Bankrupt: Andrews v. R.

Raymond Anthony Andrews committed multiple frauds running businesses whilst bankrupt including conviction in 2013 for failure to pay for beauty therapy equipment and conviction in 2019 for defrauding buyers of used cars.  Sentence of six and a half years’ imprisonment was confirmed by the Court of Appeal.  

Bankrupted in 2008, Andrews’ bankruptcy was extended to 2018 following conviction for managing a beauty therapy business whilst bankrupt.

Andrews was convicted in 2019 and sentenced to six and half years’ imprisonment by the Auckland District Court for operating a used car business whilst bankrupt and defrauding customers.  The court was told he imported vehicles from Australia (often insurance write-offs) which were then repaired, certified and on-sold. There was evidence of vehicle VIN numbers altered to prevent vehicle history being traced.  Customers gave evidence of payment made but no vehicles delivered, or different vehicles from that ordered delivered, or unrepaired vehicles delivered.  Police estimate customers were defrauded of some $700,000.

Andrews claimed he was not operating a used car business whilst bankrupt; he had an unwritten agency agreement with his son and was acting as an agent of his son’s car business.  His son denied his father had any authority to act on his behalf. At trial, the jury convicted Andrews of operating a used car business while bankrupt.  He was also convicted of other Insolvency Act offences: wilfully misleading Insolvency Service (by not disclosing bank accounts he had control over) and concealing property (funds held in the bank accounts).

Andrews challenge to the way trial counsel presented his case in court was dismissed by the Court of Appeal.

His earlier involvement in a beauty therapy business resulted in convictions for obtaining by deception: making no payments on the lease of a laser hair removal machine (which Andrews later claimed had gone missing, stolen) and failing to pay a promised $4000 for purchase of a E-Light IPL beauty machine.  In 2013, he was sentenced to 15 months imprisonment by the Tauranga District Court.

Andrews v. R. – Court of Appeal (31.08.21)

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Fraud: Ropitini v. Social Welfare

Tipare Hokimate Ropitini’s two years three months’ imprisonment was confirmed by the High Court for multiple social welfare frauds over nine years totalling $165,400.

Ropitini falsely claimed not to be living in a de facto relationship and made false claims for accommodation allowance.  In addition, she created a fictitious rental business with accomplices claiming to be tenants through forged tenancy agreements. Under false names, Ropitini claimed to be a tenant of her own fictitious rental business. Both Ropitini and her accomplices then applied for social welfare grants to collect costs of bonds, rent in advance and accommodation assistance.  Her accomplices defrauded Social Welfare of $54,400.

The High Court ruled there were no grounds to reduce the length of imprisonment imposed by the District Court.

Ropitini v. Social Welfare – High Court (31.08.21)

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Bankruptcy: FAI Money Ltd v. McKenna

Learning that former bankrupt Edward Johnston had wrangled a $100,000 concession out of secured creditors claiming rights to his forestry investment, Wayne Matthew McKenna said he had first claim having lost out when Mr Johnstone’s bankruptcy left him with a worthless $212,000 guarantee.  

Mr McKenna claimed Mr Johnston guaranteed repayment of $212,000 he loaned to Sentinel 35 Trustee Company Ltd in January 2012.  Ten months later, Mr Johnston was bankrupt.

The High Court was told a major asset in Mr Johnston’s bankruptcy was his one-fifth share in a forestry partnership.  It was heavily mortgaged.  Insolvency Service disclaimed any interest in the asset. Nine years after being bankrupted, Mr Johnston’s one-fifth share had a cash value of about $843,000: his share of the forested land ($34,000); cutting rights ($754,200); and carbon credits ($54,700).  Two creditors had security over his partnership interest: FAI Money Ltd having advanced $300,000 and a private lender making a $72,000 loan.  With more than a decade’s interest running on these secured loans, plus a legal question over the extent to which FAI’s security included cutting rights and carbon credits, a three-way deal was struck: Mr Johnston would receive $100,000 as reward for keeping up partnership payments, protecting the asset; the $72,000 private loan would be repaid with no interest; and FAI would take the balance.

