Having
fired David and Kim Webster from management of three farms he purchased in the
Dargaville region, Chinese investor Li Liang Ren has to find about $650,000 to
pay out the Websters’ shareholder advances.
The High Court reduced the amount claimed by some $77,000 following
allegations of poor farm management and shocking stock management by the
Websters.
Mr Li came to New
Zealand in 1995. He has interests in
forestry and farming. The High Court was
told Mr Li purchased three dairy farms from the Websters in late 2015 at a
total cost of $17 million: one at Waiotira; two at Arapohue. A new company, Dargaville Farms Ltd, was
formed for the purchase. Mr Li took an
eighty per cent stake, the Websters twenty per cent. The Websters were contracted to manage the
farms for a period of five years with annual salaries payable to David
($120,000) and Kim ($50,000). Working
capital for farming operations was locked in as shareholder advances. It was anticipated at least $1.8 million
dollars would be needed over the next eighteen months to upgrade farm
infrastructure. The farms have a past history
of Resource Management Act breaches and fines for effluent discharges.
The relationship
between Mr Li and the Websters broke down.
Their management contract was cancelled in June 2016. The court was told Mr Li used his majority
shareholding to remove Mr Webster as a director of Dargaville Farms and a
security agreement was signed to elevate Mr Li’s unsecured shareholder advances
to the status of a secured creditor. The
Websters remained as unsecured creditors.
The Websters sued to recover $762,229 they had advanced as working
capital. Associate judge Bell ruled Mr
Li, through his company Dargaville Farms, had an arguable case for damages
against the Websters. Mr Li claims
production was lost because of poor stock management. A farm manager taking over from the Websters
described stock as being in appalling condition. There were allegations of stock suffering
malnourishment, lameness, mastitis and stress.
Judge Bell ruled damages for mismanagement, if proved, would amount to
no more than $77,000. This left at least
$649,229 owed the Websters. Failure to
pay allows the Websters to put Dargaville Farms Ltd into liquidation.
Mr Li also alleges the
Websters failed to deliver stock numbers promised on sale of the farms. Judge Bell said any claim for short delivery
is against the vendor farming company, not the Websters personally. The Websters did not personally guarantee the
accuracy of stock numbers when selling.
Dargaville
Farms Ltd v. Webster – High Court (1.08 17).
17.094