Share Valuation: Kroll v. Envirocon Ltd

 

Julian Kroll was for five years a director of Envirocon, manufacturer of precast concrete wall units.  His abrupt departure in 2023 now sees argument over value of his sixteen per cent shareholding, with the High Court refusing him Companies Act access to financial information post-dating his departure.

Envirocon Ltd management told the High Court of concerns that Mr Kroll was asking for commercially sensitive information, potentially of benefit to competitors.  

Mr Kroll took up his sixteen per cent Envirocon shareholding in 2018, funded with a loan from majority shareholders, a Russell family trust.

He claims company management has not provided adequate financial information to enable valuation of this shareholding as at the May 2024 date when he was removed as a shareholder.

His shares were forfeited when the Russell family trust called in its loan.  He wants to know what surplus value, if any, exists in his former shareholding, above what was owed on the Russell loan.

Mr Kroll was given a draft share valuation report prepared by chartered accountants Grant Thornton, based on Envirocon’s financial statements for year ended March 2023, a date some fourteen months prior to his removal as shareholder.  The court was told this draft has never been finalised.

He subsequently made a Companies Act application for disclosure of further company financial information; financial statements for the year ended March 2024 plus access to Envirocon’s current accounting records held with Xero.  This was needed to get a complete picture of his former shareholding’s value as at May 2024, he claimed.

Envirocon refused access.  It did belatedly provide Mr Kroll with management accounts covering the period April-December 2023, providing some extra financial information.

His Companies Act application for further financial information was dismissed.  The purpose of this rule is to ensure accountability by management to shareholders, Justice Walker said.

This shareholder right was lost when he was removed as a shareholder, she ruled.

Alternative court processes to order discovery of relevant information from third parties like Envirocon are available to Mr Kroll, Justice Walker said.  Companies Act investor protection rules are not to be used as a cheap shortcut to get pre-claim information, she said.

Generally, it can be very expensive to force information from third parties as part of pre-trial discovery; third party costs incurred gathering this information must be paid in full.

Kroll v. Envirocon Ltd – High Court (13.03.25)

25.083

Leaky Building: Sole v. Hutton

 

Ordered to pay $927,000 damages, John and Heather Dutton misprepresented weathertightness of their Mount Maunganui penthouse apartment in their family trust’s 2018 sale to Murray and Lorette Sole, the High Court ruled.

The Soles claimed compensation for their share of remediation costs for the three level Belle Mer apartments on Marine Parade, plus replacement of their kitchen and two years alternative accommodation costs whilst repairs were carried out.

The High Court was told the Soles discovered weathertightness issues within a year of their $1.49 million purchase.  They learnt a series of building reports obtained by Belle Mer’s body corporate dating back over four years prior to their purchase had identified various issues, primarily leaks around apartment balconies.  Belle Mer was built in the late 1990s.

They emailed Mr Dutton, seeking an explanation.  He responded, stating the situation was ‘quite alarming’ and that he ‘did not know about the reports.’  Later confronted with evidence that he was present at body corporate meetings where weathertightness reports were discussed, Mr Dutton apologised, saying he ‘now recalled the reports.’

Justice Blanchard ruled the Duttons breached a warranty clause in the sale agreement for failing to disclose body corporate expenses were likely to rise for weathertightness repairs.

They were also liable for misprepresentation; having ticked a box in their real estate agent’s checklist stating they had no knowledge of any hidden or underlying defects.

The Soles were aware of the checklist’s existence.  The real estate agent (as agent for the Duttons) commented, when asked, that the Duttons told him there were ‘no known issues with the building.’

Damages awarded were less than the Soles’ actual remediation costs.  A deduction was made for ‘betterment;’ a deduction for the Soles now having a repaired building and new kitchen, both in better condition than if no repairs had been needed because of water ingress.

Sole v. Hutton – High Court (7.03.25)

25.082

Copyright: Alalaakkola v. Palmer

 

Copyrights can be relationship property, ruled the Supreme Court; a rule which applies to reproduction rights over original works as varied as paintings, books, audio-visual media, technical manuals and building designs.  Copyright valuation is not straightforward.  The Supreme Court set out rules for valuing copyright in paintings.

