Loan: Gemmell v. Gemmell

 

When Libby Reilly’s nine year relationship with Rewi Gemmell came to an end, it was a complete surprise to be told nearly thirty per cent of their Coromandel home was owned by Rewi’s father.  The High Court later ruled Arthur Gemmell’s financial contributions to their home were interest-free loans and could not be construed by Maori custom as giving him ownership rights.

The High Court heard evidence of Arthur Gemmell seeking to be scrupulously fair as between his children, ensuring they shared equally in getting financial support; a practice which undermined later claims he was part-owner of Libby’s and Rewi’s family home.  

While working as a builder at Hahei on Coromandel peninsular in 2009, Rewi purchased land funded with a bank mortgage and $80,000 put in by his father, Arthur.  A year later, Arthur provided another $20,000 to help fund purchase of a relocatable house shifted to the site, used by Rewi and Libby as their family home.

With their relationship at an end, Rewi claimed his father had a 28 per cent equity interest in the property.  This reduced the value of Libby’s relationship property claim over the family home.

Father and son claimed there was an oral ‘ownership agreement’ between them, having Arthur’s cash contributions creating an ownership interest.  This flowed from Maori tikanga, they said; Maori custom for some hapu recognises that a father’s financial support for a son to buy property sees the father part-owning that property.  For Maori, multi-party ownership is the norm within ancestral landholdings.

In court, the paperwork did not match this supposed family understanding.

The $20,000 payment in 2010 was matched against a bank deposit reference as being a ‘loan…interest free.’  Subsequent $20,000 payments by Arthur to his son, used to help paydown his bank mortgage, were similarly described as loans, with interest payable at 2.5 per cent.

The court was told Rewi did pay interest for a period, then stopped.

There was no documentation for the initial $80,000 advance.

Arthur subsequently signed a new will which stated this $80,000 contribution was an interest free loan to Rewi, and that on Arthur’s death this benefit was to be taken into account when distributing his estate between his two children.

Evidence was given of an excel spreadsheet named ‘house equity.xlsx’ set up by Rewi in 2010 detailing house ownership in proportion to cash put in by Arthur, Rewi and another relative, since repaid.  Forensic evidence indicated this spreadsheet was in fact created in 2010.

Justice Anderson ruled Rewi was aware from the outset that the $80,000 contribution from his father was a loan.  No trust arrangement existed such that Rewi held part-ownership on behalf of his father.

Tikanga may have influenced how Rewi viewed family interests over the property, Justice Anderson said, but the written evidence was that of a loan by Rewi’s father, with Rewi as the sole owner.

The $100,000 contributed by Arthur as interest-free on-demand loans is now repayable given that Arthur has made demand for payment, she ruled.

This debt arose out of purchase of a family home.  It is a relationship debt, repayable before any split of relationship property.

Gemmell v. Gemmell – High Court (31.10.25)

25.229

Trade Mark: APEDA v. Patent Office

 

Following disputes over use of the name ‘champagne’ and then ‘manuka honey,’ now it is the turn of basmati rice with India seeking to have sales of Pakistan’s basmati rice blocked in New Zealand.

New Zealand imports over one thousand tonnes of basmati rice each year, primarily from India and Pakistan. 

Back in 2019, India’s Ministry of Commerce made Trade Marks Act application to register a certification trade mark for basmati rice.  If approved, only basmati rice produced in India could be sold in New Zealand.

India’s Agricultural and Processed Food Products Export Development Authority (APEDA) said registration of ‘basmati’ in New Zealand is needed to identify its product as having recognised quality standards.

Consumers see Trade Marks Act certification marks every day, having little understanding of their origin: the “Made in New Zealand’ symbol; the ‘Woolmark’ symbol; the Heart Foundation’s ‘tick’ symbol.

This certification has economic value, making promises as to a product’s source and/or quality.

Owner of a certification mark can block suppliers using the mark in New Zealand without permission.

A legal campaign by French winegrowers now sees use of the word ‘champagne’ in respect of wine applying only to product produced in a specific region of France using specific grape varieties, excluding competitors in New Zealand from using the same name.

New Zealand honey producers were not so successful in attempts to claim monopoly rights to manuka honey products.  The name ‘manuka honey’ is descriptive, but not distinctive to New Zealand alone.  The same product is produced in Australia from its own native flora.

