Big Sky dispute still rumbling on

Seven years after the spectacular multimillion-dollar collapse of the controversial Big Sky dairy farm project in the Maniototo, farm founder and former shareholder Ewan Carr is still seeking redress through the courts.

In the latest round of litigation, Mr Carr and his former legal firm Gallaway Cook Allan, of Dunedin, were recently before the Supreme Court, with the result that Mr Carr could be back off to the High Court.

Mr Carr alleged the law firm was ''liable for damages for professional negligence in relation to a failed commercial transaction''.

His purchase of farm and hotel assetsfailed after the settlement deadline was missed.

Mr Carr could not be contacted for comment.

Farm founder Mr Carr and Auckland-based Rodney Humphries respectively held

one-third and two-thirds shares in five companies in the wider Big Sky group, but fell out when the project was placed in receivership and disputes arose over asset claims.

Multiple hearings and appeals on complex matters in a variety of courts followed, with the relationship between Mr Carr and Mr Humphries labelled in various courts as acrimonious, and ''dysfunctional''.

The latest judgement, released last week by the Supreme Court, follows a hearing in Wellington on November 28.

The latest litigation stems from Mr Carr and his Brookside Farm Trust Ltd.

The Supreme Court background notes said he wanted to purchase ''farming [Big Sky] and hotel [Danseys Pass] assets'' from Mr Humphries, by 4pm on May 31, 2007.

Mr Carr was unable to complete the deal in the stipulated time and Mr Humphries terminated the contract, a move upheld by the courts.

Mr Carr then contended Gallaway Cook Allan was ''negligent in handling settlement'' of the transaction, causing a delay that ''ultimately enabled Humphries to cancel the agreement''.

Mr Carr and Gallaway Cook Allan agreed to arbitration, which dismissed Mr Carr's claim, and he sought to challenge that finding in the High Court.

The arbitration agreement included a clause allowing either party to appeal the result on ''questions of law and fact'', while the Arbitration Act provides for appeals only on points of law.

The effect of the inclusion of this clause was the subject of the Supreme Court's November hearing. It ruled

that the clause made the arbitration process void, which meant Mr Carr could start proceedings all over again in the High Court.

The Supreme Court also ordered that Gallaway Cook Allan pay $25,000 court costs, and yet-to-be-determined disbursements.

Mr Carr's and Mr Humphries' legal battles have continued for several years about asset ownership relating to Big Sky.

In earlier litigation, in May 2009, Justice Dobson said of ''particular concern'' were ''substantial advances'' and accrued interest by Mr Humphries of $9 million, advanced through his company Edgeware Motel Ltd to the Big Sky Group.

The receivers had deemed the $9 million a valid security and Mr Humphries a secured creditor, but this was disputed by Mr Carr, who at the time, claimed the $9 million should be treated as an unsecured debt.

In March 2010 bankruptcy proceedings were brought against Mr Humphries by Mr Carr over claims of a $238,000 debt, which was settled on confidential terms in the High Court at Dunedin.

The Patearoa farm was proposed in early 2001 as a ''super farm'' to run up to about 6000 cows on 1600ha using supplementary feed, a proposal which attracted widespread criticism at the time. Until its receivership and subsequent sale, Big Sky was running up to 3300 cows on about 1300ha.

The New Zealand subsidiary of the multibillion-dollar Harvard University endowment fund purchased Big Sky from receivership in October 2010 for about $32 million.

It had since expanded the herd and farms about fivefold to 6318 cows, turning around a $1.1 million loss in 2010 to a $4.87 million after-tax profit for the year to June 2011.

-simon.hartley@odt.co.nz


Big Sky beginnings

• The Big Sky dairy syndicate formed in 2001, including Dunedin businessman Howard Paterson, who died in July 2003; Auckland-based Rodney Humphries; and 1992 farm founder Ewan Carr. The pair later became bitterly estranged.
• Big Sky failed to sell for $20 million and when placed in receivership in March 2007 it owed about $30 million, which included about $17 million to the BNZ.
• Purchased in 2010 out of receivership for $32 million by the multibillion-dollar Harvard University endowment fund, Big Sky and additional Maniototo farms now milk more than 6000 cows.


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