BERGMAN v BERGMAN [2015] NZCA 278

BERGMAN v BERGMAN [2015] NZCA 278 [30 June 2015]IN THE COURT OF APPEAL OF NEW ZEALANDCA204/2014[2015] NZCA 278BETWEEN CHRISTIAAN DIEDRICK BERGMANAppellantAND ARTHUR THEODORUS BERGMANRespondentHearing: 21 May 2015Court: Ellen France P, Courtney and Kós JJCounsel: A H Waalkens QC and R C Mark for AppellantJ D McBride and D R James for RespondentJudgment: 30 June 2015 at 10 amJUDGMENT OF THE COURTA The appeal is dismissed.B The appellant must pay the respondent costs for a standard appeal on a band A basis plus usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Ellen France P)Table of ContentsPara NoIntroductionBackgroundArty acknowledges a debt to ChrisWPL and NKL enter into a joint ventureChris acknowledges Arty has repaid the debtBurden of proofWas the Judge right to decline declaratory relief?A credibility assessmentReliance on contemporaneous documentsEvidence of repayment?Result[1][4][7][8][10][15][19][25][27][48][61]Introduction[1] Christiaan (Chris) Bergman, the appellant, appeals against the decision of Ellis J to decline to grant a declaration that $132,161.65 of a debt owed to Chris by his brother Arthur (Arty) Bergman, the respondent, has not been repaid.1 The debt arose in the context of ongoing business arrangements amongst the Bergman family and is due for repayment in 2019. Two years after the debt was formally documented, Chris signed a letter acknowledging Arty had repaid the debt. Chris subsequently disputed the debt had been repaid and brought a proceeding in the High Court seeking a declaration to that effect.[2] At trial, attention focused on Chris's acknowledgement that the debt had beenrepaid. Chris said that he signed this acknowledgement under a misapprehension. Ellis J rejected this explanation as not credible. The Judge, however, accepted that if there was compelling evidence the debt had not been repaid that might require her toreconsider the weight that otherwise attached to Chris's acknowledgement. Decidingthis issue necessitated consideration of evidence about whether funds for repayment came from a joint venture arrangement between the parties. After considering thisevidence, Ellis J concluded that it was not "sufficiently compelling to tip the evidentiary balance in Chris's favour and (thus) to satisfy [her] that repayment hasnot been made".2 On this basis, declaratory relief was declined.1 Bergman v Bergman [2014] NZHC 555 [the High Court decision].2 At [51] (emphasis in original).[3] On appeal, counsel focused on two matters. First, whether the Judge had erred in her approach to the burden of proof and, second, whether Ellis J was correct in her assessment of the facts. We deal with these issues after first setting out the background.Background[4] We largely adopt the description of the background events in the High Court judgment.3 As Ellis J explained, Chris and Arty along with three other brothers, Johannes/John, Benedict/Ben and Dirk/Derek, have been involved for a period of time in the business of selective rimu logging. This involves locating blocks of land on which rimu stand, negotiating with the owners for access and cutting permission, identifying which trees can be felled, obtaining logging permits, cutting down the trees, and milling, drying and selling the wood.[5] The Bergman brothers' rimu businesses have primarily been carried outthrough entities owned and controlled by them. These entities include two companies of particular significance in these proceedings, namely:4(a) Northland Kauri Ltd (NKL), which was incorporated in 2002 and was originally owned and controlled equally by John, Ben and Arty but which, since August 2011, has been solely owned and controlled by Arty;(b) Wild Life Properties Ltd (WLP) which was incorporated in 2001 and has always been equally owned and controlled by Chris and Dirk.[6] We need to highlight three events in the narrative.Arty acknowledges a debt to Chris[7] The first of these events is that, in April 2009, Arty signed a formal acknowledgement of a debt to Chris reflecting negotiations over the redistribution of shares in a family company called Mahoe Farm Kerikeri 1978 Ltd. The acknowledgement of debt records that Arty owes Chris "$159,549.65 which amount was advanced to me by [Chris] on 15 April 2009". The debt was repayable3 At [1]–[14].4 At [2] (footnotes omitted).interest-free and upon demand. The acknowledgement of debt recorded that demand may not be made before 15 April 2019. The acknowledgement further recorded thatChris "may demand payment in timber in part or full satisfaction of the Debt, of atype and at a value (GST inclusive) to be agreed between us, and failing agreement,then payment will be made in money by cleared funds".WPL and NKL enter into a joint venture[8] The second relevant event is that, at some point, the brothers entered into a joint venture arrangement to further their respective logging businesses. There is a dispute over the date at which the joint venture was formed and over which blocks of land formed part of the joint venture arrangements. The documentation of the arrangements is poor. The Judge recorded it was common ground that over theperiod from 2007 to 2010 the brothers' business affairs were "intertwined, regardlessof the duration and content of any formal joint venture between them".5 But, as Ellis J also said:6It was quite apparent from the evidence overall that their shared business endeavours were not only plagued with personal friction, but poorly recorded. There also appear to have been periodic attempts by some or all of the brothers to resolve historical differences between them and to formulate an agreed basis for moving forward. On occasion, attempts at mediating their disputes were made by others, including their sisters, spouses and friends.