Contempt: Stuart v. Lightning Cleaning Services

Luke Attard was briefly jailed and then ordered to pay $10,000 for contempt of court after failing to promptly release bank records as part of High Court litigation brought by former shareholder Gordon Stuart over liquidation of their Auckland window cleaning business Lightning Cleaning Services Ltd. 

The two 50/50 shareholders have fallen out. Lightning is in liquidation.  Mr Stuart alleges director and fellow shareholder Mr Attard sold off company assets and is hiding the proceeds.  In August 2017, Mr Attard was restrained by court order from selling off Lightning’s assets.  At the same time, Mr Attard was ordered to fully explain details of any asset sales to date.  In particular, two transactions were in question: $70,000 transferred from Lightning to a family trust controlled by Mr Attard and $95,000 paid to a company he controlled.  He refused to provide details.  This resulted in Mr Attard being imprisoned overnight for contempt of court.  He provided the information next day.

Justice Powell then fined Mr Attard for his contempt. Fines are intended to hold individuals accountable for their conduct and to deter others from defying court orders. The $10,000 fine is to be split: half to the Justice Department; half to Mr Stuart.  He was also ordered to pay Mr Stuart’s costs of $20,000.  Justice Powell said failure to pay will see Mr Attard again jailed for contempt.

Stuart v. Lightning Cleaning Services Ltd – High Court (30.04.18)

18.092

Estate: Estate of Greenwood

Estate executors Marilyn Simpson and Keith Greenwood were personally liable after selling their late father’s home to Marilyn’s son for less than market price.  They thought they were carrying out their late father’s wishes, but the words of his will took priority over any other intentions expressed orally before he died.

The High Court was told Marilyn’s son, Andrew, had been told by his grandfather in 2008 that the Greenwood family home at Torquay Place in the Christchurch suburb of Bryndwr was his ‘for about $300,000’ when he died.  This arrangement was confirmed four years later when insurers agreed Torquay Place would be rebuilt after the series of Christchurch earthquakes.  Mr Greenwood snr died in 2015.  The rebuild did not take place until after he died.  Andrew took occupation and ownership, paying to his grandfather’s estate $326,900: $320,000 agreed as honouring his grandfather’s wishes plus $6900 reflecting changes made to the original floor plan when rebuilding.  The rebuilt home had a value then of some $570,000. 

Kelvin Greenwood, as a residuary beneficiary in his late father’s estate, sued his two siblings as executors.  By selling cheap they had made a gift to grandson Andrew and short-changed him as a beneficiary, he said.

Justice Dunningham ruled executors are trustees. They are obliged to act diligently and in a prudent manner.  This means selling property for market value.  Executors cannot make gifts out of estate property, unless expressly permitted by the will.  Intentions expressed prior to death by Mr Greenwood snr could be used to interpret any ambiguous provisions in the will, but there was no ambiguity here, Justice Dunningham said.  The will made no mention of a sale to Andrew at a reduced price.  The executors were ordered to pay Kelvin $60,600 being the amount his payout was reduced by reason of the improper gift to Andrew.

re Estate of Greenwood – High Court (30.04.18)

18.093

Fraud: Grogan v. R.

Charmaine Delores Grogan was sentenced to eleven months jail for stealing $99,000 from a Maori land trust following suspicions she was ‘gaming’ the justice system with two separate guilty pleas for related but overlapping thefts as an attempt to avoid a sentence of imprisonment but home detention for each.

The High Court sitting in Rotorua was told Grogan was sentenced to eleven months home detention in June 2016 for frauds totalling $80,000 committed between 2008 and 2012.  She was treasurer of a local Maori land trust.  She was responsible for distributing net rental income to the trust’s 480 beneficiaries.  She forged cheques to wrongly take trust money.

Eighteen months later, Grogan was again convicted. This time for similar cheque frauds spanning 2010 to 2011, with $99,000 stolen from the trust.  This offending was separate from but took place during the period covered by the earlier 2016 conviction.  Separately, the two convictions would attract sentences of home detention.  Collectively, the thefts in their totality would result in imprisonment.  She was not charged with further offending until after pleading guilty to the first.  In the High Court, Justice Lang said there were concerns Grogan had gamed the system by reversing a not guilty plea to the first charges so as to prevent the sentencing judge taking into account further pending charges.

If Grogan had been sentenced on all the charges for thefts collectively totalling $179,000 she would have been sentenced to two year seven months in prison, Justice Lang ruled.  Taking into account she had already served eleven months home detention on the first charges, Grogan was sentenced to eleven months imprisonment on the second charges.

