Injunction: Autoterminal NZ v. IBC Japan Ltd

Autoterminal was refused an interim injunction blocking Hohua Hemi from supplying Japanese used car imports for 2 Cheap Cars, allegedly in breach of agreements to have Autoterminal New Zealand Ltd as sole importer.

Robert Stone controls Autoterminal; Mr Hemi, Japanese supplier IBC Japan Ltd.  Both companies form part of a joint venture in the used car trade the two have operated for over twenty years.  Business is not running smoothly.  Litigation between the two is under way in several jurisdictions around the world.

In the New Zealand courts, Mr Stone alleges Mr Hemi is cutting him out by supplying car dealers directly, without importing through Autoterminal.  He alleges Mr Hemi is breaching a July 2014 ‘vehicle supply agreement’ between IBC Japan and Autoterminal and also in breach of two supplementary agreements dated 2016 and 2017.  Mr Hemi disputes the existence of the 2016 and 2017 agreements.  He doesn’t have copies.  Mr Stone has only hard copies.  There is no email trail identifying pre-contract negotiations.  The supplementary agreements between Autoterminal and IBC Japan were allegedly signed at a time when Mr Stone was in control of both companies.  Mr Stone says digital copies of the contracts were lost when a business laptop and backup, both held by a business associate, were stolen.  Mr Hemi points out that if the supplementary agreements were created using Google Docs, as alleged, then copies should be available on the web.

Justice Woolford said he did not have to decide whether the supplementary agreements did exist; no interim injunction would be granted to enforce them.  If proved to exist and to be breached, damages would be an adequate remedy.  IBC Japan is in a position to pay damages. It is currently owed at least $40 million by Autoterminal.  Payments to IBC Japan by Autoterminal do not fall due until customers pay Autoterminal.

Justice Woolford also raised questions about enforceability of the disputed 2016 and 2017 supplementary agreements.  They appear to have the effect of substantially reducing competition, in breach of the Commerce Act, he said.

Autoterminal New Zealand Ltd v. IBC Japan Ltd – High Court (19.11.18)

19.005

CBL: Reserve Bank v. CBL Insurance Ltd

CBL Insurance directors’ Peter Harris and Alistair Hutchison were described by Justice Courtney as lacking commercial probity, manipulating information provided to the Reserve Bank as insurance regulator.  

CBL Insurance was a licensed insurer with barely one per cent of cover written on New Zealand risks.  Most of its exposure was as reinsurer of builders’ warranty insurance in France.  Concern about CBL Insurance’s financial stability led to appointment of interim liquidators in February 2018.  Full liquidation followed nine months later on two grounds: first, proof CBL Insurance was balance sheet insolvent, and secondly on grounds that it was ‘just and equitable’ to put the company into liquidation, as evidenced by manipulation of solvency data supplied to the Reserve Bank as regulator.

The High Court was told of directors misrepresenting the status of a $20 million deposit CBL Insurance had placed with National Bank of Samoa.  A March 2015 letter drafted by Mr Harris, with the involvement of Mr Hutchison, represented the Samoa deposit as being unencumbered and able to be returned to CBL Insurance at any time.  In fact, the deposit was security for a loan and the deposit was seized when interim liquidators were appointed.  If the true status of the deposit had been revealed, it would have put CBL Insurance’s solvency ratio below 100 per cent.  This at a time when CBL Corporation was being prepared for public float.  Mr Harris and Mr Hutchison sold significant parcels of shares on the float.  There were also allegations of CBL Insurance purporting to improve solvency in September 2017 by selling overdue receiveables and backdating the transaction to satisfy Reserve Bank solvency requirements. Solvency returns were required on a six-monthly basis.  The transaction was cancelled five months later.  The Reserve Bank also queried the status of an investment in a Peruvian goldmine: El Toro.  Email communications between Mr Harris and other interested parties indicate the El Toro shareholding was owned by CBL Insurance, the Reserve Bank claims. Dividends totalling US$600,000 paid by El Toro never made their way to CBL Insurance.  Clouding the issue is Reserve Bank concerns that El Toro may have been part of a money-laundering operation.  It wants answers as to whether CBL Insurance directors were aware of this.

There was differing evidence over the extent of CBL Insurance’s balance sheet insolvency; a measure of its ability to meet ‘long-tail’ insurance claims, potentially stretching out ten years.  One actuary assessed liabilities exceeding assets by $98.4 million as at December 2017.  Updated figures as at June 2018, put balance sheet insolvency at between $122.8 million and $274.8 million.  This alone was grounds to put CBL Insurance into liquidation, Justice Courtney ruled.

Reserve Bank v. CBL Insurance Ltd – High Court (16.11.18)

19.002

Lease: Annie Enterprises Ltd v. Cho

Having Social Development as a motel’s sole customer using motel units to temporarily accommodate beneficiaries did not change the site’s use as a motel.  It remained a motel, albeit with idiosyncratic features, ruled Justice Downs. Attempts to cancel the motel operator’s lease was blocked.

Hyun Sook Cho owns a six-unit motel on her Walmsley Road property in Mangere, South Auckland.  The motel is currently operated on a long-term lease until 2044 by Rajesh Sachdeva through his company, Annie Enterprises Ltd.  Ms Cho alleged Annie Enterprises was in breach of its lease; the site was no longer being used as a motel.  Mr Sachdeva says Ms Cho wants him out only because his business is now profitable.  Notice of cancellation is a tactic to force renegotiation of lease rentals, he alleges.   

The High Court was told Ministry of Social Development agreed with Annie Enterprises in 2017 for exclusive use of all six units as temporary accommodation.  Social Development pays a daily tariff.  It can cancel the arrangement on thirty days’ notice.  Occupancy by beneficiaries runs at about 80 per cent.  Social Development pays a daily rate regardless of occupancy levels.

Justice Downs ruled the ‘exclusive use’ arrangement with Social Development was not grounds for cancellation.  Auckland City accepted the new arrangement satisfied resource consents for the property’s use as ‘travellers accommodation’. Beneficiaries were in occupation for varying lengths of time, but were not living there.  It made no difference that the motel no longer advertised itself as available for bookings.  Until such time as Social Development gives notice, the motel is fully booked.

Annie Enterprises Ltd v. Cho – High Court (16.11.18)

19.001

Blue Chip: Commercial Factors Ltd v. Meltzer

Claims for payment on a Blue Chip litigation funding agreement by financier Terry Haydon failed.  Allegations Blue Chip liquidators Meltzer, Hayward and Heath acted in bad faith were dismissed by the Court of Appeal. 