[9] The joint venture arrangement was, generally speaking, between WLP andNKL and operated under the name of "Bergman Brothers". However, John, Ben andArty agreed NKL would participate through a new company, Sustainable Harvesting Ltd. As Ellis J explained:7Because of differences that had arisen between the directors and shareholders of NKL about the way in which that company was being operated, John, Ben and Arty agreed that NKL would participate in the joint venture through a new company, Sustainable Harvesting Ltd (SHL). SHL was incorporated in May 2008 and its shareholders and directors were the same as the shareholders and directors of NKL, namely John, Ben and Arty.5 At [24].6 At [24].7 At [44], n 15.Chris acknowledges Arty has repaid the debt[10] The third event of significance in this summary is the acknowledgement by Chris that Arty had repaid the debt. Chris signed the acknowledgement on 13 September 2011, the day after NKL's accountants, BDO Bay of Islands Ltd(BDO), belatedly responded to an inquiry from Whitelaw Weber Ltd, WPL'saccountants, about documentation relating to the $159,549 share debt.[11] The Judge summarised the accountants' exchange as follows:8(a) on 12 September 2011, NKL's accountants (BDO) responded toWhitelaw Weber's letter of October 2010. They said:We refer to your letter to Northland Kauri dated 27 October2010 Arty has recently met with us and has asked whether you have a copy of the agreement dated 26 April 2009 referred to in your letter? If so can you please forward a copy to us.Furthermore do you hold any supporting documents, GST invoices or calculations relating to this amount? Was GST claimed on this amount by Wildlife Properties Ltd?(b) in December 2011, when NKL's financial statements for the yearending 31 March 2010 were finalised, NKL's accountants recorded abook entry sale of timber to WLP for $159,549.[12] The acknowledgement signed by Chris on 13 September 2011 was in the following terms:TO: ARTI [sic] BERGMANI refer to the acknowledgement of debt attached, dated the 26th April 2009.I acknowledge that I have received payment in full by way of Timber RightsAs per our letter to you dated 27th October 2010, I advise that in the financial year ended 31 March 2010 this debt has been recorded by way of Timber Rights Expenses Introduced into Wildlife Properties Limited of which I am a shareholder.No GST has been claimed as no GST invoice was supplied by Arti [sic].[13] As we have foreshadowed, Chris later disavowed the acknowledgement of repayment of the debt. His evidence was that he did so after he was asked to sign a8 At [38].document forgiving a debt on the basis it had already been discharged. He instructed his lawyer to write to Arty to identify the milling rights transferred in return for the forgiveness of debt. Arty's answers did not satisfy Chris. He filed a statement ofclaim dated 29 November 2012 seeking a declaration that the debt, although not yet due, was not paid. Chris accepted in his pleading that the debt had been repaid in part by the transfer by Arty of logging rights to two blocks at Ohura owned by Johanna and David Loft (the Loft blocks). These rights were said to be valued at $27,428. Chris maintains that the balance is unpaid.[14] Arty filed a statement of defence and counterclaim and then applied for summary judgment. Chris also applied for summary judgment but later abandonedthat application. Arty's application for summary judgment was unsuccessful.9Arty's defence was subsequently amended on two occasions. The claim for a declaration was then dealt with in the High Court.Burden of proof[15] We deal first with the appellant's submission the Judge erred in her approachto the burden of proof. The appellant said that, as for a debt recovery claim, the onus was on Arty to show that the debt had been repaid. Alternatively, the appellantcontended that the Judge's approach was unfair because the parties proceeded at trialon the basis that Arty had the burden and, accordingly, the evidence for the defendant was heard first.10[16] We agree with the submissions for Arty on this point. The usual rule that the plaintiff in a civil case must prove the elements of liability constituting the cause of action applies here. Chris had to show that the position is as he asserts it in order to obtain the relief he sought. Ellis J put it in this way:[19] The point that I think needs to be made in this respect is that this is not, and could not be (until 2019), a debt recovery claim. Were it such, then the initial burden would be upon Chris to establish the basis for the debt and that demand had been made and no payment subsequently made. But the9 Bergman v Bergman [2013] NZHC 910 [the summary judgment decision].10 A direction was made that Arty's evidence be heard first following a case management telephoneconference: Bergman v Bergman HC Whangarei CIV-2012-488-830, 29 May 2013 (Minute of Associate Judge R M Bell).burden of showing that the debt had (long since) been discharged would then be on Arty. By contrast, however, Chris seeks a declaration that a debt which is not yet due has not been repaid.