Ownership of copyright in some 250 artworks was disputed in a Supreme Court hearing between painter Sirpa Alalaakkola and former spouse Paul Palmer.  They separated in 2017, after a twenty year marriage.  Some of these paintings are currently held in the District Court at Blenheim, pending resolution of their legal dispute.

Their drawn out legal battle has seen Ms Alalaakkola eventually agreeing artwork she produced during their relationship is relationship property.  But she fiercely objected to her former spouse having any share in copyrights.

She was concerned her status as an artist could be denigrated by use of images from her artwork reproduced on the likes of fridge magnets and tea towels.

Rules governing copyright allow the author of artistic works to control and monetise reproductions.  This economic incentive encourages creativity.

Copyright Act states copyrights are ‘property.’  The right to reproduce or copy an existing ‘artistic work’ lasts for the life of the work’s author plus fifty years.  Heirs of a deceased creative talent can get to enjoy royalties generated from their celebrated forbear’s work for fifty years from death.

For paintings, copyright is bundled in when an artist sells the physical painting, unless the sale contract states copyright remains with the artist.

In the Supreme Court, the relationship property dispute centred on copyright in Ms Alalaakkola’s unsold paintings.

This copyright is relationship property, the court ruled; its value to be shared with her former spouse.

Their dispute was sent back to the Family Court, to decide the value of Ms Alalaakkola’s unsold artwork and associated copyright.

Valuation may be difficult.  For many of her paintings, copyright will have no value.

The Supreme Court offered guidance.

No copyright value lies in damaged or incomplete artwork.  These are canvasses which can be painted over at a later date.

No copyright value lies with paintings intended to be kept as part of a private collection.  For Ms Alalaakkola, this includes nudes and some works she now considers culturally insensitive.

No residual copyright value lies in paintings sold on the basis no reproductions are permitted.

There is copyright value in artistic works which have been reproduced, or are intended to be reproduced.

Should the two be unable to agree on the potential market for both her artwork and any reproductions, the Family Court might direct that one or more items be sold on the open market to establish market values, the Supreme Court suggested.

In legal argument, Ms Alalaakkola said any court ruling that copyrights are relationship property will have the potential effect of deterring creative activity.  Spouses can contract out of the Property (Relationships) Act, agreeing any creative output by either spouse is not relationship property, the Supreme Court pointed out.

Ms Alalaakola’s concern that any loss of control over copyright meant she might be demeaned by poor and insensitive reproductions of her work was specifically protected by the Copyright Act, the court said.  After copyright is sold, artists still have the right to block any derogatory reproduction which damages their reputation.

This statutory ‘moral right’ is a personal right akin to a right to sue for defamation, the Supreme Court said.  As a personal right, it is retained by the artist.  ‘Moral rights’ are not relationship property.  

Alalaakkola v. Palmer – Supreme Court (6.03.25)

25.081

Director : Sheikh v. Sawhney

 

Angered that Karanvir Sawhney set up a shell company to buy their Auckland property and then walked away from the deal, Azad and Saiedah Sheikh are suing him directly in what stands as a test case for directors’ personally liability in tort where their undercapitalised company reneges on a contract.

The touted benefit of forming a limited liability company is to protect entrepreneurs from legal action.  If anything goes wrong, it is the company’s problem, not theirs.

The High Court was told Mr Sawhney set up Sawhney Enterprises Ltd to invest in property.  In early 2022, the Sheikhs agreed to sell their Papatoetoe property to Sawhney Enterprises.  It failed to pay the deposit on due date.  It failed to pay the purchase price.

The Sheikhs were told if they did not agree to renegotiate the price and to extend settlement date then Mr Sawhney would just walk away and put his valueless company into liquidation.  

After cancelling the contract and reselling, the Sheikhs sued both Mr Sawhney and his company for their loss on resale.

In a preliminary court hearing, Mr Sawhney challenged the Sheikhs’ claim against him personally.

Associate Judge Brittain ruled that, in principle, directors can be sued in tort for inducement of breach of contract where they deliberately prevent their company from performing an existing contract.

Directors are not liable where they act in their company’s best interests.  They are liable when acting in bad faith.

Fraud, or acting for an improper motive, when refusing to carry through a company contract can amount to bad faith Judge Brittain ruled.

There is a twist.  English case law has established that directors’ motives must be viewed from their company’s perspective, not the perspective of contracting parties like the Sheikhs. 

Judge Brittain declined to strike out the Sheikhs’ tort claim against Mr Sawhney.

