Squair v Taylor
[2025] NZHC 354
•28 February 2025
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2023-419-000185
[2025] NZHC 354
BETWEEN BRIAN JAMES SQUAIR and
VICKI ANN SQUAIR as partners of the SQUAIR BLOODSTOCK PARTNERSHIP
PlaintiffsAND
KEVIN JOHN TAYLOR
First Defendant
KORU THOROUGHBREDS LIMITED
Second Defendant
Hearing: 9 December 2024 Appearances:
K Bond and J Perry for the Plaintiffs T Bowler for the Defendants
Judgment:
28 February 2025
JUDGMENT OF WALKER J
This judgment was delivered by me on 28 February 2025 at 3.30 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Solicitors:
Braun Bond & Lomas Limited, Hamilton Neilsons Lawyers, Auckland
SQUAIR v TAYLOR [2025] NZHC 354 [28 February 2025]
[1] Miss Hepburn, Le Castile and Hattie Bee are thoroughbred horses owned by the plaintiffs, the Squairs, trading as Squair Bloodstock Partnership. Those horses, along with two fillies and a yearling also owned by the Squairs, are agisted at a stud owned by the second defendant, Koru Thoroughbreds Limited (Koru).
[2] The Squairs wanted the horses returned. Koru refused to return any horse until all outstanding agistment fees had been paid on all the bloodstock agisted. It contended that it was exercising a common law lien. It took steps to sell the horses to meet the plaintiffs’ indebtedness to it. The Squairs filed proceedings to prevent any sale or any advertisement of the bloodstock. They denied that Koru was entitled to a lien. They accepted that Koru provided agistment services which it has not been paid for but maintained that they have a set-off for losses caused by the unlawful retention of the bloodstock which eclipses the amount Koru is entitled to.
[3] Other lesser disputes have since arisen about the reasonableness of some of the fees charged for third party veterinary and related services but the core dispute remans retention of the bloodstock.
[4] The High Court made interim injunctive orders by consent pursuant to which Koru and Koru’s director, Kevin Taylor, are not to advertise for sale or sell the bloodstock.1 The Squairs say the intention was that the parties co-operate to sell some horses to pay off the debt but that did not happen. The reasons why are contested. Yet the Squairs also did not take further steps to progress the substantive claims. That presented (and continues to present) a “catch-22” situation. Koru’s ongoing refusal to return the bloodstock means that it continues to incur further out of pocket expenses because it rightly acknowledges an obligation to care for the bloodstock. Ongoing monthly fees being incurred are approximately $6,100 without including additional veterinary costs or interest.
[5] Finally, Koru and Mr Taylor decided to bring the matter to a head leading to the matters now before this Court:
1 Squair v Taylor HC Auckland CIV-2023-419-185, 26 July 2023 (Minute of Anderson J). These interim orders were made pending an on-notice hearing on 16 October 2023. Further orders restraining the advertisement and sale of the bloodstock were made by consent on 10 October 2023 (and the on-notice hearing was vacated).
(a)Koru’s application to discharge the interim injunction because of changed circumstances. This would have the practical effect of removing the current impediment to sale of the bloodstock by auction to meet the (disputed) debt but if this order was made it would not necessarily follow that Koru has a lawful entitlement to do so.
(b)The Squairs’ application for interim relief to have the bloodstock returned to them so that they may manage any sale in a manner protecting their reputation and maximising the value attained.2
[6] The simplicity of this commercial stand-off belies the complexity of the legal issues. In addition, an interlocutory application for injunction is not an appropriate forum to determine disputed factual matters except where the asserted fact clearly does not withstand scrutiny. It follows that many of the issues are not ripe for determination in this context.
[7]I distil the issues at this stage as:
(a)Whether Koru/Mr Taylor are entitled to apply to discharge the interim injunction which currently restrains them from taking steps to sell the Squairs’ horses.
(b)Whether the Squairs are entitled to interim mandatory relief requiring the defendants to return the horses to them. This requires determinations as to:
(i)the appropriate threshold for relief of this nature in the present circumstances;
(ii)where the balance of convenience lies; and
2 Given that the Squairs’ stated position seems to be that they have a set-off for losses which extinguishes any liability for agistment fees, it also appears that they no longer anticipate sale of the bloodstock to pay Koru.
(iii)whether the overall justice requires maintaining the status quo (and how this is to be defined), discharging the injunction in place or requiring return of the bloodstock.
[8]Each issue raises a host of sub-issues.
[9] The substantive dispute will be largely determined by whether the defendants were entitled to exercise a lien which depends on the nature of the “agistment” arrangement entered between them in 2021. If so, whether the lien entitles retention of some or all of the bloodstock agisted and whether it is in the nature of a general or particular lien. Thus, the parties’ respective applications are in effect the inverse of each other.
[10] Koru’s position has shifted since the dispute first arose. Koru’s position now is that once the costs associated with an individual horse are paid, that horse will be released “in accordance with industry standards”. Had this been the position at the outset, it is conceivable that the parties would not have resorted to litigation. I return to this point later in this judgment.
