With conflicting aims for their joint venture project, Michael McGehan and Jeffrey Clarke fell out, coming to blows over plans for their Te Hoe subdivision in north Waikato. With no agreement on a price at which either would buy out the other, Te Hoe Dairies Ltd was ordered into liquidation by the High Court.
Te Hoe lies in rolling farmland between Huntly and Morrinsville. In 2017, the McGehans and the Clarkes joined forces with plans to purchase a local farm and subdivide the property into lifestyle blocks. Jeff Clarke had farming experience; Michael McGehan had previously been his bank manager. Te Hoe Dairies Ltd was set up as a joint venture company, owned 50/50 by the two families. The property was leased to the Clarkes for farming whilst subdivision plans were progressed.
The High Court was told differences arose over marketing plans after council approval was given to split off three rural lifestyle sections. These were eventually sold in early 2020. The Clarkes leased the remaining 35 hectares as a run-off dairy unit. The Clarkes had separately purchased a neighbouring farm, intending to amalgamate the two. Things got ugly, with Mr McGehan alleging the Clarkes were using joint venture resources for capital works benefitting a future farm amalgamation. Police were called after a physical confrontation over arguments about ownership and use of machinery on site. Mr McGehan was arrested and issued with a pre-charge warning. The Clarkes trespassed Mr McGehan from the farm. The Clarkes later stopped paying farm lease rentals to the joint venture company. There were complaints the Clarkes were renting out a farmhouse on the joint venture property and were keeping the rent. No agreement could be reached over a price for one to buy out the other because of disagreement over what each owed the company or is owed by the company. Each side accuses the other of acting in their own interests, to the detriment of the other.
Associate judge Andrew ruled the only way out of the impasse was to order Te Hoe Dairies Ltd into liquidation with an independent liquidator appointed to sell the remaining 35 hectares and sort out who owes who how much.
McGehan v. Clarke – High Court (22.07.21)
21.124