WAITONUI MILLTRUST AGRICULTURAL HOLDINGS FARM MANAGEMENT LIMITED PARTNERSHIP (in receivership and in liquidation) AND ANDREW JOHN GRENFELL AND KARE JOHNSTONE as the receivers of WAITONUI MILLTRUST AGRICULTURAL...

[2024] NZHC 3699

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2024-485-552

[2024] NZHC 3699

UNDER

The Declaratory Judgments Act 1908

BETWEEN

WAITONUI MILLTRUST

AGRICULTURAL HOLDINGS FARM MANAGEMENT LIMITED

PARTNERSHIP (in receivership and in liquidation)

First Plaintiff

AND

ANDREW JOHN GRENFELL AND KARE

JOHNSTONE as the receivers of WAITONUI MILLTRUST
AGRICULTURAL HOLDINGS FARM MANAGEMENT LIMITED

PARTNERSHIP (in receivership and in liquidation)

Second Plaintiff

AND

BANK OF NEW ZEALAND

Third Plaintiff

AND

FUTURE PLANET NEW ZEALAND LIMITED PARTNERSHIP

First Defendant

AND

FONTERRA CO-OPERATIVE GROUP LIMITED

Second Defendant

(Cont. overleaf)

WAITONUI MILLTRUST AGRICULTURAL HOLDINGS FARM MANAGEMENT LTD PARTNERSHIP & ORS v FUTURE PLANET NZ LTD PARTNERSHIP & ORS [2024] NZHC 3699 [6 December 2024]

AND

STOCKCO CAPITAL LIMITED

Third Defendant

On Papers

Counsel:

L C Sizer and C S Morrison for Plaintiffs

R Hollyman KC and M Pascariu for First Defendant M Branch for Second Defendant

G Carter for Third Defendant

Judgment:

6 December 2024

JUDGMENT OF RADICH J

[Costs]

[1]                 The plaintiffs1 and Future Planet New Zealand Limited Partnership have competing claims to payments by the second defendant, Fonterra, for milk supplied to it by the first plaintiff, Waitonui.

[2]                 When the proceeding was filed, the receivers (the second plaintiffs) sought interim orders directing that the milk payments2 payable by Fonterra during the 2023/24 milking season be paid into court pending determination, through the substantive proceeding, of whether the payments should be made ultimately to Waitonui or to Future Planet.

[3]                 On 1 October 2024, the parties entered into an agreement which resolved the interlocutory injunction issues. Under the agreement, the solicitors for Future Planet undertook to the other parties that it would hold the funds in question in the joint names of Waitonui and Future Planet, upon certain terms, only to be distributed in accordance with a joint written instruction or a court order.

[4]                 In a minute of 4 October 2024, the Court made several orders by consent. They included an acknowledgement that the receivers’ interim orders application, and a related application by Fonterra to interplead, were resolved on the basis of the

1      The second plaintiffs are the receivers of the first plaintiff, Waitonui.

2      Which are approximately $912,000 but expected to increase in total to approximately

$1.75 million.

agreement that I have mentioned. And they included timetable orders for the receivers and Future Planet to file memoranda on costs.

[5]                 The receivers seek costs on the basis that, through the terms of the agreement, they were essentially successful on the interim orders application. Future Planet seeks that costs be reserved on the basis that the Court should adopt an approach which encourages settlement, that to penalise Future Planet at this point in time would be inappropriate, and that there are serious doubts as to the merits of the interim orders application in any event.

Background

[6]                 Waitonui is part of a wider group of entities which, before receivership, operated farming businesses in Oamaru and Taupo. It supplies milk to Fonterra using dairy herds owned or leased by it, including from Stockco, the third defendant.

[7]                 The Bank of New Zealand provided the Waitonui group of companies with banking facilities and has a first ranking security interest over milk payments from Fonterra to Waitonui.

[8]                 In May 2024, Future Planet gave notice to Waitonui of the cancellation of a share sale and declaration of trust agreement entered into between Waitonui and Future Planet in 2018 and, as a consequence, instructed Fonterra to direct future milk payments to it, including for the milk that Waitonui had already supplied to Fonterra. That is the fund that is now held on trust.

