Stockco Ltd v Gibson - [2012] NZCA 330

IN THE COURT OF APPEAL OF NEW ZEALAND

CA58/2011
[2012] NZCA 330

BETWEEN STOCKCO LIMITED
Appellant

AND BRENDON JAMES GIBSON AND MICHAEL PETER STIASSNY
First Respondents

AND NUGEN FARMS LIMITED
Second Respondent

Hearing: 29-31 May 2012

Court: O'Regan P, Randerson and Asher JJ

Counsel: F M R Cooke QC and M H L Morrison for Appellant
R B Stewart QC, S C D A Gollin, A E Simkiss and N R Frith for First Respondents
No appearance for Second Respondent

Judgment: 26 July 2012 at 12.30 pm

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe cross-appeal is allowed.
CCosts are reserved. Counsel may file memoranda if agreement cannot be reached.

_______________________________________________________________

REASONS OF THE COURT

(Given by O’Regan P)

Table of Contents

Para No
Introduction  [1]
Issues  [7]
      Ordinary course of business: s 53  [8]
      Subordination: s 88  [10]
      Ascertainment  [14]
      Adequacy of description: s 36  [18]
Ordinary course of business: s 53  [21]
      Facts  [22]
      Relevant law  [40]
What was the ordinary course of business of Plateau?               [52]
Was the sale of 4,000 heifers in the ordinary course
of the business of Plateau?  [72]
Was StockCo’s security interest subordinated under s 88?       [80]
      Did the 20 April 2009 letter give notice to StockCo?                [90]
      Was the bailment/lease agreement a transfer of
      Nugen’s rights in the collateral?  [104]
Ascertainment  [112]
      Did the Security Group transfer property rights to 750 cows
      to Nugen?  [114]
      Does this matter?  [123]
Adequacy of description: s 36  [129]
Issues not dealt with  [141]
      Commingling  [142]
      Application of s 53 to the 750 cows  [145]
Result  [154]
Costs  [155]

Introduction

This appeal and cross-appeal raise a number of issues about the application of the Personal Property Securities Act 1999 (PPSA) to arrangements involving the financing of livestock.
There are two different priority disputes, one relating to 4,000 rising one year heifers (R1 heifers) and the other relating to 750 cows. The competing security interest holders are a consortium of financial institutions comprising Westpac New Zealand Limited, Rabobank Limited, PGG Wrightson Limited and PGG Wrightson Finance Limited on the one hand, and the appellant, StockCo Limited, on the other. The first respondents are receivers appointed by the consortium (we will, as did the trial Judge, refer to this consortium collectively as “the Banks” and we will call the first respondents “the Receivers”).
Both the Banks and StockCo had provided financing in various ways to four dairy farming companies owned by interests associated with Allan Crafar, namely Plateau Farms Limited (Plateau), Hillside Limited, Taharua Limited and Ferry View Farms Limited. We will call these four companies “the Security Group”. The Banks held a security interest over the personal property of the Security Group, including livestock.
StockCo is a livestock trading and finance company. In 2008, it entered into a number of sale and leaseback transactions involving the Security Group and another company, Nugen Farms Limited (Nugen). Nugen is owned by interests associated with Allan Crafar’s son, Robert Crafar, and is not part of the Security Group.
The…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Stockco Ltd v Gibson

Details

AGLC: Stockco Ltd v Gibson [2012] NZCA 330
Case: [2012] NZCA 330
Decision Date: 26 July 2012

CaseChat Overview and Summary

This appeal and cross-appeal from the High Court of New Zealand concern a dispute between two sets of security interest holders over the priority of their respective claims to livestock owned by a group of companies associated with Allan Crafar. The appeal was brought by StockCo Limited, a livestock trading and finance company, while the cross-appeal was brought by the receivers appointed to the Crafar companies, acting on behalf of a consortium of financial institutions. The primary issues raised in this appeal were whether certain sales of livestock were made in the ordinary course of the seller's business, and therefore free of the Banks' security interest, and whether StockCo's security interest was subordinated under s 88 of the Personal Property Securities Act 1999 (PPSA). The Court found that the sale of 4,000 rising one year heifers by Plateau Farms Limited to StockCo was not made in the ordinary course of business, and that StockCo's security interest was not subordinated under s 88. The Court also found that the purported gift of 750 cows by the Crafar companies to Nugen Farms Limited was ineffective and that the description of the 750 cows in the security agreement between StockCo and Nugen was not adequate for the purposes of s 36(1)(b)(i) of the PPSA. The appeal was dismissed and the cross-appeal was allowed on the s 36 point. The parties were ordered to file memoranda if they could not agree on costs.

Orders