Just Do It Limited v Taupiri Farms Limited
[2018] NZHC 1105
•18 May 2018
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA
KIRIKIRIROA ROHE
CIV-2015-419-174
[2018] NZHC 1105
IN THE MATTER of breach of contract, tort of deceit, tort of negligence and breach of fiduciary duty and directors' duties BETWEEN
JUST DO IT LIMITED
Plaintiff
AND
TAUPIRI FARMS LIMITED
First Defendant
CRAIG WILSON KEITH COOMBES, GRANT HARVEY VICTOR COOMBES and HARVEY JOHN COOMBES
Second Defendants (discontinued)
Hearing: 16 October 2017 Appearances:
T M Braun for the Plaintiff
G J Kohler QC for the First Defendant
Judgment:
18 May 2018
JUDGMENT OF WOODHOUSE J
This judgment was delivered by me on 18 May 2018 at 2:00 p.m. pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
Solicitors / Counsel:
Mr T M Braun, Whitfield Braun Ltd, Solicitors, Hamilton Mr G J Kohler QC, Barrister, Auckland
Mr P Jefferies (defendant’s instructing solicitor), Jefferies Law Ltd, Solicitors, Hamilton
JUST DO IT LTD v TAUPIRI FARMS LTD [2018] NZHC 1105 [18 May 2018]
Introduction
[1] By an agreement made in July 2008 the plaintiff, Just Do It Ltd, agreed to sell its farm, stock, Fonterra shares, and some other assets, to the first defendant, Taupiri Farms Ltd. Taupiri Farms failed to settle by 18 June 2009, the default date specified in a settlement notice issued by Just Do It. Just Do It took no further steps under or arising out of the agreement until it gave notice of cancellation of the agreement in February 2014.
[2] It now seeks judgment against Taupiri Farms for damages in a sum of approximately $2.55 million, plus interest. This is claimed to be its loss for breach of the agreement by Taupiri Farms. Just Do It still owns the farm. The loss has been assessed in substantial measure as the difference between the purchase price in the agreement with Taupiri Farms and the market value of the farm land and stock, based on valuations of the farm as at 17 March 2017 and the stock as at 1 July 2017 respectively.
[3] Taupiri Farms does not dispute breach of the contract by its failure to settle. It nevertheless contends that it is entitled to judgment because Just Do It has failed to prove that it has suffered any loss.
[4] The second defendants are the directors of Taupiri Farms. They were sued in their personal capacities for deceit, negligent misstatement, negligence, breach of fiduciary duty and breach of duties under the Companies Act 1993. Shortly before the hearing commenced, Just Do It discontinued its claim against the second defendants. Those claims do not require consideration in this judgment.1
Conclusions in summary
[5] Just Do It has failed to establish that it has suffered any loss recoverable from Taupiri Farms.
[6] Taupiri Farms did breach its contract. As a result, Just Do It was entitled to bring a claim for loss it could prove had arisen from the breach based on the
1 There are costs issues to be determined following delivery of this judgment.
difference, if any, between the contract price and the market value of the farm, stock and other assets. The general approach to assessment on this basis is the difference between the contract price and market value at the date the contract was broken – the date of breach. Breach occurred in June 2009.
[7] Assessment at the date of breach is not a rigid rule. Assessment may be made at a later date if the circumstances justify a later date. In this case, however, an assessment based on market values in 2017 – approximately eight years after breach of the contract – cannot be justified on any principled basis.
[8] Had there been a principled basis to use 2017 valuations, Just Do It’s evidence was in any event insufficient to establish that it has suffered a loss. A substantial reason for this conclusion is that Just Do It, from the date of breach down to the hearing, has continued to own and operate the farm as a going concern. But it produced no probative evidence of its financial performance over the eight to nine year period. There are other problems of proof.
