Rabobank New Zealand Limited v Currie

[2013] NZHC 3215

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2013-454-000387 [2013] NZHC 3215

BETWEEN  RABOBANK NEW ZEALAND LIMITED

Plaintiff

ANDSHAUN MATTHEW CURRIE First Defendant

ROBERT JULIAN MCVITTY Second Defendant

Hearing:                   28 November 2013

Appearances:           R J Gordon for Plaintiff

L Van for First Defendant

Judgment:                3 December 2013

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1]      The plaintiff (Rabobank) claims judgment against the first defendant in the sum of $434,351.49 plus interest, being the balance of advances made to Te Rimu Station Limited (in receivership and liquidation) which were guaranteed by the first and second defendants.

[2]      Advances were secured by mortgage over 25 titles comprising two properties at 384 and 384A Rimu Road, Dannevirke.

[3]      On 1 February 2013 receivers were appointed to Te Rimu on the application of the Bank of New Zealand (BNZ).  In March 2013 the receivers sold the secured properties for $4,200,000 and $550,000 respectively.  Rabobank received the entire net proceeds and applied it to reduction of the indebtedness of Te Rimu.  Te Rimu is

unable to pay any further part of the indebtedness to Rabobank.   Rabobank has

RABOBANK NEW ZEALAND LTD v S M CURRIE [2013] NZHC 3215 [3 December 2013]

obtained judgment against the second defendant but has not, to date, received any part of the judgment sum.

[4]      The first defendant, Mr Currie, does not dispute that the advances were made, nor that he has liability under his guarantee.   Rather, although he says that a reasonable price was obtained for the property at 384 Rimu Road, the property at

384A Rimu Road was sold at under value.  He says that the sale was undertaken by the receivers, and they did so in breach of their duties under the Receiverships Act

1993 as they sold with inadequate advertising and marketing, paid insufficient regard to the infrastructure on the property, failed to attribute value to a wind contract associated with the land and earning $14,000 per annum, and failed to sell the property as separate lots.  He says that the receivers were the agents of Rabobank, so Rabobank’s claim should be offset by the extent to which this property was sold beneath its value, a sum yet to be established.

[5]      Rabobank has applied for summary judgment.  For judgment to be entered on a summary basis Rabobank must satisfy the Court that Mr Currie does not have a defence to the claim.1   Where, as in this case, liability for the debt is established, it is for the defendant to lay an evidentiary foundation to demonstrate that it has an arguable defence.  Nonetheless the onus of satisfying the Court that a defendant does not have a defence rests throughout on an applicant for summary judgment.2

[6]      In this context, two issues require determination:

(a)    Has Mr Currie established an evidentiary foundation sufficient for the Court to find that he has an arguable defence, based on breach of the receivers’ duties?

(b)     If  so,  were  the  receivers  acting  as  the  agent  of  Rabobank  so  that

Rabobank had responsibilities for their actions?

1      Rule 12.2 High Court Rules.

2      Auckett v Falvey HC Wellington CP296/86, 20 August 1986;

Maclean v Stewart (1997) 11 PRNZ 66 (CA).

First issue: has Mr Currie established an evidentiary foundation sufficient for the Court to find that he has an arguable defence, based on breach of the receivers’ duties?

Preliminary evidentiary issue

[7]      The evidence on which Mr Currie relies to establish that he has an arguable defence is comprised in four affidavits which he has affirmed.   The fourth was affirmed and filed on 27 November, the day before the hearing.   Mr Gordon took exception  to this  affidavit  being  read.    It  contains  a response by Mr  Currie to evidence given by Messrs Thomas, Southgate, Pitt and Pattison, all affidavits in reply sworn on behalf of the plaintiff.

[8]      Ms Van proferred the affidavit on the basis that it principally refuted evidence from Mr Southgate, registered valuer, on the condition of a woolshed on the land in question, but Mr Gordon correctly pointed out that the affidavit takes issue with Mr Southgate’s views on a broader basis and in addition elaborates further on his views in relation to whether the receiver should have accepted the offer which they did accept for the property.