Preliminary matters — admission of late evidence
[11] Mrs Squair has filed 3 affidavits on behalf of the plaintiffs.3 Mr Taylor filed two affidavits, the first in support of the defendants’ application to discharge the interim injunction and the second in response to Mrs Squair.4 On the last working day before the hearing, Mr Taylor filed a further affidavit. The Squairs objected on the basis this additional material was not anticipated in the timetable, leave was required and they were prejudiced by the late filing. Counsel for both parties agreed that the Court would deal with the objection in the substantive judgment rather than make any ruling in advance. The Squairs indicated they did not need an opportunity to file
3 Affidavit of Vicki Ann Squair in support of without notice application for interim injunction sworn 21 July 2023; Affidavit of Vicki Ann Squair in support of notice of opposition to defendants’ application to discharge injunction and plaintiff’s application for mandatory injunction sworn 11 October 2023; Affidavit of Vicki Ann Squair in response to affidavit of Kevin John Taylor sworn 15 November 2024.
4 Affidavit of Kevin John Taylor in support of interlocutory application for discharge of injunction and ancillary orders sworn 22 April 2024; Affidavit of Kevin John Taylor in response to affidavit of Vicki Ann Squair sworn 12 November 2024.
further evidence in response should the late affidavit be read. They say the affidavit has the flavour of submission rather than evidence.
[12] I accept that the affidavit should not be read by the Court for the reasons advanced by counsel for the Squairs. Accordingly, I disregard it.
Factual background
[13] The affidavit evidence traverses the relationship between the parties in some detail. As noted, there are factual contests, allegations and counter-allegations. As this is an interlocutory judgment, I set out only those matters essential to understanding the dispute over interim relief and the matters underpinning that dispute.
[14] Agistment arrangements between the Squairs and Koru commenced in mid-2021 when the first of the Squairs’ bloodstock was sent to Koru agistment.
[15] Things ran smoothly until January 2023 when the Squairs ceased to pay agistment fees. There was no dispute at that time that they owed payment in accordance with the invoices issued. They claimed instead that they were unable to make timely payments due to unforeseen financial constraints. The relationship between the parties deteriorated.
[16] In May 2023, Koru gave notice that it intended to sell nine of the thoroughbreds then agisted to pay down the alleged debt of $114,263.44 comprising agistment fees and associated costs.5 On 29 May 2023 Koru purported to issue a notice to sell by auction relying on s 342 of the Contract and Commercial Law Act 2017 (CCLA). Koru initially asserted (erroneously) that its lien derived from s 342 of the CCLA.
[17] The Squairs disputed Koru’s entitlement to a lien except in respect of two horses for which services over and above agistment had been supplied — Dissident and Timetest.6 They accepted that a particular lien was sustainable for those horses in respect of a relatively small portion of the debt owed. They say they were able to meet
5 The associated costs included charges for interest and debt recovery which the Squairs dispute. The debt net of those disputed elements was $102,387.56.
6 These two horses are no longer under Koru’s care.
the lien debt associated with the two horses but Koru refused to release any bloodstock until the entire debt was paid. The Squairs then demanded the return of all of the bloodstock.
[18] The Squairs advised through their solicitors that they had a buyer for one of the fillies and that the ‘balance’ of the sale proceeds would be paid to Koru to reduce the outstanding debt. The terms of sale required that the filly be sent to a third-party farm before payment to Koru. The Squairs maintain that the net sale proceeds would have resulted in a payment to Koru exceeding the debt owed on that filly at that stage and over 39 per cent of the total debt owed to Koru.
[19] Mr Taylor/Koru continued to assert an entitlement to a common law lien over all of the bloodstock on the basis that Koru provided goods and services under a single agreement to provide agistment for various bloodstock. They refused to release any horses until payment of the entire indebtedness including legal costs. That stymied the sale of the filly. It was also a key reason why the dispute escalated.
[20] The Squairs then filed proceedings on 21 July 2023 including a without notice application to restrain Koru’s threatened advertisement and sale of the bloodstock (to pay the entire debt) until such time as full argument could be heard. Counsel for the Squairs at that stage advanced the argument that all they were after was an order restraining advertising of any forced sale of the bloodstock and that Koru agree to deliver them up on payment of the debt associated with each individual horse. The application was served on a ‘Pickwick’ basis in view of the earlier correspondence between legal advisors.7
[21] When these proceedings commenced, there were nine horses subject to the agistment arrangements with Koru. Mrs Squair estimates that those horses had a total value of approximately $450,000 although this estimate is short on detail. The statement of claim pleads that, at 20 July 2023, the total owing to Koru was $92,091.62 exclusive of GST.8
7 Interim consent orders restraining the threatened advertisement and sale were granted. See Squair v Taylor, above n 1.
8 I apprehend this figure is the sum of the invoices without interest or costs. Mr Taylor deposes that as at 22 April 2024 the total sum owed was $153,722.32.
[22] In mid to late September 2023 the Squairs agreed to an attempt to sell the Blue Point filly with the balance of sale proceeds to be paid to Koru in a bid to inject some goodwill into the dispute. Mr Taylor set out terms and conditions to enable the sale to proceed. The sale went through and some money was paid to Koru. The Squairs continue to maintain that the filly was sold for significantly less than her actual value since the buyer sold her only four months later at the Karaka yearling sales for nearly three times more than the price paid to the Squairs.
