Radio Spectrum: Cayman Spectrum v. Spark NZ

 

Market dynamics a decade ago set the scene for a High Court order that Cayman Spectrum pay Spark around $2.3 million for temporary transmission tower access.  In late 2015, Cayman was days away from losing its spectrum allocation because of delays in setting up network coverage; Spark could see the strategic benefit of potentially getting its hands on more spectrum coverage than then allowed, by temporarily sharing towers with Cayman.

Auction of radio spectrum was carefully managed by Business, Innovation and Employment, accelerating internet coverage within New Zealand.  Bidding rules prevented winners from sitting on their spectrum rights in the hope of simply selling later to another buyer.

By end of November 2015, successful bidders had to be operating a commercial wireless broadband service covering at least fifteen of New Zealand’s seventy-five territorial local authorities.

Six days short of this deadline, Canada-controlled Cayman Spectrum was at risk of losing its 2.5 spectrum licence.  It did not have sufficient transmission coverage.

Vodafone could not help.  It did not have enough compatible equipment.

Spark had its network in place.  It could accommodate Cayman’s need for temporary use of some thirteen specific transmission sites.

Haggling commenced, with Spark angling for an option to later buy Cayman’s spectrum rights.

Failing that, Spark was open to deferred payment; fifty per cent of sale proceeds, if Cayman sold to a third party.  Cayman countered with an offer of fifteen per cent.  They settled at twenty per cent.

Cayman later sold its spectrum rights for USD 10 million.  Spark claimed it was owed USD two million.

Last year, the High Court ruled that then Cayman director, Boyd Craig, had no authority to unilaterally commit Cayman to the Spark deal.

With no contractual right to twenty per cent of the USD 10 million sale, the High Court ruled Spark was entitled to payment as quantum meruit: legal jargon for payment at reasonable value for services provided, where remuneration has not been agreed.  

The two sides could not agree on a figure.

There was no market price to use as a benchmark.

As Justice Lang commented, this was case of one buyer and one seller and a service agreement arising in unusual circumstances which are unlikely to ever happen again.

The agreement to pay twenty per cent of sale price from any subsequent Cayman sale served as proxy for the value provided, Justice Lang ruled. 

Justice Lang ruled Cayman owed as a quantum meruit payment the sum of USD two million, less NZD 600,000.

This deduction is the amount Cayman, now under control of entrepreneur Malcolm Dick, was willing to pay in 2016, being an unsuccessful bid to have Spark’s transmission hosting agreement run for its final five months.  Spark had exercised its right to cancel when guarantor Woosh Wireless collapsed.

In New Zealand dollars, the court order against Cayman equates to $2.3 million, using the exchange rate applying at time of Cayman’s sale.

That may not be the final figure.  Either side can still argue over what date should count when calculating the USD two million exchange rate.

Cayman Spectrum (NZ) Ltd v. Spark New Zealand Trading Ltd – High Court (16.06.25)

25.141

Loan: Jia v. Yang

 

With fourteen million dollars already committed to an Auckland North Shore property development, Yuling Yang and Sen Gao were approached by fellow investor Victor Jia for a further $1.5 million to bail him out of a problematic personal debt.  Repayment of what eventually became a three million dollar personal loan was in dispute after China Construction Bank called up its loan over the six-storey residential development.

Mr Jia, also known as Xinhong Jia, said this personal loan was in fact a limited-recourse loan tied to their joint project, with his benefactors only entitled to payment out of what might remain from the wash-up on liquidation.

The Court of Appeal was told Mr Jia’s plea for a personal loan followed difficulties in repaying a debt owed another member of the Chinese community.  Non-payment would be a severe loss of face.

Ms Yang and Mr Goa came to the rescue with an agreement recording what became an unsecured non-interest bearing three million dollar personal loan with repayment deferred until the North Shore project at Browns Bay was complete and ‘shareholder dividends payable and paid [to them as] shareholders.’

This agreement was concluded at a time when prospects of their property development being profitable looked good.

Three years later, Ms Yang and Mr Goa were demanding repayment of their three million dollars.  Twelve months on, China Construction Bank forced a sale of Browns Bay, recovering $21 million dollars owed.

