The Court of Appeal released its findings late last month into the case between Southern Farms NZ Ltd and Winton Stock Feed Ltd, ruling a judgement was entered against Southern Farms NZ Ltd in the sum of $2,209,778.03 and interest at the rate of 1% per month calculated from May 20, 2024 until the date of payment.
The issue centred on an order by Graham Hand, a director of Southern Farms NZ Ltd, which fellow director Philipp Haas said he [Mr Hand] had no authority to make.
Mr Hand signed six contracts for feed in late 2022 with Winton Stock Feed Ltd, which sold animal feed around New Zealand but mainly in Otago-Southland.
After not paying for the first two deliveries, Mr Haas then cancelled all the remaining contracts in November 2022. Mr Hand had left as a director of the company two days before the cancellation of the contracts.
‘‘GET OUT OF THE CONTRACT AND NOW!’’ Mr Haas said in the email to Winton Stock Feed Ltd.
‘‘Until this is sorted out, I will NOT make any further payments for feed! Until this is sorted out, all orders are stopped!’’
Mr Haas also cancelled an agreement between the two parties for picking up palm kernel the company owned, and was used by Winton Stock Feed Ltd.
Winton Stock Feed Ltd said it was entitled to hold Southern to its contract and that it was ready, willing and able to meet its obligation to supply. Winton issued an invoice for $1,930,234.72 plus GST (totalling $2,219,769.93).
Winton continued, and continues, to commit to supplying the balance of feed at some indefinite time in the future, the Court of Appeal said.
Southern Farms NZ Ltd contended the terms and conditions of the contract between the two parties was never sent.
Southern Firms counsel Trevor Shiels KC said only the ‘‘first page’’ of the contract, and not the terms and conditions, were texted to Mr Hand, the Court of Appeals decision said.
Mr Shiels contended Winton’s evidence fell well short of establishing its core claims.
But the Court of Appeal said evidence from Winton Stock Feed Ltd witnesses over the standard terms was uncontested.
Two of the supply contracts at issue in the relevant season and which covered three different types of feed were signed by Mr Hand on the front page.
The Court of Appeal said Mr Hand was the representative who negotiated the contracts and had direct knowledge of the commercial dealings before his departure.
‘‘The absence of any evidence from Mr Hand or anyone else from Southern involved in the making and operation of the supply contracts is telling.’’ the Court of Appeal said.
Winton Stock Feed ran under a ‘‘take or pay’’ approach, so Southern Farms NZ would be liable for any feed not taken up.
The Court of Appeal said although the condition around undelivered stock feed was clumsily expressed, parties were to work in good faith, which would potentially see some reduction in the difference between the contracted tonnage and the delivered tonnage.
‘‘There was, however, no question of working in good faith to resolve significant surpluses in circumstances where Southern repudiated the supply contracts.’’
The Court of Appeal said Winton Stock Feed’s argument had ‘‘heft’’ and rejected the suggestion by Southern the condition around non-delivery was a penalty provision or that there is a role for equity to intervene.
The High Court decision did not include a monetary figure of what Winton Stock Feed Ltd would be paid.
Southern Farms NZ Ltd had taken the case to the Court of Appeal and Winton had then joined in a cross-appeal.
Mr Haas, who was born in Switzerland, owns, through a company, Matukituki Station, a large back country station, near Wānaka, is involved in a large residential development in Invercargill and is the chairman of Turkey’s largest pharmaceutical company, Deva Holdings Ltd.
He unsuccessfully stood to be a director of Fonterra in 2019. In his profile for the Fonterra position it was said he could speak seven different languages, had been a director of 40 current and former companies and owned multiple properties in New Zealand and Argentina.
Mr Haas could not be contacted. Fellow company director Allister Wearn could also not be contacted.
‘‘I had my doubts about the New Zealand justice system, but my confidence has been restored. Because we had to understand whether the contracts were going to be enforceable,’’ he said.
He said this sort of conduct could have put his business in jeopardy.
‘‘If you’re going to have people take contracts and ... if you can’t enforce that then there’s no future in business.’’
He never met Mr Haas. All the company dealings were with Mr Hand.
It was the first time he had come across this sort of behaviour since the company started in 1988.
He said the company had the most generous terms and conditions that you could find.
‘‘We’re not charging interest. We’re not charging storage. We just store it for free.
‘‘But what we say is, when we get to the end of the season, if you haven’t picked it all up, we’ll just ask you to pay for what you haven’t picked up. And we’ll supply it for you the next season.’’
