Subdivision: Buchanan v. Buchanan

 

It took threats of legal action to have Lesley Buchanan agree to family plans for subdivision of their Wanaka property.  The High Court subsequently ordered she carry out her part of the deal after she tried to leverage changes by refusing to pay an initial $90,000 share of subdivision costs.

In what was described as a long-running and acrimonious family dispute, Neil and Graeme Buchanan have been frustrated by sister Lesley’s actions in delaying subdivision of 1.5 hectares they jointly own on Beacon Point Road.

Only after High Court action was filed seeking a court order for partition of the land between all three did Lesley agree to discussions.  A settlement agreement followed.

In 2020, this agreement was filed in the High Court, resulting in what lawyers call a Tomlin order; the agreement becoming enforceable as if it were a court order.

The High Court was told interaction between Lesley and her two brothers had become so acrimonious that the agreement included a ‘ring-fencing’ provision: a neutral outsider was appointed to carry out the now agreed subdivision, with power to call for periodic payment from all three siblings for shared contributions to subdivision costs.

Family trusts controlled by brothers Neil and Graeme are now in court challenging their sister’s refusal to pay the first call on payments.  Their neutral appointee wants some money in the bank to pay contractors’ first invoices before subdivision work starts.

Lesley refused to pay.

She wants changes made to their subdivision plan, increasing slightly the share she will receive.  This is needed to improve access, she claims.

She also demands her brothers contribute to cost of constructing a further vehicle crossing on to what will become her separate property.

Associate Judge Lester ruled she has to comply with terms of their prior agreement.  If this written agreement does not correctly record what was agreed, she has to come back to court with the necessary proof, he said.

Lesley’s attempt to unilaterally fire their neutral appointee was ruled invalid.

Lesley was ordered to pay her $90,000 share of a first tranche of payments.

She is defying terms of their settlement agreement, just to get her own way, Judge Lester ruled.  

Because of her behaviour, Lesley was ordered liable to pay her brothers’ full legal costs incurred enforcing their subdivision agreement.

Buchanan v. Buchanan – High Court (9.05.25)

25.115

Forestry Rights: ADM International v. Kiwi Forests

 

With litigation spanning the globe, Swiss-based ship charterer ADM International Ltd failed in its Fair Trading Act claim it was misled as to the value of forestry rights in New Zealand offered up as security for two ship charters. New Zealand litigation failed because ADM never checked wording of publicly available documents.

ADM International is suing to recover unpaid hire charges totalling USD 1.2 million after British Virgin Islands charterparty Golden Shine Management Ltd defaulted on two ship charters in late 2022.

The High Court in New Zealand was told this dispute is currently subject to both litigation and an arbitration in the United Kingdom.

ADM negotiates up to three thousand ship charters every year.  A sister company undertakes due diligence on proposed charterers, with a quick 24 hour turnaround usually required on the credit-worthiness of potential customers.

Golden Shine did not get quick tick.  ADM needed more information.  After getting some extra information it required extra security.

ADM accepted as further security, New Zealand forestry rights registered in the name of Golden Shine NZ Ltd, itself ultimately owned by British Virgin Island interests.   

When it came to the crunch, ADM found these forestry rights were of little value.

It sued Kiwi Forests Investment Ltd, who granted the forestry rights, claiming status of the security had been misrepresented.  ADM alleges there is a common ownership buried within all three companies: Kiwi Forests, Golden Shine and Golden Shine (NZ).

In the High Court, Justice Blanchard stated full due diligence would have identified what the forestry right amounted to.

These rights were created after Kiwi Forests 2015 purchase of 2,300 hectares of Wairarapa forestry.

It partnered with Golden Shine (NZ) to manage carbon credits associated with the forest.

Terms of their agreement were set out in 2017 contract.

It is not mandatory to register forestry agreements on title to land.  But Climate Change Response Act requires registration where there is an agreement to manage carbon credits.

Golden Shine (NZ)’s forestry right was registered.  As is the norm, title registration consisted of a short notation on the land register maintained by Land Information, with a reference number identifying the transaction.

Again, as is the norm, the 2017 contract setting out terms of this registered forestry right was filed with Land Information, available for public inspection.