India’s APEDA application claiming a certification mark for its basmati rice was unsuccessful; it faced the same legal issue as manuka honey.

Basmati rice is a type of rice, not distinctive to India alone.

APEDA appealed Trade Mark office refusal of certification.

In the High Court, Justice Boldt offered APEDA the opportunity to amend its application to allow basmati rice from Pakistan to also use the basmati name in New Zealand.

APEDA indicated that it might allow ‘legitimate’ Pakistan suppliers to use the name to describe its product when sold in New Zealand.

This concession was insufficient, Justice Boldt ruled.

APEDA’s application was dismissed.

Across the Tasman, the Australian Trade Mark office has refused APEDA’s similar application for basmati trade mark certification.

Agricultural and Processed Food Products Export Development Authority v. Commissioner of Trade Marks – High Court (30.10.25)

25.225

Patent: Oligoscience Biotech v. Commissioner of Patents

 

A patent application by German biotech company Oligoscience for a claimed novel way to optimise yield of human milk sugars failed; its supposedly new discovery identified no more than what a skilled person could adduce from existing common scientific knowledge.  A new inventive step is required to justify any patent award creating monopoly rights.

Oligoscience Biotechnology GMBH claimed novelty for its process of genetically modifying bacteria to optimise commercial yield of human milk oligosaccharides.  These HMOs are marketed as a prebiotic, feeding gut bacteria.

Commercial production of HMOs involves collection and purification of HMOs excreted from the cell wall of E.coli bacterium.  Output is optimised by then ripping the bacteria apart, extracting remaining HMO from the debris.

Oligoscience’s claimed new invention was to genetically modify E.coli bacteria, causing it to self-destruct; a so-called ‘magnesium timebomb.’

Patent Office staff rejected its application for a patent.

Oligoscience appealed.

In the High Court, Justice Churchman ruled Oliogoscience’s ‘new’ process was not novel.

The court heard argument about what was the state of scientific knowledge as at date of Oliogoscience’s 2020 patent application.

‘Common general knowledge’ is assessed as that of a scientist in a particular field having appropriate qualifications and training.

Published scientific research does not become common general knowledge until it is generally known and accepted without question by a majority of those working in that field.

Justice Churchman ruled scientific papers published up to six years prior to Oliogoscience’s patent application opened up the possibility of genetically modifying E.coli to self-destruct under certain conditions.

Oliogoscience’s use of this method to increase production of HMOs was not a novel inventive step.

Oligoscience Biotechnology GMBH v. Commissioner of Patents – High Court (30.10.25)

25.227

Repo Contract: PHC Teasury v. Settlers Honey

 

For Whanganui honey producer Henry Mathews, it was intended as a short-term three million dollar loan to ease liquidity.  Against expectations, honey prices fell, leaving his company Settlers Honey exposed and Mr Mathews unsuccessfully arguing an 87 per cent financing rate was oppressive.

The High Court was told of a 2022 repo agreement with Cliff Cook’s PHC Treasury Ltd purchasing honey stocks from Settlers for three million dollars.  Settlers kept possession of the honey.  Initial agreement was that Settlers would repurchase the honey thirteen months later for five million dollars; an effective interest rate of some 66 per cent.

With a fall in market value for honey, this arrangement went through four subsequent variations, resulting in Settlers eventually committed to an eighteen month deal having an effective interest rate of 87 per cent together with addition of second mortgage security over land owned by a related company.

When push came to shove, Settlers could not pay.  Mr Mathews stands as guarantor.

Mr Mathews and Settlers claimed the repurchase deal was an ‘oppressive credit contract,’ in breach of the Credit Contracts and Consumer Finance Act.

PHC Treasury claimed the contract was not a loan, but an investment purchase of honey.

In economic terms, repo agreements are not ‘investments,’ they are collaterised loan contracts, with assets provided as security against repayment of a loan on due date.

The fact PHC Treasury registered its security interest over the honey on the Personal Property Securities Register underscored this point; in substance, a repo agreement is a loan, not an agreement for purchase and resale.

Treating the repo agreement as a loan, Associate Judge Skelton ruled there was no evidence that loan terms were ‘oppressive’ in breach of the Credit Contracts Act.  Oppression requires proof terms ‘contravene reasonable standards of commercial practice.’

It was Mr Mathews who offered from the outset to pay 66 per cent interest.  Later increases in the effective interest rate amounted to penalty interest for late payment.