Blue Chip group was put into liquidation in 2008 leaving some 3000 investors with losses in excess of $80 million.  Liquidators canvassed the possibility of suing Blue Chip’s directors and auditor BDO Spicer.  With no money in the kitty, they looked outside for litigation funding.  Mr Haydon’s Commercial Factors Ltd agreed to provide $60,000 funding for preliminary work: getting a legal opinion and paying liquidators’ preliminary expenses.  It was agreed Commercial Factors would get a fee of $15,000 plus a 24 per cent return on its advance, subject to specified conditions.  Payment was conditional on another party agreeing to fund any ongoing court case or alternatively Blue Chip liquidators recovering any monies owed Blue Chip.

A legal opinion stated there were strong grounds to sue both directors and auditor.  Struggling to find a further litigation funder to pony up funds for legal action, the liquidators filed legal proceedings at their own expense.  Time limits for bringing legal action forced the liquidators’ hand.  In the end, legal action did not proceed.  It was estimated over $250,000 would be needed to reconstruct Blue Chip’s chaotic accounting records.

Commercial Factors alleged filing court proceedings triggered payment; ‘another party’ had agreed to fund the litigation.  The Court of Appeal ruled that once Blue Chip went into liquidation Blue Chip and the liquidators were one and the same; it could not be said funding by the liquidators amounted to funding by ‘another party’.  The evidence did not pin down exactly how much money was put up by the liquidators. Advances of $112,500 up to February 2014 were disclosed.

Commercial Factors further alleged the liquidators had acted in bad faith; it should have been repaid out of $307,900 recovered by the liquidators as debts due to Blue Chip.  Liquidators were justified in using this money to first pay liquidation expenses, the Court of Appeal ruled.

The liquidators’ final report show not only was Commercial Factors left out of pocket, so too were the liquidators. Recoveries totalled $307,900; as against liquidators’ billed remuneration of $253,200 and paid legal fees totalling $182,400.

Commercial Factors Ltd v. Meltzer – Court of Appeal (16.11.18)

19.003

Mortgage: Mangawhai Property Ltd v. Chen Hong Co Ltd

Waterstone Insolvency has the difficult task of unravelling fluid financing arrangements for a lifestyle subdivision at Hakaru between Kaiwaka and Mangawhai in Northland.  A default interest rate of 120 per cent features. As do Augustine Lau and Jiawen Mao, recently convicted following multiple breaches of resource management and building regulations in respect of properties in Auckland City.

Waterstone are liquidators of Chen Hong Co Ltd. Chen Hong’s sole director is Jiawen Mao. The company holds second mortgage security over a Hakaru subdivision being developed by Mangawhai Property Ltd. Mangawhai Property is owned by Yan Lin of Beach Haven in Auckland, also known as Bella Lin.

Chen Hong Ltd’s financing of the project is disputed; evidence indicates there might have been two separate loans.  Mangawhai Property alleges documents describing a second loan from Chen Hong Ltd were forged.   Immediately in dispute was an initial August 2016 loan.  It itemised a $693,000 advance for one month only, interest on maturity in a lump sum of $3000 with default interest running at 120 per cent for late payment.  Mangawhai Property claims it borrowed only $600,000 and that $505,100 was repaid in November 2016.  Waterstone deny there was any repayment.  They suspect a supposed repayment went to Jiawen Mao’s father.

Putting to one side the dispute about repayment, Waterstone sued in the High Court alleging at least $100,000 was still due, had not been paid and asked the High Court to put Mangawhai Property into liquidation on grounds of insolvency.  Just prior to the application coming to a hearing, Mangawhai paid the claimed $100,000. That is the end of the winding up application, Associate judge Bell ruled.  The claimed unpaid debt had been paid.  He refused Waterstone’s request to consider further money allegedly unpaid. Waterstone allege a total of $2.2 million is owed.  New court proceedings have to be filed.

There was evidence that Jiawen Mao, director of second mortgagee Chen Hong Ltd, was at critical times also director of Niu Niu Bi Co Ltd, a company which also appears to have financed Mangawhai Property.  She told Waterstone she had no hands-on involvement; Augustine Lau ran the business.

Mangawhai Property Ltd v. Chen Hong Co Ltd – High Court (15.11.18)

18.227

Resource Management: R. v. Lau & Mao

Augustine Lau’s two year’s imprisonment was upheld by the High Court for his multiple resource management and building offences committed over a three year period with some 26 non-conforming dwellings constructed on six properties around Auckland.  Rentals collected on these illegal dwellings were in the region of $240,400 a year.

The High Court was told of multiple breaches of the Resource Management Act, Building Act and Companies Act.  The worst breaches occurred at three sites: Ormiston Road (with eight dwellings constructed on a site approved for one only); Fairburn Road (where nine hundred cubic metres of earthworks were undertaken without consent, proper preparation or compaction utilising fill which included rubbish, debris and asbestos) and; Paremoremo Road (where the site contained nine dwellings with approval for one only).  Site occupancies were increased both by extending an existing dwelling and by shifting re-locatable buildings on site.  At Ormiston and Paremoremo, waste water disposal did not comply with local regulations, draining onto slopes above watercourses.  Council requisitions requiring Lau to remedy breaches were ignored.  Remediation and legal expenses are costing Auckland City ratepayers some one million dollars.

Whilst stating a longer sentence could be justified, Justice Whata dismissed appeals by both Lau and the Crown over the adequacy of sentence.  In mitigation, Lau said he suffered from ADHD.  There was medical evidence this has manifested itself in ongoing conflict with authority figures throughout his life.

Appeal against sentence by Jiawen Mao was also dismissed. She had been fined $64,000 and ordered to pay $155,000 reparations.  This arose from her ownership of and legal control of the Ormiston Road and Fairburn Road properties.  Justice Whata said she had a secondary role in the offending.  There was evidence of her acquiescence in the actions of Lau, blindly signing documents put in front of her and being coached by Lau as to evidence she should give in court.

R. v. Lau & Mao – High Court (15.11.18)

18.226

Receivership: Fatupaito v. Harris

Attempted use of receivership as leverage by property developer Gregory Olliver in an acrimonious relationship property dispute with his former wife saw the Court of Appeal ruling Keith Harris and Iain Nellies were invalidly appointed as receivers of CIT Holdings’ assets and that they were not entitled to payment of their costs and expenses from CIT.

