Ex-UBNZ dairy processor ‘entirely disingenuous’ in bid to throw out freight debt, judge says

By Paul McBeth

Feb. 8 (BusinessDesk) – New Zealand Dairy Processing, which was set up by UBNZ as part of its aborted bid to buy the Crafar family farms, was “entirely disingenuous” in its attempt to have a $687,000 freight forwarding debt thrown out, a judge has ruled.

Associate Justice David Gendall dismissed a bid to set aside a statutory demand by Schenker (NZ) and awarded costs, saying it was “entirely disingenuous for the applicant to claim now that it disputes these amounts owing to the respondent.”

The Dec. 15 judgement was published on the Justice Ministry’s website this week. The decision paves the way for Schenker to file an application to liquidate the company.

A claim that related company Hong Kong Exchange-listed Natural Dairy (NZ) paid $200,000 towards its account was “mischievous,” with Schenker instructed the payment was not to be used towards Dairy Processing’s account, rather it was to reduce the Hong Kong firm’s outstanding accounts.

“For the applicant to cloud the issue with the false claim” is “quite improper,” the judgement said.

The judge rejected Dairy Processing’s claim that the agreement was ambiguous, saying it expressly stated the terms of the deal and accurately recorded the intention of the two parties and that there was a mistake in the deal that needed to be fixed.

Dairy Processing was originally established to process milk for export to China from the Crafar farms in the event that Hong Kong-based Natural Dairy NZ gained approval to buy the properties. When the Overseas Investment Office blocked Natural Dairy’s application, the processing company turned to Fonterra Cooperative Group for its raw milk.

While Dairy Processing acquired a plant in Tauranga, the factory was mothballed in October, three months after production halted. The Bay of Plenty Times reported at the time that management blamed the lack of appetite for its long-life ultra-heat treated milk and dwindling funds to run the facility.

A unit of UBNZ was Dairy Processing’s sole shareholder until Dec. 9 last year, when New Zealand Dairy Processing (Hong Kong) took ownership, according to Companies Office documents.

Associate Justice Gendall said it was “quite improper” for NZ Dairy Processing to dispute the extra liability of loading milk powder product at its premises directly into containers for offsite storage, saying the company was “clearly warned by the respondent that this would incur additional detention costs.”

The judge said a counterclaim of product damage and shipping delays weren’t supported by evidence.

“Quite telling in my view is the fact that, even if the applicant was able to establish that it had a viable counterclaim against the respondent, it is clear that this counterclaim would not reduce the respondent’s statutory demand claim below $1,000,” the judgement said.

NZ Dairy Processing is appealing the decision.

(BusinessDesk)

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