[9]      After consideration, Mr Gordon accepted that I should receive the affidavit de bene esse and note his concerns.  Accordingly I admitted it into evidence on that basis.

Facts

[10]     The property at 384A Rimu Road, which was described in argument as the small block, a description I will adopt in this judgment, has an area of 305 hectares. It was sold for $550,000 under a contract dated 1 March 2013 signed by Mr Pattison, one of the receivers.

[11]     Under  the  ownership  of  Te  Rimu  Station  Limited  this  property  and  the adjacent property comprising 1,296 hectares were farmed as one.  From June 2010 until November 2012 Mr Currie and his co-director, on behalf of Te Rimu Station Limited, were marketing the entire property for sale.  The loan facilities secured by

the first mortgage to Rabobank were in default from time to time from 2010, and in November that year the bank made demand on the company, and on Mr Currie and Mr McVitty as guarantors in respect of an overdue interest instalment.  The arrears were paid.   A firm called For Farms (NZ) Limited was sole agent for sale of the property until December 2012.

[12]     In November 2012 Te Rimu Station Limited decided to sell the property in two parts, the 1,296 hectare property with an asking price of $4.2m, and the small property without an asking price, but for sale by negotiation. According to Mr Pitt of For Farms (NZ) Limited this marketing method was selected as the property did not have  an  operating  woolshed,  nor  a  dwelling,  so  was  best  suited  for  sale  to  a neighbour.  Interest was expressed in this property from one neighbour promptly, at a figure of $700,000.   That expression of interest did not translate into an offer; in February the agent  was  informed that  no  offer  would  be forthcoming  from  the neighbour which had expressed that interest.

[13]     In December and January two offers were received for the larger property but neither proceeded.  In February 2013 two offers were received, one for $4.2m for the larger property and one for $550,000 for the small property.  In the event both were accepted by the receivers.

[14]     The Bank of New Zealand, which held a general security over the assets of Te Rimu Station Limited, appointed receivers on 1 February 2013.  As can be seen that  was  during  a  period  of  some  activity  in  relation  to  the  sales  of  the  two properties.  Early in their receivership they learnt of the efforts made by Te Rimu Station Limited to sell the entire farm over the preceding two years, and the change of tack in November which had resulted in the offers I have described.

[15]     Shortly after their appointment the solicitors then acting for Te Rimu Station

Limited presented to its receivers two contracts for sale of the larger block, one for

$3.3m and the other for $4.2m. A covering email from the solicitors stated:

We have recently received the attach (sic) two offers for part of the holding of Te Rimu Station Limited.

Shaun Currie is of the view that the higher of the two offers, for $4,200,000, should be pursued.  He understands that offers for the balance of the land can be expected over the next two weeks, one for $400,000 and one for $500,000 (the latter likely to be received shortly after 15 February).  He is similarly of the view that the higher offer, if received, should be pursued.   Shaun is anxious that these opportunities not be missed as they represent an offer to clear your client’s [BNZ] debts, and those of Rabobank.

[16]     Shortly after that the solicitor wrote again:

Apologies, the anticipated offers for the smaller land holding are expected to be  $500,000  and  $700,000  respectively,  rather  than  the  $400,000  and

$500,000 I mentioned in my prior email, so please read my email with those figures in mind.  Shaun is anxious for the $700,000 one to be pursued when

received.

[17]     On the same day, Mr Currie forwarded to the receivers a contract for the small block at $550,000, from one of the neighbouring landowners.   Mr Pattison discussed this offer with Mr Currie and says that Mr Currie’s only suggestion at the time was that he should await the outcome of interest being shown by the other neighbouring farming organisation at around $700,000.

[18]     Shortly after that, the receivers were informed by For Farms Limited that this interest was no longer current.

[19]     All these offers had been signed prior to the receivership, so none of the offerors was aware that Te Rimu Station Limited was in receivership.  Mr Pattison passed the offers onto Rabobank, along with a marketing summary which he had commissioned from For Farms Limited.

