Fraudulent Calumny: Lowe v. Ngan

  

Claiming fraudulent calumny, Wellington property investor Peter Ngan accused his sister Helen Young of poisoning his relationship with their half-sibling Tengor Ngan resulting in Tengor cutting Peter out of his inheritance; a share of Tengor’s $3.24 million estate.

This is the first time fraudulent calumny has been claimed in a New Zealand court as grounds to invalidate a will.

The rules have been around for over 150 years, requiring proof of deliberate or reckless behaviour designed to have a ‘natural beneficiary’ left out of, or cut out of, a will.

In England, claims of fraudulent calumny have seen a recent revival; mainly unsuccessful.

Expect numbers of claims to increase as disaffected children of the baby boomer generation fight over their deceased parents’ riches.

In the New Zealand High Court, Justice La Hood ruled there was no clear and cogent evidence to support Helen Young’s claims that brother Peter Ngan was a fraudster, mismanaging half-sibling Tengor’s properties and cheating Tengor out of money due.

Helen is a person quick to make judgements based on a cursory assessment of limited information and difficult to budge from those judgements once made, Justice La Hood said.

Her view that Peter defrauded Tengor is incorrect, but genuinely held, Justice La Hood ruled.  

Being genuinely mistaken negated any suggestion Helen acted fraudulently in lobbying her half-sibling Tengor to cut her brother out of his will.

Her brother Peter was awarded assets from Tengor Ngan’s estate valued at $800,000 on a Law Reform (Testamentary Promises) Act claim; receiving two flats on Angus Avenue in Wellington inner city suburb Berhampore which would otherwise have been inherited by Helen’s children.

Four days of High Court evidence was taken up detailing the relationship between Tengor and his half-siblings.

The court was told Tengor came to New Zealand as a refugee from China in the 1940s, fleeing ahead of invading Japanese forces.

He never married.  He had no children.

He lived a very frugal life, building up a suite of rental properties.

When Tengor was in his early seventies, he approached half-brother Peter to take over management of his flats.  Peter, with his spouse, was also a residential landlord with some of his flats in the same block as Tengor’s.

The High Court was told of an informal hand-shake deal around 2005 in which Peter would manage Tengor’s flats for a fifty/fifty share of net rentals with Peter to inherit a ‘fair share’ of Tengor’s assets on death.

Tengor has five half-siblings.  As Tengor aged, there was growing interest amongst these half-siblings over potential inheritances from child-less Tengor.

Evidence was given of Helen’s growing belief that Peter was cheating Tengor of his agreed half-share of rentals.

Armed with some of Peter’s accounting records, she contacted both Tengor and Tengor’s solicitor mounting a concentrated campaign alleging fraud by Peter.

Peter’s protestations to the contrary were not helped by Peter failing to provide detailed monthly accounting summaries to Tengor and his habit of deducting sums for personal expenses incurred on Tengor’s behalf.

These loose accounting procedures led to apparent misunderstandings on Helen’s part over the distinction between business expenses and personal expenses, plus what was valid capital expenditure, Justice La Hood ruled.

The court was told of Tengor’s bank account being temporarily frozen on allegations of elder abuse and complaints of theft made to the police.  Police declined to prosecute.

On Tengor’s death in 2024 at age 94, Peter learnt he was not a beneficiary.

This had been foreshadowed by an emotional meeting between the two in August 2021 in which Tengor, relying on Helen’s comments, accused Peter of dishonesty.

At various times, both Helen and Peter lobbied Tengor seeking to direct changes to his will, the court was told.

In October 2021, Tengor signed what became his final will.

Peter was left nothing.

Two flats which were bequeathed to Peter in an earlier will were instead gifted to Helen’s two children.

These two flats were subsequently awarded to Peter as compensation on his successful Law Reform (Testamentary Promises) Act claim.

Justice La Hood ruled the seventeen years’ service Peter provided to his half-brother as both professional and personal services followed on from the 2005 promise he would receive in return a ‘fair share’ of Tengor’s estate.

Value of the two flats he receives amounts to a little less than a quarter of total estate value.

Lowe v. Ngan – High Court (11.03.26)

26.098

School Funds: Board of Trustees v. LGY

  

Using school funds to have family tag along on an authorised school trip can be grounds for dismissal, with the Employment Court ordering reinstatement of a school deputy principal while an investigation continues.  Recent law changes block, in future, orders for interim reinstatement where an employee’s behaviour is at issue.

