Asset Forfeiture: Commissioner of Police v. McMillan

 

Claims by travel broker Jitesh Mistry that his $50,000 payment six years ago to now convicted drug dealer Kenny Leslie McMillan was a part of a legitimate business scheme to import cars cut no ice with Justice Boldt, refusing Mr Mistry’s application for repayment out of McMillan assets seized as proceeds of crime.

In 2021, McMillan was sentenced to 18 years imprisonment on charges of methamphetamine supply.  All his assets were seized as part of a Criminal Proceeds (Recovery) Act application, later sold to pay down a court ordered profit forfeiture order.

While McMillan protested that Police grossly exaggerated profits made, a $2.7 million profit recovery order remains outstanding.

McMillan claims he was simply part of a chain couriering drugs through the North Island.  Police allege he was a wholesaler.

In 2025, Jitesh Mistry applied for payment of $50,000 plus interest out of cash realised from sale of McMillan’s assets.  This was a loan made to McMillan, remaining unpaid, he said.

Mr Mistry provided Police with written loan documentation dated March 2019 setting out a $50,000 on demand loan with interest payable at one per cent.

In court, Mr Mistry said he had been acting as a travel broker for McMillan since 2014.  A casual conversation identified their common interest in cars.  The loan was part of an agreement to go into business importing damaged cars from Australia, he said.

McMillan admits he received $50,000 from Mr Mistry.

Justice Boldt described the supposed business arrangement as implausible.

Mr Mistry could provide no details of how their business relationship progressed.  Mr Mistry claimed at time of the loan he did not know where McMillan lived, or of any further business interests McMillan held.  There was no further documentation, beyond the loan.

A loan expressed at one per cent interest did not fit with Mr Mistry’s claimed profile as a savvy investor; putting funds on deposit at a bank would have obtained a better return.

Justice Boldt ruled the loan document was not genuine.

Mr Mistry’s application for repayment was dismissed.  He was ordered to contribute towards Police costs incurred responding to his claim; payment of $1700 ordered.

Commissioner of Police v. McMillan – High Court (12.02.25 & 20.05.25)

25.120

Mortgagee Sale: Lau v. Silver Harbour Capital

 

Investors supporting a failed South Auckland property development have returned to China, leaving in their wake a claim against financier Silver Harbour Capital for lost profits totalling $29 million.  The High Court put this claim on hold, until they pay legal costs up front as security should they lose.

One on One Property Development Ltd, owned by Jiankang Li, secured funding from Silver Harbour Capital Funding Ltd in 2021 for a 120 lot subdivision planned at Murphys Road, in Flatbush.  With subsequent further advances, borrowing eventually totalled $17.5 million.

Auckland-based Silver Harbour is a conduit for property finance advanced by private lenders.

The High Court was told One on One defaulted on its loan.  A total of $12.8 million was recovered in a 2024 mortgagee sale, leaving a $7.3 million shortfall.

Just prior to its mortgagee sale, Silver Harbour was surprised to find a caveat lodged against title to the land by a Mr Ee Kuoh Lau, also known as Augustine Lau, claiming to have a fifty per cent equity interest in the development.

This was the first Silver Harbour had heard of Mr Lau’s existence and his supposed involvement.  Legal action followed, removing his caveat from the title, enabling a mortgagee sale to proceed.

Mr Lau, Mr Li and One on One subsequently sued Silver Harbour alleging Silver Harbour’s director Roger Su had made misleading promises about refinancing, causing One on One to abandon potential alternative options.

They also allege Silver Harbour sold the property at an undervalue.  The buyer is associated with Silver Harbour, they allege.

Evidence was given that while One on One is a New Zealand registered company, it no longer has any apparent commercial presence in the country.  Chartered accountants listed as the company’s registered office say One on One is no longer a client.  Mr Li has apparently returned to China.

Mr Lau was bankrupted in 2024, for the second time, having been discharged from a prior bankruptcy three years previously.

Insolvency Service disclaimed, as having no commercial value, all legal rights claimed by now bankrupt Mr Lau against Silver Harbour.

In the High Court, Justice Blanchard barred Mr Lau from continuing with his claim against Silver Harbour unless he first gets an Insolvency Act court order allowing him to continue legal action in his own name.

Separately, both One on One and Mr Li were blocked from continuing their claim until first putting up $36,000 security to cover Silver Harbour’s initial legal costs.

Lau v. Silver Harbour Capital Trustee Ltd – High Court (19.05.25)

25.119

Family Trust: Everiss v. Long

 

Having a family trust own business assets allows considerable dexterity in distribution of taxable profits, but has led to arguments between descendants of John Everiss, now aged 86, with grandson James challenging both prior distributions made by trustees and the manner in which commercial properties and heavy equipment owned by the Trust are now being distributed.

Everiss Family Trust had a net worth of some $7.1 million as at March 2023.

Just over half that is heavy equipment and machinery owned by Wellington-based Everiss Contractors Ltd and Everiss Civil Ltd, companies owned by the Trust.

Other Trust assets are primarily two commercial properties, plus receipts from property sales.

