Tarras Cherry Corp Limited v Hortinvest Limited
[2025] NZHC 352
•28 February 2025
IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY
I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE
CIV-2023-425-40
[2025] NZHC 352
BETWEEN TARRAS CHERRY CORP LIMITED
Plaintiff
AND
HORTINVEST LIMITED
First Defendant
LINDIS COOLPAC LP
Second DefendantLINDIS COOLPAC GP LIMITED
Third Defendant
Hearing: 20 February 2025 (by AVL) Appearances:
D M Salmon KC and S A Campbell for Plaintiff S A Keall for First Defendant
No appearance for Second and Third Defendants
Judgment:
28 February 2025
JUDGMENT OF ASSOCIATE JUDGE LESTER
TARRAS CHERRY CORP LIMITED v HORTINVEST LIMITED [2025] NZHC 352 [28 February 2025]
[1] Tarras Cherry Corporation Limited (Tarras) applies for the enforcement of discovery orders made against Hortinvest Limited (Hortinvest). That the discovery orders were made and their scope is not in dispute.
[2] A general discovery order was made on 7 March 2024 by way of Minute. Tarras submits the documents it seeks, which I describe below, are caught by that order. Tarras was dissatisfied with Hortinvest’s initial compliance with the general discovery order. Hortinvest discovered 272 documents prompting an application for further and better discovery by Tarras. On 22 August 2024, I ordered Hortinvest to provide such documents as were in its possession from a list of “Key documents missing”. Hortinvest provided Tarras with, I am told, in excess of 23,000 further electronic files containing documents.
[3] Under the contract between the parties, which related to the maintenance of a cherry orchard owned by Tarras, Hortinvest was obliged to keep full and proper accounting records in respect of its maintenance to the orchard and to make them available to Tarras on demand. Accordingly, the fact that Tarras had a contractual right to obtain records concerning its orchard provided a further basis for Tarras’ argument that it had an entitlement to a full range of material whether relevant to its proceeding or not.
[4] At the hearing on 22 August 2024, Mr Campbell, counsel for Tarras, produced a list of 20 categories of documents with additional sub-categories submitted to be relevant and which should have been discovered. The outcome of that hearing was a commitment by Hortinvest to disclose the documents from that list that were in its possession, as opposed to within its ‘control’, as that term is defined in r 1.3 of the High Court Rules 2016 (the Rules).
[5]One of the categories of documents sought was Category (t) which provides:
(t)Documents relating to conflicts:
· Other orchards / parties Hortinvest was contracted to or working for
· A breakdown of time
· Performance of those orchards comparably
· Staff and resourcing at those orchards comparatively
[6] Hortinvest has not disclosed the documents in Category (t). It argues they are not relevant or the pleading relating to conflict of interest is unsustainable and therefore it is not obliged to provide the documents. In this application Tarras now seeks an order that the documents described in Category (t) set out in [5] above be provided.
Proportionality
[7] Before going further, Mr Salmon KC, counsel for Tarras, emphasised that no evidence is produced by Hortinvest to establish that disclosure of the Category (t) documents would be disproportionate. While Mr Keall, counsel for Hortinvest, in his oral submissions described the obligation to provide the Category (t) documents as onerous and oppressive, I agree with Mr Salmon that more than an assertion of disproportionality is required. While proportionality is normally considered in defining the categories of tailored discovery, such as the list that came out of the 22 August 2024 Minute which included Category (t), there is no material upon which the Court could conclude that providing the Category (t) material would be difficult or expensive.
[8] Given there a commitment to provide the Category (t) documents was reached at the 22 August 2024 hearing, the onus was on Hortinvest to provide evidence to support its claim of disproportionality. Such evidence may of itself have led to the parties focusing on Category (t) in more detail.
