Aldrie Holdings Limited v Clover Bay Park Limited [2016] NZHC 250 (24 February 2016)

	Home \| Databases \| WorldLII \| Search \| Feedback High Court of New Zealand Decisions

BETWEEN	ALDRIE HOLDINGS LIMITED Plaintiff
AND	CLOVER BAY PARK LIMITED First Defendant ROGER WAYNE PROUT and SHERRELL ANNE PROUT as trustees of CLOVER BAY TRUST Second Defendants ROGER WAYNE PROUT Third Defendant

Hearing:	22, 23, 24, 25, 26, 29, 30 June and 1, 2 and 17 July 2015
Counsel:	S W B Foote and E McGill for Plaintiff D J Clark and J S Clark for Defendants
_Judgment:	_{24 February 2016}

ALDRIE HOLDINGS LIMITED v CLOVER BAY PARK LIMITED [2016] NZHC 250 [24 February 2016]

(b) Did Mr Prout act dishonestly? [59] Summary of factual findings [63] The Fair Trading Act cause of action [64] The Contractual Remedies Act claim [93] Counterclaims

(b) Breach of cl 30 of the agreement for sale and purchase [104] Result [112]

[1] Dairy farming can be an expensive business. In addition to typical business risks, farmers must cope with fluctuating climatic conditions and (sometimes) volatile global dairy prices. The cost of good dairy land is high. When purchasing a farm important judgments must be made about the quality of the cattle and pasture, as well as the equipment required.

[2] Constant reviews of budgeting are needed because of the volatility of the prime source of income; namely, the amount paid by Fonterra Co-operative Ltd (Fonterra) per kilogram of milk solids (kgms) produced. Fonterra reviews that figure regularly throughout the farming year. All of those realities of life and business means there is a need for care in making decisions about whether to buy a farm property, and, if so, at what price.

[3] Almost invariably, farms change hands at the commencement of each dairy season; 1 June of each year. Transactions of that type are relatively routine. They usually involve sale of land, fixtures and farming chattels. Together, those assets make up a business to be acquired as a going concern. Lawyers prepare agreements for sale and purchase to reflect the terms agreed between the parties and then proceed to settle the transaction on due date. Special conditions will generally be

inserted into standard form agreements, to reflect any important additional important arrangements that the parties have agreed.

[4] This proceeding involves a contract for the sale and purchase of a dairy farm. Aldrie Holdings Ltd (Aldrie) agreed to purchase land and fixtures from Clover Bay Park Ltd (Clover Bay) and various farming chattels, as well as shares in Fonterra Co- operative Ltd (Fonterra), from the trustees of the Clover Bay Trust (the Trust). Contrary to normal expectations, Aldrie chose not to carry out any material due diligence but to rely principally on oral statements made in the course of pre- contractual negotiations.

[5] Aldrie seeks damages for false representations said to have been made by Mr Prout which, it contends, induced it to enter into the agreement for sale and purchase. The claims are brought against Clover Bay and the Trust under the Fair Trading Act 1986, the Contractual Remedies Act 1979 and in the tort of deceit. A separate claim is brought against Mr Prout personally, for his alleged breach of the Fair Trading Act and deceit.

[6] In response, Clover Bay and the Trust have brought two counterclaims arising out of arrangements made on settlement:

(a) The first concerns losses that Mr Prout alleges were suffered as a result of a failure on the part of Aldrie to allow him to graze calves on the Kaukapakapa farm after settlement was effected.

(b) The second involves a claim for lost and empty cows, at the time of settlement; this claim is derived from cl 30 of the agreement for sale and purchase.

[7] Everything said by the vendors’ representative, Mr Roger Prout, to the director of Aldrie, Ms Pauline Laboyrie, before the agreement for sale and purchase was signed was conveyed either during the course of telephone discussions or, on one occasion, when Ms Laboyrie attended at the farm property. While Mrs Sherrell Prout and Ms Lynette Smith (a friend of Ms Laboyrie) were present when Mr Prout

and Ms Laboyrie discussed issues relating to the proposed purchase at the farm on

5 September 2013. While Ms Smith was able to give some assistance, I have doubts about the reliability of her recollection of what was said. Without intending any criticism of her, there is a real possibility of mistaken reconstruction as a result of later discussions with Ms Laboyrie. Mrs Prout did not give evidence.

[8] As there are no independent and reliable witnesses as to what was said between Ms Laboyrie and Mr Prout, relevant disputed facts fall to be determined by reference to contemporaneous documents, and other evidence that provides independent support for a particular view of the facts.

[9] On 23 September 2013, Ms Laboyrie signed an agreement for sale and purchase by which Aldrie bought land and other assets from both Clover Bay and the Trust.¹Those combined purchases enabled Aldrie to acquire the farm as a going concern.

[10] The property is known as Alpine Road Farm. It is situated near Kaukapakapa, north-west of Auckland. The total purchase price was $2,909,478.72, of which $2,500,000 was paid for land and associated farm fixtures and equipment sold by Clover Bay. The transactions had three unusual features:

(a) First, settlement was effected in October 2013, some four months into the 2013/2014 dairy season.

(b) Second, as part of the contractual arrangements, Aldrie was to lease the Trust’s herd for the balance of the season, on terms to be incorporated into a formal lease. No lease was ever executed.

(c) Third, the important representations that Ms Laboyrie says that Mr Prout made during the course of pre-contractual negotiations were not incorporated, in the form of vendors’ warranties, in the written

[11] For most of her working life, Ms Laboyrie was employed as a stenographer. During that time, she harboured a desire to own a dairy farm. Eventually, Ms Laboyrie became involved in ownership of dairy farms in the early 2000s. I use the term “ownership” advisedly. Ms Laboyrie does not hold herself out as a farmer. Rabobank Ltd, from which she obtained 100% finance for the purchase of the

owner; particularly, in relation to her ability to enhance the profitability of a dairy farming business. She was also described as a “shrewd businesswoman”. Those compliments were directed to her perceived business acumen, rather than her ability to manage and operate a dairy farm.

[12] Ms Laboyrie did not seek legal advice about the prudence of the transaction, or whether any special terms should be included in the agreement to capture the essence of the important representations she now contends were made to her. From the evidence that I heard, I am satisfied that Ms Laboyrie is not someone who customarily engages in robust due diligence processes. Historically, when acquiring property, she has been prepared to rely on what she has been told in response to specific questions. This is the first occasion on which something has gone wrong. For present purposes, I consider that Ms Laboyrie should be viewed as an experienced businesswoman who was alert to those aspects of the dairy farm business that were important to economic validity.