[23] Following the sale of the Blue Point filly the parties agreed terms of a consent order preventing Koru/Mr Taylor from advertising the sale of the Squairs’ eight remaining horses (as defined in the statement of claim excluding the Blue Point filly) or taking any steps to sell the horses.9 The consent order was granted on 10 October 2023.10 The order included leave to the defendants to apply on notice to have the order discharged.
[24]No payments have been made to Koru since the making of this consent order.
[25] Koru engaged debt collectors in or around November 2023 and filed proceedings seeking summary judgment in the District Court. Those proceedings were discontinued for reasons not explained in this proceeding.
[26] Three colts were returned to the Squairs on 6 December 2023 for welfare reasons, leaving six horses remaining at Koru.
[27] In April 2024 the Squairs learned that Mr Taylor had contacted a horse stud seeking approval to sell the Brazen Beau x Miss Hepburn filly. No further steps were taken once the Squairs advised the horse stud of the interim injunction. A month later the Squairs learned that someone had submitted the same horse to the 2024 Gold Coast National Yearling Sale and booked her on a flight to Australia. Mr Taylor’s evidence is that this was done without his knowledge and without discussion with him. Again, the Squairs alerted that party to the injunction and the filly was removed from the catalogue.
9 Joint memorandum seeking orders by consent dated 9 October2023.
10 Squair v Taylor HC Auckland CIV-2023-419-185, 10 October 2023 (Minute of Van Bohemen J).
[28] The Squairs took no steps in the proceedings but in early September 2024 Koru/Mr Taylor served an application to discharge the injunction, filed but not served many months earlier. In response, the Squairs applied for interim relief to have the bloodstock returned to them.
[29] The Squairs notified Mr Taylor through their solicitors that they had an offer to buy Hattie Bee for $600. Mr Taylor’s solicitors responded that Hattie Bee would only be released on payment of the full debt owing in relation to her which they contended was $29,588.35.
[30] It is incontrovertible that the present impasse is largely unsatisfactory for both parties. The Squairs want their horses returned. They say that they have no liability for agistment fees incurred after their request to return the horses in July 2023 and can care for the horses on their own properties for significantly less cost than charged by Koru. (It has not been explained why they sought out Koru for agistment in the first place if this was the case). They maintain they have a claim for damages against Koru for losses incurred by the alleged unlawful retention of the bloodstock, including in respect of the alleged loss of sale of one or more of the horses. That damages claim remains unparticularised.
[31] Koru continues to possess the horses, incurring further costs. It argues that there is an opportunity cost in keeping the horses on their property, wants payment and does not wish to lose what it considers to be its legitimate security for money owed.
Legal principles
[32] The starting point is that s 341 of the CCLA does not itself create a right to a lien. It provides a right of sale by auction to the extent that there is an entitlement to a lien. It reads:
341 Power of sale under lien for work done
(1)This section applies if—
(a)a person (A) has done work on goods in A’s possession and, as a result, A is entitled at law to a lien on the goods for any amount; and
(b)the amount remains unpaid for 2 months or more after it should have been paid.
(2)A may sell the goods by auction.
(3)The remedy in this section is in addition to all other remedies provided by law.
(4)In this subpart, goods includes all kinds of movable personal property, including animals.
[33] The case of Grazing & Export Meat Co Ltd v Anderson involved agistment of cattle.11 The cattle owners remained responsible for the management of the animals but were entitled to graze a limited number of livestock on the defendant’s farm. The defendants distrained the animals and intended to sell them unless arrears of agistment fees were paid. The cattle owners moved to restrain any sale. Macarthur J granted an interlocutory injunction restraining the sale, holding that improvement was a necessary ingredient to a right to a particular lien and, in the absence of special agreement, the agister who merely takes care of them and supplies them with food, has no lien.
[34] In Ermine Holdings Limited v Benjamin, horse owners sought to restrain the sale of horses by the defendant who had provided agistment and “other” services.12 The defendants relied on s 3 of the now repealed Wages Protection and Contractors Liens Repeal Act 1987 which, in material part, is not dissimilar to s 341 of the CCLA.
[35] The horse owners had acknowledged that a “particular” lien existed in respect of four specified horses but argued in relation to those animals that there was no power of sale arising from a “particular” lien. In relation to the other horses, the owners relied on the traditional distinction between work resulting in improvement to the animals and other work.
[36] Thomas J was satisfied, without resolving the point finally, that the services provided extended beyond mere agistment because they included not only grazing but also stabling and boxing, barrier services, veterinary attention, stallion servicing, foaling services, breaking the horses in to lead, transport, along with preparation and
11 Grazing & Export Meat Co Ltd v Anderson [1976] 1 NZLR 187.
12 Ermine Holdings Ltd v Benjamin (HC Auckland CP1144/90), 7 August 1990, at 5.
other services designed to present the horses for display and sale. He considered there was significant merit in the argument that the “totality” of the services was more than agistment and amounted to improvement. Despite this, he considered the horse owners had established at least a serious question to be tried in an interlocutory context so the decision to refuse to restrain sale ultimately turned on the balance of convenience.
[37] Of interest are his observations which, though not part of the ratio of his oral decision, merit repetition. First, he noted the inherent practical difficulty of trying to separate elements of the work, leading him to prefer instead to look to the services provided “in the round”.13 Secondly, he commented that the notion of agistment was “probably quite out-dated and that the services provided by those who have livestock entrusted to them will, by and large, bring about an improvement in the animals.”