[20]     Mr Pattison  met  Mr  Thomas,  a  senior  manager  in  the  Specialist  Asset Management team at Rabobank on 5 February.  On that day Mr Pattison wrote to Mr Thomas setting out an agreement they had reached at their meeting.  Relevant parts of the letter are:

Further to our discussion today we outline the agreed actions in terms of acting on behalf of Rabobank New Zealand Limited (Rabobank) in terms of your mortgage over Te Rimu Station.  ...

Both the receivers and Rabobank wish to pursue the current contracts to achieve a satisfactory sale of the farm.

Actions:

We will work with the current offers received to liaise with purchasers, agent, legal counsel, Rabobank as first mortgagee and the BNZ as second mortgagee to progress the acceptance of these contracts.  It is proposed that the offers received will need to be contemporaneous of each other.

Before entering into any sale and purchase agreement the Receivers will ensure  they  have  complied  with  their  duty  to  receive  the  best  price reasonably attainable at the time of sale.

In the event that we are unable to progress these offers to unconditional contracts we will liaise with you before taking any further action.

Costs:

Rabobank has agreed that the receivers may act on behalf of Rabobank in realising the land and the buildings of the Company.  Rabobank has agreed that we may offset our reasonable costs against the proceeds from the sale of the farm and all other associated costs with maintaining and protecting the property until it is sold.   In the event that the property is not sold and Rabobank  proceed  down  the  path  of  mortgagee  sale,  Rabobank  will reimburse our costs incurred to date on receipt of invoice.

Aside from the costs incurred in pursuing the current contracts we will have insurance (circa $6,000) on the buildings and rates costs which we will seek direct reimbursement from you.   All other costs will be cleared with you prior to them being incurred.

Accordingly, please urgently confirm in relation to the Company in writing the following:

1.On confirmation, Rabobank agrees to the Receivers realising the land and buildings that are subject to the mortgage held by Rabobank and agrees to release the mortgage on a satisfactory sale being made;

[21]     Mr Thomas replied to Mr Pattison by email confirming Rabobank agreed to the actions and terms proposed, with one qualification that:

Rabobank agrees to the Receivers realising the land and buildings that are subject to the mortgage held by Rabobank, and agrees that its consent to release the mortgage will be given on sale of the land, subject to all terms and conditions of the sale or sales being satisfactory to Rabobank.

[22]     This paragraph altered only the final paragraph of the letter, in the quoted passage.

[23]     After the exchange of correspondence between Mr Pattison and Mr Thomas which I have related, Mr Pattison sent this email to Mr Thomas, on 11 February:

Hi Ron

Please see attached summary of marketing activity since the listing commenced in 2010 with For Farms.

It would appear that there has been sufficient marketing of the property undertaken by For Farms.  My only question of For Farms is the strength of the agency across NZ in terms of exposure, though to be fair the property has been listed in national advertising mediums.

The only other point is whether there was a willing seller, as you know buyers can be put off by vendors who are not willing to negotiate, especially the listing price is not seen at realistic levels (re initially the $6.2m).

As per our discussion on Friday, the Banks views as to the appropriateness of the campaign to proceed to accept the contract would be appreciated.

As discussed below is the email from Shaun Currie re his views on the current offers.

[24]     Mr Currie’s email was then set out:

Hi Tony

Te Rimu has been on the market for three years and the present offer of $4.2 million for the 1200ha is substantially higher than any offer to date and as a Director of Te Rimu I would support this sale.

The remaining block has interest from two neighbours one at $550,000 and the other at $700,000.

If Greenhills does not make an unconditional offer at $700,000 then the lower offer should be considered.

[25]     In the meantime Mr Thomas had commissioned a valuation of the entire farm from Mr Chris Southgate, registered farm consultant and registered valuer.   His report is dated 8 February 2013.  It will be necessary to refer to this document again when considering Mr Currie’s evidence in relation to the sale price achieved for the small block, but a summary of his advice was that the likely sale price range for the property  was  $4,500,000  to  $5,000,000,  but  on  a  forced  sale  basis  between

$3,500,000 and $4,000,000.

[26]     On 14 February Mr Thomas forwarded this valuation to Mr Pattison.  After briefly noting a possible issue concerning replanting of forestry areas, he said to Mr Pattison:

Are we satisfied that the agent has got the maximum possible price from the purchasers?   Particularly in regard to the smaller block, where a possible offer at $700k has been mentioned to us.  Could the agent extract any more from Murray?

