Phoenix Company: Spence v. R.

Using a series of ‘phoenix’ companies to cheat creditors of his Auckland business trading as Compass Roofing in what was labelled as deliberate, repeated and blatant dishonesty, Sam Oliver Spence was sentenced to three years nine months’ imprisonment.

With his various companies in liquidation, he sent abusive emails to liquidators trying to unravel his business affairs; when bankrupted, he refused to co-operate with Insolvency Service; and when on trial, he tried to manipulate the court’s sentencing process by forging character references and by falsely claiming to be Maori, seeking to have sentence reduced on cultural grounds.  

Five years after Compass Roofing Ltd was set up in 2011, Spence’s business was in severe financial difficulty.  Solvency was dependent entirely on Spence repaying some $154,600 he had drawn down from his company.  Rather than repay his current account, Spence left Compass Roofing creditors stranded by transferring Company Roofing assets across to a new company he controlled called Compass Group Ltd.  This was a ‘phoenix’ company, rising from the ashes of Compass Roofing and carrying on Compass Roofing’s former business.  The Companies Act prohibits directors of a failed company from managing any company taking over its business assets.

When Compass Group itself got into financial difficulty, Spence repeated the process setting up a new phoenix company called Caspian Engineering Ltd and shifting Compass Group assets across to Caspian. This time, it was Compass Group creditors who were left stranded.

Spence was bankrupted in 2018.

One estimate puts creditor losses at $2.4 million. In the District Court, Spence was sentenced to five years three months’ imprisonment for multiple breaches of both the Companies Act and the Insolvency Act.  This sentence was reduced on appeal by 18 months.  The most serious charges Spence faced carried a maximum sentence of five years.  At sentencing, the starting point should have been five years before making deductions for mitigating circumstances, the Court of Appeal ruled.

Spence v. R. – Court of Appeal (30.09.21)

21.159

Family Trust: Addleman v. Lambie Trust

As a discretionary beneficiary in the Lambie Trust, Prudence Addleman wants to know why $44 million dollars of trust money was paid across to an Australian company called Edmonton Pty Ltd, a company not named as a trust beneficiary.

In pre-trial skirmishing at the High Court, Prudence’s sister Annette failed to get breach of trust claims against Edmonton Pty shifted to Australia where she lives.

Litigation has its origins in a $4.25 million payment Prudence received in 2002 described as a first and final payment to her as a discretionary beneficiary in a family trust called the Lambie Trust.  This came as a complete surprise.  She had never heard of the Trust and was unaware she was a beneficiary.  Some sleuthing followed.  A series of court cases forced disclosure of Trust accounts.  There have been various changes of trustee over the years.  Annette was a trustee.

Prudence, Annette and their two siblings were raised in Australia.  Annette lives in Australia; Prudence lives in the United Kingdom.  The two have been estranged for decades.  The Lambie Trust was established by their father in 1990, having as its major asset land surrounding Auckland suburb Howick. Funding for the purchase and development of the 42 hectare land holding came in part from a $1.02 million compensation payout Annette received after being left a quadriplegic following a catastrophic accident at a Sydney swimming pool.

After identifying some $65 million dollars had flowed through Trust bank accounts since 1990, Prudence sued both her sister Annette and Edmonton Co Pty Ltd alleging breach of trust.  In particular, Prudence wants Edmonton Pty to repay $44 million.

In the High Court, Edmonton Pty asked to be removed from the case.  Any claim against it should be heard in Australia, it said.  It is an Australian registered company.  Its relationship to the Lambie Trust and disputed links to Panama could be dealt with in the Australian courts, it said.  Named as a final beneficiary of the Lambie Trust is a Panama company: Edmonton Co Ltd SA.  Annette says Edmonton Pty in Australia replaced Edmonton SA in Panama.

Associate judge Bell ruled Edmonton Pty has to front up in the New Zealand courts.  Lambie Trust was established in New Zealand.  The role of Edmonton Pty and any links to Edmonton SA in Panama could be dealt with by New Zealand courts as easily as by Australian courts.  The disputed payments were made from New Zealand out of New Zealand assets, he said.

Addleman v. Lambie Trustee Ltd – High Court (23.09.21)

21.158

Maori Land: Commissioner of Police v. Kiwi

Homes built on Maori freehold land cannot be seized under proceeds of crime legislation even if built using ill-gotten gains, the High Court ruled. 

In 2018, Jay Tarahini Kiwi, Vice-President of the Greazy Dogs motorcycle gang was sentenced to nine years imprisonment for methamphetamine dealing.  The High Court subsequently ordered a property at 135 Kairua Road at Welcome Bay in Tauranga be forfeit as proceeds of crime.  A nearby property at 224A Kairua Road was exempt from seizure; as Maori freehold land it came under exclusive jurisdiction of the Maori Land Court.  The Te Ture Whenua Maori Act prohibits ownership passing to anyone other than those with a kinship connection to current Maori owners.   

As part of their methamphetamine investigations, police investigated Jay Kiwi’s financial affairs.  They identified his uncle, Warren Kiwi, had fallen behind in mortgage payments for 135 Kairua Road during 2015.  With a mortgagee sale threatened, the property was sold to Jay Kiwi. Funding for the purchase materialised through John Aitken, former President of Greazy Dogs.  Justice Katz ruled that Kiwi funded his purchase of 135 Kairua Road by laundering proceeds of his drug sales through a bank account controlled by a member of the Aitken family.  The property was ‘tainted;’ purchased with the proceeds of crime and forfeit under the Criminal Proceeds (Recovery) Act.  Kiwi purchased his uncle’s property at a considerable undervalue, paying some $102,000 for a property then having a rateable value of $227,000.  The High Court was told his uncle has remained in occupation since the sale.  Since 135 Kairua Road is held as general land, not Maori land, it is ‘property’ available for seizure as proceeds of crime.

Prior to his arrest, Kiwi was living at 224A Kairua Road.  Phone calls previously intercepted by police identified Jay Kiwi as the person managing construction of a home at 224A Kairua Road.  Police inquiries identified labour and materials for construction were commonly paid for with cash, in fifty dollar notes.  Justice Katz ruled the home was ‘tainted,’ being funded with proceeds of crime.  The house is built on Maori freehold land.  As a fixture, the house forms part of the land.  The Te Ture Whenua Act is designed to keep Maori land within Maori ownership.  The effect of the Act is to prevent seizure of Maori freehold land as proceeds of crime, Justice Katz ruled.  The High Court was told Maori Land Court records has title to 224A Kairua Road registered in the name of another of Jay Kiwi’s uncles, Graeme Kiwi.  Graeme died in prison in 2017.