[38] A year later, in AJ Hollander (NZ) Ltd v Owens Coolair Services Ltd, a substantive decision relating to a claimed lien over meat stored on behalf of the owner, Henry J also said of the distinction in the case law between maintenance and improvement for the validity of a lien:14
…I find the distinction can have an air of unreality, and doubt its validity where the maintenance has involved expenditure of time and effort and money…
[39] The terms of trade for storage included a right of lien but was a contract between the original bailee and the defendant rather than the owner and defendant. It was not strictly necessary to then consider whether a particular lien arose at common law but Henry J concluded nevertheless that it did. He rejected the argument that no expenditure of labour or skill in the improvement or repair of the meat had been expended by the defendant. He referred to the receipt of cartons of meat, loading out the meat, implementation of accounting procedures, freezing of the meat and the maintenance of the plant undertaken in order to carry that out. He concluded that the storing of the meat (which “included inter alia freezing it”)15 must be something more
13 At 6–7.
14 AJ Hollander (New Zealand) Ltd v Owens Coolair Services Ltd HC Auckland CL66/90, 3 July 1991 at 15.
15 At 15.
than maintenance because it involved an alteration to its nature and was in fact an improvement in its quality for consumer purposes.
[40] In O’Gorman v Hocking the defendants allowed the plaintiffs to graze deer on the defendants’ land for several years.16 Grazing fees fell into arrears and the defendants sold several of the deer after giving notice. The Court held that the arrangements amounted to a contract of agistment for which no lien existed. Damages were awarded to the plaintiffs instead.
[41] The seminal case of Stockco Limited v Walker followed.17 The defendant asserted a common law lien over cattle in her possession but owned by the plaintiff. She argued that the lien arose by reason of a contract between her and a third party pursuant to which she says she was required to improve the cattle, entitling her to retain possession until she was paid. The third party procured stock on behalf of the plaintiff and then made arrangements with farm owners for the stock to be raised on the farms. The overriding objective was to fatten the cattle for slaughter. The defendant entered a “Grazing Agreement” with the third party with the fee payable based on each kilogram of liveweight gained and weekly fees paid as part-payment of the ultimate fee. The third party was placed in receivership and invoices remained unpaid.
[42] The defendant served notice of sale of stock pursuant to s 3 of the Wages Protection and Contractors’ Liens Act Repeal Act 1987. A key issue, from which other issues flowed, was whether the defendant had a common law lien over the livestock.
[43] Allan J began by noting the significant body of authority supporting the proposition that there can be “no lien for the mere maintenance of chattels or for work done to prevent their deterioration as distinct from their improvement.”18 And relatedly, that a “mere contract for agistment will not support a claim to a common law lien.”19 He referred to the off-cited statement from Pennycuick J in
16 O’Gorman v Hocking HC Christchurch CP 60/92, 21 December 1992.
17 Stockco Limited v Walker HC Napier CIV-2011-441-110, 24 June 2011.
18 At [14].
19 At [18] citing Re Southern Livestock Producers Ltd [1963] 3 All ER 801 at 804.
Re Southern Livestock Producers Ltd that supervision of a natural increase of a herd of animals was not itself improvement but: 20
…there is a lien in favour of a person who trains a horse, a person who provides the service of a mare and a person who cares for an animal through illness. On the other hand, it is equally well established that there is no lien in favour of one who merely keeps a horse in a livery stable. The ground on which it has been so held is that in such a case there is no improvement of the chattel.
[44] In that case, the terms of the contract between the third party and defendant answered the question.21 It was a contract for improvement. Its whole purpose was to convert the animals into a profitable commodity with the overall remuneration based on the extent to which the bulls gained weight. That entitled the defendant to a common law lien.
[45] A more recent case cited by Ms Perry is the English case of Sheianov v Sarner International Ltd.22Although not a case involving livestock, it provides a useful exposition of developments in the common law. The dispute was over a contract to design, create and supply materials for an exhibition of vintage motorcycles lent to the defendant for that purpose. The question for summary determination was whether the defendant could keep the motorcycles until the contract price was paid. One of the pleaded justifications was the exercise of a particular lien.
[46] Describing the law of lien as an important commercial right derived entirely from the common law, the Court noted that the circumstances fell outside the usual run of cases, requiring a review of the authorities to delineate the boundaries and essentials.23
[47] The Judge cited the decision of the English Court of Appeal in Scarfe v Morgan in which a mare was sent by its owner to the owner of a stallion for breeding.24 The mare was duly covered by the stallion but the owner of the mare failed
20 At [18]. I note that Pennycuick J observed that if he were not bound by authorities, he would be tempted to draw a more generous line for improvement (at 805).
21 At [29].
22 Sheianov v Sarner International Ltd [2020] EWHC 1214.
23 At [51].
24 Scarfe v Morgan (1838) 4 M & W 270, 150 ER 1430 at 284–285.
to pay. The owner of the stallion claimed a particular lien over the mare until he was paid. The Court said:
The object is that the mare may be made more valuable by proving in foal. She is delivered to the defendant, that she may by his skill and labour, and the use of his stallion for that object, be made so; and we think therefore, that it is a case which falls within the principle of those cited in argument.
