Treaty: Sth Pacific Forestry v. Pihema

 

Squatting at a property on a forestry block in Northland, Maraea Pihema has been told by court order to leave.  Claims by Ngati Tama that the land was unlawfully confiscated are for the Waitangi Tribunal to consider, the High Court ruled.  

South Pacific Forestry Holdings Ltd is registered owner of Omakura Forest near Mangamuka.  It is up for sale.  Direct action by members of Ngati Tama is hindering the sale process.

South Pacific told the High Court that Ms Pihema is living on site, refusing to leave.  As a legal precursor to forcing her off the property, South Pacific got a court order for possession.

She did not appear in court to defend the application.

Her supporters filed papers claiming rights of occupation as an ancestral right of Ngati Tama, challenging South Pacific’s claim to ownership.

Associate judge Gardiner ruled South Pacific had full rights of ownership as named owner registered on land title for the forestry block.  Ms Pihema is an ‘unlawful occupier.’  She was given five days to leave.  Failing that, South Pacific could remove any of her belongings remaining on site.

Claims by Ngati Tama that the land was unlawfully taken in breach of the Treaty of Waitangi is for the Waitangi Tribunal to consider, Judge Gardiner ruled.

If proved, government can consider payment as compensation.  Proved Treaty breaches do not affect land ownership rights of current owners.

South Pacific Forestry Holdings Ltd v. Pihema – High Court (8.02.24)

24.049

Will: re Estate Ian Condie

 

A High Court order was needed to correct one word in a will which would otherwise remove financial benefits for his widow.

Lawyers acting for Ian Stewart Malcolm Condie were instructed to draft a will leaving the balance of his estate to his former school, Robert Gordon’s College in Aberdeen, Scotland.  There was one important proviso.  His wife May was to be allowed unrestricted access during her lifetime to his investment portfolio held with NZ Financial Planning.  Robert Gordon’s College was to get only what was left unspent after her death.  

The will, as signed, did not achieve this aim.

A key phrase which should have stated the School received the balance remaining after May’s death, instead saw him leaving to the School what was held in his investment portfolio after my death.  The gift to the School operated immediately on his death.  His widow had no right to draw down from his investment assets.

After Mr Condie died, lawyers acting for the Estate wrote to Robert Gordon’s School in Scotland explaining what had happened, getting the School’s support for the will’s correction.

Justice Osborne used a provision in the Wills Act to amend the will, replacing the word my with May.  This better gave effect to Mr Condie’s wishes, Justice Osborne said.

re Estate Ian Condie – High Court (5.02.24)

24.048

Partnership: Bei v. B & Z Trades Company

 

Claims by a father that he was a partner in his son’s car importation and repair business and with it was entitled to share in ownership of properties owned by the business came to nought.  There was no evidence that a partnership existed.  Flows of funds were explicable as family loans and repayments, rather than the father’s contributions of partnership capital.

In October 2000, Yong Sheng Bei was granted permanent residence.  Bei’s son, Yaoping Bei, arrived in New Zealand the following year.  His aunt already had a business up and running in New Zealand trading as B & Z Trades Company Ltd, primarily importing clothing from China.

The High Court was told B & Z Trades subsequently became the vehicle for Yaoping’s motor vehicle business.  Over the years it purchased sites: in Auckland suburbs of Onehunga and Kelston; plus, a further site in Christchurch at Sydenham.

There was no dispute that both father and son worked in the business.  What was in dispute was the extent of the father’s involvement.

This came to a head when the two fell out mid-2021 and was exacerbated when Yaoping told his father the Galway Street property in Onehunga was to be sold.  His father was living at Galway Street.  Evidence was given that B & Z Trades applied to the Tenancy Tribunal, without success, seeking to have Yong Sheng evicted.   

In the High Court, Yong Sheng claimed to be a partner in his son’s business and with it part-ownership of all partnership business assets including properties held in the name of B & Z Trades.

Yong Sheng said he was heavily involved in the business: repairing and preparing cars for sale.  Yaoping said his father’s involvement was little more than doing odd jobs.

