Plateau Farms Limited (in receivership and liquidation) v Lambert

[2012] NZHC 1063

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2012-419-363 [2012] NZHC 1063

BETWEEN  PLATEAU FARMS LIMITED (IN RECEIVERSHIP AND LIQUIDATION) First Plaintiff

ANDHILLSIDE LIMITED (IN RECEIVERSHIP AND LIQUIDATION) Second Plaintiff

ANDTAHARUA LIMITED (IN RECEIVERSHIP AND LIQUIDATION) Third Plaintiff

ANDFERRY VIEW FARMS LIMITED (IN RECEIVERSHIP AND LIQUIDATION) Fourth Plaintiff

ANDELIZABETH MARY LAMBERT Defendant

Hearing:         16 May 2012

Appearances: RB Stewart QC and I Rosic for Plaintiffs

Defendant in Person

Judgment:      16 May 2012

ORAL JUDGMENT OF TOOGOOD J

Solicitors:

M Sandelin/I Rosic, Minter Ellison Rudd Watts, Auckland:  [email protected] , [email protected]

EM Lambert, Huntly:  [email protected]

Copy:

RB Stewart QC, Auckland:  [email protected]

PLATEAU FARMS LIMITED (IN RECEIVERSHIP AND LIQUIDATION) & ORS V LAMBERT HC HAM CIV-2012-419-363 [16 May 2012]

[1]      The  plaintiffs  (“the  Crafar  Companies”)  are  the  registered  proprietors  of

16 farms   located   in   the   Central   North   Island   (“the   Crafar   Farms”).      On

5 October 2009, the Crafar Companies were placed in receivership by Westpac New Zealand Limited (“the Bank”) which holds registered mortgages over the titles to each of the farms.   The Bank’s right to appoint receivers derived from a general security deed entered into between the Crafar Companies and the Bank.

[2]      Although in receivership, the Crafar Companies have continued to conduct a large-scale dairying operation, contracting with and engaging sharemilking contractors to graze and milk heifers on their farms.

[3]      In November 2010, the Crafar Companies, which were still under the control of the receivers, entered into a conditional agreement with Pengxin Group International Limited (“Pengxin”) for the sale and purchase of all titles to the farms owned by the Crafar Companies.  This agreement was subject to the consent of the Overseas Investment Office, which consent was granted on 20 April 2012.  It is not relevant for the purposes of these proceedings that third parties have taken judicial review proceedings in respect of the consent which will be the subject of a hearing before the Court of Appeal in mid-July 2012.

[4]      In 2010 and 2011, the directors of the Crafar Companies engaged in a legal battle with the receivers over the possession of the farms.  In June 2011, however, the  receivers  and  the  Crafars  entered  into  a  deed  of  settlement  of  the  legal proceedings and filed in the Court a memorandum of settlement under which the Crafars agreed to vacate all of the farms on or before 31 August 2011.  A consent order in terms of the joint memorandum was made by the Court on 5 July 2011.

[5]      The effect of the settlement and the consent order was to clear the way for the receivers to continue to operate the dairying business on the farms and to complete the sale of the properties to Pengxin or another purchaser or purchasers.

[6]      On 27 August 2011, however, the defendant, Ms Lambert, and members of the Crafar family entered into agreements under which Ms Lambert purported to

purchase  the  Crafar  Farms  for  $1  each,  although  the  agreements  contained  a provision that the vendors would retain title to the properties.

[7]      In  September 2011,  the  Crafars  gave  up  possession  of  the  farms  but Ms Lambert  pursued  in  the  High  Court  at  Tauranga  an  application  intended  to prevent the Crafar Companies and the receivers from actions which she alleged were disturbing the peace and the quiet possession of all workers and residents on the Reparoa farms which she claimed to have purchased.

[8]      On 12 September 2011, Allan J struck out Ms Lambert’s proceeding on the grounds  that  the  Crafars  had  no  power  to  sell  the  Crafar  Companies’ land  to Ms Lambert and that there was no arguable case that Ms Lambert was a bona fide purchaser for value of the disputed properties.