[13] Mr Prout has been a dairy farmer for some 30 years. He is a licensed real estate agent, holds a skipper’s certificate and has operated a successful yacht charter business. I assess Mr Prout as a relatively sophisticated businessman. As an experienced farmer and businessman, he ought to have appreciated the significance of particular questions put to him by Ms Laboyrie on points relevant to economic viability and price. Also, he ought to have understood the need to answer her

[14] Following the death of her first husband in 1998, Ms Laboyrie lived on a farm at Kaukapakapa with another man with whom she had entered a relationship. Until that time, she had no experience in running a dairy farm.

[15] After that relationship ended, Ms Laboyrie went to live in Waikato, where she met another man. Together, in 2003, they bought a dairy farm in Cambridge, of about 80 hectares. In her own right, Ms Laboyrie bought a run-off property in Tirau, where young stock were grazed. When they separated in 2004, Ms Laboyrie acquired his share of the Cambridge farm by selling her run-off property in Tirau and borrowing the balance from Rabobank.

[16] The Cambridge property was subdivided in 2006. Much of it was sold. Ms Laboyrie bought, with the proceeds of sale, a dairy farm at Tirau of 75 hectares. In addition, she retained 78 acres of flat land at Cambridge for a run-off. Ms Laboyrie still owns and lives on the Tirau farm, where between 210 and 202 cows are routinely milked.

[17] Ms Laboyrie re-married in May 2010. Her husband owned a property at Gordonton. Ms Laboyrie retained her farm at Tirau and the run-off land at Cambridge. Sharemilkers and managers operated the Tirau property for her. Sadly, her husband died in October 2012. Following his death, Ms Laboyrie inherited the house property in Gordonton.

[18] In mid 2013, Ms Laboyrie decided to buy another dairy farm, as an investment. She says she was looking for a farm on which at least 200 cows could run, and was capable of producing a minimum of 60,000 kgms per annum. Ms Laboyrie understood that the farm had to be of a sufficient size to make it economical to employ a manager and still make a profit.

[19] To facilitate her proposed investment, Ms Laboyrie decided to sell the Cambridge run-off and the house at Gordonton. On 16 August 2013, she entered into an unconditional agreement for the sale of the Cambridge land for $1,450,000. Each dairy season runs from 1 June to 31 May. That property was to settle on 29

May 2014, a date that coincided with the end of the 2013/2014 season. Generally, settlement of the sale and purchase of a dairy farm will occur at the end of May each year.

[20] As part of her inquiries, Ms Laboyrie consulted the TradeMe website. She saw an advertisement for the Kaukapakapa farm that had been placed by Mr Prout. It read:

Viewing instructions: Email or phone to arrange viewing. Price: Asking price $2,500,000

Excellent location on town boundary with magnificent sea and bush views on quiet no exit road.

2 good homes. Main homestead 4 bedrooms 3 bathroom. Including separate self contained apartment, 3 car garaging, privately located in centre of farm. Managers home 3 bdrm 1 bthrm.

16 aside herringbone cowshed, with in shed meal feeders, located in centre of farm.

5 bay calf rearing shed. Large drive through hay barn/tractor/calf shed. Excellent water with 75000 litre storage capacity. Pump pressure with

gravity backup as well as gravity fed spring. Stream with water fall and swimming hole.

Spectacular elevated views over native bush to the sea. Resident wildlife include deer, pheasants, quail, pukekos, wood pigeons, tuis etc. A stunning tranquil residence.

A very well set up, and maintained, 1 man farm currently run by farm manager. A magnificent property so close to Auckland.

[21] In my view, a reasonable purchaser could discern from the advertisement that:

[22] All of those factors are relevant to a purchaser’s decision whether or not to buy a farm. They go to the question of likely economic performance. That is relevant to both acquisition and price.

[23] From the TradeMe advertisement, a purchaser could reasonably suppose that there were 96 hectares of dairy land on which 200 cows were being run and, with a manager, the property could be expected to produce about 60,000 kgms per annum. Assuming a pay-out from Fonterra of $6 per kgms,³the annual income would be in the vicinity of $360,000. That information was sufficient to galvanise Ms Laboyrie into making more specific inquiries about the property.

[24] On 31 July 2013, Ms Laboyrie made her first telephone call to Mr Prout. Between 31 July 2013 and 23 September 2013 (when the agreement for sale and purchase was signed) about 23 telephone calls were made by Ms Laboyrie to Mr Prout. They occupied a total of about one hour 30 minutes.

[25] There is a dispute between Ms Laboyrie and Mr Prout about the number of times Ms Laboyrie visited the farm before the agreement for sale and purchase was signed. Mr Prout says that she was present on two occasions, 7 August and

5 September 2013. Ms Laboyrie recalls only one visit, on 5 September 2013. Nevertheless, it is common ground that, after a meeting of about two hours at the farm on 5 September 2013, Ms Laboyrie advised Mr Prout that she was prepared to buy the farm for $2,500,000.

[26] Mr Prout’s recollection of two visits is confirmed by entries in his electronic diary on both 7 August and 5 September 2013. On each occasion, he says that Ms Laboyrie came to the farm with a friend, Ms Smith. However, Ms Smith’s evidence corroborates that of Ms Laboyrie. She recalls only one visit. Perhaps Ms Laboyrie made an appointment to go to the farm in August but was unable to do

³This seems to have been the accepted benchmark at the time, though Rabobank Ltd, Aldrie’s

[27] The difference does not assume any real significance. I work on the assumption that there was only one visit, on 5 September 2013. While that approach differs from evidence given by Mr Prout, it is more favourable to him. The existence of only one visit restricts the time available to Ms Laboyrie to make inquiries about the farm business before making a decision to purchase. In those circumstances, no injustice is done to either party by reliance being placed on Ms Laboyrie’s version of events.

[28] Following further telephone discussions and some email exchanges after the meeting on 5 September 2013, an agreement for sale and purchase was prepared. The contract involved the acquisition of assets from both Clover Bay and the Trust. The total price to be paid must have been agreed after the meeting on 5 September

agreement was signed on 23 September 2013. The agreement was subject to finance. That condition had to be satisfied on or before 30 September 2013.

