Progressive Livestock Limited v Donaldson
[2021] NZHC 3112
•18 November 2021
IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY
I TE KŌTI MATUA O AOTEAROA TE TIHI-O-MARU ROHE
CIV-2021-476-24
[2021] NZHC 3112
BETWEEN PROGRESSIVE LIVESTOCK LIMITED
Plaintiff
AND
SCOTT JAMES DONALDSON
First Defendant
AND
SLD AGRICULTURE LIMITED
Second Defendant
Hearing: 15 November 2021 (by AVL) Appearances:
T C G Nation for Plaintiff G A Paine for Defendants
Judgment:
18 November 2021
JUDGMENT OF ASSOCIATE JUDGE LESTER
PROGRESSIVE LIVESTOCK LIMITED v DONALDSON [2021] NZHC 3112 [18 November 2021]
[1] The plaintiff’s application for summary judgment raises the common issue of whether the first defendant as an individual is liable for the plaintiff’s claim or whether the liability rests with his company (the second defendant).
Summary Judgment Principles
[2] In Krukziener v Hanover Finance Ltd, the Court of Appeal outlined the principles as follows:1
[26] The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[27] Under r 141A the defendant need not file a statement of defence. The onus remains on the plaintiff, and summary judgment will be denied if on the hearing of the application it appears that there is an issue worthy of trial.
Background
[3] The plaintiff, Progressive Livestock Limited (Progressive), carries on business as a livestock agent. The first defendant, Scott Donaldson (Mr Donaldson) is a farmer. The second defendant, SLD Agriculture Limited (SLD), is Mr Donaldson’s company and he is its sole director and shareholder.
1 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307.
[4] In April, May and June of 2019, Progressive entered into three lease contracts with either Mr Donaldson or SLD.
[5] For each of the three transactions, two documents were completed. The first document is a Grazing Agreement (the Agreement) where Progressive’s counterparty is described as “Grazier”. The Grazier is named as “Scott Donaldson T.A. SDL [sic] Agriculture”. That Agreement is signed by Mr Donaldson and below that it reads “Scott Donaldson, T/A, SDL [sic] Agriculture”. While the second defendant’s name is “SLD Agriculture Ltd", Mr Donaldson is referred to as trading as “SDL Agriculture”. There is no company in the Companies Register called “SDL Agriculture Ltd”.
[6] In each case, in addition to the Grazing Agreement, an agreement called a “Lease Cow/Heifer Agreement” was entered into between Progressive and “Scott Donaldson t.a. SDL [sic] Agriculture”. Mr Donaldson signed as lessee. The same form of Agreement and the same description of the contracting parties applied to all Agreements in the three sets of transactions.
[7] Under the Agreements the Grazier was obliged to pay a lease charge of $150 per cow payable on 21 December 2019 and was obliged to purchase at least half of the total number of cows leased under each Agreement on 1 June 2020. The purchase price under the first tranche of cows was to be paid on 1 June 2020. Those cows not purchased as at 1 June 2020 would be subject to a further lease arrangement, with the Grazier/lessee obliged on 1 June 2021 to purchase the remainder of the leased animals.
[8]On 20 December 2019, Progressive issued an invoice for the lease fee of
$65,032.50 (including GST) which was payable on 1 January 2020. The invoice was for all cows leased earlier in the year as in each case the lease payment was payable on 21 December 2019.
[9] The invoice was addressed to “SDL [sic] Agriculture Ltd c/- Scott Donaldson, 62 Mill Road, Lagmhor, Ashburton”.
[10] On 1 July 2020, Progressive issued an invoice for $413,655.00 (including GST), being the amount due under the commitment to purchase at least half of the leased cows as at 1 June 2020. That invoice was also made out to “SDL [sic] Agriculture Ltd c/- Scott Donaldson, 62 Mill Road, Lagmhor, Ashburton”. The invoice stated it was payable on 13 July 2020.
[11] Neither invoice was paid, and on 14 July 2020 Progressive uplifted 196 cows from where they were grazed. All but eight of the 196 were cows originally provided by Progressive under the 2019 Lease Agreements.
[12] As to the outstanding invoices, there is reference in correspondence to Mr Donaldson offering to enter into a repayment arrangement and on 29 July 2020 his solicitor wrote to Progressive’s solicitor saying:
… we have recently been contacted by Mr Donaldson with instructions to deal with the matter of his stock arrangements with Progressive Livestock Limited.
(my emphasis)
[13] The records from the transport companies that delivered the cows are ambivalent in helping identify the correct contracting party. The first record is from a trucking company, being an invoice dated 30 April 2019 addressed to “SLD Agriculture Ltd c/- Scott Donaldson, 62 Mill Road, RD 1 Ashburton”. There are three separate invoices dated 30 April 2019, all with the same narration. However in May 2019, an invoice from a different transport company for transport of the leased animals is simply made out to “Scott Donaldson, 62 Mill Road, RD 1 Ashburton”. The July 2019 invoice from the same transport company is addressed in the same manner.
