Parry v Fassler HC Wanganui CIV-2011-483-97 [2011] NZHC 1692 (4 November 2011)

Last Updated: 30 November 2011

IN THE HIGH COURT OF NEW ZEALAND WANGANUI REGISTRY

_{CIV-2011-483-97}

BETWEEN RUSSELL JAMES PARRY Appellant

AND MARKUS FASSLER Respondent

Hearing: 29 August 2011

Appearances: H McDouall for the appellant

J Waugh for the respondent

Judgment: 4 November 2011

_{JUDGMENT OF CLIFFORD J}

Introduction

[1] In November 2008, the appellant, Mr Parry, and the respondent, Mr Fassler, entered into arrangements whereby beehives owned by Mr Fassler were put on to land owned by Mr Parry. The bees were to produce honey from Manuka growing on that land. Mr Parry and Mr Fassler were to share 50/50 the profits derived from the sale of that Manuka honey. Difficulties arose. Mr Fassler sued Mr Parry, alleging that Mr Parry had converted his beehives. He claimed damages of some

$102,500.00. The District Court upheld Mr Fassler’s claim for conversion, and

awarded him damages of $22,000.00 together with costs of $44,710.00. [2] In this appeal and cross-appeal:

(a) Mr Parry says the District Court was wrong to find that he had converted Mr Fassler’s beehives. Even if he had, the damages award

_{should be reduced.}

PARRY V FASSLER HC WANG CIV-2011-483-97 4 November 2011

(b) Mr Fassler supports the District Court’s finding that Mr Parry had converted his beehives, but says that damages – particularly for consequential losses – in excess of those awarded by the District Court are properly payable by Mr Parry to him.

Background

[3] Mr Parry and Mr Fassler are both beekeepers, although each now questions

the other’s abilities as such.

[4] In or around November 2007, Mr Parry and Mr Fassler first entered into an oral agreement pursuant to which Mr Fassler was to place 66 beehives owned by him on the property owned by Mr Parry at Parihauhau Road, Wanganui known as Narnook farm (“Narnook”). Mr Fassler was to harvest and keep the honey from those beehives. In exchange he was to provide Mr Parry with information relating to the feasibility of keeping bees on Narnook and as to the monetary returns that might be earned from such an operation. That arrangement was given effect to without difficulty over the 2007/2008 honey season.

[5] In November 2008, Mr Parry and Mr Fassler agreed that Mr Fassler would move a further 72 beehives on to Narnook, that they would in some way share the work involved in keeping the bees and harvesting the honey and that they would share the profits (as I understand it revenues after direct expenses) 50/50. Mr Parry, in his first statement of defence, referred to this as a type of partnership agreement for the 2008/2009 Manuka honey season. At the same time, Mr Fassler referred to part of the arrangement being that he would split his own hives until he had 200 strong hives on Mr Parry’s land. From that point on, he would continue splitting hives and Mr Parry “would get the splits”. He said there were never any timeframes put in place.

[6] At no time were these agreements reduced to writing. In the course of these proceedings Mr Parry discovered a handwritten memorandum prepared by him which is not inconsistent with the terms as described. It would appear to be

accepted, however, that Mr Fassler had never seen that document prior to its discovery.

[7] As best as I can tell, difficulties between Mr Parry and Mr Fassler arose during the course of the 2008/2009 season reflecting – amongst other things – differences of view as to how a disease known as American Foul Brood should be managed. The position would appear to have been complicated by difficulties Mr Fassler had. He had suffered various injuries which affected his ability to carry out physical work and, from Mr Parry’s point of view, his share of the keeping of the

138 hives. Be that as it may, around 8 and 9 January 2009 Mr Fassler, helped by friends and, for a time Mr Parry, lifted honey boxes from the hives on Narnook which subsequently yielded 1,395 kilos of honey. That honey was sold on

16 January for $5,859.00. Mr Fassler’s evidence was that he intended to lift further

boxes by the Easter weekend. In 2009 Easter Sunday fell on 12 April.

