Kaitaia Timber Co Ltd v Alternative Enterprises Ltd - [2012] NZHC 2497

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CIV-2012-488-303 [2012] NZHC 2497

BETWEEN KAITAIA TIMBER COMPANY LIMITED Plaintiff

ANDALTERNATIVE ENTERPRISES LIMITED
First Defendant

ANDJOHN LESLIE WILSON HARRISON AND JANICE ELIZABETH HARRISON Second Defendants

Hearing: 24 September 2012

Appearances: K I Bond for Plaintiff
W W Peters for Defendants

Judgment: 9 October 2012

JUDGMENT OF ASSOCIATE JUDGE R M BELL

This judgment was delivered by me on 9 October 2012 at 11:00am
pursuant to Rule 11.5 of the High Court Rules.

...................................
Registrar/Deputy Registrar

Solicitors:
Harkness Henry (K I Bond/T M Braun), Private Bag 3077 Hamilton 3240, for Plaintiff
Email: Kevin.bond@harkness.co.nz / toby.braun@harkness.co.nz

Wayne Peters Lawyers (W W Peters) P O Box 5053 Whangarei 5053 for Defendants
Email: wwp@waynepeterslawyers.co.nz

KAITAIA TIMBER COMPANY LIMITED V ALTERNATIVE ENTERPRISES LIMITED HC WHA CIV-2012-
488-303 [9 October 2012]

[1] In 2008 Kaitaia Timber Company Ltd sold its sawmill property at

155 Pukepoto Road, Kaitaia, to Alternative Enterprises Ltd for $700,000. Settlement of the purchase took place in February 2009, but under the agreement Kaitaia Timber Company Ltd left money in. It claims $484,601.14 as the outstanding balance of the purchase price payable by Alternative Enterprises Ltd and its directors, John and Janice Harrison. It applies for summary judgment.

[2] In opposition, Alternative Enterprises Ltd says that Kaitaia Timber Company Ltd induced it to enter into the agreement on misrepresentations as to the condition of the property, the environmental profile for the property and the sawmill’s business prospects. It alleges breaches of warranties under the agreement for sale and purchase. It also says that Kaitaia Timber Company Ltd did not transfer plant and equipment which were to be supplied under the agreement. It says that these matters give it claims for damages against Kaitaia Timber Company Ltd, which can be raised in defence of the claim for the purchase price by way of equitable set-off. It also alleges that a notice under s 119 of the Property Law Act 2007 was defective. The Harrisons say that they are not personally liable for the purchase price.

[3] The questions in the case are:

(a) Are Mr and Mrs Harrison personally liable?

(b) Are the defendants able to claim misrepresentation?

(c) Does Alternative Enterprises Ltd have a claim for breach of warranty under general condition 6.1(1) of the agreement for sale and purchase?

(d)Does Alternative Enterprises Ltd have a claim for breach of warranty under general condition 6.2(6) of the agreement for sale and purchase?

(e) Did Kaitaia Timber Company Ltd supply all the plant and equipment under the agreement for sale and purchase?

(f) Did Kaitaia Timber Company Ltd comply with the Property Law Act

2007 in selling a Southland property as mortgagee? (g) Can the defendants claim a damage campaign? and

(h) If Alternative Enterprises Ltd has damages claims against Kaitaia
Timber Company Ltd, can they be raised in defence by way of equitable set-off?

Facts

[4] Kaitaia Timber Company Ltd had used the site in Pukepoto Road for a sawmill, including for timber…

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: [2012] NZHC 2497
Decision Date: 9 October 2012

CaseChat Overview and Summary

In Kaitaia Timber Co Ltd v Alternative Enterprises Ltd, the High Court considered a dispute over the sale of a sawmill. Kaitaia Timber Co Ltd sued Alternative Enterprises Ltd for the outstanding balance of the purchase price, and its directors, Mr and Mrs Harrison, for personal liability under the agreement for sale and purchase and personal covenants under the mortgage. The defendants raised a number of defences, including misrepresentation, breach of warranty, non-disclosure of defects, and non-compliance with the Property Law Act. The court found that none of the defendants' claims were arguable. Mr and Mrs Harrison were personally liable under the personal covenants in the mortgage. The defendants could not raise their claims as defences by way of equitable set-off. The court granted summary judgment in favour of Kaitaia Timber Co Ltd, ordering Alternative Enterprises Ltd and the Harrisons to pay the outstanding balance, interest, and costs.

Orders