Mr Mathews had independent legal advice both during initial negotiations and during subsequent re-negotiations, the court was told.

He provided no evidence of what amounts to common commercial practice in repo agreements.  It is not for the court to assume what is, or is not, reasonable, Judge Skelton said.  Evidence of current commercial practice is required.

Both Settlers Honey as borrower and Mr Mathews as guarantor were held liable to repay the full amount.  Further evidence is required to calculate the amount due.

PHC Treasury Ltd v. Settlers Honey Ltd & Mathews – High Court (30.10.25)

25.228

Business Dispute: Thachankary v. Rasela

 

Stopping salary payments as leverage in heated negotiations between two South Auckland doctors plus allegations of false loan documentation came to a head with the High Court ordering Dr Vandana Rasela and her husband Anurag pay nearly $900,000 compensation to Dr Shigy Thachankary following a dispute over shared operation of two separate medical practices.

The High Court ruled a lease, a loan, and supposed security for this loan, used by the Raselas to oust Dr Thachankary from a Flat Bush medical centre were of no effect and invalid, with the Raselas in breach of fiduciary duties owed Dr Thachankary. 

Their business relationship started initially with a joint medical practice in Papakura.

Later, a second practice was established in nearby suburb Flat Bush.  Funding and operation of Flat Bush led later to a complete meltdown in their business relationship.

Critically, different legal structures were used for the two separate medical practices.

Papakura, operated through Auckland City Medical Clinics Ltd, is owned 50/50 by Dr Thachankary and Dr Rasela.

Flat Bush, operated as Flat Bush Medical Centre Ltd, is owned 50/50 by Dr Rasela and her husband.  Dr Thachankary provided cash upfront to set up Flat Bush, but was not listed as a shareholder.

With Dr Thackankary later complaining he was not receiving his share of fee income from Flat Bush or a return on his cash contribution, the Raselas stalled, withholding salary payments he was owed as leverage, to force resolution of their dispute.

The High Court heard evidence of the Raselas, at a time they were supposedly negotiating with Dr Thachankary, suddenly producing documentation stating they were secured creditors of Flat Bush enabling them to appoint a receiver over Flat Bush assets.

Justice Harvey stated that while there was no direct evidence that this documentation was fabricated to foil Dr Thackankary, the fact these documents surfaced very late in their dispute did raise suspicions.

Assets of the Flat Bush practice have since been sold to a third party for $481,000, the court was told.

The Raselas were ordered to pay $892,000 damages to Dr Thachankary for failing to properly reward him for his participation in Flat Bush operations, including: $257,000 for his equitable interest in Flat Bush; $400,000 for remuneration withheld; and, $235,000 plus interest in repayment of his Flat Bush loan.

In addition, the Raselas were ordered to pay $10,000 exemplary damages; special damages ordered to mark what Justice Harvey called the Raselas’ serious and outrageous misconduct.

Separately, Justice Havey was asked to rule on ownership of the Papakura medical centre owned 50/50 by Dr Thachankary and Dr Rasela through their shareholdings in Auckland City Medical Clinics Ltd.

Purchased by the two in 2016, Auckland City Medical was agreed to now be worth $1.178 million.

The court was told Dr Thachankary alone has been responsible for maintaining and growing Auckland City’s practice during their lengthy Flat Bush dispute.

Value of Auckland City Medical should be split 60:40 in Dr Thanchankray’s favour, Justice Harvey ruled.

He was given one month to buy out Dr Rasela’s forty per cent share for $471,200.

Failing that, she has a further two weeks to buy Dr Thachankary’s share.

If neither wants to assume full ownership, Auckland City Medical goes into liquidation, Justice Harvey ruled.

Thachankary v. Rasela – High Court (2.07.25 & 29.10.25)

25.226

Carbon Emissions: Environment Ministry v. Companies Office

 

Becoming aware that Whanganui-based Bradwood Forest Ltd was about to silently slide off the Companies Office register leaving behind not only disappointed investors, but also failing to refund carbon credits allegedly owed, Environment Ministry had the High Court block Bradwood’s move.

Investors in Bradwood Forest were looking to make hay from carbon emission trading regulations whilst also enjoying tax write-offs generated through participation in a limited partnership, allowing tax losses to be set off against other assessable income.