[8] In early February, Mr Parry, without Mr Fassler’s involvement, lifted a second lot of boxes and delivered them to Pohangina Honey for extraction. Sometime later (the evidence was that this was on 31 March) Mr Fassler saw his boxes at Pohangina Honey. He was upset to see that honey had been harvested without his involvement. He went to Narnook on 2 April and carried out a stock take. Mr Fassler says that at that time seven of the 138 hives had had originally placed on Narnook were missing whilst the remaining 131 were in good health and condition.

[9] Mr Fassler’s discovery of his boxes at Pohangina Honey brought matters to a head. On 8 April 2009 a meeting was held in an attempt to resolve the issues which had arisen. Mr Parry and his fiancée Andrea, and Mr Fassler attended together with a James Black. Mr Black was a friend of Mr Fassler. He facilitated the meeting, particularly given Mr Fassler’s difficulties with English, his second language. The meeting was unsuccessful. At the end of that meeting, Mr Parry served a trespass notice on Mr Fassler with respect to Narnook.

[10] There were subsequent dealings between Mr Parry and Mr Fassler, which I

will return to. These did not resolve the differences that had arisen.

[11] Mr Fassler issued proceedings against Mr Parry in the tort of conversion on

7 August 2009, based on the trespass notice served on him in April. He sought interim injunctive relief restraining Mr Parry from preventing him uplifting his property from Narnook and unspecified damages. On 12 August the District Court granted Mr Fassler interim relief. Pursuant to that interim relief Mr Fassler went to Narnook on two occasions to retrieve hives and associated chattels, assisted by friends.

[12] In a revised statement of claim filed in January 2010, Mr Fassler particularised his damages claim. He alleged loss associated with:

(a) 1,600 kg of Manuka honey which he should have been able to harvest from Narnook but had been unable to because of the trespass notice -

$17,600 (1,600 x $11.00 per kg);

(b) hive deaths occasioned by his not being able to care for hives following the issue of the trespass notice - $11,000 (44 hives at $250 each);

(c) various beekeeping chattels not returned or returned damaged -

$4,585.38;

(d) labour costs to uplift hives pursuant to injunctive relief - $8,000; (e) consequential losses:

(i) loss of honey production income for 2009 and 2010 - $49,500;

(ii) loss of value of hives to be split in March and October 2009 -

$11,700 (130 splits at $90 each).

[13] In his statement of defence Mr Parry acknowledged serving the trespass notice and – in general terms – the nature of his arrangements with Mr Fassler. He said the trespass notice was to prevent Mr Fassler “loitering” on Narnook, that Mr Fassler could have had his hives and other property picked up by somebody else

and that Mr Fassler had never demanded their return. As for the damages claimed, Mr Parry said he was not responsible for any deaths of or damage to hives, most of Mr Fassler’s beekeeping chattels had been returned and, in fact, that if he had not looked after the hives throughout the 2009 season when Mr Fassler was unable to, Mr Fassler would have suffered a total loss.

The District Court decision

[14] The District Court Judge faced a difficult task. He heard evidence over two days, much of which was unstructured and unhelpful. At the end of the evidential hearing in June 2010 he asked counsel for Mr Fassler, and Mr Parry himself, to produce a statement of agreed facts, and to prepare and file written submissions ahead of final submissions to be heard on 2 August 2010. Counsel for Mr Fassler was unable to agree to such a document with Mr Parry. In his judgment delivered on

15 March 2011, the Judge observed:[1]

I failed in an endeavour to restrict and clarify the wide-ranging matters which had, it would seem, a high emotive content for the parties. I endeavoured to persuade the parties to identify the matters on which there was agreement and on which there was disagreement. This would have been of assistance in a speedier decision. This approach was spectacularly unsuccessful. The documentation provided indicating such. [sic]

[15] The fact that Mr Parry acted for himself clearly did not help the Judge, nor help clarify the facts or legal issues relevant to determining Mr Fassler’s claim and Mr Parry’s counterclaim.

[16] In broad terms, the Judge proceeded on the basis that he accepted that Mr Parry had committed the tort of conversion. In this regard he paid particular attention to Mr Parry’s “high-handed actions”,[2] in issuing the trespass notice, and to Mr Black’s evidence that at the time Mr Parry delivered the trespass notice at the meeting on 8 April Mr Parry said to Mr Fassler:

This means that you cannot go on to the property, go near the hives or touch them in any way. They are mine now and that is the end of the matter.

