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

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)

25.128

Perjury: Slavich v. Hamilton District Court

 

Convicted of fraud nearly twenty years ago, Hamilton accountant John Kenneth Slavich’s attempts to bring a private prosecution alleging he was wrongly convicted because of lies told by a witness foundered because of strict rules governing the burden of proof for perjury.  Conviction for perjury requires evidence from at least two different sources.

In 2006, Slavich was convicted on charges involving fraudulent mortgage transactions; sentenced to 27 months’ imprisonment and ordered to pay $60,000 in reparations.

He has always protested his innocence.

One of the frauds centred on a $75,000 loan secured over a Morrinsville property with part of the proceeds paid across to a company associated with Slavich.  Owner of the Morrinsville property knew nothing of the transaction carried out in his name.

At trial, Slavich claimed he believed at all times that he was acting on behalf of the real owner, having met him at a Burger King restaurant.  The trial judge ruled that Slavich must have known that the person he met was a Mr Leslie Orchard, impersonating the true owner and a major participant in the two frauds.

A 2020 Stuff investigation later threw doubt on how many people were present at this meeting, a critical issue at the earlier criminal trial.

Buoyed by this investigation, Slavich initiated a private criminal prosecution against Mr Orchard for perjury, alleging he lied at the criminal trial some fourteen years previously.     

Criminal Procedure Act requires private criminal prosecutions be filtered, with a District Court judge reviewing the proposed evidence to ensure there is sufficient evidence to warrant a trial.

Slavich’s application was rejected.

In the High Court, Justice Becroft ruled Slavich’s application was rejected for the wrong reasons, but the proposed private criminal prosecution could still not proceed.

Convictions for perjury require corroborating evidence.  Slavich himself alleges Mr Orchard committed perjury, but more than evidence from one witness is required.  And this evidence must come form those knowing first-hand whether Mr Orchard’s gave false evidence.

Conversations written up by the Stuff journalist do not suffice.  These statements are hearsay evidence; second-hand evidence, being what the journalist heard from someone else.

First-person evidence is preferred as the best source of truth.

Justice Becroft suggested Slavich might consider two alternatives: ask Police to re-open their investigation; or request an investigation by the Criminal Cases Review Commission.

Slavich v. Hamilton District Court – High Court (28.05.25)

25.129

Body Corporate: Parkinson v. Body Corporate 62124

 

Continuing dissension within a dysfunctional Wellington four-unit residential body corporate, now under control of a court-ordered administrator, has seen two unit owners ordered to pay $21,600 administration costs because of time spent dealing with their complaints described as meritless and unnecessary.

Mr Brendan Gilhooly and Mr Pieter Bos own units at the Hankey Street development in Wellington suburb Mt Cook.  They were penalised for their unhelpful intervention in attempts to sort out ongoing wrangles over maintenance and repair costs.

Built in the 1980s of painted cedar and plaster, ongoing disputes over necessary maintenance were compounded by a dispute over liability for repairs to a boundary retaining wall.

Two years ago, the High Court appointed an administrator to take control of the body corporate.  The long-standing owners could not agree on what maintenance should be carried out, or even agree on who should chair their body corporate.

The court appointment recognised an administrator would struggle to get unanimous approval from owners on future plans; he was authorised to isolate costs incurred dealing with meritless issues raised by any apartment owner, with power to charge these costs directly to the owner.   

Unit Titles Act enables recovery against apartment owners ‘at fault.’

Parkinson v. Body Corporate 62124 – High Court (27.05.25)

25.127

Inheritance: re Estate Pita Pani Cooper

 

An apparent error on a death certificate led to a practical impossibility: how do you prove someone never existed?

Given the high standard of proof required for evidence in court, it is a logical impossibility to prove a negative.  No evidence can be called to prove something didn’t happen, or that something or someone does not exist.  Circumstantial evidence can suggest this is the case, but that is not conclusive.

Proving a negative is a particular problem with inheritances; witnesses who could otherwise provide valuable evidence may be dead.

Yet some finality is necessary; enabling distribution of estate assets, allowing following generations to get on with their lives.

The Public Trustee sought High Court approval to finalise distribution of the estate of Pita Cooper, who died in February 1986.  His spouse pre-deceased him.

