Hughes v Fea - [2017] NZHC 3037

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE

CIV-2016-425-13 [2017] NZHC 3037

UNDER The District Courts Act 1947

IN THE MATTER OF

an appeal under section 72 of that Act

BETWEEN

JOHN STANLEY HUGHES AND IRMA AINSLIE HUGHES

Appellants

AND

DUNCAN VARNAM FEA AND PETER HEENAN

Respondents

Hearing: 17 August 2017

Counsel:

C S Withnall QC and C J G Lucas for Appellants
D M Lester and J N P Young for Respondents

Judgment:

7 December 2017

FINAL JUDGMENT OF NICHOLAS DAVIDSON J (SAVE AS TO COSTS)

A INTRODUCTION

[1] The appellants Mr and Mrs Hughes, obtained judgment in the District Court to the effect that the respondent receivers of Global Bulbs Limited (“Global”), converted flower bulb stock which belonged to the Hughes.1 They brought an appeal in this
court claiming that they had suffered a loss which was far greater than reflected in the

1 Hughes v Fea DC Invercargill CIV-2010-025-348, 17 December 2015.

District Court judgment, but in an interim judgment of this court, that claim was rejected. However, they were given the opportunity to further address damages on a resumed hearing of this appeal.2 They have done so, and this judgment responds. The reasons for the resumed hearing will be understood from the litigation history.

B LITIGATION HISTORY

Background

[2] Mr and Mrs Hughes grew flower bulbs at Tapanui over many years. When they wanted to exit the business they made an arrangement with Global Bulbs Ltd (“Global”), and leased bulb stock to Global. They retained ownership of the bulbs and their replacements, so the common intention of the agreement was that the stock equivalent of the bulbs leased would be returned to them at the end of the five year term. Global was not successful. It did not pay what it owed under the lease, and went into liquidation. The respondents were appointed receivers, and wrongly denied the appellants’ ownership of bulb stock. The extent of that ownership has been at large in this litigation, as has the loss which the appellants claim in damages.

[3] Global was entitled to sell bulbs in the ordinary course of business provided that it replaced them. The nature of the appellants’ interest first came before Lang J who did not have to address the appellants’ ownership in the bulbs first leased, because they owned them anyway, independent of the lease. The replacement bulbs gave Mr and Mrs Hughes an interest in property which they would not otherwise have held. This arrangement created commercial risk that Global might not perform its obligations, including payment of the leasehold rent and not replacing bulbs. Lang J held that the original and replacement bulbs belonged to Mr and Mrs Hughes, but the lease created a security interest in respect of proceeds of sale if Global did not honour its obligation to replace bulbs sold.3

District Court

[4] The interim judgment addressed an appeal from the judgment of His Honour Judge…

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 Hughes v Fea

Details

AGLC: Hughes v Fea [2017] NZHC 3037
Case: [2017] NZHC 3037
Decision Date: 7 December 2017

CaseChat Overview and Summary

The appeal was brought by Mr and Mrs Hughes against the receivers of Global Bulbs Limited, who were appointed after Global went into liquidation. The Hughes leased flower bulb stock to Global, retaining ownership of the stock, and asserting that the receivers wrongly denied their ownership. They sought to establish the extent of their loss in damages. The interim judgment of this court held that the appeal should be finally determined based on the payment of a sum which represented the proceeds of sale of all bulbs by the receivers which belonged to the appellants, applying the civil standard of proof. This final judgment responds to the appellants' submissions on the valuation of the bulbs. The Court held that the evidence of the very limited sales made did not support the valuation produced by Mr Harrison. The Court concluded that the sales that were made totalling $72,000 should be taken to be the property of Mr and Mrs Hughes, and they are entitled to damages in that sum with interest at Judicature Act rates from receipt of the proceeds of sale by the receivers. Costs are to be agreed between the parties, or the Court will fix those after memoranda are received from the appellants within 14 calendar days from the date of this judgment, and from the respondents 14 calendar days thereafter, allowing for the Christmas vacation.

Orders