The High Court's decision in McNamara Farms Ltd v Lopez and Vermaak [2026] NZHC 1447 is the first case in which the Court has exercised its powers under s 61 of the Farm Debt Mediation Act 2019 (FDMA) to permit the appointment of receivers before the farm debt mediation process had run its course.

What happened?

The case arose from a dairy farming arrangement in which McNamara Farms Limited (McNamara Farms) entered into a sharemilking agreement with a partnership trading as the L & M Vermaak Partnership (Partnership). To enable the Partnership to acquire a dairy herd, McNamara Farms advanced a $600,000 loan and took a security interest over the herd. The herd initially comprised approximately 77 cows and represented McNamara Farms’ primary source of security for repayment of the loan.

The relationship subsequently deteriorated. The sharemilking agreement was terminated, the Partnership dissolved, and McNamara Farms became concerned that cattle were being sold without consent and without sale proceeds being applied towards repayment of the debt. There was evidence that at least 11 cows had been sold through stock agents and that further stock had been disposed of through other means. By the time the matter came before the Court, the herd had reduced from approximately 77 cows to only 21 and there were concerns the remaining cows would be sold, and the next incoming sharemilking contract terminated, before a mediation under FDMA could be arranged.

FDMA

Ordinarily, the FDMA prevents secured creditors from enforcing security over farm property unless a pre-enforcement mediation process has been completed. However, the FDMA contains an emergency exception in s 61, allowing the High Court to authorise the appointment of a receiver where the creditor has reasonable grounds to believe that there is an "event of urgency". The Court must be satisfied that:

• an event of urgency exists (such as farm property being sold, removed or endangered contrary to the security arrangements, or animals suffering unreasonable or unnecessary pain or distress); and

• appointing a receiver is necessary or desirable to safeguard the creditor's interests or the welfare of the animals.

The Court may make an order on whatever terms and conditions the court thinks fit. Justice Becroft described s 61 as a "last resort" provision that should be applied cautiously and only where the statutory criteria are clearly established.

On the facts, the Court found there was a need to “safeguard the interests of the creditor”:

First by allowing the receivers to take control of the Herd out of the hands of Mr Vermaak, thereby preventing him from continuing to sell the Herd and dissipate the Company’s security interest and likelihood of recovering the funds advanced; and Second by allowing the receivers to themselves sell the Herd and hold the proceeds, in order to free up the Farm to allow the new sharemilkers to move in by 1 June and avoid the prejudicial consequences to the Company of losing that new sharemilking contract for the upcoming season.

The Court also determined there was an ongoing “event of urgency”:

The evidence showed that Mr Vermaak is actively selling stock and not accounting to the Company for it, meaning as time goes by and more sales occur, the effect on the Company’s ability to recover its advance is diminished; and The new sharemilkers are due to move their herd onto the Farm in only nine days, meaning there is urgency for the receivers to sell the Herd and get it off the Farm if that new sharemilking contract is to survive. There is simply no way that mediation could be convened in that time, particularly given Mr Vermaak’s ongoing pattern of non-cooperation. The situation is too urgent to wait.

The Court therefore authorised the appointment of receivers, empowered them to take possession of and sell the herd, and directed that the sale proceeds be held pending mediation.

A welcome decision for secured creditors

McNamara Farms appears to be the first case to test the FDMA's emergency receivership provisions. It provides important guidance on the circumstances in which the High Court may be prepared to intervene where farm assets are at immediate risk of dissipation. The decision demonstrates that s 61 is available as a safeguard for creditors in exceptional cases, while reaffirming that mediation remains the cornerstone of the FDMA regime.

If you would like to discuss the issues raised in this article, please contact one of our experts.

Special thanks to Pippi Priestley King for her assistance in preparing this article.