Commissioner of Police v. Kiwi – High Court (17.09.21)

21.157

Family Dispute: Avoca Holdings v. Dennehy

A decades old family dispute again surfaced with sale of Whataroa Hotel on the West Coast to pay rates arears. Patrick Dennehy’s claim to $150,000 held in the pot was dismissed by the High Court.

Avoca Holdings Ltd was set up in 2000 with brothers Gerard and Patrick Dennehy 50/50 shareholders.  Ten years on, the two were in court disputing ownership of the company and arguing over who was in charge of running the Whataroa Hotel.  This after Gerard had police evict Patrick from the hotel.  Patrick’s attempt to put the company into liquidation failed; it was a private dispute about share ownership and that was not grounds to put Avoca into liquidation, the judge ruled.  Another ten years on, Westland District Council was looking to force a rating sale for hotel rates arrears.  Hampering Council sale plans was a caveat registered on the title, part of the legal debris left over from the High Court dispute ten years previously.  To expedite matters, Avoca Holdings was put into liquidation for unpaid rates and the hotel sold.  Patrick immediately resurrected his claim to a half share of Avoca’s net assets; in this case a claim against the $150,000 held by Avoca’s liquidator.  Associate judge Paulsen dismissed his claim.  Patrick had no claim against company assets; his claim remained a dispute with his brother, a dispute still not resolved.

Judge Paulsen also dismissed claims Patrick was owed money by the company for work done.  These claimed debts were over thirteen years old, well outside the six year time limit for taking legal action.

Avoca Holdings Ltd v. Dennehy – High Court (17.09.21)

21.156

Tax Evasion: Commissioner of Police v. Nabawi

Evading tax leaves taxpayers open to all undeclared taxable revenue being confiscated as proceeds of crime together with any assets purchased with this undeclared income.  In a pre-emptive strike, police seized a motor vehicle and cash following alleged tax evasion by Jamal Nasser Nabawi.

Police pounced on Nabawi for alleged tax evasion when investigating other suspected criminal activity.  Probing Nabawi’s financial affairs, police identified $1.3 million had passed through his business and personal bank accounts at a time when first he was working at Countdown earning $11,300 per year and then in subsequent years when he declared for a four year period total income of $10,300.  Police allege just over one million dollars of the money passing through his bank accounts was revenue received by a company called Premium Plasterboard NZ Ltd which was not declared for tax purposes.  Nabawi was sole director of Premium Plasterboard.

Nabawi argued proceeds of crime legislation does not apply to tax evasion.  Tax evaders do not gain a ‘benefit;’ they avoid a liability, so long as any tax evasion goes undetected.

Tax evasion attracts substantial criminal sanctions: up to five year’s imprisonment following knowing failures to pay tax in excess of $30,000.  Tax evasion qualifies as ‘significant criminal activity,’ Justice Duffy ruled. This brings proceeds of crime legislation into play.

Seized as suspected proceeds of crime were a Toyota Hilux van, $58,400 cash found in the van and the balance of Nabawi’s personal ANZ bank account.  The High Court was told this bank account held $107,400 as at September 2020.

It is still to be proved whether Nabawi was guilty of tax evasion and if so whether the seized assets should be forfeit.

Commissioner of Police v. Nabawi – High Court (15.09.21)

21.154

Fair Trading: Shabor Ltd v. Graham

Deer farmers Steve Borland and Bob Sharp recovered $371,000 damages following purchase of their Oparau farm, near Kawhia.  Vendor Robert Graham misrepresented the farm’s carrying capacity on sale.

The Court of Appeal was told the two inspected the property just three days before tenders closed in April 2014.  Their unconditional offer to buy at $5.25 million was based on sales information stating the property had a carrying capacity of 7500 stock units.  Doubts were later raised; the number of animals on changeover were low and some were in poor condition.  A lawyer’s letter followed, indicating they were looking for compensation.  In the winter following purchase, the property supported only 5000 stock units.  Mr Graham said the property had previously supported up to 7500 units, but recent carrying capacity had been badly affected by droughts in two successive years. To say carrying capacity at time of sale was 7500 stock units was a misrepresentation, the High Court decided.

When sued under the Fair Trading Act, Mr Graham pointed to a clause in the sale agreement acknowledging Borland and Sharp had purchased ‘acting solely on [their own] judgement’ and that there was no reliance on any representations made by the vendor.

The Court of Appeal ruled ‘no reliance’ clauses are of no effect in Fair Trading claims if they are overwhelmed by evidence to the contrary.  In fact, the purchasers had relied almost totally on the stated carrying capacity, the court ruled.  Carrying capacity was specific and central to advertising.  As intending purchasers, they spent barely two hours inspecting the property.  They did not negotiate a ‘due diligence’ clause in their agreement. The offered price of $5.25 million was a multiple of 7500 stock units by $700, being their assessment of then current farm prices.

Damages were assessed at the difference in value between the price paid and the actual farm value: $530,000.  This figure was reduced by thirty per cent to acknowledge they should have protected their own interests by requiring a due diligence clause. There was industry evidence that farm purchasers almost without exception require due diligence clauses in farm sale agreements.

Shabor Ltd v. Graham – Court of Appeal (15.09.21)

21.155

Fair Trading: Dempsey Wood v. Gapes

Property developer Tony Gapes was ordered to pay $286,200 damages to civil engineers Dempsey Wood after his Springpark development in Auckland collapsed.  It was a breach of the Fair Trading Act to say there was funding available for ongoing work when in fact there wasn’t.  

Gapes Redwood Group started its Mt Wellington residential project in 2014 after achieving pre-sales of some $60 million from homeowners buying off the plan.  Within a year, delays and cost overruns had the development in serious trouble. Initial funders put the project into receivership.  A replacement thirty million dollar financing facility from Singapore-based Koi Structured Credit saw the project re-started.    

Dempsey Wood Civil Ltd had a $5.3 million Springpark contract for civil works, later increased by some two million dollars for approved variations.  The High Court was told Dempsey was very pro-active in getting progress payments. Koi Credit’s funds were held in a lawyer’s trust account, released monthly against contractors’ invoices. Dempsey was in the habit of threatening to ‘down tools’ unless scheduled payments were received on time.

The Koi Credit facility expired in October 2015. Never the less it ran on, while Mr Gapes searched desperately for replacement finance.  Against this background, Dempsey sought confirmation it would be paid for further work if it stayed on the job.  Dempsey was unaware Koi had issued a Property Law Act notice to protect its position should refinancing be unsuccessful and it became necessary to sell the unfinished development.