Grogan v. R. – High Court (30.04.18)

18.091

Private Equity: Malthouse v. Rangatira Ltd

Founding shareholders in Paraparaumu brewer Tuatara Brewing failed in their claim for $920,000 from private equity investor Rangatira Ltd after Tuatara was onsold to DB Breweries in 2017 for more than $12 million dollars.

Shareholders, annoyed they had missed out on an ‘earn-out’ fee from Rangatira because changes to accounting rules for inventory dented profits, failed in their argument Rangatira had to pony up more for its initial purchase when exiting.

The High Court was told of detailed negotiations in 2013 between Rangatira and Tuatara Brewing Ltd, spearheaded by Tuatara’s majority shareholders Sean Murrie and Carl Vasta.  Price was the sticking point.  Tuatara shareholders valued their business at $16.6 million, the price offered by an unnamed large industry player.  Tuatara felt a trade sale would damage its brand.  Rangatira could offer governance expertise for the growing business, but $16 million was out of the ballpark.  Tuatara was worth no more than ten million, it said.    A deal was struck notionally valuing Tuatara at $12 million.  Rangatira paid $3.5 million for a 35 per cent stake in Tuatara with $2.7 million of that going to founding shareholders.  More was payable if specified EBITDA hurdles were met. These hurdles were not achieved, because of unfavourable changes to accounting rules shareholders complained. When DB purchased in 2017, the founding shareholders went back to Rangatira Ltd saying the original deal required a top-up of $920,000 since the business was sold for more than twelve million dollars.  This qualified as an ‘exit event’ in the 2013 deal, they said.  Justice Churchman disagreed.  Extra payment for an ‘exit event’ exceeding $12 million was time-limited, expiring in December 2015.  The 2013 deal with Rangatira was premised on the proviso that if Tuatara was worth $12 million as the founding shareholders claimed than they would earn extra over and above the ten million buy-in valuation by jumping the ‘earn-out’ hurdles, or alternatively another buyer would prove them right by buying in for more than twelve million dollars – in which case Rangatira would pay $920,000 as the agreed difference between the price it paid and recognised value.  An ‘exit event’ after December 2015, years down the track, did not qualify.

The Malthouse Ltd v. Rangatira Ltd – High Court (27.04.18)

18.089

Bankruptcy: Meder v. Official Assignee

Insolvency Service attempts to block a bankrupt’s day in court challenging grounds for his bankruptcy in order to force payment from him of an inheritance from his mother amounted to a fundamental injustice, the High Court ruled.  

Administrative coercion does not sit easily with one of the fundamental purposes of the judicial system: to provide access to justice for individuals, Justice van Bohemen said.  This particularly when the litigation in question concerns bankruptcy and the limits it imposes on individual freedoms.

Marcus Meder was bankrupted in 2010 on a $87,100 debt claimed by liquidators of his Northland building company: Marie Harper 2007 Ltd. It was disputed whether Mr Meder was aware of this claimed debt before he left for Chile in October 2010.  He returned in 2015.  He wants his day in court to challenge the claim.  The intervening bankruptcy means his legal affairs are now controlled by Insolvency Service. It wants a minimum of $55,000 for prospective legal costs.  Mr Meder is in the High Court challenging these conditions.  Insolvency Service asked the High Court to block his challenge. Mr Meder was being unco-operative, it said.  In particular, Insolvency Service complains Mr Meder refused to attend an earlier court-ordered examination as to his financial affairs and has refused to comply with a further court order that he hand over $65,000 received from his late mother’s estate.  She died one month before Mr Meder was adjudicated bankrupt.

Insolvency Services’ argument was inherently circular, Justice van Bohemen said.  It wanted to prevent Mr Meder from having his day in court to challenge his bankruptcy as a means for it to enforce the effect of his bankruptcy.  Such leverage was inconsistent with the fundamental purpose of the courts, he said.

This court ruling allowing Mr Meder to continue with his challenge was made in his absence.  Mr Meder did not attend court to argue his case.  Insolvency Service has an arrest warrant out against him for his failure to attend the earlier court-ordered examination.

Meder v. Official Assignee – High Court (27.04.18)

18.090

Company: re Galveston Nominees

The High Court refused to bring accountancy business Galveston Nominees back from the dead so former employee Vasintha Pillay could get access to its tax records as part of her claim for an alleged profit share. 