Mr Jia alleges China Construction sold at an undervalue.  Action against the bank is threatened.

Fending off claims by Ms Yang and Mr Goa for return of their three million dollars, Mr Jia said they had to wait for the outcome of litigation against China Construction.  Any surplus would be paid as a ‘shareholder dividend,’ amounting to final repayment in terms of their loan agreement, he said.

The Court of Appeal ruled ‘dividends’ as envisaged by their agreement applied to payments made by a solvent company to its equity investors.  It cannot be likened to a payment made on liquidation, the Court said.  Use of the word dividend was not to be confused with payments to creditors in a liquidation, which also get labelled as dividends, the court said.

Their contract made no provision for what might happen if the project failed; this prospect was never considered when the loan was set up.

The Court ruled it was an implied term in their loan contract that if the project failed, Mr Jia’s obligation to repay his personal loan fell due immediately.

Jia v. Yang – Court of Appeal (13.06.25)

25.140

Property Management: Millar v. First NZ Properties

 

When a commercial contract ‘runs on’ beyond its scheduled end, all contract terms continue to apply, ruled the Court of Appeal, critical of a trial judge’s selective choice as to which terms still applied when holding directors Michael Millar and son-in-law Paul Mephan liable for benefits extracted from First NZ Properties. 

Result: Mr Millar’s liability to pay some $2.4 million damages was reduced; Mr Mephan’s liability to pay $450,000 overturned.

The earlier 2024 High Court ruling covered over two decades of property management by Mr Millar, primarily through his Nelson-based company Investment Services Ltd, and his role as director of commercial properties held under the umbrella of First NZ Properties Ltd.

In the High Court, he was found liable for failing to properly disclose excess management fees charged and of taking a share of capital gain on property sales without authority.

One critical issue was: what were the terms of Investment Services ongoing management contract?

The original management contract was signed in 1995, covering three Foodtown supermarkets in Auckland.  Over time, First NZ sold these investments, purchasing replacement properties.

New management contracts were not drawn up to specifically cover these replacements.

Mr Millar, and Investment Services, said the original management contracts simply ran-on, carrying over to the replacement properties.

The High Court ruled terms covering calculation of management fees did carry over (with both Mr Millar and Investment Services liable for padding these fees) but a term entitling a share in any capital gain on sale did not carry over (ordering repayment).

The Court of Appeal ruled the original 1995 contract envisaged further properties might be purchased.  This meant all terms of the 1995 contract applied to subsequent purchases; not only the formula for calculating management fees, but also the right to five per cent of capital gain on sale.

On appeal, Mr Millar’s and Investment Services’ liability for padding fees remained.  Investment Services had developed a policy of subcontracting to others management of specific properties, charging this cost to First NZ investors, and then continuing to pocket for itself a full management fee.

Court of Appeal ruled payment of $450,000 being a share of capital gain on the 2018 sale of a First NZ property in Symonds Street, Auckland, was permitted by terms of the run-on management contract.

Millar v. First NZ Properties Ltd – Court of Appeal (11.06.25)

25.139

Will: Mabbett v. Llewellyn

 

William Llewellyn, previously known as William Biggs, was surprised to learn 35 years after dating Sue Mabbett that she had named him as sole beneficiary of her estate in a 1988 will.  Her sisters claimed a handwritten note found amongst Sue’s belongings after her 2023 death should instead stand as her final will.

This note set out cash gifts for her nieces and nephews, with the rest of her property going to two of her six siblings.  Her major asset was a small studio unit in Whangarei.  She had no spouse or children.

Forensic evidence identified the note was in her handwriting.  Being a page torn out of a diary, it contained multiple crossings-out and additions, written over time with three different pens.  It was signed and dated.  There were no witnesses to her signature, as required by the Wills Act.

Mr Llewellyn said the note was no more than preliminary thoughts about a possible new will.  The two had parted amicably some thirty five years ago, with Mr Llewellyn remaining to work in New Zealand whilst Sue wanted to travel.

After learning of the 1988 will, and having never heard of a Mr Llewellyn, nor a Mr Biggs, in their sister’s life, Sue’s sisters tracked him down through Facebook.