[29] The assets to be transferred to Aldrie under the contract were, with the ascribed values:⁵

Main dwelling:	$165,000
Curtilage:	$50,000
Managers cottage:	$54,000
Curtilage:	$25,000
Hay barn/calf shed:	$1,800
Implement shed/hay barn:	$3,500
16 ASHB cow shed:	$19,000
Grain silo and meal feeding system:	$2,500
Submersible bore pump:	$5,500
X2 25,000L water storage tanks:	$1,600

Water pressure pump:	$100
High pressure yard wash-down pump:	$400
Automatic Effluent Pump system with travelling irrigator:	$2,000
Electric fence unit:	$100
Land:	$2,166,000
Milking plant:	$3,500
Total:	$2,500,000

Honda Foreman 400 quad bike:	$3,000
Honda Foreman 500 quad bike:	$5,000
Kea calf trailer:	$2,000
Fertilizer spreader:	$2,000
Urea spreader:	$1,000
56318 Fonterra shares at $7.04 each:	$396,478.72
Total	$409,478.72

[30] A number of special conditions were inserted into the agreement for sale and purchase. While they included various warranties from the vendors (for example, about resource consents) none of the alleged representations were given warranty status.

[31] Aldrie sought finance from Rabobank. No formal application for finance was made. Ms Laboyrie met with Mr Nesbit on 10 September 2013 for about one to one and a half hours. During that time, the production potential of the farm was discussed, as was a longer term possibility of subdivision.

[32] On 27 September 2013, Rabobank offered to lend 100% of the purchase price, on terms set out in a letter of that date. It is plain from the terms of the offer that the bank assessed Aldrie’s ability to service the loan by reference to income expected from the totality of Aldrie’s farming operations, as well as the value of existing securities. The bank did not agree to lend the whole of the purchase price

solely on the basis of information provided by Ms Laboyrie about the likely income to be earned from the Kaukapapa property.

[33] Aldrie accepted that offer. Satisfaction of the finance condition was communicated to the vendors. While Ms Laboyrie did not want to acquire the property until the beginning of the 2014/2015 season (1 June 2014),⁶Mr Prout wanted to settle as soon as possible. Aldrie agreed to proceed in accordance with Mr Prout’s wishes. Ms Laboyrie made one visit to the property between the time the agreement was declared unconditional and settlement: on 10 October 2013. The transaction settled on 15 October 2013.

[34] On the evening of 15 October 2013, Ms Laboyrie entered the Fonterra website to check production figures. To her horror, she discovered that production as reported to Fonterra was 29.9% lower than the previous season. Later, she discovered that percentage referred to a production of 40,988 kgms. Ms Laboyrie only had the ability to access the Fonterra website once she had acquired the shares from the Trust.

[35] Ms Laboyrie alleges that Mr Prout made a number of false representations to her, both during their telephone exchanges and when meeting at the homestead at the Kaukapakapa farm. Mr Foote, for Aldrie, submitted that these misrepresentations were actionable under ss 9 and 14 of the Fair Trading Act, s 6 of the Contractual Remedies Act and in the tort of deceit.

[36] While the claim is based both on written and oral representations, there is a lack of clarity in the definition of the times at which certain representations were allegedly made by Mr Prout to Ms Laboyrie. For example, the written form of the statements include those found in the TradeMe advertisement. Yet, it is clear that Ms Laboyrie embarked on further inquiries after reading the advertisement. In those circumstances, it is difficult to see how she could have placed reliance on its precise

⁶She had committed to settling the sale of her land at Cambridge on 29 May 2014: see para [19]

[37] The oral representations are alleged, variously, to have been made during the course of telephone discussions involving Ms Laboyrie and Mr Prout, or when Ms Laboyrie visited the farm on 5 September 2013. That was the only time they met in person before the agreement for sale and purchase was signed. That meeting lasted about one and a half to two hours, and began around midday. No doubt the conversation would have included customary pleasantries over lunch. It is difficult to know just how pointed the questions were and whether the discussions were formal or casual in nature.

[38] Ms Laboyrie gave evidence that she told Mr Prout that, during the course of a telephone discussion on 31 July 2013 after she first saw the TradeMe advertisement, she was looking for a farm of more than 75 effective hectares that would produce

60,000 kgms from 200 cows. After providing that information, she says that she asked Mr Prout certain questions about the production, stocking rates and effective area of the farm.

(a) She should budget to do 60,000 kgms from 200 cows on the farm. (b) The farm had a 10 year average production of 50,000 kgms.

(c) Of the 96 hectares identified in the TradeMe advertisement, 15–20 hectares comprised bush, with the balance (arithmetically, between 76 and 81 hectares) being effective land.

[40] Ms Laboyrie says that she and Mr Prout talked further about farming operations during the course of later telephone discussions and her visit to the farm. Ms Laboyrie says that Mr Prout confirmed previous information about the effective area of the farm for dairying purposes, and the size of the herd. In addition, she alleges that Mr Prout told her that:

(a) The average of 50,000 kgms was achieved with “a bit of palm kernel” and that the peak production of 61,000 kgms had been achieved using palm kernel supplement.

(b) Fertiliser had been applied twice only over the period that Clover Bay had owned the farm.

(e) Clover Bay’s calves (the rising one year heifers) were grazed off the farm property.

[41] Ms Laboyrie described what she says was agreed on 5 September 2013: (a) Settlement would be effected on 15 October 2013.

(b) From the date of settlement until 31 May 2014, Mr Prout and his family would continue to live in the main house on the property.

(c) Clover Bay’s herd would remain on the farm. They were to be leased from Clover Bay to Aldrie for no payment. In effect, this arrangement worked as a set-off between the cost of leasing the cows and the absence of any payment for rent of the accommodation.

(d) Aldrie would manage the dairy operation from 15 October 2013, and receive income from the milking herd until 31 May 2014.

[42] Ms Laboyrie also alleged that Mr Prout told her that, for the purposes of financing the purchase of the property, she could work on the assumption that production between 15 October 2013 and 1 June 2014 would be 40,000 kgms, with the consequence that the income from milk production would cover outgoings on the farm, including interest repayments.

[44] In his notes, Mr Nesbit also recorded that Ms Laboyrie informed him that the existing farm manager was employed on the property and would remain there for the balance of the season. She also advised Mr Nesbit that the best production achieved by the farm “in recent years” was 60,000 kgms. Mr Nesbit undertook his calculations based on the Alpine Road Farm’s capacity to provide a milking platform for 200 cows. All of that information is consistent with what Ms Laboyrie says that Mr Prout told her.

2013, only five days after her visit to the farm, provide contemporary confirmation of representations that Ms Laboyrie asserts were made. Reference to 76 effective hectares is consistent with her allegation that Mr Prout told her that 15 to 20 hectares of the 96 identified in the TradeMe advertisement comprised bush. It is also consistent with an admission made by Clover Bay, the Trust and Mr Prout in their first Statement of Defence in the present proceeding, in which they admitted that Ms Laboyrie had been told that the bush area was about 15 to 20 hectares. In oral evidence, Mr Prout tried to explain away that admission. I found his attempts unconvincing.