In 2016, CIT Holdings Ltd was put into liquidation by Inland Revenue for unpaid tax.  CIT owned adjoining properties on Waimarie Street in the Auckland seaside suburb, St Heliers.  Liquidators KPMG have spent two years negotiating with several players having an interest in CIT: Inland Revenue (who put up cash to help with the marketing of Waimarie Street); Bank of New Zealand (having a first mortgage over the properties); Bankhouse Trust Ltd (controlled by Mr Olliver and claimed to be a secured creditor of CIT Holdings) and warring spouses Gregory Olliver and Sarah Sparks as beneficial owners of trusts controlling CIT Holdings.

Selling Waimarie Street proved problematic with litigation delaying progress.  The Court of Appeal was told Mr Olliver put commercial pressure on the liquidators, trying to force sale of selected CIT Holdings’ assets to him.  When that failed, he threatened to have receivers appointed under a general security deed he held through Bankhouse Trust.  In March 2017, Messrs Harris and Nellies were appointed.  As receivers, they agreed to a highly conditional sale of CIT assets to GMO Trust Ltd, a company associated with Mr Olliver.

It all unravelled.  The general security deed was invalidated by the High Court; it had the effect of elevating unsecured advances to the level of a secured debt. Liquidators KPMG challenged Mr Olliver’s appointment of receivers.  The Court of Appeal ruled the appointments were invalid.  Mr Olliver had acted in bad faith.  Part of the deal with GMO Trust was sale by the receivers of legal claims CIT Holdings was pursuing against Ms Sparks and trusts associated with her. The principal purpose, perhaps even the sole purpose, of the receivership was a means for Mr Olliver to get control over these claims to debts due by Ms Sparks to CIT Holdings, the Court of Appeal said.

The receivers’ appointment was invalid.  They had no right to charge costs of the receivership to CIT Holdings, the Court of Appeal ruled.  This does not preclude the receivers getting payment from Bankhouse Trust if the Trust did agree to cover costs when appointing them.  Their final receivers’ report filed at the Companies Office does not itemise their costs.

Fatupaito v. Harris – Court of Appeal (14.11.18)

18.225

Maori: Stafford v. Attorney General

The extent to which Maori land reparation claims extend to resources owned by state-owned enterprises and other Crown entities is gaining momentum following a 2017 Supreme Court ruling that successive governments are in breach of trust for failing to reserve for Nelson Maori 10,000 acres of land as promised in 1845.

The pivotal philosophy behind state-sector restructuring in the 1980s was to separate government commercial activities from direct political influence; a practice which has been embraced and continued since. To date, there have been no political directions forcing crown entity management to surrender assets in satisfaction of Maori land claims.

As nominal representative for iwi in the Nelson region, kaumatua Rore Stafford successfully sued government for breach of fiduciary duty.  An 1845 award by Commissioner Spain had promised one tenth of the 151,000 acres taken by early colonial settlers would be reserved for local Maori.  Some 5100 acres was set aside.  The remaining 10,000 acres of promised rural land never was. The Supreme Court sent the case back to the High Court to sort out an appropriate remedy for this breach.  Mr Stafford’s successful claim is not for a breach of the Treaty of Waitangi; it is for governments’ failures to honour an 1845 agreement.

To protect his iwi’s position, Mr Stafford took steps to identify government land in the Nelson area which could be ‘tagged’ as available for compensation.  Hearing that the Accident Compensation Corporation was selling a Nelson site, he had a caveat lodged against the title to protect any potential claim.  Accident Compensation’s plans to sell fell through. The High Court ruled Mr Stafford had no caveatable interest; he could not prove any specific legal link to Accident Compensation’s land.  Undeterred, Mr Stafford moved on to the Court of Appeal asking the court to rule on the wider question of whether government has power to direct crown entities like Accident Compensation to make land available for Maori reparation claims. Refusing to make a ruling, the Court of Appeal said this is a question of considerable novelty, complexity and public importance.  Better that the issues be first thrashed out in a High Court hearing before potentially coming before the Court of Appeal, it ruled.

Stafford v. Attorney-General – Court of Appeal (12.11.18)

18.224

Contract Retentions: Bennett v. Ebert Construction

Sold by politicians as protection for sub-contractors, changes to the Construction Contracts Act requiring contract retentions to be held ‘in trust’ do not in fact require creation of a trust fund.  First major casualties are Ebert Construction sub-contractors.

Construction law was changed in a knee-jerk reaction to the 2013 collapse of Mainzeal group where sub-contractors were left in the cold over retentions totalling $18 million.  For commercial construction contracts, the head contractor became obliged to hold retentions in trust.  Typically, ten per cent of a sub-contractor’s price is held back: half released when a certificate of practical completion is signed off on their work; the balance when an agreed defects liability period passes.

The High Court was told the collapse of Ebert Construction Ltd last July saw $3.67 million sitting in the company’s retention account; well short of the $9.32 million the company should have funded as a retention liability.  Ebert Construction’s ongoing reconciliation of its retention account lapsed in the months leading up to receivership.  Receivers from PwC have been untangling the claims.  There are some 152 sub-contractors who could potentially claim against the $3.67 million retentions.  Release of retention funds to some contractors had been signed off, but not actioned before receivership.  Other sub-contractors had done work but their contract was not recorded in Ebert’s computer system as needing retentions.

Justice Churchman said the Construction Contracts Act did not require retention monies to be banked into a separate account; money could be mixed in with the head contractor’s other accounts.  This does not create an express trust in the accepted legal sense.  With Ebert’s credit facilities heavily overdrawn, retentions not paid into its retentions account simply evaporated.  Sub-contractors entitled to claim against the $3.67 million retention account are those whose identified retentions were paid into the account plus those whose release had been signed off but not actioned, Justice Churchman ruled.  They all receive a pro-rata payment of what is owed. Sub-contractors who did not have any retention paid into the account cannot claim.

PwC, receiver of Ebert Construction, was also appointed receiver of the $3.67 million retention fund.  Since this account is a trust fund it is not ‘owned’ by Ebert; a High Court order was needed to have someone appointed to take control.

The court was told Ebert Contracts’ sub-contractors are owed approximately $33.8 million.  They are unlikely to get any money other than those entitled to share in the $3.67 million retentions.

Bennett v. Ebert Construction Ltd – High Court (12.11.18)

18.223

Tax: van Uden v. Inland Revenue

Despite personally owning no property in New Zealand and spending on average eight months a year at sea, China Navigation captain Gerardus van Uden was held to be a tax resident, liable for tax in New Zealand on his world-wide income and on his employer-funded superannuation.  

Mr van Uden claimed his permanent place of abode was overseas and that his stays in this country were purely transitory.  The Court of Appeal said whether a person is tax resident in New Zealand is a question of fact, turning on each individual’s circumstances.