[27]     Mr  Thomas  also  suggested  to  Mr  Pattison  that  he  would  not  object  to Mr Southgate readdressing his valuation to Mr Pattison.   Mr Pattison took up that suggestion and the valuation was then addressed to Mr Pattison’s firm.

[28]     Mr Pattison replied to Mr Thomas on 14 February.  He told him that the party which had mentioned a $700,000 offer was not interested in making a formal offer. He said he had asked the agent whether he thought the offers now before them were appropriate in terms of the current market for the property and he expected his formal response the next day.  However, he recorded that the agent’s short answer was that he thought they should not let these offers go as they were unlikely to receive offers at this level, or in any event to do so may take some time.  Mr Pattison went on to say that the offer on the small block ($550,000) was the offeror’s best offer.  He told Mr Thomas that he wanted to return the offers to the purchasers the following day by midday as he had promised the purchasers they would have them before the weekend.  He asked Mr Thomas to “chase along” his legal counsel if the offers were not returned to him by the following day.

[29]     As expected the agent made a formal report the following day to Mr Pattison. He said:

The present combined offers of $4,750,000 is in my view the best result possible in these times, because:

i)     Selling the property in 2 parts has introduced the present buyers who would not have been Purchasers on the block as a whole.

ii)    The combined offer is $250,000 better than any previous offer received in the entire marketing period.

iii)   Neither buyer has taken advantage of the fact that Te Rimu Station is in receivership.  As you are aware many buyers in this position will either lower their offer, heavily condition their offer or simply wait until a

Mortgagee Auction, which are traditionally at lower value levels than the general market on the day.

iv)   In the traditional method of Mortgagee Sale or Auction there is an absolute reliance on competition from unconditional buyers to achieve an acceptable price.  I firmly believe having marketed Te Rimu Station over this period that there are no buyers in the marketplace at anywhere near to the unconditional offers on the table.

v)    The buyers in the marketplace whom (sic) are very conversant with comparable properties throughout New Zealand tell us that there are better buys out there.

I strongly consider that the efforts and endeavours that have been employed over the marketing period have produced the best result possible in terms of Price, Terms and Conditions (or lack of) and Settlement.

[30]     Mr Pattison forwarded this to Mr Thomas shortly after he received it.

[31]     Mr  Thomas,  on  behalf  of  Rabobank,  then  approved  the  contracts  and

Mr Pattison signed them.  Both sales were subsequently settled.

[32]     At  the  time  the  receivers  were  appointed,  Rabobank  was  owed  $4.87m. Interest was in default.   The penalty rate of interest of 14.2% applied.   This was accruing at over $57,000 per month.

[33]     Mr Thomas says that when the receivers were appointed, Te Rimu Station Limited had been the subject of quite extensive marketing efforts  for a lengthy period.  There were two pending offers but initially Rabobank had favoured putting those on hold and carrying out a mortgagee sale of the property.   However, the receivers told him that both they and their lawyers were satisfied that there had been an appropriate amount of marketing of the properties already.  He was satisfied that the receivers had been working with the real estate agent since their appointment, and  efforts  had  been  made  to  try  and  generate  further  interest  from  identified potential purchasers.  From information provided by the receivers and the real estate agent Rabobank gained a better understanding of how extensive the efforts to sell Te Rimu Station had been up to that point, and in relation to the state of the market.

[34] Mr Thomas also knew the offerors would become aware of the receivership, which may result in the offers being withdrawn or lowered, and he considered and relied on the advice of the real estate agent which I have recorded in paragraph [29].

[35]     Based on all this information Rabobank decided that it would provide a discharge of its first mortgage to allow the two sales entered by the receivers to be settled.

[36]     In relation, specifically, to the small property, Mr Thomas was aware that the expression of interest at around $700,000 was not going to translate into an offer, that the offer of $550,000 from the owner of the only other neighbouring property was that party’s best offer, and that the advice he had was that the small property was not of a size or quality to be able to be sold as an economically viable stand alone farm.  He took into account the valuation advice which he sought and received and the fact that Mr Currie had stated in writing that if the prospective unconditional offer at $700,000 was not forthcoming then the lower offer, which was at $550,000 should be considered.

