Forecasts, hindsight and negligent misstatement - Green & McCahill Holdings Ltd v Williams [2025] NZHC 2581
Becroft J’s recent judgment in Green & McCahill Holdings Ltd v Williams is a long and complicated tale of how, as captured by the decision’s opening line, large scale property development is not for the faint hearted.
At its core, the case was about an overseas based landowner who allegedly suffered an enormous loss in a botched subdivision development, following an unfair and sham mortgagee sale of part of its land.
The case involved allegations of negligent misstatement, and misleading and deceptive conduct in breach of the Fair Trading Act.
Under the negligent misstatement cause of action, all of the alleged misstatements were properly characterised as opinions/predictions or forecasts as to future events. For the plaintiff to establish they were misstatements it had to be shown that they were not reasonably based at the time. However, all of the financial forecasts (as to the development's success) were reasonably based (and honestly held) and could not be shown to be misrepresentations. The Court confirmed that hindsight is irrelevant.
In this case the defendant did not owe a personal duty of care to the plaintiff in the circumstances of the complicated contractual arrangements between the parties. It was also unclear whether any misstatement was causative of loss. In any event, the proper measure of that loss was in dispute, given that the plaintiff had incorrectly claimed for contractual expectation loss rather than tort-based reliance loss.
Under the Fair Trading Act / misleading conduct cause of action, a similar conclusion was reached. None of the defendant’s conduct, properly characterised, was misleading or deceptive; and if it had been it was not causative of loss.
The Court also noted that:
The parties were highly educated, commercially astute and sophisticated, who utilised highly complex contractual and corporate structures to manage their affairs and demarcate risk and liability.
The plaintiff was well and independently advised throughout the whole development by an “armada” of legal and financial advisers.
The parties made shrewd, calculated and careful risk assessments, electing to proceed knowing full well that no forecasts could be guaranteed, and that mortgaging their land came with risk that their expected payments would rank behind the priorities given to mortgagees and lenders.
So, although the development did not play out as legitimately and reasonably anticipated, that could not result in liability in negligent misstatement or be successfully construed as misleading and deceptive conduct.
As none of these claims succeeded, the case presents a useful example of how representations will not be negligent if they are based on reasonable opinions and assessments. It also underscores the importance of seeking financial or legal advice before acting on any representation.
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