Debt: Bradley v. Bradley

After lending his mother money for home renovations, helpful son found his sister and his mother had conspired to cheat him out of repayment.   Property Law Act orders were used to recover payment from his sister after their mother’s death.   

Double dealing in the Bradley household followed a $10,500 loan made by Peter Bradley to his mother in 1996, used to renovate her Blenheim home.  Notionally repayable on demand, it was agreed no demand would be made on the loan while she still lived in the house.  Interest was payable annually at rates for first home mortgages, with unpaid interest compounding annually.  It was also agreed no mortgages would be taken out on the home before the loan was repaid.  Peter and his family lived next door.  His sister Kim looked after their mother.

Peter was to learn after his mother’s death in 2014 of considerable legal activity engineered between his sister Kim and their mother.  In 2010 a reverse mortgage with Sentinel Custodians was registered, cashing up equity in the home.  Sentinel was repaid some $117,000 in 2013 when the home was sold to daughter Kim for its then market value of $227,500.  Unable to find the full market price, she signed an acknowledgement of debt for $102,500 recording the balance due.  Her mother then immediately signed a forgiveness of debt.  On his mother’s death, Peter found she owned no home and sister Kim had been released from paying the full purchase price.          

Evidence before the District Court found Kim had joined with her mother to deliberately frustrate repayment of Peter’s loan.  In the High Court, Justice Dobson made orders under the Property Law Act requiring Kim to pay about $43,000: the orginal $10,500 loan plus compounding unpaid interest.  He said the sale to Kim with immediate forgiveness of about 45 per cent of the price was intended to prejudice Peter as a creditor by leaving his mother insolvent.  There was evidence of his mother’s only other assets being bank accounts with minimal balances.    

Bradley v. Bradley – High Court (14.10.16)

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Land Scam: Cook v. Abdallah

It took a High Court order to get ownership back for a West Coast homeowner robbed of her property by a Jordanian internet scammer.

Given the alias Ms Cook by the court, she was scammed by an individual describing himself on the internet as Akram Abdallah from Jordan.  Ms Cook suffers from post traumatic stress disorder, anxiety and depression.  In the course of chat room conversations Ms Cook offered to help Mr Abdallah get a visa for New Zealand.  He told her ownership of property in New Zealand would assist his visa application.  She offered to sell her home to him.  He agreed to buy her out and pay all legal expenses, further promising to transfer the property back to her once he was in New Zealand.  The High Court was told a Greymouth solicitor acted on the sale, transferring legal title to Mr Abdallah after Ms Cook told her solicitor she had received payment.  In fact, no payment was ever made for either the agreed $30,000 price or legal fees incurred.  The Law Society subsequently took disciplinary action against the solicitor.  Mr Abdallah’s application for a visa was refused.  When Ms Cook contacted him to get back title to her home he extorted sums of money out of her as a condition of returning ownership, then did nothing. 

Being registered on the title gave Mr Abdallah complete ownership.  There is a government guarantee of ownership once registered on the title.  He could be removed on proof of fraud but the registrar-general of land requires more than unsubstantiated allegations of fraud.  A court order is necessary.  Meanwhile, both Ms Cook and the registrar lodged caveats against the title to prevent any further dealings with the land pending a court hearing.  Legal rules require parties to any court action receive notice of an intended court hearing.  Mr Abdallah could not be traced.  Public advertisements in Amman were used as notice to Mr Abdallah.  There was no response.

After evidence detailing facts of the fraud was given in the High Court, Justice Nation restored Ms Cook to the title as owner of her home.    

Cook v. Abdallah – High Court (14.10.16)

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Unit Titles: Bridgewater Bay Apartments

Owners of five apartments at Paihia’s Bridgewater Bay allegedly owing $926,700 for unpaid body corporate levies failed to get a High Court debt collecting action thrown out.  They dispute the levies and argue any hearing should be in the Tenancy Tribunal.

Bridgewater Bay Apartments is a leaky building.  Owners of the 22 apartments are not unanimous in agreeing remedial action.  A minority disagree with proposals to raise a levy for repairs costed at over three million dollars.  Five owners went on strike, refusing to pay levies imposed.  Some have taken court action.  The body corporate raised the ante by suing those on strike in the High Court for unpaid levies and accrued interest calculated from July 2014 totalling some $926,700.  Claims against individual owners range from $213,800 to $107,900.  The disaffected minority said the High Court has no jurisdiction to hear this dispute.

The Unit Titles Act sets out three layers of dispute resolution: claims up to $50,000 are heard in the Tenancy Tribunal; between $50,000 and up to $200,000 in the District Court;  $200,000 and above in the High Court. 

Those on strike argue unpaid levies are an accumulation of separate levies all (with one exception) under $50,000.  Any dispute about these levies should be heard in the Tenancy Tribunal where hearings are cheaper and more informal.