Auckland-based Galveston Nominees (2009) Ltd, previously known as Ascent Business Directions Ltd, was wound up in 2014 by shareholders as a shell company having no assets and no creditors.  Ms Pillay says she has been cut out.  She had worked for the business since 2003 and alleges in 2009 she was promised a twenty per cent stake.  For the five years prior to liquidation she is entitled to a $116,000 profit share, Ms Pillay claims.  No formal adjustment to shareholdings was ever made.  The High Court was told director Mark Salmon held off making any changes because he was embroiled in a property relationship dispute and did not want the value of his interest in the business quantified.  Prosecution in Australia of fifty per cent shareholder, Australian accountant, Mark Letten was a further complication.  Letten was sentenced to five years jail in 2014 for operating an unregistered managed investment scheme.

To advance her profit share claim, Ms Pillay needs access to Galveston Nominees’ accounting records.  These had been destroyed twelve months after liquidation was complete, as company law allows.  As an alternative, Ms Pillay asked IRD for access to the company’s tax file. It refused.  Taxpayer secrecy precludes disclosure to third parties. Ms Pillay asked the High Court to restore Galveston Nominees to the companies register, to reinstate the company’s liquidators and then have them get a copy of Galveston’s IRD records.  Galveston’s liquidators do have a right to access Galveston’s tax records.  Associate judge Bell refused reinstatement.  Costs were disproportionate when the purpose was to uncover evidence for a separate court case, he ruled.  Liquidators are not expected to work for Ms Pillay on a charitable basis, he said. Ms Pillay has yet to prove in court she is entitled to a profit share.  And if proved, the amount will be less than her claimed $116,000, Judge Bell said. Any proved profit share will be reduced by an amount representing the 2009 value of a twenty per cent equity share given her.

re Galveston Nominees (2009) Ltd – High Court (26.04.18)

18.088

Family Trust: Reid v. Castleton-Reid

In his nineties and long retired from his housebuilding firm Reidbuilt Homes, Ross Reid sued son Barry alleging $1.7 million handed over in 2009 was not a gift and had to be repaid.  Justice Gordon ruled it was a gift.

The High Court was taken through a long history of family dealings involving a Reid family trust, the Hallmark Trust, and the former family home on Verbena Road in Birkdale on Auckland’s North Shore, known locally as ‘the Castle’.  

In 2007, $2.2 million was distributed from the Hallmark Trust following sale of its main asset, a commercial building.  This money was paid into a bank account in the sole name of Ross Reid.  He was neither a trustee nor a beneficiary of the Trust.  The funds were later shifted into bank accounts in the joint names of himself and his wife (who was a beneficiary of the trust).  When his wife died in 2008, Ross Reid assumed ownership of the balance of the joint account by survivorship: some $1.75 million. These funds were at the centre of High Court litigation.  Ross Reid said they had been transferred into an ABN AMRO Craigs share trading account, nominally in the name of son Barry, but he remained the beneficial owner. Barry said the $1.7 million transfer was a gift but he had agreed to allow his father acess the account: trading shares, borrowing some of the money to buy real estate, and taking an agreed regular allowance.

Family dynamics had been complicated by the 2008 death of Ross Reid’s wife.  Ross Reid is executor of her estate.  He is not a beneficiary.  Son Barry is the residuary beneficiary.  Daughter Dee-Ann received from her mother’s estate household effects, jewellery and a right to live at the Castle.  She chose not to live there; she had her own home.  Barry and his wife came to live at the Castle with Ross Reid.  Barry then became owner of the Castle, according to the terms of his mother’s will.  By family agreement, $800,000 was paid out of the Craigs share trading account to Dee-Ann as compensation for the small bequest she had received under her mother’s will.  Other withdrawals from the Craigs account were used to buy two apartments in Queensland for Ross Reid and to settle the purchase of apartments in the Eclipse development in Auckland central business district.  Both Ross Reid and son Barry had previously bought off the plan and were committed to settling these purchases at a later date.

Evidence was given that Barry later became concerned about the way his father was operating the Craigs account.  There was concern about amounts being taken in excess of an agreed allowance.  There was the unexpected appearance of a mortgage on title to the Castle.  It was registered whilst Ross Reid was on the title as executor of his late wife’s estate.  It proved to be a default mortgage registered when Ross Reid did not make payments due on his Eclipse apartment purchase.  In May 2010, Barry blocked his father’s access to the Craigs trading account.  His father sued to recover his claimed $1.7 million.