Names of the school and deputy principal were supressed by the Employment Court.

The court was told she had worked at the school for nearly thirty years; starting as a teacher, rising later to deputy principal.

In both 2019 and 2023 she organised fundraising campaigns enabling students to attend World of Wearable Arts shows in Wellington.  Also funded for travel and attendance were parent helpers, many of whom helped with the fundraising.

A parent complained after the 2023 trip that school funds were spent on tickets for members of the employee’s family.

The school board of trustees responded that it ‘totally and strongly rejects any suggestion of misuse of money.’

Eleven months later, the board fired her.

The Employment Court was told further information about her testy workplace relationship with some staff had now come to light, some of these complaints stretching back for over a decade.

Misuse of school funds for the Wearable Arts shows was the primary reason for termination, the board said.  This misappropriation amounted to dishonesty, it said.

It is entitled to require a greater level of trust in a senior employee who has delegated powers to deal with school funds, the board said.

The employee strongly denies there has been any misappropriation.  She has receipts for money spent on fundraising where she did not seek reimbursement; sufficient money to cover family member trip costs, she says.

Pending a full inquiry by the school board into all allegations, the Employment Court ordered her reinstatement, through a managed reintegration process overseen by Business, Innovation and Employment’s mediation service.

For future cases, interim reinstatement will not be an option, the Employment Court pointed out.

A 2026 amendment to the Employment Relations Act blocks reinstatement or compensation for personal grievance cases where the employee’s behaviour contributed to the problem.

These new rules apply to cases filed since the amendment.

Board of Trustees v. LGY – Employment Court (11.03.26)

26.097

Will: re Henning Testamentary Trust

  

While their father thought it best to keep his daughter at a distance from any inheritance, leaving her a life interest only in her half share of his estate, her brother disagreed, later supporting a High Court application allowing her to inherit.

Grace Hanning was aged seventeen when their father signed what was his final will; dividing his assets in half on death: half gifted outright to his son Jack, the balance gifted to trustees on trust for the benefit of Grace.

Grace admitted she was going through a ‘tough period’ at this time.

Their father died six years later, in 2024.

The High Court was told the funds held in trust for Grace were used to buy a house in the Auckland suburb of Massey, where Grace lives with her two children.

Exigencies of trust law meant Grace was required to pay rent to the trust, set at $635 per week, with Grace having to negotiate with trustees for ongoing repairs needed at the property.

Rent payments were necessary because neither Grace, nor her children, would ever get full ownership of trust assets.

Terms of their father’s will state that on Grace’s death all trust assets are to go to her brother Jack and his children.

The High Court was told Jack considers it unfair that he and his family stand to eventually inherit what is in effect his sister’s half share of their father’s estate.

He supported the trustees’ application to have terms of the trust amended.

Using Trust Act powers, Justice MacGillivray terminated the trust, ordering all trust assets immediately be handed over to Grace.

Most affected are Jack and his children, who otherwise stood to inherit.

Jack had considered the financial consequences to both himself and his children when supporting termination of the trust, Justice MacGillivray said.

re Testamentary Trust of Alistair Graham Hanning – High Court (9.03.26)

26.096

Marae Trust: Miru v. Te Awa

  

Paying $20,000 marae funds across to her brother Kereama Te Awa for his private use was a breach of trust.  Maori Land Court ordered repayment within a month.  Failing that, sister Georgina Te Awa and two other Waiotea marae trustees complicit in the wrongfully payment are liable to make good the loss.

Waiotea marae sits on the northern reaches of Kaipara Harbour in Northland, with beach access for vehicles.  The sole building on site is seldom used, needing repairs.

Maori Land Court was told some money has been collected over time from various sources with long-term plans to upgrade the building.

Marae trustee Mikaera Miru objected to fellow trustees arranging a $20,000 withdrawal from the marae bank account, funds drawn down with a cheque made out to cash.

This money wound up in the hands of hapu member Kereama Te Awa, a non-trustee, variously described as payment for his firewood business and to pay off a loan on his excavator.

In the Maori Land Court, Judge Williams dismissed explanations that marae funds could be used at any time to help hapu members in need of cash.

Marae funds can never be used for personal benefit, he ruled.

Funds are held in trust for marae purposes.

Trustees Georgina Te Awa, Nathan Tana and Joseph Miru were held personally liable to make good any losses should recipient Kereama Te Awa not repay the money.

