Mount Maunganui-based Jorge Arizaga and Coromandel supplier Erion Figueiredo are disputing whether a joint venture exists in their argument over who paid for what in a $10.7 million project developing a 45 hectare kiwifruit orchard at Pakaraka, near Kawakawa in Northland.
The High Court was told Mr Arizaga initially planned to establish an avocado orchard. On the advice of Mr Figueiredo, plans switched to kiwifruit. Starting with purchase of the first block of land in 2020 by Mr Arizaga’s company Agrotrust Ltd, costs began to accelerate: three million for the first block of land; one million dollars for a neighbouring property in order to get access to water for irrigation; nearly four million dollars for cost of materials and labour to establish the orchard and then nearly three million dollars for windbreaks.
Other than cash put in, project financing came from vendor mortgages on the properties purchased and from Mr Figueiredo billing only half the costs for labour and materials his business provided converting a former dairy farm to an orchard.
From the outset, there was an ill-defined understanding that this would be a joint project. Mr Figueiredo says each were to pay half of set-up costs and operating costs, splitting profits 50/50. Mr Arigaza says there was agreement only as to the future possibility of a joint venture. A joint venture agreement signed in late 2020 was conditional on a raft of requirements including agreement as to contributions to date made by each. No agreement was reached. The joint venture agreement collapsed. There are allegations that Mr Figueiredo’s companies overcharged for work done; he says he undercharged.
In a preliminary High Court hearing, Associate judge Sussock confirmed Mr Figueiredo’s registration of a caveat over the orchard land. The land is owned by Agrotrust Ltd, Mr Arizaga’s company. Mr Figueiredo has an arguable claim to an interest in the land, she ruled. Work done by his companies increased the land value. Mr Arizaga says there is no joint venture and that Mr Figueiredo has no greater status than as supplier of labour and materials. The court was told legal proceedings are underway to sort out who owes whom what. Meanwhile, the caveat blocks any further transactions involving the land.
Erlon Ltd v. Agrotrust Ltd – High Court (12.08.22)
22.141