Mr Cooper died without leaving a will.

With no surviving spouse, intestacy rules decree that his net assets be divided equally between his children.

The only record held by the Public Trust was Mr Cooper’s death certificate, stating he had five children.

One died before his father.  Having left no children, this branch of the family received no inheritance.

Three other children were known: Pene, Pita and Dolly.  They had no knowledge of a fifth child, supposedly another daughter, according to Mr Cooper’s death certificate.

The Public Trust distributed a one quarter share to each of the known children, holding back the fourth portion, amounting to $165,500 in 2025, in trust for the fifth child, yet to be found.  

The High Court was told of Public Trust employing a genealogist to carry out an extensive historical search.  This included searches of online social media.  Members of extended family were contacted, seeking information about existence of an unknown fifth child.

No trace was found.

Justice Grice stated all reasonable steps had been taken to identify a fifth child.  It appears there may have been a mistake on the death certificate, she said.

Using Trust Act powers, Justice Grice ordered the remaining $165,500 be divided three ways between the known surviving children.

re Estate Pita Pani Cooper – High Court (23.05.25)

25.125

Reckless Trading: Callin Auto NZ v. Fujisawa

 

Promoted from the shopfloor in Japan to sole director of New Zealand sale operations, Yujiro Fujisawa was ordered to pay $1.01 million damages for reckless trading, following trading losses over a ten year period.

The High Court was told Callin Auto New Zealand Ltd was incorporated in 2012 as a wholly-owned subsidiary of a Japanese company exporting used cars.

Mr Fujisawa was appointed director.  He had previously been a student in New Zealand.

Evidence was given that Callin New Zealand began slipping on deadlines for making payments due Japan after about two year’s operations.  Mr Fujisawa become increasingly difficult to contact.

By mid-2016, he had stopped sending monthly sales reports to head office in Japan.

With payments falling further behind, staff from head office met with Mr Fujisawa in New Zealand, negotiating a payment schedule requiring fifty per cent of outstanding debt to be paid immediately, the balance by monthly instalments.  This agreement was not honoured.

Mr Fujisawa did not respond to head office demands he make Callin’s New Zealand bank statements available.

In 2022, Callin was put into liquidation by its Japan shareholder.

This was some two years after Mr Fujisawa resigned from the company.

Investigations by its liquidators found Callin New Zealand had been insolvent for much of its existence.

It held no unsold cars at date of liquidation.  Debts owed to Bank of New Zealand, Inland Revenue and Japan exceeded one million dollars.

Liquidators identified some $255,400 spent on what appeared to be entertainment expenses: restaurants, bars and golf.  Mr Fujisawa said these were legitimate business expenses, hosting clients.

Justice Johnstone held Mr Fujisawa personally liable for company debts totalling $1.01 million.  These were incurred in Callin’s name at a time when Mr Fujisawa had no reasonable belief that Callin would pay, he ruled.

Mr Fujisawa did not file a statement of defence.  He did not appear in court to defend the claim.

Callin Auto New Zealand Ltd v. Fujisawa – High Court (21.05.25)

Transport: TNL International v. Bullocks Freightmasters

 

For NZX listed Move Logistics it was a New Year nightmare: one hundred containers of steel pipes imported from China stacked up at Port of Tauranga in early 2022 incurring demurrage and detention charges totalling $529,000 in part because the customer could not take delivery until after its holiday shutdown.  

A three-way dispute followed over who should bear these increased costs.

Primary responsibility for importation lay with Bullocks Freightmasters International, a freight forwarding company based in Fremantle, Western Australia.

Bullocks engaged TNL International Ltd in New Zealand to handle importation through Tauranga, with TNL in turn subcontracting Move Logistics to deal with the final leg, shifting containers from the port.

The High Court was told the late start forced on Move Logistics had knock-on effects, leaving it unable to remove the last containers until mid-March.

Move Logistics and TNL International each claimed against the other: Move saying it was owed $250,000 because shipments did not arrive on dates promised; TNL saying Move was responsible for detention fees charged for late removal of containers from the Port.  Each refused to pay invoices sent to the other.

In June 2023, each agreed to write off claims made against the other.

TNL then sued Bullocks Freightmasters, claiming the Australian freight-forwarder is liable for demurrage and detention costs.