Justice Gordon ruled Ross Reid’s claim the $1.7 miilion was not a gift lacked credibility.  Ross Reid said the Craigs account was nominally in Barry’s name so his son could sign share transfers on his behalf whilst he was in Australia; there was no need for this to be done.  He said the deal was designed to defeat any possible reimposition of death duty taxes; that is only effective if it was a gift made prior to death. He had signed documents acknowledging drawings from the Craigs account were a debt owed his son Barry; this was inconsistent with any claim the original transfer was not a gift. When Ross Reid decided to sell one of the Queensland apartments because it was ‘not paying its way’, he acknowledged in an email that this would assist in loan repayments; confirming the original $1.7 million funds transfer was a gift.

Reid v. Castleton-Reid – High Court (24.04.18)

18.077

FMA: re Forestlands

Payment of a $1.52 million tax bill out of sequestered funds held following a $23.5 million sale of Forestlands’ assets was approved by the High Court.  Assets are frozen while Forestlands’ relationship with Motueka entrepreneur Rowan Kearns is investigated by FMA.

Some 4400 investors took up offers to invest in forestry-owning companies under the Forestlands NZ banner promoted by Mr Kearns.  They are asking where their money went.  The Financial Markets Authority is seeking a court-ordered liquidation of Forestland companies.  It alleges Mr Kearns failed to keep an accurate register of investors and failed to keep adequate accounting records.  It also questions the relationship between some Kearns-controlled entities and the investors’ Forestland companies.  Forensic accountants KordaMentha are investigating.

The High Court was told Forestland assets were sold for $23.5 million.  A net balance of $18 million is currently sequestered in a law firm’s trust account. Deductions made from the $23.5 million sale price are part of a FMA investigation.  Ten of the investors’ Forestland companies have been assessed for tax at $1.52 million.  This tax bill was paid out of sequestered money to avoid tax penalties kicking in for late payment.

re Forestlands – High Court (23.04.18)

18.076

Contract: Westenra v. Westenra

Mum held son to his promise: Lou Westenra sued son Johnny for the balance owing on a $3.2 million family deal following sales of Craigieburn and Grasmere, iconic high country stations near Arthur’s Pass.  

The High Court was told Constance (Lou) Westenra reached agreement with son Johnny in a 2014 court-brokered settlement conference with a $3.2 million deal intended to settle family differences.  Problems had arisen after the 1998 death of family patriarch, Fenton.  As co-owner of Grasmere, Lou, took ownership of this property by survivorship.  Craigieburn remained under control of Fenton’s estate. Johnny was to continue managing the two properties jointly.  His farm management came in for criticism.  For a three year period from 2010 he took no active part in management, but then did return.  When Lou decided to sell Grasmere, Johnny sued to block any sale.

The 2014 family deal agreed Craigieburn would be transferred to Johnny and then both Grasmere and Craigieburn would be put on the market as a job lot, with Lou promised $3.2 million when sales were complete. There were no firm offers in the next three years.  Craigieburn was sold at a mortgagee sale in December 2017.  Lou then sold Grasmere separately, for $2.1 million.  She sued Johnny for $1.1 million to recover the full $3.2 million promised in 2014.

Johnny said he had been prejudiced by delays in negotiating rentals for the two high country stations.  Rental rates would impact on price.  The two stations are owned by University of Canterbury.  Given them by government grant in the 1870s, they were intended to provide a source of revenue for the University.  Grasmere and Craigieburn run holders have perpetually renewable leases.  Associate judge Osborne ruled Johnny committed himself to the family agreement taking a risk there might be an unfavourable outcome in lease negotiations.  He was committed to paying his mother a total of $3.2 million, regardless.

Johnny Westenra was ordered to pay the $1.1 million still due, plus interest calculated at $398,200.

Westenra v. Westenra – High Court (20.04.18)

18.075

Insurance: IAG v. H Construction Ltd

The remnants of Hawkins Construction is in the gun for allegedly defective repairs following the Christchurch earthquakes, insurer IAG claims.  The insurer has taken Hawkins to court worried that $57.4 million received after selling its New Zealand business is at risk of disappearing down a rabbit hole, leaving IAG carrying the risk alone.

In March 2017, Hawkins Group, now known as Orange H Group Ltd, sold its construction business to Downer New Zealand.  Insurer IAG has dragged Hawkins Construction into a plethora of Christchurch re-remediation claims where it is alleged Christchurch earthquake repairs prior to 2017 are defective.  IAG used Hawkins to carry out remediations.  The full number and value of IAG’s re-remediation claims were supressed in the High Court.  Evidence was given that eleven are ready for trial.