The High Court was told what was intended in late 2023 as an orderly distribution of Trust assets between two branches of the family has descended into huge family row.

Everiss Family Trust was set up in 1992.  As was common at the time, all and sundry were named as beneficiaries: children and spouses of John and Barbara Everiss, plus grandchildren and their spouses, and greatgrandchildren.

A 2023 deed winding up the Trust intended an equal split between two branches of the family: the Everiss side represented by son Brent, who is now deceased, and the Long side by daughter Keryn.

It is not a division of cash.  It is a distribution of assets.

The deed allocated to Brent’s son James a sixteen per cent share, valued at some $1.4 million.  James’ complaint is that he received what he describes as a vacant gavel yard valued at about $900,000 and some ‘faulty equipment.’

Subsequent investigations initiated by James have queried a pattern of past distributions where James alleges grandfather John improperly received Trust benefits amounting to some $1.3 million, despite not being a beneficiary.

James sued for removal of the trustees, alleging breach of trust.  He wants the High Court to review the manner in which Trust assets are distributed.

Ten weeks prior to a scheduled court hearing, the Long side of the family joined the fray; bringing a separate claim against both James and the trustees, claiming participation in the trial as interested parties.

James alleges this late claim is merely ‘a last minute attempt to create as much noise and confusion as possible.’

None of these disputed claims and counter-claims have yet to be heard.

Meanwhile, Justice Grau rescheduled the hearing date to 2026.

Both patriarch John and members of the Long family need more time to prepare, she ruled.

Everiss v. Long – High Court (14.05.25)

25.117

Fraud: Pearson v. Commonwealth of Australia

 

After a five year battle to avoid extradition, financial adviser Marion Joan Pearson now faces charges in Perth alleging she misappropriated about AUD four million from clients; 136 charges of stealing property received by a person holding power of attorney. 

In 2015, Australian Securities and Investments Commission permanently banned Pearson from Australia’s financial services industry.

Charges cover the period 2009 to 2013 and her operation of fourteen client accounts.

In New Zealand, the Court of Appeal was told she returned to New Zealand in 2013.  She returned to Australia briefly one year later to answer questions from ASIC, before leaving permanently for New Zealand.

She has resolutely challenged attempts by Australia authorities to force her return, appealing a 2019 extradition order.

Ms Pearson says her health and financial circumstances mean it is better that pre-trial procedures be dealt with remotely, having her respond from New Zealand to pre-trial procedures in Australia.

Judges in both the High Court and Court of Appeal said this is impracticable.  She may not co-operate.  Or if she did co-operate, and Australia authorities then set a trial date arranging for witnesses to attend, she may at the last minute choose not to attend.  This would require Australia authorities to re-start extradition procedures.

Ms Pearson was ordered to surrender for extradition, or face arrest and forced extradition.  She has previously surrendered her passport.  She has been on bail since 2019.

Her application for name suppression was dismissed; publication would not cause ‘extreme hardship.’

Name suppression criteria are no different for extradition cases, the Supreme Court ruled.

Pearson v. Commonwealth of Australia – Court of Appeal (16.09.24) & Supreme Court (13.05.25)

25.118

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

Insider Trading: Huljich v. R.

 

Court of Appeal doubled Peter Huljich’s Pushpay Holdings insider trading fine to $200,000, expressing concern the trial judge was unduly lenient when sentencing business executive Huljich for insider conduct in relation to a 2018 sale of Pushpay shares; unduly lenient both to the level of the fine imposed and Huljich’s further sentence of six months curfew when home detention was a possible alternative.

Huljich’s conviction followed sale of a family trust shareholding in Pushpay Holdings Ltd, ahead of public notice being released of an expected retirement by co-founder Eliot Crowther and with it Crowther’s likely sale of some nine per cent of the company, a stake valued then at about $100 million.

At the time, Pushpay was listed on both NZX and ASX.  Pushpay sold mobile payment software, primarily used to process donations.  It was delisted in 2023, following a takeover.

Part of Huljich’s lengthy High Court trial was taken up with evidence of a family trust having amongst its assets a stake in Pushpay valued in tens of millions of dollars.  All details of the Trust, its beneficiaries, and the size of its Pushpay stake, were supressed.

There was evidence of Huljich personally seeking to distance himself from Trust operations before the Trust’s disputed selldown of Pushpay shares together with evidence he received a benefit of some four million dollars following sale of its shares.

Financial Markets Conduct Act prosecution followed a May 2018 email sent by Huljich to Trust trustees and to the Trust’s principal beneficiary advising an immediate sale of Trust’s Pushpay holdings, telling them to set up a brokerage account with Craigs Investment Partners to process the sale.

This email followed Mr Crowther’s discussions with Huljich, disclosing his intention to resign from Pushpay.  Huljich was then Pushpay’s New Zealand general manager.

When Craigs was asked to open this new account, an internal email advised that the Trust was ‘keen to trade as soon as possible.’

The High Court was told the Trust sold its Pushpay shares over a three week period ending 7 June 2018 at an average price of $4.21.

NZX and ASX trading halts were called on June 18.  Pushpay executives were concerned notice had leaked of Mr Crowther’s proposed retirement.