The receivers’ duties

[37]     The duties of receivers set out in ss 18 and 19 of the Receiverships Act 1993 are these.   Section 18 provides that a receiver must exercise his or her powers in good  faith  and  for  a  proper  purpose,  and  in  a  manner  he  or  she  believes  on reasonable grounds to be in the best interests of the person in whose interests he or she was appointed (here, the BNZ).  A receiver must also exercise his or her powers with reasonable regard to the interests of the grantor of the security under which the receiver was appointed, persons claiming through the grantor, unsecured creditors of the grantor, and sureties who may be called upon to fulfil obligations of the grantor.

[38]     Section 19 provides that a receiver who exercises a power of sale of property in receivership owes a duty to obtain the best price reasonably obtainable at the time of sale, to the persons to whom the general duties in s 18 are owed.

[39]     The learned authors of Private Receivers of Companies in New Zealand3 state that when determining whether a price is reasonably obtainable:

3      Peter  Blanchard  and  Michael  Gedye  Private  Receivers  of  Companies  in  New  Zealand

(LexisNexis, Wellington, 2008) at 11.29.

... allowance will necessarily have to be made for the fact that the receiver has the right to exercise a power of sale of the company’s property.  It is the best price reasonably obtainable consistently with that right.

[40]     Mr  Gordon  submits  that  a  receiver  need  not  delay  a  decision  to  sell  a property, but is entitled to decide to carry out a sale even if the market for the property is, at that time, depressed.  I accept this submission.  It is consistent with the principle applicable to the exercise of a power of sale by a mortgagee, that a mortgagee is entitled to act purely in its own interests when deciding if and when to sell a property.4

[41]     Mr Gordon  also  submits  that  a receiver can  sell  property in  its  existing condition and is not under an obligation to spend further money to improve an asset so as to enhance its saleability or selling price. Again, I accept this submission.

[42]     Mr Gordon says that there is no principle requiring an independent valuation of property before proceeding with a sale, but notes that Blanchard and Gedye suggest that a receiver may be unwise to sell assets of a company without obtaining advice as to value.   Again, this is consistent with the principle applicable in the context of a mortgagee sale, that obtaining a valuation report from an experienced valuer as a guide to the price which could reasonably be expected for the property is an  indication  that  a  mortgagee  has  made  reasonable  efforts  to  obtain  the  best

reasonably obtainable price.5

[43]     Although the principles to which I have referred apply in the context of a mortgagee sale, they are in my view of direct assistance in assessing the sale by the receivers in this case, as the receivers were dealing with a property with a mortgage in default, and the mortgagee, Rabobank, had made it clear that it would only release its mortgage on a sale of the property if it was satisfied with all the terms and

conditions of the sale or sale contracts.

4      Downsview Nominees Ltd v First City Corporation Ltd [1993] 1 NZLR 513 (PC);

Agio Trustees Co Ltd v Harts Contributory Mortgagees Nominee Co Ltd (2001) 4 NZ ConvC

193,480 (HC).

5      Public Trust v Ottow [2010] 10 NZCPR 879 (HC) at [31].

Discussion

[44]     Mr Currie raises five issues to support his proposition that the small property was sold by the receivers in breach of their duty to obtain the best price reasonably obtainable at the time of the sale.

[45]     First, he says that the receivers did not advertise or market the small property separately, but accepted instead an offer from a neighbour at $550,000.

[46]     Secondly, he says that this price was inadequate, because he had sold in January 2013 a block of land which he says is similar in some respects to the small property, for $1.46m.

[47]     Thirdly, he says the small property comprises three titles, and a higher price could have been obtained for the land had the land in the three titles been sold separately.

[48]     Fourthly, Mr Currie says that although the receivers relied on a valuation, the valuer had not had proper regard to the infrastructure on the property.