Mr van Uden filed New Zealand income tax returns up to the 2004 tax year in which he declared approximately half his salary as taxable, declared no taxable income for the next two tax years then filed non-resident tax returns for years 2007 – 2009.  This triggered a tax audit for the years 2005 – 2009.  He said his ‘place of abode’ was no longer New Zealand; it was wherever he might be at any one time.

The Court of Appeal ruled New Zealand was still his abode, on an objective view.  Evidence was given that rental properties managed by Mr van Uden were in New Zealand, together with a family home at Cockle Bay in Auckland’s eastern suburbs. He did not personally own these properties; they were previously owned separately by Mr van Uden and his spouse before being transferred into a family trust.  Cockle Bay had been let out as a short term let, but kept available whilst he was in the country.  Cockle Bay was described as ‘own home’ in a mortgage application.  The Cockle Bay address was used for all correspondence: bills, bank statements, insurance and investments.  Motor vehicles were registered to the address.  He paid for a Sky television service at the address.

Inland Revenue was justified in charging a ten per cent penalty on the basis Mr van Uden had taken an ‘unacceptable tax position’, the Court of Appeal ruled.

van Uden v. Inland Revenue – Court of Appeal (8.11.18)

18.222

Tax: Frucor Suntory v. Inland Revenue

Inland Revenue’s claim that Frucor’s capital restructuring amounted to tax avoidance was dismissed by the High Court. Tax deductions totalling $22.4 million for the 2006 and 2007 tax years were at stake with similar deductions for subsequent tax years hanging on the High Court’s ruling.

Inland Revenue took exception to a financial arrangement seeing Frucor Holdings issue a convertible note to Deutsche Bank New Zealand with a forward purchase, by holding company Danone Asia Pte Ltd, of shares Deutsche Bank could call for under the convertible note.  In economic terms, this was a five year $204.42 million loan with interest at 6.5 per cent.  Inland Revenue alleged $55 million of the $66 million interest paid was in fact non-deductible repayment of principal.  Frucor, known as Danone Holdings NZ Ltd at the time of the transaction, is a wholly-owned subsidiary within the Danone group, owned ultimately by France-based Groupe Danone SA.

Evidence was given of Deutsche Bank touting for business in 2002 offering alternative funding sources.  Danone had recently bought Frucor for $297.5 million, funded with an almost equal split between debt and equity.  The commercial benefits offered through Deutsche Bank’s financing were a more economic debt:equity split at 63:37, a currency hedge with debt capital in New Zealand dollars and reduction in group liability for tax in France. There was evidence that Deutsche Bank’s pricing of the convertible note left a minimal margin on its loan.  It received a $1.8 million fee for setting up the arrangement.  Unusually, Deutsche Bank agreed to pay a fee to Danone to guarantee Danone’s performance of the deal. 

Inland Revenue alleged the entire arrangement was artificial.  A plain vanilla loan would serve the stated commercial purpose.  It said the $204 million paid by Deutsche Bank for the Danone convertible note was funded in part by having Singapore-based Danone Asia immediately paying $149 million in a forward purchase of the shares to be issued in five year’s time to Deutsche Bank pursuant to the convertible note. Interest cannot be claimed on a $204 million dollar loan when in effect less than $204 million was borrowed, it said.

Justice Muir said Frucor did receive $204 million dollar cash.  It attracted interest and this interest was paid over the life of the convertible note. A debt equity swap, extinguishing a debt by an issue of shares, is common commercial practice.  Doing so does not amount to tax avoidance.  One of the commercial benefits was to minimise tax payable by companies in the Danone group, in both France and Singapore.  Reductions in group offshore tax liability does not amount to tax avoidance in New Zealand, Justice Muir said.

Tax benefits engineered by Danone have been blocked since July 2018 with new tax rules; part of a world-wide move to counteract tax base erosion and profit shifting.

Frucor Suntory New Zealand Ltd v. Inland Revenue – High Court (5.11.18)

18.221

Tax: NRS Media Holdings v. Inland Revenue

NRS Media Holdings won twice over; exempt foreign income totalling $3.67 million tumbled into the till while it was also able to claim expenses of $3.88 million against this tax free income for the cost of monitoring its Australian subsidiary.

Exploiting a since-repealed loophole which appeared during legislative changes to the controlled foreign corporations regime, NRS Media Holdings Ltd argued successfully in the Court of Appeal that it could both have its cake and eat it.  NRS Media is the sole or majority shareholder of subsidiaries in the United Kingdom, Australia and Canada.  They purchase media time for client advertisers.  The Court of Appeal hearing concerned the tax effect of NRS Media’s relationship with its Australian subsidiary.  Two tax years were at issue: 2011 and 2012.  For those two tax years NRS Media received tax free dividends totalling $3.67 million.  It claimed as a NRS Media tax expense costs for payroll, consultants, marketing and travel, rent and overheads totalling $3.88 million; costs incurred to ensure proper legal governance of its Australian subsidiary, it said.  NRS Media established and managed strategic and business plans for the group, with staff travelling to and reviewing subsidiary performance on a regular basis.  NRS Media said it did not manage its subsidiary’s operations.  Each has its own board and management team.

The Court of Appeal ruled the claimed deductions were allowed under the general deductibility rules in tax law.  The costs amounted to oversight of its subsidiaries, facilitating their operations.  These were recurrent and regular business expenses, allowed as a tax deduction against revenue.

NRS Media Holdings Ltd v. Inland Revenue - Court of Appeal (1.11.18)

18.220

Asset Forfeiture: Commissioner of Police v. Cheah

After pleading guilty to methamphetamine supply and sentenced to six year’s jail, Boon Hooi Cheah will have assets seized following a High Court ruling he benefited to the tune of $2.1 million as proceeds of crime.

It is common practice for convicted criminals to negotiate with police how much will be surrendered under the Criminal Proceeds (Recovery) Act.  Cheah chose to go to trial in the High Court, arguing his drug profits were minimal.  Once police have stated their assessment of the gross revenue generated, it is for those convicted to prove revenue came from legitimate sources.

