King v PFL Finance Limited - [2012] NZCA 385

IN THE COURT OF APPEAL OF NEW ZEALAND

CA270/2012
[2012] NZCA 385

BETWEEN THOMAS FREDERICK MAZLIN KING AND JUDITH RUTH KING AS PARTNERS OF THE T F M AND J R KING PARTNERSHIP
First Appellants

AND HAVELOCK FARMS LIMITED AS TRUSTEE OF THE FOREBANK FARM TRUST
Second Appellant

AND PFL FINANCE LIMITED
First Respondent

AND CRAIG BEECROFT
Second Respondent

Hearing: 25 July 2012

Court: Stevens, Rodney Hansen and Simon France JJ

Counsel: B O'Callahan and A J Woodhouse for Appellants
A E Hansen for Respondents

Judgment: 28 August 2012 at 3.00 pm

JUDGMENT OF THE COURT

AThe applications to adduce fresh evidence are allowed in part, as described in [16] of the judgment.
BThe appeal is dismissed and the interim orders made in the High Court are discharged.
CNo order as to costs.

____________________________________________________________________

REASONS OF THE COURT

(Given by Simon France J)

Introduction

This is an appeal from a decision of Keane J declining the appellants interim relief from the exercise of mortgagee sale powers by the first respondent, PFL Finance Ltd (PFL).[1] The second respondent is a receiver appointed by PFL.

Background events

[1] King v PFL Finance Ltd [2012] NZHC 882.

The property in question is a farm block of just under 650 hectares which has been in Mr King’s family since 1873. At the time when the financing arrangement that gives rise to these proceedings was put in place, the farm was owned by the second appellant, Havelock Farms Ltd, a family controlled company. Mr and Mrs King (the first appellants) farmed the property under a leasing arrangement.
PFL’s involvement came about in mid-2011 when it provided funds to allow the Kings to settle a dispute they had with the ASB bank. ASB had been the lender on a separate failed farming venture in which the Kings were involved, and the family farm was exposed as a consequence of the failure.
To enable settlement, PFL advanced $3.385 million on an interest only basis. That amount included three months of capitalised interest payments. The lending was secured by a first mortgage over the farm (Havelock Farm Ltd therefore being the mortgagor) and a general security over plant and livestock. Mr and Mrs King also provided personal guarantees. The date of advance was agreed to be 15 July 2011, so the first interest payment was due four months later on 15 November 2011.
It seems that there had been a concentration of effort on the failed venture, and as a consequence the family farm was in need of some maintenance. In particular, fertiliser and early season supplements were required. Further, the pattern of calving, and then returning the cows to milking duties, was later than usual. Although the farm had about 320 milking cows, that number was well down in November 2011, and full milk production would not be achieved until mid to late February 2012. The borrowings of July 2011 had all been fully utilised in settling the ASB claim, and accordingly the farm operation continued…

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: [2012] NZCA 385
Decision Date: 28 August 2012

CaseChat Overview and Summary

The Court of Appeal of New Zealand heard an appeal from Thomas Frederick Mazlin King and Judith Ruth King, as partners of the T F M and J R King Partnership, against PFL Finance Limited and Craig Beecroft, a receiver appointed by PFL. The appeal concerned the denial of interim relief by the High Court to prevent the mortgagee sale powers being exercised by PFL over a farm block owned by Havelock Farms Limited, of which the appellants were the guarantors. The court was required to decide whether the appellants had established a serious question to be tried, warranting interim relief. The Court of Appeal found that the appellants had not demonstrated a plausible case on the key factual issues, and therefore dismissed the appeal and discharged the interim orders. The Court of Appeal held that the appellants' evidence regarding the alleged waiver of interest payments and their lack of knowledge of the Property Law Act Notice was implausible, and that the appellants had failed to establish a basis for the granting of interim relief. The court concluded that damages were an adequate remedy and that there was no proper basis to prevent the respondents from exercising their powers under the contract. The appeal was dismissed, and the interim orders made in the High Court were discharged. No order was made as to costs.

Orders