He also concluded that after the issue of that notice Mr Parry proceeded to deal with the hives and their contents as though it was his property, their delivery to Pohangina Honey being in his view an important example of that conduct.

[17] The Judge then assessed the evidence as to the losses that Mr Fassler had suffered as a result. Mr Fassler called evidence on the condition of the hives he retrieved from Narnook from Kevin Kibby, a beekeeping expert. Mr Kibby based his evidence on photographs of the hives taken by a Heather Wilson, who helped Mr Fassler in that task. In his opinion he had seen evidence of “damage to gear and death or bad condition of colonies to the extent of 44 colonies dead or likely to die, six boxes broken beyond repair and 72 frames broken and beyond repair”. Mr Kibby also gave evidence as to Mr Fassler’s claim for consequential losses. Assessing the evidence overall, and applying what he acknowledged to be a “robust” approach, the Judge fixed damages in the following way:

(a) He awarded Mr Fassler $9,000, representing a loss to Mr Fassler for which Mr Parry was responsible of 36 hives at $250 per hive, accepting Mr Parry’s evidence that eight hives had died due to overheating when Mr Fassler, with Mr Parry’s help, moved them on to Narnook.

(b) He awarded Mr Fassler $13,000 for the value of Manuka honey which Mr Parry was accountable to Mr Fassler for, less $3,000 in respect of honey which had been harvested subject to the 50:50 sharing arrangement which Mr Fassler acknowledged he had not accounted to Mr Parry for; and

(c) he awarded Mr Fassler $3,000 on account of damage to hives and other property, or on account of Mr Parry failing to return to Mr Fassler other property.

[18] The Judge declined to make any award for consequential losses, deciding they should lie where they fell. He based that conclusion on his assessment of the respective behaviour of the parties and the uncertainties associated with the evidence as to future income.

Issues on appeal

[19] Mr Parry first appealed, and Mr Fassler cross-appealed, on the question of the amount of damages awarded. Mr Parry subsequently filed an amended notice of appeal in which he raised the issue of whether the Judge had been right to find that he had converted Mr Fassler’s goods. Mallon J allowed that expansion of the grounds of Mr Parry’s appeal, noting that – from the outset – Mr Parry had broadly denied conversion, had alleged that Mr Fassler had left the hives in his care and had never asked or requested the return of his hives. Thus, and as summarised at [2], this appeal and cross-appeal involve all the issues considered in the District Court. In this appeal by way of re-hearing I therefore need to consider whether Mr Parry did commit the tort of conversion by reason of his serving a trespass notice on Mr Fassler on 8 April 2009 and of his subsequent conduct and, if so, whether and what damages flow as a result. I approach that task on the basis set out in Austin,

Nichols,[3] namely that:

Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment. If the appellate court’s opinion is different from the conclusion of the tribunal appealed from, then the decision under appeal is wrong in the only sense that matters, even if it was a conclusion on which minds might reasonably differ. In such circumstances it is an error for the High Court to defer to the lower court’s assessment of the acceptability and weight to be accorded to the evidence, rather than forming its own opinion.

Analysis

Did Mr Parry convert Mr Fassler’s goods?

Legal principles

[20] In Kuwait Airways Corporation v Iraqi Airways Co (Nos 4 and 5) the essential features of the tort of conversion were described by Lord Nicholls of

_{Birkenhead as follows:}[4]

Conversion of goods can occur in so many different circumstances that framing a precise definition of universal application is well nigh impossible. In general, the basic features of the tort are threefold. First, the defendant’s conduct was inconsistent with the rights of the owner (or other person entitled to possession). Second, the conduct was deliberate, not accidental. Third, the conduct was so extensive an encroachment on the rights of the owner as to exclude him from use and possession of the goods. The contrast is with lesser acts of interference. If these cause damage they may give rise to claims for trespass or in negligence, but they do not constitute conversion.

...

... mere unauthorised retention of another’s goods is not conversion of them. Mere possession of another’s goods without title is not necessarily inconsistent with the rights of the owner. To constitute conversion detention must be adverse to the owner, excluding him from the goods. It must be accompanied by an intention to keep the goods. Whether the existence of this intention can properly be inferred depends on the circumstances of the case. A demand and refusal to deliver up the goods are the usual way of proving an intention to keep goods adverse to the owner, but this is not the only way.

