A USD123 million judgment against Sir Owen Glenn’s Kea Investments was obtained by fraud the High Court ruled, curtailing attempts by entrepreneur Eric Watson in league with Australian resident Ken Wikeley to tie up Kea’s legal team in expensive litigation at a time when Kea is struggling to recover GBP129 million an English court ordered Watson pay Glenn.
In 2018, Kea Investments successful sued Mr Watson in the United Kingdom for fraud in relation to their earlier joint investments. He did not roll over and pay up. Mr Watson served time in jail for contempt of court following his initial failure to hand over business records.
Four years later, Kea Investments was surprised to receive a letter demanding payment of USD123.7 million, supposedly court-ordered damages for breach of contract. A Kentucky court had ruled Kea Investments was in breach of a joint venture agreement with Ken Wikeley’s family trust, described as the 2012 Coal Agreement. Kea had no knowledge of any such agreement and had not taken part in any Kentucky court hearing. It was told notice of the proposed hearing had been sent to Kea’s office in the British Virgin islands.
Kea had to move smartly. Wikeley’s family trust was looking to seize cash in Kea’s bank accounts.
Attempts to get a rehearing in Kentucky failed. Kea had notice of the hearing, but failed to turn up, the court said.
Kea sued in New Zealand, where Wikeley Family Trustee Ltd is registered.
It alleged Mr Watson conspired with Mr Wikeley, using fraudulent Kentucky litigation and threats to wind up Kea Investments in order both to get information about Kea’s assets and to frustrate Kea’s attempts to recover money as ordered by United Kingdom courts.
Justice Gault ruled the supposed 2012 Coal Agreement was a forgery.
There was evidence of the agreement being a ‘cut and paste’ photocopy of sundry other documents. Page numbers were not sequential. Terminology and currency amounts were not consistent throughout the document. Circumstances of Mr Watson’s signature as witness to the agreement raised suspicions.
Kea Investments had no record of any negotiations prior to the 2102 agreement despite clauses in the agreement making reference to a prior feasibility study and due diligence.
A US lawyer with expertise in the mining industry gave evidence that terms of the 2012 agreement were non-sensical. Kea was supposedly committing to pay substantial annual ‘royalties’ for the next twenty years regardless of whether any project got underway. Kea was also agreeing to loan at least USD75 million to Mr Wikeley for twenty years at three per cent.
There was never any demand for payment of the stated annual royalties over the nine year life of the supposed contract prior to the Kentucky litigation, Justice Gault commented.
Justice Gault ruled the Kentucky judgment was obtained by fraud. The 2012 agreement was fictitous. He imposed a world-wide order blocking attempts by Wikeley’s family trust to enforce the Kentucky court judgment.
Kea was ruled entitled to recover all its legal costs.
Evidence was given that Mr Wikeley previously attempted to avoid any adverse ruling from New Zealand courts by changing residence of his family trust to Kentucky and by assigning benefit of the Kentucky court judgment to a newly formed company having as its place of business a ‘virtual office.’ Justice Gault ruled these moves invalid and of no legal effect.
Kea Investments Ltd v. Wikeley Family Trustee Ltd – High Court (17.11.23)
24.015