Bankruptcy: Police v. Prescott

It began with a speed camera fine. It ended with Peter Richard Prescott’s bankruptcy.

In July 2016, a car registered to Mr Prescott’s name triggered a speed camera infringement notice.  He denied the charge.  He did not attend court and was fined $80 plus costs for the speeding infringement.  A rehearing was not successful.  A long and fruitless legal pursuit then followed through the High Court, Court of Appeal and Supreme Court with Mr Prescott seeking judicial review of his unsuccessful rehearing.  He was told this was not a case for judicial review; he should simply exercise his further right of appeal against conviction.  At each stage costs were awarded against him.

Mr Prescott back-tracked, succeeding in having his speeding conviction overturned on appeal.  This success negated the judicial review costs orders made against him, he said.  Not so, said the police.  It took steps to bankrupt Mr Prescott on the cumulative $27,700 unpaid costs orders racked up through his judicial review claims.

Mr Prescott unsuccessfully challenged the bankruptcy application arguing variously: the costs figures were incorrectly calculated; he had a counter-claim against police for malicious prosecution; both the police and the courts were legal fictions having no rights against him; there was no such person as Peter Richard Prescott as the identity with this name is a corporate entity registered in the state of Minnesota and that the natural person called Peter Richard Prescott no longer exists but has the name Peter-richard.

He was bankrupted with effect from 28 February 2022. He lives in Auckland according to Insolvency Service records.

Police v. Prescott – High Court (28.02.22)

22.045 

Fraud: Hicks v. Police

Rebekah Hicks, also known as Rebecca Harris, was convicted of theft and sentenced to two years two months’ imprisonment following thefts and false invoicing frauds affecting successive employers netting nearly $80,000.

The first employer, anonymised as company A, provided sandblasting and zinc coating services.  Four years after Hicks started work, the company identified she was stealing cash payments made by customers and supressing invoices for these transactions. Further enquiries identified that she was creating false transactions to cover transfer of company funds to a Kiwibank account she controlled and that she had been having her personal car serviced with costs charged to the company account.  Hicks admitted the thefts and resigned.

The High Court was told she immediately started work at a separate company concocting a story that she had left her previous job for health reasons.  Within months she was stealing from this company, diverting customer payments into her bank account.

Hicks pleaded guilty to four representative charges of theft by a person in a special relationship.  She appealed a District Court sentence of two years two months’ imprisonment.  The sentencing judge did not give adequate allowance for a familial trait of compulsivity and impulsivity coupled with the stress of ill health and her having to financially support a family and her mother, she said.

The calculated nature and sophistication of her offending meant there was no apparent link between her claimed personality traits and the admitted offending, Justice Osborne ruled.  The sentencing judge made adequate allowance for these factors in sentencing, he said.

Hicks v. Police – High Court (28.02.22)

22.046

Bunnings: Sunrise Management v. Bunnings

Bunnings use of a ‘pay now, argue later’ clause in its terms of trade took a knock when the High Court ruled it does not apply when a customer was misled about a Bunning’s product when signing up.

The High Court dismissed Bunnings fast-track summary judgment application on a claim against builder Sunrise Management Ltd for some $202,300 after hearing evidence Sunrise was sold China-sourced shiplap vertical weatherboard after being told it was a New Zealand made product.  A ‘pay now, argue later’ clause should not apply where a customer signs up on the basis of a misrepresentation about the product sold, Associate judge Sussock ruled.

Zhaohui Liu, director of Auckland builder Sunrise, was approached by a Bunnings’ rep in 2019 encouraging a shift to Bunnings as supplier.  While completing Bunnings’ credit approval process, Ms Liu made enquiries about delivery of weatherboard cladding.  She made it clear she did not want a China sourced product.  She was told Pineclad is manufactured in New Zealand.  She ordered the product and Sunrise was invoiced for Pineclad.  In fact, a China sourced product was supplied.  Sunrise is suing Bunnings for about $300,000 being the claimed cost of replacing cladding on four houses.  Bunnings claims Sunrise was told of the product switch prior to installation. It sued Sunrise for its unpaid trade account, saying terms of trade required Sunrise to pay now and argue later.