[49]     Fifthly, Mr Currie says that the valuer also failed to attribute any value to a contract Te Rimu Station Limited had with Genesis Energy for payment of a royalty for use of the property for a wind farm.  At the time, Te Rimu Station Limited was receiving $14,000 per annum from Genesis pending the wind  farm being built, resource consents for the wind farm were held, and the contract therefore had a value material to the overall value of the small property.

[50]     It is correct that the receivers did not carry out any advertising or undertake any other marketing to promote sale of the small property as a separate block, apart from offering it to the two adjoining neighbours.  However, Te Rimu Station Limited had not carried out any promotion by any other method, either, from the time it decided to sell this block separately in November 2012.  Rather, its appointed agent had approached sale of the property on the basis that the most likely buyers for the block were the neighbours.  Mr Pitt, a licensed real estate agent with For Farms, who

handled the sales, says that it was marketed this way because it did not have either a dwelling or an operative woolshed.  Mr Southgate describes the woolshed as old and dilapidated, a description with which Mr Thomas, having inspected the property, agrees.  Mr Southgate says there was also an airstrip and a manure bin and a small set of sheep yards away from the main shed area, together with a laneway connecting satellite yards with the old woolshed yards.

[51]     Mr  Currie  takes  issue  with  Mr  Southgate’s  description  of  the  woolshed,

saying it was operative but its power was shut off at that time.

[52]     No independent expert valuation evidence was produced to contradict either Mr Southgate’s observations, or his conclusions, or to establish a value for the property if  Mr  Currie’s  opinion  of  the  improvements  is  correct.    Nor  was  any independent expert evidence given to contradict the views of Mr Pitt on the correct way to market the property, given the limitations outlined.

[53]     The second issue raised by Mr Currie is that the receivers should have offered the small property for sale in three separate blocks, as it was already on three titles. He maintains that had this course been followed, a higher aggregate price would have been achieved.

[54]     Again, Mr Currie has not produced any expert evidence from either a valuer or from a real estate agent as to the saleability of any of the three titles, separately, nor of their values, to support his opinion.   Nor does he proffer an assessment, himself, of how much might have been obtained on the market for any of the three titles.  When he was in control of the sale process between 2010 and the appointment of the receivers in February 2013 he did not promote sale of the property on this basis, even when the sale methodology was reviewed in November 2012.  Nor did he suggest it to the receivers during February 2013.  To the contrary, he supported sale of the small block at $700,000 if an offer were forthcoming, but otherwise was generally supportive of the sale of the block at $550,000.

[55]     The third issue raised by Mr Currie was that in assessing the value of the property, in support of the sale price, proper regard was not had to the infrastructure

on it.  I have referred to this in the context of the first issue, and need add nothing further.

[56]     The fourth issue raised by Mr Currie is that in assessing the value of the small block, Mr Southgate failed to attribute any value to the wind contract with Genesis Energy.

[57]     In his report Mr Southgate noted a caveat registered by Genesis, and the receipt of $14,000 per annum as a holding sum pending development of the site. Mr Southgate went on to say that Genesis had not yet been granted resource consent and, accordingly, he did not attribute any value to potential royalties arising from wind power generation, as he considered that a prudent purchaser would not place any additional value on this resource until royalty payments were an actual fact.

[58]     Mr Currie says that in fact resource consents had been granted and the fee of

$14,000 per annum was being paid, so should have been factored into the valuation.

[59]     Assuming Mr Currie’s version to be correct, consideration of the contribution to the value of the property, if any, from this revenue stream might be thought to be relevant to a valuation.  However, Mr Currie did not adduce any evidence to confirm this proposition, nor indicate how such an income stream might in fact affect the valuation.   Nor did he produce any documents showing the terms on which the payment was being made, which might, for example, have given an indication of whether there was a commitment from Genesis to pay this sum for a long period, or whether it was for a finite period.

[60]     The fifth issue raised by Mr Currie is that the sale price achieved was well out of line with the price he achieved the month before for a similarly sized block known as Ngapaeruru.  This property had an area of 325 hectares and was sold for

$1,460,000.