[20] Whatever may be the difficulties in proving a negative, I consider that this is nonetheless the onus that Chris has assumed by bringing his claim in the present form and at the present time. I therefore proceed on the basis that it is not for Arty to establish that he has repaid the share debt but rather for Chris to satisfy me, on the balance of probabilities, that Arty has not repaid it.[17] As the case was argued, the issue was whether the acknowledgement the debt had been repaid meant what it said. Chris had to prove it did not if he wanted the relief he sought. A pre-trial direction as to the order of evidence cannot alter this evidential obligation.[18] We are satisfied that the process adopted has not had any unfair impact on Chris. When asked about the impact of the failure to advise the parties, the only possible prejudice Mr Waalkens QC on behalf of Chris could identify was that Chris would have called evidence from his accountant to explain how it was that the accounts treated the $159,549 as a benefit to WLP. This cannot be seen as aprejudice to Chris arising from the Judge's approach to the burden of proof.Regardless of where the burden lay, any explanation by the accountants for the inclusion of the sum of $159,549 as a benefit in WLP's accounts was always goingto be significant.Was the Judge right to decline declaratory relief?[19] At the hearing before us the central focus was on the factual position. The grounds of appeal to this Court included a challenge to the Judge's approach on thebasis that the documentary record should have been given primacy over issues ofcredibility and a challenge to the Judge's finding that Chris had not established thatthe debt had not been repaid. This aspect, along with the burden of proof, were the primary points advanced on the appeal. There was also a ground stating that Ellis Jwas wrong to decide that Arty's claimed repayment of the farm share debt did notamount to past consideration. This aspect received brief attention.[20] In his notice supporting the judgment on other grounds, Arty relied on his claim that the acknowledgement of repayment constituted a formal release of the debt. He also relied on s 92 of the Judicature Act 1908.11 These matters were also discussed, albeit briefly, in the written submissions for Arty but the principal issuesidentified related to the Judge's factual findings.[21] That, as we have indicated, appears to have been primarily the approach taken at trial. Ellis J said that her conclusions about the facts meant she did not need to address submissions advanced by counsel for Arty about the legal effect of an associated agreement between Chris and his brother, Derek, or, more importantly, as to whether the 13 September 2011 acknowledgement was binding as between Chris and Arty by reason of s 92 of the Judicature Act dealing with the effect of part payment of a debt. Ellis J did indicate she did not see much force in either of these two arguments.12[22] In the context of the summary judgment decision, the Associate Judge observed that parties can enter into an agreement that has the effect of discharging their existing arrangements, or they might make arrangements giving rise to a waiver of contractual rights or to an estoppel. We interpolate here that Arty's statement ofdefence and reply included a pleading that may be seen as raising estoppel although that does not appear to have been pursued. However, at the time Associate Judge Bell dealt with the summary judgment application, Arty was not aware of Chris'sacknowledgement of the repayment of the debt so the matter was dealt with on the basis of the other documents on which Arty relied to indicate he and Chris had reached a settlement arrangement. The Associate Judge noted there was "nothing certain, such as a written document signed by Chris".13 The 13 September 2011 acknowledgement was discovered after that judgment.