GLENN WILLIAM SCHAEFFER v JAMES JOSEPH MURREN [2020] NZSC 98

GLENN WILLIAM SCHAEFFER v JAMES JOSEPH MURREN [2020] NZSC 98 [22 September 2020]IN THE SUPREME COURT OF NEW ZEALANDI TE KŌTI MANA NUISC 50/2020[2020] NZSC 98BETWEEN GLENN WILLIAM SCHAEFFERApplicantAND JAMES JOSEPH MURREN ASTRUSTEE OF THE JAMES J MURRENSPENDTHRIFT TRUST AND DANIELLEERespondentsCourt: Glazebrook, O'Regan and Williams JJCounsel: G D Pearson and M E Byczkow for ApplicantA J Horne and A E Simkiss for RespondentsJudgment: 22 September 2020JUDGMENT OF THE COURTA The application for leave to appeal is dismissed.B The applicant must pay the respondents costs of $2,500.____________________________________________________________________REASONS[1] The applicant, Mr Schaeffer, seeks leave to appeal against a decision of theCourt of Appeal1 dismissing his appeal against a decision of the High Court.2[2] Mr Schaeffer and the respondents, Mr Murren and Mr Lee, were residents ofNevada in the United States. Mr Schaeffer acquired an 80 per cent interest in avineyard in Nelson, and invited the respondents (along with others) to invest in the1 Schaeffer v Murren [2020] NZCA 224 (French, Cooper and Clifford JJ) [CA judgment].2 Murren v Schaeffer [2018] NZHC 3176 (Collins J) [HC judgment].vineyard through a Nevada limited partnership. Mr Murren invested more thanUSD 1.6 million and Mr Lee more than USD 700,000. The terms of the limitedpartnership were recorded in two agreements, in 2002 and 2006. The vineyardbusiness failed and the respondents lost all of their investment. It transpired thatMr Schaeffer had not, in fact, transferred his original 80 per cent interest in thevineyard to the limited partnership, and had dealt with the assets intended to be ownedby the limited partnership as if they were his own.[3] The respondents commenced their proceedings against Mr Schaeffer in theHigh Court in 2015. Mr Schaeffer filed a protest to jurisdiction on the basis of anarbitration clause in the agreements. He also sought a dismissal or stay on the groundthat New Zealand was not the appropriate forum. Both the protest and dismissal orstay application failed in the High Court.3 There was no review or appeal of thatdecision. The respondents' claim was heard in 2018. Collins J found Mr Schaefferwas liable for negligent misstatement as well as under the Fair Trading Act 1986(New Zealand) and the Nevada Deceptive Trade Practices Act NRS § 598.4[4] The case proceeded on the basis of New Zealand law. The reason for this wasrecorded by Collins J as follows:5Except for the cause of action based on the Nevada Deceptive Trade PracticesAct, all the causes of action were based on New Zealand law, despite both the2002 and 2006 Agreements being governed by Nevada law. This was a resultof Mr Murren's and Mr Lee's election not to plead foreign law, in which casethe Court will apply domestic law irrespective of whether it would have beenthe applicable law had choice of law rules been engaged.[5] Mr Schaeffer appealed to the Court of Appeal. Although his writtensubmissions to that Court covered a number of proposed appeal grounds, the appealitself proceeded on the basis of only one ground of appeal, which had not beensignalled in the notice of appeal. That was that the High Court ought to have appliedNevada law and, because Nevada law had not been proved by the respondents, theHigh Court ought to have dismissed their claims.63 Murren v Schaeffer [2015] NZHC 2759 (Associate Judge Matthews).4 HC judgment, above n 2, at [236].5 At [96], n 6 (citation omitted).6 CA judgment, above n 1, at [7].[6] The Court of Appeal dismissed the appeal. The argument for Mr Schaeffer inthe Court of Appeal was said to be based on a number of passages from Dicey, Morrisand Collins on The Conflict of Laws.7 The Court of Appeal said it found no supportfor the proposition advanced by Mr Schaeffer in Dicey or any other relevant source.8[7] The applicant wishes to advance three grounds of appeal if leave is granted.These are:(a) whether the High Court was correct to apply New Zealand law tonegligent misstatements made and acted on in Nevada;(b) if the High Court erred in applying New Zealand law to the negligentmisstatement claim, whether that invalidates its findings on the FairTrading Act and Nevada Deceptive Trade Practices Act claims; and(c) whether the High Court was correct to apply the Fair Trading Act, giventhat s 3(1) of that Act limits its application to conduct outside NewZealand "to the extent that such conduct relates to the supply of goodsor services, or the granting of interests of land, within New Zealand".