Yong Sheng said he provided cash.  The end use of funds being moved between members of the family over a nine year period was heavily disputed. Yong Sheng provided no evidence that payments he made could be viewed as capital contributions towards the claimed partnership.

Associate judge Gardiner ruled there was no evidence a partnership existed.  There was no written agreement.  There was no evidence of emails, texts or other business records which would provide proof of an oral partnership agreement.  There was no evidence of partnership accounts being kept or partnership profits allocated.

Yong Sheng Bei v. B & Z Trades Company Ltd – High Court (31.01.24)

24.047

Asset Forfeiture: Commissioner of Police v. Hughes

 

Admitting to both tax fraud and frauds against Kainga Ora, plumbing contractor Mark Frederick Hughes had a $2.2 million settlement negotiated with Police approved by the High Court under the Criminal Proceeds (Recovery) Act.

Evidence was given that Hughes and his company Jamark Plumbing Ltd defrauded Kainga Ora for nearly a decade starting in 2010; charging in excess of agreed contract rates, charging for work not done and failing to install product that met Kainga Ora specifications.  The cost of these frauds was estimated at about $528,000.

In addition, Hughes and his company were involved in large-scale tax evasion.  Income was not declared.  Untaxed barter deals saw Hughes involved in contra deals; failing to invoice plumbing work in return for work done on private properties he owned.      

Hughes came clean with voluntary disclosure to Inland Revenue of his tax fraud.  This resulted in tax assessments of some $1.46 million.  This has been paid, the High Court was told.

Separately, police sought to recover profits generated from these frauds.  Hughes had come to own two properties just south of Hamilton and four properties in Queensland.  The criminal proceeds application sought to recover not only funds generated by the frauds but also capital gains arising from Hughes purchase of real estate with tainted funds.    

The High Court approved Hughes payment of $2.2 million in full settlement of claims under the Act.  Payment by instalments over the next nine months was approved.

If payment is not paid by required date, the six properties are to be sold, starting first with the two New Zealand properties.

Commissioner of Police v. Hughes – High Court (25.01.24)

24.046

Cryptopia: Epic Trust Ltd v. Ruscoe

 

Epic Trust, controlled by alleged scammer Victor Cattermole, was refused permission to join court hearings deciding distribution of assets held by failed cryptocurrency exchange, Cryptopia Ltd.  Epic is not directly affected, the High Court ruled.  There is no evidence it has any claim to Cryptopia’s remaining assets.  Epic’s claim to have purchased digital currency from a Cryptopia customer in a contract complying with laws of the Principality of Cogito, an entity existing in the metaverse controlled by Mr Cattermole as Crown Prince of Cogito, cut no ice with Justice Palmer.

Based in Christchurch, Cryptopia was put into liquidation by shareholders in May 2019 following a hack resulting in the loss of some thirty million dollars by value in cryptocurrency holdings.  Liquidators Grant Thornton report that at that time Cryptopia had over 2.2 million registered users.  They have identified some 960,000 accounts with positive balances.  Account holders are spread across 180 countries.  Between them, they hold around 370 different digital currencies.

Account holders have been contacted and asked to verify their balances.  Many have not responded.

Liquidators asked the High Court for instructions on how Cryptopia assets should be valued and distributed.  Epic Trust sought permission to also make submissions.  Liquidators questioned Epic’s motives.  They said Epic is not entitled to share in any distribution.  They alleged Epic has an ulterior motive; seeking to identify specific account holders and full details of their claimed cryptocurrency holdings.

In 2021, Mr Cattermole was held in contempt of court for improperly obtaining and retaining email addresses of Cryptopia account holders.

Justice Palmer dismissed Epic Trust’s application to join the proceedings.  Epic said it purchased Cryptopia digital currency holdings held in the name of a Joshua Stevenson.  There is no evidence that Mr Stevenson has transferred this asset, Justice Palmer ruled.

Liquidators dispute whether account balances can be transferred.  Cryptopia’s client rules prohibited sale of account balances.

His Honour said there was no need to even consider the validity of an unsigned agreement for sale and purchase between Mr Stevenson and Epic Trust described as being governed exclusively by laws of the Principality of Cogito.

