Winiata v Steedman - [2022] NZHC 502

IN THE HIGH COURT OF NEW ZEALAND WHANGANUI REGISTRY

I TE KŌTI MATUA O AOTEAROA WHANGANUI ROHE

CIV-2021-483-16

[2022] NZHC 502

BETWEEN
LEWIS WINIATA,

PETER WAIREHU STEEDMAN,

TAMA WIPAKI, JAMES HEMI BARRETT and STEVEN ARTHUR STONEY as

trustees of the Aorangi Awarua Trust Plaintiffs

AND

DAVID WAAKA STEEDMAN

First Defendant

MĀORI CARBON COLLECTIVE LIMITED

Second Defendant

Hearing: 22 February 2022

Appearances:

S Jeffs and T Refoy-Butler for Plaintiffs

S Cogan and J Oliver-Hood for Defendants

Judgment:

17 March 2022

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

Introduction

[1] This is an application pursuant to r 15.1 of the High Court Rules for an order striking out a counterclaim, which raises a narrow issue of contractual interpretation.

[2] The plaintiffs are the responsible trustees of the Aorangi Awarua Trust, under pt 12 of the Te Ture Whenua Māori Act 1993. The first defendant is a former responsible trustee. The second defendant, Māori Carbon Collective Ltd (MCC), is a private company.

WINIATA v STEEDMAN [2022] NZHC 502 [17 March 2022]

Background

[3] The Trust is a participant in the New Zealand Emissions Trading Scheme established under the Climate Change Response Act 2002. Between December 2019 and February 2020, the trustees, then the plaintiffs and the first defendant, on the one hand, and MCC, on the other hand, entered into contractual arrangements, to which they referred as a partnership. Essentially, they agreed that land owned by the trustees would be planted out in forestry. The area of land involved was a little over 5,000 hectares of Māori Freehold Land in two titles.1 The forest was to be established and managed by MCC. The overarching objective was to generate carbon credits. The net loss or profit from the venture was to be shared equally. The term of these contractual arrangements was to be thirty years.

[4] The parties’ arrangements were recorded in a heads of agreement and a carbon right agreement in the form of an instrument registered pursuant to s 109 of the Land Transfer Act 2017 as an easement to grant profit à prendre (a right to extract valuable material from land).

[5] In their statement of claim the trustees plead that during the last quarter of 2020 the first defendant unlawfully appropriated 13,425 units owned by them, transferring these to MCC. They say that MCC was a party to this unlawful appropriation. They say that the units had a value of a little over $300,000. They sue both defendants in relation to their alleged losses.

[6] More significantly for present purposes, on 14 April 2021, the plaintiffs, the first defendant having by this point been removed as a trustee, gave notice cancelling the contractual arrangements with MCC for breach.

[7] MCC entered a defence in the proceeding, denying any breach, treating the trustees’ cancellation as a repudiation and counterclaiming.

[8]Here is how MCC has pleaded its counterclaim:

1 Land with the status of Māori freehold land is defined by s 129 of the Te Ture Whenua Māori Act 1993 as land which“the beneficial…

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 Winiata v Steedman

Details

AGLC: Winiata v Steedman [2022] NZHC 502
Case: [2022] NZHC 502
Decision Date: 17 March 2022

CaseChat Overview and Summary

The case of Winiata v Steedman involved the Aorangi Awarua Trust, a Māori freehold land trust, and its former trustee, David Steedman, alongside Māori Carbon Collective Limited (MCC), a private company. The dispute centered on contractual arrangements for forestry management on Māori land to generate carbon credits, which led to claims of unlawful appropriation of carbon units and a counterclaim for loss of profits by MCC. The High Court of New Zealand was tasked with deciding whether MCC's claim for loss of profits, as outlined in its counterclaim, was recoverable under the contractual terms.

The central legal issue was whether MCC's claim for loss of profits was barred by the contractual exclusion clause in the Carbon Right Agreement (CRA). The plaintiffs argued that the exclusion clause precluded recovery of indirect or consequential losses, including loss of profits, while MCC contended that the clause did not explicitly exclude such claims and that loss of profits was a foreseeable consequence of the trustees' breach of contract.

The court reviewed the principles of contractual interpretation, emphasizing an objective approach that considered the parties' intentions based on the contract's text and relevant background knowledge. It acknowledged that while exclusion clauses must be clearly worded, ambiguity in such clauses generally favors the non-drafting party. The court examined the specific terms of the exclusion clause and found that the terms "indirect" and "consequential" were broad and potentially overlapping. However, the court concluded that the exclusion clause did not clearly or unambiguously exclude loss of profits, given the well-established legal precedent that loss of profit can be a direct result of a breach of contract. The court rejected the trustees' argument that loss of profits was inherently unrecoverable as indirect or consequential loss, finding that such claims were not precluded by the contractual terms at this stage of the proceedings.

The court dismissed the application to strike out the counterclaim for loss of profits, holding that the claim was not so lacking in merit as to warrant dismissal. The decision left open the possibility that the claim could be contested on other grounds, such as causation, the value of the lost chance, and mitigation, but found that these issues were not determinative at the stage of a motion to strike out.

In conclusion, the court ruled that the application to strike out the counterclaim for loss of profits was dismissed, and the matter would proceed to trial. The court reserved costs, indicating that the successful parties, the plaintiffs, might be entitled to a costs award on a standard basis, subject to resolution by the parties or further submissions if necessary.

Orders