Buried in notes to the limited partnership’s financial statements for 2016 is a prescient warning; credits for some carbon emission trading units previously generated will be reversed if deforested land is not replanted within five years of logging.

That has come to pass, Environment claims.

Tree planting earns emission trading credits; trees sequester carbon from the atmosphere.

Subsequent deforestation releases sequestered carbon, requiring purchase of offsetting emission trading units.

A rigged market, with government-manipulated prices, can see the value of emission trading units changing over time.

Environment Ministry claims it is owed money by Bradwood Forest Ltd; a claim difficult to enforce if Bradwood disappears from the Companies Office register.

Bradwood is exploiting a legal tactic commonly used by shareholders to get rid of defunct, solvent, non-trading companies by no longer filing Companies Act annual returns with Companies Office.

After multiple years of failing to file, Companies Office simply removes a defaulting company from its register with a stroke of its administrative pen.

This well-established commercial practice avoids costs of formally liquidating a solvent company.

Companies Office must give public notice of its intention to deregister a company.

Environment Ministry reacted to public notice signalling pending removal of Bradwood Forest Ltd by having the High Court order Bradwood Forest remain on the register.

This keeps Bradwood alive, and available for Environment’s Climate Change Response Act claim demanding that Bradwood repay emission trading units previously granted.

Environment Ministry v. Companies Office – High Court (28.10.25)

25.224

Family Trust: Forgan v. Lee

 

Named as residual beneficiary, together with her brother, in two family trusts set up by their father, Rebecca Forgan discovered brother Arthur Lee had improperly mortgaged trust assets as security for his struggling clothing company, cutting her adrift.  She had the High Court remove her brother and her mother as trustees, with her legal costs of $126,500 paid out of trust assets.

The court was told there looks to be a net cash balance left of some $800,000 after trust assets were sold off to avert two mortgagee sales, repaying loans made to Mr Lee’s business.  A property on Blackwood Bay in the Marlborough Sounds is a further trust asset.

Arthur Lee owns Christchurch clothing company Thermatech Ltd.

The High Court was told of sister Rebecca being kept in the dark about trust activities.

Their father set up the Blackwood Trust in 1973.  It came to own a Christchurch property on Wai-iti Terrace, where their parents lived, plus another property on Fendalton Road occupied by Arthur and his family.

A second family trust was established in 2016.

With their father diagnosed as having early onset dementia, the two trusts came to be controlled by Arthur and their mother Robyn.

Evidence was given that Rebecca belatedly learnt that trust assets were being used to prop up Arthur’s Thermatech.  Trust cash was used to pay company debts.  Trust assets were mortgaged as security for company loans.

Court orders for full disclosure of trust transactions were ignored.

Failure to make disclosure led the High Court to bar the two trustees from defending legal action taken to remove them.  After a formal proof hearing, Arthur and his mother were replaced by professional trustee, Covisory Trust Services.

The court was told both trust properties were sold at auction ahead of threatened mortgagee sales: Wai-iti Terrace for $1.1 million; Fendalton Road for $2.8 million.

Rebecca can likely lay claim to final cash balances eventually held by both trusts.

Terms of the family trusts state that on final distribution assets are to be held equally for Rebecca and her brother ‘on a hotchpot basis;’ meaning final distribution must take into account any financial benefit each has previously received from trust assets.

Forgan v. Lee – High Court (6.08.25 & 24.10.25)

25.223

Charitable Gift: re application by William Herbison

 

Christchurch private school St Margaret’s College received a handsome bequest on the 2024 death of former pupil Amber Gazzard, but a gift of $567,000 specified for ‘general upkeep and preservation of school archives’ well exceeded school needs.  A High Court order was needed to amend terms of this gift, allowing funds to be used in part for general school purposes.  

Charities law is zealous in ensuring gifts for a charitable purpose are in fact used for their stated purpose.

For St Margaret’s College, it became an embarrassment of riches if Amber Gazzard’s bequest had to be used solely for upkeep of school archives.  The High Court was told about $90,000 would be used to upgrade College archives: installing new shelving and display cabinets, upgrading lighting and technology, plus repainting.

It sought approval for the balance to be transferred to the College Foundation’s endowment fund, for general use within the College.

Charitable Trusts Act allows trust assets to be re-allocated, with court approval.

Courts are very sparing.  Wishes of the original donor are to be respected.

