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

[5]                 I am satisfied, as to the former application, r 19.5(2) of the High Court Rules 2016 expressly permits the application to be made without serving notice of the application and, as to the latter application, requiring the receivers to proceed on notice would cause them undue delay or prejudice. I therefore determine the applications can properly be dealt with without notice.4

—originating application procedure

[6]The Court of Appeal recently has observed:5

Proceedings in the High Court are normally commenced by filing a statement of claim. However, consistent with the overall objective of the Rules to secure the just, speedy and inexpensive determination of any proceeding or interlocutory application, rr 19.2 to 19.4 provide that various proceedings must be commenced by originating application. These include applications made pursuant to various specified enactments. … However, r 19.5 provides that the court may permit any proceeding not mentioned in rr 19.2 to 19.4 to be commenced by originating application if it is in the interests of justice to do so.

A proceeding brought under s 32 of the Receiverships Act is not one of those mentioned in rr 19.2 to 19.4. But, under r 19.5(1), it may be commenced by originating application “if the interests of justice permit it”.6

[7]                 The originating application procedure is “generally used for cases where it is not necessary to have full pleadings and interlocutory steps such as discovery for the proper determination of the issues”.7 Such a case:8

… tends to be an application under a specific statutory provision, where the issue that arises can be clearly defined, and the issues confined. The procedure is not well suited to the determination of substantive rights involving the application of common law doctrines as distinct from statutory tests. It is not

4      High Court Rules 2016, r 7.46.

5      Siemer v Attorney-General [2022] NZCA 200, (2022) 26 PRNZ 113 at [2], citing the High Court Rules, r 1.2.

6      Public Trust v Kain [2018] NZHC 1547 at [21].

7      Fisk v [E] Ltd [2014] NZHC 2797 at [18] citing Groves v TSSN Ltd (in Liq) [2012] NZHC 2402, [2013] 1 NZLR 111 at [25], and Hong Kong and Shanghai Banking Corporation v Erceg (2010) 20 PRNZ 652 (HC) at [26]. See also Public Trust v Kain, above n 6, at [35].

8      Hong Kong and Shanghai Banking Corporation v Erceg, above n 7, at [25].

well suited to cases involving multiple parties, and cases where there is a possibility of crossclaims or counterclaims.

“[A]ppropriate case management directions” can address such interlocutory issues as may arise,9 but the originating application procedure “is nevertheless, in relation to contested proceedings not listed in r 19.2, an exceptional procedure”.10 The “truncated procedure” is not to be used “as a short cut for urgent cases”,11 and “[i]t is not appropriate where factual issues are in dispute”.12 Finally, “the Court will generally adopt a conservative approach” to interlocutory applications in proceedings commenced by originating application.13

[8] The receivers’ substantive application thus precisely reflects the type of case for which the originating application procedure is apt. It arises under a specific statutory provision. The issue of the receivers’ liability appears clearly defined and confined. Factual issues seem unlikely to be in dispute. Except for the receivers’ application for permission to commence proceedings by originating application, no other interlocutory applications are apparent. There is precedent.14 The exception is justified. Urgency is not determinative. For the reasons I have explained at [3]–[4] above, it then is in the interests of justice to permit the receivers to commence their proceeding by originating application.

—orders under s 32

[9] Given my explanation at [3]–[4] above, I also consider I should excuse the receivers from liability under s 132(5),15 subject to leave being reserved to any person affected by such excusal to apply on notice for appropriate relief.

9      Fisk v [E] Ltd, above n 7, at [19].

10     Hong Kong v Shanghai Banking Corporation v Erceg, above n 7, at [26].

11 At [26].

12     Jones v O’Keeffe [2019] NZCA 222, (2019) 24 PRNZ 529 at [52].

13     Public Trust v Kain, above n 6, at [35].

14     Re Gower [2020] NZHC 355 at [13]–[16]; Re Eagle [2016] NZHC 10 at [7]; Re Top Retail Ltd (in rec) [2017] NZHC 2238; Re Gower [2023] NZHC 982 at [23].

15     Receiverships Act, s 132(7).

Result

[10]             I permit the receivers to commence their proceeding by originating application, and otherwise order in terms of subparas 1(a)–(e) of the receivers’ originating application dated 1 May 2024.

—Jagose J

Solicitors:

Buddle Findlay, Auckland