[9] Although Just Do It advanced its claim based on 2017 valuations, that would not necessarily prevent an assessment based on the market value at around the date of breach, or the market value in February 2014 when Just Do It gave notice of cancellation of the contract, if there was adequate evidence. The only evidence of any possible relevance comes from two contemplated agreements for sale by Just Do It, which did not proceed. For convenience I will refer to those as “agreements”, although one produced in evidence is incomplete. One was made on an unknown date, with a proposed settlement date of 1 June 2010. The other was made in February 2014 with a proposed settlement date of 1 June 2014. The evidence available from those agreements falls well short of evidence sufficient to establish that Just Do It suffered a loss assessed at around the date of breach in 2009, or around the date of cancellation in February 2014.
Background
[10] Just Do It purchased the farm in 1998 and embarked on a process to convert it into a dairy farm, including purchase and conversion of an adjacent block of land. In 2007 the directors decided to put the farm on the market.
[11] The agreement between Just Do It and Taupiri Farms was made on 11 July 2008. It was for the sale of the land, stock, shares in Fonterra Co-Operative Group Ltd (Fonterra) and any “bonuses” (as defined in detail), farm chattels, and household chattels. The purchase price was $20 million, plus GST if any. The supply to be made by the agreement was the supply of a going concern and was therefore zero rated for GST.
[12] The agreement required a 10 per cent deposit to be paid in two equal instalments. The first $1 million was due when both parties signed the agreement and was paid on that date. This part of the deposit was ultimately forfeited to Just Do It.
[13] The $1 million second half of the deposit was due “on 20 January 2009 or on the date the purchaser enters into an unconditional sale of its property at 850 Whatawhata Road, Hamilton, whichever is the earlier”. The second half was not paid.
[14] Settlement was due on 29 May 2009. By facsimile of 29 May 2009, Taupiri Farms’ solicitors advised Just Do It that Taupiri Farms’ property at Whatawhata Road had not been sold. That facsimile was sent in response to earlier correspondence from solicitors for Just Do It advising that interest on the second deposit was running in accordance with the agreement. It was clear that settlement was not going to occur on 29 May. The solicitors for Taupiri Farms said in their 29 May facsimile:
We suggested that for settlement to proceed that your clients again consider purchasing the Whatawhata farm in part payment of their farm. You advised that you would discuss this option with your clients but we have not received your response.
If your clients are not agreeable with this option then our clients will continue with the sale process.
[15] Failure to settle was governed under the agreement by cl 9. The relevant parts of that clause provide:
9.0Notice to complete and remedies on default
9.1
(1)If the sale is not settled on the settlement date either party may at any time thereafter serve on the other party a settlement notice; but
(2)The settlement notice shall be effective only if the party serving it is at the time of service either in all material respects ready able and willing to proceed to settle in accordance with the notice or is not so ready able and willing to settle only by reason of the default or omission of the other party.
…
9.4If the purchaser does not comply with the terms of the settlement notice served by the vendor then …:
(1)Without prejudice to any other rights or remedies available to the vendor at law or in equity the vendor may:
(a)sue the purchaser for specific performance; or
(b)cancel this agreement by notice and pursue either or both of the following remedies namely:
(i)forfeit and retain for the vendor’s own benefit the deposit paid by the purchaser, but not exceeding in all 10% of the purchase price; and/or
(ii)sue the purchaser for damages
…
(3)The damages claimable by the vendor under subclause 9.4(1)(b)(ii) shall include all damages claimable at common law or in equity and shall also include (but shall not be limited to) any loss incurred by the vendor on any bona fide resale contracted within one year from the date by which the purchaser should have settled in compliance with the settlement notice. The amount of that loss may include:
(a)interest on the unpaid portion of the purchase price at the interest rate for late settlement from the settlement date to the settlement of such resale; and
(b)all costs and expenses reasonably incurred in any resale or attempted resale; and
(c)all outgoings (other than interest) on or maintenance expenses in respect of the property from the settlement date to the settlement of such resale.