[23] The focus on the factual aspects to date means that there has not been any great attention paid to the legal effect of the acknowledgement of debt. That could, of course, be significant. That said, we have decided that it would not be appropriate11 Section 92 provides a statutory exception to the common law rule that part payment of a debt cannot apply to satisfy the whole debt.12 The High Court decision, above n 1, at [52].13 The summary judgment decision, above n 9, at [36].for us at this late stage to determine that issue absent findings on this from the High Court or any detailed argument on the point. It is relevant in this respect that there is a level of artificiality about dealing with the matter by way of declaratory relief rather than by ordinary debt recovery procedures at the time the debt falls due. A later judgment of Ellis J dealing with a stay application recorded Chris has taken enforcement steps.14 Accordingly we focus, as did the Judge, on the facts. The effect of the factual findings in this judgment on other proceedings is a matter for consideration in those other proceedings.[24] Proceeding in this way, the appeal can be disposed of fairly shortly. We say that because, having reviewed the evidence, we see no basis for taking a different view of the facts from that of Ellis J.A credibility assessment[25] The first point we make is that the Judge's rejection of Chris's explanationreflects, in part, an assessment of his credibility. Ellis J acknowledged that there were limits in drawing conclusions on the basis of the way in which witnesses presented their evidence.15 The dangers of drawing too much from demeanour wereparticularly relevant in this case given that it is "[d]riven by a long-standing and deep-seated discord between all the witnesses".16 The "specific family dynamics(which were obvious during the trial) arising from the fact that Chris is the oldest ofthe eleven Bergman siblings, and Arty is (I think) the youngest" also reduced the Judge's ability to draw conclusions from demeanour.17[26] The Judge's rejection of Chris's explanation for signing theacknowledgement must nonetheless be seen as an assessment of credibility. That is a factor we should take into account in our review of the evidence.1814 Bergman v Bergman [2014] NZHC 1567 at [4].15 The High Court decision, above n 1, at [21].16 At [21].17 At [21].18 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [5].Reliance on contemporaneous documents[27] The second point is that the documents on which the Judge relied support her conclusion.[28] The initial document relevant for these purposes is dated 31 March 2010. It is an agreement between Chris and Derek as the owners of WLP. The preamble to the agreement records that the object of the agreement is:B. to formalise and summarise the outcome of many meetings that have taken place recently between the shareholders their aides and advisors to allay historic and current disagreements between the parties concerning the operation of the company. Furthermore it is the understanding of both parties that the purpose of this agreement is to conclude and finalise allissues historic and otherwise of the company up to and including the financial year 2010.[29] As a special condition, cl 3 of that agreement states:3.1 It is agreed that all company issues prior to 31st March 2010 have been amicably settled and that there shall be no further discussion or recourse relating to any issue covered by this document[30] Further, the agreement between Chris and Derek also states that it is agreed:Both parties agree to accept non payment of $159,000.00 of Rimu Permits introduced to Wildlife Properties by Chris Bergman in exchange for Derek Bergman accepting no repayment due to losses to Wildlife Properties relating to the Helicopter whilst in Wildlife Properties Books.[31] The Judge noted the submissions for Arty that the latter clause indicated the parties were agreeing that Chris would bring into WLP some $159,000 worth of logging rights Chris had received from Arty in payment of the share debt, and, in response, Derek would not require the repayment of any losses accruing to the company as a result of the purchase of a helicopter. Ellis J stated this interpretation is supported by a letter written on 27 October 2010 from Whitelaw Weber to BDO. Whitelaw Weber wrote:We refer to the agreement dated 26th April 2009 between Chris Bergman and Arti [sic] Bergman for the transfer/sale of shares in Mahoe Farm Ltd for Rimu Blocks to the value of $159,549.65.This is just to advise that we have been instructed to bring the above transaction into Wildlife Properties Ltd as at 31st March 2010.[32] Ellis J correctly stated that it could reasonably be assumed that the instruction referred to in the letter came from Chris.19 No one from Whitelaw Weber was called to explain the instruction.[33] As the Judge said, this agreement did not however resolve disputes for any length of time. That is clear from the next of the documents on which Ellis J relied.This is a document entitled "The Forgotten Truth". It is written by Chris and dated 3 August 2011. In that document Chris said:I sold 159,000 of my personal farm shares to Arty Bergman in exchange for some of the rimu cutting rights. These blocks returned me approximately $300,000 in timber revenue which has remained part of WLP.