Whether Mr Sawhney is personally liable requires a further court hearing to determine full circumstances surrounding his company’s failure to perform the contract.

Sheikh v. Sawhney – High Court (5.03.25)

25.078

Scholarship: re Joe Raynes Scholarship

 

Endowment of a scholarship is admirable, but administration becomes a burden when inflation sees costs exceeding promised benefits.  Terms last century of the Joe Raynes Scholarship were tightly drawn, with trustees not allowed to draw down capital or to wind up the scholarship.  Court approval was needed to unravel the problem.

On his death in 1937, the will of successful Dargaville hotelier Joe Raynes directed that 1500 pounds be set aside, to fund scholarships for students at University of Auckland’s Elam School of Art.  The trust specified scholarships were to be funded out of income only, the capital was not to be touched.

Nearly ninety years on, the High Court was told investment income earned on the capital no longer covers administrative costs.  No scholarship has been granted since 2018.  In the prior six years, three scholarships only were awarded; at $1500 each.

Scholarship trustees asked the High Court use Charitable Trusts Act powers to revise terms of Mr Raynes’ will.  It was impracticable otherwise for the scholarship to continue.

Justice Robinson ordered that scholarship assets be transferred to the University of Auckland Foundation, with Foundation trustees given authority to draw down on capital to finance future Elam scholarships.

In effect, this ruling wound up the original Raynes’ charitable testamentary trust. The University Foundation now bears administrative costs for the Joe Raynes Scholarships.  The scholarship fund will likely be run down progressively through granting of future scholarships.

The Foundation currently manages assets in excess of $250 million.

re Joe Raynes Scholarship – High Court (5.03.25)

25.080

Charitable Trust: re Tawhiri Trust Board

 

Quaintly named, the ‘rule against perpetuities’ is derived from a seventeenth century English land law case in which Earl of Arundel sought to provide income for his younger children with inheritance of his estate on death doomed to pass to his eldest son Thomas, who was insane.  The result: the rule against perpetuities; assets cannot be tied up in a trust for ever.

This legal rule is founded on sound economic principles.  There should be a limit on how long property rights should be tied up.  The ‘creative destruction’ of economic growth, seeing existing assets repurposed for new use, requires assets to be freely transferable.

In New Zealand, the perpetuity period is now set by statute: 125 years.  Family trusts seldom outlast a single generation.  At law, they cannot last more than 125 years.

This time limit does not apply to charitable trusts.  A charitable trust, once established, cannot die, though its nature may be changed.

This rule bedevilled the Tawhiri Trust, a charitable trust established in 2008 for the sole purpose of restoring a then eighty year old classic yacht: Tawhiri.

The intent was to restore the yacht to its former glory, then be used by ‘the sailing youth of Nelson/Tasman.’

The High Court was told fundraising for restoration costs assessed at $300,000 were unsuccessful.  With free storage on council owned land in Nelson coming to an end, there was a risk the vessel would become a total ruin.

An Auckland-based descendant of the Markham family, previous Tawhiri owners, came to the rescue.  He paid for transport of the vessel to covered storage in Auckland.

His offer to buy the Tawhiri ran into a legal snag; the Tawhiri trust deed contains no power to sell.  Selling the Trust’s only asset would amount to destruction of the Trust’s essential purpose, something not permitted under rules governing charities.

The High Court gave Charitable Trusts Act approval for sale to the Markham family on evidence that the buyer would be a newly created charitable trust with this new trust committing to make the Tawhiri, when seaworthy, available annually for youth selected by sailing clubs from the Nelson/Tasman Bay area.

Terms of any sale were not disclosed.

re Tawhiri Trust Board – High Court (5.03.25)

25.079

Bankruptcy: Samson Corp v. Sutherland

 

With a history of failed businesses leaving creditors unpaid, Wendy Ann Sutherland was bankrupted by commercial landlord Samson Corporation for unpaid rent.

The High Court dismissed Ms Sutherland’s plea that bankruptcy should be averted because a new catering contract was expected to earn sufficient revenue to repay the debt.  She provided no evidence that any contract existed and no evidence of her current financial position.

Courts are unwilling to postpone bankruptcy hearings on grounds of vague promises to clear current debts over time.  Too often, this becomes a broken promise; the same broken promise patient creditors have been hearing for a long time.

