There was an Alice in Wonderland feel about Invercargill feed supplier Winton Stock Feed claiming $2.2 million from customer Southern Farms for failing to take up its agreed annual tonnage when Winton itself was previously dependent on Southern sourcing bulk supplies of palm kernel mixed into stock feed for use by Southern.
What had been a long-standing mutually beneficial commercial arrangement for the supply of supplementary livestock feed fell apart in late 2022 following Southerns’ allegations of fraud by Winton Feed.
The High Court was told Southern Farms NZ Ltd, controlled by high profile farmer Philipp Haas, negotiated each year a bulk contract with Nelson Lindsay’s Winton Stock Feed Ltd for supply to farms owned by Mr Haas.
Commitment to annual supply contracts helped Winton Feed; it could bulk buy in the knowledge it had customers for ingredients bought in.
Palm kernel extract is a common component in supplementary stock feed. Evidence was given of Winton Feed relying on Mr Haas’ international connections to source palm kernel.
This led to some byzantine accounting procedures: Southern imported palm kernel, which was offloaded and stored by Winton Feed before being mixed with other ingredients and sold back to Southern.
Day to day liaison between Winton and Southern was left to then Southern director Graham Hand. He ceased being a director in November 2022, at a time when the commercial arrangement between the two companies fell apart spectacularly.
Mr Haas told Winton that Southern would not be paying outstanding invoices totalling some $195,000 and that no further supply orders would be placed.
The High Court later ruled this $195,000 debt owed Winton was due, and payable.
More controversial was Winton’s demand that Southern pay for the balance of its 2022 season bulk order, regardless of Southern’s cancellation: a total cost claimed to be some $2.2 million.
The fine print in Winton’s annual supply contracts requires customers to pay at end of season for any feed contracted to buy but not required, with Winton offering to deliver if later requested while not guaranteeing delivery will be made.
In the High Court, Associate Judge Lester said it is arguable Winton is keeping the 2022 contract with Southern alive simply to benefit from their previous palm kernel supply arrangement, with the suggestion Winton might be able to profit by making good any later deferred deliveries with new supplies of palm kernel sourced more cheaply.
While ruling Southern is liable to pay for undelivered feed under their 2022 bulk contract, Judge Lester left open any calculation of payment required. This requires detailed accounting analysis of arrangements between the two companies for supply of imported palm kernel.
Winton Stock Feed Ltd v. Southern Farms NZ Ltd – High Court (28.03.25)
25.094