Mr McKenna objected.  He had been left out of pocket as an unsecured creditor in Mr Johnston’s bankruptcy.  He should be entitled to the $100,000 now coming available from a bankruptcy asset, he claimed.  Justice Peters dismissed his claim.  Paper work failed to prove Mr McKenna was an unsecured creditor.  The court was provided with a copy of the $212,000 supposedly guaranteed loan.  A written contract provided to the court was not signed by Sentinel as the supposed borrower; signature of the un-named guarantor was indecipherable.

FAI Money Ltd v. McKenna & Johnston – High Court (31.08.21)

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Loan: Powell v. K2 Investment Group

Bronwynne Durney left legal carnage in her wake after splitting with Gabor Kemeny: she borrowed $100,000 to help fund her relationship property dispute in Australia; promised Richard Powell mortgage security over her property company’s assets for his $100,000 loan and then proceeded to strip cash out of the company in advance of an Australian Family Court ruling that the company’s assets be handed over to Gabor Kemeny.  Meanwhile the unpaid Powell loan was accruing default interest at 180 per cent per annum. 

At a time when they were living together, Bron Durney and Gabor Kemeny set about constructing apartments in Napier and Hastings to form part of the Quest accommodation chain.  K2 Investment Group Ltd, with Ms Durney as sole director and sole shareholder, was set up as their joint investment vehicle.  The High Court was told that after the two separated in 2011 Ms Durney set about extracting cash from K2 Investment.  According to K2 Investment’s financial statements she owes $1.7 million.

Through an intermediary, Kaiapoi financier Richard Powell learnt she was looking for funds to finance Australian relationship property litigation against her former spouse.  In 2012, Mr Powell agreed to a short term six month loan of $100,000, to be repaid out of her expected relationship property settlement.  She agreed to a mortgage over K2 Investment’s assets and was described in the loan agreement as guarantor.  There proved to be no guarantee; she did not sign as guarantor, signing only as director of K2 Investment.  The Australia Family Court ruling saw all assets in K2 Investments put into Mr Kemeny’s hands and Ms Durney awarded cash insufficient to repay the $100,000 loan.  This left Mr Powell and Mr Kemeny each claiming prior rights to K2 Investment’s assets.

In the High Court, Justice Osborne ruled Mr Powell had first claim.  Ms Durney’s agreement to mortgage K2 Investment’s assets was valid; she was at the time the company’s sole director.  When the Australia Family Court awarded control of K2 Investment assets to Mr Kemeny he was aware of the Powell loan and was also aware of Mr Powell’s right to claim a mortgage over the same assets.

Mr Powell was entitled to have his mortgage registered over K2 Investment assets.  Terms of his $100,000 loan were varied.  Amount owing had ballooned out by time of the trial; default interest was running at 180 per cent per annum.  The default interest rate was left unchanged, but application suspended for a period of 39 months, reflecting Mr Powell’s delays enforcing his loan.  In total, Mr Powell was owed $1.03 million, Justice Osborne ruled.

Powell v. K2 Investment Group Ltd – High Court (30.08.21)

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Right of Way: Botev Trustee v. Tait

It took a High Court order to enforce rights of vehicle access to their Auckland property after owner of a neighbouring flat extended his outdoor patio into the right of way.

The Botevs purchased flat three at a Half Moon Bay address in 2009.  Three years later, Shane Tait purchased flat two next door.  His mother lives there; he does not.  The Botevs access to flat three takes them past flat two.  Mr Tait claimed they had pedestrian access only. Without consent of other owners of the cross-leased flats he attached a conservatory to flat two and extended the patio out into the disputed right of way.  The Botevs were further annoyed by Mr Tait’s mother renting out flat two on Airbnb. 