In mid-November, Mr Gapes forwarded an email to Dempsey Wood confirming funds from Koi were held by lawyers in a dedicated project account ‘earmarked for civils and consultants.’  Within weeks, Koi appointed receivers.  Pre-sale agreements were cancelled, making sale of the unfinished project more attractive since a new financier could re-sell the proposed terraced homes and apartments to new buyers at a higher price.  Koi Credit sold the unfinished project to Wilshire Group for $25 million, leaving Koi with a loss.  Meanwhile, funds in the lawyer’s Springpark project account earmarked for contractors were returned to Koi Credit. 

The likelihood of ongoing funding being available to contractors was quite different from that conveyed by Mr Gapes’ November email, Justice Fitzgerald said.  While Mr Gapes may have been optimistic that Koi would continue to support the project until refinancing was complete, there was no firm commitment from Koi Credit.  Without Mr Gapes’ assurance that funding was safe, Dempsey Wood would have walked off the job.  It invoiced $314,600 for work done between the date of Mr Gapes’ assurance and the date work stopped three weeks later on receivership.  Dempsey Wood was awarded damages of $286,200 for Mr Gapes misleading statement.  Damages were calculated on costs incurred by Dempsey Wood; its invoiced price less its profit margin.

Dempsey Wood Civil Ltd v. Gapes – High Court (10.09.21)

21.153

Family Trust: Mills v. Galway Trust

On their mother’s death, three siblings agreed to pool their inheritances enabling disabled brother Stephen to continue living in the family home.  It was a breach of trust for Stephen to later claim he was absolute owner of the home when in his will he supposedly gifted the Hamilton property to another sibling who had not contributed to the original arrangement.

Stephen Mills suffered from multiple sclerosis.  He was living with his mother at the family home in Galway Street when she died in 2004.  Three of his siblings: Pauline, Wayne and Mary agreed to redirect inheritances from their mother’s estate.  Instead of receiving cash, their estate entitlements would be used to part-fund purchase of Galway Street, providing Stephen with the security of having a home to live in.  The Galway Trust was established to buy the property.  Pauline Wayne and Mary contributed a total of $64,000.  Stephen put in about $80,000; his share of the estate plus personal savings.  A bank mortgage of $58,000 completed the purchase.

Terms of the trust specified the home was not to be sold while Stephen was alive and that he could live there rent free provided he paid outgoings for the mortgage, rates and insurance.

While it was intended title to Galway Street would be registered in names of Galway Trust trustees, it transpired that title was taken in Stephen’s name only.  The court was told Stephen became quite emotional when visiting his lawyer to sign the paperwork, saying he wanted something in his life he did himself. His lawyer made it clear that while Stephen’s name would go on the title alone, he held the property in trust for the Galway Trust.  On his death twelve years later, Stephen left an unsigned document, later confirmed to be his will, stating the house would go to another sibling, Terry.  Only then, did Galway Trust trustees discover they were not registered on the title.  Terry claimed he was now absolute owner of Galway Street.  Terry did not contribute financially to the trust’s Galway Street purchase.

The Court of Appeal confirmed a High Court ruling that Terry did not have ownership; the property was owned by Galway Trust.  Subsequent to Stephen’s death, trust beneficiaries are Pauline, Wayne, Mary and their children.  Stephen’s estate was entitled to repayment of $30,300; money he lent to the Trust for purchase of Galway Street.

Mills v. Galway Trust – Court of Appeal (8.09.21)

21.152

Valuation: Groom v. Bartulovic

Dennis Bartulovic and sister Winnie rented out three shops in Auckland suburb Ellerslie, a commercial holding built up from the profits of their late father’s fish and chip shop.  On Winnie’s death, Dennis tried to get these assets on the cheap, unsuccessfully disputing the value of their rental business.  

Dennis and Winnie ran the rental business as a partnership, sharing equally in profits.  Its major asset was real estate: the three Ellerslie shops.  After Winnie died in 2019, Dennis gave three months’ notice to close down their partnership, as required by the partnership agreement.  Winding down the partnership brought Dennis into conflict with Winnie’s son Paul, acting as executor of his late mother’s estate. They could not agree on a price for Dennis to buy out his sister’s half share.

Dennis demanded partnership real estate be valued on the basis of its current use only, future development potential should be ignored.  The shops were let on long leases and there was no demolition clause allowing eviction to enable redevelopment. He offered $795,000 for Winnie’s half share.  The High Court was to later order payment of $1.25 million.

Associate judge Bell said their partnership agreement required Dennis pay half the ‘net value’ of the partnership.  Valuation required assessment of the land’s market value at the date their partnership ended.  Several valuers were approached.  Their assessments valued the land at some $2.44 million.

Dennis argued the rental business lost value after Winnie’s death because her son Paul interfered with business operations.  As executor of Winnie’s estate, Paul had no legal authority to meddle in partnership business.  Actions taken by Paul did not reduce partnership value, Judge Bell ruled.  In particular, Dennis complained Paul entered into discussions with tenants about rent relief during covid-19 quarantine lockdown.  Paul made no unilateral decisions on rent relief, Judge Bell said. Tenants’ leases specifically excused payment of rent should access be prevented by pandemic restrictions.

Since the partnership ended, Dennis has received all shop rentals.  The partnership agreement specifies he must pay interest on the $1.25 million owed, calculated at bank corporate loan rates plus a margin of two per cent from date the partnership terminated in 2019. 

Groom v. Bartulovic – High Court (8.09.21)

21.151

Kiwifruit: Gao v. Zespri Group

Former Bay of Plenty contractor Haoyu Gao was ordered to pay $12 million dollars for illegally exporting kiwifruit budwood to China. 

Zespri Group Ltd holds rights under the Plant Variety Rights Act for the G3 and G9 varieties of golden kiwifruit it developed. These varieties are commercially valuable; they proved resistant to PSA, the virus which damages legacy varieties.

The court was told Mr Gao extended his Bay of Plenty kiwifruit contracting business in 2013 with the purchase of a local kiwifruit orchard.  Outbreaks of PSA put him under severe financial pressure.  Mr Gao subsequently delivered G3 and G9 budwood to an associate in China, receiving cash against future ‘royalties.’  Private investigators hired by Zespri subsequently identified these varieties planted in four orchards near the cities of Chibi, Xianning and Wuhan; orchards controlled by Shu Changqing.  He would not admit that Mr Gao supplied the budwood, but stated he did have a ‘licence agreement’ from Mr Gao supposedly giving him full intellectual property rights to G3 and G9 for the whole of China.