[46] Initially, Mr Prout did not recall telling Ms Laboyrie that the average production was 50,000 kgms over 10 years. But, he says that if he did, he would have expressed himself by saying it was “about” that figure. It would be surprising if nothing had been said about this topic, given its importance both to the suitability

of the property for Ms Laboyrie’s purposes and to price. The property had been in ownership of the Prout interests for about 10 years. In fact, the average production for those 10 years was 47,938 kgms per annum.

[47] It is more likely than not that Mr Prout did tell Ms Laboyrie that the average production was “about 50,000” kgms. That raises a question of materiality. Ms Laboyrie seemed to treat the figure given by Mr Prout as exact, or permitting very little tolerance either way. But, there was evidence from Mr Nesbit that he would not have regarded a difference of about 2,000 kgms as material when preparing a budget for a farm of this type. I accept Mr Nesbit’s evidence on this

issue. On a notional pay-out from Fonterra of $6 per kgms,⁷the difference between

[48] Given that Mr Prout anticipated any sale being effected around October 2013, it is possible that he told Ms Laboyrie that she could expect to produce 40,000 kgms from Clover Bay’s herd in the period between settlement and the end of the dairy season. Bearing in mind the time of year and the fact that there were seven months to run, a figure of 40,000 kgms, while on the high side given the actual average production, is not so implausible as to reject Ms Laboyrie’s contention. The fact that this information was provided to Mr Nesbit when Rabobank was approached for funding is independent support for the proposition that such a representation to that

effect was made.⁸It is inherently unlikely that a person of Ms Laboyrie’s business

[49] The balance of the alleged representations fall into two distinct categories. The first involve positive representations as to the quality of both the milking shed and the water on the farm. The second assert a failure, on the part of Mr Prout, to disclose information about the use of other properties on which stock were grazed at various times.

[50] I deal first with the suggestion that actionable representations were made in respect of the quality of the milking shed and water on the farm. Use of the term

“excellent” is consistent with the way in which the TradeMe advertisement referred to the water and the description of the herring bone cowshed.⁹However, I consider that those types of statements were, when taken in context, no more than puffery, and could not have been taken seriously by Ms Laboyrie as a representation on which she was entitled to rely to enter into the contract.

[51] I am aware that in Closurepac NZ Ltd v WS 2014 Ltd¹⁰Thomas J took the view that use of the term “excellent” in the context of the actual state of certain machinery amounted to an actionable representation, rather than a mere puff.¹¹

However, the Judge acknowledged that it was necessary to consider “the position in life, experience, and skill of the person to whom the [statement] was made”.¹²In this context, Mr Prout was dealing with a person whom Mr Nesbit had described, in his notes, as a “shrewd businesswoman”. Although she did not seem to accept this proposition in evidence, Ms Laboyrie must have been aware that a person in the position of Mr Prout was likely to promote the standard of those items, perhaps by

way of exaggeration. In the context of an experienced farm owner negotiating the purchase of a new dairy farm, I do not accept that Ms Laboyrie would have treated what Mr Prout said on these topics as anything more than puffery. Nor would Mr Prout have expected her to do so.

[52] As to the alleged actionable non-disclosures, Ms Laboyrie says that Mr Prout failed to tell her that:

(a) For significant periods during Clover Bay’s ownership of the farm, adjacent land had been leased for grazing the milk herd and wintering it.

(b) Approximately three to four additional hectares of land belonging to owners of properties that had been subdivided off the farm property

⁹_{The terms in which the advertisement was expressed are set
out at para [21] above.}

(d) In several years, significant supplementary feed had been used to achieve production of less than 50,000 kgms.

[53] Mr Prout states that “supplementary feed” was mentioned as a topic, but that

[54] Mr Prout accepts that he did not mention that he had agisted some stock on the nearby McLachlan Road Farm but did tell Ms Laboyrie about his use of a property (known as Longburn Farm) owned by Mr de Roode, and some subdivided land adjacent to the farm for that purpose. If Mr Prout did say anything to Ms Laboyrie about the use of external land for grazing purposes, I am satisfied that he did not bring home to Ms Laboyrie the extent of that use in the context of historical and expected production levels.

[55] The evidence in this proceeding occupied 10 sitting days, with a further day devoted to submissions. It will neither be possible, when analysing the various claims, to refer to all aspects of the evidence, nor all aspects of counsel’s helpful submissions. My approach is to analyse the issues by reference to the factors I consider important, without extensive reference to the submissions. Necessarily, I shall be selective in the evidence to which I refer, and my summaries will be incomplete. Having said that, I have considered the detailed arguments advanced by counsel on the various claims and counterclaims. I am grateful to counsel for both parties for their industry and the quality of their submissions.

[56] The starting point for analysis is the principle captured in the Latin phrase, caveat emptor; let the buyer beware. The onus is on a purchaser to inquire about those features he or she may regard as important to the decision whether to buy.

Subject to any statutory overlay, a vendor is under no duty to disclose any particular information.¹³

[57] For present purposes, statutory overlay comes in the form of the Contractual Remedies Act 1979 and the Fair Trading Act 1986. Section 6 of the former and ss 9 and 14 of the latter promote a policy that requires (in a case such as this) vendors to answer honestly and accurately any questions put to them by a purchaser, and to ensure that any voluntary disclosures are accurate. If material false statements are made, a vendor may be liable whether they are made innocently, negligently or dishonestly. The focus is on the effect of the false statement on the buyer’s decision to purchase the asset. The caveator emptor rule will be displaced in circumstances where there has been a failure on the part of a vendor to answer a material question accurately, or materially inaccurate information has been voluntarily disclosed.

[58] In this case, both the truthfulness of statements made by Mr Prout to Ms Laboyrie, and Mr Prout’s honesty are called into question. The issue of honesty arises in the context of the claim based on deceit. If Mr Prout made a false statement knowing it to be untrue or recklessly, without caring whether it was true or not, for the purpose of influencing Ms Laboyrie to enter into a contract, he has acted

[59] Ms Laboyrie bears the onus of proving that Mr Prout acted dishonestly. While I have held that some of the information he imparted was not true (or, at best, misleading), I am not satisfied on a balance of probabilities that he was dishonest in giving that information. When determining whether a person has acted dishonestly, the gravity of the allegation must be taken into account as part of the evaluative process undertaken to determine whether the requisite standard of proof has been

¹³_{Generally, see McMorland, Sale of Land (Cathcart Trust,
3}^rd_{ed 2011) at para 2.01.}

¹⁴Edgington v Fitzmorris (1885) 29 ChD 459 (CA) at 481 (Bowen LJ), cited with approval by

_{Hammond J in Gloken Holdings Ltd v The CDE Co Ltd [1997] NZHC 457; (1997) 6 NZBLC
102,272.}

[60] There was an air of puffery about much of what was said in the TradeMe advertisement, which plainly called for further inquiry by a potential purchaser. I have already found that the comments Mr Prout repeated about the cowshed and water quality could be viewed as no more than mere puffs. In any event, because Ms Laboyrie went on to make further inquiries, it is difficult to see how anything in the advertisement could have continued to affect her decision to purchase. All of the factors that she regarded as important were the subject of specific questions that she later put to Mr Prout.

