Shabor Ltd v Graham

[2020] NZHC 507

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2017-419-88

[2020] NZHC 507

IN THE MATTER

of the sale and purchase of a farm at 910 Morangi Road, Oparau

BETWEEN

SHABOR LIMITED

Plaintiff

AND

ROBERT GRAHAM

First Defendant

PINE RIDGE TRUSTEE COMPANY LIMITED

Second Defendant

SUCCESS REALTY LIMITED

Third Defendant

Hearing:

9 to 20 September 2019

Counsel:

KM Quinn and CB Pearce for plaintiff

DM O'Neill for first and second defendants

Judgment:

13 March 2020

JUDGMENT OF FITZGERALD J

This judgment was delivered by me on 13 March 2020 at 2pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:          Cargill Stent Law, Taupo (S Hickman)

Forgeson Law, Te Kuiti (D Forgeson) Gilbert/Walker, Auckland (I Rosic)

Shabor Limited v Graham [2020] NZHC 507 [13 March 2020]

CONTENTS

Introduction  [1]

Stock Units as a measure of carrying capacity  [7]
Factual background

Purchase and earlier steps taken to sell  [20] Use of fertilizer and supplementary feed in the years preceding the sale  [24] Steps to sell the Property in 2013/2014  [25]

Mr Borland and Mr Sharp become interested in the Property  [33]
Events after the visit on 7 April 2014  [46]

The misrepresentation claim – elements  [60] Is the Capacity Representation a representation as to a present or past fact? [61] Was the Capacity Representation misleading?

Introduction  [62]

Preliminary points on interpretation of Capacity Representation  [63]

Importance of soil fertility, and phosphorus in particular  [67]
Fertility levels at the Property up to the time of sale  [70]

Mr Graham’s evidence as to carrying capacity  [77]
Experts’ evidence on carrying capacity – introduction  [83]

Mr McLaughlin’s evidence as to carrying capacity  [87]
Dr Roberts’ evidence as to carrying capacity  [94]

Mr Beetham’s evidence as to carrying capacity  [99]

Mr Thomson’s evidence as to carrying capacity  [108]

Mr Miller’s evidence as to carrying capacity  [117]

Mr Matheson’s evidence as to carrying capacity  [129]
Overall conclusions regarding the Capacity Representation  [137]

Effect of the non-reliance clause

Introduction  [138]
“Fair and reasonable” assessments in leading and other relevant decisions  [142]
Should cl 27.3 be enforced in this case?  [162]

Fair Trading Act cause of action

Introduction  [183]

Approach  [186]

Discussion  [196]

Observations on reasonable reliance and damages  [199]

Reasonable reliance  [200]

Damages  [211]

Result and costs

Result  [237]

Costs  [238]

Introduction

[1]                 How many stock can a farm comfortably carry over the winter period? That is the key issue in this case.

[2]                 In 2014, the plaintiff (Shabor) bought a large sheep and beef farm (the Property) from the first and second defendants (who I will refer to collectively as “Mr Graham”). Shabor wanted to develop it into a deer farm. Shabor’s principals, Mr Sharp and Mr Borland,1 bought the Property after having seen marketing material which said it could “comfortably winter 7,500 plus Stock Units with capacity for more”.2 After inspecting the Property, Shabor submitted an unconditional tender for

$5,250,110. Its tender was accepted and Shabor took possession in June 2014.

[3]                 Shortly…