The Court of Appeal confirmed a High Court ruling that Mr Gao breached Zespri’s registered plant variety rights by exporting stock from New Zealand without Zespri approval.

Damages of $24 million were assessed on a notional royalty for the unauthorised kiwifruit subsequently harvested in China.  Damages were reduced by fifty per cent to $12 million, recognising that Zespri could take legal action in China against Mr Shu for illegally cultivating G3 and G9 varieties.

Zespri has registered in China under its equivalent of the Plant Varieties Act, Zespri’s exclusive right to commercially exploit G3 and G9 kiwifruit varieties in that country.  Zespri is required to take action in local courts to enforce these rights against growers in China.

It came out in evidence at the High Court that after Mr Gao sold a supposedly all-China exclusive licence to Mr Shu, he then attempted a sell the same licensing deal to another buyer in China.  Mr Gao was angry when this second buyer backed out, having Mr Gao then accuse him of a lack of honesty.  There was also evidence of Mr Gao suggesting to another associate in China that he get Kiwifruit stock by stealing budwood from a local orchard. Mr Gao provided detailed instructions as to where the orchard was situated.   

Gao v. Zespri Group Ltd – Court of Appeal (7.09.21)

21.150

Relationship Property: Palmer v. Alalaakkola

Works of art produced during a relationship are relationship property as also is copyright in the finished product, the High Court ruled in a dispute between Marlborough artist Sirpa Alalaakkola and her former husband when their twenty year marriage ended. 

Renowned for her colourful artwork, much of it depicting holiday activities, Ms Alalaakkola agreed former spouse Paul Palmer could have some of her paintings but objected to him also having copyright. Mr Palmer said he intended to reproduce copies of the paintings to sell and to derive future income.

In the High Court, Justice Isac ruled copyright in works of art is a ‘property right’ to be valued and divided as relationship property at the end of a relationship.  As a property right, copyright is no different in principle from intangible rights such as fishing quota, options to purchase and insurance claims, all of which have previously been treated as relationship assets.  The physical painting and copyright in the image are not one and the same, Justice Isac said.  They are separate property interests with differing economic values.  One person may own a painting, another hold copyright.

No evidence had been provided as to either the value of paintings completed by Ms Alaakkola during the relationship or the value of copyright attaching to these images.  Justice Isac recommended it was best for the two to reach agreement between themselves.  If no agreement could be reached, it was for the Family Court to decide on the value of paintings still held by Ms Alalaakkola and the value of copyright attaching to those paintings, with Mr Palmer entitled to half the value.  Many of Ms Alalaakkola’s paintings ruled to be relationship property are on exhibition in Finland, the country of her birth.

Not categorised as relationship property were paintings completed before the relationship started, sold during the relationship, or produced after the relationship ended.

Palmer v. Alalaakkola – High Court (7.09.21)

21.149

Share Buy-back: Warkworth Retail Ltd v. Warkworth Holdings Ltd

High Court appointed interim liquidators to Warkworth Holdings Ltd after allegations high-profile investors Todd Strathdee and Andrew Guest improperly used a share buyback to seize control while plotting to do a deal with themselves as neighbours to subdivide land on Falls Road, Warkworth.

Strathdee and Guest are directors on Warkworth Holdings’ board.  Value of bare land around Warkworth has increased markedly, due in part to improved access promised on completion of a new Puhoi-Warkworth highway.  Borrowings of $47 million are secured over Warkworth Holding’s land; funding provided by minority shareholder New York-based Arena Global LLC and former shareholder Warkworth Retail Ltd.  Arena has first claim on sale proceeds. Mr Guest was associated with Warkworth Retail; Mr Strathdee is associated with Arena.

With money due on loans standing at some $47 million, Warkworth Holdings had received a conditional offer for its land at $50 million.  The High Court was told that some two weeks earlier a majority of Warkworth directors had agreed to a $42 million sale, selling to a company owned ultimately by Mr Strathdee.  Two directors representing majority shareholder Foundation Developments Ltd objected to this sale.  Around the same time, Warkworth Holdings bought back its shares then held by shareholder Warkworth Retail for zero consideration.  Mr Guest facilitated the buy-back.  Reducing the number of Warkworth Holdings’ shareholders created a board deadlock; having the effect of freezing management decisions.  Arena also took steps to seize control of Foundation Developments’ shareholding in Warkworth Holdings under rights contained in a previously arranged shareholders’ agreement.  If all fell into place, Arena Global would then have 100 per cent control of Warkworth Holdings.

Former shareholder Warkworth Retail and majority shareholder Foundation Developments allege that the $42 million sale orchestrated by Strathdee and Guest is at an undervalue, that the buy-back of Retail’s shareholding is in breach of the Companies Act and that the buy-back was engineered for an improper purpose.

Only after applying to the High Court for appointment of an interim liquidator did the two disgruntled shareholders learn a valuable easement was being negotiated between Warkworth Holdings and its neighbour to benefit joint development of the two properties.  The company owning neighbouring land is controlled by Strathdee and Guest. 

Justice Gault appointed interim liquidators to Warkworth Holdings, keeping open the possibility of a later challenge to actions of Strathdee and Guest.  Days before this court hearing, Arena changed tack; exercising its rights as secured creditor, having a receiver take control of Warkworth Holdings’ land.

Warkworth Retail Ltd v. Warkworth Holdings Ltd – High Court (6.09.21)

21.148

Buy-out: PLC Trust v. Birchfield Holdings

West Coast miner Allan Birchfield has been strongly advised to accept a reasonable offer for his 25 per cent shareholding in Birchfield Holdings Ltd after he was kicked off the board.

Mining company Birchfield Holdings is valued in excess of twenty million dollars.  Through PLC Trust, Mr Birchfield controls one quarter of the shares; three siblings who between them hold a majority shareholding are also directors.  They removed Mr Birchfield as director in 2019. The High Court was to learn of deep seated differences of opinion between Mr Birchfield and his siblings, primarily over the company’s strategic direction, its dividend policy and complaints about company resources being diverted in payment of allegedly excessive salaries.  He sued, asking the High Court to have him reinstated to the board and to regulate the company’s future activities by appointing independent directors to take control.  His siblings took a short-cut, getting a court ruling that Mr Birchfield’s reinstatement as director was never on the cards and that all his claims should be dismissed since they had offered to buy him out.  If their brother went ahead with his case, a court ordered buy-out of his shares was the only plausible outcome, his siblings said.