Judge Sussock refused fast-track judgment.  Sunrise claims it signed up to Bunnings terms of trade only after being told the product was not sourced from China.  If the facts as claimed by Sunrise are substantiated following a full court hearing, it would not be conscionable to enforce the ‘pay now, argue later’ clause, Judge Sussock ruled.

Sunrise Management Ltd v. Bunnings Ltd – High Court (28.02.22)

22.048

Sanatan Sabha: Chand v. Chand

Without a validly appointed executive since 2018 and with membership split into two warring factions after convictions for gaming grant frauds, the High Court approved attempts by Manukau Sanatan Sabha to hold an informal meeting to chart the way forward.

Manukau Sanatan Sabha is an incorporated society based in south Auckland, promoting interests of Hindu members from the Fiji Indian community.  The High Court was told Society affairs have been dysfunctional for nearly five years. This followed an Internal Affairs investigation into misuse of gaming grant funding.  Five Society members and Manukau Sanatan Sabha itself were convicted in late 2018 following evidence of false quotes supporting funding applications and a failure to use money obtained for promised activities.  Two members, Rakesh Prasad and Pradeep Chand, were separately convicted for obstruction; encouraging individuals to lie when questioned by Internal Affairs investigators.  Subsequently, Sanatan Sabha’s affairs drifted along informally with no annual general members meetings held and financial statements filed late.  Society rules see terms of office for the Society executive expire each year.  With no annual members meeting held, no replacements were ever voted into office.

One member, Satish Chand, objected to Pradeep Chand informally handing over running of Society affairs in 2020 to Rakesh Prasad. Satish said Pradeep had no authority to do so and he challenged plans to call a special meeting of members. Satish Chand told the High Court there were concerns this unelected executive would sell Society assets.  He alleged ‘false accounts’ had been filed with the registrar of incorporated societies.  Unaudited accounts filed for the year ended March 2020 record Manukau Sanatan Sabha as owning three properties in Papatoetoe.  Satish Chand leases one of these properties.  Caveats have been registered against titles to Society properties, blocking registration of any sale.

Justice Fitzgerald ruled the proposed informal meeting of members should go ahead.  The Society had no validly appointed executive.  The proposed special meeting could make no decisions affecting Society activities other than propose a date for a formal general meeting of members to appoint a new executive.  Justice Fitzgerald warned the two opposing factions that the proposed special meeting had to be held in an open and transparent manner.  Aired in the High Court were suggestions there was no complete list of current members and allegations that factions were planning to ‘stack’ meetings with newly appointed members sympathetic to their side.

Chand v. Chand – High Court (28.02.22)

22.047

Estate: Connolly v. Eckhout

Karen Elizabeth Eckhout is under threat of arrest for contempt of court after failing to properly distribute assets from her late husband’s estate.

Dan Eckhout died in 2017.  What followed was an arm-wrestle over money between his third wife, 59 year old Karen, and a daughter from his first marriage, 50 year old Michelle.  Born in South Africa, Dan led an itinerant life working on oil rigs around the world. Dan had five children and a stepdaughter from his first two marriages.  Michelle was the only child to challenge Dan’s final will which left nearly all his assets to widow Karen.  With Michelle living on the Channel island of Guernsey and Karen now in Perth, West Australia, disputes over Dan’s will have been carried out long distance in the New Zealand courts.   

In 2021, the High Court ruled Michelle was entitled to $350,000 plus her legal costs in a successful claim under the Family Protection Act against her late father’s estate.  Michelle and her father had a close and mutually supportive relationship from when she turned eighteen, Justice Downs said.  Her father had offered financial support shortly before his death for her to purchase a home.

Karen was appointed administrator of her late husband’s estate after a South Africa executor named in Dan’s will declined to act. The High Court was told of difficulties in pinning down the extent of Dan’s assets.  There was a family trust, now controlled by Karen as surviving trustee, with assets of some $2.1 million.  The court was told this trust had been dissolved with Karen taking ownership of all assets.  These trust assets did not form part of Dan’s estate on his death.

