One blunt email let a supplier bill a farmer for feed it never delivered
The Court of Appeal has ruled a stock feed supplier can invoice a farmer over $2.2 million for contracted feed never taken.
In Southern Farms NZ Limited v Winton Stock Feed Limited [2026] NZCA 212, the court (Campbell, Edwards, and Walker JJ) tackled competing claims arising from supply contracts for the 2022–2023 dairy season. Winton, an independent stock feed supplier, contracted with farmers each season to supply fixed quantities at fixed prices, shielding customers from market price volatility. Southern, which operated two farm properties as part of a wider enterprise associated with director Mr Haas, entered six such contracts for palm kernel extract, maize, soya hulls, and grain pellets.
The relationship deteriorated by November 2022. Mr Haas emailed Winton complaining about a side arrangement for PKE supply, declaring he wanted out of the contract, halting all payments and stopping all orders. Winton treated this as a repudiation, cancelled the PKE arrangement, and at season’s end invoked clause 2(d) of its standard terms to invoice Southern $1,930,234.72 plus GST for the undelivered stock feed. Southern refused to pay, disputing both the incorporation of Winton’s terms and the supplier’s readiness to supply.
Associate Judge Lester entered a liability judgment against Southern but deferred the quantum. Southern appealed. Winton cross-appealed.
The court first confirmed Winton’s printed terms and conditions formed part of the supply contracts. It pointed to a course of dealing across two seasons, contract documents Winton sent to Southern’s then-director Mr Hand, and front pages Mr Hand signed acknowledging acceptance of the terms overleaf. The court found it telling that Southern produced no evidence from Mr Hand, who negotiated the contracts. No competing terms ever surfaced.
On the central interpretation question, the court departed from the judge’s view that clause 2(d) could not be determined summarily. It characterised the provision as a “take or pay” clause: if the purchaser did not take the contracted tonnage by season’s end, Winton could invoice at the contract rate for the shortfall. The court read the word “remaining” as anticipating that good-faith resolution of surpluses might reduce the tonnage, not as requiring Winton to hold the specific feed. The objective, it noted, was certainty for both parties.
The court also rejected Southern’s argument that clause 2(d) operated as an unenforceable penalty or attracted equitable intervention. Because the clause stipulated a primary obligation rather than responding to a breach, it fell outside penalty doctrine. Drawing on White and Carter (Councils) Ltd v McGregor and later authorities, the court found Winton retained a legitimate interest in seeking payment rather than damages – certainty over exposure to the spot market – and so equity offered no foothold.
On interest, the court accepted that set-off principles required netting the reciprocal debts before calculating interest. Southern was a net creditor on the first cause of action, so the court entered judgment in Southern’s favour there. It also accepted Southern raised an arguable defence on when it received Winton’s clause 2(d) invoice, finding interest ran only from 20 May 2024.
The court entered judgment against Southern on the second cause of action for $2,209,778.03 plus contractual interest at one per cent per month. Despite Southern’s partial success, the court awarded standard band A costs to Winton as the substantively successful party.