Cross lease terms required owners’ disputes go to arbitration.  A 2019 arbitration saw the arbitrator rule that rights of way created in 1975 allowed the Botevs vehicle access and that renting flat two on Airbnb was in breach of the cross lease.  A written agreement between Mr Tait and the Botevs followed: a formed driveway past flat two would be constructed with the patio rebuilt behind a retaining wall. Auckland City refused consent to the earthworks; reducing size of the patio meant ‘usable outdoor space’ requirements were no longer met.  This could be remedied by removing the illegally constructed conservatory, the High Court was told.

The Botevs applied to the High Court, asking the 2019 arbitration be registered as a court judgment.  This would enable enforcement.

Mr Tait said the 2019 arbitration was superseded by their subsequent written agreement.  This subsequent agreement was simply a failed attempt to implement the 2019 arbitration, Justice Campbell said.  The arbitration award still existed.

Mr Tait further argued enforcement of the 2019 arbitration would be against public policy; it would breach Auckland City planning rules.  There was no evidence the arbitration award breached fundamental principles of law and justice, Justice Campbell said.  The Botevs were entitled to enforce their right of vehicle access.

Botev Trustee Ltd v. Tait – High Court (26.08.21)

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Subdivision: Reynolds Trust v. Parklands Properties

Having forfeited a $2.5 million deposit in 2009 to Auckland property developer Parklands Properties, Reynolds family interests had the upper hand twelve years later when the Court of Appeal ruled Parklands would need to pay some $4.6 million to remove an easement restricting further development of its subdivision at Karaka.

In 2004, Joseph Norma’s Parkland Properties Ltd and interests associated with Francis and Juliet Reynolds jointly purchased rural land on the Hingaia peninsular near Papakura.  Auckland City expansion has seen this land developed for residential housing.  When purchased, the land contained a four hundred metre right of way ensuring access to the two surveyed lots.  By agreement Parklands took title to one lot totalling 17 hectares; Reynolds the remaining 14 hectares.  Their agreement committed each to co-operate in subdividing the land.  A subsequent deal for the Reynolds to buy out lot two owned by Parklands fell over with the Reynolds short of cash after the global financial crisis.  They forfeited a $2.5 million deposit.  After this deal collapsed, the Reynolds business relationship with Parklands’ Mr Norma soured.

Fast forward a decade: Parklands had Auckland City consent for subdivision of its land with a requirement to create a public road as access for an intended 158 residential lots.  The existing four hundred metre right of way was perfect for the job.  Parklands surrendered its share of the right of way easement for use as a public road; it asked the High Court that the Reynolds be forced to similarly give up their easement rights allowing completion of the public road designation. The Reynolds no longer used the right of way, it said.  Access to their land was provided from other public roads.

The High Court removed the Reynolds rights of way, awarding them $300,000 compensation.  This ruling was overturned by the Court of Appeal.  The prior agreement between Parklands and the Reynolds to co-operate in any future subdivision anticipated that any variation of their rights would be a matter of negotiation. It was not for the courts to override this agreement, the Court of Appeal ruled.

The court was told that removal of the Reynolds rights of way was worth $13.9 million to Parklands.  Reynolds family interests would be entitled to share in this benefit, if negotiating a surrender of access rights, the Court ruled.  Payment by Parklands of $4.6 million was an appropriate figure, the Court of Appeal said.  This represented $1.44 million loss of value to Reynolds ownership of lot one and a $3.16 million share of the benefit to be gained by Parklands with its proposed subdivision of lot two.

F&J Reynolds Trust v. Parklands Properties Ltd – Court of Appeal (23.08.21)

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Deposit: Kinleith Land v. Bremworth

Hitching its bandwagon to a low carbon economy and claiming an interest in exploiting solar energy, David Henry’s Kinleith Land & Infrastructure Ltd is in liquidation and on the hook for $2.4 million deposit unpaid on a failed property deal.

