Murren v Schaeffer - [2015] NZHC 2759

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

CIV-2015-442-000028 [2015] NZHC 2759

BETWEEN
JAMES JOSEPH MURREN AND

JAMES J MURREN SPENDTHRIFT TRUST

First Plaintiffs

DANIEL LEE Second Plaintiff

AND

GLENN SCHAEFFER Defendant

Hearing: 28 October 2015

Appearances:

A Horne for Plaintiffs
J Maslin-Caradus for Defendant

Judgment:

6 November 2015

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

Introduction

[1] Mr Murren and Mr Lee are United States citizens resident in Nevada. Mr Schaeffer is also a United States citizen. Although he now resides in New Zealand, he too lived in Nevada until early 2013.

[2] Late in 2000 Mr Schaeffer and two other persons incorporated Woollaston Estates Holdings Limited (WEHL). Mr Schaeffer held 4,000,000 of the 5,000,000 shares and was one of the two directors. In 2001 and 2002 WEHL acquired various titles to land in the Upper Moutere District near Nelson and took various steps to combine the titles and then resubdivide the land into different blocks. In 2009
WEHL acquired further land and carried out further amalgamations and re- subdivisions of the land. All these steps resulted in there ultimately being six blocks
of land, of which WEHL now owns three.

Murren & James J Murren Spendthrift Trust v Schaeffer [2015] NZHC 2759 [6 November 2015]

[3] Mr Murren and Mr Lee maintain that in 2001 and 2002 Mr Schaeffer discussed with them the prospect of their investing in the land I have described, which comprises a vineyard and a winery. Mr Schaeffer circulated to Mr Murren and Mr Lee, and a group of other investors, a draft Limited Partnership agreement. Mr Murren and Mr Lee say that in about September 2002 Mr Schaeffer represented to them that this partnership would be an investment vehicle which would own the vineyard and winery in issue. The draft partnership agreement provided for capital contributions to be made by the partners, and for Mr Schaeffer to be the general partner. It was signed by Mr Murren in September 2002, and revised by Mr Lee before he signed it in February 2003. It was not, however, ever signed by all the proposed partners. I will refer to this document as the draft 2002 agreement.

[4] From September 2002 onwards Mr Schaeffer sought capital contributions for the intended partnership from Mr Murren, Mr Lee and the other intended partners. In the course of seeking these payments Mr Schaeffer is said to have made various representations either stating or implying that they were part-owners of the Woollaston Estates Vineyard. Mr Murren and Mr Lee made substantial payments of capital in accordance with the requests made to them.

[5] In October 2003 Mr Schaeffer incorporated Constellation Partners LLC as a limited liability company in the State of Nevada. Mr Schaeffer and his ex-wife, Renee Schaeffer, are the shareholders of that company. Renee Schaeffer lived at the time, and continues to live, in the United States.

[6] In 2006 Mr Schaeffer sent out another draft Limited Partnership agreement to Mr Murren, Mr Lee and a group of investors,…

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 Murren v Schaeffer

Details

AGLC: Murren v Schaeffer [2015] NZHC 2759
Case: [2015] NZHC 2759
Decision Date: 6 November 2015

CaseChat Overview and Summary

This case involved a dispute between the plaintiffs, Mr Murren and Mr Lee, and the defendant, Mr Schaeffer, regarding alleged misrepresentations made by Mr Schaeffer concerning investments in a vineyard and winery in New Zealand. The court was required to decide two main issues: whether there was a binding agreement to arbitrate the claims made by the plaintiffs and, if not, whether New Zealand was the appropriate forum to hear the proceeding.

Regarding the first issue, the court found that there was no binding agreement to arbitrate the claims. The 2002 draft partnership agreement had not been signed by all parties and the partnership had not commenced. Although the 2006 limited partnership agreement was signed by all parties, Mr Schaeffer was not a party to that agreement and thus was not bound by the arbitration clause. Furthermore, the court found that the claims made by the plaintiffs were not within the terms of the arbitration clauses in either agreement.

As for the second issue, the court found that New Zealand was the appropriate forum to hear the proceeding. While the representations relied upon by the plaintiffs were made in Nevada, the subject matter of the alleged misrepresentations was located in New Zealand. Additionally, four of the five causes of action were based on principles of New Zealand law, and there was no manifest weakness in the claims brought by the plaintiffs.

In conclusion, the court set aside Mr Schaeffer's appearance under protest to jurisdiction, dismissed his application to dismiss or stay the proceeding, and ordered him to pay costs to the plaintiffs.

Orders