[61] On the more significant issues on which I have found that Mr Prout made representations, I consider he did so because he had failed to prepare adequately before answering inquiries made by Ms Laboyrie. Those findings are not intended to equate what was done to the type of reckless behaviour that could give rise to a claim in deceit.¹⁶I consider that Mr Prout was careless. He gave information from memory. Mr Prout accepts that there was an element of “gilding the lily” about what he said. But, he did not expect or intend that Ms Laboyrie would decide to purchase on the faith of what was in the TradeMe advertisement and said to her.

[62] In other words, without checking the records, Mr Prout endeavoured to convey to Ms Laboyrie the information that she requested, albeit in the most favourable light for the vendors. The way in which he gave evidence suggested to me that he was capable of giving different explanations that could not be reconciled, even though he was not lying in doing so. The degree of carelessness that he exhibited is not, in my view, sufficient to reach the standard of recklessness required to provide a basis for the tort of deceit. In those circumstances, it is unnecessary for me to consider arguments based on the tort of deceit.

(a) Mr Prout did tell Ms Laboyrie that the farm had an effective area of about 76 hectares. Whether that was a positive statement or an

inference taken from the fact that 15–20 hectares were in bush is beside the point. Mr Prout’s denial of any discussion of the effective area is inconsistent with contemporary documents, the provision of that information to another potential purchaser, Mr Turnbull and to Ms Laboyrie providing it (soon afterwards) to Mr Nesbit for financing

(b) While Mr Prout did tell Ms Laboyrie that the farm achieved an average of 50,000 kgms over the 10 year period that Clover Bay owned the farm, he qualified that by use of the word “about”. Although the 50,000 kgms figure was not exact, the difference between that and the actual average of 47,938 kgms was not, in the

(c) Mr Prout told Ms Laboyrie that production could be achieved by using a herd of 200 cows. While it is not contested that the parties always worked on the basis of an available herd of 200 cows, the herd made available to Aldrie on settlement comprised only 167.

(d) Mr Prout did not make it clear to Ms Laboyrie that other properties, (Longburn Farm and three of the subdivided parcels of land) had been used for grazing in order to achieve the better results. The benefits gained from the use of such land, combined with increased herd sizes in some years, resulted in production figures of 60,195 kgms in

(e) Mr Prout did not tell Ms Laboyrie that the 68,060 kgms quantity had been achieved through use of another neighbouring property, the McLachlan Road farm, for grazing purposes.

(f) Mr Prout did not say anything about the quality of water, milk shed and pasture that could be regarded as anything more than puffery.

[64] Although initially placing reliance on s 14 of the Fair Trading Act, in closing Mr Foote restricted his submissions to s 9. That was a responsible approach. If there were no s 9 liability, the case could not be proved by reference to s 14. I analyse this aspect of the claim by reference only to s 9.

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

[66] In Red Eagle Corporation Ltd v Ellis,¹⁹the Supreme Court provided guidance on the approach that a first instance Court should take in determining whether an actionable claim exists under s 9 of the Fair Trading Act. The Court acknowledged that the approach outlined in its judgment might not be appropriate in all situations in which a s 9 claim was made.²⁰However, I see no reason, in the circumstances of this case, to depart from the Supreme Court’s suggested approach.

[67] It is a requirement of s 9 that the misleading or deceptive conduct occur “in trade”. I have no doubt that the conduct in this case was “in trade”. A valuable farming enterprise was being sold as a going concern. For this purpose, it would be artificial to separate out the entities that owned the farm and the chattels respectively. The chattels were needed to enable the farm business to be sold as a going concern. Mr Prout was acting as agent for each.²¹

[68] The Supreme Court said that s 9 “is directed to promoting fair dealing in trade by proscribing conduct which, examined objectively, is deceptive or misleading in the particular circumstances”.²²Applying Neumegen v Neumegen & Co,²³the

¹⁹_{Red Eagle Corporation Ltd v Ellis [2010] NZSC 20; [2010] 2 NZLR 492
(SC).}

²¹_{Mr Prout’s personal liability flows from s 43(1)(d)
of the Fair Trading Act 1986.}

²²_{Red Eagle Corporation Ltd v Ellis [2010] NZSC 20; [2010] 2 NZLR 492
(SC), at para [28].}

intention to mislead or deceive. The Supreme Court emphasised the need for a s 9 analysis to be undertaken in context.

[69] Delivering the judgment of the Supreme Court, Blanchard J identified “the characteristics of the person or persons said to be affected” as one of the circumstances to be considered. He added:

[28] . . . Conduct towards a sophisticated businessman may, for instance, be less likely to be objectively regarded as capable of misleading or deceiving such a person than similar conduct directed towards a consumer or, to take an extreme case, towards an individual known by the defendant to have intellectual difficulties. Richardson J in Goldsbro v Walker [[1993] 1

NZLR 394 (CA)] said that there must be an assessment of the circumstances in which the conduct occurred and the person or persons likely to be affected

accordingly whether a reasonable person in the claimant’s situation – that is, with the characteristics known to the defendant or of which the defendant ought to have been aware – would likely have been misled or deceived. If so, a breach of s 9 has been established. It is not necessary under s 9 to prove that the defendant’s conduct actually misled or deceived the particular plaintiff or anyone else. If the conduct objectively had the capacity to mislead or deceive the hypothetical reasonable person, there has been a breach of s 9. If it is likely to do so, it has the capacity to do so. Of course the fact that someone was actually misled or deceived may well be enough to show that the requisite capacity existed.

[70] In Poplawski v Pryde,²⁴O’Regan P paraphrased that part of the Red Eagle analysis: “A breach [of s 9] will only occur where it is objectively reasonable for the claimant to be misled in all the circumstances”.