Mr Birchfield appealed.  Any buy-out offer would be unfair, he said.  Value of company shares had been harmed by his siblings’ abject mismanagement, he claimed.  He had rejected their various buy-out offers.

Buying out a minority shareholder at fair value is the appropriate remedy where a minority shareholder complains about how a company is run, the Court of Appeal ruled.  Calculation of fair value can be difficult where majority shareholders’ previous conduct has affected company share value.  This can include payment of allegedly excessive salaries.  In this case, terms of reference previously agreed by the Birchfield family for determining fair value required that prior payment of any excess salaries be taken into account, the court said.

Mr Birchfield was given three weeks to consider the most recent buy-out offer.  Terms of this offer were not publically disclosed.  Failure to agree would see further litigation over what was fair value.

PLC Trust v. Birchfield Holdings Ltd – Court of Appeal (2.09.21)

21.147

Bankrupt: Andrews v. R.

Raymond Anthony Andrews committed multiple frauds running businesses whilst bankrupt including conviction in 2013 for failure to pay for beauty therapy equipment and conviction in 2019 for defrauding buyers of used cars.  Sentence of six and a half years’ imprisonment was confirmed by the Court of Appeal.  

Bankrupted in 2008, Andrews’ bankruptcy was extended to 2018 following conviction for managing a beauty therapy business whilst bankrupt.

Andrews was convicted in 2019 and sentenced to six and half years’ imprisonment by the Auckland District Court for operating a used car business whilst bankrupt and defrauding customers.  The court was told he imported vehicles from Australia (often insurance write-offs) which were then repaired, certified and on-sold. There was evidence of vehicle VIN numbers altered to prevent vehicle history being traced.  Customers gave evidence of payment made but no vehicles delivered, or different vehicles from that ordered delivered, or unrepaired vehicles delivered.  Police estimate customers were defrauded of some $700,000.

Andrews claimed he was not operating a used car business whilst bankrupt; he had an unwritten agency agreement with his son and was acting as an agent of his son’s car business.  His son denied his father had any authority to act on his behalf. At trial, the jury convicted Andrews of operating a used car business while bankrupt.  He was also convicted of other Insolvency Act offences: wilfully misleading Insolvency Service (by not disclosing bank accounts he had control over) and concealing property (funds held in the bank accounts).

Andrews challenge to the way trial counsel presented his case in court was dismissed by the Court of Appeal.

His earlier involvement in a beauty therapy business resulted in convictions for obtaining by deception: making no payments on the lease of a laser hair removal machine (which Andrews later claimed had gone missing, stolen) and failing to pay a promised $4000 for purchase of a E-Light IPL beauty machine.  In 2013, he was sentenced to 15 months imprisonment by the Tauranga District Court.

Andrews v. R. – Court of Appeal (31.08.21)

21.145

Fraud: Ropitini v. Social Welfare

Tipare Hokimate Ropitini’s two years three months’ imprisonment was confirmed by the High Court for multiple social welfare frauds over nine years totalling $165,400.

Ropitini falsely claimed not to be living in a de facto relationship and made false claims for accommodation allowance.  In addition, she created a fictitious rental business with accomplices claiming to be tenants through forged tenancy agreements. Under false names, Ropitini claimed to be a tenant of her own fictitious rental business. Both Ropitini and her accomplices then applied for social welfare grants to collect costs of bonds, rent in advance and accommodation assistance.  Her accomplices defrauded Social Welfare of $54,400.

The High Court ruled there were no grounds to reduce the length of imprisonment imposed by the District Court.

Ropitini v. Social Welfare – High Court (31.08.21)

21.144

Bankruptcy: FAI Money Ltd v. McKenna

Learning that former bankrupt Edward Johnston had wrangled a $100,000 concession out of secured creditors claiming rights to his forestry investment, Wayne Matthew McKenna said he had first claim having lost out when Mr Johnstone’s bankruptcy left him with a worthless $212,000 guarantee.  

Mr McKenna claimed Mr Johnston guaranteed repayment of $212,000 he loaned to Sentinel 35 Trustee Company Ltd in January 2012.  Ten months later, Mr Johnston was bankrupt.

The High Court was told a major asset in Mr Johnston’s bankruptcy was his one-fifth share in a forestry partnership.  It was heavily mortgaged.  Insolvency Service disclaimed any interest in the asset. Nine years after being bankrupted, Mr Johnston’s one-fifth share had a cash value of about $843,000: his share of the forested land ($34,000); cutting rights ($754,200); and carbon credits ($54,700).  Two creditors had security over his partnership interest: FAI Money Ltd having advanced $300,000 and a private lender making a $72,000 loan.  With more than a decade’s interest running on these secured loans, plus a legal question over the extent to which FAI’s security included cutting rights and carbon credits, a three-way deal was struck: Mr Johnston would receive $100,000 as reward for keeping up partnership payments, protecting the asset; the $72,000 private loan would be repaid with no interest; and FAI would take the balance.

Mr McKenna objected.  He had been left out of pocket as an unsecured creditor in Mr Johnston’s bankruptcy.  He should be entitled to the $100,000 now coming available from a bankruptcy asset, he claimed.  Justice Peters dismissed his claim.  Paper work failed to prove Mr McKenna was an unsecured creditor.  The court was provided with a copy of the $212,000 supposedly guaranteed loan.  A written contract provided to the court was not signed by Sentinel as the supposed borrower; signature of the un-named guarantor was indecipherable.

FAI Money Ltd v. McKenna & Johnston – High Court (31.08.21)

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Loan: Powell v. K2 Investment Group

Bronwynne Durney left legal carnage in her wake after splitting with Gabor Kemeny: she borrowed $100,000 to help fund her relationship property dispute in Australia; promised Richard Powell mortgage security over her property company’s assets for his $100,000 loan and then proceeded to strip cash out of the company in advance of an Australian Family Court ruling that the company’s assets be handed over to Gabor Kemeny.  Meanwhile the unpaid Powell loan was accruing default interest at 180 per cent per annum. 

At a time when they were living together, Bron Durney and Gabor Kemeny set about constructing apartments in Napier and Hastings to form part of the Quest accommodation chain.  K2 Investment Group Ltd, with Ms Durney as sole director and sole shareholder, was set up as their joint investment vehicle.  The High Court was told that after the two separated in 2011 Ms Durney set about extracting cash from K2 Investment.  According to K2 Investment’s financial statements she owes $1.7 million.