As a guide, judges follow an ancient common law legal principle, known as the cy-pres doctrine: the proposed new purpose must fit as close as possible to the original purpose specified by the donor.

In the High Court, Justice Boldt ruled transfer of a $470,000 surplus to the College endowment fund would provide a benefit to the school, analogous to wording of her bequest.

The court was told Ms Gazzard was devoted to the school.  She had for many years volunteered, maintaining school archives.

The $567,000 she gifted was the balance of her estate, after payment of several specific bequests.

re application by William Herbison for variation of Gazzard Charitable Trust – High Court (24.10.25)

25.222

Relationship Property: Paul v. Mead

 

After a Supreme Court ruling that Property (Relationship) Act also covers polyamorous relationships, the Family Court divided assets equally between Fiona, Lilach and Brett who had lived together on a rural Auckland property at Kumeu for fifteen years.

Fiona Mead claimed she was entitled to the greater share.  She financed the Kumeu purchase and it was her money that maintained their ‘commune-like’ lifestyle, she said.

Greater financial contributions by one party to a relationship are common, Judge Muir said.  Parties should not be ‘hypnotised’ by unequal cash contributions when dividing relationship property, he said.

Fiona was ordered to pay Lilach Paul $624,400; Brett Paul $618,100.  

The Family Court was told the three formed a polyamorous relationship in 2002.

Fiona had trained as a vet, later developing a business practising holistic animal medicine.

Lilach was raised on a kibbutz in Israel.  She is a sculptor.

Paul spent time in the Auckland Centrepoint community.  He ran a lawnmowing business.

The court was told all three had a common interest in a US-based esoteric teaching organisation called Builders of the Adytum.

When their triangular relationship ended in 2017, the major relationship asset was a rural property held in Fiona’s name on Trotting Course Drive at Kumeu, agreed to be now worth $1.8 million.    

Fiona said she is entitled to fifty per cent of relationship property, with Lilach and Paul to receive twenty-five per cent each.

Judge Muir ruled there was a high degree of financial interdependence between the three with each contributing in different ways.  Net assets are to be split equally, he ruled, with adjustments made for post-separation revenue and expenses covering the eight year period since separation.

Paul v. Mead – Family Court (17.10.25)

25.221

Tax: Inland Revenue v. Garnham

 

Clearly frustrated with his continued tax defaults, Inland Revenue was outmanoeuvred by Wellington lawyer Mike Garnham who had the High Court approve an Insolvency Act part-payment scheme, forcing Inland Revenue to accept less in full payment than offered previously and rejected.

The High Court was told of Mr Garnham’s thirty year history of tax non-compliance which has seen legal action taken against him multiple times, various settlement offers negotiated, and significant tax write-offs agreed.

Over the last two decades, Inland Revenue commenced legal action on five separate occasions to recover tax arrears.

In 2023, Inland Revenue took steps to bankrupt Mr Garnham on tax debts then amounting to $737,000.  Further penalties have since accrued.

This was not the first time bankruptcy has been threatened by Inland Revenue.

He applied for Tax Administration Act financial relief on hardship grounds, blaming non-payment variously on his spouse’s ill health, the incompetence of his former office manager and the later illness of a newly employed accountant.

Inland Revenue did not agree to yet another tax write-off benefitting Mr Garnham.  Multiple write-offs threaten the integrity of the tax system, challenging conscientious taxpayers who pay tax when due, it said.

Refused any tax relief, Mr Garnham set up an Insolvency Act part-payment scheme.

If approved by a majority of creditors who between them hold seventy five per cent of affected debt, the proposal is binding on all creditors, following court approval.

Associate judge Skelton approved a proposal which saw a family trust providing $380,000 to part-pay Mr Garnham’s unsecured creditors an estimated ten to fifteen cents in the dollar.  The exact payout depends on how much of the $380,000 is used to pay costs of getting court approval and then administering the proposal.

Inland Revenue voted against; owed $300,000 as a preferential creditor for unpaid GST and about $600,000 as an unsecured creditor.

Mr Garnham’s proposal offers full payment to creditors owed less than $5000; part-payment to creditors owed above $5000.

Inland Revenue complained that included as unsecured creditor votes in favour were a family trust and family companies; owed $4.3 million by Mr Garnham.  They should be excluded from the vote, Inland Revenue said.  His proposal specifically deferred any payment going to these related party creditors.

