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

Maori: Sycamore v. Rangatira E Development

 

With beneficial owners kept in the dark about land development proposals, together with trustees’ failure to hold regular annual meetings, their failure to prepare annual financial statements and failure to comply with a court order to elect a further trustee, the Maori Land Court ordered current trustees of a Taupo’s Rangatira E land trust stand down from office.

Allan Sycamore, one of Rangatira E Development Trust’s 3500 beneficial owners, called current trustees to account.  He controls a 0.96 per cent beneficial interest.

Rangatira E owns 994 hectares of Maori land off Acacia Bay Road in Taupo.  The land has substantial commercial potential.

The four current trustees have been in office for some time: James Alexander Wilson (since 1982), Reima Hall (1999), Susan Smith (2003) and Gloria McLaughlin (2004).

The Maori Land Court was told a trust requirement for annual meetings had been ignored, with trustees holding just four annual beneficiary meetings in the last fourteen years.

Until prodded by the court, no financial statements had been produced since 2018.  Subsequently, annual financial reporting was brought up to date.

Judge Coxhead commented that while the Trust has been operating well, and trustees have not been dilatory in paying themselves remuneration, there had been a complete failure to properly report on a regular basis to beneficiaries.

Some beneficiaries complain they are being kept in the dark about the outcome of negotiations with Taupo Council about future development of their land.

Evidence was given of some Trust activities being contracted out to a company owned by trustee Gloria McLaughlin; the company receiving payments totalling more than $70,000 in the 2021 financial year.

Rangatira E must have five trustees, according to its trust deed.  The four current trustees were criticised for not taking steps to have a replacement trustee elected following a 2019 death of the then fifth trustee.

To ensure a much-needed beneficiary meeting is held, Judge Coxhead deputised court staff to arrange an annual meeting of Rangatira E beneficiaries, to be held within the next four months.

Current trustees are to stand down at that meeting, he ruled.  They may stand for re-election.

Trustees are not to finalise any agreements with Taupo Council prior to this meeting, Judge Coxhead said.

Sycamore v. Rangatira E Development Trust – Maori Land Court (2.04.25)

25.100

Family Trust: FMI Building v.Li

 

The High Court allowed payment of beneficiary living expenses out of a frozen family trust bank account over top of allegations by unpaid creditor FMI Building that the Li family’s Oka Tree Family Trust was part of a scheme designed to cheat creditors.

Lin Li is bankrupt after his company failed.  Auckland-based building supplier FMI Building Innovation Ltd is chasing him for over $1.2 million, a company debt Mr Li personally guaranteed.

To protect its position, FMI Building got a High Court order freezing all assets of Mr Li, his spouse Xi Shen, and their family trust Oka Tree.  

FMI Building alleges Mr Li is shifting all his assets out of creditors’ reach.

The High Court was told Mr Li transferred a South Auckland property to Oka Tree in September 2024, just days after he received a demand from FMI Building calling for payment on its guarantee.

Some two weeks later, Mr Li sold a second South Auckland property with net proceeds of some $200,000 transferred to his mother-in-law in China.  Repayment of her loan, he said.

In addition, Mr Li and Ms Shen signed a Property (Relationships) Act agreement around the same time stating the two South Auckland properties were Ms Shen’s separate property.

The validity of all these transactions is disputed.

Meanwhile, Mr Li asked the High Court to release funds from Oka Tree’s frozen bank account to meet household expenses and legal fees.

Evidence was given that funds frozen in New Zealand then totalled about $151,000.

FMI Building objected to any release.

The bank account is a Trust asset.  The Trust does not have any living expenses, it said.

Mr Li has provided no evidence of insufficient funds within the family to pay current living expenses, FMI Building said, particularly in light of the $200,000 remitted offshore to family in China.

Justice Venning said High Court Rules allow release of frozen funds to meet ordinary living expenses.  A broad interpretation of these Rules allows release of family trust assets to meet beneficiary living costs, he ruled.

Reimbursement of $60,100 was allowed for living costs and legal fees incurred.

FMI Building Innovation Ltd v. Li – High Court (2.04.25)

25.101

Investment: Commissioner of Police v. Hua

 

Acting on friends’ advice, Min Hu lent $61,400 to currency exchange remitter Ye Hua expecting to profit from FX trading.  Her money is now trapped, along with funds totalling some $1.5 million owed fourteen similar investors, following a High Court restraining order freezing all Ms Hua’s assets as proceeds of crime on her conviction for laundering proceeds of drug dealing.  

The High Court was told about $4.5 million is held frozen.  It is estimated Ms Hua laundered some $27.5 million.  She is currently in prison. 

Police acknowledge that Ms Hu appears to have been innocently caught up in Ms Hua’s illegal activities and is likely owed $61,400.  Ms Hu lent money to Ms Hua in two tranches in 2018 and 2019, being promised a ten per cent return on her investments.