[9]                 Future Planet has asserted that it has a priority claim to the milk payments on the basis that it is essentially the “supplying shareholder” in Fonterra.

[10]              Between July and August 2024, the receivers, the Bank and Future Planet attempted to negotiate undertakings over the milk payments pending determination of the competing ownership claims. Future Planet proposed that Fonterra would make the final payment into its solicitors’ trust account on the basis of an undertaking from the solicitors that “upon receipt into the solicitors’ trust account in cleared funds from Fonterra of the amount of the Milk Payments, the solicitors shall not release the Milk

Payments from their trust account except in accordance with a written agreement signed by or on behalf of both FPNZ [Future Planet] and Waitonui, or a Court order”.

[11]              The receivers were concerned that the undertakings did not go far enough in the sense that they were made only to Fonterra and did not include a term preventing Future Planet from making any deduction from the milk payments.

[12]When agreement could not then be reached, this proceeding was filed.

[13]              Future Planet, in the first instance, opposed the interim orders application and provided a substantial affidavit in support of its opposition but, on 4 October, it agreed to the undertakings the receivers had sought. They were executed on 31 October.

The receivers’ position

[14]              The receivers say that the application should not have been necessary. They say that the differences between the undertakings they sought immediately prior to filing the proceedings and the undertaking themselves are immaterial. The only relevant change, it is said, is a reservation of rights clause in the signed agreement. Accordingly, they say that under r 14.8 of the High Court Rules, costs should now be fixed in their favour, $7,075 is claimed (including disbursements).

Discussion

[15]              Under r 14.8 of the High Court Rules, costs on an opposed interlocutory application must be fixed in accordance with the rules when the application is “determined”, unless there are special reasons to the contrary. Interlocutory applications are “determined” for the purposes of the rule when the Court makes a decision in a judgment, where an application is withdrawn, or by agreement of the parties.3 If orders are made by consent, then there can be a presumption that the applicant was the successful party.4

3      SKP Incorporated v Auckland Council [2019] NZHC 1665 at [5].

4      Samson Corporation Ltd v Thermosash Commercial Ltd [2024] NZHC 51 at [32].

[16]              However, this is not a case in which one of the parties effectively resiled from a diametrically opposed position on an interim injunction through a set of consent orders. Rather, it is a case in which, while the parties were relatively close on agreeing that an undertaking should be in place, they could not agree upon the terms. The receivers make a fair point that there was little difference between the undertakings they had proposed prior to filing proceedings and the undertakings contained in the agreement that was reached subsequently. Future Planet might have reached agreement sooner than it did. However, it had agreed to an undertaking being in place that would have preserved the funds in the absence of an agreement or a court order, even although it would have been an undertaking made only to Fonterra.

[17]              Accordingly, while the interim injunction application has been “determined” in terms of r 14.8, this is not, as I see it, a case in which Future Planet has “failed”— in terms of one of the overriding principles for the determination of costs in r 14.2.

[18]              Two further points are material. The first is that reasonable settlements should be encouraged.5 While settlement should never be compelled or cajoled by the Court, the resolution of interim order proceedings pending trial by the parties, of their own volition, is something that the Court should promote appropriately. The consent orders did not, as I have mentioned, amount to a capitulation by one party but, rather, a coming together; although not has quickly as the receivers would have liked.

[19]              Secondly, the merits of the application have not been tested. Future Planet says that there were serious doubts as to the merits of the application for interim orders on the basis, primarily, that there was no risk of dissipation of the final payout and because damages would have been an appropriate remedy.

[20]              For these reasons, this is in my view one of those relatively exceptional cases in which there are special reasons for costs not to be fixed upon the determination of an interlocutory application. Future Planet has sought that costs be reserved. I am content to proceed on that basis.

5      Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd [1998] HCA 38, cited in Napier City Council v Local Government Mutual Funds Trustees Ltd [2022] NZCA 422, [2022] 3 NZLR 528 at [91].

[21]Costs on the receivers’ application for interim orders are reserved accordingly.

Radich J

Solicitors:

Buddle Findlay, Auckland for Plaintiffs

Hamilton Locke, Auckland for First Defendant