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The recent Court of Appeal case of Kakara Estate Ltd v Savvy Vineyards 3552 Ltd [2013] NZCA 101 provides a useful reminder that an assignment and a novation of an agreement are different. When an agreement is assigned, the assignor remains a party to the agreement. If the agreement is novated, a new agreement is created between the assignee and the continuing party, and the "assignor" is released. In Kakara the practical consequence of the agreement being assigned rather than novated was that the continuing party was entitled to terminate that agreement on the grounds of the liquidation of the assignor, even though the assignee remained solvent and was continuing to perform the original obligations of the assignor under the agreement. This case involved an agreement for management of a vineyard and the purchase of grapes. The agreement was originally between The Vines Development Management Company Limited (the Vines) and Goldridge Estate Limited (Goldridge). The Vines owned the vineyard, and under the agreement Goldridge agreed to manage and buy the grapes grown at that vineyard. The Vines sold the vineyard to Kakara Estate Limited (Kakara), and the agreement was novated from the Vines to Kakara.
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