[48] This contrasted with agistment in which the agister does not confer any additional value on the article, either by the exertion of any skill of his own or indirectly — rather he simply takes in the animal to feed it.
[49] Among the key principles distilled by the Court was that it is a question of fact whether the work carried out improves or gives additional value to the chattel in question. If the agreed work is of a hybrid nature, some of which is apt to create a particular lien and some of which is not, and the work cannot be severed into those two constituent parts, no particular lien is created.25
[50] Finally, the author of Garrow and Fenton’s Law of Personal Property in New Zealand comment:26
The distinction between improvement and maintenance seems anachronistic and difficult to justify in a modern age. The carriers’ and innkeepers’ liens, neither of which involve improvement in the accepted sense, have been allowed to develop separate categories of lien, and there is good reason to ask why the distinction between improvement and maintenance should be perpetuated.
Discussion
What are the terms of the arrangements between the Squairs and Koru?
[51] Of key importance are the terms of the arrangements between the Squairs and Koru. Describing the arrangements as an ‘agistment’ agreement begs the question of what services were to be provided. Agistment is a term of antiquity generally referring to the feeding and care of livestock on one’s property. This is material because the
25 Sheianov v Sarner International Ltd, above n 22, at [80].
26 Roger Fenton Garrow and Fenton’s Law of Personal Property in New Zealand (7th ed, LexisNexis, Wellington, 2010) vol 1 at 679.
weight of authority holds that a common law lien is not available in respect of agistment services.
[52] It is common ground that there is no written signed agreement between the parties. Mr Taylor deposes that a price list and terms and conditions were “supplied to the Squairs when at Koru Thoroughbreds”. He suggests that the Squairs accepted the terms and conditions after reading them. Mr Taylor does not say who provided those terms to the Squairs. He goes on in his affidavit to state that the Squairs confirmed acceptance of the terms and conditions proffered by Koru in a text message on 26 September 2023. Those purported terms, headed “General Terms and Conditions” state, among other things:
Any horses associated with the outstanding debt that has been overdue for an extended period of time shall be sold under the Liens Act at the discretion of Koru Thoroughbreds Ltd.
[53] The Squairs emphatically deny that the written terms now relied on by Koru were ever presented.
[54] There are three reasons why I do not find Mr Taylor’s evidence persuasive on this aspect, although I do not finally determine the point. First, Mr Taylor only introduced reference to the presentation of written terms late in the dispute. There is no mention of stipulated contract terms providing for a lien in any of the correspondence between the parties’ respective solicitors. As far as I can ascertain, the first occasion that a contractual lien (as opposed to a common law lien) was raised in this proceeding was the defendants’ notice of opposition to the Squairs’ application filed on 11 October 2024.27 I do not overlook that in parallel proceedings filed in the District Court in May 2024 for summary judgment Mr Taylor deposed that the terms of the agreement for agistment were discussed along with a copy of the agistment rates.
[55] Secondly, this narrative is inconsistent with the chronology of the dispute. It does not accord with common sense that, after filing an application for interlocutory
27 Initial claims by Koru in correspondence between solicitors that it was not relying on a common law lien erroneously sought to rely on a “statutory lien” under the Contract and Commercial Law Act 2017. That was revised to a common law lien.
relief contending that there was no entitlement to a lien, the Squairs would confirm acceptance of contractual terms undermining their whole case.
[56] Thirdly, Mrs Squairs’ evidence that the text (of 26 September 2023) related only to acceptance of terms proposed for the sale of one of the horses as a measure of good faith, is more plausible and credible.
[57] Accordingly, based on the evidence before this Court, I find it highly unlikely that terms and conditions providing for a contractual lien were agreed. The result leaves only the prospect of a common law lien. Unless custom or contract provides otherwise, a common law lien is a particular rather than general lien. A particular lien only gives the lien holder the right to hold the particular chattel improved/repaired until the costs of that improvement/repair have been paid.28 It only applies to costs incurred for repair/improvement of the particular asset and not to other amounts which may be owing to the lien holder. In short, the work done which is the basis for the lien and the amount claimed for that work must coincide.29
[58] These principles happen to be consistent with the method of invoicing to the Squairs. The invoices rendered referred to each individual horse, detailing the agistment fee based on units and including other line items (such as farriering) for each. This shows that each horse was charged for as an individual rather than on a herd basis, as cattle or other livestock might be.
[59] It also means that Koru’s effort to extend the scope of a lien to include interest and costs is problematic because it goes beyond the costs incurred in any arguable ‘improvement’ of the relevant bloodstock.
[60] This does not resolve the question of what the orally agreed service terms were. Mrs Squair deposes that there was only verbal agreement for standard agistment services followed by invoices to be sent by Koru monthly. The services to be delivered were agistment (meaning grazing and feed), hoof trimming and shoeing (farrier work),
28 Laws of New Zealand Conflict of Laws: Lien (online ed, LexisNexis) at [22].
29 Ermine Holdings Ltd v Benjamin, above n 12.
veterinary visits and foaling.30 There is however no independent evidence about what “standard” agistment services entail.
Are the defendants entitled to seek to discharge the interlocutory injunction?