The earlier 1988 will naming him a sole beneficiary should stand, Mr Llewellyn said.

The High Court may validate, as a will, documents not complying with strict Wills Act requirements if the document records ‘a settled testamentary intention.’

Justice Gardiner validated the note as her final will.

It was headed: ‘my will.’

In the years prior to her death, several of her siblings had prompted her to ensure she made a will.  In reply, she had told them details were on a piece of paper with her belongings.  She also told them who would inherit.

The note, matching her earlier description was found by her sisters when sorting her belongings after her death.  She had carried the note with her when shifting to a new studio unit in the year prior to her death.

The fact she signed the note with the same pen used to make the final crossing-out, indicated she had reached a final conclusion about disposal of her assets, Justice Gardiner said.

Mabbett v. Llewellyn – High Court (5.06.25)

25.137

Voluntary Adminstration: Rahman v. Shephard

 

Struggling financially, Wellington Combined Taxis was sold to Auckland Co-op Taxis for two million dollars, only after a fiercely fought battle between Wellington drivers which saw the High Court making novel use of Companies Act administration procedures effectively putting Wellington Combined on the block: giving drivers a choice between an Auckland takeover, or refinancing by current Wellington owners.

Wellington’s traditional taxi services have been in decline for nearly a decade, accelerated by covid-19 lockdowns, a downturn in the regional economy and the rise of online competitors such as Uber.  In the last five years, annual patronage fell fifty per cent from 1.2 million rides to less than 600,000.

Wellington Combined is asset rich, holding property with a market value of more than one million dollars; but suffers ongoing operating losses with accumulated losses for the five years ending 2024 totalling nearly three million dollars.

About one-third of taxi licences held by Wellington Combined drivers sit unused, non-operational because driving is not profitable.  Taxi licences which changed hands for $50,000 ten years ago, now struggle to find a buyer at $2000.

It was a 2020 decision by Wellington Combined directors to reduce monthly levies charged non-operational members that blew open the dispute.  A number of active drivers alleged this reduction was made primarily to benefit directors personally, an allegation they deny.

When Companies Act court approval was given a ginger group of active drivers to challenge directors’ selective levy reduction, with the company to bear all litigation costs, directors promptly put Wellington Combined Taxis Ltd into administration.

Companies Act administration is intended to allow an insolvent or ‘near-insolvent’ company to take stock, blocking ongoing legal claims, while future prospects are considered.

Administration envisages creditors voting on possible future action: restructuring or liquidation.

The legal novelty facing Justice Boldt was that Wellington Combined Taxis creditors were at no immediate risk of being left unpaid.  In fact, during the court hearing, Bank of New Zealand was sufficiently encouraged about Wellington Taxis’ financial prospects that it extended the company’s overdraft limit by a further $200,000.

In the High Court, Justice Boldt imposed a two-step process: first, a vote by Wellington Taxis driver/shareholders on two rival proposals put forward; then second, a vote by creditors on whatever option shareholders approved.

One proposal would see Auckland Co-op Taxis buying out Wellington Combined Taxis’ assets, offering franchise opportunities to Wellington drivers.

The other proposal envisaged a promised $1.5 million injection of cash from a new investor, election of a new board, and operating revenue improved with an increase in monthly levies charged drivers.

Recognising that the vagaries of voting, having some shareholders holding multiple taxi licences, might see both proposals getting more than fifty per cent support, Justice Boldt ruled that the proposal getting the greater level of support was to be put to creditors for further approval.

Companies Office records show a sale to Auckland Co-op at two million dollars was approved, with payment to be made in twelve monthly instalments.

Rahman v. Shephard – High Court (5.06.25)

25.136

Mortgagee Sale: Golden Touch Investment v. Zhu

 

Ordered to pay $1.9 million shortfall on a mortgagee sale of her failed Auckland property development, Jian Tan was also ordered to pay $111,900 as an occupation rent for the period taken to evict her from the Massey property.  The High Court ruled out her negligence claim against a real estate agent marketing the property; in a mortgagee sale, real estate agents are acting on behalf of the unpaid creditor, not the defaulting owner.