[8] The application for leave is advanced on the basis that the points at issue arematters of general and public importance and that, if leave is not granted, a substantialmiscarriage of justice will arise.9[9] The proposition that Mr Schaeffer wishes to advance on appeal, that the HighCourt was required to determine the legal question of which substantive law applied,even though neither party pleaded that Nevada law applied, appears to be inconsistent7 Lord Collins (ed) Dicey, Morris and Collins on The Conflict of Laws (15th ed, Sweet and Maxwell,London, 2012) [Dicey] at ch 9.8 CA judgment, above n 1, at [28].9 Senior Courts Act 2016, s 74(2)(a) and (b).with the commentary in Dicey. In Dicey, the relevant rule, r 25, is expressed asfollows:10(1) In any case to which foreign law applies, that law must be pleaded andproved as a fact to the satisfaction of the judge by expert evidence orsometimes by certain other means.(2) In the absence of satisfactory evidence of foreign law, the court willapply English (domestic) law to such a case.[10] As the Court of Appeal acknowledged, Dicey qualifies this rule with thefollowing observation:11But in recent years there have been increasing signs that [the default rule]cannot invariably follow, and in cases where it would be wholly artificial toapply rules of English law to an issue governed by foreign law, a court maysimply regard a party who has pleaded but who has failed to prove foreign lawwith sufficient specificity as will allow an English Court to simply apply it, ashaving failed to establish his case without regard to the correspondingprinciple of English domestic law.[11] This is not a case where that qualification applies.[12] The position outlined in Dicey is confirmed in the recent New Zealand text,The Conflict of Laws in New Zealand.12 It is also consistent with the position statedin other leading texts.13[13] In light of this, we do not consider that the argument that the applicant wishesto advance on appeal has sufficient chance of success to justify the cost and expenseof a further appeal.[14] Having reached that conclusion, we do not consider that either the second orthird grounds of appeal could assist the applicant. There may be room for argumentas to the soundness of the conclusion in relation to the application of the Fair Trading10 Dicey, above n 7, at [9R-001] (footnote omitted).11 At [9-002] (footnote omitted).12 Maria Hook and Jack Wass The Conflict of Laws in New Zealand (LexisNexis, Wellington, 2020)at [3.87].13 Paul Torremans (ed) Cheshire, North & Fawcett: Private International Law (15th ed, OxfordUniversity Press, Oxford, 2017) at 105–106; David McClean and Verónica Ruiz Abou-Nigm TheConflict of Laws (9th ed, Sweet & Maxwell , London, 2016) at 8; and Martin Davies, Andrew Belland Paul Le Gay Brereton Nygh's Conflict of Laws in Australia (8th ed, LexisNexis, Chatswood(NSW), 2010) at [17.4] and [17.37].Act, but the arguments that the applicant wishes to raise are fact-specific and do notgive rise to any significant point of law. Even if this Court were to disturb the findingsin relation to the Fair Trading Act and the Nevada Deceptive Trade Practices Act, thatwould not affect the outcome of the case, because the negligent misstatement finding,and the damages awarded in respect of it, would remain.[15] In these circumstances, we are not satisfied that it is in the interests of justiceto grant leave to appeal. We therefore dismiss the application for leave.[16] We award costs to the respondents of $2,500.Solicitors:Isherwood Le Gros, Nelson for ApplicantMinter Ellison Rudd Watts, Auckland for Respondents