[21] It is to be noted that where an act of conversion amounts also to a breach of contract, the wronged party may sue in either tort or contract, or both, provided the contract in question does not limit or contradict the tort duty.[5]

[22] What was essentially pleaded in this case is conversion by keeping or detaining. Conversion by detention was discussed by the Court of Appeal in Cuff v Broadlands Finance Ltd on the following terms:[6]

Conversion may also arise in other ways, as where a defendant who innocently obtains possession of a chattel is shown to have an intention to retain it as against a plaintiff who has the immediate right to possession. In such a case a demand by the plaintiff and a failure to comply with the demand by a defendant is the usual, but not the only, means of establishing the defendant’s intent and the plaintiff may sue in detinue for the return of the specific chattel or in conversion for damages.

[23] In terms of Cuff, therefore, Mr Fassler had to establish that by his actions Mr Parry has shown an intention to retain property belonging to Mr Fassler to which Mr Fassler had an immediate right to possession. Mr Parry’s actions in delivering the trespass notice, together with his statement at the time as reported by Mr Black, ordinarily understood would appear to go a fair way to establishing the necessary intention. After all, Mr Black’s evidence – not on this point successfully challenged

_{in any meaningful way – was that Mr Parry said the hives were now his, and that}

was the end of the matter. On appeal, Mr McDouall for Mr Parry acknowledged as much. In these circumstances, Mr Waugh’s submission that no further evidence of intention was required can be understood. At the same time, the authorities are clear that where a plaintiff was not in possession, and conversion by detention or other dealing is alleged, the plaintiff must have a right to immediate possession at the time of the alleged conversion. Moreover, and in terms of establishing the relevant intention, I think it is appropriate to consider the significance of the trespass notice and associated conduct as regards Mr Parry’s intent in light of the surrounding circumstances. This includes the evidence pointed to by the parties as to whether, in terms of establishing that Mr Parry had the necessary intention, unequivocal demand was made by Mr Fassler and refused by Mr Parry.

[24] There is also that element of the tort, as confirmed in Kuwait Airways, that to constitute conversion the intentional conduct in question must be such an extensive encroachment on the rights of the owner as to exclude him from use and possession of his goods.

[25] Thus, in light of the authorities, three questions must be answered to determine whether Mr Parry converted Mr Fassler’s hives. These are:

(a) whether, at the time Mr Parry served the trespass notice on Mr Fassler, Mr Fassler had an immediate right to the possession of those beehives and associated chattels?; and

(b) if so, whether Mr Parry’s actions demonstrated an intention to keep the goods, including as assessed by reference to whether Mr Fassler made demand for possession of those goods and whether Mr Parry failed to comply with such a demand?; and

(c) if so, did Mr Parry’s actions give rise to the necessary degree of

encroachment on Mr Fassler’s rights?

Did Mr Fassler have an immediate right to possession?

[26] Mr Fassler voluntarily placed his beehives and associated chattels onto Mr Parry’s land. He did so pursuant to contractual arrangements, albeit unwritten, as already outlined. It was therefore for Mr Fassler to establish, notwithstanding his action in placing the beehives on Mr Parry’s land and entering into those arrangements, that he had a right to the immediate possession of that property. Before me, Mr Waugh asserted that that right arose as a consequence of Mr Fassler’s ownership of the beehives. In my view, that does not follow. The tort of conversion depends upon a right to possession, not on title.

[27] Therefore, Mr Fassler’s right to immediate possession depends upon the terms of his contractual arrangements with Mr Parry. The problem here is that having decided to sue in the tort of conversion, Mr Fassler did not plead any relevant factual matters relating to those contractual arrangements. Little or no attention was paid to those arrangements in the District Court, or to the issue of whether Mr Fassler had a right to immediate possession.