Epic Trust Ltd v. Ruscoe – High Court (24.01.24)

24.045

CBL: FMA v. CBL Corporation

 

Source of funds settling multiple claims against directors of failed CBL Corporation have never been made public, but the insurer underwriting D&O insurance for CBL senior management will have taken a hit.

Some $72.5 million had to be found after an out of court legal settlement with CBL’s liquidator and aggrieved investors.  Then civil penalties totalling $4.1 million were ordered against four CBL directors after action was taken under the Financial Markets Conduct Act.

Penalties of one million dollars each were imposed on CBL’s independent directors Sir John Wells, Paul Donaldson and Ian Marsh; $1.1 million against Anthony Hannon, chair of CBL board’s audit and financial risk committee.  This followed Financial Markets Authority’s claim these directors failed to keep the market fully informed in the run up to CBL’s 2018 collapse.  They admitted liability.

A subsequent court hearing determined penalties.

Claims against fellow director Alistair Hutchison were withdrawn.  He died prior to the hearing.

CBL’s final annual report discloses the company paid for insurance cover, indemnifying them for liability.

No mention at the Financial Markets Conduct hearing as to what extent their monetary penalties might be covered by directors and officers insurance carried by CBL.

At the penalty hearing, the High Court was told of the dollar amounts each director had contributed personally to the earlier $72.5 million litigation settlement.  This suggests directors have excesses to pay, or are running up against the maximum limits of their insurance cover.  The amount each in fact paid as part of the $72.5 million settlement was redacted from the publicly available Financial Markets penalty judgment.

At the penalty hearing, failures by CBL directors to keep the market fully informed were spelt out.  They included:

·      a market announcement in August 2017 that CBL needed to make a ‘one-off’ increase to reserves of $16.5 million, providing a buffer for future claims.  This was a misrepresentation.  Directors knew this was not a ‘one-off;’ regulators were already pressing for further provisioning.

·      burying in a note to its 2017 interim financial statements a reference to CBL’s need to further provision for bad debts.  This was a problem which potentially could have an $34.2 million adverse effect on CBL’s solvency ratio.  This incomplete disclosure was compounded by a later failure to fully disclose extent of bad debt provisions as at December 2017.  By that date, CBL’s auditors had told CBL management it could not pretend the potential bad debt write offs had vanished by sale of aged accounts receivable.

·      failing to immediately disclose conditions Irish regulators imposed on CBL’s Irish subsidiary in June and July 2017 imposing a ‘stand-still;’ the subsidiary’s assets could not be sold other than in the normal course of business and transfers of cash were restricted.   

·      further failing to immediately disclose that Irish insurance regulators had demanded in late January 2018 that CBL’s Irish subsidiary immediately increase reserves by approximately $100 million.

Regulators instructions and CBL’s ongoing solvency issues did not become public knowledge until February 2018, after trading in CBL’s shares were suspended.

Financial Markets Authority said these failures to disclose were prolonged, spread over a six month period, and were exacerbated by the misleading August 2017 on-market disclosure stating the then disclosed increase to reserves was a ‘one-off’ issue.

Financial Markets Authority v. CBL Corporation Ltd – High Court (21.12.23)

24.042

Property: re Estate Eric Hart

 

Family financial arrangements enabling a daughter to buy a home came unstuck with a later dispute over ownership.  Cash contributions did not match ownership as registered on title to an Auckland property. 

The High Court was told the Harts agreed in 2006 to assist daughter Marlene to purchase a home on Minerva Terrace, Howick.   She has five other siblings.

A bank loan of $670,000 completed the purchase.  Allocation of this money was less than straightforward.  Parents Eric and Doreen Hart used $300,000 to pay off the current mortgage on their existing home, with the balance going towards purchase of Minerva Terrace. 

Marlene and husband Brian used the remaining $370,000 to pay off a small debt, with again the balance used to buy Minerva Terrace.

The Harts subsequently came to live with Marlene’s family, renting out their own home.

The legal position was that all four were jointly liable to repay the $670,000 bank loan with joint ownership recorded on the title as the Harts holding a half share as tenants in common, Marlene and husband the other half share as tenants in common.  The title did not reflect the differing economic contributions by each family.

