PGG Wrightson Real Estate Ltd v Routhan

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA53/2022
 [2023] NZCA 123

BETWEEN	PGG WRIGHTSON REAL ESTATE LIMITED Appellant
AND	PHILIP WILLIAM ROUTHAN AND JULIE VERONICA ROUTHAN AS TRUSTES OF THE KANIERE FAMILY TRUST Respondents

Hearing:	25 August 2022 (further submissions received 6 September 2022)
Court:	Gilbert, Mallon and Wylie JJ
Counsel:	L J Taylor KC, M E Parker and J E Eckford for Appellant D R Kalderimis, O T H Neas and T Nelson for Respondents
Judgment:	24 April 2023 at 2 pm

JUDGMENT OF THE COURT

AThe appeal is allowed.

BThe High Court judgment is set aside.  Judgment is entered for the respondents in the sum of $300,000 plus interest under the Interest On Money Claims Act 2016 from the date of settlement of the purchase on 20 December 2010 until the judgment debt is paid in full.

CThe cross-appeal is dismissed.

DThe respondents must pay costs to the appellant for a complex appeal on a band C basis and usual disbursements.  We certify for second counsel.

EThe respondents’ entitlement to costs in the High Court is undisturbed.

___________________________________________________________________

REASONS OF THE COURT

(Given by Gilbert J)

Table of Contents

Introduction  [1]
Overview  [4]
The Trust’s claims  [9]
PGG’s defences  [10]
High Court judgment
Assessment of liability  [11]
           The effect of the disclaimer  [14]
           Limitation defence  [16]
           Assessment of loss  [17]
           Contributory negligence  [18]
PGG’s appeal  [20]
The Trust’s cross-appeal  [22]
The issues  [25]
The factual narrative  [26]
           Pre-purchase  [27]
           Agreement for sale and purchase of the Farm  [45]
           Post-settlement  [55]
  Farm manager  [57]
  Herd replacement and increased stocking rate  [58]
  Termination of cow lease and subsequent arbitration            [59]
  Re-grassing of pasture  [63]
  Capital expenditure  [66]
  Decline in dairy price  [67]
  Increase in borrowing costs  [68]
  Standstill agreement  [70]
  Forced sale of the properties  [71]
Was the Judge correct to dismiss the deceit claim?  [76]
Was liability excluded by the disclaimer?  [88]
Was the Fair Trading Act claim time-barred?  [89]
Was the Trust induced by the misrepresentation to
enter into the agreement?  [95]
Was the recoverable loss assessed correctly?  [107]
           Did the losses awarded come within the scope of PGG’s duty?        [109]
           What losses, if any, are recoverable?  [128]
Costs  [151]
Result  [153]

Introduction

1. The primary question on this appeal concerns the proper measure of damages in a claim against a real estate agent for a misrepresentation about production levels relied on by a purchaser in deciding to purchase a dairy farm. 

2. The purchaser claims it would not have purchased the farm had it known the correct position.  It invested substantial sums in an effort to improve the production of the farm over the 10-year period of its operation but was unable to achieve the represented level.  The purchaser’s already high level of gearing at the time of purchase increased substantially to fund this further investment.  The purchaser was ultimately unable to service its borrowings, in part because of a dramatic decline in the milk price.  The mortgagee forced the sale of…