MacIntyre and Williamson Partnership - [2015] NZHC 3012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-877 [2015] NZHC 3012

BETWEEN
MACINTYRE AND WILLIAMSON

PARTNERSHIP First Plaintiff

WAITAKI DAIRY LIMITED Second Plaintiff

BURKE FARMING DEVELOPMENT LIMITED

Third Plaintiff

Continued over page…

AND

FONTERRA CO-OPERATIVE GROUP LIMITED

Defendant

Hearing: 7-11, 14-15 and 17-18 September 2015

Appearances:

D J Goddard QC and B M Russell for the Plaintiffs
J E Hodder QC, D T Street and H K Wham for the Defendant

Judgment:

01 December 2015

RESERVED JUDGMENT OF MUIR J

This judgment was delivered by me on Tuesday 1 December 2015 at 1.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:………………………….

Counsel/Solicitors:
D J Goddard QC, Barrister, Auckland
B M Russell, Lane Neave, Christchurch
J Hodder QC, Chapman Tripp, Wellington
D T Street, Chapman Tripp, Auckland
H K Wham, Chapman Tripp, Auckland

MACINTYRE AND WILLIAMSON PARTNERSHIP v FONTERRA CO-OPERATIVE GROUP LIMITED [2015] NZHC 3012 [01 December 2015]

STRATHBURN FARMS LIMITED Fourth Plaintiff

MORVEN FARMING PARTNERSHIP Fifth Plaintiff

R G LAMB LIMITED Sixth Plaintiff

WAITAKI PARTNERSHIP Seventh Plaintiff

BLACK LINE DOWNS LIMITED Eighth Plaintiff

WELLPARK DAIRYING LIMITED Ninth Plaintiff

ST ANDREWS DAIRY LIMITED Tenth Plaintiff

HOLME STATION DAIRIES LIMITED Eleventh Plaintiff

CANDY DAIRY LIMITED Twelfth Plaintiff

KAILEY DAIRIES LIMITED Thirteenth Plaintiff

GRAY ROSENEATH FARMS LIMITED Fourteenth Plaintiff

RICHARD PAUL WILLANS, KAREN JEAN WILLANS, LEIGH JOSEPH HORTON AS TRUSTEES OF THE R P
& K J WILLANS FAMILY TRUST Fifteenth Plaintiff

BORST HOLDINGS LIMITED Sixteenth Plaintiff

NORTH OTAGO FARM LIMITED Seventeenth Plaintiff

QUEENS FLAT DAIRY FARM LIMITED (Discontinued) Eighteenth Plaintiff

ELLIS-LEA FARMS (2000) LIMITED Nineteenth Plaintiff

WILLANS HOLDINGS LIMITED Twentieth Plaintiff

Contents
Paragraph

Introduction 1

Background 4

The questions 45

Question 1 47

Statutory Framework 47

The plaintiffs’ arguments 57

Fonterra’s arguments 75

Analysis 95

Question 2 107

Question 3 117

Introduction 117

The first alleged representation –

not legally possible to acquire shares 127

Meeting of 15 June 2012 128

Meeting of 20 June 2012 137

The second alleged representation –

inability of other Fonterra shareholders to buy shares 155

Significance of legal representation 164

Entire agreement clause 165

Reliance and loss 166

Question 4 168

Question 5 170

Result 174

Costs 175

Introduction

[1] This case raises novel issues under the Dairy Industry Restructuring Act 2001 (DIRA) as a result of the failure of an independently owned South Canterbury processing plant. The principal issue is whether Fonterra Co-operative Group Ltd (Fonterra) was, in tandem with its acquisition of the plant from receivers, lawfully able to offer former suppliers of the plant so called “Growth Contracts” on terms inferior to those offered to its other suppliers. Its reasons for doing so stemmed from a perceived need to assuage internal politics within its supplier base and included also an element of “messaging” for the benefit of other farmers who might in the future be persuaded to leave Fonterra and support an independent. Fonterra claims that it was lawfully entitled to do so despite the provisions of s 106 of DIRA which broadly require new entrants…

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.

Continue reading MacIntyre and Williamson Partnership

Details

AGLC: MacIntyre and Williamson Partnership [2015] NZHC 3012
Case: [2015] NZHC 3012
Decision Date: 01 December 2015

CaseChat Overview and Summary

This case involved a dispute between dairy farmers and Fonterra Co-operative Group Ltd regarding the terms of milk supply agreements. The plaintiffs, who were former suppliers of a milk processing plant, claimed that Fonterra breached statutory obligations and engaged in misleading and deceptive conduct by offering them inferior terms compared to other suppliers. The court was required to determine several issues, including whether the plaintiffs were considered "new entrants" under the Dairy Industry Restructuring Act 2001 (DIRA), if Fonterra breached DIRA by offering the plaintiffs inferior terms, and if Fonterra's advice about the plaintiffs' ability to buy shares and supply milk was misleading and deceptive under the Fair Trading Act 1986 (FTA).

The court found that the plaintiffs were "new entrants" under DIRA and that Fonterra breached the Act by offering them inferior terms. The court held that Fonterra's primary motivation for offering the inferior terms was to appease its existing shareholders, which was not an objective difference in circumstances that would justify different terms under DIRA. The court also found that Fonterra's advice to the plaintiffs about their ability to buy shares and supply milk was misleading and deceptive under the FTA. The court concluded that the plaintiffs were likely misled into believing that they were legally precluded from buying shares and supplying milk on a shared-up basis due to Fonterra's statements.

As a result of the court's findings, the plaintiffs succeeded on their first cause of action, and the court found breaches of both DIRA and the FTA. Issues of reliance, inducement, loss, and costs were deferred for a subsequent hearing.

Orders