Karen proved evasive in disclosing what assets Dan owned.  It took a court order to force disclosure.  In May 2021, Karen filed a statutory declaration stating she had received some $1.6 million of which $642,400 was held in a Commonwealth Bank account in Australia.  While declaring she held this money ready to hand over if Michelle’s claim was successful, Karen did not release any money.  It took further court orders before Commonwealth Bank handed over the funds. By then, there was only $4828 in the account.

Justice Campbell issued a warrant for Karen’s arrest.  Her non-compliance with court orders was flagrant, he said.  Execution of the arrest warrant was suspended for one month, giving her time to pay money due Michelle.  Karen is liable to pay in excess of $450,000; the court-ordered Family Protection claim plus all of Michelle’s legal costs to date.

Connolly v. Eckhout – High Court (1.04.21, 15.06.21 & 25.02.22)

22.044

Apartments: Body Corporate 210106 v. Apartment Owners

High Court assistance was needed to force sale of a twelve-apartment building in Auckland’s central business district after several owners refused consent.  Redevelopment potential of the land likely exceeded cost of repairs.

A 1950s warehouse in Edinburgh Street was refurbished in early 2000s and separate apartments sold off in a project branded as The Zone.  Weathertightness defects saw owners facing a repair bill estimated at between $7.5 million and $8.5 million.  Expert advice recommended owners sell The Zone in its entirety to a developer allowing the building to be demolished and the site redeveloped.  This proposal required unanimous consent from all current owners. Three owners refused to sign up. They offered no alternative proposal. Frustrated, The Zone body corporate applied to the High Court for approvals.

Justice Campbell ordered cancellation of The Zone’s current individual unit titles.  The building could no longer be safely occupied by owners and they could not afford to pay remediation costs.   

He also ordered sale of the owners’ resulting joint interest in the building.  Net sale proceeds are to be divided between each apartment owner.  Each apartment owner then has deducted from their share any outstanding body corporate levies and any mortgage secured against the apartment.

The High Court was told Edinburgh Street had been sold ahead of the court application with settlement conditional on court approval for cancellation of owner’s individual unit titles.  Online records show Edinburgh Street selling for $8.3 million in May 2021 and selling again for $11.4 million in June 2021.

Body Corporate 210106 v. Apartment Owners – High Court (23.02.22)

22.041

Insurance: Sneesby v. Southern Response

Having settled a Christchurch earthquake insurance claim against Southern Response in 2017 as ‘full and final’ settlement of all claims, John Sneesby could not later make a further claim supposedly on behalf of himself and some 9500 other people he says were underpaid.

Mr Sneesby says he was sold short in 2014 when Southern Response did not pay out his full entitlement under an AMI insurance policy. Government-funded Southern Response took over AMI Insurance earthquake liabilities when the sheer weight of claims meant AMI would shut up shop, insolvent.  Mr Sneesby says he is owed at least a further $6200.  This arose after a 2016 High Court case identified professional design fees should have been included in cash settlement payouts: Dodds Case.

Mr Sneesby mounted a class action, claiming in his name on behalf of all policyholders similarly paid short.  Southern Response told the High Court it has responded to the Dodds decision by offering a top-up to affected policyholders previously paid out.  It challenged Mr Sneesby’s right to bring a class action.

Associate judge Lester ruled Mr Sneesby did not even get to first base.  Mr Sneesby ended entirely separate Christchurch earthquake litigation against Southern Response in 2017, signing an extensive ‘full and final’ settlement agreement preventing any ‘further or other claim.’  Judge Lester said litigants can sign away rights and claims they are unaware of, provided the wording is clear.  The effect of the 2017 ‘full and final’ settlement was to bar Mr Sneesby from re-opening his earlier separate 2014 claim, Judge Lester ruled.

