FMA: Lindeman Investment v. Financial Markets Authority

 

Financial Markets Authority power to intervene in capital markets does not make it guarantor of investors’ investments ruled the High Court, striking out a Du Val investor’s claim the Authority was responsible for its Du Val investment losses because of FMA’s engagement with Du Val before the property company was pushed into statutory management in 2024.

In 2022, Lindeman Investment Ltd, controlled by Karl Lindeman, invested two million dollars in a Du Val promoted mortgage fund offering a fixed ten per cent return.

It claims FMA ‘effectively approved’ a debt/equity swap offered to mortgage fund investors in early 2024 by the then financially struggling Du Val group, leaving Lindeman Investment holding worthless Du Val shares.  

Government-appointed statutory managers seized control of all Du Val group assets and the personal assets of Du Val founders, Kenyon and Charlotte Clarke, in August 2024.

Over the previous three years, FMA had found it necessary to demand correction and amendment of publicity material directed at prospective and current investors.

FMA’s main gripe has been that Du Val group was exploiting reduced disclosure rules permitted when offering securities to ‘wholesale investors’ while actively targeting naive ‘Mum and Dad’ investors.  Wholesale investors are presumed to be able to look after themselves when appraising potential investments.  Those investing more than $750,000 in an offered security are presumed to be wholesale investors.

In 2022, the High Court upheld FMA demands that specified Du Val advertisements be reworded and that a publicity video be taken down.

Lindeman Investment’s specific complaint was that FMA failed to adequately warn current Du Val mortgage fund investors like itself about the risks of swapping their status as creditors in the Du Val mortgage fund to become shareholders in the Du Val property group: a debt/equity swap.

The High Court was told of extensive negotiations between Du Val management and FMA from late 2023, with FMA demanding a rewrite of an information memorandum sent to investors offered the debt/equity swap.

Eventually, FMA was satisfied with the content of supplementary information Du Val provided to these investors.  FMA withdrew earlier threats to go public with its current concerns.

Lindeman Investments claimed this decision to make no further public comment amounted to ‘approval’ of the debt/equity swap as promoted by Du Val.  It claims information Du Val provided was misleading. 

FMA should pay compensation, it claims.

In the High Court, Justice Blanchard ruled FMA does not owe any duty of care to specific investors like Lindeman Investments.

FMA oversight of capital markets is to protect the integrity of the capital market generally, Justice Blanchard ruled.

FMA powers are not intended to protect specific investors, each having their own legal rights and personal concerns.

Doing so would have FMA acting as backstop insurer for every investor’s idiosyncratic investment decision, Justice Blanchard ruled.  That was never intended by parliament, he said.

Lindeman Investment Ltd v. Financial Markets Authority – High Court (11.07.25)

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Insolvent: Fenning v. Lexus Trustees

 

Creditors short-changed after debtor Warren Fenning set up an Insolvency Act part-payment scheme to avoid bankruptcy, then lost out again when a lawyer stole the money set aside for payment.

Back in 2019, Mr Fenning was being harried by creditors following collapse of his then print business.  Creditors were not impressed by his living the high life at a time when payments were in arrears.

He owed some $1.8 million.  Heartland Bank was his major creditor.

By now working as a real estate agent, he was concerned to avoid bankruptcy

A majority of creditors approved his Insolvency Act proposal promising each would be paid ten cents in the dollar, spread over three years, in full satisfaction of debts owed.

Funds were promised from Mr Fenning’s future real estate income, plus $50,000 coming from a family trust.

High Court approval was given, making the part-payment proposal binding on all creditors, preventing them suing for unpaid balances.

Payments to creditors were to be actioned through the trust account of Auckland lawyer Aaron Rodney Nicholls.  A total of $180,000 was paid into his trust account over a four year period.

Those setting up the part-payment scheme learnt later that Nicholls had been misappropriating client money for years.  He was struck off in 2024.

A Law Society audit found he had misappropriated at least $700,000 of trust funds, including money held for payment to Mr Fenning’s creditors.

The Law Society fidelity fund limits compensation for any one claim to $100,000.