[9]      The   judgment   issued   on   11 September 2011,[1]     gave   clear   notice   to Ms Lambert that the Court considered that she had no rights to any of the Crafar Farms.  The judgment included a statement to the effect that by participating in the purported sale of the Farms to Ms Lambert, the Crafar family may have been in breach of their undertakings to the Bank and purported to exercise powers of sale which they did not possess.   The Judge held that the receivers and Pengxin had equitable interests in the farms which had priority over any interest claimed by Ms Lambert.

[1] Lambert v Plateau Farms Limited (In Receivership) & Ors HC Rotorua CIV-2011-463-528,

12 September 2011.

[10]     Nevertheless, five days after Allan J’s judgment, Ms Lambert applied to the Tenancy Tribunal to have the receivers removed as “squatters” from one of the Crafar Farms located in Shaw Road, Reparoa.  That application was dismissed by the Tribunal on 17 October 2011, on the basis that Ms Lambert had no claim to be the

legitimate owner of the property.[2]

[2] Lambert v Stiassny & Anor TT Rotorua No. 11/01648/RO, 17 October 2011.

[11]     Between September 2011 and January 2012, in spite of the judgment of the

High Court and the decision of the Tenancy Tribunal rejecting Ms Lambert’s claims

to an interest in the Crafar Farms, Ms Lambert lodged caveats against the titles to

almost all of the Crafar Farms, claiming a possessory interest on the basis of the purported  sale  and  purchase agreements.    Ms Lambert  refused  a  request  by the receivers to withdraw the caveats and,  on 9 February 2012,  Lang J  made orders directing that the caveats be removed.

[12]     Ms Lambert persisted with her claims.  An attempt was made to register new caveats over some of the farms, but they were rejected by the Registrar of Land Information New Zealand.

Plaintiffs’ proceeding for declaration, permanent injunctions and damages

[13]     In this proceeding, filed on 28 March 2012, the plaintiffs allege breaches of the Fair Trading Act 1986; the torts of malicious falsehood and unlawful interference with business; a breach of s 146 of the Land Transfer Act; and trespass.  They seek a declaration that the purported sale and purchase agreements between Ms Lambert and the Crafar family are invalid and of no effect.   They seek also a permanent injunction restraining Ms Lambert and anyone on her behalf from continuing to maintain that she has an interest in the Crafar Farms.  They ask the Court to inquire into the losses sustained by the plaintiffs as a result of Ms Lambert’s conduct and to award damages. They also claim solicitor/client costs on a full indemnity basis.

[14]     Ms Lambert has filed a statement of defence to the substantive claim.  In it she sets out a summary of her views of the factual background.  She then pleads as follows:

30.In January of 2012 the defendant proceeded to arrange leases for the farms with various third parties.   These leases flow from the head lease  of  99 years  that  the  defendant  has  granted  to  the  Crafar Companies.

31.The defendant relies on the ownership of the fee simple that was granted on 27th August 2011 to create tenures under the sale and purchase agreements.

[15]     The defendant’s defence to all causes of action pleaded by the plaintiffs is that she is the owner of the fee simple and all of her actions are the result of this alleged fact.  She pleads that, in essence, her defence is that she is telling the truth of the matter.

[16]     In addition to resisting the plaintiffs’ claims, the defendant counterclaims against the plaintiffs for losses suffered by her by conversion or theft of her machinery and goods by the receivers as the agents of the Crafar Companies.  She has provided a schedule of the machinery and goods concerned.   Next, she counterclaims for loss suffered by her in pursuing her rights under the purported sale and purchase agreements as a result of obstruction by the receivers as agents of the Crafar Companies.  She claims $12,000 which was awarded against her by way of a costs order on the removal of the caveats at Hamilton on 9 February 2012.  Finally, she counterclaims for costs of $3,200 incurred in the placing of caveats “lawfully” on the titles of the Crafar Companies.

