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)

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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)

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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)

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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)

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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