[71] If a s 9 claim were made out, the next inquiry is into the loss (if any) that the claimant has suffered “by” the conduct of the representor. Section 43 of the Fair Trading Act provides a smorgasbord of remedies. For present purposes, it is sufficient to refer to the ability to award damages to compensate for loss.²⁵

[72] The reference in s 43 to the need for loss to arise “by the conduct” of the representor emphasises the need to establish a causal connection between any false representation and loss or damage claimed to have been suffered. In the course of

[29] . . . The language of s 43 has been said to require a “common law practical or common-sense concept of causation”. The court must first ask itself whether the particular claimant was actually misled or deceived by the defendant’s conduct. It does not follow from the fact that a reasonable person would have been misled or deceived (the capacity of the conduct) that the particular claimant was actually misled or deceived. If the court takes the view, usually by drawing an inference from the evidence as a whole, that the claimant was indeed misled or deceived, it needs then to ask whether the defendant’s conduct in breach of s 9 was an operating cause of the claimant’s loss or damage. Put another way, was the defendant’s breach the effective cause or an effective cause? Richardson J in Goldsbro spoke of the need for, or, as he put it, the sufficiency of, a “clear nexus” between the conduct and the loss or damage. The impugned conduct, in breach of s 9, does not have to be the sole cause, but it must be an effective cause, not merely something which was, in the end, immaterial to the suffering of the loss or damage. The claimant may, for instance, have been materially influenced exclusively by some other matter, such as advice from a third party.

[73] The amount of any damages to be awarded can take into account conduct on the part of a claimant that may have contributed to its financial loss, even to the point where the prima facie loss should be extinguished. Blanchard J said:

[30] Another operating cause of loss or damage may perhaps have been the claimant’s own conduct in failing to take reasonable care to look after his or her own interests. The court should therefore ask itself whether the claimant’s carelessness, if there were any, should be regarded as the sole or a contributory operative cause of the loss. The fact that the claimant may have contributed by carelessness to his or her own downfall does not disqualify the claim. Gleeson CJ remarked in Henville v Walker:

The purpose of the legislation is not restricted to the protection of the careful or the astute. Negligence on the part of the victim of a contravention is not a bar to an action under [the Australian equivalent of s 43] unless the conduct of the victim is such as to destroy the causal connection between contravention and loss or damage.

As the Goldsbro case has established, the court has a discretion under s 43 (it “may” make an order), and the proper exercise of that discretion may lead it to decide that part only of the amount of the loss or damage should be paid by the defendant to the claimant (or, in some cases of reckless behaviour by the claimant, even that no order for payment should be made).

[31] The exercise of the power to make an order for payment under s 43 is, in the end, as Richardson J also said Goldsbro, a matter of doing justice to the parties in the circumstances of the particular case and in terms of the policy of the Act.

[74] The misleading representations I have found that Mr Prout made were as to: (a) The effective area of the land.

[75] The impact of those statements was that Ms Laboyrie believed Aldrie was buying a dairy farm that could produce an average of 50,000 kgms per annum from a herd of 200 cows on an effective area of 76 hectares. The area available to the dairy herd has been measured at 63.1 hectares. Mr Prout’s failure to offer information about the true amount of supplementary feed used in high production years and the material use of off-site land for grazing compounded the effect of those false statements.

[76] The next question is whether a person with Ms Laboyrie’s dairy farming and business experience should be regarded as someone in respect of whom the mis- statements were, viewed objectively, misleading or deceptive.

[77] In the circumstances of this case, Mr Prout knew that Ms Laboyrie was asking relevant questions about the viability of the farm which would necessarily have informed her decision whether Aldrie would acquire it, or pay the asking price. Whether or not Ms Laboyrie ought to have verified the information by asking to see production records, and insisting on viewing the Fonterra website information, Mr Prout was under a legal duty to answer her questions accurately. I am satisfied that they were statements relevant to a purchaser’s decision on which she was

[78] The third question is whether there is a sufficient causal connection between the loss or damage claimed and the false representation. Plainly, what Ms Laboyrie was told was taken into account in determining whether to enter into the contract. But, she also relied both on her own business decision not to conduct further due diligence and her bank’s response to her request for 100% finance. For Fair Trading Act purposes, I am satisfied that the false representations were “an operating cause”

of Aldrie’s loss, in the manner expressed by the Supreme Court in Red Eagle.²⁸

[79] So far as loss is concerned, Ms Laboyrie paid a total sum of $2,909,478.72 for the farm and associated fixtures, chattels and Fonterra shares. A sum of

$2.5 million was paid for the farm itself to Clover Bay. What Aldrie has lost is the difference in value between what a farm she believed Aldrie was purchasing was worth and the amount that would have been paid to acquire a farm that has its actual production capacity. I am satisfied that had the true position been disclosed, Aldrie

[80] Damages are also sought in respect of expected costs for improvement of the milking shed and the water bore, the shortfall of expected income from milk solid production for the 2014 dairy year, the expected shortfall from milk solid production for the 2015 dairy year and the cost of additional palm kernel feed and molasses which is referable to the period following acquisition of the farm. The cost of emergency fertilizer for the farm in October and November 2013 and the expenses

represent: (a)	Shortfall in income from 15 October 2013 to
	31 May 2014:	$110,527
(b)	Shortfall in represented income in 2014/2015 season:	$44,158.50
(c)	Costs of repairing plant in the milking shed	$27,558.32
(d)	Cost of a new bore to access good quality water:	$18,400.00
(e)	Cost of emergency fertilizer in October and November 2013:	$12,388.04

²⁸_{Red Eagle Corporation Ltd v Ellis [2010] NZSC 20; [2010] 2 NZLR 492
(SC) at para [29], set out [72] above.}

²⁹This measure of loss and the basis on which it is claimable is discussed in Cox & Coxon Ltd v

Leipst [1998] NZCA 202; [1999] 2 NZLR 15 (CA) at 19–23 (Gault J) and 25 (Henry and Blanchard JJ).

(f)	Cost of additional palm kernel feed in the 2014 season:	$24,728.44
(g)	Cost of additional molasses in the 2015 season:	$2,252.16
(h)	Cost of employing a farm consultant from 21 October 2013 to resolve problems on the farm:	$29,250.69

[81] Valuers called by each party have assessed the difference in value between the true market value and what was paid at $500,000. I do not consider it is appropriate to add to that damages to reflect consequential losses. Such losses as are pleaded are subsumed within the proved difference in land value. In addition, in my view, the loss actually suffered by Aldrie is reflected in that difference in value.

[82] The next question is whether there is any basis to reduce the amount that would otherwise be awarded to Aldrie, on the basis of its own failure to take reasonable care to look after its own interests. I apply the principles set out in Red Eagle, in that regard.³⁰

[83] Whatever was said by Mr Prout in response to Ms Laboyrie’s specific queries, she must bear a significant part of the blame for the predicament in which Aldrie finds itself.

