Vining Realty Group Ltd v D S and J W Moorhouse

• Jurisdiction: New Zealand
• Judge: William Young P
• Judgment Date: 29 March 2010
• Neutral Citation: [2010] NZCA 104
• Docket Number: CA438/2008 CA448/2008 CA215/2009 CA214/2009
• Court: Court of Appeal
• Date: 29 March 2010

BETWEEN

Vining Realty Group Limited

Appellant

and

D S and J W Moorhouse

First Respondents

and

Gascoigne Wicks

Second Respondent

and

Marlborough District Council

Third Respondent

and

Altimarloch Joint Venture Limited

Fourth Respondent

AND BETWEEN

Marlborough District Council

Appellant

and

Altimarloch Joint Venture Limited

First Respondent

and

D S and J W Moorhouse

Second Respondents

and

Vining Realty Group Limited

Third Respondent

and

Gascoigne Wicks

Fourth Respondent

AND BETWEEN

Gascoigne Wicks

Appellant

and

D S and J W Moorhouse

First Respondents

and

Vining Realty Group Limited

Second Respondent

and

Altimarloch Joint Venture Limited

Third Respondent

and

Marlborough District Council

Fourth Respondent

[2010] NZCA 104

Court:

William Young P, Hammond and Robertson JJ

CA438/2008

CA213/2009

CA448/2008

CA215/2009

CA214/2009

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeals against findings of liability and negligence of both the appellants and respondents in relation to misrepresentations pertaining to water permits in a sale and purchase agreement — whether agents had made representations which induced Altimarloch Joint Venture Ltd (“AJV”) to enter into the agreement — whether AJV suffered a loss — whether the Council owed a duty of care in its preparation of the LIM report.

Counsel:

M R Ring QC and A B Darroch for Vining Realty Group Limited

T C Weston QC for Mr and Mrs Moorhouse

D J Goddard QC and M J Radich for Marlborough District Council

M Casey QC and R M Dunningham for Altimarloch Joint Venture Limited

F B Barton and M B Couling for Gascoigne Wicks

• A The appeal of the MDC is allowed to the extent that the judgment against it in favour of the Moorhouses is reduced to $62,500.

• B The appeal by Vining is allowed to the extent that the apportionment of liability between it and Gascoigne Wicks is altered from 80:20 to 60:40.

• C The orders for costs in the High Court are varied to reflect differences in the effective proportions of the ultimate liability to AJVL which are to be borne by Vining, Gascoigne Wicks and the MDC.

• D The appeals are otherwise dismissed.

• E In this court there is no award of costs either way in respect of the MDC (which has been partly but not completely successful).

• F Vining and Gascoigne Wicks are to pay to AJVL costs and disbursements for a complex appeal on a band B basis and usual disbursements (apportioned as to 60% to Vining and 40% to Gascoigne Wicks).

• G Vining is to pay the Moorhouses their costs of and relating to the appeal (including disbursements) as fixed on an actual solicitor and client basis to be agreed between the parties and in default of agreement fixed by the Registrar.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by William Young P)

Table of Contents

	Para No
Introduction	[1]
How the problem arose	[10]
The mistaken belief of the Vining staff that the original water
permits were still available	[10]
Misrepresentations made by Vining agents as to the water permits	[18]
The failure by Gascoigne Wicks to make appropriate inquiries
as to the available water entitlements	[19]
The terms of the agreement	[21]
The approval of the agreement by the solicitors	[26]
Due diligence	[29]
What happened on settlement	[34]
Missed warning signals	[36]
The liability of the Moorhouses to AJVL	[37]
Overview	[37]
Did the agents of the Moorhouses misrepresent the
position as to the water entitlements?	[39]
Was AJVL induced to enter the contract as a result?	[45]
The quantum of damages	[54]
Contributory negligence	[64]
The liability of the MDC to AJVL	[68]
Overview	[68]
Was the information held by the MDC as to the water permits
subject to s 44A of LGOIMA?	[72]
Does the MDC have immunity from suit under's 41 of LGOIMA?	[79]
Did the MDC owe a duty of care in relation to the LIM?	[92]
Did AJVL suffer any loss and if so what was the quantum?	[98]
Contribution and / or apportionment between the Moorhouses
and the MDC	[114]
Overview	[114]
Section 17 of the Law Reform Act 1936	[118]
The 50:50 apportionment	[123]
Apportionment Vining / Gascoigne Wicks	[126]
Costs	[130]
The orders	[134]

Introduction

1 David and Gillian Moorhouse owned “Altimarloch”, a farm property in the Awatere Valley, Marlborough. They held three resource consents entitling them to take class A, B and C water. We will refer to these resource consents as water permits and the underling rights as entitlements. Although not strictly running with the land, these entitlements were able to be transferred. The class A entitlements (amounting to 1,500 cubic metres per day) were able to be drawn directly from the Altimarloch stream. They were far more significant than the class B and C entitlements, which permitted the taking of water for storage purposes only.