…
[16] Just Do It sent a settlement notice to Taupiri Farms on 2 June 2009. It recorded that Taupiri Farms had failed to settle and that the vendor remained in all material respects ready, willing and able to proceed to settlement. The notice concluded as follows:
5.The purchaser is required to settle the purchase within twelve (12) working days after the date of service of this notice (excluding the day of service), time being of the essence, by paying to the vendor the balance required to settle in full being $19,193,899.75 as per the attached settlement statement, together with interest on the balance
…
6.If the purchaser does not comply with the terms of this settlement notice, the vendor may exercise such of the vendor’s remedies under the agreement, at law or in equity as the vendor may elect
(emphasis in bold in original)
[17] Settlement did not occur by 18 June 2009, being 12 working days from the date of the notice. The agreement was not cancelled at that time, nor did Just Do It seek to exercise against Taupiri Farms any other of the vendor’s remedies, under the agreement or otherwise. No formal steps were taken by Just Do It until a notice of cancellation was sent by its solicitors on 26 February 2014, more than four and a half years after Taupiri Farms’ breach by failing to settle.
[18]The relevant paragraphs of the notice of cancellation provided:
3.We advise our client has entered a conditional contract with a third party for the sale of the property. The removal of the caveat registered by your client is a condition of our client’s current sale agreement. Please immediately arrange for withdrawal of the caveat and provide confirmation once this has been registered.
4.We note that pursuant to clause 9.4(2) the agreement with your client is at an end. However, as our client has incurred considerable losses as a result of your client’s breach and failure to complete settlement this action is without prejudice to our client’s full contractual and equitable rights against your client and must not be taken as any concession, indulgence or waiver on our client’s part.
[19] Negotiations by Just Do It with a third party at that time, and with another on a later date, resulted in the two “agreements” with other parties mentioned in the summary of conclusions above. The other parties were Dairy Assets Holdings Ltd
and Mr Derek Hopkins. I will refer to these as the Dairy Assets agreement and Hopkins agreement.
[20] The Dairy Assets agreement is not dated. It has a possession date of 1 June 2010. The contract was for the land, buildings and Fonterra shares, but did not include stock or farm chattels. The price was $17 million plus GST if any. There is a handwritten provision which appears to be as follows:
Further Terms & conditions will be inserted into this agreement after purchaser complete [sic] due diligence & satisfy with it [sic] and continue with the purchaser. and further Terms & conditions are approved by the vendors [sic].
The document produced in evidence is incomplete.
[21] The Hopkins agreement is dated 10 February 2014 and, presumably, was the agreement referred to in the cancellation notice sent to Taupiri Farms on 26 February 2014. The settlement date is 1 June 2014. The price is $18.7 million, plus GST if any. The contract was for the sale of the land, stock, Fonterra shares (but excluding Fonterra dividends and bonus issue), specified farm machinery and other farm chattels, and household chattels. The agreement was conditional upon approval of the purchaser’s solicitor.
[22] Neither the Hopkins nor the Dairy Assets agreement proceeded to completion. The contractual documents were included in the bundle of documents, but they were not explained.
The claim
[23] Just Do It’s original claim against Taupiri Farms was for specific performance, or damages in the alternative. The claim for specific performance was untenable, given the prior cancellation, and it was abandoned. The damages claim, expressly pleaded as an alternative to a claim for specific performance, was for “the difference between the purchase price in the Agreement (less the $1,000,000.00 deposit that has already been paid) and the current value of the Property, such loss estimated at $2,000,000.00”.
[24] There was an issue whether an independent claim for damages was statute barred under the Limitation Act 1950. The proceeding was commenced within six years of the date of breach, with the latest possible date of breach being 18 June 2009 when the settlement notice expired. The proceeding was filed on 19 May 2015.
[25] A limitation defence was pleaded and briefly noted in submissions of Mr Kohler QC for Taupiri Farms. The claim actually advanced was different from the claim as pleaded, and there was no application for amendment of the pleading within the six year period from breach. I do not consider it necessary to determine this point. The primary argument for Taupiri Farms was on the question whether Just Do It had proved that it had suffered any loss. As I have concluded that Just Do It failed to prove that it had suffered a loss I prefer to determine the claim on its merits, rather than the limitation point.
[26] The claim advanced at trial was for damages in a sum of $2,548,655.65, with some alternative calculations, plus interest. The total sum sought was claimed to be the difference between valuation of assets in 2017 and the price in the agreement with Taupiri Farms. Alternative sums were put forward for the total loss in the event the March 2017 valuations were not accepted.