Judge Williams took steps to remove all three as marae trustees.

He was critical of both their breach of trust and the abuse they directed at the court.

Mikaera Miru told the court payment has gone to whanau having gang affiliations.  There is a serious risk the money will not be recovered, he said.

Miru v. Te Awa – Maori Land Court (9.03.26)

26.095

Monopoly: Commerce Commission v. Alderson Logistics

  

Andrew and Susan Alderson’s transport company enjoyed a monopoly over supply of bulk wood shavings to Waikato poultry farmers after buying up the then two top suppliers in 2022, a business strategy later costing their business a $420,000 Commerce Act penalty for anti-competitive behaviour.  This monopoly was broken by new suppliers entering the market some thirty months later, offering a better deal.

Based in Auckland, Alderson Logistics Group provides transport services across the North Island.

The High Court was told of Aldersons’ policy decision in late 2021 to gain control of trucking operations delivering bedding for goats and chickens in the Waikato.

Alderson Group purchased two suppliers which between them then controlled eighty per cent of the market, buying up wood shavings from timber mills for delivery to goat and chicken farmers.   

There is no bedding product substitution available for chickens; Primary Industries requires use of untreated wood shavings for poultry welfare.  There are limited product alternatives for goat bedding.

The two acquisitions gave Aldersons a monopoly for supply in the Waikato.

Aldersons’ legal advisers for the purchases did not suggest Commerce Commission clearance might first be required.  Commission sprung into action only after a customer’s complaint. 

The High Court was told prices for supply increased markedly after Aldersons’ acquisitions.

This was justified by a ‘supply shock’ from mid-2023, Aldersons said.

A number of timber mills in the region closed down.

And Aldersons was in competition for wood shavings from a new industry, manufacturing wood pellets from shavings for use as heating fuel.

Commerce Commission intervention saw a 2024 agreement that Alderson Group would divest part of its wood shavings/animal bedding operations, accepting a warning for its prior anti-competitive merger.

Ultimately, there was no divestment.

A formal sale process was initiated through an investment bank.

There was interest from only one prospective buyer.  No sale was inked.

Commerce Commission changed tack, cancelling the need for divestment, taking High Court action declaring Alderson Group breached Commerce Act merger rules.

Approving an agreed settlement, Justice Gardiner imposed a $420,000 fine.

Alderson Group’s financial details were supressed.

Alderson claims it ran at a financial loss for the years 2023-25, with further losses forecast for the 2026 year.

Commerce Commission v. Alderson Logistics Ltd – High Court (6.03.26)

26.094

Price-fixing: Commerce Commission v.Aramex

  

After courier company Aramex admitted a 2021 tie-up with logistics company Zappy amounted to cartel behaviour, High Court approved a $700,000 penalty negotiated between Aramex and Commerce Commission.  Zappy agreed not to poach Aramex customers without prior approval, and if approved, not to undercut Aramex fees. 

Singapore-owned Aramex NZ gained a New Zealand foothold with its 2016 purchase of Fastway Couriers.

Aramex is now the third largest courier company in New Zealand, with over three hundred individual courier-franchised territories in operation. 

In late 2021, Aramex negotiated a re-sellers agreement with Zappy, then known as Payport.

Zappy owns cloud-based software used to track courier deliveries in real time, a system integrated across New Zealand’s retail and transport industries.

Aramex told the High Court that the 2021 agreement was drawn up by its national sales manager who simply copied a template document used previously by a Fastway subsidiary, deleting names of the original contracting parties and substituting Aramex and Zappy as the new contracting parties.

No one read the document in any detail.

Aramex was unaware clauses in this contract breached the Commerce Act.

The High Court was told the cartel agreement was scrapped as soon as a Commerce Commission investigation commenced.  Aramex co-operated fully with the investigation.

Commission said the extent of any financial benefit gained by Aramex could not be quantified.

Aramex claims there was ever only one instance of Zappy making contact to co-ordinate pricing for a courier contract.

Commerce Commission v. Aramex New Zealand Holdings Ltd – High Court (4.03.26)

26.093

Banking: Financial Markets Authority v. ASB

  

ASB was ordered to pay a $2.1 million penalty after overcharging customers for nearly a decade, with the penalty increased in part because of its failure to act promptly on staff warnings.

In 2013, a member of the Bank’s wealth team was told to shut up after sending some sixty emails to his line manager warning that client insurance policy discounts were being wrongly calculated.