Bullocks denies liability, stating Move Logistics should be the one to pay.

Move failed in its High Court application to have Bullocks claim struck out.

Associate Judge Taylor ruled Bullocks is entitled to its day in court, with its claim that Move Logistics’ negligence led to $529,000 increased port charges.

This negligence claim is yet to be heard.

The critical legal issue will be questions of ‘causation,’ Judge Taylor signalled; why was there a delay in moving containers from the Port?

TNL International Ltd v. Bullocks Freightmasters International Proprietary Co Ltd – High Court (20.05.25)

21.121

Asset Forfeiture: Commissioner of Police v. McMillan

 

Claims by travel broker Jitesh Mistry that his $50,000 payment six years ago to now convicted drug dealer Kenny Leslie McMillan was a part of a legitimate business scheme to import cars cut no ice with Justice Boldt, refusing Mr Mistry’s application for repayment out of McMillan assets seized as proceeds of crime.

In 2021, McMillan was sentenced to 18 years imprisonment on charges of methamphetamine supply.  All his assets were seized as part of a Criminal Proceeds (Recovery) Act application, later sold to pay down a court ordered profit forfeiture order.

While McMillan protested that Police grossly exaggerated profits made, a $2.7 million profit recovery order remains outstanding.

McMillan claims he was simply part of a chain couriering drugs through the North Island.  Police allege he was a wholesaler.

In 2025, Jitesh Mistry applied for payment of $50,000 plus interest out of cash realised from sale of McMillan’s assets.  This was a loan made to McMillan, remaining unpaid, he said.

Mr Mistry provided Police with written loan documentation dated March 2019 setting out a $50,000 on demand loan with interest payable at one per cent.

In court, Mr Mistry said he had been acting as a travel broker for McMillan since 2014.  A casual conversation identified their common interest in cars.  The loan was part of an agreement to go into business importing damaged cars from Australia, he said.

McMillan admits he received $50,000 from Mr Mistry.

Justice Boldt described the supposed business arrangement as implausible.

Mr Mistry could provide no details of how their business relationship progressed.  Mr Mistry claimed at time of the loan he did not know where McMillan lived, or of any further business interests McMillan held.  There was no further documentation, beyond the loan.

A loan expressed at one per cent interest did not fit with Mr Mistry’s claimed profile as a savvy investor; putting funds on deposit at a bank would have obtained a better return.

Justice Boldt ruled the loan document was not genuine.

Mr Mistry’s application for repayment was dismissed.  He was ordered to contribute towards Police costs incurred responding to his claim; payment of $1700 ordered.

Commissioner of Police v. McMillan – High Court (12.02.25 & 20.05.25)

25.120

Mortgagee Sale: Lau v. Silver Harbour Capital

 

Investors supporting a failed South Auckland property development have returned to China, leaving in their wake a claim against financier Silver Harbour Capital for lost profits totalling $29 million.  The High Court put this claim on hold, until they pay legal costs up front as security should they lose.

One on One Property Development Ltd, owned by Jiankang Li, secured funding from Silver Harbour Capital Funding Ltd in 2021 for a 120 lot subdivision planned at Murphys Road, in Flatbush.  With subsequent further advances, borrowing eventually totalled $17.5 million.

Auckland-based Silver Harbour is a conduit for property finance advanced by private lenders.

The High Court was told One on One defaulted on its loan.  A total of $12.8 million was recovered in a 2024 mortgagee sale, leaving a $7.3 million shortfall.

Just prior to its mortgagee sale, Silver Harbour was surprised to find a caveat lodged against title to the land by a Mr Ee Kuoh Lau, also known as Augustine Lau, claiming to have a fifty per cent equity interest in the development.

This was the first Silver Harbour had heard of Mr Lau’s existence and his supposed involvement.  Legal action followed, removing his caveat from the title, enabling a mortgagee sale to proceed.

Mr Lau, Mr Li and One on One subsequently sued Silver Harbour alleging Silver Harbour’s director Roger Su had made misleading promises about refinancing, causing One on One to abandon potential alternative options.

They also allege Silver Harbour sold the property at an undervalue.  The buyer is associated with Silver Harbour, they allege.