Damages for breach of contract
[27] Taupiri Farms accepts that, in failing to comply with the terms of the settlement notice, it breached the agreement. That breach gave Just Do It a right to sue for specific performance or to cancel the agreement and pursue further remedies. Just Do It was entitled to retain the deposit paid by the purchaser and Taupiri Farms has forfeited its initial deposit of $1 million.
[28]There are two issues relating to the damages claim:
(a)Is Just Do It entitled to rely on 2017 valuations to measure its loss for a breach in 2009?
(b)If so, has Just Do It proved a loss?
Appropriate market valuation date
[29] The measure of damages commonly applied for a breach of the type that occurred in this case is the difference between the contract price and the market price at the time of the breach.2
[30] In this case, the date of the breach was 18 June 2009, being the date of the purchaser’s failure to settle within the time specified in the settlement notice. There is an issue whether there is sufficient evidence to determine the market value of the land, Fonterra shares, stock and chattels on that date. I will come to that. The first issue is whether there is a principled basis for the measure of damages to be determined as the difference between the contract price and values assessed in 2017, approximately eight years after the date of breach.
[31] Clause 9.4(3) of the contract expressly provides that damages claimable by the vendor can include “any loss incurred by the vendor on any bona fide resale contracted within one year from the date by which the purchaser should have settled in compliance with the settlement notice”. Those words are not determinative of the appropriate date for the market valuation because, amongst other things, they are prefaced by a statement that remedies include but are “not limited to” this stated measure of damages. However, the fact that the contract refers to a period of one year from the date of breach is a matter which can be weighed in the overall assessment.
[32] Mr Braun, for Just Do It, submitted that where the property takes some time to resell, or resale is not achieved following efforts over a period of time, and the market has declined since the original sale, it may be appropriate to adopt a date different from the date of breach for assessment of market value. Several authorities were relied on by Mr Braun in favour of that approach.
2 Williams v Kirk [1988] 1 NZLR 452 (CA) at 463 per Bisson J. See generally Stephen Todd “Remedies” in Jeremy Finn, Stephen Todd and Matthew Barber (eds) Burrows, Finn and Todd on the Law of Contract in New Zealand (6th ed, LexisNexis, Wellington, 2018) 813 at 828 and Harvey McGregor McGregor on Damages (19th ed, Sweet & Maxwell, London, 2014) at [25– 036].
[33] In Williams v Kirk, a majority of the Court of Appeal accepted that value at a date subsequent to the date of breach could be used, but it received little argument on the point.3
[34] A vendor and purchaser made an agreement in November 1983 for the sale and purchase of a farm for $330,000. By late December the purchaser no longer wished to proceed with the agreement. The vendor cancelled for repudiation in February 1984. The vendor resold the property for $290,000 in June 1984, and sued the purchaser for damages at common law. At first instance, the vendor was awarded damages assessed by reference to the resale price (and other damages) despite there being little evidence of the farm’s market value aside from the resale price.
[35] On appeal, the purchaser argued the measure of damages should have been the difference between the contract price and the value of the land at the date of breach. It was argued the vendor had not pleaded or proved the value of the land was less than the resale price. Separate reasons were given by Cooke P, Somers and Bisson JJ.
[36] Cooke P and Bisson J appear to have concurred on the point that, where a contract has been cancelled and resale occurs within a reasonable time period, it may be appropriate to adopt the value obtained on the subsequent sale as the market value. Cooke P observed:4
It seems to me that allowance to the vendor of a reasonable time to resell is in accordance with the usual approach of the law to questions of time. The device of treating resale price within a reasonable time as evidence of market value at an earlier date will not do justice in all cases. There may be an intervening drop in value, yet the vendor may have acted reasonably and indeed prudently in not selling instantly. So, where there has in fact been a resale within a reasonable time, I would measure the vendor’s damages as the difference between the contract price and the resale price, together with any consequential losses that are recoverable. At least that should be the measure in the absence of special circumstances. There are none in this case; I add the caveat only because it is as well to be wary about general rules in the field of damages.