Excluding the $4.3 million owed related party creditors from the vote would see Inland Revenue in control, defeating the proposal by voting against with a now re-calculated ninety per cent of unsecured debt.

Judge Skelton left in the related party votes; meaning seventy-five per cent of debt by value remained in favour.

Family finances are funding the proposal, he said.  Creditors would receive less on bankruptcy.

Separately, Inland Revenue argued it is not bound by Insolvency Act part-payment proposals; it has its own bespoke procedure in the Tax Administration Act for negotiating hardship concessions with tax defaulters.

Tax Administration work-outs are a bilateral process between Inland Revenue and individual taxpayers, Judge Skelton said.  Where there are multiple creditors affected by a part-payment proposal, Insolvency Act rules apply and Inland Revenue is bound by these rules, he said.

Approving Mr Garnham’s part-payment proposal, Judge Skelton required proposal wording be amended to make it clear that Inland Revenue’s preferential claim for $300,000 takes priority, and is to be paid in full, before any part-payment to unsecured creditors.

Inland Revenue v. Garnham – High Court (17.10.25)

25.220

Bankruptcy: BNZ v. Gollan

 

Bankrupted on guarantee of a bank loan to her software start-up The Work Shop, Melissa Gollan argued the debt was not hers alone, liability should lie also with an intending investor who later backed out.

The $350,000 debt was hers alone, the High Court ruled.  She signed the guarantee.  There was no evidence of the intended new investor becoming liable for her business debts.

Wellington-based Melissa Linda Gollan attracted media attention with Work Shop, offering software to manage business expenses.

In 2024, she guaranteed Work Shop’s lending facility with Bank of New Zealand.

She later claimed the Bank facility was intended as a bridging loan, with a one million equity investment expected from a Bay of Plenty Charitable Trust managed by Ricki Gage: Te Runanga o Te Whanau.

She told the High Court that BNZ was aware that she held a ‘signed post-dated share transfer’ for Te Whanau’s expected investment.

This investment never came through.

When BNZ took action to bankrupt Ms Gollan on her guarantee of Workshop’s unpaid $350,000 debt, she said this was not solely her debt; Te Whanau ‘shared’ liability, she claimed.

There was no evidence of any arrangement between BNZ and Te Whanau having Te Whanau provide security for Work Shop’s overdraft, Associate Judge Skelton said.

Ms Gollan, as sole guarantor, was liable for the full amount.

BNZ was justified in refusing Ms Gollan’s offer to make repayments by instalments, he said.  She had made no repayments since notice of default in July 2024, and had provided no evidence of her current personal financial position.

BNZ v. Gollan – High Court (15.10.25)

25.219

Estate: Matene v. Estate Joe Matene

 

Winding up estates of two brothers was left to drift, reaching the stage where Izak Matene as the five per cent owner of a Massey property in Auckland refused to allow estate beneficiaries any access to their inherited property while he lived there with his family.  The High Court ordered a Property Law Act sale, with Izak given six weeks to shift out.

A 2014 family arrangement saw the Kopi Place property purchased collectively by several relatives: Izac taking a five per cent share; his father Joe taking a seventy per cent share; and Joe’s brother Isaac a twenty-five per cent share.

Part of the price was paid with a $296,000 bank loan, having all three liable as signatories.  It is claimed Izak put in no cash.

At time of this purchase, Izak’s uncle Isaac had limited mental capacity, the result of a head injury twenty years previously.  Isak’s father Joe was one of Isaac’s court-appointed property managers, authorised to handle his financial affairs.

Isaac died three months after Joe signed him into his purchase of a twenty-five per cent share of Kopi Place.

Isaac left no will.  No steps were taken to deal with his twenty-five per cent share.

Nearly ten years after Isaac’s death, son Daniel became administrator of his late father’s estate and started asking questions.  Initially, family were unaware that Isaac was part-owner of Kopi Place.

The High Court was told Daniel was refused access to Kopi Place and physically threatened when he questioned ownership rights.

By this time, Izak’s father Joe (who held a seventy per cent share of Kopi Place) had died.

He also left no will.  Again, no steps were taken to deal with his estate.

