Claims that profits from Hells Gate tourist attraction near Rotorua are not being shared properly ground to a halt in the High Court when it was found a 1996 commercial joint venture was not properly set up; legal eagles registered the wrong names at the Companies Office.
Trustees for the Tikitere Trust, representing some 1200 Maori beneficiaries, allege they have been ripped off by fellow investors who have not properly accounted for profits from Hells Gate’s operations. In 1996, Tikitere’s then trustees agreed to a joint venture arrangement with neighbouring Maori. Their written agreement envisaged creation of a new holding company split 50:50 between Tikitere Trust and Tatou Holdings Ltd, the corporate vehicle representing their neighbour. Tatou was required to chip in $120,000 cash; Tikitere its management control of 32 hectares of geothermal land at Tikitere.
When Tikitere Trust later sued complaining about operation of their joint venture, Tatou Holdings said there was no enforceable joint venture agreement. Companies Office records had their joint venture company shareholdings recorded with Tatou Holdings correctly holding half the shares and Tikitere Trust incorrectly holding half. Company law does not allow a trust to be recorded as a shareholder; shares must be held in the names of the trustees. This meant half the shares in the joint venture holding company was held by a legally non-existent entity. The holding company still existed. But in the eyes of the law, Tatou Holdings was sole shareholder. Justice Duffy refused to add Tikitere trustees to the holding company’s share register with a wave of the judicial pen. It is not for a court in 2020 to depart from the words of the official record to cure an error made in 1996, she said. The supposed 1996 written joint venture agreement is a legal nullity; it was never implemented. Tikitere Trust is now required to tackle the hard yards; prove through Tikitere’s and Tatou’s conduct over subsequent decades that a joint venture did exist and from this conduct prove what are its terms.
Whata v. Hughes – High Court (10.02.20)
20.028