(emphasis added)
3 Williams v Kirk, above n 2.
4 At 457.
[37] Bisson J emphasised that questions of the market value are questions of fact. He said:5
If there is a resale of the property within a reasonable time of the breach that may well be the best evidence of the market value of the property at the date of the breach of contract. That will be a question of fact for determination in each case and one issue may be whether the market was sufficiently explored and another issue may be whether the resale was unreasonably delayed at a time when prices of such properties were falling. If a property is not sold, valuation evidence would be required to establish any loss … if the property takes some time to resell and over that time market prices fall it is again a question for the Court to assess damages, and the Court will strive to do justice to both parties, fixing a date other than the date of breach if that be necessary to provide appropriate compensation to the innocent party.
(emphasis added)
[38] The emphasis has been added to those two citations in anticipation of my consideration of the evidence. In this case there was a marked lack of evidence of the sort referred to in those passages.
[39] The approach of the majority in Williams v Kirk finds support in the judgment of Lord Wilberforce in Johnson v Agnew, cited by Bisson J.6 Lord Wilberforce said:7
The general principle for the assessment of damages is compensatory, i.e., that the innocent party is to be placed, so far as money can do so, in the same position as if the contract had been performed. … But this is not an absolute rule: if to follow it would give rise to injustice the court has power to fix such other date as may be appropriate in the circumstances.
In cases where a breach of a contract for sale has occurred, and the innocent party reasonably continues to try to have the contract completed, it would to me appear more logical and just rather than tie him to the date of the original breach, to assess damages as at the date when (otherwise than by his default) the contract is lost.
[40] In Williams v Kirk Somers J considered that the case was not an appropriate one in which to review the general rule.8
[41] Mr Braun also relied on a more recent decision of the Court of Appeal of England and Wales in Hooper v Oates.9 In that case, the vendors had entered a
5 At 463.
6 Johnson v Agnew [1980] AC 367 (HL).
7 At 400.
8 Williams v Kirk, above n 2, at 461.
9 Hooper v Oates [2013] EWCA Civ 91, [2014] Ch 287.
contract for the sale of their residence on 8 February 2008, for completion by 30 June 2008. The purchaser failed to complete on that date and failed to comply with a subsequent notice to complete. The vendors cancelled for repudiation on 14 July 2008. The property was remarketed, but failed to sell for 14 months (likely due to the turn of the global market from mid-2008). In October 2009 the vendors let the property to tenants for six months. When the tenants left, it was again marketed for sale, but unsuccessfully. By mid-2011 the vendors abandoned their efforts to sell and moved back into the premises.
[42] On a claim for damages (and forfeiture of the deposit), the vendors were successful at first instance in obtaining damages calculated as the difference between the agreement price and the market value at the time the decision was made to move back into the property, around three years after breach.
[43] On appeal, the purchaser argued a breach-date valuation should have been adopted. Lloyd LJ was not persuaded by that argument. After conducting a thorough review of the authorities,10 he held:
[38] It seems to me that the breach date is the right date for assessment of damages only where there is an immediately available market for the sale of the relevant asset or, in the converse case, for the purchase of an equivalent asset. This is most unlikely to be the case where the asset in question is land. If the defaulting party is the buyer, much will depend on what the seller does in response to the breach, as is suggested in Chitty on Contracts, 31st ed, para 26-014, cited above. If he resells, the buyer may be able to show that, in so doing, the seller failed to take reasonable steps to mitigate his loss, for example by taking too long, or failing to follow proper professional advice, or in some other way. Absent any feature of that kind, the eventual resale price is likely to be the figure to be set against the contract price for assessment of the damages, not because it represents the market value at the date of the breach, but because it shows what loss the seller has suffered, uncomplicated by issues of remoteness or failure to mitigate. If the property market has declined during that time, it is of no avail for the defaulting buyer to say that this should not be laid at his door. If he had completed the contract, he would have suffered that decline in value, so this is part of the loss for which the seller needs to be compensated.
