Hearing:	23 February 2017
Court:	Kós P, Harrison and Winkelmann JJ
Counsel:	M A Corlett QC, A I C Denton and E Armstrong for Appellants J A Farmer QC and C T Patterson for Respondent
Judgment:	14 August 2017 at 3.00 pm

JUDGMENT OF THE COURT

AThe appellants’ application to adduce further evidence is granted.
BThe appeal is allowed in part, as stated at [61].
CThe cross-appeal is dismissed.
DThe respondent must pay the first appellant costs for a standard appeal on a band A basis and usual disbursements. We certify for two counsel.

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REASONS OF THE COURT

(Given by Kós P)

Mr Wallace and Mr Herron are property developers. They undertook a number of projects together. Difficulties developed between them in 2005 when it was discovered that Mr Wallace had diverted funds to assist one of his separate property developments and to settle a relationship property claim with his former partner. Thereafter they rearranged their business relationship. Mr Herron allowed some of his assets to be used to prop up a project of Mr Wallace’s. In consequence of that and his earlier misuse of joint funds, Mr Wallace acknowledged indebtedness to Mr Herron of almost $3.2 million.
Mr Herron sued Mr Wallace and his company Belmont Lifestyle Village Ltd (Belmont) in respect of debts he alleged Mr Wallace still owed and which Belmont had guaranteed. What lay at the heart of the parties’ litigation was a dispute over the interpretation and application of two related settlement deeds. The documents themselves are factually and structurally complex because they reflect the parties’ participation in a range of projects, undertaken either together or in conjunction with Mark Bryers of the Blue Chip Group of companies for the development of properties in Auckland and Queenstown. The primary issue is whether Mr Wallace has been discharged from his liability for some or all of the agreed indebtedness, either by complying with settlement conditions or as a consequence of Mr Herron’s conduct in preventing Mr Wallace’s performance.
Faire J entered judgment against Mr Wallace in the sum of $966,531.93. This was much less than Mr Herron had claimed. Mr Wallace and Belmont variously appeal and cross-appeal four decisions of Faire J. The most significant is the appeal against the substantive judgment.[1] Mr Herron cross-appeals that judgment also. The other appeals relate to a decision dismissing the Mr Wallace and Belmont’s application to recall the substantive judgment,[2] and two costs judgments (also cross‑appealed).[3]

Background

[1]Herron v Wallace [2016] NZHC 1129 [Substantive judgment].

[2]Herron v Wallace [2016] NZHC 2426 [Recall judgment]. That appeal was abandoned before us.

[3]Herron v Wallace [2016] NZHC 2427 [Interim costs decision]; and Herron v Wallace [2016] NZHC 2896 [Final costs decision].

Messrs Wallace and Herron met in 2003. Mr Wallace had…

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.

Continue reading Wallace v Herron

Details

AGLC: Wallace v Herron [2017] NZCA 346
Case: [2017] NZCA 346
Decision Date: 14 August 2017 at 3.00 pm

CaseChat Overview and Summary

Wayne Andrew Wallace and Belmont Lifestyle Village Limited (appellants) appealed against judgments entered in the High Court in favour of Stuart Walton Herron (respondent). The judgments arose from a dispute between the parties over the interpretation and application of two settlement deeds. The primary issue was whether Wallace had been discharged from his liability for some or all of the agreed indebtedness, either by complying with settlement conditions or as a consequence of Herron’s conduct in preventing Wallace’s performance. The Court allowed the appeal in part and dismissed the cross-appeal. The Court held Wallace was entitled to a reduction in debt under the settlement deed of $675,000 in respect of the Queenstown sale and purchase agreement, but Wallace was not entitled to a deduction of $175,000 in relation to the Sexton apartment. The Court found that Wallace was entitled to a deduction under the settlement deed for the value of the Turner and Waverly apartments. The Court also held that the deed of acknowledgment of debt did not record a debt of $600,000 distinct from the $600,000 recorded in the settlement deed. Finally, the Court found that no interest was payable on the sums under the settlement deed or the deed of acknowledgment of debt.

Orders