[61] Koru/Mr Taylor argue that the order ought to be discharged on the grounds, among others, that the Squairs have taken no steps in relation to the proceedings or the restrained bloodstock since the injunction was granted; the horses require urgent treatment which the Squairs refuse to pay for; and Koru requires the use of the land to provide services to other clients.31
[62] I accept Mr Bowler’s submission on Koru’s behalf that the circumstances have altered, entitling Koru to apply to discharge the interlocutory injunction. The Squairs did not advance their substantive case against the defendants once the consent order was made. An interlocutory injunction is a protective order ancillary to a final order so is designed to be a temporary remedy only. This Court has jurisdiction to vary or rescind such orders in the light of changing circumstances to meet the justice of the situation and the terms of the consent orders anticipate this by reserving leave to the defendants to do so.32
[63] Given the interrelationship of the issues before this Court however, the logical approach is to address the Squairs’ application first. If the Squairs are entitled to have the bloodstock returned to them, Koru’s application is moot.
Are the defendants entitled to exercise a common law lien?
[64] The threshold test for interim relief and application of the principles are well established. The three questions that the Court must consider when evaluating an application for an interlocutory/interim injunction are:
30 I apprehend that foaling was not arranging for the mare to be covered and choosing the sire but relates to the mare giving birth to the foal she was already carrying although this was not absolutely clear on the evidence.
31 The assertion of refusal to pay for treatment is disputed.
32 Sealegs International Ltd v Zhang [2017] NZHC 741 at [8]; Haylock v Patek [2010] NZCA 289, [2011] 1 NZLR 100 at [39].
(a)whether there is a serious issue to be tried;
(b)where the balance of convenience lies (in granting versus not granting the order; and
(c)the overall interests of justice.
[65] Mr Bowler submitted that the Squairs’ application ought to attract a higher threshold since the whole dispute could have been substantively determined by now had the Squairs progressed matters. He did not articulate how that higher threshold should be framed. Nor did he emphasise the mandatory nature of the order sought by the Squairs which has evolved from that advanced on the filing of the initial application for interlocutory relief. Then the focus was restraining the advertisement for sale and sale of the horses and Koru’s agreement to deliver up the horses on payment of the debt associated with each horse. This has now morphed into a mandatory order for delivery up of the bloodstock without any payment by the Squairs to Koru.
[66] The Squairs’ position is that they need only show a serious issue that the retention of their horses is unlawful. This threshold means only a claim that is not vexatious or frivolous and on which a plaintiff has at least a “tenable basis on which it might succeed at trial”.33
[67] The overarching principle is that the Court should take whichever course seems likely to cause the least irremediable prejudice to one party or another.34 That principle applies whether the injunction is prohibitory or mandatory.35 The Court of Appeal in Commerce Commission v Viagogo AG said that what ultimately matters is the practical implications of ordering the injunction sought.36
[68] On one view, special care is required where the grant of an interim injunction has the effect of a final order based on untested material. The practical implications
33 Intellihub Ltd v Genesis Energy Ltd [2020] NZCA 344, [2020] NZCCLR 29 at [27].
34 Commerce Commission v Viagogo AG [2019] NZCA 472 at [31] citing National Commercial Bank Jamaica Ltd v Olint Corp Ltd [2009] UKPC 16, [2009] 1 WLR 1405 at [17].
35 National Commercial Bank Jamaica Ltd v Olint Corp Ltd [2009] UKPC 16, [2009] 1 WLR 1405.
36 Commerce Comission v Viagogo AG, above n 33, at [90].
of this type of order are different and more consequential for the parties. Generally, special circumstances are required and a clear case for the relief sought because of its irreversibility.
[69] It is incontrovertible that the order which the Squairs seek would have the effect of a final order. Although a claim to damages is also pleaded, the principal remedy pleaded in the prayer for relief is an order requiring delivery up of the horses. That is irreversible in so far as loss of the security which a lien (if justified) provides. Loss of possession terminates a lien. However, the same can also be said for the order which Koru seeks. Although framed as an application to remove a current constraint, to grant it would mean that there is nothing to stop Koru selling the bloodstock other than the risk of a damages claim.
[70] Mrs Squair deposes that she and her husband asked Koru to provide standard agistment services which comprise agistment, farrier, vet visits and foaling. Her evidence is:
None of these services improve the relevant horse, they just maintain the horse and its value. There is a difference between agistment services that maintain the horses and other services that improve the value of the horse. Costs such as general agistment, farriers, drench, transport, regular vet and chiropractic visits all simply maintain the value of the horse.
…
Similarly, foaling down doesn’t add value to a mare. The mare’s value doesn’t change just because she has had a foal. It changes based on a pedigree upgrade (e.g her foal or sibling becoming a highly successful racehorse). So the mare’s value could increase in two or three years if a trainer can get that foal to win a big race, but it doesn’t increase at the time of foaling. Alternatively, the mare may become more valuable because of the foal she is carrying. For example, if the sire becomes successful. None of that is in Koru’s control. Rather, it is based on our decisions such as which stallion to send the mare to.