Ms Sutherland was ordered in 2022 by the District Court to pay Samson some $66,000 in rent arrears.  She subsequently agreed with Samson to pay this debt in weekly instalments of $550.  Five months later, she stopped payments.  Still owing was $56,000.

With Samson’s subsequent High Court application for her bankruptcy, Ms Sutherland turned up in court claiming to have been offered a cafeteria catering contract with Employers and Manufacturers Association.  Profits from this contract will clear her Samson debt, she claimed.

Associate Judge Taylor adjudged her bankrupt.  She provided no evidence of her ability to meet Samson’s unpaid debt, he said.

Given her past commercial history, with two failed businesses, it is in the public interest to bankrupt Ms Sutherland, he said.

She was a director of Marvel Grill North Wharf Co Ltd (an Auckland restaurant, going into liquidation insolvent in 2019) and Marque Hospitality Ltd (a business providing advice to the hospitality industry, wound up insolvent in 2023).

Samson Corporation Ltd v. Sutherland – High Court (4.03.25)

25.077

Charitable Trust: Singh v. Singh

 

A schism within South Auckland’s Calvary Indian Assembly of God has seen part of the congregation barred from church attendance, doors locked and a trespass notice issued.  In the absence of a negotiated solution, a decision is needed on what are the criteria for church membership, followed by a vote for new church management, the High Court ruled.

The High Court was told of a split within Calvary Indian membership accelerating in late 2022 on the arrival of a new pastor.  With church board members split 2:3, each faction and its supporters sought, without success, to vote out the other faction.

After what proved to be fruitless efforts to have church business conducted under supervision of an independent chair, Mr Son Singh and Mr Rajesh Jattan unilaterally assumed control, the court was told.

The three other trustees were sidelined.  Meetings were not held.  Members of the rival faction and their supporters were barred from attending church services at the Nikau Road church in Otahuhu.

For a time, Mr Singh took sole control of the church’s bank account.

Messrs Singh and Jattan asked the High Court to remove all Church trustees from control, including themselves, with new elections to be held.

Justice van Bohemen declined to act.  Messrs Singh and Jattan had themselves been a major cause of the current impasse, he said.  There would be no satisfactory election outcome without first identifying who could stand for office and who could vote.

Evidence was given of confusion within the Church regarding its own rules.

Calvary Indian Church assets are held by a charitable trust, with trustees appointed.

No current financial information for the Church is held on the Charities Register.

Operational decisions were supposedly made separately by board members elected under rules of an incorporated society called the Calvary Indian Assembly of God.  Whilst rules had been drafted, no such incorporated society has been registered.

With one exception, all Church trustees were also elected board members.  The trustees/elected board members often appeared to be unaware of the legal distinction between the two different parts of their church organisation.

Rules governing societies (incorporated or not) differ from rules governing charitable trusts, in the same way that rules governing the game of rugby union differ from rules governing rugby league.  They are similar; but different.

The court cannot use rules governing charitable trusts, as Messrs Singh and Jattan requested, to deal with their separate organisational dispute over daily running of the Assembly, Justice van Bohemen said.  Daily organisation is governed by the Church’s unregistered rules, not charities legislation.

The court was told there is separate court proceedings already underway dealing with members’ dispute over election eligibility.

Singh v. Singh – High Court (3.03.25)

25.076

Joint Venture: Werder v. Singh

 

For Roshyn Singh Lyons and Rajeshwari Gosai their relationship was long over and all relationship property divided, when out of the blue came a claim from former family friend Ian Werder claiming a share of those assets stating that twenty-five years ago all three were party to a joint venture property agreement.

Finding that all three were embroidering the truth in various respects, Justice Anderson ruled there may have been some agreed joint venture arrangement between Roshyn Lyons and Ian Werder, but terms of this agreement were never established on evidence in court.

True facts proved elusive in the face of forged documents coupled with inconsistent and at times barely credible evidence given in court.

Evidence given in Family Court was inconsistent with evidence later given in the High Court.  Documents produced in evidence had multiple amendments, some of which could not be explained.  Financial records did not match legal realities.   

The High Court was told Mr Lyons and Mr Werder met in the early 1990s.  They lived together in a property they purchased on Calgary Street in Auckland suburb Sandringham.  Their relationship ended about one year later when Mr Werder left for Otago to train for the priesthood.

