Associate Judge Dale Lester dismissed an application by Moffitt Dairy Ltd, which operates a dairy farm near Temuka, to set aside a statutory demand from agricultural product supplier Hazlett Ltd for $136,373.70 in a High Court decision this month.
“There is no suggestion Hazlett could or should have been aware of the issue with the seed so as to make this sale out of the ordinary,” Associate Judge Lester ruled.
“Hazlett was, to MDL’s [the dairy company’s] knowledge, a conduit for the seed which it sourced from a third party … There was no change of circumstances of which Hazlett was aware from prior transactions that may have made silence misleading.”
Moffitt Dairy purchased 152 bags of Brigadier fodder beet seed from Hazlett for $60,306 in November 2019, to sow 150 hectares to grow supplementary feed for its herd.
The dairy company told the court it had been sowing the same type of seed for 10 years, producing between 20 and 30 tonnes of dry matter per hectare on its irrigated land – but found the seed from Hazlett “defective” because it only yielded about 12 tonnes.
“MDL’s evidence is it became clear early on that the seed had a low-strike rate,” Associate Judge Lester said.
“Twelve tonnes per hectare was the best it could achieve, despite re-sowing its land with the remainder of the seed it had purchased. In order to complete the re-sowing, MDL purchased further fodder beet seed from a third party and says the new seed performed satisfactorily.”
The dairy company believed responsibility for the “partially-failed crop” rested on the quality of the seed from Hazlett.
The agricultural product supplier issued a statutory demand for the cost of the seed on May 7, 2020.
“Hazlett’s counsel, in submissions filed for the hearing, accepted, albeit reluctantly, that MDL had established an arguable case for a set-off or counterclaim – but says that does not provide an excuse for MDL not paying the invoices, because the Terms of Trade between the parties contain a ‘no set-off’ clause.”
Associate Judge Lester said while it was “reasonably arguable that the seed was sub-standard”, Moffitt Dairy could not point to a breach of contract or a claim under the Fair Trading Act.
“It follows that the application to set aside the statutory demand is dismissed.”
