Farm Debt Mediation Act: High Court Grants First Urgent Receivership Order
The High Court has delivered its first decision under section 61 of the Farm Debt Mediation Act 2019 (‘the Act’) in McNamara Farms Ltd v Lopez and Vermaak [2026] NZHC 1447.
The case involved a dairy herd purchased using funds advanced by McNamara Farms Ltd under a loan facility secured by a General Security Agreement. Following the breakdown of a sharemilking relationship, the secured creditor became concerned that stock subject to its security interest was being sold without consent and without accounting for sale proceeds.
Ordinarily, the Act prevents secured creditors from taking enforcement action against farm property unless an enforcement certificate has been obtained following mediation. However, section 61 provides a limited exception where there is an "event of urgency" and court intervention is necessary to protect a creditor's interests or animal welfare.
The Court found that the borrower had been selling stock contrary to the security arrangements and that there was a real risk the remaining herd would be dissipated before mediation could occur. While acknowledging the exceptional nature of granting relief without notice — meaning the orders were made before the respondents had an opportunity to be heard by the Court — the Court described the circumstances as one of those rare and exceptional cases where urgent intervention was justified. It reiterated that section 61 is a "last resort" provision requiring careful and cautious application.
In granting the application, the Court:
Allowed the creditor to proceed by originating application;
Appointed receivers over the dairy herd without notice to the respondents;
Authorised the receivers to take possession of and sell the herd;
Directed that sale proceeds be held on trust pending mediation or further court order; and
Scheduled a subsequent hearing to allow the respondents to be heard.
The decision provides important guidance on the circumstances in which urgent court intervention may be available notwithstanding the mediation requirements of the Act. It confirms that where secured farm property is at genuine risk of being sold, removed, or otherwise dissipated, the Court may act swiftly to preserve the security position while still protecting the parties' opportunity to engage in mediation.
How Downie Stewart Can Help
Downie Stewart has significant experience advising clients in farm debt mediation matters. Partner, Paul Hubbard has acted for a number of clients involved in the farm debt mediation process, including representing parties through mediation and negotiating settlement agreements reached as a result of that process.
If you are a farmer, lender, rural contractor, or secured creditor facing issues involving farm debt enforcement, mediation requirements, or security interests over farm property, our team can provide practical and strategic advice on your options.