Tax: Stan Semenoff Logging v. NZTA

Stan Semenoff Logging Ltd’s Northland operation habitually overloaded its trucks.  High Court evidence identified that some 11,700 out of 17,200 loads crossing the Northport weighbridge over a ten month period were loaded in excess of each truck’s allowable weight.  The court dismissed Semenoff Logging’s appeal against additional road user charges totalling $532,800.

The company argued its own calculation of actual trips overweight should be preferred to NZ Transport Agency’s assessment.  It said arrears of only $135,300 were due.  NZTA polices operation of road user charges.  User charges are assessed on vehicle weight and type.  Heavy transport road users buy distance licences (in units of 1000 kilometres) for various weight categories.  User charges are intended to meet the economic cost of damage to roads.  The industry accepts weight-based evasion has been rife, with licences purchased for a lesser weight than that actually carried. Semenoff Logging challenged NZTA to find any logging operator in Northland who plays by the rules.

Semenoff Logging claimed NZTA assessment of unpaid road user charges was completely arbitrary, bearing no relation to actual distances travelled overweight.  It said trucks run empty returning from Northport.  NZTA’s set scale of charges takes into account that trucks will run empty for nearly half their trips, having no backload.

The Road User Charges Act requires NZTA apply an appropriate methodology for assessing unpaid road used charges.  This need not be the only appropriate or even the most appropriate methodology, Justice Gordon ruled.  The challenge to NZTA’s methodology failed.

Stan Semenoff Logging Ltd v. New Zealand Transport Agency – High Court (30.01.20)

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Maori: Kamo v. Conservation

Increased tourism to the Chathams makes access to cultural sites commercially valuable.  Claims to mana whenua do not create property rights over land, the Court of Appeal ruled in a dispute over control of Conservation land on the Chathams.

Chatham Islands’ bloody history was revisited in a dispute over control of cultural sites on the islands.  In dispute, Taia Farm; 1200 hectares of low-lying sand dune and peat country containing carved images on living kopi trees.  The area is currently an historic reserve under Conservation Department control.  Management of the reserve is in dispute.  Moriori claim mana whenua, saying they should have management control.  Mana whenua is also claimed by Ngati Mutunga, who invaded in 1835, subjugating the then 2000-3000 Moriori living on the islands.

Ngati Mutunga point to an 1870 Native Land Court ruling confirming its native title as traditional owner of the land.  This ruling was based on what is known as ‘the 1840 rule:’ who was the traditional owner as at 1840?  By Maori custom, Ngati Mutunga’s invasion had extinguished Moriori ownership rights by 1840.  Most Ngati Mutunga invaders in fact later returned to their ancestral Taranaki lands.

Now in the 21^stcentury, Ngati Mutunga are in court arguing failure to give them management control of Taia Farm is a breach of property rights enshrined in the New Zealand Bill of Rights Act; an ‘unreasonable seizure of property.’

Mana whenua is not a property right in the classical western sense, the Court of Appeal ruled.  Property rights introduced by European settlers have property as an asset capable of sale, mortgage and partition.  None of these concepts apply to mana whenua; a Maori concept of having collective control over land and use of its resources.

Kamo v. Conservation – Court of Appeal (29.01.20)

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Contract: Montgomerie v. Montgomerie

One brother failed in his claim that repayment of a million dollar loan from his brother was frustrated because of difficulties in completing a property development.

James Montgomerie resorted to the courts after running out of patience with brother Andrew.  Property developer Andrew Montgomerie ran into financial difficulty in 2008.  He was rescued by brother James, a businessman based in Florida.  Initially, James refinanced Andrew’s Waiheke family home on the basis Andrew and family would continue living there but meet outgoings.  Later, Andrew secured a bank loan over Waiheke.  He did not keep up mortgage payments.  Interest due on the loan from his brother was also accruing.

Evidence was given of multiple re-negotiations between Andrew and his brother over terms of his financial assistance.  When push came to shove, the High Court was asked to enforce a March 2017 agreement requiring Andrew to make final payment by October 2018 of all money owed.  James agreed a concession: if payment was made by that date, Andrew’s liability was capped at one million dollars.  No final payment was made.

When sued, Andrew said performance of the March 2017 agreement had been ‘frustrated.’  No payment was due.  In contract law, the doctrine of frustration applies where performance of a contract is no longer possible through no fault of either party because of an external intervening event; a force majeure event. 