[34] The cost of the helicopter to WLP was apparently an ongoing source ofconcern for Derek. It was in relation to that that Chris said in "The Forgotten Truth":The money for the helicopter has come mainly from the Rimu logging rights I personally bought from Arty in exchange for my shares in Mahoe Farm [35] The Judge then referred to developments involving the other brothers. Ben and John were then co-owners of NKL together with Arty.[36] They had concerns about the way that NKL was operating and set in train what Arty called a "forensic audit" of NKL's affairs. In a document setting out the reasons for their concerns, they noted Arty's repayment of the $159,000 debt out of NKL's timber rights had not been reflected in his NKL Current Account for the yearending 31 March 2010. Ben and John stated:$159,000 traded to Chris Bergman for shares in the Mahoe farm in exchange for native timber product belonging to NK. Steven has the paper work for this. What has been done about it?[37] As Ellis J explained, the "Steven" referred to is NKL's accountant,Stephen Rundle. Mr Rundle was not well enough to attend the hearing in the High Court but filed an affidavit. The transcript records the affidavit was admitted by consent. Before us there was some dispute about whether or not the filing of theaffidavit occurred by consent. It is clear that Chris's counsel received notice in19 The High Court decision, above n 1, at [34].advance of the hearing of Mr Rundle's unavailability.20 In the normal course, if objection had been pursued, there would have been an application and a ruling from the Judge on the point. However, we cannot resolve this issue on the basis of the information before us.[38] Mr Rundle's affidavit confirmed that NKL's accounts were prepared on thebasis that repayment of the debt had been made. It also referred to the further correspondence between Whitelaw Weber and BDO about the issues which we havecited above and which culminated in $159,549 being included in WPL's accounts asa benefit.[39] The next relevant document is Chris's acknowledgement that the debt had been repaid. The background to the signing of this document is not entirely clear but there is evidence to support the proposition it occurred as part of attempts within the family to resolve ongoing disputes.[40] When asked in evidence in chief why he had signed the acknowledgement that the debt was repaid, Chris said this:Well, I was just led to believe that, you know, he paid me and I can't remember who told me, whether it was John, or someone, I just can't thinkwho told me but I was led to believe I'd been paid, you know, deep down I never really quite believed it but just to keep the peace, you know, that's, that's the thing, you know, I'm the oldest brother out of all these guys, I'vebrought them up because our father died when I was 17, and these guys were just, still at school, and you intend to trust the buggers.John wanted me, 'cos John, he was led to believe, you know, I'd been paidand he wanted it recognised because, you know, there was some, you know,like you've read what was happening in Northland Kauri and John is realconcerned and he wanted it recognised because there's obviously tax issues and, and even though deep down I just, I wasn't really totally happy, I signedit, I signed it, we all make mistakes, some people make [more] mistakes than others.20 Memorandum of defendant to seek waiver of attendance of the proposed witness Mr S A Rundle dated 21 November 2013.[41] In cross-examination, he added:Like I said, I got conned into believing I'd got paid and it just spread intoeverything after that. You know John wanted – recognised because of all the litigation and all the – well not litigation but, you know, what was happening in Northland Kauri and –I know, that's what I'm saying. The whole thing was a mistake and it waslike a disease that just spread into everything.[42] Similarly, Chris explained "The Forgotten Truth" document as an illustrationof what he called the "disease".[43] Chris and Arty's brother John gave evidence for Chris. John's evidence wasthat Arty put a document under his nose telling him that he had overpaid Chris forthe farm shares. John said he "just took his word for it" and he thought that if thatwere the case then this had to be recognised in the company's books. He said he never discussed getting Chris's agreement. Although Chris himself accepts thatrepayment of some $27,000 occurred via the Loft blocks, John said he did not know anything about the Loft blocks. Nor did he really know much about the joint venture.[44] Arty's response to the letter of 12 September 2012 from Chris's lawyersasking him to identify the milling rights transferred in repayment was to say that John had arranged the deal with Chris about the shares for the forestry blocks. In the affidavit applying for summary judgment he said that he gave John two laminatedcopies of a document entitled "Settlement of Chris's share adjustment" and John was "active" as an intermediary between Arty and Chris. Derek, who gave evidence for Arty, said he was made aware of "an understanding reached" with which he waswilling to go along as a co-director of WPL that the net profits of five blocks would be used to pay off Arty's farm share debt. We come back to the detail of "settlement" document shortly.