Levin Meats Limited v Perfect Packaging Limited HC Christchurch CIV-2011-409-000018

[2011] NZHC 1409

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2011-409-000018

BETWEEN  LEVIN MEATS LIMITED Appellant

ANDPERFECT PACKAGING LIMITED Respondent

Counsel:         P T Finnigan for Appellant

A Marsh for Respondent

Judgment:      17 October 2011

JUDGMENT OF HON JUSTICE FRENCH

on application for leave to appeal

[1]      Levin Meats seeks leave to appeal my judgment of 1 August 2011, which in turn was an appeal from the District Court.  I dismissed the appeal and confirmed the District Court decision.[1]

[1] Levin Meats Ltd v Perfect Packaging Ltd HC Christchurch CIV-2011-409-000018 1 August

2011; Perfect Packaging Ltd v Levin Meats Ltd DC Christchurch CIV-2010-009-000986, 26

November 2010.

[2]      The  decision  concerned  Levin  Meat’s  liability  under  a  contract  for  the purchase price of a meat-wrapping machine.   Levin Meat’s general manager had signed the sale agreement without obtaining board approval.  Both the District Court Judge and I held that, regardless of whether the manager did or did not have actual authority, Levin Meats was liable by virtue of the doctrine of ostensible authority and s 18(1) of the Companies Act.

[3]      The second issue raised before me was whether the District Court Judge had erred in failing to deduct the fair market value of the meat-wrapping machine in calculating damages.   I held that the Judge had not erred, because there was no

available market.

LEVIN MEATS LIMITED V PERFECT PACKAGING LIMITED HC CHCH CIV-2011-409-000018 17 October

2011

Principles applying to granting of leave

[4]      The principles applying to the granting of leave to bring a second appeal are well established.

[5]      Levin Meats’ draft notice of appeal identifies four grounds which it wishes to

argue before the Court of Appeal:

(i)That I was wrong to regard the fact the chief executive officer/general manager had signed other capital purchase contracts as bearing on the issue of ostensible authority.  Levin Meats argues the signing of those other contracts could only be relevant if there had been evidence that they too had been signed without Board approval, and the Board was aware of this but had done nothing to prevent it.

(ii)Use of the short trial form in the District Court resulted in an injustice because it prevented full discovery.

(iii)I  erred  in  my  analysis  of  the  evidence  in  finding  that  the proviso to s 18(1) did not apply.  Levin Meats argues that the evidence shows Perfect Packaging was put on notice about the manager’s lack, or possible lack, of authority and should have made further enquiries.

(iv)In upholding the District Court judgment on quantum, I failed to take into account the possibility that Blue Sky Meats will not take the machine. This last ground arises from the fact that the meat-wrapping machine has been leased to Blue Sky for a

12-month period commencing 1 November 2011, with Blue Sky having the option to purchase the machine for $120,000. Levin  Meats  argues  that  if  Blue Sky does  not  exercise  its option, the fair market value still needs to be calculated and the amount reduced from the quantum.

[6]      Since filing its draft notice of appeal, Levin Meats says it has found a discrepancy in the documentary evidence which casts doubt on interest charges of

$38,373.40.  It wishes to also argue this matter before the Court of Appeal.

[7]      In my view, none of these grounds raise questions of sufficient merit or importance to warrant a second appeal.   My reasons for that conclusion are as follows.

[8]      First, the legal principles relating to ostensible authority and s 18 are well established.   The nature of the error alleged is an error in the application of well settled principles.   It does not raise a question of general public importance.

[9]      Secondly, Levin Meats agreed to the short trial form.  An attempt to appeal on the grounds of the limited discovery inherent in that process accordingly lacks merit.  In any event, most of the documents which it is submitted ought to have been discovered were within the control and possession of Levin Meats itself, and furthermore bear on an irrelevant issue (namely the manager’s actual authority).

[10]     The third proposed ground of appeal is entirely fact-specific and therefore of no general public importance.  It also involves a concurrent finding of fact, ie one reached in both the District and High Court.

[11]   Also entirely fact-specific is the issue of alleged discrepancies in the documentary evidence.  The amount involved ($38,373.80) is not significant, while the alleged discrepancies were never put to the witnesses at the hearing.  In my view, on a second appeal it is far too late to be attempting to raise this matter now.

[12]     As for issues relating to quantum, the Judge awarded the balance of the purchase price still outstanding, namely $191,090.18 less all payments made by Blue Sky under the lease to date of judgment.  He further ordered that subject to payment of the judgment sum, costs and interest, Levin Meats was entitled to receive any additional sums paid by Blue Sky Meats for the purchase of the machinery.

[13]     The reason for the Judge formulating judgment in those terms was that under the contract, property in the wrapping machine remains with Perfect Packaging until payment in full and neither party has cancelled.

[14]     Levin Meats argues (in effect) that damages should have been calculated as damages for non-acceptance, and therefore under s 51 of the Sale of Goods Act 1908 the market value was required to be taken into account.

[15]     However, even if the claim should have been characterised as an action for damages for non-acceptance rather than an action for the price, it does not assist Levin Meats, because the evidence established there was no available market and s 51(2) only applies if there is an available market.  In the absence of an available market, the Judge’s approach is a reasonable one regardless of how the claim is characterised.  My finding on quantum does not overlook the possibility of Blue Sky electing not to purchase.  On the contrary, my judgment at [82] states it is unlikely Blue Sky meats will purchase.   It is the factual finding that there is no available market that is the crucial point.

[16]     Finally, for completeness, I should record that I have not overlooked an NBR article which counsel has drawn to my attention.  The article states that my decision in this case “is expected to have broad implications for corporate accountability”. However, if the writer intended to suggest that my decision did anything other than apply well-settled principles, I must respectfully disagree.

Outcome

[17]     The application for leave to appeal to the Court of Appeal is dismissed. [18] Levin Meats must pay costs on the application on a 2B basis.

Solicitors:

SRB Law, Christchurch

Duthie Whyte, Auckland

P T Finnigan, Auckland