Ms Tan’s five unit development on Massey’s Don Buck Road collapsed into a welter of claims and counter claims when her company Golden Touch Investment and Trade Co Ltd defaulted in late 2023 on a $3.8 million loan.

The loan was advanced by Jianzhong Zhu.  Ms Tan guaranteed repayment.

The High Court was told Ms Zhu’s loan was used to refinance existing lending at a time when the project was already in difficulty.  By the time repayment of Ms Zhu’s loan was due, the development was still not complete.  No code compliance certificate had been issued.

Following a later High Court hearing, Associate Judge Cogswell said Ms Tan did little more than raise vague and unsubstantiated allegations about the mortgagee sale process.

At heart of Ms Tan’s allegations was a complaint that Ms Zhu was party to a fraud, intended to get control of her Don Buck property at a cheap price.

Ms Tan alleged purchaser at the mortgagee sale, Cypress Investment Holding Ltd, was a front for Ms Zhu.  She claimed Cypress Investment was controlled by Ms Zhu’s spouse.  She had private investigators attempt to track down who was running Cypress; to no avail.

Legal costs mounted with multiple unsuccessful attempts by Ms Tan to block any mortgagee sale.

Ms Tan claimed Ms Zhu wrongly dismissed attempts to refinance.  The deal she offered would have seen part-payment to Ms Zhu, with her then first ranking mortgage reduced to a second-ranking security for the unpaid balance.

Ms Zhu was not obliged to enter into arrangements that increased the risk of further losses, Judge Cogswell said.  Golden Touch was in breach of its loan; Ms Zhu was entitled to enforce her mortgage, he said.

Ms Tan claimed Ms Zhu did not properly advertise the property when selling.  She also claimed damages for negligence from Harcourts Three Kings.

Photographs included in an information pack provided to potential bidders did not show the current state of the property to best advantage, she said.  They were taken at an earlier point in construction.

The court was told Ms Tan had refused access during the marketing period.  There was no opportunity to get better photographs.

Even if inadequate photographs were a defect in marketing the property, it was a defect caused by Ms Tan, Judge Cogswell said.  In any event, they correctly illustrated that the project was incomplete at time of sale, he said.

After purchasing at mortgagee sale, Cypress discovered the property was occupied and tenanted.

It was awarded mesne profits totalling $111,900 against both Golden Touch and Ms Tan for the seven month period from date of the mortgagee sale to the date of the court hearing.  Akin to the law of trespass, these damages are compensation for the wrongful occupation of property owned by someone else.

Both Golden Touch and Ms Tan were ordered to surrender possession.

Ms Tan’s claims against Harcourts Three Kings were dismissed.

Real estate agents acting on a mortgagee sale owe legal duties to their client, the secured creditor enforcing its security.  A defaulting debtor is not the client.

Any claims for losses arising from poor marketing of a property in a mortgagee sale are made against the secured creditor forcing the sale, not the real estate company acting as agent for the creditor.

Golden Touch Investment and Trade Company Ltd v. Zhu – High Court (5.06.25)

25.138

Fraud: Parata v. R

 

High Court confirmed two years’ imprisonment for Lance Parata, convicted of a $57,500 invoicing fraud where he altered invoices for work done by his employer’s Helensville vehicle workshop, with payment diverted to his personal Westpac account. 

What stung for employer NP Dobbie Maintenance Ltd was that much of this offending took place during covid lockdowns at a time when Parata manipulated staff, denigrating Dobbie management.

The High Court was told that Parata, on a $80,000 plus salary package, altered customer invoices on over thirty occasions through a period of at least two years.

He subsequently disputed the amount taken, eventually pleading guilty to charges amounting to $57,400.

He appealed his two year sentence, claiming insufficient credit was given for both his guilty plea and his history of drug and alcohol abuse.

His guilty plea came eleven months after being charged and after multiple preliminary court appearances.  Further credit would have required an earlier guilty plea, Justice Downs said.

Justice Downs questioned the direct relevance of Parata’s substance abuse on the sentence imposed.  Money stolen was not spent solely on drugs and alcohol; it was spent variously on food, tools, and equipment, plus drugs and alcohol.

