LSD 2017 Ltd v Landscaping Direct Ltd - [2021] NZHC 3386

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2019-463-101

[2021] NZHC 3386

BETWEEN
LSD 2017 LTD

Plaintiff

AND

LANDSCAPING DIRECT LTD

Defendant

Hearing: 3 June 2021

Appearances:

P Bell-Connell for the Plaintiff No appearance for the Defendant

Judgment:

10 December 2021

JUDGMENT OF POWELL J

This judgment was delivered by me on 10 December 2021 at 3.30pm pursuant to R 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

LSD 2017 LTD v LANDSCAPING DIRECT LTD [2021] NZHC 3386 [10 December 2021]

[1] The plaintiff, LSD 2017 Ltd (“LSD”), seeks damages under the Contract and Commercial Law Act 2017 (“CCLA”)1 and/or the Fair Trading Act 1986 (“FTA”).2 It alleges that misrepresentations made by the defendant, Landscaping Direct Limited (“Landscaping Direct”), induced it to enter into two contracts in October 2017. Specifically, LSD claims that Landscaping Direct repeatedly advised that Landscaping Direct’s rights to mine a quarry at Acacia Bay near Taupo (“the quarry”) had been extended from 2026 to 2041 and on this basis LSD had entered into the contracts by which it:

(a)obtained exclusive rights to the supply of scoria from the quarry for a period of five years;

(b)obtained an option to take over Landscaping Direct’s interest in the quarry at the end of the five year period; and

(c)agreed to purchase various assets and assume various liabilities from Landscaping Direct.

[2] LSD’s claim has proceeded to hearing by way of formal proof, Landscaping Direct having gone into voluntary liquidation after the issue of proceedings.

[3] In its statement of defence filed prior to liquidation, Landscaping Direct admitted it had represented that an extension of Landscaping Direct’s right in the quarry had been agreed, but said that LSD was aware “the extension was not documented” and that otherwise the representation was truthful. Landscaping Direct also pleaded that the representations did not induce LSD to enter the contracts, nor that any such reliance was reasonable.

[4] As Mr Bell-Connell submitted on behalf of LSD, the following issues must be determined:

1 CCLA, s 35.
2 FTA, s 9.

(a)Was Landscaping Direct’s representation regarding the extension a misrepresentation under the CCLA and/or misleading or deceptive conduct in terms of the FTA?

(b)Did Landscaping Direct’s representation regarding the extension induce LSD to enter into the contracts?

(c)Was LSD’s reliance on Landscaping Direct’s representation regarding the extension reasonable?

(d)Is LSD is entitled to damages?

Factual background

[5] According to the principal witness for LSD, Alex Semenoff, the Semenoff Group of companies (“the Semenoff Group”) have a range of business interests, including transport, and operate three quarries in Northland. In 2017, Landscaping Direct was operating in a similar space, quarrying and transporting building materials from the quarry to depots in Silverdale and Takanini for sale to the Auckland building industry.

[6] In July 2017, Stan Semenoff and Alex Semenoff of the Semenoff Group became aware that Landscaping Direct appeared to be having difficulties supplying scoria to its customers and was also not paying…

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 LSD 2017 Ltd v Landscaping Direct Ltd

Details

AGLC: LSD 2017 Ltd v Landscaping Direct Ltd [2021] NZHC 3386
Case: [2021] NZHC 3386
Decision Date: 10 December 2021

CaseChat Overview and Summary

The plaintiff, LSD 2017 Ltd, sought damages against the defendant, Landscaping Direct Ltd, for misrepresentations made by the defendant in relation to the extension of rights to mine a quarry. LSD claimed that it was induced to enter into two contracts on the basis of the misrepresentations. Landscaping Direct had gone into voluntary liquidation before the hearing. LSD’s claim proceeded by way of formal proof. The Court had to determine whether there was a misrepresentation under the Contract and Commercial Law Act 2017 or misleading or deceptive conduct in terms of the Fair Trading Act 1986. The Court also had to determine whether the representation induced LSD to enter into the contracts, whether LSD’s reliance on the representation was reasonable and whether LSD was entitled to damages. The Court found that there was no misrepresentation as the representations related to future conduct or events. Even if there had been a misrepresentation, it was not made to LSD as LSD had not been incorporated at that time. Furthermore, the representation did not induce the contracts as there was no evidence to support the contention that the contracts were dependent on the extension. Even if the contracts had been induced, it was not reasonable for LSD to rely on the representation once it became clear that the extension had not been agreed to in writing. LSD’s claims were dismissed.

Orders