In a 2016 drugs bust, police seized cash and methamphetamine from Cheah’s home in the Auckland suburb of Avondale together with a diary recording drug sales for the previous two months.  Sales averaged $1300 per day.  These figures, extrapolated to cover the seven years police claim he was dealing, resulted in estimated cash sales totalling $2.1 million. Cheah protested.  He said he lived a frugal lifestyle, supported by income from hairdressing and selling cosmetics.  He was previously employed by L’Oreal and claimed he had stockpiled cosmetics given him as reward for being a top sales performer.  No taxable income was declared to Inland Revenue for this supposed employment, or for his drug dealing.  Justice Grice said Cheah was not a credible witness when it came to these explanations.  No allowance was made for the cost of Cheah’s methamphetamine purchases.  The Act allows seizure of ‘proceeds of crime’ not ‘profits of crime’.  Earlier ‘proceeds of crime’ cases have disallowed deductions for dealers’ costs in purchasing drugs for supply; it would lead to practical difficulties determining costs of drug trading in what is a hidden illegal market.

Justice Grice ordered confiscation from Cheah of $378,500 in cash and bank accounts and ordered sale of his half interest in a property on Great North Road in Avondale.

Commissioner of Police v. Cheah – High Court (31.10.18)

18.219

Partnership: Cochrane v. Guardian Trust

While farmer Marcelyn Barnes prided herself on keeping family finances well recorded, her practice of mixing together business and personal transactions in a ‘mish-mash’ through one bank account led to litigation on her husband’s death.  Marcelyn said assets totalling $931,400 were hers; daughter Gillian said the funds were partnership assets to be divided between members of the family.

The High Court was told Marcelyn and her late husband Alan had farmed in partnership at Dannevirke for over fifty years. Marcelyn kept the farm accounts and filed tax returns for both the business and themselves.  Complications arose on Alan’s death in 2013.  Recorded as partnership assets were a $600,000 loan made to son Richard and his wife and $331,400 invested in term deposits.  Marcelyn said these financial assets were personal assets jointly owned by both herself and her late husband; she inherited full ownership by survivorship.  Gillian pointed out they were recorded as a partnership asset; the farming partnership came to an end on Alan’s death and partnership assets do not pass by survivorship. Partnership law sees partnerships dissolved on the death of a partner and each partner’s share treated as their personal property.  If personal property, Alan’s will left a life interest to his widow with Marcelyn entitled to interest only on Alan’s half share of the $931,400 so long as she lived.

Justice Cull ruled the $931,400 financial assets were personal assets of Marcelyn and Alan, not partnership assets.  The loan and term deposits were derived from their personal savings.  Marcelyn inherited her late husband’s share by survivorship.  Recording them as partnership assets was a mistake.  The court was told Marcelyn had no professional expertise in accounting and took a frugal approach to bank charges. Personal and farming transactions were all run through the same bank account.  She was inconsistent in the way she treated partnership assets and personal income for tax purposes.  It made no difference to Inland Revenue; the correct amount of tax was paid.

Justice Cull said evidence the disputed financial assets were personal assets, not partnership assets, was indicated by advice given their lawyer when preparing wills and account authorities signed when opening a joint bank account.

Cochrane v. NZ Guardian Trust Co Ltd & Barnes – High Court (31.10.18)

18.218

Fraud: Worldclear Ltd v. T1 Holdings Ltd

Worldclear looks to have pinned down all but $720,000 of the $4.6 million former employee Richard Witham is alleged to have stolen when fleeing the country in May 2018 for Singapore. Witham is under arrest in Singapore.

Hamilton-based financial service provider Worldclear Ltd was thrown into a spin when it found Mr Witham had disappeared after locking down online access to company bank accounts.  Frantic inquiries identified he had shifted Worldclear funds across to his own bank accounts and left the country with his family.  Within 24 hours, Worldclear’s dropbox account was being accessed from Singapore and company files systematically deleted.  In a hurried court application, Worldclear had freezing orders imposed on all assets Mr Whitlam may have in New Zealand. The High Court was told some $3.45 million has either been recovered or frozen as a result of the court order.

Worldclear is back in court.  More detective work has discovered about $435,000 held in a BNZ account in the name of Retail Guru Ltd.  Richard and Erika Witham are majority shareholders.  Their company is in liquidation.  The $435,000 is a debt owed to Worldclear, the High Court ruled. Retail Guru’s liquidation report discloses that Mr Witham has been arrested in Singapore where he faces criminal charges. There is also an arrest warrant issued by New Zealand authorities.

Worldclear Ltd v. T1 Holdings Ltd – High Court (30.10.18)

18.217

Land: Taylor v. Small

Three years after Geoff and Aria Small built equestrian facilities on their South Auckland lifestyle block, neighbours turned on them.  The High Court dismissed complaints the utilitarian facilities were out of character for the area and refused an injunction for their breach of a restrictive covenant over the land.

The Smalls’ problems have their genesis in a 1994 subdivision of the Taylor family farm on Ingram Road at Ramarama near the southern boundaries of Auckland City.  In 2013, the Smalls purchased a 17.5 hectare lot from the Taylors.  They in turn subdivided their block into seven lots. Restrictive covenants forming part of the Taylor subdivision passed on down into the Smalls’ subdivision.  They restrict owners to a single dwelling together with a farm outbuilding which must be ‘usual and reasonable for … rural use [and of] a pleasing and aesthetically compatible appearance’. When building, owners are required to build a home costing not less than $300,000.

Neighbours are unhappy with the Smalls development. The Smalls have built a 300 square metre stable and barn with accommodation on two levels together with an attached machinery shed.  They allege the equestrian facilities are being used as if it were a home, in breach of the restrictive covenant.  The Smalls have been living there since December 2014.  Neighbours also claim the Smalls’ seven subdivided lots cannot each have a home on them, hampering the Smalls attempts to sell.  By the time their dispute got to court, the Smalls had sold two of their six lots up for sale.

Justice Gordon ruled the Taylors’ restrictive covenant controlled the quality and character of buildings, not their density. A single dwelling could be built on each of the lots being sold by the Smalls.  There was evidence the Smalls equestrian facilities fit within the spectrum of other facilities in the district.  The building is usual and reasonable for those keeping horses in a rural area, Justice Gordon ruled.

Neighbours say the equestrian facility should be taken down; the restrictive covenant allows farm outbuildings in conjunction with a dwelling, but there is no dwelling on site.  The equestrian facilities have been used since 2014 as ‘temporary living quarters’.  Justice Gordon ruled the stand-alone equestrian facilities were in breach of the restrictive covenant in the absence of an adjoining home.  No injunction was granted because the Smalls say they intend building a house.  Cooking facilities will then be removed from the equestrian centre, they said.  Cash from the sale of lots in their subdivision is needed to fund their house construction, the Smalls said.

