Bank need not intervene when receivers stopped performing a major US wine contract
The High Court has ordered Sacred Hill’s guarantor to pay Westpac nearly $12.8 million, finding the bank had no obligation to intervene in decisions made by receivers it appointed.
In Westpac New Zealand Limited v Mason [2026] NZHC 3413, handed down on 4 November 2026, the court granted Westpac New Zealand Limited (Westpac) summary judgment for $12,789,952.68 plus default interest, deciding the claim without a full trial.
The Sacred Hill Group produced wine. Under a major contract, it supplied Costco in the US through purchasing agent Mach Flynt Incorporated (Mach Flynt). The group’s then managing director and majority shareholder had personally guaranteed its debts to Westpac. After a string of defaults, Westpac appointed receivers in May 2021. They sold the business and stock to Vinlink Marlborough Limited (Vinlink) for about $41 million. As at 31 October 2024, the group still owed nearly $12.8 million.
The guarantor argued that Westpac breached its duty of good faith and its obligations under s. 25 of the Personal Property Securities Act 1999 (the PPSA). On the day receivers were appointed to one group company, he had agreed to sell it to Vinlink for $39.8 million while keeping the Mach Flynt contract in the group. He argued that Westpac knew the contract’s value yet stood by while the receivers let it go for nothing.
The court rejected the defence, noting that receivers generally act as the company’s agent and owe their duty to get the best price reasonably obtainable to the company, not the bank.
The court said the guarantor faced a “significant hurdle.” The court also said, “the relevant acts were all carried out by the receivers.”
The court held that Westpac had no obligation to make the receivers deal with the contract in a particular way. Given the group’s finances, the bank did not act in bad faith by not intervening when the receivers decided to stop performing the Mach Flynt contract.
On the PPSA claim, the court noted that no grantor appeared to have successfully argued that a secured creditor could be liable under s. 25 for staying out of receivers’ decisions. It added that the guarantor had excluded the contract from his own Vinlink deal and had himself said that including it would have made the price “much much higher than $40 million.”
With the group’s finances having worsened by the time of the receivership, the court said it was understandable that Westpac “may not have viewed that same contract as a ‘golden goose.’”
The court found that the guarantor’s complaints about the sale process, which it did not assess, were matters for the receivers and gave him no defence under the guarantee. It asked the parties to agree on interest and costs.
