RESORT PACIFICA LIMITED V BAY OF PLENTY RACING CLUB INCORPORATED HC TAU CIV-2007-470-304

RESORT PACIFICA LIMITED V BAY OF PLENTY RACING CLUB INCORPORATED HC TAU CIV-2007- 470-304 28 November 2007IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY CIV-2007-470-304BETWEEN RESORT PACIFICA LIMITED Appellant AND BAY OF PLENTY RACING CLUB INCORPORATED Respondent Hearing: 19 September 2007 Counsel: D G Chesterman for Appellant M H Hill for Respondent Judgment: 28 November 2007JUDGMENT OF BARAGWANATH JThis judgment was delivered by Justice Baragwanath on 28 November 2007 at 3.30 pm pursuant to Rule 540(4) of the High Court Rules Registrar/Deputy RegistrarDate: Solicitors: Duncan Cotterill, Wellington Cooney Lees Morgan, Tauranga Counsel: D G Chesterman, TaurangaIntroduction[1] Resort Pacifica Limited appeals against a decision of the District Court delivered by Judge Ingram finding that its director, Mr Cribb, had orally committed it unconditionally to sponsor a race meeting held by the Bay of Plenty Racing Club on 26 February 2005. The issue on appeal is whether on the whole of the evidence Resort Pacifica can overcome the powerful presumption that the Judge's strong credibility findings should stand.Context[2] The learned Judge accepted the evidence of Ms Barbour, the sponsorship and promotions executive at Thoroughbred Racing Action Consortium Ltd incorporating racing clubs in the Waikato and Bay of Plenty regions, which include the respondent for whom TRAC acted as agent. Ms Barbour, whose job was to sell sponsorship and organise promotions racing events, was paid on commission. She therefore possessed an incentive to view the contemplated contract by Resort Pacifica as firm. On the other side, Resort Pacifica, which in 2001 had bought a resort and golf course from the receiver of its former owner and taken title to it under the Unit Titles Act 1972, was in the process of converting the unit titles to individual freehold titles Mr Cribb was motivated to treat the transaction as unconfirmed unless the projected race day should conform with Resort Pacifica's marketing calendar. The judge did not accept the evidence of Mr Cribb on its behalf.Approach[3] Human memory does not operate like the playing of a recording device but in the case of perfectly honest people can be affected by many factors, which can include self-interest. William H.R. Rivers in "Instinct And The Unconscious: A Contribution To A Biological Theory Of The Psycho-Neuroses" (1920) said of rationalisation:This is a process by which the solution of a conflict is frequently attempted this process enters largely into the composition of anxiety.The phenomenon is familiar to anyone with experience of cases where a witness is asked to recount past events. King Henry V was aware of it:Old men forget; yet all shall be forgot, But he'll remember with advantages What feats he did that day. (Act 4 scene 3)[4] Where there is conflict of evidence the practice of judges of first instance, with the responsibility of resolving it, is to be cautious before accepting the assertion of any witness in the absence of support. But where as here there are pointers each way the judge must simply form a preference. [5] Appellate courts have even more difficulty in resolving factual differences. In Hutton v Palmer [1990] 2 NZLR 260 (CA) Somers J, delivering the judgment of the Court of Appeal, acknowledged at 268 that:An appeal such as the present is by way of rehearing and the Court has an obligation to come to its own conclusion.But he immediately added:Running across that principle is another, namely, that an appellate Court is under the disadvantage that it has not seen or heard the witnesses. In a case which depends on an opinion as to conflicting testimony an appellate Court will not interfere unless it can be shown that the trial Judge has failed to use or has palpably misused his advantage; it ought not to reverse the conclusions at which he has arrived merely from its own comparison and criticisms of the witnesses and its own view of the probabilities of the case Thus an appellate Court will interfere where the evidence accepted by the trial Judge is inconsistent with facts incontrovertibly established by other evidence or is patently improbable[6] It is helpful in this as in other cases of factual difference on appeal to examine the context within the perspective established by unchallenged evidence before moving to the area of dispute.Background facts[7] At the heart of the appellant's case lay the exercise of converting unmarketable unit trust shares in a development into saleable fee simple titles. In early 2004 Ms Barbour made an unsolicited approach to Mr Cribb for Resort Pacifica's sponsorship of a race meeting. [8] It is common ground that Mr Cribb told Ms Barbour that he was not then ready to proceed with sponsorship for reasons relating to the fact that titles had not been issued. Whereas sections could be sold following deposit of the plan upon the grant of resource consent, settlement could not