In 1996, Mr Lyons married Rajeshwari Gosai.

One year later, Mr Werder transferred his half interest in Calgary Street to Mr Lyons and Ms Gosai at a cost of one dollar.

The status of this one dollar consideration loomed large in later litigation.

Mr Lyons said that the 1997 transfer was for a nominal sum because Mr Werder was absent, unable to keep up his share of mortgage payments, and that he had been covering for him.

Mr Werder said the one dollar token payment was part of an overarching joint venture property agreement in which his Calgary Street equity would now be parleyed into purchase of a property portfolio.

Evidence was given that Mr Lyons and Ms Gosai established, over time, a property portfolio encompassing eleven properties across Auckland.

Justice Anderon was to rule that the document dated as a 1997 three-way joint venture property agreement produced in court was in part a forgery.  Forensic evidence identified that it had been signed by Mr Lyons and Mr Werder; it had not been signed by Ms Gosai.

Justice Anderson also ruled that the document had not been compiled in 1997.  The actual date it had been prepared could not be determined with any accuracy.

Complicating a search for the truth was circumstances of Mr Werder’s return to Auckland after being refused ordination.  At one point, he returned to live in a sleep out at rear of Calgary Street.

He paid a weekly sum in cash to Ms Gosai, described by her in subsequent Family Court hearings as being in part reduction of the Calgary Street mortgage.  Mr Lyons said these payments were in fact rent and that Ms Gosai should account for half as relationship property.

Later in the High Court, Mr Werder said Ms Gosai’s Family Court evidence reinforced his claim that a joint venture agreement existed.

Also in the High Court, when challenging existence of Mr Werder’s claimed joint venture, Ms Gosai recanted, now saying in evidence his regular cash payments were rent only.

Compounding the confused evidence were handwritten unsigned documents from 2000 and 2003 appearing to allow Mr Werder various percentage shares in named properties.  Both Mr Lyons and Ms Gosai denied any knowledge of the documents.  Mr Werder’s handwriting expert said Mr Lyons was probably, in part, the author.

There was no evidence of these documents ever being put into effect.

At the time, Mr Werder did not demand the documents be acted on.  He was reminded of their existence only during his High Court claim, nearly two decades later.

Justice Anderson ruled that even if there were proof of a 1997 three way joint venture property agreement, it would not be enforceable, because of Mr Werder’s excessive delay.

He had sat on his claimed rights for too long before taking action.  If he were to make a claim, it should have been flagged at least by the time Mr Lyons and Ms Gosai were divvying up properties as part of their relationship property claims.

Their Family Court dispute spanned at least six years.  Mr Werder was aware of this; he assisted Ms Gosai in preparing her evidence.

Werder v. Singh – High Court (28.02.25)

25.074

Loan: Waimauri Ltd v. Powell Junior Ltd

 

What was intended as a $560,000 five month bridging loan in 2015 to ensure completion of an Auckland family home is now well overdue with more than two million dollars outstanding and the High Court ruling Tim Edney’s Waimauri Ltd did not improperly sidestep consumer protection legislation by having Jason and Melinda Harvey form a company as a conduit to take up their loan as borrower.

Consumer protection provisions in the Credit Contracts and Consumer Finance Act do not kick in when the borrower is a corporate.

The High Court was told Mr Edney, Mr Harvey and a Mr Peter Chevin were business associates then involved in a residential subdivision at Te Kauwhata, south of Auckland.  Melinda Harvey and Peter Chevin are siblings.

Acting as an intermediary, Mr Chevin approached Mr Edney for assistance in bailing out his sister and her husband.

The Harveys were under pressure from a financier looking to exit its ownership of a property where they were living on Powell Street, in Auckland suburb Avondale.  Mainstream financiers were not interested in financing the Harveys exercise of an option to buy Powell Street.  Work was required to get building code compliance.  Paperwork for new cross-lease title registration was incomplete.

Short term funds were provided by Mr Edney’s Waimauri Ltd; just under $560,000 lent for five months at twelve per cent with a default rate of twenty-two per cent.

A condition of the loan was that the borrower had to be a corporate.  The Harveys set up Junior Powell Ltd as borrower.

The loan was not repaid.  Repayment date was extended, on the assumption profits from the Te Kauwhata subdivision would soon become available.  This subdivision, in fact, ran into financial difficulties.