In August 2020, Kinleith Land signed up to buy Cavalier Bremworth’s commercial property in Auckland suburb Papatoetoe for $24 million. The High Court was told settlement date was extended while Kinleith Land continued negotiations with a US funder. The financing deal fell over.  Bremworth cancelled the sale.  It found another buyer, paying $24.9 million for the Papatoetoe site.

When sued for the unpaid deposit, Kinleith Land argued its liability to pay a deposit on the cancelled contract disappeared when Bremworth turned around and resold at a $900,000 ‘profit.’  The right to sue for a deposit remains when a contract is cancelled, Associate judge Gardiner ruled.  Re-selling at an increased price was irrelevant; Bremworth had expended time and energy in finding another buyer.

Kinleith Land also argued negotiations over a later settlement date meant the requirement to pay a deposit was waived. Not so, Judge Gardiner ruled. Bremworth made it clear during negotiations that any new arrangement was without prejudice to its rights under the original August 2020 contract.

Bremworth is left as $2.4 million unsecured creditor in Kinleith Land’s liquidation.  Liquidators first report shows no evidence of Kinleith Land having assets of any value.

Kinleith Land & Infrastructure Ltd v. Bremworth Ltd – High Court (19.08.21)

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Leasehold: Paros Property v. Smith

The lessor has choice of valuer when owners of leasehold interests want to freehold Freemans Bay townhouses build by Auckland city in the 1970s.

Occupiers have been looking to freehold in the face of crippling rent rises as property values sky rocket.  Some occupiers have walked off; reducing liability for rent arrears by selling their leasehold interest back to the lessor.

Inner city suburb Freemans Bay was gentrified by Auckland City in the 1970s with its purchase and demolition of slum properties, subsequently redeveloping the suburb with terraced townhouses. Auckland City initially retained ownership, selling leasehold interests to intending purchasers.  Neil Christian’s Paros Property Trust Ltd took ownership after Auckland City sold its Freemans Bay property interests in the 1990s.

Caught in the rent review vice was Tim Smith.  In 2015, he purchased the leasehold interest in a Napier Street townhouse for $155,000.  Four years later, a rent review notice advised annual rent was now $81,375.  The lease requires rent reviews every seven years.  He had recently lost his job and there were ongoing relationship property negotiations with his former spouse, the High Court was told.  Mr Smith approached Paros Property, looking to exercise his right to purchase the freehold.  No agreement was reached on choice of valuer to put a price on the freehold.  Mr Smith wanted valuers Gribble Churton Taylor; Mr Christian did not.  A Paros Property internal email variously described Gribble Churton as having a ‘torrid reputation’ and acting as ‘advocate for lessees.’  Mr Smith said Paros Property’s failure to accept his choice of valuer meant the lease was cancelled and he was no longer liable for rental arrears, by then running into the hundreds of thousands of dollars.  

Wording of the lease was not specific, but Paros Property had the right to choose a valuer, Justice Harland ruled.  Mr Smith had no grounds for cancellation.  He was ordered to pay rent arrears of $237,600. Mr Smith’s former spouse is also liable for the unpaid rent; she is recorded as joint owner of the leasehold interest in Napier Street.  She has never lived at the property.

Paros Property Trust Ltd v. Smith – High Court (19.08.21)

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Freezing Order: Kimiko Trust v. Walton 18 Ltd

Properties owned by companies controlled by Auckland property developer Teik Huat Ghee were frozen by High Court order following allegations he was hiding assets in advance of a court hearing into a $935,000 damages claim by two purchasers alleging defects in houses sold. 

The court was told Mr Ghee controls some 65 separate companies.  Some companies he previously controlled have gone into liquidation, insolvent.  One of his companies, Walton 18 Ltd, constructed homes on Gracefield Lane in Auckland seaside suburb St Heliers.  Kimiko Trust purchased one; a Mr Hsu, another. Neither were happy with their purchase. Each is suing for damages, claiming defects in construction.  Mr Ghee says any defects are minor and easily remedied.

