The Three Sisters Vineyard Limited v Storey - [2014] NZHC 471

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV2014-409-000122 [2014] NZHC 471

BETWEEN THE THREE SISTERS VINEYARD LIMITED
Plaintiff

ANDCARL DAVID STOREY, JEANETTE HELEN HOY STOREY AND STEPHEN DAVID HOBDAY AS TRUSTEES OF THE STOREY FAMILY TRUST Defendants

Hearing: 13 March 2014

Counsel: E St John for Plaintiff
MAJ Elliott for Defendants

Judgment: 14 March 2014

JUDGMENT OF WHATA J

[1] The Three Sisters Vineyard Limited (Three Sisters) sold a commercial vineyard to the Trustees of the Storey Family Trust (Trustees). A long period of settlement was agreed to 30 June 2014. In the interim the Trustees leased and operated the vineyard. Rental payments were not made and the Trustees raised various issues. A variation to the sale and purchase agreement was reached and a new settlement date agreed of 24 January 2014.

[2] The Trustees did not settle on the 24th or subsequently pursuant to a notice to settle. Three Sisters has now sought an injunction allowing it to re-enter the property for the purposes of harvesting and selling the grapes. Three Sisters also seek, by way of summary judgment, a declaration that the sale and purchase agreement and attached lease agreement is cancelled together with damages equal to the difference
in the value of the property and the price agreed in the sale and purchase agreement.

THE THREE SISTERS VINEYARD LIMITED v TRUSTEES OF THE STOREY FAMILY TRUST [2014] NZHC 471 [14 March 2014]

[3] The Trustees admit that they breached the sale and purchase agreement in that they did not settle. However they seek relief under s 33 of the Property Law Act
2007 referring to various problems including the initial poor state of the property, and the works undertaken by them to put the property, plant and machinery into operation. They also complain that the property was worth less than the purchase price.

[4] The relief sought includes reinstatement of the settlement date to 30 June

2014, payment of outstanding rent to date, payment of rent on time and (in short)

harvesting by the Trustees subject to the oversight of Three Sisters.

[5] This matter comes to me under urgency given the prospect of an impending harvest. Abridgment of the time to file papers was agreed.

Background

[6] The plaintiff, Three Sisters, is the owner of a 17.6 hectare block of land in Canterbury located at 167 MacKenzies Road, Waipara Valley. The defendants are the Trustees of the Storey Family Trust.

[7] By agreement dated 15 January 2013, Three Sisters, agreed to sell the property to the Trustees on the following terms:1

(a) That the Trust would pay the total sum of $1.25 million for the
Property.

(b) That the sale would include the vineyard as a going concern (clauses
18 and 21).

(c) That the Trust would pay a deposit of $250,000.

(d) That settlement would take place on 30 June 2014, or earlier by mutual agreement.

(e) That, pending settlement, the Trust would lease the property from the plaintiff, including g the vineyard…

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: [2014] NZHC 471
Decision Date: 14 March 2014

CaseChat Overview and Summary

The Three Sisters Vineyard Limited (Three Sisters) sought an injunction against the Trustees of the Storey Family Trust to allow it to re-enter the property for the purposes of harvesting and selling the grapes. The Trustees had leased the property pending settlement of the sale, but failed to make rental payments and did not settle on the new settlement date. Three Sisters sought a declaration that the sale and purchase agreement and attached lease agreement was cancelled together with damages equal to the difference in the value of the property and the price agreed in the sale and purchase agreement. The Trustees sought relief under s 33 of the Property Law Act 2007, referring to various problems including the initial poor state of the property, and the works undertaken by them to put the property, plant and machinery into operation. They also complained that the property was worth less than the purchase price. The relief sought included reinstatement of the settlement date to 30 June 2014, payment of outstanding rent to date, payment of rent on time and harvesting by the Trustees subject to the oversight of Three Sisters. The court found that the Trustees had expended considerable resource in giving effect to the agreements and making the operation of the vineyard viable, and in light of the evidence of Mr Storey, it was prepared to accept that the property had been considerably enhanced as a result of the time and money invested in it by the Trustees. However, the conduct of the Trustees in failing to meet their contractual requirements, combined with their parlous financial position, meant that overall, the greater unfairness lies with the grant of relief. The court found that there was little confidence that the Trustees would be able to comply with any conditions of relief, let alone settle by the due date. The likely effect of any relief would unfairly impose the burden of subsidising the Trustees’ vineyard business for a further four or so months. There was also the risk that the Trust would be unable to meet the ultimate debt, including penalty interest of about $136,000 (to June 2014). The court found that the Trustees were not debarred by cancellation or re-entry from making a claim for unjust enrichment. Accordingly, the court made an order cancelling the sale and purchase agreement and lease, requiring the Trustees to vacate the property and surrender it to Three Sisters, and restraining the Trustees from harvesting, selling or in any way dealing with the grapes on the property. The court granted leave to the parties to seek further assistance of the Court in relation to the period by which the premises must be vacated. The court did not address the application for interim injunction.

The final orders made by the court were as follows: (a) The sale and purchase agreement and lease are cancelled; (b) The defendants must vacate the property and surrender the property to the plaintiff; and (c) An order restraining the defendants from harvesting, selling or in any way dealing with the grapes on the property. The parties agreed that costs should be reserved at this stage.

Orders