Kiwi Forests could not be considered acting in a misleading and deceptive manner when full details of the supposed security were available for public inspection, Justice Blanchard ruled.

Those undertaking land title searches are aware short notations on a title are not a full description of rights granted; underlying documents often need inspection.

ADM International SARL v. Kiwi Forests Investment Ltd – High Court (9.05.25)

25.114

Bankruptcy: Seven Brews v. Flavell

 

Proof is required, not promises.  Graeme Pierre Flavell was bankrupted on a $51,500 debt owed liquor wholesaler Seven Brews Ltd with the High Court unmoved by Mr Flavell’s claim that given time he could pay off the debt.

The Seven Brews debt followed court action taken against Mr Flavell.  It refused an offer by Mr Flavell to make payment by instalments; an upfront payment of $2000 with monthly payments of $1500 to follow.  It would take at least three years to clear the debt, if payments were made as promised.

The High Court was told Mr Flavell has been making instalment payments to other creditors, while refusing to make any payment to Seven Brews unless it agreed to the deal on offer.

Mr Flavell told the court he had ‘current’ major creditors owed $85,600.

He claimed work prospects looked good, with his current employment in food manufacturing.  Bankruptcy would hamper overseas travel as part of this job, he said.

Bankrupts are prohibited from leaving New Zealand, but may travel with consent of Insolvency Service.

Associate Judge Paulsen decided little weight could be given to Mr Flavell’s claims to potential sources of cash sufficient to pay his debts.

Mr Flavell claims to be owed $86,500 by a company called Equinox New Zealand Ltd.

Equinox is in liquidation, insolvent.  Mr Flavell provided no evidence that Equinox liquidators had accepted from him a proof of debt, or whether Equinox’ creditors are likely to receive any payment.

Mr Flavell provided no evidence of his current employment, and no evidence of any surplus income from this job being potentially available to pay down past debts.

Insolvency Service has power to have bankrupts pay down part of pre-bankruptcy debts out of current income.  This requirement will accommodate Mr Flavell’s expressed wish to pay present debts out of future income, Judge Paulsen indicated.

Seven Brews Ltd v. Flavell – High Court (7.05.25)

25.116

Bankrupt: Wenzhou Hongliang v. Williams

 

With Insolvency Service about to close the file on bankrupt Gerald Norman Williams, unpaid creditor Wenzhou Trading had the High Court order a further investigation into Williams’ business affairs alleging he was living off assets he managed to shield from creditors.

Mr Williams automatic discharge from bankruptcy was to have been triggered on 24 November 2023, three years from the date he engaged with Insolvency Service after creditor Wenzhou Hongliang Trading Co Ltd forced him into bankruptcy.

One day prior, Wenzhou halted this automatic discharge, asking the High Court for a further investigation into Mr Williams’ financial circumstances.

Wenzhou is based in China.  It was stung in 2010 after an importation of infant milk powder went sour.  Mr Williams was one of three directors controlling a New Zealand company exporting this milk powder to China.  The product was rejected on arrival; labelling did not comply with local regulations.  Wenzhou lost the $306,000 paid in advance of shipment.

With Mr Williams’ New Zealand company in liquidation, Wenzhou funded a successful legal action by liquidators against all three directors.  Ordered to pay $900,000, two directors settled with Wenzhou.  Mr Williams did not contribute.

In 2020, Wenzhou bankrupted Mr Williams. 

Insolvency Service told the High Court it has spent some $62,400 in chargeable time investigating Mr Williams financial position, finding no assets available to pay creditors.

Mr Williams, now aged 77, was described as now retired, living solely off his pension.

Wenzhou said further investigation is needed; in particular, earlier dealings surrounding a Drury subdivision in South Auckland and sale of a property at Papamoa in the Bay of Plenty.

Wenzhou alleges profits wound up in the hands of Mr Williams’ family trust.

In the High Court, Associate Judge Taylor suspended the automatic discharge, ordering Insolvency Service carry out a more detailed investigation into Mr Williams’ financial affairs.

Wenzhou complains that Insolvency Service has failed to follow up on a 2021 court ruling requiring interests associated with Mr Williams hand over $575,000; funds arising from the Drury subdivision diverted from Mr Williams’ pocket at a time when he was insolvent.