take place until certificates of title were available. So when on 2 June 2004 Ms Barbour wrote to Mr Cribb with a specific marketing proposal related to regular race meetings Mr Cribb responded that because titles had not been issued he was still not ready to proceed with sponsorship. Ms Barbour was asked whether in June she knew about the significance of the issue of titles. She replied that she knew "it was too soon". Mr Cribb accepted that Ms Barbour was unlikely to have appreciated the distinction between getting a resource consent and the issue of titles. [9] On 28 September 2004 resource consent was granted under the Resource Management Act 1991 to a waste water scheme. That consent became operative on 19 October 2004 when the appeal period passed without objection. Local body approval certificates under ss 223 and 224 were issued the same day. Those events afford an evidential basis for a submission that circumstances had altered between June and November. But the titles were not in fact issued until 6 September 2005 and until that point transactions could only occur subject to the issue of title.The disputed evidence[10] Ms Barbour's evidence was that on her third approach to Mr Cribb in November 2004 he orally committed Resort Pacifica to the sponsorship package. In cross-examination Ms Barbour asserted that the commitment was in place prior to a dinner at Morton Estate held by Resort Pacifica in late 2004 to celebrate progresson its development. Mr Cribb gave evidence that the dinner was to celebrate the securing of the resource consents and that Ms Barbour's invitation did not signify Resort Pacifica's commitment to sponsorship of the February racing meeting. Ms Barbour by contrast asserted that Mr Cribb invited her to the dinner essentially because the project was ready for launch and that he introduced her to a number of people and each time told them about the sponsorship she had arranged for Resort Pacifica. She said that she took the uncompleted contract document to the dinner but that there was no convenient stage at which she could ask Mr Cribb to finalise it. Mr Cribb said that notwithstanding the resource consents, caveats in relation to two sections held up the grant of title to some 40 owners. While the land agent had marketed 74 of the 150 sections, which received publicity in a newspaper article on 29 January 2005, Mr Cribb denied that he was banking on a potential February release of the titles and accordingly that he would then be able to provide immediate title to purchasers so as to be motivated to commit Resort Pacifica to sponsor the February meeting. Ms Barbour however asserted that Resort Pacifica had been advertising the development at about the same time as the February race meeting. There was no documentary evidence on the point. [11] Ms Barbour said that at the Morton Estate dinner Mr Cribb invited her to communicate with his representative, Mr Brachlei, regarding the form of the advertising for the Tauranga Classic. Ms Barbour tried to obtain authority from Mr Brachlei to proceed with the advertising. Mr Brachlei told her that he was unable to obtain authority from Mr Cribb for that purpose. [12] In the event Ms Barbour simply proceeded without authority as to the precise form of advertising from either Mr Cribb or Mr Brachlei, conduct which she accepted was "rather presumptuous". [13] There is a conflict of evidence as to what occurred in November 2004. There is no doubt that on 11 November Ms Barbour wrote to Mr Cribb enclosing a marketing proposal for a Tauranga Classic Day on Saturday 26 February 2005 which was described as a feature day with the running of the Tauranga Classic, a listed race with a stake of $45,000 increased by $5,000 from the previous year. She included an "acceptance and confirmation form" recording investments of $15,000 plus GSTwhich she signed on behalf of TRAC Racing Tauranga and which provided for signature above the typed words "Mr Rocky Cribb on behalf of". [14] In January 2005 Mr Cribb's brother was diagnosed as terminally ill. In February he was admitted to hospital and his death occurred in March. That and the commitments of what was described as a $65 million project may well have distracted Mr Cribb who was unable to recall events noted in his diary from 11 January 2005. [15] Ms Barbour produced a series of diary entries typed in retrospective form from 14 November back to 25 February 2005. These notes were said to have been typed from a diary then in her possession which has since gone missing. I infer from her evidence that she had made no notes in the computer in respect of the antecedent period covering what on her evidence was the vital stage of an unconditional commitment to sponsorship made orally in about November that likewise she had no such note in her diary. Ms Hill submits that the reason is that the purpose of the diary was confined to noting appointments rather than recording other information, and that Ms Barbour departed from that pattern only after the dispute arose. [16] Mr Cribb also made diary notes. The first, of 11 January 2005, reads "Phone Naomi still no progress re titles". A note of 27 January reads "Naomi re MKT/fee simple" suggests an actual or intended conversation with Ms Barbour on the topic of marketing and the issue of titles. At the foot of the diary page for 15 February appears Mr Cribb's entry:Note! Naomi re cancelation [sic] of MKT no titles have yet been issued.