When ownership issues were raised eventually in the High Court, Izak and his family were living at Kopi Place, having no interest in sorting out ownership rights to ninety-five per cent of the property Izak did not own.  This ninety-five per cent share is expected to pass under default rules in the Administration Act to descendants of his father Joe and his uncle Isaac.

Izak himself is a beneficiary under his late father’s intestacy, together with his two sisters.

With Izak refusing access for co-owners, Justice MacGillivray ordered a Property Law Act forced sale of Kopi Place.

Net proceeds of sale are to be held by a law firm while Administration Act inheritance rights are identified.

Izak was ordered to pay an occupation rent for his use of Kopi Place since 2014, with a calculation of market rents over this period, less an allowance for Izak’s payment of rates and mortgage interest.

In addition to receiving five per cent of the net proceeds from Kopi Place as part-owner, Izak will receive an Administration Act inheritance out of the seventy per cent share payable to his late father’s estate.

Matene v. Estate of Joe Matene – High Court (10.10.25)

25.217

Asset Freeze: Belvedere Residential v. Li

 

Accused of wrongly taking $900,000 out of an Auckland property development she had just sold, Sifen Li claims it was a loan repayment made with the knowledge of Belvedere Residential Ltd’s new owner, Richard Lee.

The High Court imposed a freezing order over Ms Li’s assets, pending a full hearing.

The property development had its genesis in a 2021 agreement to buy a site on Belvedere Place in Warkworth for eleven million dollars.

Over the next twelve months, a deposit of $1.5 million was paid in three equal instalments, funded from various sources associated with Ms Li.

By early 2024, Ms Li was in sole control of Belvedere Residential Ltd and its Warkworth development, other investors having since departed.  Seven months later, she sold out to Richard Lee, who then took control of Belvedere.

The High Court was told Ms Li continued to have access to Belvedere’s bank account with Mr Lee’s consent and had authority to make payments on Belvedere’s behalf.

A $900,000 April 2025 transfer of Belvedere funds to Ms Li’s personal bank account proved contentious.

This was repayment of funds previously lent to Belvedere, used to pay the $1.5 million deposit, she says.

The deposit was an equity contribution put in by Ms Li, Mr Lee says.

If so, this equity contribution was taken into account when calculating the price paid by Mr Lee when buying Belvedere.

In the High Court, Justice Gardiner said that limited evidence before the court indicated funds for the deposit could have been either a loan or an equity contribution.

A full hearing is needed to decide.

In the interim, Justice Gardiner imposed a freeze prohibiting sale of a property owned by Ms Li on Clonbern Road in Auckland suburb Remuera and a similar freeze over shareholdings in four separate companies she owns plus a freeze over her personal bank accounts.

The amount frozen is limited to one million dollars.  Ms Li is permitted to draw down on her personal bank accounts to pay ordinary living expenses and her company bank accounts to pay business expenses.   

Justice Gardiner said a wide freezing order is necessary because of her apparent practice of mixing personal and business assets.

The court was told Mr Lee’s Belvedere Residential is in financial difficulty, with evidence of Belvedere’s property listed for mortgagee sale.

Belvedere Residential Ltd v. Li – High Court (10.10.25)

25.218

Unit Title: Body Corporate 49407 v. Donovan

 

Amended Unit Title powers enabled a Tauranga body corporate to assume ownership of an apartment, forcing a sale after the bankrupt owner squatted there for more than a decade without paying council rates, body corporate fees or contributing towards his $242,000 share of building remediation costs.

The High Court was told Michael Philip Donovan was bankrupted in 2009.

Insolvency Service disclaimed rights to his inner city Willow Street apartment; the amount secured by mortgages registered against the apartment meant it was valueless as an asset in Mr Donovan’s bankruptcy.

Land disclaimed in a bankruptcy defaults to crown ownership; a relic of feudal law from England.  Land tenure is derived ultimately from crown ownership.

Mr Donovan remained living in his apartment as if nothing had happened.

Known as Strata Views, the building has seven apartments; six operating as business premises.  Mr Donovan’s is the only one occupied as a residence.

Strata Views body corporate told the High Court it had received little co-operation from Mr Donovan.  He refused to leave.  Body corporate levies due following his bankruptcy mounted up, unpaid.  Council rates were not paid.

Attempts by Tauranga Council to force a Rating Act sale for non-payment of rates foundered.  No agreement could be reached with the first mortgagee over setting an auction reserve price.