Trading re-opened after Mr Crowther’s nine per cent stake was sold off-market at a price of $4.04.

At the time trading was halted, Pushpay was priced at $4.18.  When trading resumed, the price closed that day at $4.27.

Financial Markets Conduct Act liability for improper insider conduct requires proof ‘material information’ was used to encourage trading in listed securities at a time when that information was not generally available to the market.

The legal test for materiality looks at the likely or hypothetical movement in share prices had the non-public information been released at the time the insider acted.

Expert evidence was given of securities market behaviour: departure of a company founder with sale of a substantial shareholding depresses market prices; requiring sale at a discount to clear the increased volume of shares offered for sale.

General movements in market prices subsequent to improper use of inside information are of no direct relevance in determining ‘materiality’ at time the insider trades.

The High Court jury’s verdict that Huljich knew the fact of Mr Crowther’s proposed retirement was ‘material information’ was upheld by the Court of Appeal.  Huljich was acting on non-public material information when advising the family trust to sell.

Huljich was fined $200,000 for improper inside conduct.

The High Court sentence that he serve six months’ community detention with a 9.00 pm to 6.00 am curfew at a specified address seven days a week was grudgingly accepted by the Court of Appeal.

Insider misconduct is a form of fraud, the Court of Appeal said.  It undermines public confidence in the integrity of the stock market.  Sentences should act as a deterrent.

The High Court imposed a curfew in place of home detention on compassionate grounds.  Reasons were supressed.

Huljich v. R – Court of Appeal (8.05.25)

25.123

Secret Commission: Spark NZ Ltd v. Bryan

 

Spark is chasing backhanders totalling $3.5 million paid by Sean Bryan’s Victory IT Ltd, being secret commissions rewarding a Spark contractor for putting work its way.

Telco Spark says it overpaid for services received, following years of invoices padded with under the table commissions paid without its knowledge or approval.

Court of Appeal ruled Mr Bryan personally liable to pay Spark $1.72 million for backhanders paid from 2016; a further court hearing is needed to deal with Limitation Act defences over liability for $1.8 million paid prior to 2016.

The court was told a corrupt arrangement to make secret payments was negotiated in 2013 between Mr Bryan and a Spark contractor.  This contractor currently has name suppression; part of an ongoing Secret Commissions Act prosecution.

The contractor negotiated a profit-sharing arrangement with Mr Bryan in which a significant share of Victory profits earned on its Spark contract was handed back to the contractor.

Spark awarded a contract in 2013 for a major upgrade to its customer services digital platform.  The successful contractor had ultimate responsibility for all testing services required by Spark, plus an active role in selecting third-party providers.

The court was told Spark was encouraged by this contractor to retain Victory as a testing service provider, despite its rates being significantly higher than competitors.  The contractor having name suppression justified approval to Spark of these premium rates on grounds Victory’s testing services were superior.

Unbeknown to Spark, this contractor would be getting a slice; kickbacks from Victory.

Over a three year period, the contractor received kickbacks totalling $3.5 million.

Invoicing inconsistences through 2015 led to questions by Spark.  Suspicions mounted with both Mr Bryan and the contractor refusing to provide adequate explanations or to disclose relevant information.

It took court orders to force disclosure of bank records.

In 2021, their invoicing dispute went to arbitration.

The arbitrator ruled Victory had acted dishonestly in paying backhanders to the contractor and that Mr Bryan had knowingly participated in the unlawful scheme.

The arbitrator dismissed explanations for the corrupt payments as being ‘a complete fabrication.’

With Victory IT Ltd in liquidation, Spark looked to recover these corrupt payments from Mr Bryan personally.

In the Court of Appeal, Mr Bryan said the arbitration ruling was not enforceable against him personally; it was against his company Victory.  Spark could recover only from Victory, he said.

The central principle of company law is that an incorporated company is a separate legal entity from its shareholders and its directors.

It is the company that is liable for actions carried out in its name.

There is an exception where management benefit directly from their company’s dishonesty; management can be sued.

As sole director and shareholder, Mr Bryan was Victory’s ‘alter ego,’ the court ruled.

He had complete control of the company.  He was the direct beneficiary of Victory’s dishonest financial arrangement.

The Court of Appeal ruled Mr Bryan personally was liable to compensate Spark for the amount paid in backhanders.

The Limitation Act bars recovery of compensation for wrongdoing more than six years prior to court action being filed.

Mr Bryan is liable to pay Spark the $1.72 million secret commissions handed over during this six year period, the Court of Appeal ruled.

Credit was given for an unpaid Victory invoice of $1.08 million, leaving Mr Bryan immediately liable to pay a net amount of some $650,000.

Mr Bryan’s liability for the remaining $1.8 million paid in backhanders requires proof at a subsequent court hearing that Spark had ‘late knowledge’ of its right to sue.  Spark claims delays in taking legal action were caused by the fraudsters unhelpful and evasive responses to earlier requests for information.

The Court of Appeal was told Spark is also taking legal action against the Spark contractor receiving these backhanders.

Spark New Zealand Ltd v. Bryan – Court of Appeal (8.05.25)

25.124

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