Taylor v. Small – High Court (29.10.18)

18.214

Liquidation: Harnish v. Whittfield

Having purchased a fifty per cent stake in Whitford Properties Ltd at public auction enforcing a court judgment, Owen Harnish is suspicious an avalanche of claims against the company, now in liquidation, will leave his shareholding worthless.  The High Court refused his application to inspect creditors’ claims.

Litigation surrounding Whitford Properties has kept the courts busy in recent years.  The company went into receivership and then liquidation after failed attempts to subdivide 8.6 hectares of rural land near Whitford Golf Club in south Auckland.  Whitford Properties founding shareholder Robert Bruce had his fifty per cent stake in the company forcibly sold to enforce a court judgment against him for an unpaid loan.  Mr Harnish bought the Bruce shares at auction.  At that point, Whitford Properties’ major asset was pending litigation over the manner in which its land was sold when threatened with a mortgagee sale.  A series of court cases saw some four million dollars compensation paid to Whitford Properties’ liquidator.  Whitford’s mortgaged land was sold in 2014 for ten million dollars to interests associated with financier Gregory Hayhow.  The High Court was told this land was then onsold two years later for some $22 million.

Mr Harnish complains the Whitford Properties’ liquidator wrongly re-advertised for creditor claims after receiving the four million dollars compensation.  This resulted in claims by unsecured creditors increasing roughly one hundred fold. What had appeared to be a solvent liquidation with a return for himself as shareholder was now potentially an insolvent liquidation with nothing for shareholders.  He asked the High Court for permission to access the liquidator’s files.  He alleges the liquidator has pre-judged some of these claims, to his detriment as a shareholder.  The liquidator objected.  Associate judge Smith refused access.  The liquidator has the right to control the manner in which creditor claims are assessed.  There was evidence of insolvency practitioners readvertising for creditor claims in some instances.  They have a duty to ensure all creditors are identified.  The court was told two large unsecured claims (one for one million dollars and another for $2.8 million) have been submitted; neither has been yet admitted for payment.  The liquidator’s inquiries as to their legal validity are still underway.  One $100,000 creditor claim submitted after readvertising has already been rejected.

Harnish v. Whittfield – High Court (29.10.18)

18.216

Estate Costs: Gillibrand v. Swanepoel

Chris Gillibrand’s legal action against his solicitor for allegedly not curtailing a ‘hopeless’ legal defence to claims from Bupa for $53,000 owing for care of Chris’ late father did not succeed. He had previously recovered $73,950 damages against the barrister representing him in court.

The $53,000 Bupa debt had blown out to $200,000 with addition of extra costs for his replacement as executor of his late father’s estate together with Bupa Care Services Ltd’s full legal costs responding to what was described as a hopeless defence to its claim for unpaid care costs.  It is rare for a successful litigant to be awarded full legal costs; court regulations usually allow a contribution only.  

A barrister handling his defence was heavily censured for his conduct.  Barrister Andrew Holgate had likened Bupa’s care services to Auschwitz concentration camp and had emailed copies of Chris Gillibrand’s allegations about Bupa’s poor care to the Northern Advocatenewspaper ahead of the trial.

The Court of Appeal was told Chris’ father Gordon Gillibrand required 24-hour care at Bupa’s Dargaville care facility from 2003 after suffering a stroke.  He died eight years later, prematurely because of poor care from Bupa, Chris alleged. When hospitalised, Gordon transferred his farm to a family trust controlled by son Chris.  The full sale price of $505,000 was left in as a loan. Gordon paid Bupa’s rest home fees until his own cash resources ran out, then the family trust made payment on his behalf reducing the debt owed Gordon personally.  The trust stopped paying in 2009; Gordon’s debt to Bupa built up. When he died, Bupa claimed against his estate.  By then, the only estate asset was the balance of the debt owed for the farm purchase. As executor, Chris refused to pay saying variously the debt due from the family trust had been forgiven and that Bupa should not be paid because it was liable in damages for allegedly poor care of his father.  Whangarei solicitor George Swanepoel initially handled the complaint.  As court proceedings became likely, barrister Andrew Holgate took over the file.  He was later subject of a complaint to the Law Society and ordered by the High Court to pay $73,950 damages to Chris for his conduct of the defence to Bupa’s claim.

Chris alleged solicitor Mr Swanepoel was equally to blame. The Court of Appeal ruled Mr Swanepoel was not liable; he had told Chris that he disagreed with Mr Holgate’s litigation strategy and reminded him he could be liable for costs, without explicitly telling him that in the extreme he could be required to pay Bupa’s full legal costs.  The Court of Appeal said Chris Gillibrand chose not to act on Mr Swanepoel’s advice and in any event was unlikely to accept any advice from him no matter how forcefully put.

Gillibrand v. Swanepoel – Court of Appeal (29.10.18)

18.215

Petrol Pricing: Berry v. Petroleum Logistics Ltd

It was commercially absurd to argue wholesaler Petroleum Logistics Ltd had agreed to charge Whitianga reseller Acme Fasteners the ex-Singapore price for petroleum products with no mark-up for shipping, delivery and margin, the High Court ruled.

Peter Berry claimed he had been overcharged more than $140,000 for fuel supplied over the previous five years when sued by Petroleum Logistics in 2017 for account arrears.  The High Court was told payments had been kept up to date for the first four years, then monthly invoices started being paid in rounded amounts before default.  Fuel supplied in bulk to Mr Berry’s Acme Fasteners was onsold to retail customers, mainly fishing and charter vessels operating out of Whitianga.  Acme Fasteners customers were issued with fuel cards allowing them discounts on fuel purchased from pumps both at the wharf and at nearby BP and Mobil outlets.   

Evidence was given that Petroleum Logistics’ supply contract described the ‘wholesale price’ as being that determined by MOPS: an acronym for ‘mean of Platts Singapore’.  This is a reference to pricing benchmarks published by global energy information provider Platts which publishes forward pricing (typically 15 to 30 days forward) for oil products loading in Singapore.  Mr Berry said this was the price he should have been charged for fuel supplied over the previous five years.  Justice Lang said it was a commercially absurd result to have Petroleum Logistics agreeing to supply fuel to a customer in Whitianga at an ex-Singapore price.  The plain words of the contract made it clear MOPS provided the base wholesale price with Logistics expenses and margin to be added in, he ruled.  If there was any valid question over calculation of the wholesale price, it is likely to be raised early in the supply relationship rather than when sued for non-payment.  Acme Fasteners was ordered to pay arrears of $71,300. 

The court was told the price Petroleum Logistics charged Acme Fasteners changed every few days following movements in the price of oil and exchange rates.  Mr Berry was advised every day the supply price changed so he in turn could immediately adjust his retail price.