Problems followed when Marlene’s parents died within six months of each other, in late 2016 and early 2017.

Three of Marlene’s siblings said their father’s estate was entitled to half the value of Minerva Terrace, to be divided amongst the six children as set out in their parents’ wills.  A 2022 valuation valued Minerva Terrace at $1.5 million.

To force the issue, the executor of their late father’s estate applied to the High Court for a Property Law Act order that Minerva Terrace be sold.  Justice Tahana gave Marlene and husband Brian first choice to buy out their parents’ share, before ordering a forced sale.

He ruled the financial evidence was that the Harts had contributed 34 per cent of the purchase price; Marlene and Brian 66 per cent.  They could buy out the estate’s share for $419,250; allowing a credit for Marlene’s one sixth share of the estate.

The general rule is that ownership as recorded on the title is proof of ownership shares.  This can be overturned by evidence to the contrary.  In this case, there was evidence of Mr Hart telling his children during his lifetime that Marlene had ‘the documents’ proving she was entitled to a greater share.

re Estate Eric Leslie Hart – High Court (21.12.23)

24.044

Franchise: Waterworld v. Taupo Wake Park

 

The water-borne inflated playground franchised by Kelvin Travers as Waterworld did not excite one High Court judge, indicating the franchise contained little by way of intellectual property rights justifying legal protection when a Taupo company was sued after dumping the Waterworld product with plans to install its own aqua playground equipment sourced from China.

The High Court was told John Hindle and Odette Arthurs have since 2013 operated Taupo Wake Park on an artificial lake excavated near the Waikato River.  Operations initially centred on a wake board facility with customers towed across the lake by cable.  Inflatable slides and trampolines were later added.

In early 2023, agreement was reached with Mr Traver’s Waterworld Ltd for installation of a floating children’s playground.  It was agreed revenue from customers using this playground would be split 50/50.

Mr Hindle was to later tell the High Court he viewed this as ‘a pretty casual arrangement.’  He had in fact signed a 27 page franchise agreement for five year’s use of Waterworld’s equipment and agreed to a restraint of trade promising not to set up in opposition to Waterworld’s services.

Mr Travers deflated the playground at end of the 2023 summer season, returning it to storage in Tauranga.  The product sees little use over colder months and deteriorates if left in the open.

Evidence was given that attempts to discuss with Mr Hindle timings for reinstallation the following summer met with no response.  Mr Travers learnt his customer was planning to go it alone with purchase of a similar product from China.  He sued, claiming their five year agreement prohibited use of an alternative.

Justice Johnstone ruled Mr Hindle could go ahead in the interim with his alternative.  If the restraint of trade is proved to be valid, Waterworld can recover damages, he said.

Waterworld is claiming $1.2 million damages for breach of contract.  Justice Johnstone indicated Waterworld will have an uphill battle to prove it holds property rights of any substance able to be enforced.

Waterworld claims to have created a unique booking system.  There was evidence the system was in fact based on commercially available software.

Waterworld claims there is goodwill attached to its brand.  Justice Johnstone said he considered it unlikely that the branding of the particular waterborne structures upon which the public amuse themselves carried any real resonance in their minds.

Waterworld claims property rights to health and safety standards mandated in its operations manual.  These appear to be drawn from Worksafe’s published requirements, Justice Johnstone ruled.

Waterworld Ltd v. Taupo Wake Park Ltd – High Court (21.12.23)

24.043

Bankruptcy: re Fonagy

 

Persons must be just before they are generous and debts must be paid before gifts can be made; words spoken by an English judge 150 years ago, applied this century in a challenge to a $350,800 gift made by Auckland property developer Andrew Fonagy prior to his 2020 bankruptcy.

Whilst Fonagy is now discharged from bankruptcy, Insolvency Service is still at work sorting out claims from his earlier bankruptcy.  In particular, it is hunting down recovery of a $350,800 loan owed Mr Fonagy which he gifted some four years prior to bankruptcy; a gift to a family trust he then controlled. 