[9] Mr Keall only saw the list referred to at [4] above for the first time at the 22 August 2024 hearing. Mr Keall can be forgiven for not averting to the full import of the Category (t) documents, but an application to set aside the outcome of the 22 August 2024 hearing should have been made. That said, Mr Salmon fairly recognised the position Mr Keall was in on 22 August 2024, faced with a list of 20 items to consider more or less on the spot. While not abandoning the argument that the outcome of the 22 August 2024 hearing committed Hortinvest to provide the Category (t) documents, Mr Salmon invited me to approach the present application on the basis that even without the 22 August 2024 hearing, Hortinvest was committed to provide this material pursuant to the order of standard discovery made on
7 March 2024, as the documents are relevant. I consider that a fair way of approaching matters.
Relevance
A brief precis of the claim
[10] On 23 March 2018, Tarras entered into a Service Management Agreement with Hortinvest to develop and manage Tarras’ cherry orchard (the Service Agreement). Hortinvest had a wide range of obligations including planting trees in the orchard, pruning and training the trees, irrigation, maintenance of tree nutrition and health, and maintaining a shelter belt to protect the trees. Tarras alleges that all of these obligations were breached in one form of another.
[11] The statement of claim, under the heading “Breach of the Hortinvest Agreement — Conflict”:1
[25]Hortinvest failed to identify and manage conflicts of interest as follows:
(a)Hortinvest is working with multiple cherry orchards, including the following, spanning more than 175 hectares:
(i)Ardgour Valley orchards;
(ii)Lindis Peaks cherry orchard;
(iii)Mt Pisa cherry orchard; and
(iv)[Tarras].
(b)In working with this number of orchards, over a wide geographic region, Hortinvest is required to spread its resources across different orchards.
(c)Hortinvest did not have adequate resources to service [Tarras] in the 2021/2022 and 2022/203 seasons.
(d)Hortinvest (through its trustee company, Highlander 2 Trustee Limited) takes equity positions (or shares) in its clients, including as follows.
(e)The equity positions incentivise Hortinvest to prioritise clients in which Hortinvest has a great equity stake over clients it has no or a lesser equity stake in.
1 It appears that paragraph 25(d) is incomplete as it ends “including as follows” and nothing follows thereafter.
[12]Clause 12 of the Service Agreement states:
12.Conflicts and Disputes
12.1From time to time conflicts of interest may arise because of the small nature of the New Zealand horticultural industry. The parties will consider the potential for these conflicts to occur and will manage them appropriately should any be identified.
12.2If a dispute relating to this Agreement cannot be resolved amicably within a reasonable time, either party may give the other party written notice requiring the dispute to be referred to mediation.
12.3If the parties cannot agree on a mediator with 14 days of notice being given under clause 12.2, either party may ask the Resolution Institute to select the mediator.
12.4Conduct of a mediation in accordance will be without prejudice to each party’s ability to commence court proceedings on completion of the mediation, if a binding agreement has not been reached as a result of that mediation.
[13] Hortinvest’s obligations are summarised under the heading “Services” in the Service as follows:
3.Services
3.1The Contractor will supply the Services:
(a)in an efficient and competent manner;
(b)in accordance with the principles of good professional and prudent industry management and practices; and
(c)with the measure of diligence, skill and judgement reasonably expected of persons who professionally manage orchards.
3.2In providing the Services, the Contractor will comply with all relevant statutes, statutory regulations, orders in council, by-laws, rules and ordinances.
3.3The Company may, on giving reasonable prior notice to the Contractor:
(a)amend specific elements of the Services;
(b)make reasonable rules and directions to protect the Orchard.
3.4The Contractor will comply, and will ensure its Key Personnel, employees, agents, subcontractors and invitees comply, with any notice given under clause 3.3.
[14] ‘Services’ is a defined term with reference to four schedules to the Service Agreement which set out in detail Hortinvest’s obligations through from development of the orchard to packing and international marketing.
[15] What the conflicts clause is aimed at will be a matter for argument. In any event, Mr Salmon submitted that the Category (t) material was relevant to the allegation of breach of cl 3. In a nutshell, Mr Salmon’s proposition was he anticipated Hortinvest’s position would be the poor performance of the Tarras orchard was due to seasonal factors and not a breach of the Service Agreement. Mr Salmon submitted if Tarras can demonstrate that Hortinvest did not have the capacity to meet its obligations under cl 3 that would undermine Hortinvest’s position that the poor performance of the orchard was due to seasonal factors. In short, if Hortinvest had overcommitted its resources and such was a factor in the poor performance of the orchard, then that would be relevant to the argument that cl 3 was breached.