It said no compensation would be paid Mr Fenning’s creditors until the part-payment scheme was reworked in the High Court.  It was difficult to identify exactly how much had been already paid to which of Mr Fenning’s creditors.

Mr Fenning’s creditors were asked to now agree that a pro-rata distribution of the $100,000 compensation, calculated on the original debt each had claimed, would amount to final payment.

Creditors agreed.

Justice Robinson approved the amended Insolvency Act scheme.

Fenning v. Lexus Trustees – High Court (19.11.19) & Noyce v. Lexus Trustees – High Court (10.07.25)

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Estate: re Estate Mary Tahuhu Edmonds

 

Identifying with the sovereign citizen movement and expecting to be addressed as dora-elizabeth-mary:house of edmonds, Dora Edmonds demanded she was the only person competent to handle her later mother’s estate, to the exclusion of two sisters named as fellow executors, leading the High Court to remove her as executor on grounds she intended to distribute her late mother’s assets contrary to terms of her will.

Mary Edmonds died in 2022.  Three years on, probate of her will was yet to be granted.  Daughters Dora, Rachel and Veronica are named as executors.

The High Court was told Dora’s interpretation of the will is disputed.  She refused to assist her sisters’ application for probate.

In dispute is one clause in Mary’s will which states her home on Vogel Street in Palmerston North is to be sold, the proceeds used to make specified cash gifts to Mary’s two sisters and further money used for specified improvements to properties on Maori land at Whangarei in which Mary has an ancestral interest.

The legal complication is that Vogel Street was sold nearly five years prior to her death.

At law, specific legacies to be paid out of specified property adeem if prior to death the property is sold and no longer forms part of the estate.  By implication, the specific legacy is revoked.

Regardless of this rule, Dora wants to see estate money used for the proposed improvements in Whangarei.

The court was told this would see estate money used for improvements to a property Dora currently occupies.

Dora claims that as sole executrix of their late mother’s will, and with the assistance of her ‘hapu native counsel,’ she would carry out terms of the will ‘to the letter.’

Justice McHerron granted probate of Mary’s will to daughters Veronica and Rachel, excluding Dora.

Dora’s motivation in seeking sole appointment is self-interest, with an intention to use estate funds to achieve a purpose that is no longer provided for in the will, he said.      

Complaints by Dora about distribution of their mother’s personal effects were dismissed.

Veronica and Rachel had made reasonable attempts to involve Dora in gathering up and dealing with their mother’s belongings, Justice McHerron said.  These assets were of minimal value and decisions were necessary to minimise storage costs, he said.

re Estate Mary Tahuhu Edmonds – High Court (9.07.25)

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Asset Seizure: Commissioner of Police v. Hansen

 

Police went too far in seeking court approval to pre-emptively seize vehicles from Auckland pensioner Brian Hansen without prior notice after Mr Hansen had previously been found not guilty of benefit fraud, the High Court ruled.

Police must first give notice of its court application, giving Mr Hansen a chance to respond, Justice Powell ruled.

Sweeping powers in Criminal Proceeds (Recovery) Act allow seizure of assets without any formal warning or prior notice where criminal activity is suspected and there is a risk that these assets might be disposed of or destroyed.

Seizure is a preliminary step; a later hearing determines whether confiscation is justified.

Such pre-emptive strikes require prior court approval.

Justice Powell was dismissive of police evidence that Mr Hansen was not to be trusted, likely to hide his Tesla, Mercedes Benz, Jaguar XJ, caravan and boat if given prior notice of plans to seize them.

The court was told Mr Hansen was found not guilty of benefit fraud in March 2025.

He is a 77 year old pensioner, living in Housing New Zealand property, where he cares for his adult intellectually disabled daughter.

The earlier unsuccessful prosecution followed allegations he fraudulently obtained benefits through a company he controlled, having this company claim payment for services caring for his daughter.  It was alleged this arrangement was a fraud, designed to circumvent a prohibition on parents claiming benefits for the cost of caring for their disabled children.