Wenzhou Hongliang Trading Co Ltd v. MSUT Trustee Ltd – High Court (11.11.21) & Wenzhou Hongliang Trading Co Ltd v. Williams – High Court (2.05.25)

25.113

Canam Construction: Miedema Family Trust v. Petrou

 

Directors Loukas Petrou and Stephen Jones were ordered to pay $513,400 damages to Mark’s and Julie’s Miedema Family Trust for wrongly extracting cash from a Canam Construction Tauranga subsidiary part owned by the Trust at a time when the two directors were up to their neck in an unconnected Canam commercial arbitration over costs on the then troubled Auckland apartment build for Auckland Trotting Club at Greenlane’s Alexandra Park.

In 2022, the arbitrator held a Canam Construction subsidiary liable to pay Auckland Trotting some $85 million.

While preparing for this arbitration, Canam’s Bay of Plenty operations were of peripheral concern to Messrs Petrou and Jones.  But Bay of Plenty was a major concern for Canam Construction (BOP) Ltd’s minority shareholder, Mark Miedema and his family trust’s 33 per cent shareholding.

The High Court was told Mr Miedema had been lobbying for some time to have a substantial dividend paid by Canam (BOP); cash needed to purchase a family home.  No dividend was forthcoming.

Eventually, Mr Miedema took his trade skills elsewhere; taking employment with a rival construction company.  Many of his staff followed, leaving Canam (BOP) without staff and no ongoing work.

The legal dispute that followed saw Miedema Family Trust suing both Mr Petrou and Mr Jones, alleging they were party to a scheme stripping cash out of the company.

After a two week High Court hearing in late 2023, Justice Anderson ruled the two personally liable for charging overhead costs of some $2.3 million to Canam (BOP), depriving the company of resources otherwise available to pay a dividend.

Evidence was given of the Canam group operating a centralised accounting system with revenue and expenses for all subsidiaries, including Canam (BOP), passing through one bank account: the ‘treasury account.’

Each financial year, ‘head office’ costs were pro-rated across the various subsidiary companies in preparation of annual financial statements.

Mr Miedema complained a large $2.3 million ‘head office’ charge levied against Canam (BOP) on his departure from the company was in breach of the Companies Act as ‘oppressive behaviour’ by a majority shareholder.  This sum was well in excess of previous annual overhead charges.

Messrs Petrou and Jones argued that while there was a prior agreement that Canam (BOP) would not be levied its fair share of overhead expenses during its start-up period, it was agreed that reduced charges would be recovered over time.

No overhead charge was levied Canam (BOP) for its first three years.  Charges for the next three years were well below costs of head office support, they said.

The $2.3 million taken was part of the agreed catch-up, they argued.

Justice Anderson ruled there was no evidence of any catch-up agreement.

It was ‘oppressive behaviour’ affecting Miedema Family Trust as minority shareholder to later impose these increased charges, she ruled.

The two directors were ordered to pay $513,400 damages: the tax free equivalent to Trust beneficiaries of the Trust’s 33 per cent share of a notional $2.3 million dividend paid to Canam (BOP) shareholders; with this share then notionally taxed again in hands of the Trust.

To avoid ongoing clashes, Justice Anderson ordered the Trust’s shareholding in the now worthless Canam (BOP) Ltd be transferred to Mr Petrou and Mr Jones for a token one dollar payment.

But that was not the end.

Both sides were subsequently back in court claiming each side should pay the other’s legal costs and expenses.  Calculation was made difficult by the fact Miedema Family Trust abandoned some of its initial claims and lost others, while still being awarded $513,400 damages for its successful claim.

The net result: Messrs Petrou and Jones were ordered to pay the Trust a further $94,300; a contribution towards its legal costs.

The Trust claimed $507,500 in litigation fees and expenses.

Miedema Family Trust v. Petrou – High Court (31.10.24 & 1.05.25)

25.112

Mortgagee Sale: Bank of India v. Gupta

 

Partly constructed buildings left abandoned are the most difficult to sell in a mortgagee sale; a point accepted by the High Court when dismissing Herschel Gupta’s complaint that Bank of India failed to properly market a mortgagee sale of his failed South Auckland townhouse development. 