[44]Leveson LJ, agreeing with the judgment of Lloyd LJ, considered that it was
“only necessary to ask the question what more the vendors could have done to
10 See [17]-[33].
dispose of a property which they no longer wished to occupy.”11 He considered “they did everything that they could to market and sell the property, returning not because they wished to but because there was no other alternative.”12
[45] Mr Kohler submitted that Williams v Kirk is not of assistance to Just Do It because it would be necessary for the delay between the breach and resale to be “reasonable”. On his submission, that is not the case here. Mr Kohler sought to distinguish Hooper v Oates on the grounds that in that case the delay was only two years,13 the contract was residential in nature, and the vendors had borne the cost of the property being vacant for all but 6 months.
[46] I agree with Mr Kohler’s contention that this is not the appropriate case in which to adopt a market valuation after the date of breach. Hooper v Oates is readily distinguishable on the facts. But, in any event, the principle to be taken from these cases is not applicable in this case. The broad principle is that the vendor must have acted reasonably. One important aspect of acting reasonably, in my judgment, involves acting within a time that, in the circumstances, is reasonable. The onus was on Just Do It to satisfy me that its approach was reasonable. I am not satisfied that it was. I am satisfied that it would be unjust to adopt 2017 valuations. I have come to that conclusion for the following reasons.
[47] First, the land valuation proposed by Just Do It was as at 17 March 2017. That is just under eight years after the date of breach. This period is far in excess of the period of three years between breach and valuation date in Hooper v Oates, let alone the contractual provision directed to resale within one year. In the absence of adequate evidence to explain what on the face of it amounts to inordinate delay, and to establish that the delay was reasonable and would not be an injustice to Taupiri Farms, in my judgment such a long delay should in itself be treated as unreasonable.
[48] No such evidence was provided. The only explanation was that the 17 March 2017 land valuation was one obtained at a date reasonably close to trial.
11 At [41].
12 At [41].
13 This was an obvious error. The delay was approximately three years, but in this case nothing turns on the difference.
[49] There was some evidence for Just Do It, but it fell well short of what would be required. In her brief of evidence, Ms Dodd (a director of the plaintiff) simply said:
Since the Taupiri Farm sale fell over, we have put the farm on the market with numerous real estate agents in the district.
[50] The paucity of evidence was in fact captured in a closing submission by Mr Braun when he observed that Just Do It had “engaged real estate agents to market the Property in the subsequent years on [an] on and off basis”.
[51] Agreements between Just Do It and real estate agents were put in evidence. Agreements were made with different real estate agencies on 24 March 2015, 9 June 2015, 29 July 2015 and 18 February 2016. That evidence does not establish that Just Do It was actively proceeding to resale in a reasonable manner after the breach by Taupiri Farms. Rather, apart from the Dairy Assets and Hopkins agreements (to which I will come) Just Do It waited nearly six years after Taupiri Farms failed to settle before making further efforts to take the farm to market. This may be contrasted with the evidence in Hooper v Oates, which established the immediate and consistent efforts of the vendors to sell their property after their initial agreement was repudiated by the purchaser.14
[52] The sale prices listed in the real estate agency agreements cannot be reconciled with the claim now brought by Just Do It to support a conclusion that the delay by Just Do It was reasonable. The list price in the three agreements in 2015 was $22 million. That is $2 million more than the price in the agreement with Taupiri Farms. The list price in the 2016 real estate agency agreement was $19.75 million. This evidence is not probative on the question whether the steps taken by Just Do It at that time were reasonable, even assuming that it would otherwise be appropriate to consider value six or more years after Taupiri Farms breached the agreement.
14 Hooper v Oates, above n 9. See in particular the detailed evidence of how the property was marketed, summarised by Lloyd LJ at [8]-[9].
[53] I have, to this point, focused primarily on the March 2017 valuation of the farm land. This is the most significant figure because it represents a large part of the overall valuation for the damages claim as well as the largest part of the original price. The conclusion I have reached that Just Do It cannot rely on the March 2017 value is sufficient for a conclusion that it has not established the loss it claims based on 2017 figures. I will nevertheless briefly note the reasons for my conclusion that evidence of value of other assets falls short of what is required.