Sneesby v. Southern Response Earthquake Services Ltd – High Court (23.02.22)

22.042

 

Charity: re St John's College Trust Board

High Court approval was given for Anglican St John’s College Trust Board to write off loans totalling $14.85 million made to two Maori-Anglican schools in Hawkes Bay: Te Aute College and Hukarere Girls’ College.

In 2012, St John’s Trust provided financial support to avert the Schools’ closure.  Further funds were provided over following years.  A total of $14.85 million was advanced by 2020.  The schools are managed by the Te Aute Trust Board.  It was a condition of the loans that St John’s Trust be represented on the board of Te Aute Trust.  It was anticipated that Te Aute Trust would never be in a position to repay.

Legal issues arose when St John’s Trust decided to write off the loans.  There was a conflict of interest.  Trustees from the St John’s Board who are obliged to look after the interests of St John’s were also sitting on the Te Aute Board which would benefit from any loan write off.

St John’s told the High Court that the three St John’s trustees sitting on the Te Aute Board took no part in the St John’s Trust Board’s vote approving cancellation of Te Aute’s debt.  High Court approval was given to the cancellation.  The dual trustees did not vote; their abstention avoided a conflict of interest.

St John’s College Trust Board financial statements for the 2020 year record annual net income of $64.7 million, including capital gains of $46 million.

re St John’s College Trust Board – High Court (23.02.22)

22.043

Fraud: Singh v. R.

Being fired from his job and facing deportation are the natural consequences of involvement in a SIM-swapping fraud the Court of Appeal ruled, refusing a discharge without conviction for India national Jaswinder Jass Singh.

The court was told Singh acted as a ‘secondary mule’ in a mobile phone fraud in which phone users saw their SIM card hijacked and bank accounts accessed.  Fraudsters transferred funds to a bank account they controlled and then had secondary mules withdraw cash from these accounts.  On three occasions over two months, Singh withdrew $23,000 on behalf of fraudsters.  Singh said he was paid five hundred dollars ‘maybe once or twice’ for acting as a mule.

Singh pleaded guilty to fraud, asking for discharge without conviction.  In the District Court, he was sentenced to twelve months supervision and ordered to pay $23,000 reparations.  The reparations have been paid.  Immigration advised he was liable for deportation. He was told informally by an immigration officer that deportation might be averted if his conviction was overturned. The Immigration Act in fact allows for deportation even if discharged without conviction; decisions about deportation are based on the fact of offending, not on conviction.

Singh said his job with a NZ Post contractor was at risk. NZ Post prohibits contractors from employing staff with fraud convictions.

Singh v. R. – Court of Appeal (21.02.22)

22.040 

Advertising Hoarding: Freedom Ventures v. L'Estrange-Corbet

Disputes over access rights cannot be used for the collateral advantage of forcing approval to resource consent the High Court ruled in a dispute over access to install digital advertising on the side of an Auckland building.

Napier-based business Freedom Ventures Ltd owns a small 99 square metre site on Pitt Street in Auckland’s central business district. It earned income from a static billboard previously fixed to a wall on the southern boundary.  The neighbouring property is owned by a trust controlled by Denise L’Estrange-Corbet.  The High Court was told she refused access to install a digital billboard.  She was told it would be only a two or three day job and that there was resource consent for the work.  Ms L’Estrange-Corbet learnt from Auckland City there was no resource consent for a digital billboard and that an application was still under consideration.  Legal action followed.

Freedom Ventures sued under the Property Law Act claiming access through Ms L’Estrange-Corbet’s land to the boundary wall was needed since the wall was landlocked land.  Courts may order reasonable access.

Associate judge Sussock ruled it was too early to decide whether the wall was landlocked.  It only became a legal issue if and when Freedom Ventures had resource consent to install a digital advertising sign and was then unable to agree access with its neighbour.

The court was told progress on resource consent was on hold; Freedom Ventures had yet to pay required fees.  There is currently no billboard on the boundary wall.  The earlier static billboard was removed in March 2020 after Freedom Ventures cancelled its contract with the media company then managing static billboards.  Freedom Ventures has also learnt that its Pitt Street building is built over the boundary and encroaches on Ms L’Estrange-Corbet’s land.

