Routhan v PGG Wrightson Real Estate Limited - [2025] NZSC 68

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI O AOTEAROA

SC 45/2023
[2025] NZSC 68

BETWEEN	PHILIP WILLIAM ROUTHAN AND JULIE VERONICA ROUTHAN AS TRUSTEES OF THE KANIERE FAMILY TRUST Appellants
AND	PGG WRIGHTSON REAL ESTATE LIMITED Respondent

Hearing: Further Submissions:	11–12 March 2024 22 March 2024
Court:	Winkelmann CJ, Glazebrook, Ellen France, Kós and Miller JJ
Counsel:	D R Kalderimis, T Nelson and O T H Neas for Appellants L J Taylor KC, M E Parker, J Eckford and C J J Mair for Respondent
Judgment:	26 June 2025

JUDGMENT OF THE COURT

AThe appeal is allowed. We fix damages payable by the respondent at $780,500, with interest as specified at [234].
BThe cross-appeal is dismissed.
CThe respondent must pay the appellants one set of costs of $50,000 plus usual disbursements. We allow for second counsel.

____________________________________________________________________

REASONS

Para No
Summary of Reasons Glazebrook and Miller JJ Kós J	[1] [18] [238]
Winkelmann CJ and Ellen France J	[327]

SUMMARY OF REASONS
(Given by the Court)

This summary of the Court’s reasons on the principal issues must be read alongside the full reasons.

Background

In 2010, the Routhans bought a dairy farm near Hokitika.[1] The real estate agent, PGG Wrightson Real Estate Ltd (PGG), carelessly misrepresented to the Routhans that the farm’s recent milk production historical average was steady at 103,000 kg of milk solids (kgMS) per season. In ‍, the farm’s recent production was substantially less than that, and in decline. The Routhans would not have bought the farm had they known the truth. They never achieved 103,000 kgMS, and the farming business declined until their bank forced them to sell the farm in 2020. The lost their incoming equity. They sued PGG for damages in negligence and under the Fair Trading Act 1986.
[1]The appellants bought the farm in their capacity as trustees of the Kaniere Family Trust.
The Courts below established that PGG is liable to the Routhans. The remaining issue in this Court is how much PGG must pay, and on what basis. This Court has also been asked whether and how New Zealand courts should apply the House of Lords decision in South Australia Asset Management Corp v York Montague Ltd (SAAMCO),[2] as refined in subsequent English decisions. The‍ of Appeal applied SAAMCO in this case to limit PGG’s liability to the difference between the price paid and the value of the farm had PGG’s representations been true.

The scope of duty principle and the SAAMCO cap

[2]South Australia Asset Management Corp v York Montague Ltd [1997] AC 191 (HL).

A majority comprising Winkelmann CJ, Glazebrook, Ellen France and Miller JJ confirmed that the “scope of duty” principle, which was discussed in SAAMCO, forms part of New Zealand’s law of negligence.[3] The principle requires the court to consider the position at the time the defendant’s duty arose or was assumed and inquire for what kinds of risk was the defendant taking responsibility and whether the allocation…

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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Details

Case: [2025] NZSC 68
Decision Date: 26 June 2025

CaseChat Overview and Summary

The case involved a dispute between the Routhans, who purchased a dairy farm, and PGG Wrightson Real Estate Limited, the real estate agent that negligently misrepresented the farm’s recent milk production history. The Routhans sought damages for the misrepresentation that caused them to overpay for the farm and subsequently pursue what they had been led to believe was the farm’s existing production level. The primary legal issues were the scope of PGG’s duty of care, the measure of damages, and the application of the SAAMCO cap. The Court confirmed that the “scope of duty” principle, which limits liability to risks the defendant assumed, forms part of New Zealand’s law of negligence. The majority found that PGG’s duty of care extended to the risk that the Routhans would pay too much for the farm and to the risk that they would produce less than the represented historical average following acquisition. The Court held that PGG was liable for certain heads of loss, including the overpayment for the farm and costs incurred to improve production, but not for other losses such as revenue shortfalls or additional borrowings. The Court allowed the Routhans’ appeal and fixed damages payable by PGG at $780,500, with interest, alongside $50,000 in costs plus usual disbursements. The Court dismissed PGG’s cross-appeal, which related to how the overpayment should be calculated.

Orders