It was not until 2021, after a then recent royal commission on banking in Australia heavily criticised operation of retail banks, that ASB senior management sat up and took notice of the problem.

The High Court was told that since 2011 ASB staff had been miscalculating some insurance premium discounts for policies sold on behalf of IAG Insurance.

Confusion saw premium discounts not being given when bank customers had more than one qualifying IAG policy, and also discounts wrongly given when customers had more than one policy which included caravan and motorbike policies which were not eligible for a premium discount.

ASB and IAG jointly agreed to reimburse affected customers; ASB’s share being $2.9 million.

The High Court was also told ASB did not apply promised bank fee reductions for many FastNet business customers for the period 2011 through to 2020.

ASB senior management did not become aware of the extent of the problem until a mid-2019 ‘deep dive,’ following up complaints from business customers.

The fact bank fees were disclosed on business customer accounts as a single line item kept the issue hidden for years.  Anomalies only became apparent after some business customers asked for a detailed breakdown of fees charged.

Errors were found in 21 per cent of business accounts.

ASB told the High Court that the mistake was unintentional, not pursued for financial gain.

Errors arose because granting a fee concession was a manual procedure.  The Bank had no systems in place to ensure discounts were properly applied.

ASB self-reported its mistakes to Financial Markets Authority, admitting to breaches of the Financial Markets Conduct Act; making false and misleading statements in its provision of financial services.  Advertised discounts were not applied as promised.

ASB negotiated a $2.1 million penalty with Financial Markets Authority.

This penalty was approved by the High Court.

FMA has first claim on this money; recovering its costs.

Financial Markets Authority v. ASB Bank – High Court (4.03.26)

26.092

Asset Forfeiture: Commissioner of Police v. Piper

  

Partnership law principles underlie Police ability to selectively recover unlawful gains from ‘joint enterprise’ criminal activity; participants having the most readily accessible assets can wind up bearing the cost, their impecunious colleagues escaping proceeds-of-crime liability.

Meth production in Northland through 2021 saw Martin John Piper and Troy Kakau both facing asset forfeitures under the Criminal Proceeds (Recovery) Act.

The High Court was told of Piper sourcing precursor chemicals, supplied to Kakau who oversaw production of methamphetamine.

Both were convicted of drug offences.

Police calculation of the volume produced, and revenue earned, was helped by communication intercepts in which the two congratulated themselves on their meth cook’s skills; yielding 90 per cent meth from each kilogram of ephedrine supplied by Piper.

Forfeiture of assets to the value of $639,500 was ordered, as revenue earned from their criminal activity.

For Piper, in dispute at the High Court was: what credit could be claimed for an earlier criminal proceeds recovery against co-offender Kakau, and; whether a house on Admiralty Drive at Haruru in the Bay of Islands, registered in the name of Piper’s partner, could be confiscated.  

Evidence was given of Piper and his partner Lisa May O’Sullivan jointly purchasing Admiralty Drive back in 2015.

Whilst in custody, and before his criminal trial for meth dealing, Piper gifted his Admiralty Drive half share to Ms O’Sullivan; to ease insurance difficulties, he later told the High Court. 

Insurance was difficult to obtain when he faced criminal charges, he claimed.

Justice O’Gorman subsequently ordered forfeiture of Admiralty Drive, being financed from proceeds of crime. Ms O’Sullivan either knew mortgage payments came from proceeds of crime or deliberately refrained from asking questions that might confirm her suspicions, Justice O’Gorman ruled.

The High Court was told of assets previously being seized from Piper’s co-offender Troy Kakau to the value of $114,900; forfeited by court order as proceeds of crime for Kakau’s involvement in their joint meth activities.

Piper claimed a credit on any asset forfeiture order made against him for this earlier recovery from his co-offender.

Justice O’Gorman ruled a credit is necessary to avoid double-counting, unless the precursor chemicals provided by Piper were unrelated to batches of meth cooked by Kakau for which his assets were confiscated.

For Criminal Proceeds (Recovery) Act forfeitures, joint criminal ventures are treated as if they were law-abiding business partnerships.

With co-offenders jointly and severally liable to forfeit proceeds of their criminal activity, authorities may choose to chase all, or just one, for the amount due.

The High Court was told assets to the value of $114,900 previously confiscated from Kakau as proceeds of crime amounted to the full value of his then available assets: $79,300 cash plus proceeds from sale of his Holden ute and Harley Davidson motor bike.