IAG has threatened to get Hawkins bank accounts frozen to ensure there is enough left to meet potential claims.  Of an eighty million dollar deal, Hawkins got $57.4 million upfront.  The balance payable later.  To placate IAG, Hawkins said it would give thirty working days notice of any intention to pay a dividend to Hawkins’ shareholders.  This was not enough for IAG.  The High Court was told IAG wrote to Hawkins’ directors seeking detailed financial information about Hawkins’ solvency and its financial position.  Not satisfied with the answers, IAG went to the High Court demanding the information be made available.  In particular, IAG expressed concerned about the level of indebtedness between Hawkins and shareholder McConnell Ltd. Thirty days notice of a dividend to shareholders is of little moment if a shareholder is being ‘paid’ through repayment of loans. 

The financial information demanded would generally only be available to senior executives and directors, Justice Venning said. IAG has not proved that there is a danger Hawkins will not be able to meet any potential liability for re-remediation claims, he said.

IAG hinted it was considering bringing McConnell directors to court to establish details of the relationship between McConnell Ltd and Hawkins.

[Post-judgment note: Orange H Group/Hawkins Construction was put into receivership by its shareholder in May 2018] 

IAG New Zealand v. H Construction Ltd (formerly Hawkins Construction Ltd) – High Court (18.04.18)

18.074

Family Trust: Guest v. Warner

It is a common problem in rural New Zealand: how are children to be treated equally when a son is to take over the farm but other siblings want ‘their share’ in cash?  With siblings at daggers drawn, the High Court removed all trustees from a Northland family farming trust replacing them as trustee with an independent lawyer having experience in mediating family disputes. This after disruption to the farm’s refinancing, use of trespass notices and moves to keep one son from his mother’s funeral.  

Family grievances came to a head following the deaths of brothers Bill and Martin Guest, who had farmed in partnership at Te Kopuru, near Dargaville, since the 1970s.  Martin died in 2012; Bill in 2016.  Their partnership leased land from each of their respective family trusts, including Martin’s family trust: the M&A Family Trust.

The High Court was told of bad blood between some of Martin’s children and a deadlock in the operation of his family trust: M&A Family.  Aaron (on one side) had remained at home to work the farm. His siblings Joanne, Melissa and Philip (on the other side) had left for careers elsewhere.  At its simplest: Aaron wants to see the farm kept operational as a viable farming unit; his sisters want to get out cash so all benefit ‘in equal shares’.  Aaron has made legal claims against his parents’ estates and M&A Family to keep the farm intact as an economic unit.  As a complicating factor, there is a dispute between the brothers’ family trusts over the partnership accounts with allegations accounting trickery has been used to advantage Bill’s family over Martin’s.

Against this background, M&A Family was in turmoil with disputes over who were the current trustees: members of Martin’s family or Anne Warner (previously a business confidante of Martin’s brother Bill). Justice Jagose swept the board clear by removing all claiming to be trustees.  Deadlock had arisen over approvals for farm refinancing.  Land was sold to get cash and ward off a possible mortgagee sale.  Attempts were made to trespass Aaron from the former family home.  Aaron was given belated notice of his mother’s death.  His siblings omitted him from the order of service for her funeral. Justice Jagose said an independent trustee was needed.  Animosity between beneficiaries meant any trust beneficiary also acting as trustee lacked neutrality.  He indicated the warring trustees are to bear their own legal costs; M&A Family does not have to pay.  Lawyers for each side were asked to agree on a suitable candidate to take over as sole trustee of M&A Family Trust.

Guest v. Warner – High Court (12.04.18)

18.073

Asset Forfeiture: Commissioner of Police v. de Wys

Ronnie and Penelope de Wys face the loss of their Kihi Road property near Kawhia Harbour after the High Court found their purchase was funded in part from commercial cultivation of cannabis on a Putaruru farm they previously managed.  Police allege up to $729,500 in cash came from cannabis dealing.  The two have never been charged with dealing. Police interest was piqued by bank reports the de Wys banked large sums of cash in small denomination notes.

Legal expenses are mounting.  They have been to the High Court, Court of Appeal and back to the High Court protesting their innocence and unsuccessfully challenging police witnesses.  An agricultural contractor gave evidence of seeing cannabis planted in the middle of Putaruru maize crops.  Police forensic evidence identified traces of cannabis in bins.  Remnants of dried cannabis were found in the roof cavity of the manager’s cottage previously occupied by the de Wys in Putaruru.  