Mr Gupta was defending liability to Bank of India on a guarantee given in late 2021 for a $4.8 million loan to his property development company Kauri Investments Ltd.  There was a $2.1 million shortfall when Bank of India sold up the unfinished development in 2024.

Mr Gupta demanded the amount due on his guarantee be reduced; the Bank had failed to comply with Property Law Act requirements to take reasonable steps to get the best price, he claimed.  The Bank had sold the property hastily, at a knock down price, he said.

Kauri Investment’s initial purchase three years previously at $4.79 million was a better guide as to market value, he claimed. 

The Bank engaged Ray White Real Estate in Takanini for its mortgagee sale.

Ray White properly tested the market, Associate Judge Paulsen ruled.

It carried out a five week marketing campaign.  The property was listed on TradeMe and One Roof.  Flyers were distributed.  Details promoted on social media.  Signage placed on site.

At auction in April 2024, there were eight registered bidders; six active bidders.

The highest bid was $3.3 million.  The Bank accepted this bid, withdrawing its initial reserve set at $5.1 million.

The townhouses sold were not complete: they had been vandalised; one was damaged by fire.

The court was told abandoned commercial sites are always difficult to sell.  Purchasers cannot clearly assess what extra work is needed to complete construction.  Past vandalism indicates further vandalism is likely.  Obtaining insurance prior to settlement is difficult.

Mr Gupta’s claim current market value to be around $4.9 million was dismissed.

Prices from 2021 did not reflect a drop in market prices over the subsequent three years, Judge Paulsen said.

And the suggested $4.9 million did not itself reflect a true market price as at 2021; it was the price set in a related party sale between two companies, both controlled by Mr Gupta.

Mr Gupta was ruled liable to pay $2.1 million due on the Bank guarantee.

Bank of India v. Gupta – High Court (30.04.25)

25.110

Trust: Huang v. Chen

 

Renovate or sell: a decision splitting trustees of Auckland’s North Shore Bread of Life Christian Church, currently occupying a two storey commercial building purchased with adherents donations of over $1.5 million.  Refusing to intervene, the High Court ruled this is a commercial decision.

The building on Apollo Drive in Rosedale was purchased some eight years ago after nearly two decades of fundraising.  Intent was to renovate the building, creating an auditorium accommodating three hundred worshippers.

The High Court was told initial plans proved unworkable: in part because of cost; in part because of economic consequences following covid-19 pandemic lockdowns.

The six person board of trustees is split 50/50 over future plans.

Trust rules allow the chair to exercise a casting vote.  The two factions dispute who has been validly appointed as chair.

Each faction has legal action underway seeking to remove members of the other faction from the board of trustees.

The rift is compounded by the current pastor’s employment status.  Pastor Chen is one of the trustees.  There is an ongoing employment dispute over his position and his remuneration.

One faction, including Pastor Chen, want to see the building sold, or at least fully leased to a commercial tenant, with the proceeds used to lease a new building for Church activities.

The original purchase was funded, in part, by mortgage.  Donations from Church members are paying down this mortgage.  They question why their donations, intended to have their Church have ownership of its own land and buildings, should now be used to fund a business leasing commercial properties.

Being part of the second faction, they want to see the building retained, with a scaled down version of initial renovation plans, accommodating a smaller congregation.  Building consents have been obtained.

Differences are so entrenched that the two factions now hold separate church meetings.

Membership has declined.

With trustees deadlocked, the faction in favour of renovation asked the High Court give Trust Act approval for work to proceed.

Justice Anderson declined their application.  The Church is in a poor financial position, she said.  It is for trustees to make a commercial decision about the viability of their various options.

Justice Anderson was told trustees collectively have considered bringing in an independent advisor to assist.

Huang v. Chen – High Court (30.04.25)

25.111

Reckless Trading: Batley v. MacDonald

 

Hamilton builder John MacDonald was ordered to pay nearly $290,000 to two customers after what the High Court described as his dishonest conduct in having his building company extract deposits from them for new builds never completed.

Mr MacDonald’s claim to be a victim of circumstances with covid-19 lockdowns causing his building company to fail in 2021 was dismissed by Justice Wilkinson-Smith.  His company was trading insolvent for years prior to the pandemic.