Piper was held liable for the balance of their joint criminal enterprise ‘proceeds of crime debt:’ $524,600.

The High Court ordered sale of Admiralty Drive, together with sale of Piper’s two Land Rovers and his boat.  Cash totalling $26,200 was also confiscated.

The court was told Piper has form; previously in 2014 having cash, cars and a boat seized following a court-ordered proceeds of crime forfeiture.

Commissioner of Police v. Piper – High Court (3.03.26)

26.091

Insolvency: Grant v. Kiwi Hire and Sales

  

Pulling hire equipment from a building site months before an insolvent developer went under negated benefit of the so called ‘running account’ defence, requiring Kiwi Hire and Sales repay $48,000 received in the four months prior to Vijay Holdings liquidation.

Vijay Holdings Ltd signed up in 2019 to build the Nido store in West Auckland, on a fixed price contract: $37.8 million.  There were cost overruns of some seven million dollars, according to the liquidator’s initial report.

The High Court was told Vijay’s unsecured creditors owed $1.8 million will get nothing.

Hire company Kiwi Hire and Sales Ltd disputed liquidator’s demands it return payments received prior to Vijay Holding’s November 2020 liquidation, leaving it to prove as an unsecured creditor.

Companies Act rules require payments received by suppliers in the six months prior to insolvent liquidation be repaid; onus is on the supplier to justify keeping the money.

Special rules apply to payments made by insolvent companies on trade accounts where goods or services have been supplied by businesses on a regular basis with payments typically expected to be settled monthly; so-called ‘running accounts.’

Strict application of the six month rule would see regular suppliers having to repay monthly payments received for up to six months prior to liquidation, with no credit for supplies delivered over that same period.  

The ‘running account’ defence allows suppliers to look at their net position over that six month period.  If payments received exceed value of goods or services supplied in that period, the net difference has to be returned.

Kiwi Hire and Sales supplied hire equipment to Vijay for use on site, billed monthly.

The High Court ruled Kiwi Hire must repay $48,000 received after it removed all its hire equipment from the Nido build site in June 2020, some five months before Vijay Holdings went into liquidation.

There was no on-going business relationship at the time subsequent payments were received; no ‘running account’ existed.  It ended earlier, when Kiwi Hire took back all its equipment.

Grant v. Kiwi Hire and Sales Ltd – High Court (27.02.26)

26.088

Real Estate Commission: Savills v. Burson

  

Real estate commission of $120,000 was at stake with the High Court ruling Savills (NZ) Ltd’s failure to get its agency appointment signed off before introducing a buyer for Burson Family Trust’s Auckland industrial site at Drury meant it could not claim any commission.

Real Estate Agents Act rules prohibit agents suing for commission if they do not have signed authorisation to act as agent; rules enacted to stop interminable arguments about commission on sales of real estate.

The High Court was told Savills agent Henry Mann cold-called a trustee of the Burson Family Trust in late 2023 asking if the Trust was interested in selling its Drury landholding.

Encouraged by the Trust’s response that it would sell, provided it cleared six million dollars net of agent fees, Mr Mann emailed one day later that he had a prospective purchaser.

This email included a Savills agency agreement for signature.

Meeting with Burson trustees three weeks later, after the Christmas/New Year break, Mr Mann presented an offer from Scarlett family’s Aintree Group, together with a hard copy of Savills’ as yet unsigned agency agreement.  Commission rate was reduced to achieve a net six million dollar sale.

Trustees subsequently signed both contracts, after taking legal advice.

Aintree Group later withdrew its conditional offer; the deal did not go ahead.

Mr Mann emailed Burson trustees, acknowledging the property was no longer on the market, offering to assist in any future marketing programme.

Learning some seven months later that Burson Trust had now sold to one of the Scarlett family’s other companies on terms similar to the earlier abandoned contract, Savills sued for commission.

The previously signed agency contract entitled Savills to commission on any sale subsequent to the agency if the sale was to a buyer ‘introduced’ during the agency.

The Scarletts as prospective buyers were introduced before the agency agreement was signed, Associate Judge Sussock said.

Putting forward the first Aintree offer before getting a signed agency contract meant Savills did not ‘introduce’ the eventual buyer during period of the agency, she ruled.