Criminal proceeds legislation allows seizure of assets obtained through criminal activity, even if no conviction follows.

Police suspect that the number of high value vehicles Mr Hansen owns must have been funded from illegal activities.

The power to pre-emptively seize assets must be carefully managed, Justice Powell ruled.  There is a risk of arbitrary and unfair action by the state.

There was no evidence of any risk that Mr Hansen would destroy or conceal the vehicles if notice of police application was served on him before a court hearing deciding whether seizure is necessary, he said.

Proceeding without prior notice in such circumstances would mean any citizen’s moveable property could be seized by the state without notice at any time, he ruled.

Commissioner of Police v. Hansen – High Court (8.07.25)

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Bequest: re Estate Helen Moeroa Snowball

 

A potential $20,000 bequest to a wayward son that disappeared out the front door following a court ruling, then re-appeared through the back door because of rules governing partial intestacies.

When Helen Snowball died in 2023 she left an unsigned will, the document incomplete as she was undecided about whether to leave any money to her son.

The High Court was told she had a difficult relationship with her only child, son Nootai.

At a time when she was running a taxi business, Nootai stole one of the taxis and sold it.  Her only regular contact had been Nootai’s arrival on her doorstep every two to three years demanding money.  Police were called on each occasion.

Her 2023 purchase of an Auckland home at Prangley Avenue in Mangere, ten months prior to her death, prompted advice from her lawyer about a will.

This purchase was registered jointly with her niece, Helen Tumu.  They took title as tenants-in-common in equal shares; meaning there was no right of survivorship, with the half share owned by each forming part of their estate.

The two had lived together since Ms Tumu was aged fourteen, with Ms Tumu later regularly providing household financial assistance.

Ms Tumu did not provide half the purchase cost for Prangley Avenue, but it was agreed that she would pay the mortgage and other outgoings.  This arrangement was recorded in a property sharing agreement.

Ms Snowball told her lawyer she wanted all her estate to go to her grand-niece, Ms Tumu’s daughter.  She is still a child.  Her name was suppressed by the court.

Ms Snowball’s lawyer cautioned about leaving nothing to son Nootai, indicating this might lead to her son later claiming against her estate.

A draft will was prepared leaving a $20,000 gift to Nootai; everything else going to her grand-niece, to be held in trust until she reached age 25.

When presented with this draft for signature, Ms Snowball prevaricated, saying she wanted more time to think about any gift at all to Nootai.

She died before any will was signed.

Using powers in the Wills Act, Justice La Hood approved as Ms Snowball’s final will the unsigned original draft, less the then proposed bequest of $20,000 to her son.

He withheld $20,000 from estate distribution, saying Ms Snowball had made a clear testamentary intention that her estate was to go to her grand-niece, but at time of her death remained undecided about destination of the $20,000.

Default rules in the Administration Act governing intestacies apply to distribution of this $20,000.

Ms Snowball had no husband or de facto partner.  Nootai is her only child.  He inherits the $20,000.

Evidence was given that the balance of Ms Snowball’s estate is valued at about $680,000.

re Estate Helen Moeroa Snowball – High Court (7.07.25)

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Off-shore Trust: Maiolini v. Fideis (New Zealand)

 

There is over twenty million euros at stake with the Maiolini family, living in Italy and the Emirates, claiming professional advisers have duped them, with family losing access to music royalty payments.  The High Court put receivers in control of disputed assets until ownership is resolved, with a legal chase to follow through the intricacies of trust law and international tax arbitrage.

It is alleged professional advisers in the Netherlands, Canada and Australia have milked trust assets for their own benefit, refusing to return control to the Maiolini family.

Giacomo Maiolini is the founder of Time Records and driving force behind Best Records and Riga Music.  In the 1990s, he took advice on international asset structures from Dutch national, Erwin de Ruiter.

The High Court in New Zealand was told details of Maiolini family asset holdings being frequently restructured over the following two decades.

In 2005, an offshore trust was set up in Caribbean tax haven, Nevis: the Riga Settlement Trust.