Evidence was given that while One on One is a New Zealand registered company, it no longer has any apparent commercial presence in the country.  Chartered accountants listed as the company’s registered office say One on One is no longer a client.  Mr Li has apparently returned to China.

Mr Lau was bankrupted in 2024, for the second time, having been discharged from a prior bankruptcy three years previously.

Insolvency Service disclaimed, as having no commercial value, all legal rights claimed by now bankrupt Mr Lau against Silver Harbour.

In the High Court, Justice Blanchard barred Mr Lau from continuing with his claim against Silver Harbour unless he first gets an Insolvency Act court order allowing him to continue legal action in his own name.

Separately, both One on One and Mr Li were blocked from continuing their claim until first putting up $36,000 security to cover Silver Harbour’s initial legal costs.

Lau v. Silver Harbour Capital Trustee Ltd – High Court (19.05.25)

25.119

Family Trust: Everiss v. Long

 

Having a family trust own business assets allows considerable dexterity in distribution of taxable profits, but has led to arguments between descendants of John Everiss, now aged 86, with grandson James challenging both prior distributions made by trustees and the manner in which commercial properties and heavy equipment owned by the Trust are now being distributed.

Everiss Family Trust had a net worth of some $7.1 million as at March 2023.

Just over half that is heavy equipment and machinery owned by Wellington-based Everiss Contractors Ltd and Everiss Civil Ltd, companies owned by the Trust.

Other Trust assets are primarily two commercial properties, plus receipts from property sales.

The High Court was told what was intended in late 2023 as an orderly distribution of Trust assets between two branches of the family has descended into huge family row.

Everiss Family Trust was set up in 1992.  As was common at the time, all and sundry were named as beneficiaries: children and spouses of John and Barbara Everiss, plus grandchildren and their spouses, and greatgrandchildren.

A 2023 deed winding up the Trust intended an equal split between two branches of the family: the Everiss side represented by son Brent, who is now deceased, and the Long side by daughter Keryn.

It is not a division of cash.  It is a distribution of assets.

The deed allocated to Brent’s son James a sixteen per cent share, valued at some $1.4 million.  James’ complaint is that he received what he describes as a vacant gavel yard valued at about $900,000 and some ‘faulty equipment.’

Subsequent investigations initiated by James have queried a pattern of past distributions where James alleges grandfather John improperly received Trust benefits amounting to some $1.3 million, despite not being a beneficiary.

James sued for removal of the trustees, alleging breach of trust.  He wants the High Court to review the manner in which Trust assets are distributed.

Ten weeks prior to a scheduled court hearing, the Long side of the family joined the fray; bringing a separate claim against both James and the trustees, claiming participation in the trial as interested parties.

James alleges this late claim is merely ‘a last minute attempt to create as much noise and confusion as possible.’

None of these disputed claims and counter-claims have yet to be heard.

Meanwhile, Justice Grau rescheduled the hearing date to 2026.

Both patriarch John and members of the Long family need more time to prepare, she ruled.

Everiss v. Long – High Court (14.05.25)

25.117

Fraud: Pearson v. Commonwealth of Australia

 

After a five year battle to avoid extradition, financial adviser Marion Joan Pearson now faces charges in Perth alleging she misappropriated about AUD four million from clients; 136 charges of stealing property received by a person holding power of attorney. 

In 2015, Australian Securities and Investments Commission permanently banned Pearson from Australia’s financial services industry.

Charges cover the period 2009 to 2013 and her operation of fourteen client accounts.

In New Zealand, the Court of Appeal was told she returned to New Zealand in 2013.  She returned to Australia briefly one year later to answer questions from ASIC, before leaving permanently for New Zealand.

She has resolutely challenged attempts by Australia authorities to force her return, appealing a 2019 extradition order.

Ms Pearson says her health and financial circumstances mean it is better that pre-trial procedures be dealt with remotely, having her respond from New Zealand to pre-trial procedures in Australia.

Judges in both the High Court and Court of Appeal said this is impracticable.  She may not co-operate.  Or if she did co-operate, and Australia authorities then set a trial date arranging for witnesses to attend, she may at the last minute choose not to attend.  This would require Australia authorities to re-start extradition procedures.