Savills (NZ) Ltd v. Burson – High Court (27.02.26)

26.087

Deadlock: Hamilton v. WA Hamilton Ltd

  

The Sword of Damocles now hangs over their head with High Court ordering liquidation of their family company owning farmland near Hot Water Beach in the Coromandel following more than two decades of hostile bickering between brothers Michael and Errol Hamilton.

A dispute over how the family farm might be divided between the two is now spiralling into a strong possibility the farm will be sold, ending three generations of family ownership.

Known locally as ‘Ponderosa,’ the 490 hectare farm was inherited by the two brothers, held now though their shareholdings in a family company: WA Hamilton Ltd.

The size of their respective ownership stakes is disputed, with legal action needed to reinstate Michael as a director after Errol used a supposed shareholding majority to remove his brother as director in late 2024.

The High Court was told Hamilton Ltd is now a landholding company only.  Michael alone has been paying rates due, with no contribution from Errol.

Each brother farms separate blocks of the company’s land.

Their decades-long dispute centres on plans to subdivide the land, giving each brother separate title over part of the farm.

Michael says equal division should be by value, with survey lines drawn accordingly.  Errol demands equal division by area.

Evidence was given of an earlier 2006 High Court hearing in which the trial judge travelled to the farm and met the brothers together with their lawyers, valuers and surveyors.

A farmgate agreement was hammered out, with notes taken by the judge placed on the court record.

This record stated agreement by the brothers that their land be divided ‘by equal partition.’

Errol says this means division by area.

At their latest High Court hearing, now twenty years on, Errol stated this interpretation was confirmed by a private conversation he had with the judge at the farmgate.

Lawyers who have attended site visits by judges would be surprised that there was any opportunity for a ‘private conversation.’

Michael questioned the veracity of any such conversation, given that the judge’s notes state a need for valuations; needed to ensure equality of value, Michael says.

With the two now again back in the High Court, Associate Judge Sussock ruled putting Hamilton Ltd into liquidation was the most ‘just and equitable’ way to deal with the brothers’ ongoing dispute.

The two have been fighting for years.

Neither has the financial ability to buy out the other.

Ongoing disagreement about what was supposedly agreed twenty years ago means further mediation is unlikely to be successful, Michael said.     

With their company now in liquidation, control passes to court-appointed liquidators.

They have power to negotiate a final settlement between the two.  Failing that, liquidators can sell the farm, splitting net proceeds between the two brothers.

Hamilton v. WA Hamilton Ltd – High Court (27.02.26)

26.090

Director Duties: Strongroom Ltd v. Felhofer

  

Auckland IT professional Peter Felhofer was ordered to pay $494,300 damages on liquidation of his company Strongroom Ltd for breach of directors’ duties, after hiring out Strongroom employees to other businesses he owned, leaving employee tax deduction liabilities with asset-less Strongroom.

The High Court was told Mr Felhofer wound down Strongroom’s business after losing several major clients in 2017.

He then started up several new companies under the brands ‘Craniums’ and ‘The Computer Guys.’  For what was later explained as administrative convenience, he employed staff for these new businesses through Strongroom, now a shell company, using Strongroom’s existing payroll system.

By 2021, Inland Revenue was chasing Strongroom for PAYE, Kiwisaver deductions and student loan repayments supposedly deducted from employee wages but not forwarded to Inland Revenue.

Evidence was given that Mr Felhofer’s related companies notionally reimbursed Strongroom for net wages these related companies paid to staff supposedly on hire from Strongroom.

Strongroom received no reimbursement for employee tax deductions owed Inland Revenue.

This improved cashflow for his related companies, but left Strongroom exposed for unpaid employee taxes.

With Strongroom now in liquidation, liquidators found no assets and a trail of unpaid debts totalling nearly $494,000; almost all this owed Inland Revenue.

Strongman’s accounting records were described as inadequate.  Accounting transactions recorded with Xero remained unreconciled.

Justice Becroft ruled Mr Felhofer failed to comply with multiple Companies Act director duties, including: failing to act in good faith; incurring debts the company could not pay and failing to keep proper accounting records.

Not having related companies agreeing to reimburse Strongroom for employee tax deductions amounted to reckless trading.

Mr Felhofer did not defend the liquidator’s claim.

Strongroom Ltd v. Felhofer – High Court (27.02.26)

26.089

Lease: Avon City Auctions v. Inch Quality

  

It was a chapter of errors: Christchurch dealer Devin Inch was unaware his car yard lease had rolled over automatically for another four years; landlord’s agent David Alexander wanted him out because he had a new tenant, then changed his mind; and then a rent review was miscalculated, with too much rent charged.

