Bacon Holdings Ltd v Bally McCahill Ltd
[2018] NZHC 2507
•25 September 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-2102
[2018] NZHC 2507
BETWEEN BACON HOLDINGS LIMITED
Applicant
AND
BALLY MCCAHILL LIMITED
Respondent
Hearing: 24 September 2018 Appearances:
M J Fisher for the Applicant
T M Molloy for the Respondent
Judgment:
25 September 2018
JUDGMENT OF PALMER J
This judgment was delivered by me on 25 September 2018 at 3:00 p.m. pursuant to r 11.5 of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Counsel/Solicitors:
M J Fisher, Barrister, Auckland Claymore Partners Ltd, Auckland T M Molloy, Barrister, Auckland Snedden & Associates, Auckland
BACON HOLDINGS LTD v BALLY MCCAHILL LTD [2018] NZHC 2507 [25 September 2018]
Summary
[1] Bacon Holdings Ltd (Bacon Holdings) applies for an interim interim injunction against Bally McCahill Ltd (Bally McCahill), until determination of its application for an interim injunction. Bacon Holdings wants orders allowing its managing director, Mr Kevin Morris, to access Bally McCahill’s adjoining dairy farm to dispose of effluent and irrigate waste water. I order Bally McCahill not to prevent Bacon Holdings’ and Mr Morris’s access to the dairy farm for that purpose. And it must do what it legally can to require its dairy farm tenants, Bresa Ltd (Bresa), not to prevent access, provided advance notice is given of what will be done, for how long and in relation to which paddocks.
What happened?
Leases and sub-leases
[2] Bacon Holdings operates a piggery on land on Ostrich Farm Road, Pukekohe. Bacon Holdings says it leases the land from Bally McCahill and, in December 2009, orally, it exercised its option to extend the lease for 15 years. Bacon Holdings has brought proceedings against Bally McCahill seeking a declaration to that effect. Bally McCahill opposes that and counterclaims for cancellation of what it says is now a monthly tenancy and for possession of the land. There are timetabling orders in place but not yet a date for the substantive hearing.
[3] In cl 13 of the 2009 deed of lease, Bacon Holdings agreed to cooperate and liaise with the then lessees of the adjoining dairy farm about its disposal of effluent and irrigation of waste water from the piggery onto the dairy farm paddocks:
The Tenant [Bacon Holdings] acknowledges the Landlord’s (sic) [Bally McCahill] has an existing Deed of Lease with Mt View Farms Ltd as Tenant of the adjoining dairy farm. The Tenant [Bacon Holdings] agrees that:
(i)The Tenant will co-operate and liaise with the management and staff (as appropriate) of the said Mt View Farms Ltd in respect of matters relating to the disposal of effluent on to the adjoining Dairy farm; and
(ii)The Irrigation of waste water from the pig farming operations onto the adjoining Dairy farm shall continue without hindrance although in consultation with both parties; […]
[4] There is a resource consent for the discharge of effluent and air contaminants and an Environmental Management Plan for odour regarding the piggery. Mr Morris’s evidence is the irrigation programme was based on the programme employed by Bally McCahill when it operated the piggery.1 The dairy farmers would note the rotation of the dairy herd by reference to specified paddocks and, based on that, Mr Morris would assess the condition of the available paddocks and form a view of an area’s capacity to receive and benefit from irrigation.
[5] Since mid-2017, Bally McCahill has leased its adjoining dairy farm to Otereti Ltd, which subleases it to Bresa Ltd, operated by Ms Roslyn and Mr Brendon Austen. That lease agreement has not yet been disclosed. But I would be surprised if there is no term in it relating to the effluent discharge and waste water irrigation of the dairy farm by the piggery, or no agreement in any form between Bally McCahill and the lessee or sublessee about discharge and/or irrigation. For the first year of Bresa’s sublease, according to Mr Morris, the irrigation programme continued to function cooperatively between him and Bresa.2 Although they did not note down their herd rotation for Bacon Holdings, as previous operators of the dairy farm had done, Mr Morris observed it and disposed of effluent as usual.