The Harveys stopped paying interest on their company’s loan.

In the High Court, Justice Anderson made a Property Law Act possession order allowing Waimauri Ltd to take possession of Powell Street for non-payment of the loan.

As at March 2024, outstanding balance exceeded $2.2 million.

Mr Harvey’s claim Waimauri induced his company to take up the loan by oppressive means was dismissed.  Email correspondence during negotiations made it clear Mr Harvey was comfortable with the terms and acknowledged it was bridging finance only.

Mr Harvey’s claim the loan was ‘in substance’ a consumer credit contract was dismissed.

Whilst purpose of the loan was a house purchase, Waimauri was not in the business of making consumer loans.  The deal just happened to eventuate as part and parcel of their then business relationship in developing the residential subdivision at Te Kauwhata.

There are no ‘anti-avoidance’ rules in the Credit Contracts and Consumer Finance Act, prohibiting insertion of a corporate as titular borrower when making a loan.

It was proper in the circumstances for Mr Edney to require the Harveys have a company interposed as borrower, Justice Anderson ruled.  A company is not a natural person; it is not a consumer.

Waimauri Ltd v. Powell Junior Ltd – High Court (28.02.25)

25.075

Family Trust: Aspinall Family Trust v. Aspinall

 

Having their Auckland family home held in a family trust forced Audrey Cadness to jump through multiple legal hoops after estranged spouse Kyle Aspinall refused to engage in any meaningful discussions for sale of their home, leading eventually to Kyle’s removal as trustee and court approval for sale of the property. 

The High Court was told the two lived together in a de facto relationship for fourteen years ending 2018.  Their sole major asset, a house at Buckleys Track, Paremoremo, was purchased in 2008 with title held in name of the Aspinall Family Trust.  Both were trustees.  An independent corporate trustee is a third trustee.

After their 2018 separation, the property was tenanted for some four years, before Mr Aspinall resumed occupation without paying rent to the Trust.

Evidence was given of ASB Bank issuing repeated Property Law Act notices threatening a mortgagee sale when mortgage payments fell behind.  In each case, Mr Aspinall belatedly paid arrears due.

Ms Cadness learnt to her surprise that she was guarantor of a sometimes overdrawn ASB mortgage-linked personal account in her spouse’s name; money used to fund her spouse’s company Exceed Online Ltd, she said.

ASB Bank made the signed document containing her guarantee available to her for inspection.  She told the High Court the guarantee must have been included in the multiple legal documents her spouse put in front of her for signature from time to time.

She told the High Court her spouse had refused to engage in discussions for the Trust’s sale of Buckleys Track.

A Trustee Act notice was served on Mr Aspinall removing him as trustee.  His failure to respond within the required twenty working days meant he was automatically removed as trustee.

The two remaining trustees then asked the High Court give Trustee Act ‘blessing’ for sale of Buckleys Track.  ‘Blessing’ protects them from any later comeback from Mr Aspinall alleging the sale was rigged to Ms Cadness’ advantage.

Justice Walker approved sale of Buckleys Track with the net proceeds divided equally between the two after repayment of the ASB mortgage and repayment of monies advanced by a family trust controlled by Ms Cadness and her father.

Evidence was given that Buckleys Track had a potential net equity of about $1.4 million as at late 2024.

Mr Aspinall did not defend the court application.

For pragmatic reasons, Ms Cadness said she would not challenge ASB recovery from sale proceeds that money lent to Mr Aspinall for his personal use though his company Exceed Online.

She will be claiming this borrowing was Mr Aspinall’s personal debt, in any later relationship property wash-up, she said.

Aspinall Family Trust v. Aspinall – High Court (26.02.25)

25.073

Estate: Stirrup v. Rahurahu

 

Wording of their mother’s will did not properly carry out terms of a family understanding Helena Stirrup claims, leading to a dispute over ownership of a Rotorua home later occupied by her sister to the exclusion of Helena and her siblings.

The legal train of events started with a 1986 relationship property settlement in which Hemi Colin Scott transferred his half interest in the family home on Dawson Drive in Ngongotaha to his spouse Mary Anne Scott.  She now had full legal ownership of the family home.

She died eleven years later.  Her 1996 will gave widowed spouse Hemi rights to occupy Dawson Drive until he died or earlier remarried.