Associate judge Bell ruled the High Court has jurisdiction.  It has inherent authority to hear any dispute unfettered by jurisdictional limits imposed on lower courts and tribunals.  Attempting to split the dispute into small discrete claims is obviously inefficient and will prolong the dispute, he said.

Whether the disaffected minority is liable to pay any disputed levies is yet to be decided.   

re Bridgewater Bay Apartments – High Court (14.10.16)

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Tax: Charter Holdings v. Inland Revenue

Inland Revenue can be asked to review a tax assessment despite failures to challenge tax assessments within time said the Court of Appeal when ordering Inland Revenue reconsider a taxpayer’s claim that $1.4 million in tax losses be set off against subsequent income.    

Tax law allows taxpayers four months to file any objection to a tax assessment.  Inland Revenue argued any delay drew a line under the assessment, it could not be challenged in court later.  The Court of Appeal ruled section 113 of the Tax Administration Act empowers Inland Revenue to correct any assessment even where no objection is filed in time.

At issue was tax returns for six consecutive tax years filed by Mr Adrian Padfield on behalf of Charter Holdings Ltd.  He left blank tax return questions asking whether there was any claim for tax losses brought forward presuming, incorrectly, that Inland Revenue kept a running total for each taxpayer of any accumulating tax losses.  Presented in July 2014 with a tax demand that Charter Holdings pay $850,523 for tax arrears of some $306,400 plus penalties and interest Mr Padfield was surprised to learn Charter Holdings could not utilise accumulated tax losses of some $1.4 million.  Charter had not completed its tax returns correctly in the first place.  Inland Revenue said section 113 reviews can not be used to correct tax assessments outside the statutory disputes process.  The Court of Appeal said it is illogical to argue courts have no right to review Inland Revenue administrative processes because the statutory objection procedure has not been followed.  It goes to the integrity of the tax system that taxpayers have a right to ensure their tax returns are determined “fairly, impartially, and according to the law”, the Court said.

Inland Revenue had refused to reconsider Charter Holdings entitlement to past tax losses because a senior staffmember doubted Mr Padfield’s credibility in failing to properly complete the disputed tax returns.  The Court said this staffmember had made several mistakes of fact: she assumed Mr Padfield had correctly noted losses carried forward in his own tax returns while not doing the same when filing returns for Charter Holdings (in fact he was inconsistent claiming losses carried forward in only one year of his personal returns); she suspected trading income for Charter Holdings had been suppressed (without fully investigating the position).  Charter Holdings’ claimed tax losses must be reconsidered by a different Inland Revenue staffmember, the Court ruled.

Section 113 reviews are intended to ensure a tax assessment is correct, said the Court of Appeal.  The onus is on taxpayers to provide sufficient information when asking an assessment be corrected.  

Charter Holdings v. Inland Revenue – Court of Appeal (13.10.16)

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Fraud: R. v. Love

In what is a substantial fall from grace, kaumatua Ralph Heberley Ngatata Love was sentenced to two years and six months imprisonment for obtaining $1.38 million by deception after diverting funds belonging to Wellington and Taranaki Maori to buy a luxury property at Plimmerton near Wellington.

Justice Lang said a deterrent sentence is needed to warn trustees managing assets on behalf of beneficiaries that serious consequences will follow if they help themselves to trust assets.

Love and his partner Lorraine Skiffington obtained payments of $1.38 million in early 2007 from developers during negotiations for the construction of an office block on land in central Wellington owned by the Tenths Trust.  Love had been a Tenths Trust trustee for many years.  At the time of negotiations he was executive trustee.  Developers were led to believe that payments made to a company called Pipitea Street Developments Ltd were to reimburse Treaty negotiation expenses.  In fact, the payment was used to reduce a $1.8 million mortgage recently taken out by Love and Ms Skiffington to purchase a home in Plimmerton.  The fact of the payment was kept hidden from the board of Tenths Trust.  The court was told Ms Skiffington is very ill.  Charges against her are on hold.      

Love is 79 years old.  He has no previous convictions.  Credit was given for the four decades of selfless service he had provided to Maori both in Wellington and nationally.  Allowance was made for his health.  Medical reports before the court referred to cardiovascular issues, diabetes and onset of dementia.  Justice Lang said poor health makes a term of imprisonment more difficult than for those in good health.

No order was made for a sale of the Plimmerton property.  Ownership is in the name of trustees of Love’s family trust and the family trust of Ms Skiffington.  Criminal Proceeds (Recovery) Act restraining orders have been registered against the title.  The court was told there are plans to have the property seized and sold with the proceeds going to the Tenths Trust.    

R. v. Love – High Court (7.10.16)

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