They allege Mr Ghee is stripping assets out of Walton 18 in advance of their court hearing; four properties were transferred from Walton 18 to another company: Allum Trustees No.1 Ltd.  Mr Ghee controls both Walton 18 and Allum Trustees.

Justice Wylie imposed a freezing order on both companies’ assets.  Construction work on building sites owned by the two companies can continue, but proceeds of any sale are frozen.

Kimiko Trust v. Walton 18 Ltd – High Court (17.08.21)

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Construction: Cain v. Rilean Construction

General liquidation creditors should not bear the cost of sorting out entitlements to Construction Contracts Act retentions when the there is a shortfall in building companies’ retention funds, the High Court ruled.

With Rilean Construction (Central Otago) Ltd in liquidation insolvent and Construction Act retention moneys sitting in a law firm’s trust account with no one apparently willing to meet costs of managing payouts, the High Court appointed EY’s Rhys Cain as receiver to handle distribution.

Gary Dent’s and Steve McLean’s Queenstown property company went into liquidation in 2020 with accounting firm Ernst Young appointed liquidators.  There were four projects on Rilean’s books; the most problematic being a 56 apartment complex, Remarkables Residences.  Rilean’s tracking system for Construction Act retention payments indicated there should be $140,200 held in trust with a law firm for ten Remarkables subcontractors yet paid in full.  In fact there was a shortfall; primarily a failure to account for GST payable on those retentions.  In addition, remedial work for defects by one subcontractor exceeded retentions held on its behalf.

With the law firm simply holding retention money as a bare trustee, it was left to EY to do the leg work sorting out claims against the fund.  EY said this cost should be carried by contractors entitled to payment out of the fund, not just buried as a general expense of the Rilean liquidation. Associate judge Paulsen agreed.

EY associate partner Rhys Cain was appointed receiver of the Remarkables retention fund and authorised to pay pro rata valid claims by subcontractors after deduction of EY fees for managing and administering the fund.

Cain v. Rilean Construction (Central Otago) Ltd – High Court (17.08.21)

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Leaky Building: 'The Links'

Body corporate management controlling the high-rise Links apartments at Paraparaumu Beach was described by a High Court judge as being obstructive, using legal tactics to stall efforts by one apartment holder to get compensation for rental losses whilst the building was reclad.

In November 2018, court approval was given to a Unit Titles Act scheme of arrangement allocating between apartment owners costs of recladding the fourteen-story block.  Left undecided was a demand by one apartment owner for compensation covering loss of income for the period her apartment was no longer available for rent. Body corporate management told the court it would discuss this issue with her.  Discussions were unsuccessful.

The apartment owner went back to court, asking the approved scheme of arrangement be varied to order payment of compensation. She faced what Justice Cooke described as a course of deliberate obstruction: the body corporate did not respond to her court application until days before a scheduled court hearing and then tried to get the case thrown out on the basis she should have started from step one, filing paper work for a brand new scheme of arrangement to be voted on by all apartment owners.  With this legal manoeuvre tossed out, the judge set a new timetable for the body corporate’s legal response to be filed.  The body corporate again failed to respond, waiting until two days before this filing deadline expired to announce it planned to appeal.  Justice Cooke refused leave to appeal and also refused body corporate requests to further hold up proceedings by seeking an eight week extension of time to file its evidence.  The Links body corporate was ordered to file within twenty working days its grounds for refusing compensation and told there would be no more extensions.

Roe-Shaw v. Body Corporate 81340 – High Court (13.08.21)

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Fraud: Eight Mile Farms v. Bradley

Legal action has been taken against King Country accounts clerk Sharon Bradley in an attempt to recover $2.4 million stolen from farming client Eight Mile Farms.