[61]     This property was referred to in Mr Southgate’s valuation report as a recent sale, and was described in these terms:

Ngapaeruru near Dannevirke.  Medium hill in moderately summer dry area. Clean   country   with   good   fertiliser   history   until   five   years   ago. Improvements comprise of a 1980’s woolshed, implement shed and sundry farm buildings, tidy fencing and tracking but no dwelling.

[62]     In his affidavit Mr Southgate says that he did not, and still does not, consider that this property is a good comparison to Te Rimu Station primarily because of its size and location.  The reference to size arose because in his valuation report he was assessing the value of Te Rimu as a whole.  Ngapaeruru is comparable in size only to the small block.  The reference to location is based on the fact that Ngapaeruru is only a quarter of the distance from Dannevirke of Te Rimu.

[63]     Mr Pattison says that in his view the small property was not an especially desirable property.   It is very isolated, has difficult contours and its stock carrying capacity had been compromised by a lack of investment by Te Rimu Station in fertiliser and pasture renewal.  He says it could best be described as rundown with significant work needed on tracks to make them passable in places, and fences that required stock-proofing or total replacement.

[64]     Mr Currie describes the small block as being at a higher altitude than the larger part of Te Rimu Station, as having a steep and rugged gully, and having some cutover forestry area.

[65]     On this issue, as on others, whilst Mr Currie has expressed his own view that the two properties are comparable, he has not produced any independent evidence to refute the evidence of Mr Southgate or to substantiate his opinion.   In effect, the Court is being asked to draw an inference that because the two properties were of similar area, they were also of similar worth, or at least that the small block was worth something in the order of the sale price of Ngapaeruru, if perhaps a little less because of its location.  However, the Court cannot speculate.  It is trite to say that every property is unique, and value is established in a market by assessment of its positive and negative features. A professional valuation assessment is established by careful analysis of a multitude of factors, of which comparative sales is only one. The range of factors can readily be seen by examining Mr Southgate’s report on Te Rimu  Station,  where  there  is  analysis  of  location,  physical  features  (including

contour, aspect, altitude, soils, climate, cover, weeds, pests, access, fertiliser, water supply, subdivision, carrying capacity and production) as well as improvements.

[66]     Taking into account all the issues raised by Mr Currie in support of his contention that the receivers sold the property in breach of their duty under s 19, I am  not  satisfied  that  he  has  demonstrated  that  he  has  a  tenable  defence.    The strongest points he has made relate to the lack of advertising or marketing by the receivers, and the discrepancy he sees in the way the infrastructure on the property has been described in the valuation.  I am satisfied, however, that there were sound reasons, based on independent professional advice, for the view that the most likely, if not the only buyers for the property would be neighbours, from whom only one offer was forthcoming.  Mr Currie himself was broadly supportive of that offer being accepted, at the time.  There is no independent evidence that any further advertising or marketing beyond that which had already been done would have achieved a higher sale price.

[67]     Further, the aggregate of the prices under the contracts for sale of both parts of the property ($4,750,000) was squarely within the market value range assessed by Mr  Southgate  ($4,500,000  to  $5,000,000)  and  the  offers  were  made  before  the market  could  have  had  wind  of  the  possibility  of  a  forced  sale  which  would, according to Mr Southgate, have reduced the value of the property to a range of

$3,500,000 to $4,000,000.   Even if the offers had not been accepted, and further advertising and marketing of the small block had been undertaken with a view to trying to find a buyer at a price higher than $550,000, the fact of the receivership would have inevitably, on the evidence, had an adverse effect on the value of the property.   The same would apply if Rabobank had elected to take mortgagee sale steps after expiration of its Property Law Act notice.  And while that was going on, interest was accruing on the unpaid portion of the loan at 14.2 percent.

[68]     So far as the other issues raised by Mr Currie are concerned, the lack of any independent evidence to validate his opinions leads inevitably to the view that a sound foundation for them has not been laid.  The Court has no way of knowing how much might have been achieved for the sale of each of the three separate titles, what the terms of the wind farm contract were and what effect, if any, it may have had on

the value of the property, nor the effect on the value of the property of the infrastructure  being  the  way  Mr  Currie  describes  it,  compared  with  the  way Mr Southgate and Mr Thomas describe it.