[17] The Judge asked Mr Cribb what that note meant. He was unable to advise whether it recorded a telephone conversation, a face to face discussion or a letter or how he came to write it. [18] Ms Barbour's notes start from 25 February "Note to ring". Although her employer had asked her to arrange for Mr Cribb to sign the offer and acceptance form that never occurred.[19] The race meeting took place on 26 February. Ms Barbour asserted and Mr Cribb denied that she had sent 20 tickets to Resort Pacifica. No one from Resort Pacifica attended. [20] On 28 February the chief executive of the club, Mr Watters, wrote to Mr Cribb thanking him and Resort Pacifica for their generous support at the event on 26 February and recording disappointment that he or representatives of Resort Pacifica had been unable to be present. The same day an invoice was sent by the racing club to Resort Pacifica for $16,875 ($15,000 plus GST). [21] There is a note dated 2 March in Mr Cribb's diary stating:Naomi/Tauranga Racing Club file note! Advise Naomi cannot consider branding/MKT [?], titles progress still no conclusion or confirmation dates for issue. She still requested verbal approval to continue![22] A note in Mr Cribb's diary of 21 April states:Tauranga Racing Club Naomi – cancelled because titles still not been issued.[23] An entry for 31 May states:Tauranga Racing Club Naomi/conclude matters cannot accept liability as never agreed to! Always subject to title. However it compromise/forward marketing.[24] From 25 February 2005 Ms Barbour's diary records a series of notes to ring Mr Cribb. On 2 June 2005 an employee of Resort Pacifica wrote to the racing club referring to its invoice and stating that Mr Cribb did not authorise the sponsorship and so payment of the invoice amount could not be made. It was suggested that the club contact him by telephone. [25] Ms Barbour's diary for 22 August records an intention to organise a lunch the next day to sort out the problem of the outstanding account.[26] A note of 23 August records a conversation with Mr Cribb:He said that the Tauranga business community is small and that he would put together a 12 month programme where everyone is a winner. Wants to sponsor more races and pay off the owed amount.[27] A memorandum faxed from Mr Cribb to Ms Barbour on 12 September 2005 stated:As per our conversation earlier today could we please look at an agreement over the next 12 months for sponsorship of a race at each race meeting available, and also the payment of the February 26 2005 race meeting sponsorship amount of $14,000 ($15,000 less $1,000 for hospitality) as from the sponsorship race meetings during this period. Naomi, I would appreciate you coming back to me with a proposal along these lines. Kind regards Rocky Cribb Owner of Resort Pacifica Golf Club[28] It was submitted for the racing club that this document is retrospective confirmation of an earlier commitment; for Resort Pacifica that it is consistent with its position. [29] Ms Barbour's diary records for 26 September two meetings with Mr Cribb, the first was a meeting at 8.30 am where Ms Barbour said she gave him three options to choose from and it looked like he wanted option two which entailed sponsoring at four of the remaining Tauranga race meetings and paying off the $14,000 in four instalments with the racing sponsorship. A message timed at 4.30 pm that day records Mr Cribb as stating titles had come through and he would look at Ms Barbour's proposals as soon as possible and have a think about it. [30] Both diaries record a meeting on 14 November. Mr Cribb's states "Naomi/racing club settlement goodwill gesture only". Ms Barbour's records:We talked about him wanting to be involved in the Jan 3 (2000 plus GST) and March 25 (5000 plus GST race meetings). He then wants us to recalculate the $14,000 amount and send an invoice for that total amount.He said that if Jim Watters wasn't happy with that then he could ring him and talk to him about it. Also that the racing club didn't co-operate then they wouldn't be getting anything at all.