The plaintiffs’ interlocutory application for an interim injunction

[17]     Before the Court today is an  application by the plaintiffs for an interim injunction restraining Ms Lambert and her representatives:

(a)       from making certain representations;

(b)from interfering with the operations of the Crafar Companies and the receiverships;

(c)       preventing Ms Lambert from lodging any further caveats to the titles to the farms; and

(d)restraining  her  from   entering  onto  or  remaining  on   the  farm properties.

[18]     The plaintiffs allege that the actions of Ms Lambert described in the evidence are disruptive to the business and distressing to those engaged in or associated with it.  Pending the trial of the plaintiffs’ substantive claims for declarations, permanent injunctions and damages, the plaintiffs sought interim orders:

To restrain and prohibit Ms Lambert and her associates, assigns, agents and representatives from:

(a)       making   representations,  whether   orally   or   in   writing,   to   the

plaintiffs’ employees, contractors and third parties;

(b)       contacting the plaintiffs’ employees and contractors and otherwise improperly interfering with the operations and receivership of the plaintiffs;

(c)       lodging caveats against the titles to the farms owned by the Crafar

Companies; and

(d)      entering into and/or remaining on the farms owned by the Crafar

Companies.

[19]     Ms Lambert  opposed  the  making  of  the  interim  orders  sought  by  the plaintiffs.  In her notice of opposition, she argued that the interlocutory application was an attempt by the plaintiffs to short-circuit her right to a hearing on the substantive matter.  She said:

(a)       There is a serious question to be tried as to the validity of the sale

and  purchase  agreements  signed  with  the  plaintiff’s  directors  on

27 August 2011.  The plaintiffs have sought to have these sale and purchase agreement [sic] declared null and void by the Court.

(b)       The Statement of Claim seeking this declaration was served on the defendant   on   5 April 2012   and   the   defendant   is   preparing   a Statement of Defense [sic] and Counterclaim against the plaintiffs.

(c)       The   plaintiffs   by   their   application   seek   to   short-circuit   the defendant’s lawful process of a hearing on the substantive matter, by use of Rule 7.53 [of the High Court Rules].

(d)       The balance of convenience is on the defendant’s side in that the damage sought to be inflicted upon the defendant cannot not [sic] be compensated with money damages.   The undertaking given on the part of the plaintiff is worthless in this context.

(e)       In particular the following fetters are sought.

(f)       The plaintiff seek [sic] to fetter the defendant’s freedom of speech.

(g)       The plaintiffs seek to fetter the defendant’s freedom of movement on

her own land, by using the court to issue trespass notices.

(h)       The plaintiffs seek to restrain the defendant from placing caveats that she is lawfully enabled to place.

[20]     In the affidavit filed in support of her opposition to the making of the interim orders, Ms Lambert reasserted the claim that she had purchased the 16 farms from the directors of the Crafar Farm Group on 27 August.  She said that the registered proprietors of the farms are the companies, not the companies in receivership, and that  the  power  of  sale  never  vested,  and  certainly  not  solely,  in  the  receivers. Ms Lambert said that notwithstanding the receivership, the agreements are all valid

so that although the companies in receivership presently farm the land she regards her legal rights under the sale and purchase contracts as remaining intact.

[21]     Ms Lambert asserts that on the basis of the sale and purchase agreements and the rights given to her by them, she has attempted to protect her interests in the farms by placing caveats on the titles and informing the people presently working on the farms and the receivers of the situation.

[22]     As to the claim by the plaintiffs that allowing her to place further caveats against  the  titles  may  frustrate  the  receivers’ attempts  to  sell  the  properties  to Pengxin or to any other purchaser, Ms Lambert said that the plaintiffs appeared to be attempting to complete the sale under false pretences by not allowing the substantive argument over the sale and purchase agreements to be dealt with by the Court until after the farms are disposed of.