By late 2024, unpaid arrears totalled $604,000: rates, insurance, body corporate levies and Mr Donovan’s unpaid share of weathertightness remediation costs.  Fellow apartment owners were covering his costs.

The High Court allowed the body corporate to assume ownership of Mr Donovan’s apartment.

Since 2010, the Unit Titles Act has allowed bodies corporate to exercise powers of a ‘natural person.’

Strata Views, like any natural person, was entitled to make an Insolvency Act application for the disclaimed apartment to be registered in its name.  It had ‘suffered loss,’ incurring body corporate expenses covering Mr Donovan’s apartment, Justice Andrew ruled.

Once registered as owner by court order, Strata Views body corporate is entitled to have current mortgages removed, clearing the title, enabling sale of Mr Donovan’s apartment, Justice Andrew said.

Two of the mortgages secure debts which fell due for repayment in July 2008 and July 2009.  No action has been taken to force repayment.

Limtation Act rules state recovery of a mortgage debt is time-barred if no steps are taken for twelve years from repayment date.  Both these mortgages are now ‘stale;’ time-barred and not enforceable, Justice Andrew ruled.

The remaining mortgage secured debts owed by Mr Donovan to the body corporate.  Strata Views right to recover this debt is achieved by assuming ownership of the apartment.

The court was told the body corporate intends to clean up the apartment, then sell.

Mr Donovan’s claim to instead have ownership of the disclaimed apartment returned to him was dismissed by both the High Court and the Court of Appeal.

Mr Donovan has no realistic ability to pay arrears, now well overdue, the court said.  Vesting ownership in Mr Donovan would perpetuate the body corporate’s current impasse attempting to deal with him.

Ownership passes to Strata Views’ body corporate, holding title on behalf of all the other apartment owners, who have been paying Mr Donovan’s share of outgoings.

Body Corporate 49407 v. Donovan – High Court (16.12.24) & Court of Appeal (8.10.25)

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Mutton Bird: re Succession to Phyliss Harmon

 

Ten years on from Polly Harmon’s death, disputes over inheritance rights saw the Maori Land Court rule Polly validly skipped a generation, gifting her customary Maori land holdings to granddaughter Nicki Rimene.  But Nicki’s inherited rights to take mutton bird at Stewart Island must be approved separately through the Rakiura Titi Committee, which oversees harvesting rights, the court said.

Ngai Tahu’s Treaty settlement led to special rules governing ancestral rights to collect mutton bird from 36 small islands surrounding Stewart Island.

These rights are tightly held.  On half these islands, only certain families can harvest mutton bird.  Management of harvest rights on other islands is overseen by the Rakiura Titi Committee.  Who is entitled to the resource is closely controlled.

On Polly Harmon’s death at Masterton in 2014, she left by will all she owned to granddaughter Nicki, leaving nothing to her ten children.

Polly raised Nicki from childhood in a whangai adoption, with Nicki living with her at time of her death.

Rules in the Maori Purposes Act prohibit mutton bird harvesting rights being passed on by will.

Terms of Polly’s will supposedly gifting her mutton birding rights to Nicki are invalid.

In the Maori Land Court, Judge Stone offered Nicky an opportunity to disclaim this part of her inheritance.  If so, these ancestral rights pass directly to Polly’s ten children.  If not, evidence is required from the Rakiura Titi Committee whether granddaughters raised as whangai can directly inherit a grandparent’s rights.

Also in the Maori Land Court, Polly’s ten children challenged their mother’s choice of leaving all to Nicki as being unfair.

Te Ture Whenua Maori Act allows interests in ancestral land to be transferred by will to one or more blood relatives, overriding the customary rule that ancestral land is simply divided on death equally between direct descendants.

Polly’s will validly passed this land to Nicki, Judge Stone ruled.

It was too late for Polly’s children to bring a Family Protection Act claim against her estate ten years after their mother died; the Act imposes a twelve month deadline.

And back in 2015, all ten children signed a letter acknowledging they would not challenge their mother’s will.  This effectively barred any Te Ture Whenua challenge to the will, Judge Stone ruled. 

He dismissed claims this letter was signed without fully understanding its effect; terms of the letter were clear, he said.

The court was told Nicki intends to place her bequest of ancestral land holdings into a trust for the benefit of all Polly’s descendants.

re Succession to Phyliss Harmon – Maori Land Court (3.10.25)

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