[28] By my assessment, however, the principal elements at least of those arrangements – though unwritten – appear relatively straightforward. By the time of the 2008/2009 season Mr Fassler and Mr Parry had agreed that the beehives would be kept on Mr Parry’s land, and that they would in some way share 50/50 in the profits of the venture. They would also share 50/50 in the work required, Mr Fassler having access to Mr Parry’s land for that purpose. There would not appear to have been a fixed term to that arrangement. Although Mr Parry referred to it being an arrangement for the 2008/2009 season, Mr Fassler gave evidence that there were no fixed times agreed. Moreover, Mr Fassler’s evidence was that he would share splits with Mr Parry once he had 200 hives of his own on Mr Parry’s land. As he had not reached that point towards the end of the 2009 season, it might be inferred that Mr Parry’s understanding of the arrangements also was that they would continue for a further period. Mr Parry had a clear interest in receiving more splits over time and, in that context, it seems unlikely that the agreement was to come to an end at the end of the 2008/2009 season. Mr McDouall acknowledged as much in arguing the appeal for Mr Parry.

[29] Therefore, in my view, the best understanding of these arrangements is that they were for an indefinite period, but could have come to an end either on agreement not being reached between one season and another that they were to continue or, during a season, on reasonable notice of termination being given. That reasonable notice might have had to be such as would have given the parties a reasonable opportunity to replace, in the case of Mr Parry, his access to Mr Fassler’s hives and, in the case of Mr Fassler, his access to Mr Parry’s land. Beyond that, and on the basis of the available evidence and the unresolved conflicts in evidence, it is difficult to conclude that any other element of the arrangements were agreed with sufficient certainty to make them an element of the unwritten contract.

[30] Up until the time the trespass notice was given, although difficulties had arisen between Mr Parry and Mr Fassler, there is no evidence that either of them had acted in such a way as to bring the contractual arrangements to an end. I therefore conclude that those arrangements were, at that point, ongoing. Therefore, I do not think it can be concluded that, at that point in time, Mr Fassler had a right to the immediate possession of his hives. His hives were committed to the arrangement with Mr Parry. His right to possession of those hives depended upon that arrangement being brought to an end. It may well be that Mr Parry’s action in serving the trespass notice on Mr Fassler constituted a repudiation of those contractual arrangements. In that circumstance, whether or not that brought those contractual arrangements to an end depends upon whether or not Mr Fassler accepted that repudiation, or rejected it and chose to enforce the contractual arrangement.

[31] I have therefore concluded that Mr Fassler did not have an immediate right to possession of the hives in question and that, therefore, that requirement of the tort of conversion by detention has not been established. It follows that, for that reason alone, I must allow Mr Parry’s appeal and dismiss Mr Fassler’s cross-appeal. In my view, what that conclusion in many ways highlights is that this was fundamentally a contractual dispute between Mr Fassler and Mr Parry. Whilst, clearly, an action in conversion may be brought where an action for breach of contract may also be brought, here the essential question of whether or not the tort had been committed involved a contractual question. That is, whether the contractual arrangements

whereby Mr Parry was lawfully in possession of Mr Fassler’s goods had come to an end so as to give Mr Fassler an immediate right to possession upon which he could base a claim for conversion.

[32] I also must record that, as regards the second element of the tort of conversion, namely the necessary intent, the position is – notwithstanding the terms of the trespass notice and what Mr Parry said at the time – less than clear. This lack of clarity as to the necessary intent arises first in the context of the negotiations between Mr Parry and Mr Fassler which occurred in the weeks immediately following the unsuccessful meeting of 8 April and the issue of the trespass notice.

[33] Following that meeting a Mr McCammon, who as the operator of Pohangina Honey was caught in the middle of the dispute between Mr Parry and Mr Fassler, brokered a settlement proposal. This involved a sensible arrangement whereby the sales proceeds of the honey harvested by each of them would be shared equally and, subject to which, Mr Fassler would by sometime in May retrieve his hives. It would appear, based on an email of 24 April, that Mr McCammon thought both Mr Fassler and Mr Parry had agreed to that proposal. Mr Parry’s view was that such an agreement had indeed been reached. Mr Fassler denied that that was the case. Be that as it may, these negotiations and in that context Mr Parry’s willingness to return hives to Mr Fassler, is in my view at odds with the intent of deprivation of possession that the tort of conversion calls for. It might be argued, of course, that Mr Parry only had a conditional intention to return Mr Fassler’s goods to him. In that context an issue may arise as to whether or not Mr Parry – to whom it was acknowledged Mr Fassler owed money for honey – had some lien over Mr Fassler’s hives. Furthermore, and before the injunctive relief proceedings were served on him, Mr Parry had – in cooperation it would appear with the local Police who had been brought into this matter – arranged for at least some of Mr Fassler’s hives to be placed on a property owned by Mr Parry at Marton, to allow Mr Fassler to uplift those hives under Police supervision. As matters transpired, Mr Fassler saw the hives there and took them back into his own possession before he sought injunctive relief. Again, I think this action on Mr Parry’s part sits at least a little uneasily with the intent called for by the tort of conversion.