Freedom Ventures Ltd v. L’Estrange-Corbet – High Court (18.02.22)

22.039

Legal Highs: Stewart v. Fatupaito

Liquidators for legal-high company Eversons have a Court of Appeal ruling forcing director Evan Stewart into court to explain what happened to some two million dollars withdrawn from Everson’s bank account days before a government law change prohibited sales of synthetic highs. 

Eversons International Ltd is in liquidation with Inland Revenue claiming $3.7 million.  The company’s tax accounts make reference to overseas investments totalling $6.5 million, overseas investments Mr Stewart denies any knowledge of. Liquidators questioned him in early 2021 at their KPMG office.  Mr Stewart denied knowing what Eversons offshore cash transfers were used for.  On further questioning, he said the company’s overseas investments had ‘flopped.’  When liquidators later identified an Australian solicitor who had supposedly received Eversons funds for onward investment, she told liquidators she was unaware of Eversons’ existence and did not act for the company.  Mr Stewart refused to attend any more meetings with Eversons’ liquidators. He challenged a High Court order that he attend at court for further examination about company operations saying one round of questioning by liquidators was enough and he did not have to answer any more.

The Court of Appeal ruled there was no policy reason why a court-ordered examination should not follow.  Mr Stewart had been un-cooperative at the earlier voluntary meeting with liquidators.  As sole director of Eversons, Mr Stewart would be expected to know what had happened to company assets, the court said.

The effect of a court-ordered examination is that a director can be forced to produce company books and records in court and is liable for perjury if questions are answered dishonestly. 

Stewart v. Fatupaito – Court of Appeal (18.02.22)

22.038

Construction: Dempsey Wood v. Concrete Structures (NZ) Ltd

Before having an enforceable construction contract ‘pay now’ claim, contractors must comply strictly with rules for submitting progress payment claims, the High Court ruled in a dispute over Concrete Structures (NZ) Ltd claim to $1.8 million for work on Auckland’s Whau bridge.

In 2020, civil engineers Dempsey Wood sub-contracted part of the Whau bridge construction in New Lynn to Concrete Structures.  All sub-contractors were subsequently required to submit progress payment claims to a given Dempsey Wood email address in PDF format.  This enabled progress payments to be easily processed through its finance system.  The High Court was told Concrete Structures had been already following this requirement but in addition had been forwarding an email copy to Dempsey Wood’s project engineer Dale Pickard.

In dispute was a $1.8 million progress claim sent only to Mr Pickard’s email address in late January 2021.  Unlike other previous progress payment claims, no copy was sent to the nominated Dempsey Wood email account.   Mr Pickard did not become aware of the email until early April.  In late January, he was busy working on a large KiwiRail project.  He was getting over one hundred work emails a day and went on leave days later.  On discovering the Pickard email, Dempsey Wood responded immediately to the $1.8 million claim, reducing the amount to what it assessed was due: $135,600.  It paid this amount and disputed payment of the balance.

Concrete Structures sued.  It said under the Constructions Contracts Act ‘pay now, argue later’ regime Dempsey Wood had to front up with full payment.  Dempsey Wood alleged Concrete Structures was gaming the strict ‘pay now, argue later’ rules by deliberately sending the email to Mr Pickard alone, predicting it would be overlooked.  Concrete Structures said failing to also email Dempsey Wood’s nominated account was just a mistake.

Associate judge Sussock ruled Dempsey Wood did not have to ‘pay now;’ it had grounds to delay full payment and to argue its case. The $1.8 million payment claim was not ‘received’ until delivered into the nominated company email account, Dempsey Wood argued.  And the progress payment claim sent to Mr Pickard’s email account was not ‘received’ until Mr Pickard actually opened the email in April, it further argued.

The Construction Contracts Regulations set out rules as to when emailed documents are deemed to have been received. Failure to respond promptly to a progress payment claim means the full amount claimed is immediately enforceable as a debt due.