[54] A second component of the total assets in the agreement with Taupiri Farms was the livestock. There was evidence for Just Do It from Mr Christopher Elliott. Mr Elliott is employed by PGG Wrightson as a dairy livestock representative and auctioneer. In July 2017, he provided a livestock valuation for Just Do It based on his inspection of stock on the farm in June 2017. There was no comparative calculation of the stock Just Do It agreed to sell to Taupiri Farms. Mr Elliott expressly said in his evidence that it was not possible to value the stock specified in the agreement with Taupiri Farms. It was clear from the evidence that stock had been bought and sold as part of the ongoing operation of the farm by Just Do It over the preceding nine years. In addition, the stock numbers valued by Mr Elliott were different from the number agreed to be sold to Taupiri Farms. And there was no evidence of returns from the original stock, either by sale or by way of income.
[55] Mr Elliott’s evidence was of no assistance to Just Do It in seeking to establish loss in its claim against Taupiri Farms.
[56] A further substantial part of the assets being sold to Taupiri Farms was the Fonterra shares. The approach to proof in this regard was just as deficient. Just Do It sought to prove the value of the Fonterra shares on 17 March 2017 by producing a copy of a screenshot of a Yahoo Finance website. There was no direct valuation of the Fonterra shares owned by Just Do It at any date. In particular, there was no evidence provided of value in 2009, at or around the date of breach, or in 2014, at or around the date of cancellation.
[57] I will refer to one further significant deficiency in the proof of loss. The farm and its operation has remained with Just Do It since the date of breach by Taupiri
Farms. Just Do It throughout this long period of time has operated the farm as a going concern. It is an unusual feature of this case that Just Do It did not call expert accounting evidence to establish the overall financial position for Just Do It arising from its farming operations over this period. There was in fact no evidence of its financial position over the years. That information should have been provided because the defendant can only be held liable for damages in a sum that would place Just Do It in the position it would have been had the breach not occurred. This applies irrespective of the valuation date for the valuation of particular assets.
[58] Just Do It’s primary claim fails because it has not established that it has acted reasonably in seeking to rely on 2017 valuations and it has in any event failed to prove a loss based on 2017 valuations.
Other valuation evidence
[59] Just Do It sought, in the alternative, to rely on the Dairy Assets and Hopkins agreements in order to establish loss at earlier dates.
[60] For these agreements to assist Just Do It, the prices recorded in them, or at least in one of them, would have to be reliable evidence of market value at the date of the particular agreement. Neither document comes close to establishing market value.
[61] A significant difficulty for Just Do It is that neither agreement led to completion of a sale. There are other deficiencies. These two agreements are not comparable with the agreement with Taupiri Farms because they were not on the same terms in respect of all of the same assets.
[62] I also agree with Mr Kohler’s submission that, if the prices in the Hopkins and Dairy Assets agreements are adjusted to take account of the differences between each of those agreements and the agreement with Taupiri Farms (for example, adjusting for stock differences and payment of the original deposit) any loss would be likely to be less than $100,000.
[63] The prices in the Dairy Assets and Hopkins agreements are not reliable indicators of market value. But if it is assumed that they are reasonably close, only minor adjustments from the proposed purchase prices, with the further necessary adjustments for the differences between each of those agreements and the Taupiri Farm agreement, would reduce loss to Just Do It to zero.
[64] There was no evidence about these agreements from witnesses for Just Do It. And there was the further difficulty with the Dairy Assets agreement in that the document produced was not even a complete document.
Conclusion and costs
[65] For these various reasons Just Do It has failed to establish that it has suffered any loss and its claim is dismissed.
[66] Taupiri Farms is entitled to costs. Mr Kohler advised that the second defendants would also be seeking costs for the claim discontinued against them.
[67] Assessment of the quantum of costs is reserved. If no agreement is reached on the quantum of costs for Taupiri Farms and the second defendants, they are to file and serve costs memoranda by 1 June 2018. Any memorandum in response for Just Do It is to be filed and served by 8 June 2018.
Woodhouse J
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