Dispute
[6] Around May 2018, relationships between Mr Morris and Bresa deteriorated, as they apparently had between Mr Morris and at least one previous lessee of the dairy farm. On 30 August 2018, Bresa asked Mr Morris to change the irrigation programme. On 31 August 2018, Bresa issued Mr Morris with a trespass notice. On 1 September 2018, Ms Austen sent Mr Morris an email, saying:
(a)it was important for lines of communication between Bacon Holdings and Bresa to remain open to facilitate the application of effluent and meet their health and safety obligations;
1 Affidavit of Kevin Morris of 19 September 2018 [Morris affidavit] at [11].
2 Morris affidavit at [12].
(b)Bresa had asked for a text message when Mr Morris entered their leased premises together with details as to what he intends to do and where;
(c)where irrigation could and could not occur in terms of the consent conditions; and
(d)the trespass notice was served because of Mr Morris’s failure to notify them by text as requested, failure to liaise with Bresa regarding irrigation and failure to manage the resource in an environmentally responsible manner, but Bresa was committed to engage with employees or contractors regarding effluent irrigation if they notify Bresa prior to entry and engage on the location of the irrigation.
[7] On 7 September 2018, Mr Morris emailed Bally McCahill saying he had rights under the lease to irrigate without hindrance, including the right to enter and remain on the dairy farm for that purpose. He asked Bally McCahill to get its tenants to cooperate with him, in compliance with the lease. Bally McCahill replied disputing Mr Morris’s assertion of Bacon Holdings’ rights. Bacon Holdings’ lawyers replied to that, threatening legal proceedings. Bally McCahill’s lawyers responded.
[8] Mr Morris’s evidence is that he is the only person with the experience, expertise and knowledge to decide on the management of Bacon Holdings’ effluent programme, to ensure compliance with the resource consent, the Environmental Management Plan and the Resource Management Act 1991 (RMA).3 There is no evidence to the contrary before me, and Bally McCahill did not challenge that.
[9] On 18 September 2018, according to Mr Morris, he sent a text message advising of his intention to go on the dairy farm. He was told he had been trespassed, he was not welcome and his employees/contractors were welcome but they had to provide a map numbering all irrigation hydrants and a text message on entering/exiting the farm with the intended location. The same exchange occurred on Wednesday 19 September 2018.
3 Morris affidavit at [26].
[10] Bacon Holdings now seeks an interim injunction against Bally McCahill to maintain Bacon Holdings’ ability to dispose of effluent and irrigate waste water. If it cannot do so, it says overflow from a pond on its property will cause environmental damage, breach Bacon Holdings’ consent under the RMA and potentially expose Bacon Holdings and Bally McCahill to criminal liability. Whether and when that would happen depends on the weather. As of yesterday morning, an overflow is possible in 10 to 14 days.
Law of interim interim and mandatory injunctions
[11] Rule 7.53 of the High Court Rules 2016 entitles a party to a proceeding to apply for an interlocutory injunction provided they file a signed undertaking to comply with any order for the payment of damages to compensate the other party for damage sustained by the injection. The court will examine whether there is a serious question to be tried, consider the balance of convenience on the parties and assess the overall justice of the position.4 It will pay particular attention to whether damages would be an adequate remedy.5
[12] An interim interim injunction is usually granted for the purpose of preserving the status quo pending a hearing on whether there should be an interim injunction, pending trial. An injunction usually restrains its subject from doing something. An application for an interim mandatory injunction, requiring a party to do something they would not otherwise do, does not usually accord with that purpose. But, as I said in Clode v Oliphant, the legal test is the same.6
Submissions
[13] At the call of this matter in the list there was substantial agreement between counsel on a timetable to the hearing of the application for the interim injunction on 28 November 2018. I make directions accordingly at the end of this judgment. They include provision for Bacon Holdings to consider whether it wishes to apply to join Bresa to the proceeding.
4 NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90, (2013) 13 TCLR 531 at [12].
5 Cabco Group Ltd v Bartlett (2009) 6 NZELR 500 (HC) at [30].
6 Clode v Oliphant [2018] NZHC 1442 at [21]–[23]; and see Pilkington v Fidelity Life Assurance Co Ltd HC Wellington CIV-2007-485-2270, 14 April 2010 at [18].
[14] Mr Fisher, for Bacon Holdings, submits there is a serious question to be tried. He submits Bacon Holdings has the right to dispose of the effluent and irrigate the waste water and Bally McCahill has an obligation under the lease to procure that under cl 13 and an obligation to mediate in good faith under cl 5 of the lease. He submits the balance of convenience favours an interim interim injunction until the hearing on 28 November 2018 that restrains Bally McCahill from hindering Bacon Holdings accessing and installing and operating equipment on the dairy farm for the disposal of effluent and irrigation of waste water. At the hearing, he also sought an additional order that Bally McCahill procure its tenants of the dairy farm not to do the same.