This loan arose from the 2016 purchase of a property in Auckland, at Papakura.  The purchaser was a company then controlled by Fonagy.  The purchase was funded in part by a $350,800 loan from Mr Fonagy, repayable on demand.

Insolvency Service claims the value of this gift should be clawed back to pay creditors in his bankruptcy.

Insolvency law has detailed rules regarding recovery of assets gifted prior to bankruptcy.  There is a history of debtors getting rid of valuable assets before going into bankruptcy.

Any gift received two years prior to bankruptcy has to be returned, handed over to Insolvency Service.  Gifts received further back in time, three years through to five years prior to bankruptcy, also have to be surrendered, unless the person receiving the gift can prove the bankrupted donor was solvent.     

Mr Fonagy’s family trust asked the High Court to dismiss under its fast-track summary judgment procedure attempts by Insolvency Service to call back the $350,800 loan.  It was an open and shut case, the Trust claimed.  There was no dispute Mr Fonagy was solvent at the time, it said.

The High Court was told Mr Fonagy was heavily involved in Christchurch’s post-earthquake rebuild at time rights to repayment of the $350,800 loan were gifted to his family trust.  His company, Colombo Projects Ltd, was building in Christchurch’s central business district.

For Insolvency Service, the central issue turned out to be the status of a personal guarantee Mr Fonagy had given for borrowings by Colombo Projects.

Insolvency Service said the full dollar value of Colombo’s guaranteed debt counted as a personal debt of Mr Fonagy.  It was a contingent liability.  No claim had been made on the guarantee at time of the gift, but it was a Fonagy debt nevertheless, it said.  On this assessment, Mr Fonagy personally, was at best, over five hundred thousand dollars in the red after gifting the $350,800.

Mr Fonagy’s family trust said any valuation of liability on the guarantee should include an assessment of Colombo’s then solvency.  Colombo could meet its debts when the gift was made, the Trust claimed.

Associate judge Sussock ruled the dollar amount of guaranteed Colombo debt counted as a personal debt of Mr Fonagy in assessing his solvency at time of the 2016 gift.  It was as if the guaranteed debt were due and owing at that time.  Solvency of Colombo itself was not relevant.

Colombo later proved to be insolvent.  The High Court ruled in 2020 that a debt of $1.4 million was owed by Mr Fonagy’s bankrupt estate on his guarantee, being the shortfall on a mortgagee sale by a Colombo Projects’ secured creditor.

re Fonagy – High Court (20.12.23)

24.041

Estate: Waite v. Waite

 

Stepson was pitted against stepmother when Graeme Waite found as residuary beneficiary of his late father’s estate that it consisted of little more than two bank accounts holding some $18,000.  He challenged stepmother Ngaere’s right to take full ownership by survivorship of a Kihikihi property near Hamilton, valued at about $770,000, previously part-owned by his father.

The High Court was told Graeme was aged five when his parents separated.  His mother died five years later.  His father Jack remarried.  Jack was widowed fifteen years later.  His subsequent marriage to Ngaere lasted 33 years.

Graeme was named as executor of his father’s estate.  He had received nothing on the death decades previously of his mother.  And while named as residuary beneficiary in his father’s estate, again there was little prospect of a financial benefit.

Evidence was given that his father’s will contains a specific bequest of $25,000 to his widow Ngaere.  This is to be paid first before stepson Graeme receives any financial benefit.

As executor of his father’s estate, he sued under the Property Relationships Act, setting in train a circuitous legal process to bring back into the estate property that his father had jointly owned with his now widow Ngaere.  If successful, this litigation would benefit Graeme personally as residual beneficiary of his father’s estate.

Title to land recognises two types of joint ownership: ownership as ‘tenants-in-common’ where each owner’s share remains their separate property on death and is passed on according to terms of their will (or if there is no will according to the rules on an intestacy); or joint ownership, described in legal jargon as a ‘joint tenancy,’ where ownership of a joint interest passes automatically to the survivor on death.

Use of the words ‘tenant’ and ‘tenancy’ in this context have nothing to do with contemporary landlord/tenant rental agreements; they are archaic terms describing forms of land ownership, a residue of feudal English land law.