[34] Furthermore, there was, in my view, no clear evidence that Mr Fassler ever did in fact demand the return of his beehives and associated chattels. In cross- examination, Mr Waugh put it to Mr Parry that – by reference to the meetings that were held and Mr McCammon’s email record of matters - Mr Parry “must have understood” that Mr Fassler wanted his beehives back. That such an understanding may have been inferred from what took place at the meeting and subsequently is not, in my view, evidence of a demand in the way understood for the purposes of the tort of conversion. Moreover, notwithstanding extensive cross-examination Mr Parry denied that Mr Fassler had ever asked for his beehives back. There is not, as far as I am aware, any evidence of such a request on the record.

[35] It was also Mr Parry’s evidence that he did not intend to deprive Mr Fassler of possession of his goods, rather only to exclude Mr Fassler personally from coming on to Mr Parry’s land. The Judge dismissed that proposition. I am not certain that I should do likewise. I think Mr Parry’s actions in entering into the settlement discussions, and subsequently moving beehives to another of his properties so as to enable Mr Fassler to collect them, provide at least some basis for a conclusion that if Mr Fassler had indeed asked Mr Parry to allow a third party access to his hives, Mr Parry may have granted that request.

[36] In my view, these considerations also reflect the essentially contractual nature of this dispute and, unfortunately for Mr Fassler, the fatal difficulties (as I have found) he faced in bringing an action based on the tort of conversion.

[37] I acknowledge that, particularly for Mr Fassler, this is not an especially satisfactory outcome as his choice of the way in which he brought his claim against Mr Parry means, in effect, that the merits of that claim have not now been finally determined.

[38] I have considered whether, in that context, I should now outline my views on the liability elements of Mr Fassler’s claim, on the basis that either I was wrong as regards the tort of conversion or on the basis that – as I have indicated – there clearly is a contractual dispute between Mr Parry and Mr Fassler in respect of which Mr Fassler could have brought proceedings for breach of contract. Here, I face the

same difficulties as the District Court Judge in terms of the evidence that was provided. Notwithstanding Mr Waugh’s considerable efforts in his written submissions on the quantum of damages, all I can say is that – having wrestled with this matter for some time – I am unable to reach even a provisional conclusion that I would have awarded damages to Mr Fassler in any greater amount than that found by the District Court Judge. These arrangements clearly went badly awry as between Mr Parry and Mr Fassler. They have both suffered losses as a result. I hope my indication as to my general agreement, albeit in the round, with the level of damages arrived at by the District Court Judge may provide the parties, with input from their counsel, with a basis upon which to settle this matter as between themselves.

Result

[39] I therefore allow Mr Parry’s appeal against the decision in the District Court.

Costs

[40] The question of costs both in this Court and that Court arises. As I heard no submissions on costs the question of costs is reserved. If the parties are unable to resolve that matter they may file submissions no later than one month after the date

_{of this judgment.}

Clifford J

Solicitors:

Jack Riddet Tripe, P O Box 5, Wanganui for the appellant ([e-mail])

Horsley Christie, P O Box 655, Wanganui for the respondent ([e-mail])

---

[1] _{Fassler v Parry DC Wanganui CIV-2009-083-276, 15 March 2011 at [7].}
[2] At [5]
[3] _{Austin, Nichols & Co Inc v Stitching Lodestar [2007] NZSC 103 at [16].}
[4] Kuwait Airways Corporation v Iraqi Airways Co (Nos 4 and 5) [2002] 2 AC 883 (HL) at 39 and 42.
[5] _{Stephen Todd Law of Torts in New Zealand (5}th _{ed, Brookers, Wellington, 2009) at 569.}
[6] Cuff v Broadlands Finance Ltd [1987] 2 NZLR 343, at 346.