[45] At trial, Arty said that he showed the laminated form to John and not to Chrisand that the whole family "wanted it sorted". He ultimately accepted that Chris did not come back to him and say he had agreed with the proposal set out in thelaminated document. That acknowledgement provides some support for Chris'sevidence but it would seem surprising, given the two were at loggerheads, for Chris to sign the acknowledgement without some explanation.[46] As Ellis J said in rejecting Chris's evidence he was mistaken or not thinkingstraight:21If there had just been one such document, read and signed in haste, I might be differently inclined. But there was a series of them, written for different audiences and different purposes. He is an intelligent, experienced businessman. I recognise that it may merely have suited Chris's otherinterests (namely his dealings with Derek) to assert that repayment had been made, and that documents such as "The Forgotten Truth" must be viewed inthat context. But I consider that his repetition of that statement, his instructions to his accountants and his signing a formal acknowledgement to that effect are acts that are inexplicable unless there was some foundation in reality for them.We agree.[47] We turn to address the evidence about repayment. This requires some attention to the evidence about the joint venture.Evidence of repayment?[48] The Judge recorded the parties' agreement that, generally speaking, the terms of the joint venture were correctly set out in an undated and handwritten document inArty's hand entitled "Deal with Chris on Rimu" which says:1. Both put effort into sourcing blocks2. Arty responsible for - Forest Assessment (volume)- Permits- ALP (tree selection)- GPS and mapping for cutters3. WLP responsible for cross-cutting.the above to balance equally – no charge4. Milling to be charged by WLP or logs split and we will mill our own.21 The High Court decision, above n 1, at [40].[49] The dispute between the parties is focused on whether the Maxwell, Black and Maori blocks were part of the joint venture and when that joint venture wasformed. In addition, the parties obviously dispute whether NKL's share of the timberrights was retained by Chris/WLP as repayment for the share debt.[50] The Judge accurately summarised Chris's position, which was that theMaxwell, Black and Maori blocks were sourced and harvested by WLP prior to the commencement of the joint venture and did not form part of it. In support of the appeal, Mr Waalkens first emphasised evidence that these blocks could not have been used as a basis for repayment because the blocks were not part of the joint venture: the operator was WLP not NKL; Sustainable Harvest Ltd, the NKL vehicle, was not incorporated until May 2008; and because harvesting had taken place by the end of 2007, that is, prior to the commencement of the joint venture.[51] Secondly, Mr Waalkens submitted that the two key documents relied on by Arty, the document of 28 July 2008 which Arty describes as the laminated form("Settlement of Chris's Share adjustment") and a document entitled "Forestry Rights held by each party" do not, in fact, support Arty's claim. It is also submitted that theJudge did not deal with the criticisms of these two documents and failed to draw the inevitable conclusion that Chris could not have been paid in the way suggested.[52] Arty's position is not easy to pin down. We say that because it has variedsomewhat over time. But, in essence, he says that the joint venture started earlier than Chris would have it. Arty states that it started in approximately July of 2007 and Chris says it was May 2008. Further, although Arty accepts that some blocks were signed up prior to the formation of the joint venture, Arty also says he provided active services towards harvest benefits of at least some of the disputed blocks, particularly the Maxwell, Black and Maori blocks. His case is, essentially, that he provided value by way of services even on these blocks and, as part of a "wash-up"settlement that value was accepted by Chris as payment of the shares.[53] If Arty is right about the date of the joint venture and his contribution to these blocks, the evidence Chris relies on that they were harvested by the end of 2007 takes on less force. There would be some value in Arty's contribution and that mightconceivably later be brought into account in the parties' settlement arrangements. There is some documentary evidence to support Arty's claim that the joint venturestarted earlier.[54] We consider there was a basis in the evidence for the Judge's view that the group of blocks in the joint venture "may well have contained blocks that hadbeen sourced by NKL and WLP separately and prior to the commencement of the joint venture".22 Further, as the Judge says:23 there does appear to have been a combined effort involved in bringingsome or all of those blocks to harvest. There are also apparentlycontemporaneous documents which suggest that Arty's understanding, atleast, was that the timber rights in relation to the Loft, Maxwell, Black and the Maori blocks were in some way going to be used to pay off his farm share debt.