[23]     I have taken those allegations to mean that Ms Lambert considers that the Court should  not  prevent  her from  exercising the  rights  she claims  to the land without the full consideration of her position at the substantive hearing, and that the Court should not open the way for the receivers to complete the sale to Pengxin or any other purchaser in the meantime.

Oral submissions by counsel for the plaintiffs

[24]     I received helpful written submissions from counsel for the plaintiffs prior to the hearing and that enabled me to understand the nature of the plaintiffs’ case for interim relief.   I was also helped by oral submissions this morning from senior counsel for the plaintiffs, Mr Stewart QC.

[25]     In the course of counsel’s argument, I had a brief discussion with him about whether, in the cause of action under the Fair Trading Act, Ms Lambert could be said to be “in trade”.   I indicated to Mr Stewart that I did not need to hear further submissions from him, at that point, on whether the plaintiffs had an arguable case under any one or more of the other causes of action set out in the statement of claim.

[26]     Mr Stewart QC and I spent some time discussing the scope of the relief sought by the plaintiffs in terms of interim orders.  Mr Stewart agreed, having come into the matter relatively recently, that aspects of the relief sought were drafted too broadly.   He accepted the principle that the Court should confine itself to making such orders as were reasonably necessary to protect the plaintiffs’ legitimate interests without unduly impinging upon the rights of the defendant.  Mr Stewart undertook to re-draft the orders sought so that I could then take account of the re-drafted claims in the exercise of considering the balance of convenience, if I got to that point.

[27]     Among the issues to be addressed in the re-drafting was the principle that, as Mr Stewart properly acknowledged, it would not be proper for the Court to make any orders binding on any persons not before the Court.  There were also concerns about the Court restraining oral representations, with such orders amounting to a possible infringement of Ms Lambert’s rights of freedom of speech.   It was suggested that difficult questions of proof may also arise in respect of any alleged breach.

Oral submissions by Ms Lambert

[28]     I was impressed by Ms Lambert’s grasp of the issues when she addressed me. It is clear that she has taken the matters before the Court very seriously.   She appeared to understand, in general terms, the matters of law and fact which fall for decision by the Court in cases such as this, and in this case in particular.

[29]     In argument, she questioned whether or not it could be said that she was “in trade” in making any of the alleged representations.  Before Ms Lambert got to the point of discussing whether or not the plaintiffs had an arguable case in respect of any of the other causes of action, I questioned her as to her intentions pending a substantive hearing.

[30]     In the course of the morning, I had become aware from the Registrar that the Court was able to offer the parties a three-day fixture for the substantive hearing, beginning on 25 June 2012.  Ms Lambert confirmed to me during our discussion that she  had  no  real  need  nor  intention  to  go  onto  the  farms  between  now  and  a substantive hearing; and that she would not need to be lodging any caveats, or taking

some of the other steps which have been of concern to the plaintiffs.   Sensibly, Ms Lambert agreed in those circumstances to consider the possibility that she might give undertakings to the Court.   She acknowledged that, if any undertakings were accepted by the plaintiffs, it would not be necessary for the Court to make any coercive orders against her.  She also acknowledged that, if they were not accepted by the plaintiffs, the undertakings would at least be taken into account by the Court in deciding where the balance of convenience lay.

[31]     I adjourned the hearing, therefore, so that Mr Stewart and Ms Rosic could confer with Ms Lambert over the terms of possible undertakings.

Undertakings by the defendant and consent orders

[32]     I am pleased to record that the parties reached what I consider to be a sensible agreement based on undertakings which Ms Lambert was prepared to give.[3]

[3] I had indicated to counsel and to Ms Lambert that a copy of the undertakings and proposed draft orders would be attached to the written transcript of judgment, but I consider on reflection that that is unnecessary.

[33]     Pending the further order of the Court, Ms Lambert has undertaken to the

Court:

(a)      That she will not lodge or attempt to lodge any caveats against the Titles to the Crafar Farms, being the titles set out in the schedule to the plaintiffs’ notice of interlocutory application for interim injunction dated 27 March 2012.