[84] Ms Laboyrie did not walk over the property because she was not a farmer. While it is understandable that Ms Laboyrie did not do so (in light of her limited farming operational experience) it is surprising that she did not arrange for someone with that experience to do so, given the need to gain an appreciation of its economic viability by reference to the quality of pasture, effective grazing area and milking shed equipment.

[85] Ms Laboyrie did not prepare a budget for the farm operation before she committed Aldrie to buy. Nor did she engage an accountant to do so for her. Ms Laboyrie left her preferred financier, Rabobank to determine the amount it was prepared to offer. Understandably (and appropriately) Rabobank undertook that assessment by reference to the overall value of Aldrie’s assets, rather that the asserted productive capacity of the Kaukapakapa farm.

[86] Mr Prout was faced with a purchaser whom he knew owned other dairy farms and had contacted him with a view to acquiring a dairy farm for a sum in the vicinity of $2.5 million. I have no doubt that Ms Laboyrie would have presented herself to Mr Prout as an experienced businesswoman. Although issues now raised by Ms Laboyrie appear to have been discussed during the course of telephone conversations or on her one visit to the farm on 5 September 2013, she was prepared to indicate orally an offer to buy the property for $2.5 million on the basis of information she had obtained on those occasions. The absence of further due diligence must have surprised Mr Prout. However, had he not misled Ms Laboyrie his approach to the negotiations could not be criticised.

[87] I discount the compensation of $500,000 that I would otherwise have awarded because, to a large extent, Ms Laboyrie was the author of Aldrie’s financial misfortune. I have never seen a case in which property of the value of this dairy farm ($2.9 million) has been acquired solely on the basis of a few (albeit significant) questions put to a vendor, following a series of telephone calls and one (relatively brief) attendance at the property, without any further inquiry by the purchase into the economic viability of the farm for its intended purposes.

[88] The principle of caveat emptor must still have some part to play in the exercise of the discretion to award compensation under s 43 of the Fair Trading Act. When the sale and purchase of land is involved, added protection is available to a purchaser after any oral agreement has been reached through the ability to insist on further terms before any agreement is enforceable. Such a contract must be in writing.³¹That is to ensure all important terms are recorded in the agreement.

[89] In my view, while the purpose of s 9 of the Fair Trading Act is, as the Supreme Court made clear in Red Eagle, to dissuade persons acting in trade from making misleading or deceptive statements that a reasonable person in the position of the representee could act upon to his or her detriment, it is equally important in commerce for purchasers of significant assets for large sums of money to be dissuaded from entering into contracts without undertaking due diligence, or making

it clear to the vendor that reliance was being placed on his or her answers to specific questions.

[90] In my view, Ms Laboyrie’s conduct justifies a reduction in the compensation claimable of 50%. If anything, that reduction is generous to Aldrie. I consider that an appropriate reduction could properly be assessed in the range between 50% and

[91] On the Fair Trading Act claim, I would award damages in favour of Aldrie in the sum of $250,000. There is no reason why interest should not be awarded on that sum at Judicature Act rates from the date on which the proceeding was issued.

[92] Judgment will be entered against Clover Bay (which owned the land and farming equipment) and Mr Prout personally, as the person who made the statements. As the false representations do not affect the values set out in the agreement in respect of assets purchased from the Trust, there is no reason to enter judgment against it.

(1) If a party to a contract has been induced to enter into it by a misrepresentation, whether innocent or fraudulent, made to him by or on behalf of another party to that contract—

(a) he shall be entitled to damages from that other party in the same manner and to the same extent as if the representation were a term of the contract that has been broken; and

(b) he shall not, in the case of a fraudulent misrepresentation, or of an innocent misrepresentation made negligently, be entitled to damages from that other party for deceit or negligence in respect of that misrepresentation.

(2) Notwithstanding anything in section 56 or section 60(2) of the Sale of Goods Act 1908, but subject to section 5 of this Act, subsection (1) shall apply to contracts for the sale of goods.

[94] The 1979 Act preceded the more general provisions contained in s 9 of the Fair Trading Act 1986. Liability for each runs concurrently.³²Section 6 was designed to enable a representee to sue if induced to enter into a contract by a false representation made by the other party. Unlike the pre-existing legal situation, where claims in tort could be brought for negligent misrepresentation or deceit, the misrepresentation was to be treated as a term of the contract. Thus, damages could

[95] Section 9 of the Fair Trading Act applies to any misleading statements that are made in a commercial setting: “in trade”. To establish liability, it does not matter whether the parties entered into contractual relations in consequence. That is why a different approach to damages is required if s 6 of the 1979 Act is breached. In that circumstance, the representation becomes an unwritten term of the contract; and all measures of calculation of loss are available to respond to the true loss suffered.³³

[96] The question of “inducement” is one that differentiates the s 9 liability from s 6 of the Contractual Remedies Act. The Court of Appeal has held that the question whether a purchaser was induced to enter into a contract by a misrepresentation is not one to be addressed solely by reference to the subjective view of the purchaser. Rather, consideration must also be given to whether the representing party intended reliance on those statements to entice a purchaser to enter into a contract. The need for that additional requirement was explained by Hardie Boys J in Savill v NZI

At general law, inducement involves purpose as well as result. Not only must the representation have caused the representee to enter into the contract but also the representor must, either in fact or in contemplation of law have intended to cause him to do so: see for example 31 Halsbury’s Laws of England (4th ed) paras 1069 and 1071 and Cheshire Fifoot & Furmston (11th ed, 1986) at p 262. In Ware v Johnson [1983] NZHC 155; [1984] 2 NZLR 518, 538, Prichard J, referring to fraudulent misrepresentation, expressed the view that the Act has done away with this requirement; whilst in Shotover Mining Ltd v Brownlie

³²_{Gloken Holdings Ltd v The CDE Co Ltd [1997] NZHC 457; (1997) 6 NZBLC
102,272 (HC).}

³³Generally, see Newmans Tours Ltd v Ranier Investments Ltd [1992] 2 NZLR 68 (HC) at 86–88 (Fisher J).

³⁴Savill v NZI Finance Ltd [1990] 3 NZLR 135 (CA) at 145. Casey J joined in the reasons given by Hardie Boys J. Nothing in the separate judgment of Bisson J is in conflict with these observations. In Bonz Group Pty Ltd v Cooke [1996] NZCA 301; (1996) 5 NZBLC 104,188 (CA) at 104,193 it was said that this was an element of actual or constructive intention to induce a party to enter into a contract.