Dempsey Wood Civil Ltd v. Concrete Structures (NZ) Ltd – High Court (17.02.22)

22.036

Construction: Palmer v. Hewitt Building

Fearing that Masterton builder Mark Hewitt was deliberately running down his home renovation business Hewitt Building Ltd as a ploy to avoid paying a $392,400 court judgment, Barbara Palmer forced him back into court to admit Hewitt Building was profitable and in a position to pay over time.

In June 2021, the High Court ordered Mark Hewitt personally pay $67,500 and his company separately pay $392,400 following the failure to complete a fixed price home renovation according to contract specifications.  His company Hewitt Building Ltd did not bother to defend the claim and Mr Hewitt defiantly told the court that his company had no assets to meet any damages claim.  Ms Palmer called his bluff.

In late December 2021, she had Mr Hewitt ordered into court to answer questions about his company.  Financial statements for the year ended March 2021 evidenced that Hewitt Building had earnings before interest and tax of some $250,000.  If it continued trading, the $392,400 court order could be paid over time.  Ms Palmer expressed concern that Mr Hewitt was running down his company’s operations, switching key staff and existing work across to a new company.  Associate judge Johnstone ordered Hewitt Building Ltd start making instalment payments at $8000 per month to Ms Palmer.

This instalment payment order reminds Mr Hewitt of his potential personal liability for the company’s debt.  If assets are stripped out of Hewitt Building making it unable to continue instalment payments, Mr Hewitt faces liability as director for actions leaving his company insolvent.

The court was told that Mr Hewitt had taken steps to pay Ms Palmer $184,000 being the June 2021 court judgment against him personally plus a substantial costs order he was subsequently ordered to pay.

Palmer v. Hewitt Building Ltd – High Court (17.02.22)

22.035

Family Trust: re Ruby Trust

Changes to trust law allowing all beneficiaries access to family trust details now has its expected consequence; a family trust in court asking certain beneficiaries be excluded from any distributions and details of court proceedings supressed and kept secret.

A 1980s Wellington family trust was first.  As part of the court suppression order, it was given a fictitious name: Ruby Trust.  Parents set up the trust to hold business assets; beneficiaries being their two daughters along with their spouses and children plus extended family members. Trustees have a wide discretionary power to allocate income and capital between beneficiaries.

The High Court was told one daughter disputed decisions made by trustees.  Deep divisions developed between members of the immediate family as to how Ruby Trust was operated.  The daughter sued.  All this took place outside the knowledge of extended family members who did not know they were also Ruby Trust beneficiaries.  As a further complication, two other family trusts were tied in with Ruby Trust.  After detailed discussions and negotiations between the one surviving parent and members of immediate family a proposal was hatched to deal with Ruby Trust assets: fifty per cent of all future distributions were to go to one daughter and her immediate family; forty per cent to a second daughter and her immediate family; and ten per cent to the surviving parent with this share going to the second daughter by default if she was no longer alive at time of distribution. The deal required all extended family beneficiaries be cut out of any future distributions.  They did not know of the deal being arranged.

In the High Court, Justice Gendall gave judicial blessing to the arrangement.  The agreement finalised a bitter family dispute between members of the immediate family, enabling them to get on with their lives.  The effect of deleting extended family beneficiaries was minimal, Justice Gendall ruled. They did not know they were beneficiaries.  Trustees were not expected to make trust distributions to them in any event.  When setting up Ruby Trust, the parents signed a ‘memorandum of wishes’ indicating they intended members of immediate family be primary beneficiaries.

re Ruby Trust – High Court (17.02.22)

22.037

Management Contract: Body Corporate S90876 v. Palmer Trading

Owners of unit titles at Aspen Villas in Taupo successfully challenged a long-term management contract set up by the Calvert family who redeveloped the property in 2001.

Property management contracts are a valuable asset, promising a regular income stream.  Government was forced to change the rules with effect from 2011 to stop property developers giving themselves favourable management contracts over apartment projects at the early stages of development and then either sitting pretty after onselling unit titles or selling the management rights and generating further profit from the development.

