Mulward Holdings Limited v Wilton Collery Farm Limited
[2013] NZHC 3324
•11 December 2013
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2013-419-770 [2013] NZHC 3324
BETWEEN MULWARD HOLDINGS LIMITED Appellant
ANDWILTON COLLERY FARM LIMITED Respondent
Hearing: 5 December 2013
Appearances: S A McKenna for Appellant
D M O'Neill and T A Needham for Respondent
Judgment: 11 December 2013
JUDGMENT OF PETERS J
This judgment was delivered by Justice Peters on 11 December 2013 at 4.45 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Date: ...................................
Counsel: S A McKenna, Hamilton
D M O’Neill, Hamilton
T A Needham, Hamilton
MULWARD HOLDINGS LIMITED v WILTON COLLERY FARM LIMITED [2013] NZHC 3324 [11
December 2013]
[1] The Appellant appeals from a decision of Judge Spiller in the District Court at Hamilton.1
[2] The issue in the appeal is whether the Judge erred in finding that on
17 January 2012 the parties agreed that the Appellant would acquire the Respondent’s interest in livestock at a price equivalent to 50 per cent of a valuation they agreed to obtain.
[3] The Appellant contends the Judge erred and that the price the Appellant would pay for the livestock was left for subsequent negotiation and agreement.
Background
[4] The Appellant and Respondent were equal partners in a partnership rearing livestock. The Appellant held a lease of land for the partnership, and there was some plant and/or equipment and livestock.
[5] One of the principals of the Appellant, Mr Muldoon, visited the principals of the Respondent, Mr and Mrs McMullin, at their house on Sunday, 17 January 2012. By this time the partnership had been in operation for approximately six months.
[6] Mr Muldoon was dissatisfied with an aspect of the partnership. He proposed that the Appellant should acquire the Respondent’s interest in the partnership assets, including the livestock. Mr and Mrs McMullin agreed. The parties agreed that there would be a reconciliation of sums that each had paid for the partnership so that they were met on an equal basis. It is common ground that Mr McMullin said that the stock would have to be valued and Mr Muldoon agreed. The Appellant’s acquisition included its assumption of liability for rent due under the lease from 1 February
2012.
[7] The other principal of the Appellant is Mr Hayward. After the meeting on
17 January 2012 Mr McMullin telephoned Mr Hayward and discussed the need to arrange a valuation of the livestock. Mr Hayward and Mr McMullin agreed that a
valuer from PGG Wrightson known to them both would be engaged, as he was.
1 Wilton Collery Farm Ltd v Mulward Holdings Ltd DC Hamilton, CIV-2012-019-965, 18 July 2013.
[8] The valuer valued the animals on 25 January 2012 and provided a valuation addressed to both parties on 27 January 2012. The valuer determined that the value of the livestock was $177,932.50 excluding GST. Each party paid half of the valuer’s fee.
[9] It is common ground that the Appellant acquired the Respondent’s
50 per cent interest in the partnership with effect from 31 January 2012.
[10] In February 2012 Mr McMullin sent an email to Mr Muldoon enquiring about settlement of the acquisition.
[11] The Appellant then made an offer to pay $91,037 for the Respondent’s share of the livestock and plant and equipment. Mr McMullin sought an explanation, as the sum offered was less than the amount due for plant, equipment and livestock if the price for the latter was 50 per cent of the value determined by the valuer.
[12] The Appellant then withdrew its offer to pay $91,037 and offered a lesser sum. That too was rejected. The Appellant then made a series of offers subsequently, none of which was accepted by the Respondent.
[13] The Respondent subsequently commenced proceedings seeking an order that the Appellant pay $104,589.66 plus interest from 1 February 2012. There is no dispute that this is the sum due if the Appellant is required to pay for the Respondent’s share in the livestock at 50 per cent of the value determined by the valuer.
[14] The Appellant sold the stock after the proceedings commenced.
Discussion
[15] The Respondent’s case, which Judge Spiller accepted, was that the parties
had agreed that the Appellant would purchase the Respondent’s interest in the
livestock at 50 per cent of the value determined by the valuer. At [24], the Judge said:2
[24] I find that, on 17 January 2012, the plaintiff and the defendant companies reached a concluded agreement for the cancellation of their partnership (as at 31 January 2012), involving the transfer of all items and animals bought between them to the ownership of the defendant, who was to pay to the plaintiff the price of the animals to be fixed by valuation, and the price of the other items to be fixed by an agreed mechanism. I make this finding in light of the following evidence.
[16] The Appellant’s case on appeal is that:
The finding at [24] of the judgment of Judge Spiller is wrong in fact and in law and is contrary to the weight of the evidence and should substituted with a finding that:
On 17 January 2012, the Appellant and Respondent companies reached an agreement for the cancellation of their partnership involving the transfer of all animals bought between them for a price to be agreed at a later date after the obtaining of a valuation of the cattle.
[17] Counsel for the Appellant submitted that the appeal should be allowed and the case remitted back to the District Court for further consideration.
[18] The import of the Appellant’s submission is that it acquired the Respondent’s
50 per cent interest in the partnership assets from 1 February 2012, and was thereafter free to treat them as its own, but with the price on the livestock (the most substantial asset of the partnership) still to be agreed.
[19] I do not accept that submission. I am satisfied that the Judge’s decision was correct. I accept the parties did not say words to the effect that the Appellant would purchase and the Respondent would sell its share in the livestock at 50 per cent of the value fixed by the valuer. I am satisfied, however, that was implicit in the agreement that the stock would be valued, that the parties would instruct the valuer jointly and that the transfer would take effect on 31 January 2013.
[20] A party would not be bound to accept a valuation which on its face contained an error, but in such a case the valuation provided would not have constituted the
valuation that the parties had agreed to obtain.
2 Wilton Collery Farm Ltd v Mulward Holdings Ltd, above n 1, at [24].
[21] If I am wrong in the conclusion expressed in [19], I accept the Respondent’s submission that the Appellant would be required to pay a “reasonable” price for the Respondent’s interest in the livestock. The Respondent submits that, if parties do not agree a price or mechanism for the fixing of a price, a term may be implied by law to the effect that a “reasonable” price is to be paid,3 at least in a contract which has
been acted upon.4
[22] Counsel for the Appellant submitted that the appeal should be allowed and the case remitted back to the District Court for further consideration. Even if I considered the Judge had erred, and I do not, such an order would be unnecessary. It is apparent that the best evidence available as to the value of the livestock as at
31 January 2012 is that assessed by the expert valuer. A reasonable price to pay for a
50 per cent interest in the stock would be 50 per cent of that value.
Result
[23] I dismiss this appeal accordingly.
[24] The Appellant is to pay costs on a 2B basis, together with disbursements as fixed by the Registrar.
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M Peters J
3 Money v Ven-Lu-Ree [1989] 3 NZLR 129 (PC) at 133.
4 British Bank of Foreign Trade v Novinex [1949] 1 KB 623; Sykes (Wessex) Ltd v Fine Fare Ltd [1967] 1 Lloyd's Report 53; and Mamidoil-Jetoil Greek Petroleum Company SA v Okta Crude Oil Refinery AD [2001] 2 Lloyd's Law Reports.
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