[14] Progressive’s solicitors sent emails to Mr Donaldson calling for payment. When corresponding with Mr Donaldson’s solicitor, the subject line was “Donaldson and Progressive Livestock Limited”. However, on 30 June 2021, Progressive’s solicitors sent a letter of demand addressed to “SLD Agriculture Limited”. The email was sent to counsel instructed for the defendants and asked counsel to confirm whether they were authorised “to accept service on behalf of SLD Agriculture Limited and on behalf of Mr Scott Donaldson personally”.
[15] Defendants’ counsel replied that he did not have instructions to accept service and asserted that Mr Donaldson could not be party to any claim.
[16] To further complicate matters, Progressive first dealt with Mr Donaldson in October and November 2018 when invoices were issued to Mr Donaldson personally. However, in January, February and April 2019, the invoices issued by Progressive for unrelated transactions were addressed to “SDL [sic] Agriculture Ltd” c/- Scott Donaldson, 62 Mill Road, Lagmhor, Ashburton”.
[17] Counsel for the defendants, Mr Paine, does not refer to the misdescription of the company’s name in documents issued by Progressive – no doubt because it was recognised as being a typographical error.
The statement of claim
[18]The statement of claim seeks judgment for $478,660.50 calculated as follows:
(a)Lease Fees for 377 cows at $150.00 per head totalling $56,500.00 excluding GST.
(b)The original purchase price for the cows as per the contracts referred to above:
163 cows at $1,950 per head, totalling $317,850.00 74 cows at $1,900 per head, totalling $140,600.00 140 cows at $1,850 per head, totalling $259,000.00
Less
188 Uplifted Stock at a weighted average price of $1,903.50 Credit for 8 wrongly uplifted cows totalling $5,284.40 Totalling $359,676.53 excluding GST
(c)Inclusive of GST the total amount owed by the First Defendant to the Plaintiff is $478,660.50 (Amount Outstanding).
[19] The statement of claim seeks judgment against Mr Donaldson and, in the alternative, against SLD.
[20] The application for summary judgment asks for judgment “against the defendant on the plaintiff’s claim” without differentiating between the two defendants. Mr Nation, counsel for Progressive, confirmed at the hearing that summary judgment was sought against Mr Donaldson.
Who did Progressive contract with? – discussion
[21] Progressive’s evidence does not explain who prepared the Agreements and why they named the contracting party as “Scott Donaldson t/a SDL [sic] Agriculture”. There is no evidence before the Court from the representative of Progressive who negotiated the Agreements, at least not in relation to the actual discussions that led to the contracts. Both parties’ evidence on this issue is skeletal with the Managing Director of Progressive by affidavit saying: “When dealing with SLD Agriculture, Progressive Livestock staff always dealt with Mr Donaldson, SLD Agriculture’s sole director and shareholder.”
[22] Mr Donaldson says: “I refer to SLD Agriculture as being the contracting party because at all times it was recognised by Progressive and myself that we were dealing with my company and I was simply signing on its behalf”. Mr Donaldson does not explain why that was the case.
[23] It is not in dispute that Progressive was aware of SLD. Its history of invoicing shows that. The description of the contracting party in the contracts at issue in this proceeding points to Mr Donaldson personally being the contracting party. However, as noted, Progressive issued the invoices sued for in this proceeding to the company, albeit misspelling its name. Furthermore, after Progressive’s solicitor initially sought payment from Mr Donaldson, the solicitor then made demand against SLD. I note the 30 June 2021 demand is addressed to SLD, albeit in the same letter, defendants’ counsel is asked to accept service on behalf of both defendants.
[24] The Court was not told who organised the transport of the leased cows. Progressive’s General Terms of Sale (which Mr Donaldson claims not to have seen) says that unless agreed otherwise the vendor shall deliver the livestock to the buyer, albeit delivery is deemed to take place when the livestock “[c]ross the tailgate of the Purchaser’s nominated carrier”. If Progressive organised transport on behalf of the
vendor or passed the defendants’ details on to the vendor, then given the initial freight invoice is addressed to the company, that would suggest Progressive considered it was dealing with the company, notwithstanding the way the parties are described in the Agreement. However, the subsequent transport invoices point the other way.
[25] Progressive does not explain how the invoices came to be made out to the company.
Quantum
[26] As already noted, on 14 July 2020 Progressive uplifted all cows that it was able to. That included eight cows that were not subject to the Lease Agreements, albeit a credit is given for those eight cows in the overall sum sought.