[55] The Judge then dealt with the question Mr Waalkens raises about how these rights, assuming they existed, can form part of the basis of repayment given that the documents relied on by Arty pre-date the acknowledgement by him of his debt. Of these matters, the Judge said this:[50] I accept that the documents relied on by Arty, and the harvesting dates for the relevant blocks, predate the formalisation of the farm share debt in April 2009. Although Mr Mark submitted that this timing engaged the rule that past consideration is not good consideration, I do not think that is of any particular relevance here. The joint venture was wound up in March 2010, when NKL sold its share in the joint venture to Mr George Houry. And it was at the end of the same month that Chris is first recorded as acknowledging that repayment had been made, in his agreement with Derek (above). It seems quite possible that it was in the ten or so months between the formalisation of the share debt and the cessation of the joint venture that some form of final division and reconciliation between the parties (probably via intermediaries) took place. And the existence of some form of agreement or understanding after the formalisation of the farm share debt isalso consistent with Chris's own acceptance that the harvest rights to theLoft blocks were transferred in partial repayment of that debt.[56] We agree. We now briefly address the two documents the focus of Mr Waalkens' argument.22 At [49].23 At [49] (footnote omitted).[57] The contents of the laminated form, "Settlement of Chris's share adjustment"are summarised by Associate Judge Bell in this way:24It sets out volumes of timber harvested from five named blocks – Maori Blocks, Maxwell, Black, Loft-Joanna and Loft-David. The recovery rate from the total volume is given as 57 per cent, said to amount to 665 cubic metres sawn. On a sale price average of $2,000 per cubic metre, the harvest is said to have earned a gross yield of $1,330,000. From that, there are deductions for costs (crosscut and milling, helicopter and landowner) at the rate of $1,400.00 per cubic metre, giving a total profit of $399,000. That is divided in half to give a half share of $199,500.[58] Mr Waalkens' submission about this document is that on this basis Chris would effectively be paying himself. This comes back to Chris's claim that theseinterests are not owned by Arty but by Chris/WLP. However, as Mr McBridesubmitted, although Arty's debt is personal, if NKL has been transacting businesswith WPL and conveying value it is possible to see the parties agreeing to treat thecompany dealings as part of their arrangements. Again, Arty's case is that he hascontributed value via his services. The document also has to be viewed in light of the difficulties in working out what the profits were let alone their source given the absence of proper documentation of these matters.[59] The second document is headed "Forestry Rights held by each party". It lists the "Rimu Blocks available to Bergman Brothers". Mr Waalkens submitted Arty hasscored an own goal because he has written by each of the Maxwell, Black and Maoriblocks "WLP" not "NKL". This is said to make it clear Arty had no interest in theseblocks and/or they were not part of the joint venture. However, Arty's case is thatwhilst he may not have sourced these blocks, he contributed to their value. As Arty explained in cross-examination, the notations: represent [WLP] and [NKL] sourcing, making the contact originally, and from – they were all part of the joint venture. [NKL] had some input, [WLP] had some input.[60] When all of these matters are taken into account, we agree with the Judge'sconclusion that while the joint venture evidence is probably not sufficiently clear to satisfy a court that repayment of the farm share debt has been made, it is not sufficiently compelling to tip the balance the other way. It is relevant in this respect24 The summary judgment decision, above n 9, at [20].to keep in mind the extent to which the parties' affairs were intertwined and, as well,poorly documented. As Ellis J suggested, this case is one of the sort that Lord Brandon had in mind when he said:25 the Judge is not bound always to make a finding one way or the otherwith regard to the facts averred by the parties. He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden. No Judge likes to decide cases on burden of proof if he can legitimately avoid having to do so. There are cases, however, in which, owing to the unsatisfactory state of the evidence or otherwise, deciding on the burden of proof is the only just course for him to take.Result[61] For these reasons, the appeal is dismissed. The parties accepted that costs should follow the event. The appellant must pay the respondent costs for a standard appeal on a band A basis together with usual disbursements.Solicitors:Palmer Macauley, Kerikeri for Respondent25 The High Court decision, above n 1, at [18]; Rhesa Shipping Co SA v Edmunds [1985] 1 WLR 948 (HL) at 955–956.