[31] At a later meeting on 22 November 2005 Mr Cribb asserted that sponsorship was always conditional on the prior issue of titles. Ms Barbour said she had never heard of such conditions. [32] There was further evidence of correspondence following the event. Ms Barbour relied on a letter provided by Mr Cribb for auditors which Ms Hill submitted constituted a partial admission; Mr Chesterman that it was, as Mr Cribb asserted, no more than an exercise in "stringing along" Ms Barbour and therefore the influential members of the Racing Club until Resort Pacifica had sold its sections. But despite the admissibility in law of the letters written after the event, as is commonly the case I find them of no help in determining where in fact the truth lies.Appellant's submission[33] Resort Pacifica naturally place at the centre of their argument the facts and contentions: a) the letter of 11 November calls itself a "proposal" ("The committee sincerely hopes you will utilise this unique opportunity"); b) Mr Cribb never signed the contract document proffered by Ms Barbour on 11 November signed by her with provision for signature by Mr Cribb; c) there was a common expectation that any acceptance must be in writing; d) neither Mr Cribb nor Mr Brachlei authorised the form of advertising to appear in the race booklet;e) accordingly the Court should find that the offer was never accepted and that Resort Pacifica was never committed.The judgment[34] The actual issue for the learned Judge was whether the Racing Club had established commitment by Resort Pacifica. [35] At para [3] of the judgment he stated:The issue for determination in these proceedings is whether the defendant's contention [that there was never any sponsorship agreement] is correct.[36] So expressed the issue appears to reverse the onus of proof which the judgment expresses correctly two sentences later:In order for the plaintiff to succeed, I would need to be satisfied that there was a concluded agreement between the parties that the defendant accepted the proposal advanced by the Tauranga Racing Club for sponsorship, and that such agreement was not conditional upon the prior issue of Certificates of Title.He added:An oral acceptance of a written offer, if given, is just as binding as a written acceptance.Discussion[37] In the present class of alleged contract the statements in [36] are legally correct. But where one party, here the Racing Club, has advanced its proposal in a manner suggesting that acceptance would be in writing there is room for a factual submission that without writing the Court should not impute to the parties an intention to be bound. [38] There is clearly much to be said in favour of the Racing Club's submissions. The arguments included the fact that because Ms Barbour's unsolicited proposal was conveyed in writing to Resort Pacifica that affords good reason to suggest a commonexpectation that it would be accepted in writing. On that proposition was mounted the argument that as in Verissimo v Walker [2006] 1 NZLR 760 (CA) the Court should decline to compute to the parties an intention to be bound. That was however a case concerning the sale of land in respect of which the Contracts Enforcement Act 1956 (now Part 2 Subpart 2 Property Law Act 2007) adds legal weight to an argument that writing was to be expected. Other authorities requiring writing have involved contracts of more complexity than this. [39] Of even more force is the odd fact that Ms Barbour admitted taking the unsigned form to the dinner and, without either getting it signed or getting authority as to the form of the advertising that was to appear on the race card, took it on herself to settle it. Had I been sitting at first instance I would have thought hard before accepting her evidence that there was nevertheless unconditional commitment by Mr Cribb. [40] There are however pointers the other way, including the subsequent correspondence [41] Sitting on appeal the issue is not which version I would find preferable, which is the test in the District Court. Here the starting point is Judge Ingram's powerful credibility findings in favour of Ms Barbour. As Hutton v Palmer shows, the evidentiary burden on an appellant who challenges findings of the tribunal of fact at first instance is a heavy one which is difficult to sustain. In Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] 3 LRC 374 the High Court of Australia stated at [98]:The Court of Appeal's view is a view which the trier of fact might have taken. However, the question is whether the Court of Appeal was right to reverse the different view which the trial judge took. The reasoning of the Court of Appealdoes not demonstrate that the trial judge's view, which was, in significant part, demeanour based, was either glaringly improbable or contrary to compelling influences.[42] If what Ms Barbour says as to Mr Cribb's oral acceptance of the written offer were otherwise acceptable, the fact that she then carried it out by completing the race card in what was presumably a conventional manner (the race card was not produced) is not enough to require rejection of her evidence. While on an objectiveappraisal of the evidence there would be little difficulty in rationalising a judgment in favour of Resort Pacifica, I find it impossible to say that the contrary result found by the learned Judge is glaringly improbable.Result[43] That being the case the law requires that the appeal must be dismissed. [44] Costs on a 2B basis to the respondent will follow the event. ___________________________ W D Baragwanath J