Andrew said final payment was predicated on the sale of eight townhouses under construction at Alberton Lane in Mt Albert, Auckland. Payment was frustrated by delays in completion.  The builder had gone bust; there were delays in getting construction restarted. Holding costs escalated dramatically.

The Court of Appeal said the March 2017 agreement was not dependent on completion of Alberton Lane.  The agreement specified a ‘drop dead’ date for final payment, identifying properties, including Alberton Lane, which could be sold to fund repayment. How repayment was to be funded was Andrew’s concern, not his brother’s.

Failure to complete Alberton Lane was not a frustrating event.  Their loan agreement was enforced.  Andrew was ordered to pay $US865,120 still outstanding, plus interest and his brother’s full legal expenses.

Montgomerie v. Montgomerie – High Court (8.05.19) & Court of Appeal (28.01.20)

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Franchise: Goria Jean's Coffees v. Daboko Ltd

Straining basic tenets of contract law, Justice Gault accepted variations to a Gloria Jean’s Coffee franchise were enforceable despite operating to the overwhelming benefit of the franchisee.

In March 2012, Darina Borisova moved to New Zealand from Russia to study English.  Within twelve months she was negotiating the purchase of a Gloria Jean franchise in Auckland’s central business district.  What exactly were terms of this franchise agreement came to trouble the High Court seven years later.  An initial franchise agreement dated April 2013 was markedly different from a replacement franchise agreement agreed one month later: May 2013.  The first had the Gloria Jean franchise expire in October 2022; the second an April 2018 expiry date.  Ms Borisova’s announcement in 2018 that she was no longer paying franchise fees came as a surprise to Gloria Jean.  The master franchise’s new owner had not been aware of any negotiated variation.  It claimed the May 2013 replacement agreement was a sham.  All signatories to the second agreement agreed in court to circumstances of its signature; new owners of the Gloria Jean master franchise had no knowledge of events in 2013.

Justice Gault accepted the second franchise agreement, expiring in April 2018, was the operative agreement.  He questioned whether this second agreement was enforceable; for lack of consideration.  General rules in contract law require each side provide a benefit to the other before promises are enforced.  In legal jargon, ‘consideration’ is required.

The second franchise agreement promised a benefit to Ms Borisova (a quicker exit from the franchise); there was no apparent benefit to Gloria Jean.  Justice Gault ruled Gloria Jean enjoyed a ‘benefit in practice.’  There was evidence Ms Borisova’s husband, then still in Russia, was refusing to remit funds to New Zealand unless the franchise term was reduced.  Following agreement to a shorter franchise period, money was sent to complete the purchase.

The court ordered payment to Gloria Jean: franchise fees totalling $56,500 unpaid up to the April 2018 expiry date; plus interest for late payment.

Gloria Jean’s Coffees International Pty Ltd v. Daboko Ltd – High Court (28.01.20)

20.022

Land: McKenzie v. Mortimer

Owners of adjoining cross-leased units on Auckland’s North Shore in dispute over parking arrangements and the refurbishment of one unit were told to go to arbitration as their cross-leases required. 

The High Court was told of escalating disharmony between the Mortimers in flat two and the McKenzies as owner of flat three, cross-leased properties on Beach Road in Castor Bay.  The McKenzies refused to sign off on the Mortimers’ plans to build a pop-top on the roof of flat two; did not agree to an alternative plan to change part of the existing flat two iron roofing with clear glass; and took legal action when the Mortimers then set about making internal alterations within their flat.  Their dispute escalated with the McKenzies complaining that the Mortimers parking arrangements for a car and campervan constituted a legal nuisance, obstructing safe exit and entrance to the property.

Cross-lease developments were a crafty legal workaround first developed to overcome Auckland Council’s then restrictions on subdivision sizes.  There was no subdivision, lawyers argued.  All flat owners part-owned the undivided freehold, granting each a 999 year lease over a specified area for their own personal use.  Each lease is in identical terms, bar identification of the area each claims as their own.  The cross-lease sets out rights as between owners.

The McKenzies went to court arguing the Mortimers’ activities breached terms of the cross-leases.  They want the Mortimers to remove all internal alterations, returning flat two to its original layout.  Associate judge Smith ruled their dispute must first be put to arbitration.  Their cross-leases require arbitration for any ‘differences’ arising out of the leases ‘operation.’

McKenzie v. Mortimer – High Court (17.01.20)

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