[71] Ms Perry, who carried the oral argument for the Squairs, submitted that it is well established that an agistment agreement does not support a claim to a common law lien.37 She contended that a common law particular lien requires some work done that improves or repairs a chattel delivered to the lien claimant for the purpose of improvement or repair. Since feeding and facilitating veterinary and farrier services
37 Relying on Stockco Limited v Walker, above n 17.
are agistment services considered to be maintenance only, none of the horses currently held have debts associated with them which could give rise to a lien. Two of the earlier released horses incurred charges for breaking-in and pretraining respectively, which did provide a basis for a lien.
[72] Mr Bowler acknowledged that prior legal advisors to the defendants had muddled the difference between a general and particular lien but that the services provided were not merely maintenance because they improved the condition of the bloodstock. He referred to comments by courts that trying to distinguish between maintenance and improvement has an air of unreality and that the existing case-law may not reflect modern day equine practice and advancements.
[73] The term “agistment” is anachronistic. Resort to that terminology begs the essential question. The weight of authority establishes that mere maintenance as distinct from improvement does not support a lien. But whether the services provided in any particular case amounts to an improvement (giving rise to a lien), or is confined to maintenance, is a question of fact and degree.38 If the agister expends no skill upon the animals, merely taking care of them and supplying them with food, the proper remedy ought to be bringing an action for the price of grazing, not a lien.39 The modern day reality of taking in bloodstock is, however, likely to be far removed from a traditional grazing contract for livestock. In any event it will be a question of fact.
[74] None of the line descriptions rendered in the relevant invoices in respect of the six horses currently on Koru’s property cogently show that services beyond maintenance have been provided as part of the agistment arrangements. Mrs Squair deposes that they decide which stallion to send their mares to, the mare’s value is unaltered by ‘foaling down’ (giving birth) and that veterinary attendance is no more than maintenance. Her evidence is that there is no preparation of the remaining horses, breaking in or other like attendances. Mr Taylor on the other hand says that his expertise, time and experience in the care of bloodstock amounts to improvement.
38 Stockco Limited v Walker, above n 17, at [22].
39 Grazing & Export Meat Co Ltd v Anderson, above n 11, at 189; Ermine Holdings Ltd v Benjamin, above n 12, at 4; O'Gorman v Hocking, above n 16, at 16.
[75] I am satisfied on the material before this Court that the Squairs have established a good arguable case that Koru is not entitled to a lien of any kind so its retention of any of the bloodstock is wrongful. But it is by no means an unanswerable case given the evidence is untested. It also cannot be said that Koru is unable to meet the threshold of a serious issue to be tried as to its entitlement to a particular lien since the relative strengths of their respective cases may alter when a complete narrative is placed before the Court.
[76] However, the proposition that Koru acted wrongfully when it purported to exercise a general as opposed to a particular lien is virtually incontrovertible for the reasons set out in [35] to [38] above. Thus, from the point at which Koru refused to permit the Squairs to meet the costs incurred in respect of a particular horse and to have that horse released, I consider it acted wrongfully.
[77] I turn then to address the balance of convenience since I am satisfied that the Squairs’ case easily meets the requisite threshold for relief.
Where does the balance of convenience lie?
[78] This second stage is to balance the risk of doing an injustice to either party by granting or not granting an interim injunction. The first question is generally the adequacy of damages for either party if ultimately vindicated at a substantive trial.40 Other considerations include the conduct of the parties, preservation of the status quo (if relevant), the relative strength of the parties’ cases and consequences for third parties, if any. All of these factors are considered in the context of the assessing the lease irremediable prejudice to the parties.
[79] Ms Perry submitted that quantification of losses for the Squairs if they are not able to manage the sale of their horses as they see fit will be at best difficult and at worst impossible because they will suffer damage to their reputation as quality thoroughbred horse breeders. Mrs Squairs’ evidence is that in a relatively small
40 An alternative approach is to regard the balance of convenience as generally only arising where there is doubt as to the adequacy of damages. See Cabco Group Ltd v Bartlett (2009) 6 NZELR 500 at [30].
industry, everyone would believe the Squairs were under pressure and needed to sell the horses.
[80] This evidence does not take the matter very far because on the Squairs’ own case, it is true and accurate. Moreover, given the small community and all that has transpired since the dispute first arose, it is highly likely that any reputation damage has already arisen.
[81] A related aspect of this control argument is the risk of an undervalue sale with both tangible and intangible detriments to the Squairs and broader impacts on third parties who own related progeny.41 Mrs Squairs deposes to a situation in which she alleges pressure was applied by Mr Taylor to another party to sell a Savanite colt to a related party who then on sold the colt for up to four times the value paid by that related party. The allegation is sparse on detail and contested by Mr Taylor. That conflict of evidence cannot be resolved in an interlocutory hearing. Similarly, I am not persuaded that the risk of sale at an undervalue is anything other than speculative. Koru’s interests lie in obtaining the best available value, particularly given the significantly increased (albeit disputed) debt levels.
[82] Ms Perry submitted that on the flip side, the quantification of damages payable to Koru is straightforward because it is recorded in invoices rendered to the Squairs.
[83] I agree that quantification of damages is more straightforward for Koru but the Squairs’ ability to meet any award of damages and the loss of security (if the lien is valid) are relevant factors. An undertaking as to damages has been provided by the Squairs but it is incumbent on them to provide sufficient evidence to show that the undertaking is worth something. Mrs Squair provides a schedule of properties owned by her and her husband. The schedule records a “listed price” value and the level of borrowings. These are merely bare assertions shorn of important detail. There is no evidence about the Squair partnership’s overall financial situation or that of Mr and Mrs Squair personally, including their overall indebtedness.
