Grenfell v Stockco Capital Limited - [2024] NZHC 1080

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-999

[2024] NZHC 1080

UNDER Part 19 of the High Court Rules 2016 and s 32 of the Receiverships Act 1993

IN THE MATTER

of the receivership of WAITONUI MILLTRUST AGRICULTURAL

HOLDINGS LIMITED PARTNERSHIP (in

receivership), WAITONUI MILLTRUST AGRICULTURAL HOLDINGS FARM MANAGEMENT LIMITED

PARTNERSHIP (in receivership), WAITONUI MILLTRUST

AGRICULTURAL HOLDINGS GENERAL

PARTNER LIMITED (in receivership) and WMAH FARM MANAGEMENT GENERAL PARTNER LIMITED (in

receivership)

BETWEEN

ANDREW JOHN GRENFELL and KARE

JOHNSTONE as receivers and managers of the foregoing entities

Applicants

AND

STOCKCO CAPITAL LIMITED

First respondent

AND

WMAH LP (SPV 3) LIMITED

Second respondent

Hearing: On the papers

Appearances:

L C Sizer and C S Morrison for applicants

Date of judgment:

3 May 2024

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 3 May 2024 at 3.30pm. Pursuant to Rule 11.5 of the High Court Rules.
………………………… Registrar/Deputy Registrar

GRENFELL v STOCKCO CAPITAL LIMITED [2024] NZHC 1080 [3 May 2024]

[1] As duty judge, I have without notice applications to commence proceedings by originating application, and then for orders under s 32 of the Receiverships Act 1993.

Background

[2] The applicants are bank-appointed receivers and managers of the Waitonui Group — operating large dairy farming enterprises in the central North and South Islands of New Zealand, grazing some 5,000 cattle on over 2,000 hectares of land — including Waitonui Milltrust Agricultural Holdings Farm Management Limited Partnership (in receivership) (Management LP) which leases land and livestock from the respondents. At the time of the receivers’ appointment on 15 April 2024, the Group owed the bank some $36.5 million.

[3] The leases risk the receivers’ personal liability,1 including a near $7 million balloon payment due 15 May 2024 under the livestock lease, if unable to abandon the land or livestock. Maintenance of the livestock, desirably on the land, is preferable. Proper attendance to animals’ welfare is a primary consideration.2 The purpose of receivers’ personal liability “is to ensure that a receiver does not obtain a benefit for the debtor company or the secured creditor without paying for it”.3 The receivers disavow any intention to use or benefit from the livestock or land, and the livestock lessor has released them from liability.

[4] Nonetheless, the receivers cannot practically account for and relocate (or abandon) the stock before the balloon payment or rental is due, and the release may not be good beyond its contractual confine. Except for the land lessor’s possible loss of rental (and that landlord is in any event wholly owned by Management LP, and negotiations are in train for a new lease), no-one appears adversely affected by excusing the receivers’ liability.

1 Receiverships Act 1993, s 32(5).
2 Animal Welfare Act 1999, ss 9–11.
3 Body Corporate 162791 v Gilbert [2015] NZCA 185, [2015] 3 NZLR 601 at [36]; Gilbert v Body Corporate 162791 [2016] NZSC 61, [2018] 1 NZLR 1 at [24].

Discussion

—without notice applications

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2024] NZHC 1080
Decision Date: 3 May 2024

CaseChat Overview and Summary

Grenfell v Stockco Capital Limited is a case involving bank-appointed receivers and managers of the Waitonui Group, who have applied to the High Court for permission to commence proceedings by originating application and for orders under section 32 of the Receiverships Act 1993. The applicants seek to avoid personal liability for leases and rentals due from the group to the respondents, Stockco Capital Limited and WMAH LP (SPV 3) Limited. The court was required to decide whether the applicants could commence the proceedings by originating application, and if so, whether the receivers should be excused from liability under section 132(5) of the Receiverships Act 1993.

The court found that the receivers could commence the proceedings by originating application as it was in the interests of justice to do so. The application arose under a specific statutory provision, the issue was clearly defined, and factual issues seemed unlikely to be in dispute. The court considered the originating application procedure to be appropriate for the case as it was not well suited to cases involving multiple parties or where there is a possibility of crossclaims or counterclaims. The court also found that it was in the interests of justice to excuse the receivers from liability under section 132(5), subject to leave being reserved to any person affected by such excusal to apply on notice for appropriate relief.

In conclusion, the court granted the receivers permission to commence their proceeding by originating application and ordered that they be excused from liability under section 132(5) of the Receiverships Act 1993. The court emphasised that the originating application procedure is not to be used as a short cut for urgent cases and is not appropriate where factual issues are in dispute. The court also noted that the “truncated procedure” is not to be used as a short cut for urgent cases and that the court will generally adopt a conservative approach to interlocutory applications in proceedings commenced by originating application.

Orders