[69]     I need add nothing to the comments I have already made about comparing the price of the small block with that attained for the Ngapaeruru block.

[70]     I conclude that a tenable defence has not been demonstrated.

Second  issue:  have  the  receivers  acted  as  the  agent  of  Rabobank  so  that

Rabobank had responsibilities for their actions?

[71]     Given the conclusion I have reached on the first issue it is unnecessary to discuss at any length whether Rabobank might be liable for any breach of duty under the Receiverships Act by receivers appointed by the BNZ.  Both counsel accepted that there was no authority for this proposition.  Mr Gordon impressed on me that although in some circumstances the appointor of a receiver may so act as to become liable for the receivers’ action, the same cannot apply to another party.   Ms Van impressed on me that there was no reason in principle why this could not be so.

[72]     In general terms the receivers say that they were undertaking their task as receivers, and complied at all times with their duties under ss 18 and 19.  They had to take account of Rabobank’s position as first mortgagee, as a sale of the property could not be concluded without Rabobank releasing its mortgage.   Rabobank says that it took appropriate advice on the steps it should take, that it was satisfied with the marketing that had been undertaken, that it took advice in relation to the value that could properly be expected for the secured property as a whole, that it took into account Mr Currie’s expressed views at the time, and that it took all these steps as mortgagee, in accordance with its duties to the mortgagor.  It refutes any suggestion that it appointed the receivers as agent and might thus be liable for their actions, as principal.

[73]     In my view, the evidence viewed overall is consistent with the receivers undertaking their tasks as they were required to do, and Rabobank taking steps

which it was appropriate, indeed its duty, to take as mortgagee.  The receivers and Rabobank worked closely together, and with the same aim, namely to achieve a price which was consistent with the advice they received, by entering contracts before the market got wind any sales may possibly be stressed or forced, and by entering contracts with prompt settlement dates given interest was running at over 14 percent per annum.   In my view, the evidence is inconsistent with the receivers acting as agents of Rabobank.  Rabobank made it clear in writing to the receivers that it would make a decision on whether or not it would release its mortgage after consideration of the terms of any sales agreements they might arrange.

[74]     The only factor which in my view requires further mention is the letter from Mr  Pattison  to  Mr  Currie  sent  on  5  February  2013  which  recorded  agreement between them “that the receivers may act on behalf of Rabobank in realising the land and buildings of the company”.  On its face this was an agreement that the receivers would act as agents of Rabobank, and Rabobank accepted that the letter accurately recorded that agreement.  However, the only right Rabobank had to sell the property was  its  right  under  the  Property  Law Act  as  a  mortgagee.    Shortly  after  this agreement was reached Rabobank, having considered conducting a mortgagee sale, decided not to.  From the time that decision was taken Rabobank was not engaged in selling the property pursuant to its only right to do so.   If the agreement made on

5 February was an agency given by Rabobank to the receivers, it necessarily came to an end when Rabobank decided that it would not sell the property as mortgagee, and told the receivers of that decision.  All steps taken after that by the receivers were necessarily on their own behalf, pursuant to their powers to sell the company’s property, as they could not remain agents of Rabobank to undertake an action which Rabobank had specifically informed them it was no longer taking.

[75]     Had it been necessary for me to decide this issue, I would have found that

Rabobank has established that the receivers were not its agent.

Outcome

[76]     Mr Currie has not laid an evidentiary foundation demonstrating a tenable defence.   Rabobank has established that, in the event, the receivers were not its

agents.  Rabobank has satisfied the Court that Mr Currie does not have a defence to the claim.

(a)     I enter summary judgment for Rabobank in the sum of $434,351.49.

(b)I enter judgment for Rabobank for interest at the rate of 14.2 percent per annum from 21 June 2013 until the date of judgment.

(c)    I declare that Rabobank is entitled to interest from the date of judgment at the rate of 14.2 percent on the judgment sum until the date of payment.

(d)I award costs to Rabobank on a 2B basis plus disbursements fixed by the Registrar.

J G Matthews

Associate Judge

Solicitors:

Minter Ellison Rudd Watts, Wellington. Kensington Swan, Auckland.