Ms Pearson was ordered to surrender for extradition, or face arrest and forced extradition.  She has previously surrendered her passport.  She has been on bail since 2019.

Her application for name suppression was dismissed; publication would not cause ‘extreme hardship.’

Name suppression criteria are no different for extradition cases, the Supreme Court ruled.

Pearson v. Commonwealth of Australia – Court of Appeal (16.09.24) & Supreme Court (13.05.25)

25.118

Subdivision: Buchanan v. Buchanan

 

It took threats of legal action to have Lesley Buchanan agree to family plans for subdivision of their Wanaka property.  The High Court subsequently ordered she carry out her part of the deal after she tried to leverage changes by refusing to pay an initial $90,000 share of subdivision costs.

In what was described as a long-running and acrimonious family dispute, Neil and Graeme Buchanan have been frustrated by sister Lesley’s actions in delaying subdivision of 1.5 hectares they jointly own on Beacon Point Road.

Only after High Court action was filed seeking a court order for partition of the land between all three did Lesley agree to discussions.  A settlement agreement followed.

In 2020, this agreement was filed in the High Court, resulting in what lawyers call a Tomlin order; the agreement becoming enforceable as if it were a court order.

The High Court was told interaction between Lesley and her two brothers had become so acrimonious that the agreement included a ‘ring-fencing’ provision: a neutral outsider was appointed to carry out the now agreed subdivision, with power to call for periodic payment from all three siblings for shared contributions to subdivision costs.

Family trusts controlled by brothers Neil and Graeme are now in court challenging their sister’s refusal to pay the first call on payments.  Their neutral appointee wants some money in the bank to pay contractors’ first invoices before subdivision work starts.

Lesley refused to pay.

She wants changes made to their subdivision plan, increasing slightly the share she will receive.  This is needed to improve access, she claims.

She also demands her brothers contribute to cost of constructing a further vehicle crossing on to what will become her separate property.

Associate Judge Lester ruled she has to comply with terms of their prior agreement.  If this written agreement does not correctly record what was agreed, she has to come back to court with the necessary proof, he said.

Lesley’s attempt to unilaterally fire their neutral appointee was ruled invalid.

Lesley was ordered to pay her $90,000 share of a first tranche of payments.

She is defying terms of their settlement agreement, just to get her own way, Judge Lester ruled.  

Because of her behaviour, Lesley was ordered liable to pay her brothers’ full legal costs incurred enforcing their subdivision agreement.

Buchanan v. Buchanan – High Court (9.05.25)

25.115

Forestry Rights: ADM International v. Kiwi Forests

 

With litigation spanning the globe, Swiss-based ship charterer ADM International Ltd failed in its Fair Trading Act claim it was misled as to the value of forestry rights in New Zealand offered up as security for two ship charters. New Zealand litigation failed because ADM never checked wording of publicly available documents.

ADM International is suing to recover unpaid hire charges totalling USD 1.2 million after British Virgin Islands charterparty Golden Shine Management Ltd defaulted on two ship charters in late 2022.

The High Court in New Zealand was told this dispute is currently subject to both litigation and an arbitration in the United Kingdom.

ADM negotiates up to three thousand ship charters every year.  A sister company undertakes due diligence on proposed charterers, with a quick 24 hour turnaround usually required on the credit-worthiness of potential customers.

Golden Shine did not get quick tick.  ADM needed more information.  After getting some extra information it required extra security.

ADM accepted as further security, New Zealand forestry rights registered in the name of Golden Shine NZ Ltd, itself ultimately owned by British Virgin Island interests.   

When it came to the crunch, ADM found these forestry rights were of little value.

It sued Kiwi Forests Investment Ltd, who granted the forestry rights, claiming status of the security had been misrepresented.  ADM alleges there is a common ownership buried within all three companies: Kiwi Forests, Golden Shine and Golden Shine (NZ).

In the High Court, Justice Blanchard stated full due diligence would have identified what the forestry right amounted to.

These rights were created after Kiwi Forests 2015 purchase of 2,300 hectares of Wairarapa forestry.

It partnered with Golden Shine (NZ) to manage carbon credits associated with the forest.

Terms of their agreement were set out in 2017 contract.

It is not mandatory to register forestry agreements on title to land.  But Climate Change Response Act requires registration where there is an agreement to manage carbon credits.