It all came to a head with landlord Avon City Auctions Ltd attempting to put Inch’s car dealership, Inch Quality European Ltd, into liquidation for supposedly unpaid rent. 

In the High Court, Associate Judge Lester ruled that the disputed lease was still live and that Inch Quality owed rent, but further legal action was put on hold whilst calculation of overpaid rent was sorted out.

The court was told Inch Quality signed a lease in 2021 for commercial premises on Ferry Road in Christchurch; a two year lease with one four year right of renewal.

Unusually for a commercial lease, Inch Quality did not have to give notice of an intention to take up the four year extension; terms of the lease stated a four year extension happened automatically unless Inch Quality gave notice otherwise.

It didn’t.

Early in the new four year term, Inch Quality vacated its Ferry Road car yard, refusing to pay any more rent.  The old lease was at an end, it claimed.

Judge Lester ruled the lease remained current.

Inch Quality was bound by the four year roll-over, even if owner Devin Inch had not properly understood the lease.

The court was told Avon City had taken steps previously to have Inch Quality surrender its lease, with a new tenant in prospect willing to pay a higher rent.  Nothing was formalised; the lease was not surrendered, leaving Inch Quality remaining liable as tenant.

Avon City subsequently did not cancel Inch Quality’s lease by posting a ‘For Lease’ sign at the site, seeking a new tenant on Inch Quality’s departure, Judge Lester ruled.

Cancellation would have had the effect of removing Inch Quality’s liability for ongoing rent.

Avon City Auctions Ltd v. Inch Quality European Ltd – High Court (24.02.26)

26.086

Insurance: Auckland City v. Local Govt Mutual

  

Some of Auckland City’s building-defect insurance compensation claims were struck out by the High Court following confusion over which lawyers were acting for Lloyds syndicates providing cover.

Being the only solvent party left standing after developers go bust, local authorities like Auckland City have forked out hundreds of millions of dollars over two decades in compensation remediating faulty buildings.   

Auckland City carries insurance cover reimbursing its compensation costs.

In dispute was insurance cover for the 2016-2017 year.

The High Court was told Auckland had several layers of cover for this period, collectively totalling 29 separate underwriters, all but one based overseas.

Legal action has followed insurers’ denial of cover, relying on a ‘weathertightness’ exclusion in their policies.

Insurers claimed all cover, even for non-weathertightness defects, was excluded if there was a weathertightness issue in any building where Council has paid compensation.

A 2022 Napier City Council appeal decision ruled otherwise; a weathertightness exclusion did not exclude claims for non-weathertightness defects. 

A host of Auckland City claims left hanging from the 2016-2017 period suddenly became a live issue.

Some underwriters argued the game was over; delays by Auckland City meant they were no longer liable.

At issue was whether they had been served in time with notice of Auckland City’s legal action.

There was no dispute that three insurers providing primary cover for the 2016-2017 period had been properly served with notice of legal proceedings.

These claims are still under negotiation.

But no proper notice had been given to some insurance syndicates operating out of Lloyds in London, providing a second layer of cover.

The High Court was told of Auckland City’s solicitors Minter Ellison liaising with lawyers acting for the three primary insurers on what turned out to be a mistaken assumption that the primary insurers’ lawyers had authority to act also on behalf of sundry other Lloyds’ syndicates also being sued.

They did not.

Consequently, these Lloyds’ syndicates did not have formal legal notice that they were being sued.

This left Auckland City scrambling.

A High Court rule that writs not served on defendants become stale twelve months after court issue meant that Auckland City insurance claims against some syndicates were now deemed abandoned.

Auckland City’s solicitors told the High Court of their suspicions that lawyers for the primary insurers deliberately delayed clarifying whether they had authority to act for these other syndicates, winding down the twelve month clock.

Justice Lang said there was no evidence to support this.

A closer reading of earlier correspondence would have identified service on a number of Lloyds’ syndicates was an issue, he said.

Auckland City can file new claims against these syndicates, Justice Lang said.

These replacement claims would be based on a different allegation of breach of contract; that is, insurers wrongfully declined Auckland City’s reimbursement claim for non-weathertightness remediations.

Auckland Council v. Local Government Mutual Funds Trustee Ltd - High Court (24.02.26)

26.085