Through an intermediary, Kaiapoi financier Richard Powell learnt she was looking for funds to finance Australian relationship property litigation against her former spouse.  In 2012, Mr Powell agreed to a short term six month loan of $100,000, to be repaid out of her expected relationship property settlement.  She agreed to a mortgage over K2 Investment’s assets and was described in the loan agreement as guarantor.  There proved to be no guarantee; she did not sign as guarantor, signing only as director of K2 Investment.  The Australia Family Court ruling saw all assets in K2 Investments put into Mr Kemeny’s hands and Ms Durney awarded cash insufficient to repay the $100,000 loan.  This left Mr Powell and Mr Kemeny each claiming prior rights to K2 Investment’s assets.

In the High Court, Justice Osborne ruled Mr Powell had first claim.  Ms Durney’s agreement to mortgage K2 Investment’s assets was valid; she was at the time the company’s sole director.  When the Australia Family Court awarded control of K2 Investment assets to Mr Kemeny he was aware of the Powell loan and was also aware of Mr Powell’s right to claim a mortgage over the same assets.

Mr Powell was entitled to have his mortgage registered over K2 Investment assets.  Terms of his $100,000 loan were varied.  Amount owing had ballooned out by time of the trial; default interest was running at 180 per cent per annum.  The default interest rate was left unchanged, but application suspended for a period of 39 months, reflecting Mr Powell’s delays enforcing his loan.  In total, Mr Powell was owed $1.03 million, Justice Osborne ruled.

Powell v. K2 Investment Group Ltd – High Court (30.08.21)

21.143

Right of Way: Botev Trustee v. Tait

It took a High Court order to enforce rights of vehicle access to their Auckland property after owner of a neighbouring flat extended his outdoor patio into the right of way.

The Botevs purchased flat three at a Half Moon Bay address in 2009.  Three years later, Shane Tait purchased flat two next door.  His mother lives there; he does not.  The Botevs access to flat three takes them past flat two.  Mr Tait claimed they had pedestrian access only. Without consent of other owners of the cross-leased flats he attached a conservatory to flat two and extended the patio out into the disputed right of way.  The Botevs were further annoyed by Mr Tait’s mother renting out flat two on Airbnb. 

Cross lease terms required owners’ disputes go to arbitration.  A 2019 arbitration saw the arbitrator rule that rights of way created in 1975 allowed the Botevs vehicle access and that renting flat two on Airbnb was in breach of the cross lease.  A written agreement between Mr Tait and the Botevs followed: a formed driveway past flat two would be constructed with the patio rebuilt behind a retaining wall. Auckland City refused consent to the earthworks; reducing size of the patio meant ‘usable outdoor space’ requirements were no longer met.  This could be remedied by removing the illegally constructed conservatory, the High Court was told.

The Botevs applied to the High Court, asking the 2019 arbitration be registered as a court judgment.  This would enable enforcement.

Mr Tait said the 2019 arbitration was superseded by their subsequent written agreement.  This subsequent agreement was simply a failed attempt to implement the 2019 arbitration, Justice Campbell said.  The arbitration award still existed.

Mr Tait further argued enforcement of the 2019 arbitration would be against public policy; it would breach Auckland City planning rules.  There was no evidence the arbitration award breached fundamental principles of law and justice, Justice Campbell said.  The Botevs were entitled to enforce their right of vehicle access.

Botev Trustee Ltd v. Tait – High Court (26.08.21)

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Subdivision: Reynolds Trust v. Parklands Properties

Having forfeited a $2.5 million deposit in 2009 to Auckland property developer Parklands Properties, Reynolds family interests had the upper hand twelve years later when the Court of Appeal ruled Parklands would need to pay some $4.6 million to remove an easement restricting further development of its subdivision at Karaka.

In 2004, Joseph Norma’s Parkland Properties Ltd and interests associated with Francis and Juliet Reynolds jointly purchased rural land on the Hingaia peninsular near Papakura.  Auckland City expansion has seen this land developed for residential housing.  When purchased, the land contained a four hundred metre right of way ensuring access to the two surveyed lots.  By agreement Parklands took title to one lot totalling 17 hectares; Reynolds the remaining 14 hectares.  Their agreement committed each to co-operate in subdividing the land.  A subsequent deal for the Reynolds to buy out lot two owned by Parklands fell over with the Reynolds short of cash after the global financial crisis.  They forfeited a $2.5 million deposit.  After this deal collapsed, the Reynolds business relationship with Parklands’ Mr Norma soured.

Fast forward a decade: Parklands had Auckland City consent for subdivision of its land with a requirement to create a public road as access for an intended 158 residential lots.  The existing four hundred metre right of way was perfect for the job.  Parklands surrendered its share of the right of way easement for use as a public road; it asked the High Court that the Reynolds be forced to similarly give up their easement rights allowing completion of the public road designation. The Reynolds no longer used the right of way, it said.  Access to their land was provided from other public roads.

The High Court removed the Reynolds rights of way, awarding them $300,000 compensation.  This ruling was overturned by the Court of Appeal.  The prior agreement between Parklands and the Reynolds to co-operate in any future subdivision anticipated that any variation of their rights would be a matter of negotiation. It was not for the courts to override this agreement, the Court of Appeal ruled.

The court was told that removal of the Reynolds rights of way was worth $13.9 million to Parklands.  Reynolds family interests would be entitled to share in this benefit, if negotiating a surrender of access rights, the Court ruled.  Payment by Parklands of $4.6 million was an appropriate figure, the Court of Appeal said.  This represented $1.44 million loss of value to Reynolds ownership of lot one and a $3.16 million share of the benefit to be gained by Parklands with its proposed subdivision of lot two.

F&J Reynolds Trust v. Parklands Properties Ltd – Court of Appeal (23.08.21)

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Deposit: Kinleith Land v. Bremworth

Hitching its bandwagon to a low carbon economy and claiming an interest in exploiting solar energy, David Henry’s Kinleith Land & Infrastructure Ltd is in liquidation and on the hook for $2.4 million deposit unpaid on a failed property deal.

In August 2020, Kinleith Land signed up to buy Cavalier Bremworth’s commercial property in Auckland suburb Papatoetoe for $24 million. The High Court was told settlement date was extended while Kinleith Land continued negotiations with a US funder. The financing deal fell over.  Bremworth cancelled the sale.  It found another buyer, paying $24.9 million for the Papatoetoe site.