Berry v. Petroleum Logistics Ltd – High Court (26.10.18)

18.212

Relationship Property: Cossio v. Cossio

After being twice-married to the same man with both marriages subsequently dissolved, Theresa Cossio was in court claiming a share of former husband Mathew’s interests in a waterproofing business based in Avondale, Auckland.

Mathew Cossio has since remarried and now lives in Australia.  He is defending claims in the New Zealand courts that his business interests are relationship property.  Their first marriage, in 1979, was dissolved after three years.  Married again in 1985, they separated 24 years later.  In dispute, is Mathew’s interests in two companies set up by his father: J Cosio Ltd (which owns business premises on Rosebank Road, Avondale) and Permathene Ltd (a business providing geosynthetic waterproofing systems for agricultural, horticultural and construction sites).

Mathew has a 51 per cent shareholding in each company; his sister Jane the remaining 49 per cent.  Mathew says he ‘inherited’ his majority shareholding from his father. The High Court was told Mathew took over the business during his second marriage to Theresa.  This happened when his father sold up, planning to pursue business interests in the United States.  It was not an ‘inheritance’ in the sense that his father had died and left the business to two of his children in his will.

Justice Venning ruled Mathew’s interest in J Cosio Ltd was relationship property.  The default rule in the Property (Relationships) Act is that all assets acquired during marriage are relationship property. Shares in the company were ‘acquired’ when Mathew agreed to buy in, paying his father later.  It did not matter what was the source of funds used for payment.  Dividends subsequently paid out by the company were used to pay his father.

In contrast, shares in Permathene were gifted to Mathew.  Assets received by way of gift are not relationship property.  Theresa’s claim to an interest in Permathene required proof she had helped ‘sustain’ the asset.  Justice Venning said a $30,000 interest free loan made from household savings providing liquidity for Permathene’s operations amounted to a direct contribution which helped ‘sustain’ the business.  This contribution is relationship property, he said.

The case was referred back to the Family Court to determine values for the assets ruled to be relationship property: a majority stake in J Cosio Ltd and the economic value of a $30,000 interest free loan to Permathene Ltd.

Cossio v. Cossio – High Court (26.10.18)

18.211

Director's Duties: Adtraction Marketing Ltd v. Ehrenfeld

Sydney company director Gabriel Ehrenfeld barred by ASIC from managing any Australian corporation for five years from 2016 but not before he had plundered resources out of Auckland advertising agency Adtraction Marketing Ltd.  The High Court ordered repayment of $181,000 wrongly taken from Adtraction, now in liquidation insolvent owing creditors over two million dollars. 

The Australian Securities & Investment Commission’s five year ban followed Mr Ehrenfeld’s failure to comply with Australian corporations law and for what was described as his failure to show any insight or contrition into his behaviour.  This included mismanagement of Australian company Reeltime Media Ltd, a company used by Mr Ehrenfeld to fleece Auckland-based Adtraction Marketing in late 2013.

The High Court was told Mr Ehrenfeld bought into Adtraction Marketing in October 2013.  Adtraction had been operating for some nine years prior to his purchase. He promised big things: greater expertise through his Australian connections, back-office administrative support and an injection of AUD$100,000 fresh capital.  The capital injection never eventuated.  Evidence was given of cash filtered out of Adtraction Marketing almost as soon as he was installed as director.  Over a four month period, $228,500 was transferred to Australia in what Mr Ehrenfeld called a ‘squeeze and release’ methodology.  The ‘squeeze’ amounted to fees charged for provision of administration and financial services together with licensing fees all intended to sharpen cost centre focus; the ‘release’, supposed discounts for improved performance.  Justice Venning ruled there was no evidence to support most of the fees charged by Reeltime Media group.  A series of invoices for the supposed fees was created ex-post after the cash had been transferred and just prior to Mr Ehrenfeld putting Adtraction into liquidation.

Justice Venning ruled there was no commercial justification for $181,000 of the cash moved to Australia.  Many of the services invoiced were not provided.  Mr Enrenfeld was ordered to compensate Adtraction.  He breached duties as a director; failing to act in good faith and in the best interests of the company.

Adtraction Marketing Ltd v. Ehrenfeld – High Court (26.10.18)

18.213

Fraud: Grant v. R

The Court of Appeal forced full disclosure of SkyCity’s recoveries from fraudster Tessa Fiona Grant before reducing her jail term to six years from seven years eight months.  SkyCity recovered $1.4 million of its stolen $1.9 million.

Grant pleaded guilty to two frauds totalling $2.75 million: $1.9 million taken from SkyCity Entertainment’s Hamilton operations whilst finance manager between 2008 and 2014 and $795,000 misappropriated from Waikato Diocesan School for Girls whilst the School’s commercial manager between 2014 and 2015.

The Sky City fraud followed false invoicing, using company cheques to pay personal expenses and misuse of petty cash.  She used the money to pay credit card expenses, construct a $425,400 horse arena at her property and fund her sport as an equestrian.  This fraud came to light following subsequent publicity for similar frauds at Waikato Diocesan:  false invoicing, using School cheques to cover personal expenses and improper use of her corporate credit card.  A contractor asked to verify work supposedly done for Waikato Diocesan, which proved to be subject of a forged invoice, had previously carried out work for SkyCity when Grant was an employee.  He contacted SkyCity, telling it to check its records.

Prior to sentencing, Grant repaid Waikato Diocesan the money stolen plus interest and its costs.  SkyCity, meanwhile, was taking legal action against Grant to recover its losses.  An out-of-court deal was struck.  This was kept confidential.  At sentencing, the trial judge was told there had been reparations paid, but not the detail. The Sentencing Act allows reductions in punishment where there is ‘any offer of amends’ and ‘compensation to any victim’.

Grant appealed her sentence, saying full credit was not given for the level of reparations paid.  The Court of Appeal required full disclosure.  It did not matter that SkyCity made recoveries in a confidential settlement as part of threatened civil action.  The Court was told Grant paid SkyCity $1.4 million from the sale of her horse trucks and three properties she owned.  Some of these assets had been previously transferred by her to a company owned by her father.

Grant v. R – Court of Appeal (25.10.18)

18.210

Company: Latumbo v. Pacific Auto Carrier

For over two decades Robert Stone and Hohua Hemi built up their business exporting used cars from Japan to New Zealand and other countries.  Now they are at each other’s throats.  Each alleges the other is stripping cash out of the business for their own personal benefit. An Auckland customs broker stands between them left holding $8.8 million, unsure who gets the money.   