Mr MacDonald deviously extracted deposits from these two customers just prior to liquidation, immediately using this money to meet both personal and company debts at a time when his business had been trading whilst insolvent, she ruled. 

The High Court was told Mr MacDonald was director and sole shareholder of John S MacDonald Builders Ltd.

In September 2020, his company agreed to build a new home in Cambridge for a Batley Family Trust.  Trustees signed a standard-form Registered Master Builders Contract agreeing to pay a $115,000 deposit.  This contract states the deposit can be used only to pay costs of their build.

Evidence was given of the trustees being asked to sign three weeks later what was represented as being a duplicate of their earlier contract.  What was presented as a duplicate had one critical alteration; their deposit did not have to be held in trust against payment of construction costs.  

They later learnt their money had already been siphoned off to meet other company debts and to pay Mr MacDonald’s personal expenses, including renovations at his family home.

Concrete footings for their new home were poured before work stopped with Mr MacDonald putting his company into liquidation.

The Singh family suffered a similar experience.  Trustees of their family trust paid a $172,500 deposit in late 2020 for construction of two residential units in Hamilton.

Initial agreement was for a fixed price contract, with no deposit required.

Mr MacDonald then pressed for an increase in price.  A compromise was reached; no price increase, provided a $250,000 deposit was paid in advance by instalments.

The Singhs never paid the full $250,000; they paid no further instalments beyond initial payments of $172,500 concerned when there was no sign of construction starting.

As with the Batleys, their deposit was never returned, dissipated in payment of sundry personal and business MacDonald debts.

Justice Wilkinson-Smith ruled Mr MacDonald personally liable to repay the deposits received by his company.  The company’s two customers were left as unpaid unsecured creditors.  Mr MacDonald had traded recklessly, having his company incur further liabilities at a time when it was insolvent and creditors unpaid.  This was a breach of Companies Act director’s duties.

Justice Wilkinson-Smith signalled she intended to order Mr MacDonald pay in full all legal costs incurred by the Batleys and Singhs in bringing their claim to court.

They had a strong claim, she said, not helped by Mr MacDonald fighting to the end and then stating at the last minute that he would not appear in court to defend their claims.

Indemnity costs orders are necessary to disincentivise defendants from prolonging hopeless proceedings until litigation fatigue or increasing costs forces plaintiffs to give up, she said.

The Batleys and the Singhs were invited to file in court full details of litigation costs incurred, with Mr MacDonald given an opportunity to challenge the amounts claimed.

Batley v. MacDonald – High Court (28.04.25)

25.109

Corporate Restructuring: McKay v. Bartlett

 

Entrepreneur Doug Bartlett was ordered to pay $361,000 damages following a 2015 restructuring of his nascent ‘Fun Cart’ business manufacturing shopping trollies which saw control of business assets shifted across to a new company without payment.

His commercial dream was to have major retailers across the United States use his product; a plastic moulded trolley, allowing a child ensconced inside to be separately entertained whilst an adult roamed supermarket aisles loading produce onto the upper deck.

The High Court was told his company Aisleworx Ltd needed further equity finance in 2015 after initial capital was chewed up dealing with production problems and remedying faults in the carts’ electronics.

In receivership for two years from 2017, and in liquidation since 2020, insolvency specialists have been struggling to unravel Aisleworx’ finances.

Evidence was given of Aisleworx flying on a wing and prayer; dependent almost entirely on Mr Bartlett’s entrepreneurial zeal, manufacturing contacts and business connections.

Proper financial reporting was all but non-existent, with management accounts later being reworked by Aisleworx’ liquidators in an attempt to identify the company’s financial position.

A claim by initial investor PG Admin Ltd to be owed USD 3.4 million was disallowed by Aisleworx’ liquidator.  She accepted PG’s claim in the liquidation for USD 284,000 only.

PG is controlled by Auckland-based Kerrin Harrison.

PG Admin spearheaded High Court litigation in 2023 claiming Mr Bartlett was personally liable to pay USD 3.4 million, alleging breaches of a multitude of director’s duties.

All claims were dismissed.

