Central to the multiple and complex court proceedings spanning more than two years are Ewan Carr, of Patearoa, and his estranged former Auckland-based business partner Rodney Humphries, whose bitter relationship has been labelled in various courts as "warring parties", "acrimonious", and "dysfunctional".
The latest legal decision, released by Justice Dobson in the High Court at Wellington, granted an application by Mr Carr to have Big Sky Dairy Farms Ltd and Cascade Capital Ltd placed in the hands of the Official Assignee on June 2 for liquidation.
"Longstanding animosity between Messrs Carr and Humphries has inarguably rendered the governance of the Big Sky Group of [six] companies dysfunctional," the judge said.
Mr Carr has a one-third interest and Mr Humphries a two-thirds interest in each of Consultants Management Services Ltd, Big Sky Dairy Farms Ltd, Cascade Capital Ltd, Main Farm Ltd, and Tercio Dairy Ltd, collectively "the Big Sky Group".
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 have deemed the $9 million a valid security and Mr Humphries a secured creditor, but this is disputed by Mr Carr, who claims the $9 million security is "invalid" and therefore should be treated as an unsecured debt.
Gus Jenkins, of Insolvency Management Ltd, was contacted yesterday, and while unable to comment directly on Justice Dobson's finding, said that in general terms the receiver already acting for the BNZ has precedence over Mr Carr's successful application for appointment of a liquidator, the Official Assignee.
In dealing with the company assets, the existing BNZ receiver may go ahead with a mooted sale of the property on behalf of the bank.
However, if there are surplus funds remaining after payment to the BNZ, then the Official Assignee would take control of those surplus funds for the benefit of creditors.
However, another receiver could be appointed to take control of the remaining funds ahead of the Official Assignee, if there were other securities in place over the remaining assets.
The Patearoa farm was initially proposed in early 2001 as a super farm running up to 6000 cows on 1600ha using supplementary feed, prompting widespread criticism at the time; but it had been running 3000 cows on about 1300ha in recent times.
The Big Sky dairy syndicate formed in 2001 included Dunedin businessman Howard Paterson, who died in July 2003, Mr Humphries, and Mr Carr, who had been running the Patearoa farm since 1992.
More than 1 million kilograms of milk solids were expected to be produced annually.
Estimates in August 2007 were that several companies associated with the farm owed more than $30 million to a host of creditors.
Receivers at the time anticipated preferential creditors would will be paid in full, including the BNZ which forced the receivership and was owed $17.33 million, but payment for unsecured creditors owed a total of $12.52 million is dependent on the value of assets sold.
In early June 2007, a potential settlement fell through because Mr Carr and Mr Humphries were thought to have disagreed about the farm value, although other sources understood Fonterra's increased forecast payout for milk solids was at the heart of the matter.
The farm was on the market for $20 million almost seven years ago but did not sell, and has since become mired in litigation.
In early May, it was reported a conditional contract for the sale of Big Sky Dairy Farm was still being negotiated.
While counsel for Mr Humphries argued with Justice Dobson that a successful application for liquidation could impede the later use of gains from tax losses, Mr Carr wanted liquidators appointed, which could have allowed him to push for detailed investigations into pre-receivership governance issues - but at a cost to the unsecured creditors, Mr Humphries and the company.
"There is no compelling reason to defer appointment of a liquidator on the basis of improving the prospects of realising tax losses as an asset of a group of companies," Justice Dobson said.
As it appeared the BNZ would be paid through the farm sale by receivership, Justice Dobson noted that on behalf of unsecured creditors, a liquidator could use the proceeds of acquisition of tax losses to have a dividend payable to them.
Mr Carr wanted Christchurch liquidators appointed while Mr Humphries' counsel sought Dunedin liquidators, and both cited conflicting interests with the other's respective choices.
The choices prompted Justice Dobson to appoint the Official Assignee as liquidator, the assignee not being "identified with either of the warring parties" and having the experience to conduct the liquidation despite "the highly charged and bitter divisions between the shareholding's groups [Mr Humphries and Mr Carr]".
• Earlier this month, in the Dunedin District Court, Mr Humphries was discharged without conviction on a charge relating to the theft of a Mowzip flail mower, the property of Mr Carr, in September 2007.
Mr Humphries, who has no previous convictions, was ordered to return the mower and to pay $500 court costs, the judge noting the criminality was very limited.
Two alternative charges of burglary and theft did not proceed.
• Tenders are expected to close shortly for the sale of the 147-year-old Danseys Pass Coach Inn near Naseby which was advertised for sale by its receivers in late April.
The hotel owner, Anesyds Ltd, whose directors are listed by the Companies Office as Mr Carr and Mr Humphries, was placed in receivership in March 2007.
At the time it went into receivership, the company owed $1.08 million to Edgewater Motel Ltd, owned by Mr Humphries.
