Lambert v Plateau Farms Limited (in rec) HC Rotorua CIV 2011-463-528

[2011] NZHC 1248

IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

CIV 2011-463-528

BETWEEN  ELIZABETH MARY LAMBERT Applicant

ANDPLATEAU FARMS LIMITED (IN RECEIVERSHIP)

First Respondent

ANDBJ GIBSON AND MP STIASSNY AS RECEIVERS AND MANAGERS OF PLATEAU FARMS LTD

Second Respondents

Hearing:         12 September 2011

Appearances: Applicant in person

R  B Stewart QC for respondent

Judgment:      12 September 2011

JUDGMENT OF ALLAN J

Solicitors/party:

Ms E M Lambert, 31A Bailey Street, Huntly

Minter Ellison Rudd Watts, Auckland  [email protected]

R B Stewart QC Auckland  [email protected]

ELIZABETH MARY LAMBERT V PLATEAU FARMS LIMITED (IN RECEIVERSHIP) HC ROT CIV 2011-

463-528 12 September 2011

[1]      On 1 September 2011, Ms Lambert filed in the Rotorua Registry of this Court an ex parte interlocutory application in which she sought orders directing the first and second respondents to desist from disturbing the peace, and from disturbing quiet possession of all workers in residence on farms at Reporoa recently purchased by her.   Lang J considered that the application ought to be heard on notice, and directed service of the papers on the solicitors for the respondents.

[2]      Subsequently, Ms Lambert has filed one or two affidavits and the solicitors for the respondents have filed a notice of opposition which has been supplemented by a synopsis of submissions which Mr Stewart, who appears for the respondents, has addressed this afternoon.

[3]      The brief background is that the properties, the subject of the application, comprise a number of farms in the Reporoa area, which have become of considerable public interest in recent times, given the financial difficulties of the owner, Plateau Farms Ltd, and the directors of that company, the Crafars.

[4]      Some time ago the second respondents were appointed as receivers of the first respondent, pursuant to rights to appoint receivers contained in security documents executed in favour of Westpac.  More recently, the receivers have taken steps to realise Westpac’s securities.  Currently there is extant an agreement for sale and purchase which is conditional upon the approval of the Overseas Investment

Office.   In long running proceedings between the receivers and the Crafars,[1]  the

receivers had taken steps to obtain possession of the relevant farms from them.  In June 2011 those proceedings were settled.  The parties executed a deed of settlement and filed in this Court a memorandum of settlement pursuant to which the Crafars agreed to vacate all of the farms on or before 31 August 2011.   Associate Judge Christiansen made an order in terms of the consent memorandum on 5 July 2011.

[1] HC Rotorua CIV 2010-463-384.

[5]      On  27 August  2011,  the  applicant  entered  into  agreements  for  sale  and purchase of all the farms with Plateau Farms Ltd.  The agreements were executed on

behalf  of  the  vendor  by  the  directors  of  Plateau  Farms.     In  each  case  the consideration was expressed to be $1, but the terms of each sale stipulated that “the vendor retains title”.

[6]      Shortly after the commencement of this proceeding, the Crafars gave up possession of the various properties in terms of the settlement earlier entered into with the receivers.

[7]      As Ms Lambert points out, the current application is therefore somewhat inapt, because it was filed upon the assumption that the Crafars would remain in occupation of the farms until the present application was determined.  It was a term of the arrangement between her and the vendors, she says, that the Crafars would remain on the properties, and would continue with their farming activities.  From the bar, she advises the Court that it was contemplated that she would retain her interest in the properties in perpetuity.   Ms Lambert’s submission is that Westpac’s rights must be pursued against the directors of Plateau Farms Ltd, and that by reason of the sale to her, Westpac has lost its right to realise any real securities.

[8]      Because   the   application   requires   amendment   in   the   light   of   recent developments, Ms Lambert asks the Court to make timetable orders for the future conduct of the proceeding, including the giving of directions in respect of the filing of an amended application for interim relief.

[9]      Mr Stewart opposes the application at a fundamental level.   He argues that there is no serious question to be tried, and that the proceeding ought simply to be dismissed because there is no substance in Ms Lambert’s claim to have an interest in the properties.

[10]     As I have already observed, each of the agreements for sale and purchase purports  to  be  executed  by various  of  the  directors  of  Plateau  Farms  Ltd.   As Mr Stewart points out, the terms of the security documents executed by Plateau Farms in favour of Westpac effectively exclude the directors of Plateau Farms from the exercise of realising assets of the company.  All such powers are vested in the

receivers  once  receivership  has  commenced.    Moreover,  no  dealings  with  the

mortgaged property may take place without Westpac’s written consent.

[11]     Mr Stewart cited certain passages from Blanchard & Gedye[2]which set out principles  that  are  well  settled.    They  support  Mr  Stewart’s  argument  that  the directors had no power to sell the company’s land to Ms Lambert.  The directors of Plateau Farms retain the right to redeem the securities, but there is no suggestion in that case that that was ever their intention.  Mr Stewart advises the Court that the amount outstanding was of the order of $200 million.

[2] Private Receivers of Companies in New Zealand Blanchard & Gedye Wellington LexisNexis 2008

[12]     On the face of it therefore, the Crafars have, by participating in the purported sale of the properties to Ms Lambert, breached their undertakings to Westpac, and have purported to exercise powers which they no longer have.

[13]     Moreover, there is in existence an agreement for sale and purchase in favour of a third party purchaser which is conditional only on the consent of the Overseas Investment Office.  Ms Lambert submitted that she and the Crafars were effectively entitled to gazump the rights of that purchaser, but there is no place in our law for any such procedure.  She has not registered her transfers, and indeed, is unable to do so because the agreements for sale and purchase expressly provide for title to be retained by the purchasers.  In those circumstances, the earlier purchaser has a prior equitable interest in the land to that of Ms Lambert, and it is difficult to see how she is entitled to maintain a claim to the land in priority either to the receivers or the first purchasers.

[14]     Against that background there is substance in Mr Stewart’s submission that the present application cannot succeed, because Ms Lambert has not demonstrated that there is a serious question to be tried.  I am not satisfied that she has an arguable case to the effect that she is a bona fide purchaser for value of the land in dispute.  So the present application could not in any event have succeeded on the merits, even if the  factual  state  of  affairs  had  remained  the  same  as  was  the  case  when  the

application was filed.

[15]     For those reasons I consider Mr Stewart is entitled to an order for costs. Accordingly, there will be an order for costs on a category 2B basis in favour of the respondents jointly against the applicant.

[16]     That leaves the question of the future conduct of Ms Lambert’s proceeding. There is no statement of claim and it is arguable that the proceeding is simply a nullity. All that appears on the file is the application for interim relief upon which at present the applicant does not wish to proceed, and which requires amendment in any event, along with certain brief affidavits which are insufficient to set out for the Court the precise basis upon which relief is claimed.

[17]   Because I consider this proceeding has not really been commenced in accordance with the High Court Rules at all, the proper course is to dismiss the proceeding as it stands.   That leaves Ms Lambert free to commence a fresh proceeding, in the course of which she may, if she wishes, make a further application for interim relief.  Having said that, she will need to take the advice to which she refers in her memorandum, particularly legal advice, because it seems to me there are certain extremely high barriers which will need to be surmounted if any fresh proceeding is likely to make any headway.

[18]     In  that  regard,  Mr  Stewart  asks  me  to  record  that  if  there  is  a  further proceeding, and it runs along similar lines to those advanced today, then he will if successful in defence of the proceeding, be asking for indemnity costs.

C J Allan J