41 Counsel informed the Court that calculating the value of thoroughbreds is an inherently difficult task and is largely dependent on the physical condition of the horse at the time of valuation, as well as the pedigree.
[84] Mrs Squair also states that as at 21 July 2023, there were conditional agreements in place for two properties she and her husband own and that their equity position remains sufficient to repay Koru the amount claimed if the Court ultimately finds Koru is entitled to full payment. There is insufficient updating evidence and no detail such as the titles, sale price, conditions, valuations, or information as to the registered securities or other debts owed.
[85] Overall, the lack of financial information means that the adequacy of damages favours Koru/Mr Taylor.
[86] Both parties allege conduct by the other which disentitles them to equitable relief. Much is disputed and I generally put those allegations to one side, save as discussed below. There is no evidence that the welfare of the bloodstock is a concern. On the contrary, the evidence is that there is no risk to the bloodstock in Koru’s possession.
[87] There are two aspects of conduct on the part of each party which I find material. Until relatively recently, Koru/Mr Taylor stipulated through solicitors that no individual horse would be released unless and until the entire debt in respect of all the bloodstock was cleared. As noted, this was an untenable position. It significantly escalated the dispute and has led to Koru incurring further out of pocket expenses. Secondly, and relatedly, restraining the full quota of bloodstock said to be valued at around $450,000 in July 2023 in respect of a debt alleged to be around one quarter of that total was also unreasonable.
[88] On the flip side, there is merit in the argument that the Squairs ought to have progressed the substantive proceedings after the consent position was reached. Mr Bowler submitted that the orders now sought by the Squairs are inconsistent with what the parties already agreed as recorded in the consent orders. He relies for support on Arrow International (NZ) Limited v NZ Project 29 Limited.42 The weight of that submission is arguably diluted when Koru/Mr Taylor are themselves seeking to discharge the injunction. The point in Arrow International was that the parties had addressed the question of what should happen when there had been a contractual
42 Arrow International (NZ) Limited v NZ Project 29 Limited [2019] NZHC 132.
default in their contract at the outset of their relationship. That is different to agreeing an interim position which also builds in leave for the defendants to seek a discharge from that interim position.
[89] On balance, the question of disentitling conduct marginally favours the Squairs’ position but not to such a degree that special circumstances justify the grant of an interlocutory injunction with dispositive substantive effect.
Status quo
[90] When all other factors are evenly balanced, preservation of the status quo may be preferred. It is often described as the “last peaceable state between the parties.”43 I find the status quo is best represented by the position under the consent order (which also mirrors the position at the time the dispute arose).
[91] Mr Taylor deposes that Koru requires the use of the land to service other clients; the costs incurred by Koru continue to mount; and retaining the Squairs’ horses is having an adverse effect on their business. From the Squairs’ perspective, the status quo means they are incurring further disputed costs and continue to lack control over their property. However, the fact that the status quo is undesirable for both parties is neither here nor there.
[92] Taking into account all these factors, I find that the appropriate course is to maintain the status quo by retaining the current interim order but with additional conditions attached. I reach this view because I am not persuaded that there are sufficient factors justifying the grant of interim relief sought either by Koru/Mr Taylor or the Squairs.
What does the overall justice require?
[93] Standing back to consider the overall justice of the situation does not alter my conclusion at the first and second stages of the analysis taking into account the Squairs’ failure to pay agistment fees incurred in the first place was the catalyst for the dispute;
43 Inguran, LLC v CRV Ltd [2023] NZHC 3692 at [16].
the undertaking as to damages is not fulsomely supported; and it appears that their current position is that they do not owe Koru any money in the light of a set-off claim which is not currently particularised.
[94] That disposes of the application by the Squairs. I am not persuaded that Koru’s application to discharge the interim injunction is meritorious, largely for the same reasons discussed in this judgment. Koru’s claim to a lien is no more than tenable and the status quo is preferable, notwithstanding the disadvantages to both parties.
[95] Accordingly, I dismiss both applications. The interim injunction currently in place remains in place. However, I intend to impose additional conditions to attach to that consent order which reflects the findings in this judgment. Those conditions will first, set a timetable for progressing the substantive proceeding and secondly, prescribe a mechanism for the release of any individual horse on payment of agistment fees outstanding in respect of that individual horse (excluding claimed interest and legal costs). Payment is to be made to a solicitor’s trust account pending court order or written agreement of the parties.
[96] In the first instance, I invite counsel to confer with a view to agreeing a timetable and to propose the wording of the additional conditions referred to in [95] above no later than 21 days after release of this judgment and to notify the Court by joint memorandum. Thereafter the case will be placed on the next available Chambers List to monitor progress.
[97] In the event no agreement is reached, I will determine those conditions to attach to the current interim injunction and will release an addendum to this judgment notifying the parties.
Costs
[98] Both parties have successfully resisted the opposing parties’ applications which suggests that costs should lie where they fall. I will determine any questions of costs which do arise on the papers. Memoranda of no more than four pages in length
are to be filed within 21 days, with any responsive memoranda, of no more than three pages, within a further seven days.
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Walker J
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