Mr de Ruiter controlled this Trust.  Royalties were diverted to the Trust.  Mr Maiolini’s signature was needed to operate the Trust’s Luxembourg bank account.

For those versed in the intricacies of international tax law, it is not surprising that no mention was made in Riga Trust documentation of Maiolini family members as settlor, trustee or beneficiaries.

The only named beneficiary was a childrens hospital in Brescia, Italy.

The trust deed did allow for later addition of further beneficiaries.

Complications arose after tax authorities in various jurisdictions around the world cracked down on use of tax havens.

By 2010, Nevis was included on a blacklist of non-co-operative jurisdictions.  Mr de Ruiter recommended trust domicile be shifted to New Zealand.

Assets were then transferred to a new trust established in New Zealand: Riga Settlement (NZ).

The Riga Settlement (NZ) trust deed made no mention of a childrens hospital in Brescia; in fact, there is no named beneficiary in the trust deed.

Mr Maiolini continued to control payments out of the new Trust’s Luxembourg bank account.

Further complications arose with Mr de Ruiter’s 2018 conviction and three years’ imprisonment in the Netherlands for tax fraud.

To distance the New Zealand trust from Mr de Ruiter when he was under investigation in the Netherlands, trust assets were again re-settled in 2015, with creation of a further new trust: Quinoa Settlement.  Architect of this further re-settlement was an associate of Mr de Ruiter, Canadian businessman, Earl Campbell.

Trust assets came to be controlled variously by Mr Campbell and Australian chartered accountant, Kieran Brush, acting through a corporate trustee: Quinoa Trustees Ltd.

The Maiolini family claim that when the Luxembourg bank unilaterally closed the Quinoa Settlement’s bank account in 2019, trust money came to be dispersed into bank accounts in Canada, Dubai, Monaco and also into client accounts with Morgan Stanley and Bank Edmond de Rothschild.

Mr Maiolini claims in the New Zealand High Court that the trio of Mr de Ruiter, Mr Campbell and Mr Brush are diverting trust assets to their own benefit.

Using Trust Act powers, Justice Blanchard put the disputed assets under control of receivers based in New Zealand, until ownership is resolved.

The High Court was told Maiolini family want the 2015 Quinoa Settlement declared null and void.

If successful, this will see trust assets reverting to the prior trust: Riga Settlement (NZ).

This could result in assets then reverting to the Maiolini family.  They claim there is a written ‘statement of wishes’ on record identifying them as ‘hidden’ beneficiaries of the Riga Settlement (NZ) trust.

Maiolini v. Fidelis (New Zealand) Ltd – High Court (4.07.25)

25.152

Trust: Doig v. Kahia

 

With trustees failing to account for trust money received, making payouts in cash with no receipts, and some enjoying personal loans with no obligation to repay; Lisa Doig as beneficiary of a Taupo Maori trust called trustees to account.  The Maori Land Court ordered a meeting of all beneficiaries, with the Court indicating removal of trustees and orders for repayment is in the offing.

The Alice Kahia and Rawiri Kahia Hapeta Whanau Trust is unusual in having a narrower range of beneficiaries than is common for a Maori trust holding substantial assets.  Beneficiaries are direct descendants of Alice and Rawiri.

The full extent of trust assets is not a matter of public record, but the Trust holds shares in Contact Energy and has interests in land situated near both Turangi and Rotorua.  Annual income exceeds $99,000.

The Trust was established in 1995.  There are currently eight trustees.

In 2021, beneficiary Lisa Doig asked the Maori Land Court for a full review of Trust operations.  Her questions have gone unanswered by trustees since 2003. 

A court-ordered investigation found little or no supporting documentation for payments made by trustees, plus evidence of some trust revenue being paid directly into trustees’ personal bank accounts.

There was evidence of some trust transactions being agreed by sub-sets of trustees, without the knowledge and approval of other trustees.

Also of concern was evidence of at least three current trustees having previously borrowed trust funds with no apparent obligation to repay.  In addition, some trustees have received grants with no record of the amounts given, why the grants were made, or who approved payment.

