JAMES JOSEPH MURREN as trustee of the JAMES J MURREN SPENDTHRIFT
TRUST First Plaintiff
DANIEL LEE Second Plaintiff
AND
GLENN SCHAEFFER
Defendant
Hearing:
29 October 2018 to 31 October 2018 and 2 November 2018;
5 November 2018 to 7 November 2018
Counsel:
A J Horne with A E Simkiss and J J K Spring for Plaintiffs
A R Shaw with C W Martin (29 October to 30 October 2018) and with S J Stewart (31 October and 2 November 2019; and 5 November 2019 to 7 November 2019) for Defendant
Judgment:
5 December 2018
JUDGMENT OF COLLINS J
PART I INTRODUCTION
[1] The gravamen of this proceeding is whether Mr Schaeffer should be held liable for representations he made to Mr Murren and Mr Lee that they say led them to invest in a vineyard. At all relevant times, Mr Schaeffer owned 80 per cent of the shares in the company that owned the vineyard.
MURREN v SCHAEFFER [2018] NZHC 3176 [5 December 2018]
[2] I have concluded that Mr Schaeffer made negligent misstatements to Mr Murren and Mr Lee for which he is liable. I have also concluded that Mr Schaeffer is liable in relation to causes of action brought under the Fair Trading Act 1986 and the Nevada Deceptive Trade Practices Act. None of the affirmative defences alleged by Mr Schaeffer have merit. Accordingly, I find Mr Schaeffer is liable for the damages sought plus interest. Judgement is entered in favour of Mr Murren for USD 1,600,813.92 plus interest and USD 700,406.96 plus interest for Mr Lee.
PART II BACKGROUND
The vineyard
[3] The focal point of this litigation is a vineyard in the Tasman region of the South Island of New Zealand. Originally the vineyard was called “Woollaston Estates”, but in 2015 its name was changed to “Mahana Estates”. For convenience, I will refer to the land and the assets used to produce wine as “the vineyard”.
[4] At its peak, the vineyard was spread over several sites and comprised more than 100 hectares of land in and around Moutere and Hope. The principal buildings on the vineyard are a four-level gravity-fed winery with a restaurant and reception facility designed by a well-known American architect and a villa, which is described in advertising literature as “featuring seven bedrooms, seven bathrooms, wine cellar, library and art gallery”.
The parties
[5] Mr Murren, Mr Lee and Mr Schaeffer met each other in the 1980s. At the time, Mr Murren was an equity analyst on Wall Street. He moved to Las Vegas in 1998, where he became the Chief Financial Officer, and subsequently the Chairman and Chief Executive Officer, of MGM Grand Casino Inc (MGM). When Mr Lee first met Mr Schaeffer, he was also working on Wall Street, as a research analyst. In 1992, Mr Lee moved to Las Vegas to take up positions as the Chief…
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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AGLC
Murren v Schaeffer [2018] NZHC 3176
Case
[2018] NZHC 3176
Decision Date
CaseChat Overview and Summary
In the case of Murren v Schaeffer, the High Court of New Zealand found that Glenn Schaeffer, the defendant, was liable for negligent misstatements, breaches of the Fair Trading Act 1986, and breaches of the Nevada Deceptive Trade Practices Act. The plaintiffs, James Joseph Murren and Daniel Lee, were led to believe that they were investing in a vineyard through a partnership called Kiwi Ventures, which was supposed to own an entity that held 80% of the vineyard. However, Schaeffer, who owned 80% of the shares in the companies owning the vineyard, misled the plaintiffs about the true nature of their investments. The court found that Schaeffer's representations were false or misleading, and the plaintiffs reasonably relied on them, suffering loss as a consequence. The court awarded damages to the plaintiffs in the amount of their investments, plus interest. The court also found that none of Schaeffer's affirmative defences had merit.