The High Court has made its first reported order under section 61 of the Farm Debt Mediation Act 2019 (FDMA), appointing receivers over a dairy herd on a without-notice basis. The recent decision in McNamara Farms Ltd v Lopez and Vermaak [2026] NZHC 1447 confirms that although section 61 is a narrow, last-resort provision, it provides a mechanism to preserve secured farm property under urgent circumstances, where the ordinary farm debt mediation process cannot respond quickly enough.
Background
McNamara Farms Limited owned a dairy farm and had advanced $600,000 under a Loan Facility Agreement to the L & M Vermaak Partnership. The purpose of the loan was to enable the Partnership to purchase 77 dairy cows and operate as sharemilker for the 2025/26 season.
Eventually, the relationship between McNamara and the Partnership soured and then the Partnership itself dissolved. McNamara terminated the sharemilking agreement, but Mr Vermaak issued a notice of dispute and the parties engaged unsuccessfully in mediation.
From February 2026, Mr Vermaak began selling off the herd without McNamara’s consent, and without returning the proceeds to McNamara, breaching the loan and security agreements.
Ordinarily, McNamara could have exercised its rights by taking control of and selling the herd. However, section 11 of the FDMA prevents a secured creditor, like McNamara, from taking enforcement action against farm property unless mediation has resulted in an enforcement certificate. With only nine days remaining before a new sharemilker and herd arrived, and the existing herd rapidly disappearing, the ordinary process could not provide protection in time. McNamara applied for orders under section 61 to protect its position on a without-notice basis. By the time of the Court’s decision, only 21 of the original 77 cows remained.
The decision
Section 61 of the FDMA enables a creditor to apply to the High Court for an order allowing the appointment of a receiver notwithstanding the restrictions in section 11. Section 61 requires that there is an event of urgency, and the appointment of a receiver is necessary or desirable to safeguard the creditor’s interests or the welfare of animals.
Justice Becroft referred to section 61 as a “last resort provision” that should be carefully and cautiously applied only where the preconditions are clearly met.
The Court considered that there was an event of urgency in this case. It was satisfied that this was a “rare, if not exceptional” situation where an order under section 61 was justified to mitigate the real risk that the remaining herd would be sold off.
The Court appointed receivers with authority to take possession of and sell the remaining herd without delay. Technically, the Court appointed the receivers as opposed to allowing the creditor to do so as envisaged by section 61. Additionally, net sale proceeds were to be held on trust pending mediation under the FDMA or further order of the Court.
Key takeaways
For creditors, the decision confirms that section 61 is available where there is real urgency and an ongoing risk to secured property but reinforces the high threshold for relief. The case is a timely reminder to ensure that loan documentation is robust, to monitor collateral closely, and to act quickly.
For farmers and borrowers, the decision underscores the importance of engaging with the FDMA process. Refusal to participate in mediation and uncooperative conduct were factors in the Court’s willingness to grant urgent without-notice relief. The FDMA protects debtors’ interests, but reasonable engagement is essential.
For advice on farm debt mediation, receivership, or urgent enforcement options, contact our litigation and insolvency specialists.