(Invercargill, CP 96/86, 30 September 1987) McGechan J left the point open. I cannot think that the legislature intended such a change, which would make the test of inducement a purely subjective one, judged from the point of view of the representee. Not only is there no spelling out of an intention of that kind; but the familiar verb “induce”, which has always had its two aspects, has been retained. Therefore I consider that it remains the law that it is not enough for a party to say that a representation caused him to act in a particular way. He must also show either that the representor intended him to do so, or that he “wilfully used language calculated, or of a nature to induce a normal person in the circumstances of the case to act as the representee did”: I quote from Spencer Bower & Turner at p 132. . . .

[97] In Savill, the question was whether the appellants were induced to sign a guarantee by a misrepresentation made by the respondent’s solicitor that he was satisfied with a letter stating that a collateral transaction was unconditional. Hardie Boys J held that the solicitor could not have intended the appellants to act on that statement because:³⁵

. . . Mr Levin’s [the solicitor’s] drafting of the letter (if he did draft it) thus cannot be seen as more than an intimation as to what he would accept as confirmation for the purpose of advising his client, NZI. It did not absolve the borrower from the obligation to provide the confirmation. Mr Levin was not privy to arrangements between Chase and the Savills. Mr Savill was not entitled to rely upon him for protection under those arrangements. That was a matter for him and his solicitors. His approach to Mr Levin was to expedite NZI's payment of the funds, not to confirm his own arrangements with Chase. And so I see no ground for concluding that a reasonable person would have thought that Mr Levin meant him to execute the guarantee on the strength of what he said. . . .

[98] While I have found that Ms Laboyrie relied on the representations, I am not satisfied on a balance of probabilities that Mr Prout intended that she do so for the purpose of entering into a contract. I find that Mr Prout felt able to rely on memory and to provide broad answers to Ms Laboyrie because he expected her to make further inquiries before she decided to enter into a formal contract.³⁶As a former real estate agent, he would have been well aware that a contract for the sale and

³⁵Ibid, at 146. See also Burrows et al, Law of Contract in New Zealand (5^thed 2016, LexisNexis)

[99] I do not consider that the requisite intention on the part of Mr Prout was present to justify a finding of inducement under the Contractual Remedies Act. For that reason, I dismiss Aldrie’s claims under that Act.

[100] Clover Bay “and/or” the Trust allege that, in or around September 2013, a verbal agreement was entered into between Mr Prout and Ms Laboyrie, to the effect that calves “owned by the defendants” would remain on the farm from the date of settlement to and including the period expiring on 31 May 2014. The costs of feeding and grazing the calves were to be borne by Aldrie.

[101] It is common ground that Mr Prout and Ms Laboyrie agreed that the calves could remain on the farm until 31 May 2014, when Mr Prout and his family were to vacate the homestead. This agreement was reached, according to Ms Laboyrie, when she visited the farm on 10 October 2013, after the agreement for sale and purchase had become unconditional. Ms Laboyrie accepted that the grass cover was adequate at that time for the calves to be grazed in that way. Some five days later, she asserted that there was insufficient grass and told Mr Prout to remove the calves.

[102] A text exchange occurred on 15 October 2013 to that effect. That was the day before settlement of the agreement for sale and purchase was to be completed. Ms Laboyrie wrote: “... I will post u a cheque tomoro for $5,000 deposit for tractor but due to shortage of grass could u please find grazing for yr calves”. Mr Prout responded: “Ok. Thanks Pauline”.

[103] Mr Prout’s evidence was that he was acknowledging the fact that the $5,000 deposit was to be paid but did not intend to agree to remove his calves from the land. However, viewed objectively, the exchange of emails must also be interpreted as an agreement to remove the calves. In that situation, I am not satisfied on a balance of probabilities that the oral agreement continued to exist. This aspect of the counterclaim must fail.

[104] A claim is made under cl 30.1 of the agreement for sale and purchase. That clause provides:

Waikato district including the obligation of the purchaser to return to the vendor at the end of the term the same number of cows, all in- calf and in good health.

[105] The agreement for sale and purchase was structured so that the lease of the cattle was, in effect, the consideration for Mr Prout having the right to occupy the homestead, and an attached self-contained flat, until 31 May 2014. Clause 29.1 of the agreement for sale and purchase provided that the only charge for the occupation of the property during that period was “payment of power and telephone expenses”.

[106] No cows were sold with the farm. It is unclear what entity actually owned the cows. The claim is pleaded as being brought on behalf of Clover Bay “and/or” the Trust.

(a) 167 cows were handed over to Aldrie on settlement of the purchase; (b) There were three culls from the herd;

[108] Mr Prout accepted in cross-examination that three of the cows had died. That left one cow unaccounted for.

[109] So far as the empty cows are concerned, Ms Laboyrie claimed that they were handed over in a condition that reduced the prospect of all becoming pregnant. There is no complaint made about the artificial insemination programme Ms Laboyrie undertook. There is a dispute about whether sufficient bulls, both as to quantity and quality, were provided for mating.

[110] A veterinarian, Dr O’Reilly, gave evidence that 10 out of 120 cows represented a reasonable tolerance for a herd of that size. Nevertheless, cl 30.1 required Aldrie to return “the same number of cows, all in-calf and in good health” on 31 May 2014.

[111] Although cl 30.1 contemplated that the parties would enter into a lease of the herd, no such lease was executed. Nor were 178 cows handed over, as required by cl 30.1. While it is clear that Aldrie was to be the lessee, the identity of the lessor cannot readily be determined. Judgment could only be entered against the true contracting party. In the absence of evidence that satisfies me that either Clover Bay or the Trust is entitled to claim contractually, I consider that this aspect of the counterclaim cannot succeed.

(a) Judgment is entered in favour of Aldrie against Clover Bay and Mr Prout (jointly and severally) in the sum of $250,000. Interest on that amount is ordered at the rate prescribed by the Judicature Act 1908 from the date of issue of the proceeding.

[113] Counsel advised me that there has been relevant pre-trial correspondence on the question of costs. For that reason, I reserved questions of costs. I direct:

(a) A joint memorandum shall be filed on or before 31 March 2016 setting out the respective positions of the parties in summary form.

(b) Unless the parties have been able to settle questions of costs before that time, the Registrar shall set the proceeding down for a case management telephone conference before me on the first available date after 8 April 2016. At that time, I will hear from counsel as to any further directions that may be required. That will include the question whether costs are to be resolved on the papers, or after a brief oral hearing.

[114] I conclude by expressing my regret for the unacceptable delay in delivery of this judgment. Although there are a number of good reasons why that has occurred, I am conscious that parties to particular litigation will always consider their dispute as requiring resolution before others. And, that is understandable.

High Court of New Zealand Decisions

Aldrie Holdings Limited v Clover Bay Park Limited [2016] NZHC 250 (24 February 2016)