[16] Mr Keall submitted that was not a correct approach to liability. He emphasised that why a contract was breached was not relevant, the only issue being whether the contract was breached. So much is correct. It is no defence to a breach of contract for a party to say they had done everything they could to comply.
[17] However, I am satisfied the documents are relevant. Tarras is entitled to seek documents that will assist its case or harm Hortinvest’s case. If, for example, Tarras can demonstrate that spray was not applied in a manner consistent with prudent industry management because Hortinvest’s equipment was busy on other sites, that will assist it in proving breach. That will not prevent Hortinvest saying that whether spray had been applied or not, the crop would still have been poor because of seasonal factors, but where the contractual standard is linked to “principles of good professional and prudent industry management and practices”, Hortinvest’s approach to managing the orchards and its ability and capacity to do so are relevant.
[18] Mr Keall is correct in a sense that ultimately the question for the Court is whether there was a breach. But in horticultural/agricultural cases there is often a range of intangible factors at play as to whether a crop has failed or performed poorly.
[19] Equally, it may assist Hortinvest in its defence if it can take off the table the suggestion it was ill equipped or stretched too thinly to meet its contractual obligations.
[20] While there is an argument as to what conflicts are caught by cl 12, that is, whether it is intended to apply where Hortinvest has a conflict in terms of its management commitment (for example, if it was committed to harvest two orchards at the same time) or if it is focused only on marketing. That is an issue for trial, but if the conflict provision has a wider meaning then the relationship between that clause and cl 3.1 of the Service Agreement, whether Hortinvest was sufficiently equipped to manage those conflicts and how it managed the conflicts (Mr Keall advising that no conflicts were notified under cl 12), may be relevant.
Decision
[21] As I have indicated, I consider the Category (t) documents to be relevant. Tarras in arguing that cl 3 was breached, in my view, would be entitled to argue that Hortinvest did not have the equipment, staff or resources available to meet its obligations because it was overcommitted. Whether Hortinvest could then argue in terms of causation that even if that was right, the loss would still have occurred, is another matter. However, such causation arguments are not a reason to deprive Tarras of the opportunity to obtain discovery of documents that are put in issue by its pleadings.
[22] There is an order that Hortinvest is to give discovery of the Category (t) documents by verified list of documents within 20 working days of this judgment.
Costs
[23] There is no reason why costs should not follow the event. Counsel were not heard on costs. Hortinvest is to pay costs to Tarras on a 2B basis plus disbursements as fixed by the Registrar. There is, however, leave to counsel to file submissions on costs within 10 working days of no more than five pages. If no costs submissions are filed then the above costs order will come into effect after 10 working days.
Setting down
[24] Mr Keall made the strongest of submissions on behalf of his client to have this matter set down for a hearing. I am not prepared to set this matter down when discovery is not complete.
[25] However, counsel are to confer with a view to the calculation of an accurate hearing time estimate. Counsel are to confer on how long will be required for opening submissions. Tarras is to identify the witnesses of fact it intends to call and its expert witnesses. Tarras is to estimate the length of each factual witnesses’ brief. Mr Keall, as best he can, is to estimate how long he will need for cross-examination. Counsel are to discuss the conferral of expert witnesses with a view to arriving at an estimate of how long their evidence will take. I appreciate that is not an easy exercise at this stage but counsel need to do the best they can if an accurate hearing estimate is to be arrived at. Finally, an estimate of the time required for closing submissions is to be included.
Associate Judge Lester
Solicitors:
Wynn Williams, Queenstown (for Plaintiff)
Parker Cowan, Queenstown (for First Defendant)Anderson Lloyd, Queenstown (for Second and Third Defendants)
Copy to counsel:
D M Salmon KC, Auckland (for Plaintiff)
S Keall, Barrister, Auckland (for First Defendant)
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