All current trustees, in some way, have breached their trustee duties, Judge Warren said.  These failings went beyond technical breaches of the law, he said.

If whanau choose a trust structure to manage their assets, then they must comply with trust law rules, he said.

Lack of accounting records meant an audit could not be completed.

Judge Warren was critical of trustees not responding to Ms Doig’s requests for information.

A court-ordered meeting of Trust beneficiaries was ordered.

Judge Warren asked beneficiaries to advise whether current trustees should be removed, who might be suitable replacements and whether current loans to trustees should be written off, or repayment terms imposed.

While he will be guided by beneficiary views, Judge Warren made it clear he is not bound by their decisions.

He ordered all trust funds be frozen pending a final decision.

Doig v. Kahia and others – Maori Land Court (3.07.25)

25.151

Liquidation: Khov v. Waitotara Farms

 

With relationship property claims stalled in the Family Court, Linda Smiley joined court-appointed receivers having the High Court wind up an Ohinewai farming company.  She alleges former partner Keith Stark is colluding with others to drive down the value of relationship property.

Calculation of her relationship property entitlements depends, in part, on final distribution of Keith Stark’s late father’s estate.

There have been complaints about Keith’s management of a seventy hectare Waikato farm, still part owned by his late father’s estate.  Loans Keith owes the estate are also in dispute.

Last year, the farm was valued at between $2.6 million and three million dollars.

Estate assets have been under control of court-appointed receivers since 2023.  They told the High Court a recent attempt to sell the farm failed, with Keith trespassing real estate agents from the property.

What followed was an allegedly bogus offer to buy, from an individual suspected to be allied with the ‘sovereign citizen’ movement. 

So-called sovereign citizens deny the state has any control over their lives, putting up pseudo-legal arguments which purport to separate their state-registered name from their personal sovereign existence.  A tenet of their beliefs is that they are not bound by government rules.

Ms Smiley told the High Court she suspects Keith Stark is colluding to drive down the farm sale price, affecting her relationship property claim.

Evidence was given that occupiers of a residential property on the farm are suspected to have links to the sovereign citizen movement.

The High Court was told receivers handling Keith Stark’s late father’s assets had found it impossible to reach agreement on winding up the estate.

Central to the dispute is Waitotara Farms Ltd.  The estate is a minority shareholder in Waitotara Farms.

Keith Stark and Linda Smiley are the two directors.  Any Waitotara decision requires their joint approval.

Receivers’ previous attempt to force sale of farming assets by putting Waitotara Farms into liquidation was put on hold with Keith and Linda jointly agreeing to support plans for sale of the farm.

This agreement led to an October 2024 mediation agreement, signed by all parties, setting out a process for sale.

The High Court was told Keith then deliberately obstructed access.  A scheduled auction was cancelled.

With receivers’ liquidation application then renewed, Keith alleged the receivers ‘continued to exceed their authority,’ were running up excessive bills, were making false and misleading statements and were blocking payment of his wages.

He asked liquidation be delayed, enabling him to get legal advice, and to belatedly file a statement of defence.

Associate Judge Sussock ordered Waitotara Farms Ltd into liquidation immediately.  It was ‘just and equitable’ that liquidation take place, enabling sale of farm assets and distribution of Keith’s father’s estate.

She dismissed claims by Keith that liquidation was not necessary.  He had found a buyer for the farm, he claimed.

There were doubts about the substance of this offer.

There was no deposit payable.  There was a one month ‘due diligence’ clause, with no obligation to buy.  The buyer’s financial circumstances were unknown.

Receivers said the offer was no better than a free option, leaving open the opportunity to come back later and negotiate down the offer price.

Evidence was given that the offer to buy was in the name of an individual who is part-owner of a Huntly property used as the contact address for a non-existent court, oft-named in sovereign citizen pseudo-legal demands: the Royal Crown Court of Equity in Exchequer.

If it was intended to make a bona fide offer for the farm, such an offer can be made now to the liquidator, Judge Sussock said.

Khov v. Waitotara Farms Ltd – High Court (1.07.25)

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