The High Court was told Aspen apartment owners objected to a long run management contract which left Palmer Trading Ltd, controlled by the Calvert family, with potential control over management of Aspen through to 2048.  They stopped paying Palmer Trading’s monthly invoices.  Aspen Villas operates as a seventeen unit motel.  By early 2022, unpaid invoices totalled $190,000 and management fees were accruing at some $6600 per month.

Palmer Trading was given the management contract in 2008, at a time when the Calvert family had majority voting control of Aspen’s body corporate.  This initial management contract was for a term of five years, automatically renewable for three further five year periods.  Justice van Bohemen ruled the contract was valid for five years only, being the first term ending in 2013.  Aspen Villa body corporate rules, as they then stood, put a limit on long-term contracts entered into.  It could not enter into contracts of more than five years duration.  Any decision to renew had to come back to the body corporate for a new vote.

Aspen Villa owners were left to sort out the downside consequences of Palmer Trading apparently having no right to charge management fees since 2013.

Changes to the Unit Titles Act, effective from July 2011, limited unit developers use of their voting control to set up favourable management contracts.  Terms must benefit unit owners, not management.  Contracts can be set aside if ‘harsh and unconscionable.’

Body Corporate S90876 v. Palmer Trading Ltd – High Court (10.02.22)

22.034

Debt: re Vey Group Ltd

A nearly five year campaign by Palmerston North director Leslie Fugle unsuccessfully challenging minority shareholder rights in a Wellington property company saw the High Court commenting that he would have saved himself hundreds of thousands of dollars if he had just bought out the minority at fair price from the outset.  

Minority shareholder claims that Vey Group owes them over one million dollars has been the major issue.  Vey owns an investment property in Wellington’s Webb Street.  Interests associated with Mr Fugle hold a majority interest.  The Orana Trust, representing Turvey family interests, was reduced to a minority stake after dissension within the Turvey family saw a partial sell-down of their holding in a forced sale.  At that time, Patricia Turvey was allied with Mr Fugle.  A series of court cases followed after Mr Fugle attempted to freeze out Orana Trust.  A court-ordered receivership was followed by a court-ordered liquidation.

The High Court was told Mr Fugle disputed the level of unsecured loans put into Vey Group by Orana Trust.  Arguments about the extent of this liability meant no price could be agreed in setting a figure for Mr Fugle to buy out Orana’s minority holding.  Meanwhile, redevelopment of Webb Street remained on hold.

Acting on court instructions, accountants analysed Vey Group transactions determining that Orana was owed $1.04 million.  This debt was accepted by Vey Group liquidators as a claim in the liquidation.  Mr Fugle was back in court, challenging the debt.  He variously alleged most of this money related to Turvey family tax arrangements unrelated to Vey Group but run through Vey Group’s books and that much of the money Orana put into the company was capital, not loans enjoying prior payment on liquidation.  Justice Mallon dismissed Mr Fugle’s attempt to overturn the liquidator’s decision.  He put up no evidence to support his claims, she said.  In contrast, the accountants had used source documents to verify as best possible the debt claimed by Orana Trust.  Receivers marked down Orana’s initial claim of a $1.3 million debt to a final figure of $1.04 million.

Justice Mallon also dismissed Mr Fugle’s claim that even if the $1.04 million was loaned to Vey Group the loans were ‘stale,’ payment being outside the Limitation Act six year period and were no longer recoverable.  Funds provided were either expressly repayable on demand or impliedly repayable on demand and the six year rule did not start running until demand was made, Justice Mallon ruled.  Orana Group made demand for payment in June 2018.

The court was told Mr Fugle has now taken one hundred per cent control of Vey Group by paying $200,000 to buy out Orana Trust’s 49 per cent holding.  The court-ordered liquidation has not been terminated.  Mr Fugle told the court he has funds in hand to pay out Vey Group creditors.  Orana Trust remains a Vey Group creditor for the sum of $1.04 million.

re Vey Group Ltd – High Court (2.02.22)

22.033