Forced
to surrender $11.2 million owed to a Kawerau Maori trust following breach of
fiduciary duty, Beverly Adlam argued this money should be shared with a
neighbouring Maori trust. The two trusts
do not share all the same beneficiaries.
Described in court as the Bath Trust and
the Farm Trust, these two Bay of Plenty Ahu Whenua trusts operate power
generation plants using geothermal steam and waste water from the Kawerau Pulp
and Paper Mill. The Maori Land Court
removed Ms Adlam as trustee of the Bath Trust in 2014 after evidence she had
duped the Trust out of $11.2 million.
She was the driving force behind Bath’s collaboration with Israeli
company Ormat Technologies in developing the geothermal project. When getting Bath to sign up, Ms Adlam did not
mention she had a backdoor deal with Ormat granting an option to buy back
shares when the project was finished.
She exercised that option in 2010, onselling to Gisborne-based
infrastructure company Eastland Group Ltd at a personal profit of $11.2 million. She later admitted this was a breach of her
fiduciary duty as a Bath trustee: amounting to a conflict of interest,
self-dealing and failure to disclose.
Ms Adlam argued some of the $11.2 million
should go to neighbouring Farm Trust.
While the geothermal plant is built on Bath Trust land, it uses Farm
Trust land to source geothermal energy.
Steam is piped over Farm Trust land and waste water piped back across
the same land. The Court of Appeal ruled
the full $11.2 million goes to the Bath Trust.
Her obligation to account for breach of trust was an obligation to
account to the Bath Trust. No claim had
been made by the Farm Trust. She was not
a trustee of the Farm Trust.
At earlier Maori Land Court hearings, Ms
Adlam was also ordered to repay access fees and royalties on power produced
totalling $2.4 million she had wrongly retained and used for her own benefit. In the Court of Appeal, she accepted
liability for interest of $1.54 million on the money taken. She was refused any allowance for work done
on behalf of the Trust because her blatant breach of fiduciary duty was serious
and Trust beneficiaries have been deprived of their money for a long time.
Adlam
v. Matata Parish 39A Trust – Court of Appeal (22.09.16)
16.140