When sued for the unpaid deposit, Kinleith Land argued its liability to pay a deposit on the cancelled contract disappeared when Bremworth turned around and resold at a $900,000 ‘profit.’  The right to sue for a deposit remains when a contract is cancelled, Associate judge Gardiner ruled.  Re-selling at an increased price was irrelevant; Bremworth had expended time and energy in finding another buyer.

Kinleith Land also argued negotiations over a later settlement date meant the requirement to pay a deposit was waived. Not so, Judge Gardiner ruled. Bremworth made it clear during negotiations that any new arrangement was without prejudice to its rights under the original August 2020 contract.

Bremworth is left as $2.4 million unsecured creditor in Kinleith Land’s liquidation.  Liquidators first report shows no evidence of Kinleith Land having assets of any value.

Kinleith Land & Infrastructure Ltd v. Bremworth Ltd – High Court (19.08.21)

21.140

Leasehold: Paros Property v. Smith

The lessor has choice of valuer when owners of leasehold interests want to freehold Freemans Bay townhouses build by Auckland city in the 1970s.

Occupiers have been looking to freehold in the face of crippling rent rises as property values sky rocket.  Some occupiers have walked off; reducing liability for rent arrears by selling their leasehold interest back to the lessor.

Inner city suburb Freemans Bay was gentrified by Auckland City in the 1970s with its purchase and demolition of slum properties, subsequently redeveloping the suburb with terraced townhouses. Auckland City initially retained ownership, selling leasehold interests to intending purchasers.  Neil Christian’s Paros Property Trust Ltd took ownership after Auckland City sold its Freemans Bay property interests in the 1990s.

Caught in the rent review vice was Tim Smith.  In 2015, he purchased the leasehold interest in a Napier Street townhouse for $155,000.  Four years later, a rent review notice advised annual rent was now $81,375.  The lease requires rent reviews every seven years.  He had recently lost his job and there were ongoing relationship property negotiations with his former spouse, the High Court was told.  Mr Smith approached Paros Property, looking to exercise his right to purchase the freehold.  No agreement was reached on choice of valuer to put a price on the freehold.  Mr Smith wanted valuers Gribble Churton Taylor; Mr Christian did not.  A Paros Property internal email variously described Gribble Churton as having a ‘torrid reputation’ and acting as ‘advocate for lessees.’  Mr Smith said Paros Property’s failure to accept his choice of valuer meant the lease was cancelled and he was no longer liable for rental arrears, by then running into the hundreds of thousands of dollars.  

Wording of the lease was not specific, but Paros Property had the right to choose a valuer, Justice Harland ruled.  Mr Smith had no grounds for cancellation.  He was ordered to pay rent arrears of $237,600. Mr Smith’s former spouse is also liable for the unpaid rent; she is recorded as joint owner of the leasehold interest in Napier Street.  She has never lived at the property.

Paros Property Trust Ltd v. Smith – High Court (19.08.21)

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Freezing Order: Kimiko Trust v. Walton 18 Ltd

Properties owned by companies controlled by Auckland property developer Teik Huat Ghee were frozen by High Court order following allegations he was hiding assets in advance of a court hearing into a $935,000 damages claim by two purchasers alleging defects in houses sold. 

The court was told Mr Ghee controls some 65 separate companies.  Some companies he previously controlled have gone into liquidation, insolvent.  One of his companies, Walton 18 Ltd, constructed homes on Gracefield Lane in Auckland seaside suburb St Heliers.  Kimiko Trust purchased one; a Mr Hsu, another. Neither were happy with their purchase. Each is suing for damages, claiming defects in construction.  Mr Ghee says any defects are minor and easily remedied.

They allege Mr Ghee is stripping assets out of Walton 18 in advance of their court hearing; four properties were transferred from Walton 18 to another company: Allum Trustees No.1 Ltd.  Mr Ghee controls both Walton 18 and Allum Trustees.

Justice Wylie imposed a freezing order on both companies’ assets.  Construction work on building sites owned by the two companies can continue, but proceeds of any sale are frozen.

Kimiko Trust v. Walton 18 Ltd – High Court (17.08.21)

21.138

Construction: Cain v. Rilean Construction

General liquidation creditors should not bear the cost of sorting out entitlements to Construction Contracts Act retentions when the there is a shortfall in building companies’ retention funds, the High Court ruled.

With Rilean Construction (Central Otago) Ltd in liquidation insolvent and Construction Act retention moneys sitting in a law firm’s trust account with no one apparently willing to meet costs of managing payouts, the High Court appointed EY’s Rhys Cain as receiver to handle distribution.

Gary Dent’s and Steve McLean’s Queenstown property company went into liquidation in 2020 with accounting firm Ernst Young appointed liquidators.  There were four projects on Rilean’s books; the most problematic being a 56 apartment complex, Remarkables Residences.  Rilean’s tracking system for Construction Act retention payments indicated there should be $140,200 held in trust with a law firm for ten Remarkables subcontractors yet paid in full.  In fact there was a shortfall; primarily a failure to account for GST payable on those retentions.  In addition, remedial work for defects by one subcontractor exceeded retentions held on its behalf.

With the law firm simply holding retention money as a bare trustee, it was left to EY to do the leg work sorting out claims against the fund.  EY said this cost should be carried by contractors entitled to payment out of the fund, not just buried as a general expense of the Rilean liquidation. Associate judge Paulsen agreed.

EY associate partner Rhys Cain was appointed receiver of the Remarkables retention fund and authorised to pay pro rata valid claims by subcontractors after deduction of EY fees for managing and administering the fund.

Cain v. Rilean Construction (Central Otago) Ltd – High Court (17.08.21)

21.137

Leaky Building: 'The Links'

Body corporate management controlling the high-rise Links apartments at Paraparaumu Beach was described by a High Court judge as being obstructive, using legal tactics to stall efforts by one apartment holder to get compensation for rental losses whilst the building was reclad.

In November 2018, court approval was given to a Unit Titles Act scheme of arrangement allocating between apartment owners costs of recladding the fourteen-story block.  Left undecided was a demand by one apartment owner for compensation covering loss of income for the period her apartment was no longer available for rent. Body corporate management told the court it would discuss this issue with her.  Discussions were unsuccessful.

The apartment owner went back to court, asking the approved scheme of arrangement be varied to order payment of compensation. She faced what Justice Cooke described as a course of deliberate obstruction: the body corporate did not respond to her court application until days before a scheduled court hearing and then tried to get the case thrown out on the basis she should have started from step one, filing paper work for a brand new scheme of arrangement to be voted on by all apartment owners.  With this legal manoeuvre tossed out, the judge set a new timetable for the body corporate’s legal response to be filed.  The body corporate again failed to respond, waiting until two days before this filing deadline expired to announce it planned to appeal.  Justice Cooke refused leave to appeal and also refused body corporate requests to further hold up proceedings by seeking an eight week extension of time to file its evidence.  The Links body corporate was ordered to file within twenty working days its grounds for refusing compensation and told there would be no more extensions.