Golden Shine (NZ)’s forestry right was registered.  As is the norm, title registration consisted of a short notation on the land register maintained by Land Information, with a reference number identifying the transaction.

Again, as is the norm, the 2017 contract setting out terms of this registered forestry right was filed with Land Information, available for public inspection.

Kiwi Forests could not be considered acting in a misleading and deceptive manner when full details of the supposed security were available for public inspection, Justice Blanchard ruled.

Those undertaking land title searches are aware short notations on a title are not a full description of rights granted; underlying documents often need inspection.

ADM International SARL v. Kiwi Forests Investment Ltd – High Court (9.05.25)

25.114

Insider Trading: Huljich v. R.

 

Court of Appeal doubled Peter Huljich’s Pushpay Holdings insider trading fine to $200,000, expressing concern the trial judge was unduly lenient when sentencing business executive Huljich for insider conduct in relation to a 2018 sale of Pushpay shares; unduly lenient both to the level of the fine imposed and Huljich’s further sentence of six months curfew when home detention was a possible alternative.

Huljich’s conviction followed sale of a family trust shareholding in Pushpay Holdings Ltd, ahead of public notice being released of an expected retirement by co-founder Eliot Crowther and with it Crowther’s likely sale of some nine per cent of the company, a stake valued then at about $100 million.

At the time, Pushpay was listed on both NZX and ASX.  Pushpay sold mobile payment software, primarily used to process donations.  It was delisted in 2023, following a takeover.

Part of Huljich’s lengthy High Court trial was taken up with evidence of a family trust having amongst its assets a stake in Pushpay valued in tens of millions of dollars.  All details of the Trust, its beneficiaries, and the size of its Pushpay stake, were supressed.

There was evidence of Huljich personally seeking to distance himself from Trust operations before the Trust’s disputed selldown of Pushpay shares together with evidence he received a benefit of some four million dollars following sale of its shares.

Financial Markets Conduct Act prosecution followed a May 2018 email sent by Huljich to Trust trustees and to the Trust’s principal beneficiary advising an immediate sale of Trust’s Pushpay holdings, telling them to set up a brokerage account with Craigs Investment Partners to process the sale.

This email followed Mr Crowther’s discussions with Huljich, disclosing his intention to resign from Pushpay.  Huljich was then Pushpay’s New Zealand general manager.

When Craigs was asked to open this new account, an internal email advised that the Trust was ‘keen to trade as soon as possible.’

The High Court was told the Trust sold its Pushpay shares over a three week period ending 7 June 2018 at an average price of $4.21.

NZX and ASX trading halts were called on June 18.  Pushpay executives were concerned notice had leaked of Mr Crowther’s proposed retirement.

Trading re-opened after Mr Crowther’s nine per cent stake was sold off-market at a price of $4.04.

At the time trading was halted, Pushpay was priced at $4.18.  When trading resumed, the price closed that day at $4.27.

Financial Markets Conduct Act liability for improper insider conduct requires proof ‘material information’ was used to encourage trading in listed securities at a time when that information was not generally available to the market.

The legal test for materiality looks at the likely or hypothetical movement in share prices had the non-public information been released at the time the insider acted.

Expert evidence was given of securities market behaviour: departure of a company founder with sale of a substantial shareholding depresses market prices; requiring sale at a discount to clear the increased volume of shares offered for sale.

General movements in market prices subsequent to improper use of inside information are of no direct relevance in determining ‘materiality’ at time the insider trades.

The High Court jury’s verdict that Huljich knew the fact of Mr Crowther’s proposed retirement was ‘material information’ was upheld by the Court of Appeal.  Huljich was acting on non-public material information when advising the family trust to sell.

Huljich was fined $200,000 for improper inside conduct.

The High Court sentence that he serve six months’ community detention with a 9.00 pm to 6.00 am curfew at a specified address seven days a week was grudgingly accepted by the Court of Appeal.

Insider misconduct is a form of fraud, the Court of Appeal said.  It undermines public confidence in the integrity of the stock market.  Sentences should act as a deterrent.

The High Court imposed a curfew in place of home detention on compassionate grounds.  Reasons were supressed.

Huljich v. R – Court of Appeal (8.05.25)

25.123