The High Court was told the two entrepreneurs own, directly or indirectly, a string of companies, stretching from Japan through the Philippines and the British Virgin Islands, co-ordinating sales and shipment. While business was prospering, operations were managed on an informal basis.  The two have fallen out.  Mr Hemi alleges Mr Stone has misapplied business resources to fund a lavish lifestyle in the Philippines.  Mr Stone alleges Mr Hemi has wrongly used joint business resources to finance expenses in New Zealand.  In particular, he complains Mr Hemi’s Pacific Auto Carrier (NZ) Ltd used joint business and shipping arrangements to run a competing business.  They should both share in Pacific Auto’s profits, he claims. From 2012, Mr Hemi, through Pacific Auto, imported used Japanese cars sold on a door-to-door basis, separate from their well-established importing business.

A 2016 mediation failed to sort out their differences. Next stop; the High Court.  Legal action was taken by Melanie Latumbo, financial controller for Philippines-based iCOMM International Ltd providing back-office services for the Stone/Hemi conglomerate.  She alleged she had been wrongly removed as a director of Pacific Auto, asked to be reinstated and further asked for legal action to be taken in the company’s name against Mr Hemi.  She assured the court she was acting on her own initiative.  Justice van Bohemen said her legal claim was being pursued for collateral reasons; advancing Mr Stone’s personal dispute against Mr Hemi.  It is highly unlikely that Ms Latumbo would have brought these proceedings without Mr Stone’s active support and encouragement, he said.

Ms Latumbo’s claim was dismissed.  The evidence indicated Ms Latumbo had resigned as director of Pacific Auto by October 2014, though no formal letter of resignation was sent in.  Since Ms Latumbo had not proved she was still a director, she could not ask the court to take action in the company’s name against Mr Hemi.

Latumbo v. Pacific Auto Carrier (NZ) Ltd – High Court (25.10.18)

18.209

Insurance: Settlers Crescent Partnership v. IAG

A speculative insurance claim by litigation funder Risk Worldwide New Zealand that commercial buildings in Christchurch could be destroyed twice over in successive earthquakes was dismissed by the High Court.

IAG Insurance was left defending its pragmatic 2011 decision settling claims for damage to two buildings, part of four adjoining buildings in Ferrymead owned by Settlers Crescent Partnership.  All were damaged to varying degrees during the initial sequence of Christchurch earthquakes in 2010/2011.  In what was a pragmatic commercial decision, IAG agreed to pay $10.2 million as if the buildings were destroyed leaving Settlers Crescent to decide whether they might be repaired or replaced.

Some three years later, Risk Worldwide sued in the name of Settlers Crescent arguing IAG assumed further risk when Settlers renewed its insurance policy and this risk eventuated when the June 2011 earthquake in fact destroyed unrepaired buildings on site.  Settlers claimed $1.12 million for further damage.  IAG described this claim as opportunistic; money claimed for a loss which had already been paid.  Settlers said the earlier deal was for anticipated repair costs only.

Justice Gendall ruled the earlier $10.2 million payout was agreed to be in full settlement of Settlers Crescents’ claim as if the buildings were a total loss and would be replaced.  This figure was calculated on an assumed rebuild cost though both parties knew some repair might be possible.  A further payment would amount to double recovery, he said. The buildings could not be treated as destroyed twice over.  It made no difference damage from the June 2011 earthquake occurred under a new policy, Justice Gendall said.

The site is currently vacant.  The buildings in dispute, a large warehouse and a Les Mills gym, were demolished in 2013.

Settlers Crescent Partnership v. IAG New Zealand – High Court (25.10.18)

18.208

Excise Duty: Parkes v. R.

Vintners Stephen and Wendy Parkes were convicted of selling product in breach of the Customs and Excise Act after their Sentry Hill winery in Taranaki was wound up insolvent.  They had no valid grounds to assume any legal right to sell, the High Court ruled.   

Lepperton winery Sentry Hill (2006) Ltd was put into liquidation by Customs in 2016 for unpaid excise duty totalling $281,800.  Mr Parkes agreed to help the liquidator continue operations.  Selling Sentry Hill as a going concern would get a better price.  Mr Parkes later took issue with the liquidator’s refusal to pay him for his time or to pay rent to a family trust owning the site.  He took legal advice and was told he could seize product and hold it as a lien against payment.  Mr Parkes told the liquidator of plans to do so and to sell the product to recover money he claimed was owed. The liquidator responded: no lien could be claimed and Sentry Hill owned the excise licence; only the company could sell. Mrs Parkes applied for an excise licence.  Her application was refused; Sentry Hill held a licence for the site.

Mr and Mrs Parkes were prosecuted after a customs official saw Sentry Hill product for sale at liquor outlets in Waitara and Bell Block.  They admitted selling Sentry Hill wine, claiming legal justification for the sales.

Convicted of defrauding the revenue and each fined $1000, they could not rely on their legal advice as grounds to avoid conviction, the High Court ruled.  Taxpayers are presumed to know the law.  The Parkes’ legal advice related only to the alleged possibilities of claiming a lien. It did not canvas the legalities of any sales.  They knew an excise licence was needed, given their involvement in the industry.  The liquidator had specifically reminded them Sentry Hill held the licence.  The Parkes were also ordered to pay personally $13,670 excise duty evaded with their unauthorised sales.

The High Court dismissed their appeal that conviction was disproportionate.  They said a conviction would prejudice their current jobs.  Mr Parkes now works as a process manager for Fonterra; a job involving overseas travel, he says.  Mrs Parkes is employed in a pharmacy.

Parkes v. R – High Court (24.10.18)

18.207

Asset Forfeiture: Commissioner of Police v. Cho

'Proceeds of crime’ confiscations extend to assets held overseas.  Convicted for possession and sale of class C drugs, Allen Bryan Cho surrendered assets valued at $1.13 million including his interest in US real estate.

Cho was sentenced to ten months home detention in March 2018, having been snared in Operation Ark a police drug surveillance commenced back in 2010.  Police seized cash and motor vehicles in Cho’s possession and had a restraining order placed over a New Jersey property registered in the name of his parents.

In a negotiated settlement under the Criminal Proceeds (Recovery) Act, Cho surrendered cash seized and the cash value of money he put into the New Jersey property.  The US restraining order was lifted so his parents could mortgage the property, raising cash for Cho’s payment.  Police accepted part of the New Jersey purchase was funded legitimately by Cho’s parents.  A 2001 BMW was returned to Cho together with the cash value of his 1992 Nissan Skyline, sold by police after it was seized.

Commissioner of Police v. Cho – High Court (24.10.18)

18.206