Roe-Shaw v. Body Corporate 81340 – High Court (13.08.21)

21.136

Fraud: Eight Mile Farms v. Bradley

Legal action has been taken against King Country accounts clerk Sharon Bradley in an attempt to recover $2.4 million stolen from farming client Eight Mile Farms.

Te Kuiti-based Eight Mile Farms Ltd used local accounting firms for back office accounting services.  Having moved through various firms as a trusted employee while local accounting practices merged, Bradley perpetrated a long running fraud stealing more than two million dollars from Eight Mile Farms over a twelve year period ending 2018.  She stole money by creating false invoices actioned with payment out of Eight Mile Farms’ Rabobank account into accounts she controlled at Kiwibank, ANZ and Westpac. The fraud was discovered by accident one year after she left her job. Bradley had not deleted a false payment template in the accounting firm’s database.  An Eight Mile supplier queried why payment had not been made on a genuine invoice; payment had been made but was diverted by the false template into Bradley’s bank account.

In July 2020, the High Court ordered Bradley pay just over two million dollars to Eight Mile Farms for deceit and breach of fiduciary duty.  The court left open further action where it could be proved specific assets were purchased with the stolen money.  A court-appointed investigator identified about $2.4 million had been stolen from Eight Mile Farms.  He traced some of the money directly into purchases of a lawnmower, a ride-on mower and specific electronic equipment.  In August 2021, the High Court ordered these items be handed over. The court was told money was also traced into her family trust.  The balance had been used for family living and lifestyle expenses.  Real estate owned by Bradley is currently frozen by High Court order.

Eight Mile Farms Ltd v. Bradley – High Court (9.08.21)

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Estate: McMahon v. Blind Foundation

Born in London, Graham Rowles died at Whangarei in 2017 leaving an estate valued at four million dollars. In an unsigned typewritten note, later accepted to be his valid will, he asked that his ashes be mixed with ground bait and thrown into a favoured fishing spot on the River Severn at Bewdley in Worcestershire and that his estate go to support guide dogs for the blind. This set the scene for claims against his estate by Angeline McMahon, claims dismissed by the High Court after a series of contested cases through the Tenancy Tribunal and the District Court.   

The High Court was told Mr Rowles lived on a property at Tavinor Road off Otaiko Valley Road near Whangarei.  There were two dwellings on site: one occupied by Mr Rowles; the other rented by Ms McMahon.  She stopped paying rent in October 2016.  On Mr Rowles’ death she claimed a right to continued occupation for herself and her adult children, rent free.  There were allegations of her renting out the dwellings after Mr Rowleys’ death and keeping the rent.

This put her in direct conflict with New Zealand Foundation of the Blind, the sole beneficiary in Mr Rowley’s will. Her claims to occupation were dismissed by both the Tenancy Tribunal and the District Court.  Financial offers to pack up and leave were ignored.  It took an eviction order for Blind Foundation to get vacant possession of Tavinor Road before selling.  Evidence was given of Ms McMahon persistently trespassing at Tavinor Road after her eviction and causing damage.

After sale of Tavinor Road, she was in the High Court pursuing a claim for $50,000 plus exemplary damages.  She claimed that lawyers acting for the Blind Foundation had a conflict of interest (she was the first to contact them when she brought in Mr Rowles’ will) and that correct procedures in the Residential Tenancies Act were not followed prior to eviction.

Justice Toogood dismissed both claims.  Her standing as the law firm’s client lapsed when she did not follow up on lawyer’s requests for her to complete court documents to have Mr Rowles’ typewritten note validated as his will; Blind Foundation stepped in to provide the necessary information.  And there were no irregularities in the eviction process; delays arose from her appeals and extended time encouraging her to depart willingly. 

McMahon v. Royal NZ Foundation of the Blind – High Court (9.08.21)

21.135

Estate: Moleta v. Darlow

Daughters Lorraine and Jolene were each awarded $950,000 from their late mother’s $5.4 million estate after left nothing in her will, all assets going to a third daughter Dellisse.

Delisse Moleta barred access to their mother in the last four years of her life; a period in which loans were secured over their mother’s previously mortgage-free properties and their mother’s condition declined dramatically.  She was admitted to hospital weighing just 23 kilograms, three days before her death in July 2016.   

The High Court was told family friction followed the collapse of their mother’s marriage in 1971.  She bore a grudge against those who stayed with their father during what was an extremely bitter separation.  In 1973, Mrs Moleta moved to Auckland with daughters Michelle, Delisse and Jolene. As a solo mother she worked very long hours to put these three daughters through a private education at Diocesan School. She had high expectations; any daughter who did not follow her bidding was ostracised.  As her assets accumulated, Mrs Moleta purchased property in Auckland and later in Australia. 

Evidence was given that Mrs Moleta followed daughter Dellisse to Australia in 1989, in part because Delisse was not coping well on her own and needed support.  Dellisse had trained as a pharmacist.  Her lack of business management skills led to a prosecution in Australia and her de-listing as a pharmacist.  From there, Dellisse dabbled in share trading before amassing rental properties as had her mother.  Mother and daughter returned to New Zealand in 2011, one year before Mrs Moleta suffered a stroke. At the time of her mother’s death: Dellisse owned in Australia two properties in her own name, two properties jointly with her mother; and in New Zealand four properties jointly with her mother.  These jointly owned properties passed to Dellisse absolutely on her mother’s death by survivorship; they do not form part of her mother’s estate which separately holds in its own right three properties in Auckland, two in New South Wales and one in Queensland.  The net equity in these estate properties totalled $5.4 million.

Justice Hinton ruled daughters Lorraine and Jolene were each entitled to $950,000 from their late mother’s estate under the Family Protection Act.  The balance of her estate remains with Dellisse.  Other daughter Melissa pre-deceased her mother.

When signing her will, Mrs Moleta was warned by her lawyers that cutting out Lorraine and Jolene would likely lead to litigation after her death.  The total exclusion of Jolene and Lorraine from their mother’s will was a breach of her moral duty to provide them with maintenance and support, Justice Hinton said. Both had been very loyal and loving daughters and done all they could to help their mother, she said.

Moleta v. Darlow – High Court (5.08.21)

21.133