[27] The Grazing Agreements signed by Mr Donaldson contained the following clause:
Progressive (and its nominee) may enter the Property or any other land or premises where the Stock may be kept at any time, with reasonable notice to the Owner, to inspect the Stock, monitor the Stock’s condition, and/or to take possession of and remove Stock (whether or not the grazing period has expired).
[28] Progressive does not assert that it gave reasonable notice as per this clause, so it was arguably in breach of the Agreements in that regard. However, given the defendants’ failure to pay the 20 December 2019 and the 1 July 2020 invoices, the defendants can hardly be surprised that Progressive took steps to protect its position.
[29] There is no reference to the Agreements being cancelled. Whoever Progressive contracted with was plainly in breach of its payment obligations. A failure to pay not quite $480,000 was probably of sufficient gravity to warrant cancellation and arguably the uplifting of the stock amounted to cancellation.2 Certainly, there can be no suggestion that Progressive was expecting one or other of the defendants to follow through with the obligation to purchase the remaining stock when all the stock the defendants held had been uplifted.
2 Under s 41(2) of the Contract and Commercial Law Act 2017 cancellation may be made known by conduct showing an intention to cancel so long as the intention to cancel is made known.
[30] Progressive quantifies its claim, which is in debt, on the basis of the initial lease invoice, together with the contracted price for all the stock to be sold under the lease agreements, less the value of the repossessed cows at a “weighted average price of $1,903.50”.
[31] I do not think this is the correct way to quantify Progressive’s claim in debt. Progressive properly invoiced the initial lease cost and the first tranche of purchases the grazier was obliged to complete. Mr Paine accepts Progressive was entitled to raise these invoices and that they are both mathematically correct. Accordingly, the total of these invoices is the starting point for Progressive’s claim.
[32] Mr Nation submitted the value of the animals repossessed essentially cancelled out the amount the buyer would have had to pay for them in June of the year following repossession. Therefore, no loss of bargain damages is sought. Any claim for loss arising from the repossessed animals would be in damages, not in debt. But as Progressive does not assert such loss, this issue only serves to unnecessarily complicate the calculation of quantum. Accordingly, the issue of the repossessed cows should be put to one side.
[33] The defendants raise issues with the value of the cows incorrectly uplifted, but that claim is unsupported by any evidence.
[34] The value of Progressive’s debt claim is therefore the invoice dated 20 December 2019 for $65,032.50 plus the invoice dated 1 July 2020 for $413,655 less the credit for the eight wrongfully uplifted cows of $5,284.40, leaving
$473,403.10 due.
[35]The real issue is who is liable for the debt?
Decision
[36] As noted, neither party gives evidence dealing with the negotiations leading to the contracts in issue. Progressive was aware of Mr Donaldson’s company. The only invoices produced made out to him were issued in 2018. An invoice issued on a separate contract by Progressive on 12 April 2019 was made out to SLD. At some
point in Progressive’s accounting system, the contracts in issue here were recorded as being with the company, or at least that is what the responsible person at Progressive believed. The invoices to each of the defendants have different customer codes which suggests separate ledgers or accounts were maintained for each of the defendants.
[37] Mr Nation’s core submission is the contracts named Mr Donaldson as the contracting party, they were signed by him with no qualification, so that, at the point of signing, he was the contracting party and nothing that followed changed that. However, the problem with this submission is that it presupposes the error in Progressive’s systems occurred at the time of invoicing and not at the time Progressive prepared the contract documents.
[38] On the evidence, I cannot determine which of the documents issued by Progressive is correct – the contracts or the invoices. The inconsistency in Progressive’s documents required it to explain why the invoices were in error, rather than assert the invoices could in effect be ignored.
[39] By a narrow margin the application for summary judgment is dismissed. I say a narrow margin, as Mr Donaldson’s evidence as to the making of the Agreements lacks detail (in fairness, so does Progressive’s but it can at least point to the written Agreements). Nor does Mr Donaldson explain why he signed the documents when they did not refer to his company. I also note that before the proceedings were issued, Mr Donaldson’s solicitor referred to the stock arrangements as being with Mr Donaldson.
[40] However, the onus is on Progressive to show Mr Donaldson has no defence on this issue. That it sues the company in the alternative is itself some recognition that the issue is not clear cut.
[41]Accordingly, the application for summary judgment is dismissed.
[42]Costs are reserved.
[43] There will be a telephone conference at 9.30am on 10 December 2021 for counsel to agree a timetable for the completion of discovery. If counsel can agree directions by consent, the telephone conference can be vacated.
Associate Judge Lester
Solicitors:
Timpany Walton, Timaru (for Plaintiff)
Staley Cardoza Lawyers, Dunedin (for First and Second Defendants)
Copy to counsel: G A Paine, Barrister, Dunedin (for First and Second Defendants)
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