In an unusual move, Justice Jagose kept the case open, suggesting PG Admin reformulate its claim to concentrate on what he called the ‘real controversy:’ Aisleworx’ 2015 restructuring which saw control of Aisleworx’ assets pass to a newly-formed US subsidiary, without payment.

In evidence, Mr Bartlett admitted that at time of the 2015 restructuring Aisleworx was insolvent.  It had run out of money and was unable to meet its payroll.

New investors in 2015 demanded a separate corporate vehicle be set up to continue the now re-capitalised business.

Mr Bartlett breached his duties to Aisleworx by transferring control of business assets, both tangible and intangible, across to this new company, without payment, the High Court held.

To determine appropriate compensation, Justice Jagose indicated the best he could do is rely on the much-criticised accounting information in existence at 2015.

Mr Bartlett was ordered to pay $361,100.

Justice Jagose ruled this compensation be paid to Aisleworx Ltd, now in liquidation, insolvent.  In addition, Mr Bartlett is liable for interest payable from 2015 to date payment is made.

McKay v. Bartlett – High Court (22.12.23 & 17.04.25)

25.108

Construction: Arnerich v. DHC Assets Ltd

 

More than a decade after Antony Arnerich’s Vaco Investments sold a newly constructed West Auckland commercial building customised for incoming tenant ASB Bank, he is arguing the toss over damages claimed by DHC Assets for construction cost overruns.  Lack of coherence between an earlier arbitration and later litigation in which Mr Arnerich was ordered to pay $1.18 million to DHC has led to two separate High Court hearings and now an almost-conclusive Court of Appeal ruling.

DHC Assets Ltd signed up with Mr Arnerich’s Vaco Investments (Lincoln Road) Ltd in 2011 to build the two-storey commercial building.  DHC has seen multiple changes in shareholders and directors over the last decade, but one continuing presence as director has been Clearwater Construction’s Mike Sullivan. 

DHC’s main complaint is that Mr Arnerich transferred cash out of Vaco Investments to family interests at a time when payments due under its construction contract were not finalised.  Mr Arnerich subsequently put Vaco Investments into liquidation.

Vaco sold its completed building in April 2013 for $8.4 million, with $2.3 million then transferred to Mr Arnerich, family members and his family trust.

Mr Arnerich fiercely contests much of what DHC claims is still due.

In 2019, the High Court ruled Mr Arnerich liable for breach of director’s duties for extracting cash from his company when the full extent of company liabilities was not yet sorted.

He was ordered to pay DHC some $367,000; the amount Vaco was ordered to pay DHC after an earlier Construction Contracts Act arbitration.  At the arbitration, DHC claimed it was owed $1.08 million in total.

What followed was multiple High Court hearings and subsequent appeals seeking to identify what DHC was owed.

The Court of Appeal ruled their arbitration provisional only; contractual claims not covered by the arbitration could be litigated.

With default interest in their construction contract for late payment running at 12.4 per cent compounding monthly, damages claimed began to escalate substantially.

With Vaco Investments now in liquidation, DHC argued Mr Arnerich personally was liable for these extra payments; if his company couldn’t pay, then the amount should be added to his personal liability for breaching his duties as a director, it said.

Prolonged litigation has seen argument over what costs are, or are not, covered by their contract and how interest is to be calculated.

Mr Arnerich personally is liable to pay DHC $1.18 million, the Court of Appeal ruled.

A subsidiary issue was payments by ASB to Vaco Investments for contract variations carried out during the build, at ASB’s request as incoming tenant.

It was agreed Vaco would pass these payments on to DHC; part of a side deal standing outside the main contract.

ASB paid in full for its contract variations.  Not all payments were passed on.  This is a debt still due to DHC.

If both sides cannot agree on the extent of ASB payments yet to be passed on, it is back to the High Court said the Court of Appeal.

Arnerich v. DHC Assets Ltd – Court of Appeal (9.04.25)

25.107

Bankruptcy: Makele v. Tugaga

 

In Kafka’s novel The Trial, Josef K is forced to defend himself against an authoritarian regime with no knowledge of the allegations he faces.  A far cry from our liberal democracy, where those appearing before a judge must be told.

Facing a High Court bankruptcy hearing, Fiona Tugaga argued, unsuccessfully, that the hearing could not go ahead because she had not been given prior notice.