The Criminal Proceeds (Recovery) Act does not require police to prove cash came from illegal activity; it is for the recipients to prove otherwise.  At the second High Court hearing, Justice Whata said the de Wys explanations for large holdings of cash lacked credibility.  Asked to explain the source, they said it came from legitimate farm-related cash sales plus savings they had hoarded, stored in a tin under the house, rather than banked.  Farm cash sales were listed in a notebook: the ‘red book’.  A total of $398,400 was recorded as cash receipts from sale of firewood, machinery, livestock, scrap metal and dumping fees paid by those dumping waste in gullies on the property.  These transactions were not supported by documentation.  The red book was written up, supposedly from memory, years after the transactions. Challenged about some of the major transactions, such as a sale of scrap metal at $60,000, Mr de Wys could only remember the purchaser being called Santa Claus.  Justice Whata accepted it was likely that some legitimate cash savings were held unbanked on the property, but not the full $230,000 claimed by the de Wys.

Justice Whata ordered a valuation of the Kihi Road property pending potential confiscation.  The monetary value of any confiscation order is yet to be decided.  The High Court was told Inland Revenue is assessing the de Wys for tax due on cannabis dealing.  The value of any confiscation order will reduce assessable revenue.

Commissioner of Police v. de Wys – High Court (6.04.18)

18.072

Forestry: Hikurangi Forest Farms v. Negara Developments

Malaysian-owned Hikurangi Forest Farms failed in its bid to bulldoze a Tolaga Bay neighbour into accepting a permanent intrusion onto his property with 1.3 hectares of pine planted over the boundary line.  Hikurangi was ordered to pay damages for trespass.

Scott Funnell was adamant Hikurangi Forest had no right to harvest the trees.  Hikurangi argued it had cutting rights, part of a ‘give and take’ boundary on Tuahu Road negotiated with a previous owner when pine trees were planted in the early 1980s.

Informal ‘give and take’ arrangements are very common in rural areas where boundary fences do not follow legal boundaries.  For reasons of stock control, it is better to site fences on a ridge line rather than run a fence through nearby broken country on the legal boundary.  Frequently the land is of marginal productivity.  What one farmer loses with a fence deviating from the legal boundary in one area evens out with contra deviations down the fence line.  On the east coast of the North Island what was once marginal farmland is now ‘green gold’; forestry land with a crop rotation every twenty to thirty years.

The High Court was told Mr Funnell purchased a controlling interest in what was Waingaromia Station in 1992.  The Station bordered Hikurangi Forest Farms.  It is now owned by Negara Developments Ltd.  Mr Funnell is the sole director.  The two neighbours duked it out in court when Hikurangi Forests started felling trees on Negara Developments’ land in 2015.  The trees were planted on 1.3 hectares of land on Hikurangi’s side of a boundary fence, but the fence was not on the legal boundary.

The general rule in land law is that the owner of land owns everything attached to the land: buildings and trees.  Negara Developments owns the disputed 1.3 hectares. But trees can be separate property in their own right, by agreement.   Agreed forestry rights can be registered against the land title.

Hikurangi Forest argued its right to the trees was protected by an agreement with the previous owner and it alleged Mr Funnell knew of this agreement when he purchased.  Justice Duffy was asked to untangle conflicting evidence about events which took place up to twenty-five years previously, including an era when Fletcher Forests was the owner.  She ruled Mr Funnell had no knowledge of any arrangement between Hikurangi Forest and former owners over planting rights.  Confusion abounded in the intermittent contact between Mr Funnell and Hikurangi Forest.  Hikurangi presumed it had the right to harvest whilst Mr Funnell assumed it was just a case of accidental overplanting and Hikurangi had no cutting rights.  At no time did Mr Funnell agree to Hikurangi having rights to the trees, she ruled.  Mr Funnell refused to grant a registrable forest right when asked.  He issued trespass notices when contractors moved on to the land harvesting trees.  He refused to allow logged trees to be moved offsite.  They were left to rot.

Hikurangi Forest Farms was ordered to pay $45,000 for trespass; the value of the trees cut down and left to rot.  Hikurangi was also ordered to pay exemplary damages of $7500. It was reckless to start harvesting in the face of Mr Funnell’s repeated objections.

Hikurangi Forest Farms Ltd v. Negara Developments Ltd – High Court (5.04.18)

18.071