In McCollum v Thompson  NZHC 28 the High Court heard a claim and counter-claim involving the enforcement of a loan and general security agreement (GSA) over livestock. The plaintiffs loaned the defendants $260,000, which was secured over livestock listed under the GSA. Upon default, receivers were appointed to sell livestock belonging to the defendants.
In their counter-claim, the defendants claimed that certain livestock seized was not included in the GSA and that the seizure of that unsecured livestock amounted to conversion. The defendants also claimed that the receivers had sold the secured livestock at undervalue, in breach of the duty to secure the best price obtainable.
The Court found that security in the livestock extended only to the livestock identified and listed in the GSA. The GSA did not contemplate security existing over any additional stock that might be added to the herd, or any progeny from existing herd stock.
Under the counter-claim, the Court held that the receivers had sold the stock under market value. In particular, the receivers had failed to obtain available herd breeding information, which meant the livestock had been sold at a price that was based on this information not existing.
Further, the seizure of livestock not secured by the GSA amounted to conversion by the plaintiffs. The Court granted the defendants damages for conversion and for consequential loss of income as a result of not being able to milk the livestock.
See Court decision here.