The Property Relationships Act allows survivorship rules to be reversed in exceptional circumstances.  It requires proof that a ‘serious injustice’ would otherwise arise.

It has been used when a father stated in his will that proceeds of a life assurance policy would go to his children.  Before his death, he cashed in the policy.  The proceeds were paid into a joint bank account.  The full content of this account passed to his widow by survivorship when he died.  His children were held entitled to the value of the cashed-in policy.

Graeme Waite argued there had been a ‘serious injustice’ when his stepmother assumed full ownership by survivorship of the Kihikihi property she owned jointly with Graeme’s father.

Justice Gault affirmed a District Court ruling there had been no ‘serious injustice.’  Stepmother Ngaere had not received an undeserved windfall.  Source of funds for the Kihikihi purchase could be traced back to separate property they each sold to fund construction of a large new home at Whatawhata used first as a rest home and later as a bed and breakfast.  This property, which they owned as ‘tenants in common,’ was sold to buy their final home at Kihikihi.  There was evidence that their ownership of Kihikihi was registered as joint tenants with full understanding that this gave each the right of survivorship.

Simply having an estate with insufficient funds to meet a bequest, does not, on its own, amount to a ‘serious injustice’ justifying reversal of a part-owner’s rights of survivorship Justice Gault ruled.

Waite v. Waite – High Court (20.12.23)

24.040

Family Trust: Noyce v. Prendrell Investments Ltd

 

Last ditch efforts to prevent sale of a family trust’s prime asset in Auckland suburb Remuera were overridden by High Court orders that five caveats be removed and that aggrieved beneficiary Stuart Lobb and members of his wider family are not to further interfere in the sale.

The 2016 separation of Stuart Lobb and his then wife Verena Ryan has been followed by a bitter dispute over their former family home in Orakei Road held in a family trust: the Lothbury Trust.

A series of cases saw the High Court place control of Lothbury in hands of Auckland chartered accountant Digby Noyce.  He has orders to sell Orakei Road and divide the net proceeds.  Mr Lobb has fought the process every step of the way.

Final resolution looked close with a sale at auction for $3.69 million to buyer Pendrell Investments Ltd.  Settlement was scheduled for October 2023.

The High Court was told use of Pendrell Investments as a front enabled Lobb family interests to register and bid at the auction.  At time of the auction, Pendrell’s owner, according to Companies Office records, was a Philip Hardiman.  Ownership was transferred to interests associated with Mr Lobb after the auction and some three weeks before Pendrell had to pay.

Pendrell Investments failed to settle on due date.  The sale was cancelled. Pendrell forfeited its deposit.

Mr Noyce then negotiated a further sale, selling to an unsuccessful auction bidder at a price of $3.05 million.  This second sale was due to settle on 20 December 2023.  Settlement was at risk, with five caveats registered against title to Orakei Road; caveats lodged by Mr Lobb personally, his father and entities related to Mr Lobb.  The second buyer was not going to hand over payment while facing a legal morass with others claiming an interest in the property.  Mr Noyce applied to have the caveats removed.

A court hearing was delayed by a bomb threat directed at the Auckland High Court.

Justice Powell handed down his ruling later, one day prior to scheduled payment by the second purchaser.  All five caveats were ordered removed.  The various claims to an interest in Orakei Road had either already been dismissed following earlier court hearings, or were not supported by any evidence, or the claimants had no legal rights against the property.  Mr Lobb, members of the wider Lobb family and any entities of which they are directors or shareholders were prohibited from lodging further caveats against title to Orakei Road.

Noyce v. Pendrell Investments Ltd – High Court (19.12.23)

24.039

Property: Wu v. Tan

 

It was a clash between Chinese custom and legal property rights in a cross-cultural chasm as a relationship property dispute saw Chinese cultural norms taking priority over signed documents with an inter-spousal gift of an Auckland house ruled to be not a gift, the house remaining relationship property.

Yanlan Wu and Kai Tan married in 2013, separating just over three years later.  The High Court was told they purchased an Auckland home and later a Palmerston North motel, in both cases with financial assistance from Mr Tan’s parents.

