the defendants knew as breeders or friends. The plaintiffs are, with just one exception, described as either horse-trainers or horse-breeders and they all purchased lifetime nominations at the price sought.

[8]All the lifetime nomination agreements contained the following terms:

1.BERKLEY STUD are offering a limited number of lifetime nominations to HIGHLY RECOMMENDED (AUS) which entitle the holder to:

Ø Five (5) service rights in the first three stud seasons commencing 2013 with a maximum of two (2) service rights in any one stud season and thereafter one service right for each stud season…

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 Harris v Morris

Details

AGLC: Harris v Morris [2019] NZHC 3177
Case: [2019] NZHC 3177
Decision Date: 4 December 2019

CaseChat Overview and Summary

In the High Court of New Zealand, the case of Harris v Morris involved a dispute over lifetime nomination rights to the stallion Highly Recommended. The plaintiffs, who held lifetime nomination rights, argued they were entitled to 2 per cent of the sale price for each lifetime nomination held upon the sale of Highly Recommended. The defendants, the owners of Highly Recommended, contended that the plaintiffs' entitlement under the lifetime nomination agreements only arises upon the extinguishment of their nomination rights. The primary issue was the interpretation of the lifetime nomination agreements, particularly clause 5. The court examined the objective meaning of the contractual terms, considering the context of the commercial purposes of the contract, and the background knowledge reasonably available to the parties. The court found that the plaintiffs' interpretation of clause 5, which suggested their entitlement to a share of the sale proceeds was not contingent on the loss of their nomination rights, was not commercially sensible and did not align with industry practice. The court concluded that the defendants' interpretation of clause 5, which linked the plaintiffs' entitlement to a share of the sale proceeds with the extinguishment of their nomination rights, was tenable. Consequently, the plaintiffs' application for summary judgment was dismissed. The case will proceed to trial to determine the correct interpretation of the lifetime nomination agreements.

The plaintiffs' application for summary judgment is dismissed. Costs are reserved, with parties having the opportunity to file submissions if they consider a departure from the ordinary rule is warranted. The case will be called for a first teleconference on 17 December 2019.

Orders