[15] Mr Molloy, for Bally McCahill, opposes interim interim orders. He submits Bresa, not Bally McCahill, is the proper respondent. He submits Bresa is the lawful tenant of the adjoining land and has exclusive legal possession and control of it and the right to exclude third parties. He says access is a matter for Bacon Holdings to negotiate with Bresa. He submits there is no problem with an order Bally McCahill not hinder access, and Bally McCahill has not ever hindered, prevented, or interfered with access to the land, nor authorised or permitted Bresa to exclude Mr Morris. But he says Bally McCahill has no way of compelling Bresa to allow access to the land. Bally McCahill has no interest in there being a breach of Bacon Holdings’ resource consent given its own potential liability. But it considers the conditions Bresa wishes to put on Mr Morris’s access to the property are reasonable.
Should there be an interim interim injunction?
[16] There is some force to Bacon Holdings’ submission that cl 13 of the deed of lease imposes implied obligations on Bally McCahill in relation to effluent and irrigation. There may be equal or greater force on Bally McCahill’s side, but I cannot easily assess that at this stage of the proceeding. Bacon Holdings may also have an action under s 12 of the Contract and Commercial Law Act 2017 if the lease to Bresa confers a benefit on Bacon Holdings. But I cannot assess that as the terms of the lease are not available. Overall, I consider there is a serious question to be tried in the application for the interim injunction and in the substantive proceeding.
[17] On Bally McCahill’s submissions, there is no prejudice to it in granting the orders sought restraining Bally McCahill itself from hindering Bacon Holdings accessing and installing and operating irrigation equipment on the dairy farm for the purposes of effluent disposal and irrigation of waste water. Indeed, Bally McCahill does not really oppose that. I grant those orders. But it is not clear that will be effective in preserving the status quo until the hearing of the application for the interim injunction on 28 November 2018. The more difficult question is whether there should be interim interim orders requiring Bally McCahill to do what it can, lawfully, to procure Bresa to do the same. Bresa itself is not, yet, a party to the proceeding so cannot be enjoined directly.
[18] Interim mandatory orders are “rare indeed” in the words of a former Chief Justice.7 But I consider they are justified in these circumstances for two reasons. First, I accept the consequences of there being no interim interim injunction are significant in that they could include the relevant pool at the piggery overflowing, causing environmental damage and exposing both of the current parties to potential criminal liability. Damages would not be an adequate remedy for that. The interests of both parties to the proceeding, and the balance of convenience, favours a practical solution being put in place to prevent that, pending the hearing of the interim injunction in nine weeks’ time.
[19] Second, on the evidence available to me, I consider a practical solution must involve Mr Morris, himself, being able to access the land. There is no information available to me supporting the proposition Bacon Holdings can effectively operate the irrigation without that. But Mr Morris must only do so on a reasonable basis. That includes him providing advance notice to Bresa of when he proposes to access the land, what will be done, for how long and in relation to which paddocks. And I note Bally McCahill is only required to do what it can do lawfully. I am no more specific than that because I do not know the terms of its lease of the dairy farm.
[20] This arrangement may not be as effective as an arrangement directly binding Bresa, from whom I have not heard. But, on the information currently available to
7 Soft-Tech International Pty Ltd v Ball (1990) 3 PRNZ 683 (HC) at 684.
me, I consider such a practical arrangement would be in the overall interests of justice, until the determination of the application for the interim injunction.
Result
[21] I order, until determination by the High Court of Bacon Holdings’ application for an interim injunction, Bally McCahill Ltd must not, and must do what it legally can to require its dairy farm tenants not to:
(a)hinder or prevent Bacon Holdings Ltd, or its agents including Mr Kevin Morris, from accessing and installing and operating plant and equipment on Bally McCahill Ltd’s dairy farm;
(b)on the condition that is done for purposes relating to the disposal of effluent and irrigation of waste water in accordance with Bacon Holdings Ltd’s rights and obligations under its lease, resource consents and Environmental Management Plan; and
(c)on the condition Bacon Holdings or its agents, including Mr Kevin Morris, provide notice to Bresa at least one hour in advance of when it or they propose to access the land, for how long, and of what will be done and in relation to which paddocks.
[22] I reserve leave for either of the parties, or Bresa, to apply for variations to these orders with three working days’ notice. Because of the mixed nature of the result, costs will lie where they fall. I also make the following timetabling directions:
(a)by 5.00 pm Thursday 4 October 2018, the respondent is to file and serve its affidavits;
(b)by 5.00 pm Monday 15 October 2018, the applicant will file and serve any affidavits in reply and any application and supporting documents applying to join other parties to the proceeding;
(c)in the week of 22 October 2018, the matter will be called in the duty list for any further timetabling orders required in relation to any application concerning other parties;
(d)there will be a one and a quarter hour hearing of the application for an interim injunction at 11.45 am, Wednesday 28 November 2018.
Palmer J
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