The Auckland property was initially registered in both their names.  Mr Tan later transferred his half interest to his spouse, having Ms Wu listed on the title as sole owner.  He told a Family Court hearing that this was done because their relationship was unstable; he wanted to make Ms Wu happy.  It was to satisfy her vanity, he said.

Legal documentation for the transfer described the transaction as a gift.  Mr Tan acknowledged it was a gift when asked directly.  Generally, a specific gift by one spouse to another removes that asset from the pool of relationship property; it becomes separate property.

In the High Court, Justice Grice declined to overturn a Family Court ruling that the Auckland property remained relationship property.  Mr Tan did not intend to gift his ownership share.  In Mr Tan’s view, removing his name from the title was purely cosmetic.  Rentals from the Auckland property continued to go into their joint bank account; income from their Palmerston North motel business continued to be used to cover the difference between Auckland rental income and the property’s outgoings; he remained liable for the Auckland mortgage debt as guarantor. 

Separately, Justice Grice confirmed funds totalling $520,000 received from Mr Tan’s parents put towards purchase of both the Auckland and Palmerston North properties were loans, not gifts, to be deducted from relationship assets before division between Mr Tan and Ms Wu.

There was detailed evidence in the Family Court about circumstances of this funding.

Ms Wu produced a ‘gift certificate’ supposedly signed by Mr Tan’s mother evidencing the first tranche of funding provided by Mr Tan’s parents.  It transpired this document had been manufactured by Mr Tan to identify available funds already held when seeking bank finance for purchase of the Auckland house.

Also at issue, was written loan documentation supposedly acknowledging all the funding from his parents were loans.  Mr Tan later admitted in court that he had created these documents after the deal was done; the loan arrangement was previously agreed orally with his parents.

Justice Grice ruled evidence from Mr Tan’s mother of a prior oral agreement that funds she provided were loans was conclusive, in the absence of any evidence to the contrary.  An oral agreement fitted with Chinese custom that family financial deals are seldom in writing.

Wu v.Tan – High Court (18.12.23)

24.038

Property: Kereopa v. Brunsha Ltd

 

It was a family transaction designed to keep former Maori land at Raglan within the family Rangimonehu Kereopa claims, having the High Court agree a caveat should remain on the title preventing her son’s company from selling while their family dispute is sorted out.

The High Court was told Rangimonehu and her since deceased husband Piripi had land containing their family home on Wainui Road transferred from the Maori land register to the general land register years ago.  This proved useful when their daughter in 1999 was looking to purchase a nearby property on Government Road; they allowed the daughter’s bank loan to be secured over their Wainui Road as additional security.

Three years later, Rangimonehu and Piripi were in financial difficulty with unpaid rates and the possibility of a forced mortgagee sale of Wainui Road.  They were reduced to living in a shed on the property without running water or toilet facilities while the main house was rented out.

Son Dennis organised a rescue.  He borrowed funds to buy out his parents taking ownership of Wainui Road; his parents in turn took ownership of their daughter’s property on Government Road; and the then existing bank mortgage was repaid.  Rangimonehu and Piripi received no money.

Circumstances of this rescue package were canvassed in the High Court over twenty years later after Rangimonehu learnt her son had put Wainui Road on the market.  Lawyers acting for Dennis had done all the paperwork for the rescue package, she said.  She had acted on the faith that Denis was acting to keep Wainui Road in the family and that would remain the case, she said.

There was an arguable case that Denis took title to Wainui Road on terms of a trust, Associate judge Brittain ruled.  A full court hearing is needed to determine if a trust exists and what are its terms.  Meanwhile, the caveat remains.

Six years after the rescue package was implemented, Denis transferred ownership of Wainui Road to a company he controlled: Brunsha Ltd. 

Judge Brittain ruled it is arguable Denis engineered a sale to his company Brunsha Ltd, as a supposedly innocent third party purchaser, in an attempt to exploit Land Transfer rules so as to side step Rangimonehu’s claim there was an enforceable trust over Wainui Road requiring ownership be kept within the family.

Land Transfer Act rules allow subsequent owners to keep ownership free of any prior trust, provided the new owner did not have actual knowledge of or was ‘wilfully blind’ to the existence of a prior trust affecting the land.