Te Kuiti-based Eight Mile Farms Ltd used local accounting firms for back office accounting services.  Having moved through various firms as a trusted employee while local accounting practices merged, Bradley perpetrated a long running fraud stealing more than two million dollars from Eight Mile Farms over a twelve year period ending 2018.  She stole money by creating false invoices actioned with payment out of Eight Mile Farms’ Rabobank account into accounts she controlled at Kiwibank, ANZ and Westpac. The fraud was discovered by accident one year after she left her job. Bradley had not deleted a false payment template in the accounting firm’s database.  An Eight Mile supplier queried why payment had not been made on a genuine invoice; payment had been made but was diverted by the false template into Bradley’s bank account.

In July 2020, the High Court ordered Bradley pay just over two million dollars to Eight Mile Farms for deceit and breach of fiduciary duty.  The court left open further action where it could be proved specific assets were purchased with the stolen money.  A court-appointed investigator identified about $2.4 million had been stolen from Eight Mile Farms.  He traced some of the money directly into purchases of a lawnmower, a ride-on mower and specific electronic equipment.  In August 2021, the High Court ordered these items be handed over. The court was told money was also traced into her family trust.  The balance had been used for family living and lifestyle expenses.  Real estate owned by Bradley is currently frozen by High Court order.

Eight Mile Farms Ltd v. Bradley – High Court (9.08.21)

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Estate: McMahon v. Blind Foundation

Born in London, Graham Rowles died at Whangarei in 2017 leaving an estate valued at four million dollars. In an unsigned typewritten note, later accepted to be his valid will, he asked that his ashes be mixed with ground bait and thrown into a favoured fishing spot on the River Severn at Bewdley in Worcestershire and that his estate go to support guide dogs for the blind. This set the scene for claims against his estate by Angeline McMahon, claims dismissed by the High Court after a series of contested cases through the Tenancy Tribunal and the District Court.   

The High Court was told Mr Rowles lived on a property at Tavinor Road off Otaiko Valley Road near Whangarei.  There were two dwellings on site: one occupied by Mr Rowles; the other rented by Ms McMahon.  She stopped paying rent in October 2016.  On Mr Rowles’ death she claimed a right to continued occupation for herself and her adult children, rent free.  There were allegations of her renting out the dwellings after Mr Rowleys’ death and keeping the rent.

This put her in direct conflict with New Zealand Foundation of the Blind, the sole beneficiary in Mr Rowley’s will. Her claims to occupation were dismissed by both the Tenancy Tribunal and the District Court.  Financial offers to pack up and leave were ignored.  It took an eviction order for Blind Foundation to get vacant possession of Tavinor Road before selling.  Evidence was given of Ms McMahon persistently trespassing at Tavinor Road after her eviction and causing damage.

After sale of Tavinor Road, she was in the High Court pursuing a claim for $50,000 plus exemplary damages.  She claimed that lawyers acting for the Blind Foundation had a conflict of interest (she was the first to contact them when she brought in Mr Rowles’ will) and that correct procedures in the Residential Tenancies Act were not followed prior to eviction.

Justice Toogood dismissed both claims.  Her standing as the law firm’s client lapsed when she did not follow up on lawyer’s requests for her to complete court documents to have Mr Rowles’ typewritten note validated as his will; Blind Foundation stepped in to provide the necessary information.  And there were no irregularities in the eviction process; delays arose from her appeals and extended time encouraging her to depart willingly. 

McMahon v. Royal NZ Foundation of the Blind – High Court (9.08.21)

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Estate: Moleta v. Darlow

Daughters Lorraine and Jolene were each awarded $950,000 from their late mother’s $5.4 million estate after left nothing in her will, all assets going to a third daughter Dellisse.

Delisse Moleta barred access to their mother in the last four years of her life; a period in which loans were secured over their mother’s previously mortgage-free properties and their mother’s condition declined dramatically.  She was admitted to hospital weighing just 23 kilograms, three days before her death in July 2016.   

The High Court was told family friction followed the collapse of their mother’s marriage in 1971.  She bore a grudge against those who stayed with their father during what was an extremely bitter separation.  In 1973, Mrs Moleta moved to Auckland with daughters Michelle, Delisse and Jolene. As a solo mother she worked very long hours to put these three daughters through a private education at Diocesan School. She had high expectations; any daughter who did not follow her bidding was ostracised.  As her assets accumulated, Mrs Moleta purchased property in Auckland and later in Australia. 