Ms Hu is not entitled to be paid her $61,400 immediately out of the $4.25 million held frozen, the High Court ruled.  She stands as an unsecured creditor of Ms Hua, amongst sundry other creditors, including Police with a Criminal Proceeds Recovery Act claim, all seeking to recover from the frozen fund.

Ms Hu had lent the money to Ms Hua for her to invest as she saw fit.

Ms Hu’s investment could not be traced to any one specific account or investment.  Police gave evidence that Ms Hua had access to multiple third party bank accounts in both New Zealand and China, which she used as conduits for money laundering.

Ms Hu’s best avenue for any recovery is to give evidence at a later profit forfeiture hearing in support of her claim for a share of the $4.25 million currently frozen, Justice Wilkinson-Smith said.

Commissioner of Police v. Hua – High Court (1.04.25)

25.099

Defamation: Zhu v. Chen

 

Zhen Chen set out to discredit Wanli Zhu by saying she is just a paid front acting on behalf of the Chinese Communist Party whilst masquerading as an activist critic.  Ms Zhu claimed these comments are defamatory, part of an orchestrated campaign intended to destroy her credibility after she published details of criminal charges in the US brought against a critic of the Chinese government.

In the High Court, Ms Zhu was awarded $150,000 damages for defamation.  Mr Chen did not defend the claim.    

Ms Zhu came to New Zealand from China in 2003, becoming a New Zealand citizen five years later.

She describes herself as a political commentator and whistle-blower, calling out dishonest behaviour.  This led her You Tube channel to expose details of self-exiled Chinese businessman Guo Wengui’s prosecution in the United States for investment fraud.  He is associated with an organisation called Himalaya Farm Alliance.

She claims Himalaya Farm members are simply presenting themselves as a dissident group for financial advantage.  She reported to Financial Markets Authority what she described as illegal financial activities by New Zealand members of Himalaya Farm.

Ms Zhu told the High Court members of an Auckland branch of Himalaya Farm then stepped up a programme of harassment, naming her as a paid spy of the Chinese Communist Party.  A protest was held outside her then Hamilton home.  A leaflet drop was made across her suburb.  Derogatory comments were tweeted, and re-tweeted.  She and her family were threatened.

Evidence was given of financial loss suffered: paid subscriptions to her You Tube account dropped from a previous high of 22,400; her Hamilton home was sold quickly at below market value when her family shifted address.

She identified Mr Chen as one of those making derogatory and threatening comments under the moniker Bluesky.  She described him as a self-employed business owner.

Awarding damages, Justice Wilkinson-Smith ruled it was defamatory to state Ms Zhu was a paid spy for the Chinese Communist Party who was dishonest and cheated on her taxes.

Zhu v. Chen - High Court (1.04.25)

25.098

Health Data: Te Whare Hauora v. Health Support Systems

 

Lack of an industry standard for storage and transfer of personal health data complicates provision of primary health care, giving data storage companies leverage in maintaining existing contracts.

Patient data does not fit into one tidy computer file.  Linked to a patient identifier can be doctors’ notes, specialist reports, scans, x-rays, allergy alerts and a list of medications prescribed.

If this data were stored in the cloud, any authorised medical professional could access records held on an individual patient.

The norm is for competing private sector data management companies to provide bespoke storage and access for health sector clients.  It is not in their commercial interest to allow easy transfer of these records; an issue faced by Waikato primary healthcare provider Te Whare Hauora O Raungaiti Trust, based in Waharoa.

The High Court was told Hamilton-based Health Support Systems Ltd provided a practice management system for Te Whare.  In 2021, Te Whare gave notice, terminating the contract.  It has been battling ever since to have patient data transferred.

No agreement has been reached over a format for data transfer.  Health Support says data transfer is available only in ‘flattened’ format.  This potentially cuts links to individual patient files, damaging the utility of information transferred.

Transfers in any other format would breach intellectual property rights held in the ‘indici’ trademarked file management system it is licensed to use, Health Support says.

It came out in evidence that Health Support uses an indici data management system provided by Dublin-based Valentia Technologies.  Ironically, Valentia touts its indici data storage system as being a world-leading cloud-based system.

Health Systems told the court Te Whare is using Medtech Ltd as its new provider; a direct competitor to Valentia, it says.

Associate Judge Sussock declined Te Whare’s application for fast-track summary judgment ordering that Health Systems copy across all Te Whare’s data in native format without modification.

A full court hearing is necessary, she ruled.  Interpretation of data transfer rules in their contract requires a detailed investigation as to what would be the understanding of a reasonable person having all the relevant background knowledge available at the time their contract was entered into, she said.

Te Whare Hauora O Raungaiti Trust v. Health Support Systems Ltd – High Court (1.04.25)

25.097