No further credit, beyond three months already allowed by the trial judge, was granted.  There was no evidence that substance abuse ‘caused’ the offending.

Parata has a criminal record.  The trial judge added two months to her sentence calculation for this prior criminal history.

Parata v. R – High Court (5.06.25)

25.135

Rating: Marsden City Partnership v. Whangarei District

 

Struggling to capitalise on its $8.6 million purchase of a stalled Marsden Point subdivision, John and James Sax’s Marsden City Ltd Partnership placed temporary fences and water troughs across the 82 hectare property, then stocked the land with cattle, claiming the subdivided land should be rated as farmland.

Whangarei Distict Council said no.  The High Court agreed.

Subdivided into 87 separate land titles with infrastructure vested in the local council, all roading, lighting and drainage are in place.

Sax investors bought the project from Westpac receivers in 2017 for $8.6 million.  Original developers defaulted on a $56 million Westpac loan.

The subdivision formed part of Whangarei District’s anticipated satellite city of some 40,000 people north of Ruakaka, near Marsden Point.  It was previously farmland.

Subdivided lots proved difficult to sell.

Sax’s Marsden City Partnership also found sales slow.

They claimed the land, reworked into nine paddocks, now operated as a farm and should be rated as such.

The court learnt that farming operations did not cover costs, and were unlikely to ever do so.

Between 75 and 150 head of cattle grazed on site.  Pasture cover was not ideal for livestock.

High Court stated the Sax’s arrangement was no more than an attempt to achieve de facto postponement of rates as a farm, while awaiting a rise in market interest before resuming marketing of individual subdivided lots.

Land Valuation Tribunal ruled previously that it was very unlikely the reworked subdivision would ever be on-sold as a single farming unit.

Marsden City Limited Partnership v. Whangarei District Council – High Court (5.06.25)

25.134

Auction: Tippen v. Spark

 

Auction of a Waikuku Beach property north of Christchurch was thrown into chaos when the winning bid was subsequently found to have come from a bidder being treated for a minor mental health condition who was unable to later pay the $606,000 bid price.

Accepting liability to pay damages for breach of contract, she disputed the amount claimed.

Ordered to pay about $230,000 damages, the High Court dismissed her claim that damages for loss on resale should be reduced because she bid at auction well beyond the then market price.

One valuer assessed the Waikuku property as being worth no more than $430,000 at time of the January 2024 auction.  One year later, it was sold to a new buyer for $440,000.

In the High Court, Associate Judge Paulsen ruled breach of contract damages are calculated to compensate the innocent party as if the contract had been performed. The promised contract price is relevant; market value of the land sold is not relevant.

In any event, the fact an underbidder was willing to offer $599,000 prior to her $606,000 closing bid indicates there was market interest close to the final contract price, Judge Paulsen said.

Damages totalling $230,000 included: a $110,400 loss on resale; real estate costs for the resale; and, interest for late payment calculated at the contract rate of sixteen per cent.

The court was told neither the vendors nor their real estate agent was aware of her mental health issues at time of the auction.

Tippen v. Spark – High Court (3.06.25)

25.133

Tax: Anthony & Summit Scaffold v. Inland Revenue

 

Inland Revenue’s power to negotiate instalment payment of tax arrears is not available as of right for delinquent taxpayers with a track record of poor compliance, the High Court ruled.  Integrity of the tax system is paramount.  Voluntary compliance with tax obligations by other taxpayers is threatened if concessions are seen to be unfair, arbitrary and a reward for past non-compliance, Justice Andrew said.

The High Court was told of lengthy dealings with Inland Revenue by Roshan Anthony and his Auckland business, Summit Scaffold NZ Ltd.

Back in 2018, Inland Revenue first sought to liquidate Summit for unpaid taxes.

Legal proceedings were discontinued after Inland Revenue agreed payment by instalments.  Within months, Summit defaulted on this agreement.

A further High Court liquidation application in 2021 by Inland Revenue was also halted after Summit made part-payment of arrears, with Inland Revenue agreeing to write off accrued penalties and interest.  