The High Court did not believe her story that she was not the person served with court papers.

The bankruptcy application was brought by former tenant Rob Makele, enforcing a $21,200 Tenancy Tribunal order.

Evidence was given that Mr Makele’s process server handed a bankruptcy notice to a woman at Ms Tugaga’s home in August 2024.  These Insolvency Act notices are precursors to bankruptcy applications.  Bankruptcy follows if the claimed debt is not paid.

Four months later, the same process server served formal notice of a scheduled bankruptcy hearing on the same woman at the same address.

He said in evidence that on each occasion the woman receiving the documents acknowledged that her name was Fiona Tugaga.

The process server pointed to Ms Tugaga in court, saying this was the person served on each occasion.

Ms Tugaga said that at both times she was at her sister’s place.  The process server must have been speaking to her gardener, she claimed.  She had never seen the documents, Ms Tugaga said.

She produced eftpos receipts indicating she was with her sister or shopping each time the process server was at her place.

Associate Judge Cogswell questioned credibility of the eftpos evidence; the receipts produced were from two separate eftpos cards, neither being a card owned by Ms Tugaga.

He questioned why Ms Tugaga’s sister was not called to give evidence of their supposed meetings.

Judge Cogswell ruled the bankruptcy papers validly served.

A bankruptcy hearing was timetabled for five weeks later.

Such hearings are vacated if the debt is paid.

Makele v. Tugaga – High Court (9.04.25)

25.104

Rent Review: A&H Kumeu Ltd v. Kumeu Playschool

 

The maths went well beyond any understanding expected of infants at Kumeu Childcare, but Childcare’s interpretation of how rent increases should be calculated was mathematically incoherent, the High Court ruled.

Harinder Bedi’s company A&H (Kumeu) Ltd, trading as Kumeu Childcare, operates in West Auckland.  As tenant, it disputed landlord calculations for rent increases post-2022.

Kumeu Childcare argued for a 2.2 per cent rent increase supposedly achieved by calculating a percentage of annual percentage changes in the CPI.  The correct calculation required assessment of the percentage increase in raw index figures.

As it turned out, Kumeu Childcare in fact incorrectly applied the incorrect formula it championed; if its incorrect formula was applied as Kumeu Childcare intended, it would be in for a 22 per cent rent increase.  This figure is markedly more than the 7.2 per cent increase demanded by its landlord’s correct formula. 

Media coverage of price inflation (or rarely, deflation) concentrates on any percentage change in index figures since the last reporting period, be it quarterly or yearly.  Left unreported, is the index change; the raw figures representing price changes over the period chosen, be they up or down.

Confusion between the two was at the heart of the Kumeu rent review dispute.

An annual rent review clause in Kumeu Childcare’s lease allowed rent to increase by the ‘amount of the proportionate increase in the consumer price index.’

Their rent dispute went to arbitration, with the arbitrator agreeing with the landlord: prices making up the index had increased over the 2022 year by 7.2 per cent.

In the High Court, Kumeu Childcare argued this calculation was fundamentally wrong.  The word ‘proportionate’ in their lease required an assessment of the percentage difference between the published annual percentage change at end of year 2021 (being a 5.9 per cent change over the previous year) with the percentage annual change at end 2022 (being 7.2 per cent).

Not so, ruled Justice Becroft.

The arbitrator’s calculation correctly relied on raw figures in the index, resulting in a new annual rental of some $307,000.

A&H (Kumeu) Ltd v. Kumeu Playschool Ltd – High Court (9.04.25)

25.106

Maori: Te Pou Matakana v. Maori Development

 

Appeals to Treaty rights by a West Auckland social services provider linked to John Tamihere were dismissed by the High Court as simply a commercial complaint about loss of a near decade long contract.  The replacements?  One new contract went to an Auckland based health provider with links back to the late Dame Tariana Turia; a second to a provider linked to Ngati Toa.

Supported by John Tamihere as one of its patrons, Henderson-based provider Te Pou Matakana Ltd had future funding cut off after a government decision to re-tender contracts.

Te Pou is better known as Whanau Ora Commissioning Agency, providing what it describes as wrap-around social services for at-risk families.