2 The Moorhouses subdivided the property and, in January 2001, sold part to McNaught and Walker Limited (MWL) for development as a vineyard and olive grove. Pursuant to this transaction, the Moorhouses transferred to MWL all their class B entitlements and half of their class A entitlements. This transfer meant that their class A entitlements were reduced to 750 cubic metres of water a day.

3 Pursuant to an agreement for sale and purchase of 20 February 2004, the Moorhouses sold the balance of the property to Altimarloch Joint Venture Ltd (AJVL), a company associated with Mr Warren McNabb. Mr McNabb also had viticultural ambitions and was naturally interested in the availability of water. In circumstances which will be discussed in more detail later in this judgment, he was led to believe that the class A, B and C entitlements originally held by the Moorhouses would be transferred with the balance of the land.

4 Soon after settlement, Mr McNabb discovered that half of the class A and all of the B entitlements had been transferred to MWL. So AJVL was able to obtain only the balance of the class A entitlements (ie the right to take 750 cubic metres a day) and the class C entitlements.

5 The upshot was a claim for damages by AJVL against the Moorhouses premised on the contention that they, by their real estate agent, Vining Realty Ltd (Vining), and by their solicitors, Gascoigne Wicks, had represented to Mr McNabb and AJVL that the original water permits were available (and as a corollary would be transferred with the land). As well, AJVL sued the Marlborough District Council (MDC). This latter claim involved a number of causes of action which focused on alleged misrepresentation by the MDC in a Land Information Memorandum (LIM) it provided as to the water permits.

6 In turn, the Moorhouses joined Vining and Gascoigne Wicks as third parties.

7 The case produced two judgments delivered by Wild J, the first on 3 July 2008 1 and the second on 23 March 2009. 2 In the result, he entered judgment as follows:

• (a) for AJVL under's 6 of the Contractual Remedies Act 1979 against the Moorhouses based on misrepresentations as to water permits made by their agents, Vining and Gascoigne Wicks;

• (b) for AJVL against the MDC in tort for negligent misrepresentation and breach of statutory duty in relation to the LIM;

• (c) for damages, as between AJVL and the Moorhouses of $1,055,907.16;

• (d) for damages, as between AJVL and the MDC, of $400,000;

• (e) for the Moorhouses against the MDC for $200,000 by way of contribution (representing half the common liability);

• (f) that Vining and Gascoigne Wicks indemnify the Moorhouses for the entire amount of the net judgment against them apportioned as to 80 per cent against Vining and 20 per cent against Gascoigne Wicks;

• (g) that the costs of AJVL on a 3B basis be paid by the Moorhouses and the MDC in the same proportions as their liability to AJVL and that Vining and Gascoigne Wicks indemnify the Moorhouses in relation to costs in the same proportions as earlier fixed, that is 80 per cent and 20 per cent respectively;

• (h) that Vining and Gascoigne Wicks meet the Moorhouses' costs on an indemnity basis.

8 Although Vining initially challenged the Judge's conclusion that the Moorhouses should be fully indemnified by Vining and Gascoigne Wicks, that argument, in the end, was not pressed. All other aspects of the Judge's findings, as just summarised, are in issue.

9 A number of procedural problems complicate our assessment of the appeals. These include the staged nature of the adjudicative process in the High Court, the lodging of appeals in relation to both judgments delivered by Wild J, changes of counsel for Vining and the MDC and, perhaps associated with this, some changes of (or developments in) position resulting in some arguments being advanced before us which were either not before the High Court or not signalled in timely notices of appeal. Further, there is room for debate as to the extent to which Vining and Gascoigne Wicks can challenge the judgment in favour of AJVL on the basis of arguments which might have been, but were not, the subject of appeal by the Moorhouses. All in all, there is considerable scope for disagreement as to whether all arguments which were put to us are legitimately on the table. Given our conclusions as to the substance of the disputed arguments and in an attempt to keep this judgment as simple as possible, we will address the merits of the contentions as advanced, at least where this is relevant to the ultimate outcome of the appeals.

How the problem arose

The mistaken belief of the Vining staff that the original water permits were still available

10 The Vining agents involved (Mr John Hoare and Ms Jackie Herkt) had previously been involved as agents for the Moorhouses on the sale to MWL. As we have noted, this sale encompassed half of the...