Evidence was given that Mrs Moleta followed daughter Dellisse to Australia in 1989, in part because Delisse was not coping well on her own and needed support.  Dellisse had trained as a pharmacist.  Her lack of business management skills led to a prosecution in Australia and her de-listing as a pharmacist.  From there, Dellisse dabbled in share trading before amassing rental properties as had her mother.  Mother and daughter returned to New Zealand in 2011, one year before Mrs Moleta suffered a stroke. At the time of her mother’s death: Dellisse owned in Australia two properties in her own name, two properties jointly with her mother; and in New Zealand four properties jointly with her mother.  These jointly owned properties passed to Dellisse absolutely on her mother’s death by survivorship; they do not form part of her mother’s estate which separately holds in its own right three properties in Auckland, two in New South Wales and one in Queensland.  The net equity in these estate properties totalled $5.4 million.

Justice Hinton ruled daughters Lorraine and Jolene were each entitled to $950,000 from their late mother’s estate under the Family Protection Act.  The balance of her estate remains with Dellisse.  Other daughter Melissa pre-deceased her mother.

When signing her will, Mrs Moleta was warned by her lawyers that cutting out Lorraine and Jolene would likely lead to litigation after her death.  The total exclusion of Jolene and Lorraine from their mother’s will was a breach of her moral duty to provide them with maintenance and support, Justice Hinton said. Both had been very loyal and loving daughters and done all they could to help their mother, she said.

Moleta v. Darlow – High Court (5.08.21)

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Bankruptcy: Paterson v. Lepionka & Co Investments

Bankrupted once in Australia and twice in New Zealand over a five year period, Hawkes Bay property developer Garth Bowkett Paterson was barred from ongoing litigation over a subdivision on the banks of the Tukituki River with his litigious behaviour described by the Court of Appeal as frivolous, vexatious and abusive. 

Paterson was bankrupted by Australian tax authorities in 2015.  Subsequent bankruptcies in New Zealand in 2016 and 2020 followed a failed subdivision of lifestyle blocks in Hawkes Bay and extensive litigation against interests associated with Stefan Lepionka who had bought lots in the subdivision and then bought out Westpac as first mortgagee when Paterson’s GLW Group Ltd ran out of cash to complete the subdivision.

Lepionka Investments bankrupted Paterson in 2016 for non-payment of a court costs order.  Lepionka Investments was later found by the High Court to have improperly benefitted from its exercise of Westpac’s rights to sell as mortgagee, but damages were left to be assessed after market prices were known on completion of the subdivision and sale of lifestyle blocks. Whilst bankrupt, Mr Paterson engineered a string of caveats over lots at the subdivision variously in the names of GLW Group and a supposed family trust claiming rights to the land.  The High Court ordered removal of the caveats, ruling there was no evidence to support the claims and that Mr Paterson was attempting to frustrate Lepionka Investments’ sale of lots in the subdivision. Despite a court order barring him from lodging any further caveats, further caveats were lodged by interests associated with Mr Paterson.  His second New Zealand bankruptcy in 2020 followed a failure to pay another court costs order awarded in favour of Lepionka.

Damages due to GLW Group by Lepionka Investments for its improper exercise of mortgagee sale powers were settled out of court after GLW Group went into liquidation.  The liquidator’s report identifies Lepionka agreed to pay $100,000 damages.

Mr Paterson, still bankrupt, took legal action attempting to have both Stefan Lepionka and Lepionka Investments convicted and fined for breaching the Property Law Act.  Terms of the $100,000 out of court settlement with GLW Group’s liquidator precluded any further legal action against either Stefan Lepionka or Lepionka Investments, the Court of Appeal ruled.

Paterson v. Lepionka & Co Investments Ltd – Court of Appeal (3.08.21)

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