Legal Research
Cases
Herbert v USAR Napier Limited

Herbert v USAR Napier Limited

Case [2022] NZCA 288 4 July 2022

Civil Litigation & Procedure

Type to search within this case.

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA627/2021
[2022] NZCA 288

BETWEEN	MALCOLM ANDREW HERBERT First Appellant ANTHONY JAMES HERBERT Second Appellant ANTHONY JAMES HERBERT AND STEPHEN PETER LUNN AS TRUSTEES OF THE THACKERAY TRUST Third Appellants ANTHONY JAMES HERBERT AND STEPHEN PETER LUNN AS TRUSTEES OF THE CHARLES STREET TRUST Fourth Appellants
AND	USAR NAPIER LIMITED Respondent

Hearing:	8 June 2022
Court:	Gilbert, Mander and Fitzgerald JJ
Counsel:	J K Mahuta-Coyle for Appellants S M Lowery and J C Suyker for Respondent
Judgment:	4 July 2022 at 9.30 am

JUDGMENT OF THE COURT

AThe application to adduce further evidence is declined.
BThe appeal is dismissed.
CThe appellants must pay costs to the respondent for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Gilbert J)

Introduction

This is an appeal against the entry of summary judgment on a claim for monies payable under a written settlement agreement (the settlement agreement).[1]
[1]USAR Napier Ltd v Herbert [2021] NZHC 2638 [Summary judgment].
The settlement agreement provided for specified payments to be made, and security to be provided, by the appellants (the Herberts) to the respondent, USAR Napier Ltd (USAR), in exchange for the surrender of its rights under an agreement to lease a commercial property in Napier (the property). USAR is one of a group of companies known as the Sarin Group which operate in the hotel and events centre sectors. Mr Udai Sarin is the chief executive officer of the Sarin Group.
The property was being developed by the first appellant, Mr Malcolm Herbert, for use by USAR as a hotel trading under the Hilton brand. The second appellant, Mr Anthony Herbert, is Malcolm’s brother. He and Mr Stephen Lunn, a practising solicitor, are the trustees of the Thackeray Trust and the Charles Street Trust, the third and fourth appellants. The Thackeray Trust was the lessor under the agreement to lease. The Charles Street Trust agreed to provide security under the settlement agreement.
Prior to the completion of the development, the Thackeray Trust purported to cancel the agreement to lease. This was to enable it to pursue a more favourable arrangement with another hotel chain, Swiss-Belhotel International New Zealand Ltd (Swiss-Bel). USAR responded by applying for an interim injunction to preserve its rights under the agreement to lease.

The settlement agreement

The settlement agreement was negotiated at a meeting in Wellington on the morning of 10 December 2020, immediately prior to the hearing of USAR’s application for an interim injunction. Present at the meeting were Mr Malcolm Herbert, Mr Sarin and the parties’ respective barristers, Mr David O’Connor for the Herberts and Mr Lowery for USAR. The terms of the settlement agreement are set out in a handwritten heads of agreement. After it was signed by Mr Malcolm Herbert and Mr Sarin and witnessed by the barristers, the parties advised the Court that a settlement had been reached. Mr Lunn signed the settlement…

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 Herbert v USAR Napier Limited

Details

AGLC: Herbert v USAR Napier Limited [2022] NZCA 288
Case: [2022] NZCA 288
Decision Date: 4 July 2022 at 9.30 am

CaseChat Overview and Summary

The appeal is against the entry of summary judgment in favour of USAR Napier Ltd on its claim for monies payable under a written settlement agreement (the settlement agreement). The settlement agreement provided for specified payments to be made, and security to be provided, by the Herberts (the appellants) to USAR in exchange for the surrender of its rights under an agreement to lease a commercial property in Napier (the property). USAR gave notice of breach on 18 December 2020 requiring the breaches to be remedied by 23 December 2020. USAR commenced proceedings in the High Court at Napier on 12 February 2021 to enforce the settlement agreement and applied for summary judgment on its claim. The Herberts opposed the application for summary judgment claiming they had a reasonably arguable defence by way of set-off arising out of an alleged pre-contractual misrepresentation, made by Mr Sarin on behalf of USAR at the time the settlement agreement was being negotiated on 10 December 2020. The application for summary judgment was heard on 20 September 2021 and the reserved decision was delivered on 5 October 2021. The Associate Judge concluded that the set-off defence was not reasonably arguable. The appeal was heard on 8 June 2022. The Herberts apply to adduce further evidence on appeal to support a new loss thesis. This attempts to respond to the Associate Judge’s finding that “[t]here is no suggestion [USAR] was responsible for the Hotel not opening earlier than it did”. The proposed evidence is an affidavit from each of Mr Malcolm Herbert and Mr Ian Smith, both sworn on 13 April 2022. Mr Smith is the principal of Far Corporate Services Ltd, a wholesale corporate advisory firm based in Wellington. He says he has assisted Mr Herbert and his family trusts to obtain refinance for the hotel although he does not specify over what period or provide any other details about this assistance. He was asked to provide his opinion as to whether the Herberts would have been able to obtain finance from pre-bookings. As to this, Mr Smith states: If [the Herberts] had pre-bookings for the period from January to May 2021, I am confident I could have used them as an asset basis to obtain finance from a non-bank Lender, such as a high net worth individual. Our firm deals with many such private lenders. I believe it would have been possible for [the Herberts] to have obtained finance of approximately 70 percent of the value of these pre-bookings, as a loan to the hotel operating company with the pre-sales and personal guarantees. The new evidence is not fresh in the required sense. The evidence is advanced in support of an entirely new loss thesis, being that if the Herberts had achieved $600,000 of pre-bookings for the period December 2020 to May 2021, they could have borrowed $420,000 additional funding in June 2021. This would have enabled them to complete and open the hotel in July 2021. While the hotel did not open until December 2021, there is no reason why evidence to support this thesis could not have been advanced before the Associate Judge. In particular, the Herberts could have adduced Mr Smith’s evidence to support the asserted prospect of borrowing $420,000 in June 2021. They could also have provided evidence of the likely consequent delay in completion of the hotel. By the time the application for summary judgment was heard in late September, the opening had already been delayed by some three months if this thesis was correct. The new evidence is not credible or cogent. The evidence is detached from reality and there is nothing other than Mr Herbert’s unsubstantiated assertion that the hotel would then have been completed and able to open one month later, in June 2021, notwithstanding the supply chain issues. The new evidence is also not cogent for the further reasons developed below. In short, the asserted defence is not arguable in any event. We therefore decline the application to adduce the further evidence. The appeal is dismissed. The appellants must pay costs to the respondent for a standard appeal on a band A basis and usual disbursements.

Orders