One year later, Summit failed to file tax returns.

In May 2024, Inland Revenue again filed for liquidation of Summit Scaffold claiming unpaid GST, PAYE and income tax totalling nearly $400,000.

Hearing of this liquidation application was put on hold, while Summit challenged Inland Revenue’s dismissal of its multiple further requests for payment by instalments.

Evidence was given of Inland Revenue concerns over the level of borrowings taken out of the company by Mr Anthony and steps he had taken to transfer property out of his name into the name of his spouse.

Inland Revenue told the court Mr Anthony was taking cash out of his company at a time when there was sufficient available for Summit to meet tax debts.  Mr Anthony declined Inland Revenue’s suggestion that an instalment plan might be approved if mortgage security were given over property recently transferred to his spouse.

Seeking High Court judicial review of Inland Revenue’s refusals, Mr Anthony and Summit Scaffold claimed there was a failure to properly apply discretionary powers in the Tax Administration Act.

The Act does not require Inland Revenue to accept each and every instalment proposal solely on the basis this would achieve a better recovery than putting that taxpayer into bankruptcy or liquidation, Justice Andrew said.

Decisions about individual taxpayers must be balanced against broader public interest considerations.

Separately, a March 2024 District Court default judgment held Mr Anthony liable to Inland Revenue for income tax of some $180,000 unpaid for tax years 2019 – 2023.

Inland Revenue subsequently accepted his proposal to pay this debt in full by instalments over two months.  The High Court was told this personal tax debt has been paid in full.

Mr Anthony’s request that the earlier District Court default judgment now be set aside was refused.  Inland Revenue acted reasonably and in compliance with the law in taking legal action against Mr Anthony to force recovery of tax due, Justice Andrew ruled.

Anthony & Summit Scaffold NZ Ltd v. Inland Revenue – High Court (30.05.25)

25.126

Hobson Towers: Body Corporate 172108 v. Cummins

 

Long-running dispute over remediation costs for Hobson Towers in Auckland’s central business district ended with the body corporate bankrupting Wellington-based Robert James Cummins over unpaid litigation costs, bringing to a close a fifteen-year argument over allocation of repair costs for his twelfth-floor apartment held in the name of Manchester Securities Ltd, itself in liquidation insolvent.  

Plans to remediate Hobson Towers kicked off in 2009, with Mr Cummins’ Manchester Securities accepting responsibility for work on its top floor apartment.

Over fifteen years later, this work is not complete, compounded by rounds of litigation arguing what part of Manchester’s costs may or may not be a body corporate expense.

Manchester Securities was forced into liquidation in 2020 for unpaid body corporate fees.

It currently owes in excess of one million dollars.

Participating in several unsuccessful appeals to stop this liquidation, Mr Cummins was ordered in 2021 to contribute $32,800 towards body corporate costs.  Four years on, he was bankrupted following a failure to pay these costs.

The High Court was told Mr Cummins eventually came to owe Hobson Towers body corporate more than $168,000 in litigation costs, following further unsuccessful litigation.

The court dismissed his last ditch steps to avoid bankruptcy.

Mr Cummins claimed that through Manchester Securities he had several valid cross-claims against Hobson Towers body corporate.

Associate Judge Skelton ruled these cross-claims lack substance.

Even if Manchester Securities were to succeed in its claims, this would be of little financial benefit to Mr Cummins, he pointed out.  A multi-party agreement between Manchester Securities’ liquidator, secured creditors and the body corporate, sees Mr Cummins well down the list of claimants entitled to any payout.  

Mr Cummins claimed bankruptcy was pointless; he has no assets of substance.  

Body Corporate said there was no proof Mr Cummins has no assets.

It was in the public interest to have Insolvency Service investigate Mr Cummins personal financial position, Judge Skelton ruled.

Mr Cummins plea that special circumstances meant bankruptcy should be refused was also dismissed.

There has been a protracted and convoluted dispute since 2009 over repair of Hobson Towers in which Mr Cummins has played a central role, Judge Skelton said.  The legitimate interests of other apartment owners are being grossly prejudiced.  Ongoing disputes, litigation, the failure to complete necessary remedial work for level twelve, and now a delay in determining his bankruptcy are prejudicial to their interests, he said.