Te Pou is owned 88 per cent by National Urban Maori Authority; nine per cent by Waipareira Trust.

Earlier this year, government confirmed tenders for new six-year contracts, running from July 2025.

Contract for northern part of the North Island went to National Hauora Coalition Ltd, an umbrella organisation consisting of primary health providers.  Representatives of Ngati Toa were awarded a contract for North Island’s southern regions.

Te Pou sued, seeking to prevent government signing any new contracts, alleging a failure by government to comply with principles of the Treaty of Waitangi.

Te Pou claims it was the better applicant.  The provider network available to the new contractors is markedly inferior to its own network, it claims.  It argues that disruption which will follow from a change of provider puts government in breach of its obligations to vulnerable whanau under the Treaty.

Justice Boldt ruled there was no merit in Te Pou’s attempts to review government policy.  He refused Te Pou’s application to appeal his decision to the Court of Appeal.

The tight time frame allowed the two new contractors to set up business operations militated against inevitable delays caused by a further appeal, he ruled.

Te Pou Matakana Ltd v. Maori Development – High Court (9.04.25)

24.105

Asset Seizure: Commissioner of Police v. Karetu

 

An insight into how gangs extort funds through intimidation surfaced in a Hawkes Bay proceeds of crime application with police evidence of Mongrel Mob gang members levied to attend a tangi and threatened with fines and a beating if they failed to attend.

This evidence followed police investigations into activities of Mathew Philip Karetu, described as national president of the Barbarians chapter of the Mongrel Mob.  In December 2023, he ordered members attend and contribute fifty dollars each to an upcoming tangi.  Those failing to attend were threatened with a $1000 fine and a beating. 

This evidence was put before the High Court as part of a Criminal Proceeds (Recovery) Act asset seizure application after police found in October 2024 about $76,700 cash in a bedroom occupied by Mr Karetu at a half-way house in the Auckland suburb of Manurewa.

This facility accommodates people released from prison.  Mr Karetu was on electronically monitored bail at the Grace Foundation half-way house, with a 24 hour curfew.

Justice McQueen ordered the cash restrained for twelve months, pending further police action.

The court was told Police had earlier seized $70,000 cash in a March 2024 search at a property rented by Mr Karetu and his partner.

Police allege Mr Karetu is implicated in distribution of methamphetamine valued in excess of $1.5 million.

Commissioner of Police v. Karetu – High Court (7.04.25)

25.103

Benefit Fraud: Commissioner of Police v. Hart

 

Social Development cannot piggy-back on Police powers when investigating benefit fraud, the High Court ruled.  It must follow its own statutory investigation procedures.

Demonstrating some clever lateral thinking, Social Development staff hit upon using High Court rules which allow limited public access to court documents in order to search through some 1990 pages of evidence in an affidavit filed by Police in the Rotorua High Court; part of a proposed Criminal Proceeds (Recovery) Act profit forfeiture application sought by Police against four named defendants.

These High Court access rules are most commonly used by journalists seeking detailed background from court files for news stories, or genealogists seeking to open a long-closed divorce file held since the days divorce required a High Court application.

Social Development wanted to take advantage of affidavit evidence derived from the stronger powers of investigation allowed Police in tracking down ill-gotten gains.

It suspected the lengthy affidavit filed by Police would have information assisting its own benefit fraud inquiry.

Police did not object to disclosure.  Pane Jasmin Hart, one of the four defendants, did object.

Having been forced to attend a judge-ordered police interview under the Criminal Proceeds (Recovery) Act, Mr Hart said he had no right to silence.  Failure to answer police questions would lead to criminal prosecution.  Generally, answers given in a Criminal Proceeds examination cannot be used in any subsequent trial.  But Police can use this information to uncover other evidence which can be used at trial.

Mr Hart said it was contrary to the fair administration of justice for information extracted under compulsion for one purpose to be used by Social Development for a different investigation, an investigation where he does have a right to remain silent.

Social Development is given extensive information gathering powers by the Social Security Act, Justice Blanchard said.  The orderly administration of justice is better served by Social Development using its own statutory procedure, and with it, the beneficiary safeguards built into its code of conduct, he ruled.

Commissioner of Police v. Hart – High Court (3.04.25)

25.102