(b)That she will not instruct, direct or cause any other person or entity to lodge or attempt to lodge any caveats against the said titles to the Crafar Farms.

(c)      That she will not enter upon any of the Crafar Farms, being the land contained and described in the said titles.

(d)That  she  will  not  direct,  authorise  or  cause  any  other  person  or persons to enter upon the said farms on her behalf or otherwise.

(e)      That she will not take any steps to interfere with, impede or delay the receivers’ sale of the farms to Pengxin Group International Limited or any other purchaser.

(f)      That she will not seek to deal with any of the assets owned by the plaintiffs including but not limited to:

(i)       the Crafar Farms as defined above;

(ii)chattels     owned    by     or     in     the     possession     of     the plaintiffs/receivers;

(iii)     cows;

(iv)     milk proceeds; and

(v)      implements and machinery wherever situated.

[34]     It was then noted that, in giving those undertakings, the defendant recognises that pending further order of the Court the receivers are free to sell or dispose of any and all of the assets set out above.

[35]     I record that, in discussions I held with Ms Lambert when I became aware of the proposed terms of the undertakings, I reminded her that the plaintiffs had given undertakings as to damages.   I explained that this meant that, in the event that it should be held following a substantive hearing that the plaintiffs should not have had interim relief, or that Ms Lambert has suffered any damage by the plaintiffs being given interim relief, the effect of which was unlawfully to restrain her, she would be entitled to awards of damages by way of compensation.

[36]     I record also that, before asking Ms Lambert to sign the undertakings which had been drafted, I was concerned to ensure that she understood the consequences of

her entering into solemn undertakings to the Court in the terms set out.  I provided to her  a  copy  of  the  text  The  Laws  of  New  Zealand,  Part 3,  Civil  Contempt, paragraph 75, in the section dealing with disobedience to orders and breaches of undertakings to the Court.  That extract from the text makes it clear that a plaintiff who gives an undertaking to the Court and then breaches it is at risk of being held in contempt of Court.  The other consequences of such an undertaking are also set out in the statement of the law.

[37]     On the basis of the signed undertakings, the plaintiffs have agreed not to pursue the interlocutory application for interim relief at this stage.  That application is adjourned.

[38]     The parties shall have leave to apply to the Court on 24 hours’ notice for such

further or other orders in the proceeding as may be necessary or desirable.

[39]     As agreed, costs are reserved for determination in the cause or as sought by the parties in the event that the substantive hearing does not proceed.   I note that, although the High Court Rules provide that costs decisions ought to be made at the time any interlocutory application is dealt with, it is not appropriate that any costs orders should be made at this stage in part, at least, because the interim injunction applications have not yet been determined.

[40]     The parties have agreed to accept the fixture offered by the Court.   The substantive hearing is set down for three days, beginning on Monday, 25 June 2012. The parties have also helpfully agreed on a timetable for taking steps preparatory to the substantive hearing, and I now make the following timetabling orders:

(a)       The plaintiffs’ briefs of evidence are to be filed and served by Friday,

1 June 2012;

(b)The  defendant’s  briefs  of  evidence  are  to  be  filed  and  served  by Friday, 15 June 2012, together with an index of the documents to be included in the agreed bundle;

(c)       The plaintiffs’ synopsis  of argument  is to  be  filed and  served  by

2:00 pm Thursday, 21 June 2012;

(d)An agreed bundle of documents is to be filed and served with the plaintiffs’ synopsis by 2:00 pm Thursday, 21 June 2012.

[41]     The order I have made granting leave to the parties to return to the Court on

24 hours’ notice encompasses any application the parties may need to make for further interlocutory orders pending the substantive hearing.

[42]     I record my gratitude to counsel and to Ms Lambert for reaching what I consider, with respect, to be a sensible interim arrangement which does not prejudice any party in the important matters which are to be considered by the Court at the substantive hearing.

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Toogood J