Body Corporate 172108 v. Cummins – High Court (30.05.25)

25.132

 

Post judgment note: Companies Office reports filed by Manchester Securities’ liquidator state that he has been unable to arrange funding for completion of work on Hobson Towers level twelve and has abandoned the project.

 

It is common for bodies corporate to assume control of apartments abandoned by their owners.

Investment: Preiss v. Vermeulen

 

Philatelists Karl and Louise Vermeulen sued stamp dealer Jaques Preiss for $234,000 on his ‘no questions asked’ refund policy after expert evidence suggested some of the stamps sold were fakes and forgeries.

Mr Preiss argued, unsuccessfully, that a time limit applied and that the Vermeulens had not complained within a reasonable time.  

The High Court was told they purchased thousands of stamps from Mr Preiss over a fifteen month period from 2021.

Initial purchases were through Mr Preiss’ TradeMe account.  His advertised terms of sale offered a ‘no questions refund … Your satisfaction is what I care most about.’  Later sales moved off the TradeMe platform, made directly with the Vermeulens.

They were later contacted by two expert philatelists who advised that Mr Preiss’ offerings were ‘highly suspect’ and that higher value stamps purchased were potentially fakes or reprints.

When the Vermeulens demanded a refund, Mr Preiss denied ever knowingly selling forgeries.  He required proof of forgeries before making any refund.

The Vermeulens said the cost of having individual stamps verified was prohibitive, with thousands of stamps to be checked at a quoted cost of $75 per stamp.

Associate judge Cogswell ruled the Vermeulens were entitled to a refund under terms of Mr Preiss’ guarantee.

This guarantee applied to stamps sold both through his TradeMe account and subsequent direct sales.  Their history of dealings meant the guarantee given earlier on TradeMe carried over, by inference, into their subsequent direct dealings.

The refund guarantee was open-ended.  There was no time limit.

This reduced the perceived risk of dealing with an online vendor, Judge Cogswell said.

Even if claims under the guarantee had to be made within a reasonable time, the Vermeulens had done so, he said.  They acted promptly once warned some of the stamps were suspect.

Preiss v. Vermeulen – High Court (30.05.25)

25.131

Liquidation: Kang v. Jan

 

Responding to Liquidation Management Ltd’s offer online of specialist insolvency advice, company director Judy Kang later found that Liquidation Management director Imran Khan is a disqualified insolvency practitioner.  She alleges Mr Khan engineered appointment of Mohammed Jan as liquidator of her insolvent companies, with Mr Khan improperly managing these liquidations from behind the scenes. 

In the High Court, Associate Judge Lester ruled there was no evidence that Mr Jan was failing doing his job properly, but he did order Mr Jan file later in court full details of all work charged to the liquidations by Mr Khan and his company.

Three companies owned by Ms Kang, also known as Ngoc Giau Kang, are in liquidation, with two of these companies owing Inland Revenue more than $1.5 million.

Ms Kang told the court she had a September 2024 telephone conversation with Mr Khan following her earlier online contact.  She described him as appearing thoroughly professional, claiming to have had twenty years insolvency experience and having completed over two hundred company liquidations.

She says Mr Khan subsequently created a sense of urgency and panic, making numerous requests for early signature to resolutions putting her companies into liquidation.  As it turned out, these resolutions appointed Mr Jan as liquidator.

Later learning that Mr Khan has been disqualified from acting as an insolvency practitioner, she tried unsuccessfully to have Mr Jan removed, saying Mr Jan lacked independence, alleging Mr Khan was pulling the strings.

Judge Lester ruled Insolvency Practitioners Regulation Act does not govern those merely giving financial or business advice.  While disqualified to act as an insolvency practitioner, the Act did not stop Mr Khan giving general pre-liquidation advice about possible business strategies.

All contact with Ms Kang, after her companies were put into liquidation, came from Mr Jan directly.

Whilst Mr Jan then subcontracted much of the work to Mr Khan’s Liquidation Management Ltd, there was no evidence that Mr Jan was not bringing his independent judgment to liquidation decisions, Judge Lester ruled.