Kereopa v. Brunsha Ltd – High Court (18.12.23)

24.037

Property: NZ Tourist Investments v. Vast Investments

 

Auckland property investor Vast Investments Ltd, controlled by Dabin Wang, was held liable for a $800,000 loss on resale after defaulting on agreement to buy a Herne Bay property for $5.7 million.  Interest for late settlement now sees total damages payable exceeding $1.2 million.

In March 2022, Vast Investments agreed to buy the Hamilton Road property with settlement due in three months.  After Vast failed to settle, vendor NZ Tourist Investments Ltd put the property back on the market, listing with Ray White Remuera as agent for the resale.

The High Court was told of eight potential buyers inspecting the property.  Two made offers.  One, a conditional offer, was later withdrawn during negotiations over price.  The second was accepted; an unconditional offer at $4.9 million.

Sued for the $800,000 loss on resale, Vast Investments said Ray White Remuera had prejudiced the sale price before resale by setting a low appraisal; between $4.5 million and $5.0 million.  Vast Investments claimed a registered valuer it hired had appraised the property on resale at $5.4 million with that appraisal including a markdown acknowledging a market decline over previous months.

Associate judge Brittain ruled a $4.9 million resale represented the current market price.  It was a sale to a buyer unrelated to the vendor.  Ray White Remuera conducted a conventional marketing programme.  It helped negotiate an increased offer, obtaining for the vendor an extra $100,000 over an initial offer made.

In addition to the $800,000 loss on resale, Vast Investments was ordered to pay costs of resale and interest at a rate of fourteen per cent, as specified in the sale agreement, until the debt is cleared.  By date of the court hearing, interest currently due was calculated at some $405,000.  Part of the debt due was cleared by the vendor keeping a $570,000 deposit Vast Investments paid.

NZ Tourist Investments Ltd v. Vast Investments Ltd – High Court (18.12.23)

24.036

Property: Xu v. Meng

 

Wei Xu and Huimin Guan went to school together in China.  Two decades later they were facing off in the New Zealand High Court arguing over a residential property deal that fell apart.

Mr Xu agreed to let Ms Guan and her husband take occupation of a residential property in Browns Bay on Auckland’s North Shore with a May 2018 handshake deal. They agreed to buy at $1.78 million, paying Mr Xu’s property outgoings until such time as they got finance to complete their purchase.

Applications for a bank loan were unsuccessful.  No bank would lend on an oral agreement to buy; a written contract was required.  The deal collapsed when Mr Xu wanted to increase the price.

It took a court order for Mr Xu to regain possession in September 2021, followed by a dispute over who owed what.  Ms Guan demanded return of a $200,000 deposit paid.  Mr Xu said they had not paid in full all property outgoings as agreed.

Property outgoings included interest on successive bank loans Mr Xu had secured over the property.  Ms Guan complained the amount claimed included interest on a mortgage over Mr Xu’s private home; the bank mortgage took security over both Browns Bay and Mr Xu’s family home.

In the High Court, Justice Woolford calculated Browns Bay interest unpaid amounted to some $16,500.  This was the amount Ms Guan was required to pay, not the $153,600 Mr Xu claimed.

In turn, Mr Xu was ordered to refund the $200,000 deposit.  He had agreed to refund the balance left after all property outgoings were cleared. 

Separately, Mr Xu demanded Ms Guan hand over $70,380 received from boarders at the property while they were in occupation.  This was income derived from use of his asset, he said.

Justice Woolford ruled Ms Guan was entitled to keep the income.  There was evidence that Mr Xu had agreed to boarders being taken in, to help Ms Guan meet property outgoings.

Mr Xu’s further claim for rent was dismissed.  He claimed rent for a 96 week period at just on $1700 per week; the period from when Ms Guan stopped contributing to outgoings and their subsequent departure from the property.

Justice Woolford ruled Mr Xu could not claim there was tenancy with rent unpaid after earlier getting a High Court order that Ms Guan leave the property by stating there was no tenancy agreement in place and there was no continuing right to her occupation.

Xu v. Meng – High Court (18.12.23)

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