Separately, Ms Kang laid a complaint about Mr Jan to the Institute of Chartered Accountants professional conduct committee.  While stating it is unusual for a liquidator to have no contact with a potential client before appointment, the committee said the evidence was that subsequently Mr Jan became actively involved in Ms Kang’s companies’ liquidations.

Kang v. Jan – High Court (29.05.25)

25.130

Ormiston Rise: Arena Alceon v. Grant

 

It was attack and counter-attack in a war between shareholders with high profile insolvency specialist Damien Grant siding with shareholder Clinton Webber who was pushed out of a struggling South Auckland residential property development at Ormiston Rise while Webber’s former financial partner and fellow shareholder Arena Alceon then sued Grant, claiming he failed to act properly, lacking independence in going after Arena.

In 2021, US financier Arena Alceon put the Ormiston Rise development into receivership, with the part-finished project sold to a related company, cutting out Webber’s Foundation Developments Ltd from any share in potential profits.

The High Court was told Mr Webber then met with insolvency specialist Mr Grant and between the two they put in place a plan to put Ormiston Rise into liquidation and then challenge Arena’s use of receivership to gain full control.

Their first step was to put Ormiston Rise into Companies Act administration.

The High Court was to later rule Mr Grant lacked professional independence when acting for Mr Webber and failed to follow correct statutory procedures when putting Ormiston Rise into administration, part of a tactically necessary first step prior to liquidation.

Despite these false steps, Associate Judge Lester did not remove Mr Grant from his current position as liquidator of Ormiston Rise, ruling any monetary penalties against him will be dealt with in the liquidation wash-up.

The High Court was told of tense meetings between Mr Webber and Arena Alceon in 2021, resulting in shareholder/creditor Arena calling up its loan.

Following a lengthy meeting between Mr Webber and Mr Grant at an Auckland café, it was decided to put Ormiston into administration.

This could be achieved easily, using a voting majority at board level now held by interests associated with Mr Webber.

Two Arena-appointed directors had previously been removed from the board.

The philosophy behind Companies Act voluntary administration procedures is to create a brief breathing space, allowing creditors to determine whether a company can be saved, or should be put into liquidation.

Insolvency practitioners acting as administrators are required to act impartially, exercising professional independence.

Associate Judge Lester was to later rule that Mr Grant acted as if Mr Webber were his client.

Companies Act administration was a necessary first step towards liquidation of the Ormiston Rise companies; Mr Webber and his associates did not have sufficient voting power as shareholders to put these companies directly into liquidation.

Mr Grant’s lack of independence was evidenced by steps taken ‘touting’ for votes from Ormiston creditors who were likely to support a plan for creditors to support the shift from administration to liquidation.  There was evidence of Arena’s rights to vote as a creditor being disputed.

There was no adequate disclosure of the fact Mr Webber was bankrolling his fees.

Judge Lester said it was clear administration was intended to later gain leverage over Arena with an internal email sent by Mr Grant indicating it was a strategy designed to ‘frighten the horses.’

Mr Grant billed Ormiston $180,000 for work done during administration, prior to Ormiston going into liquidation.  Arena questioned this level of fees charged for some five weeks work on Companies Act administration for a single-asset company where that asset had already been sold by the Arena-appointed receiver.

Judge Lester said the level of work done was more applicable to a liquidation investigation, ruling this was further evidence of Mr Grant lacking proper independence and acting for the benefit of Mr Webber.

With separate Ormiston litigation pending over Arena’s alleged misuse of the receivership process to maximise its return from the Ormiston Rise project, Judge Lester ruled Mr Grant as liquidator is to use external legal advisers, not in-house lawyers, for any further legal advice required in this dispute.

Mr Grant’s entitlement to fees charged for the five week period of administration and for fees charged to date for in-house legal advice are to be reviewed when the Ormiston Rise company liquidations are complete, Judge Lester said.

In-house lawyers at Mr Grant’s Waterstone insolvency practice billed for work done as if they were an external law firm.

Arena Alceon NZ Credit Partners LLC v. Grant – High Court (28.05.25)

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