When he remarried just over a decade later, Dawson Drive came to be registered in the sole name of Leonie Rahurahu, one of their daughters.  She treated it as her own, borrowing against security of the property.

It wasn’t until after their father’s death in 2024 that Leonie’s sister Helena Stirrup took legal action claiming a share of the value of Dawson Drive.

Helena claims that while their mother’s will gave ownership of Dawson Drive to Leonie, half the value was to be shared between Leonie’s four siblings, including Helena.  This is disputed.

Helena lodged a caveat against title to Dawson Drive, protecting her claimed interest.

Associate Judge Taylor ruled the caveat remain until the dispute is resolved.

The court was told of offers made to settle their dispute, including a suggestion Dawson Drive be put on the market with Leonie to receive half the sale price (and be required to pay off mortgages registered against the title) and her four siblings to share the other half.

Stirrup v. Rahurahu – High Court (25.02.25)

25.072

Contract: Stoneburn Farm v. Rural Air Work

 

Five weeks before his death from cancer, Lindsay McNicol agreed to buy a former topdressing aircraft from Rural Air for $250,000 on a handshake deal after a brief inspection and not requiring an engineering inspection.  Son James challenges the deal as an unenforceable bargain, alleging Rural Air took advantage of his late father’s then cognitive difficulties.  The High Court put Rural Air’s claim for payment on hold, pending detailed evidence as to Lindsay’s medical condition at time of his purchase.

Since the January 2024 transaction, the Fletcher aircraft has been sitting at Hawkes Bay airport incurring parking fees.

Rural Air Work Ltd is controlled by Joshua Calder.

He told the High Court that Lindsay McNicol both viewed and purchased the aircraft on the same day in 2024 with an oral agreement to buy at $250,000; paying a ten per cent deposit with the balance due in two weeks.  The buyer was Mr McNicol’s company: Stoneburn Farm Ltd.     

Stoneburn Farm paid the deposit.  Rural Air sued after Mr McNicol’s death, when the balance was not paid.

By this time, Stoneburn Farm was under control of Mr McNicol’s son James.  He lives in Australia.

Son James challenges whether there is an enforceable contract.

The first he heard of the purchase was advice from his father days before his death of plans to convert the aircraft into a ‘caravan’ and go tripping around Australia, he says.

He claims Mr Calder took advantage of an elderly 78 year old man with underlying health issues.  The High Court was told Lindsay McNicol’s prostate cancer had spread to his brain prior to his death.

Mr Calder says Mr McNicol drove himself to the viewing and showed no evidence of being impaired in any way in course of their discussions.

Son James claims the purchase is an unenforceable unconscionable bargain.

Courts will not enforce contracts where a stronger party knows the weaker was under a disadvantage and took advantage of that fact.

What is a ‘disadvantage’ depends on the circumstances.  It can include ignorance, lack of education, illness, age, mental or physical infirmity, stress or anxiety.

Associate Judge Skelton refused Rural Air’s application for fast-track summary judgment on its claim.

Detailed evidence is needed as to Lindsay McNicol’s medical condition at time of his $250,000 purchase on behalf of Stoneburn Farm.

Stoneburn Farm Ltd v. Rural Air Work Ltd – High Court (24.02.25)

25.071

Maori: Tuhoe-Te Uru v. Mason

 

First came the Treaty settlement; now an internecine battle within Tuhoe over forestry rights to a 2,100 hectare Matahi forestry block valued at some $9.4 million, with allegations of intimidation to silence critics of disputed logging operations.

In 2017, Tuhoe received Matahi forest, some forty kilometres from Whakatane, in part settlement of its historical Treaty of Waitangi claims.

Treaty settlement assets were transferred to a custodial trustee company controlled by Tuhoe.

Some descendants of Ngai Tama Tuhirae from Omuriwaka marae, a hapu within Tuhoe, claim Matahi forest as their own; customary Maori land, over which they have absolute control, they say.

The High Court was told Tuhoe took exception to clandestine logging operations within Matahi forest with sections of the forest felled and logs trucked away, apparently under supervision of Omuriwaka marae members.

Contractors ignored requests to stop logging operations.  They also ignored a Tuhoe trespass notice.

Justice McQueen imposed a temporary restraining order, halting logging and requiring all heavy equipment be removed from the forest, pending a court hearing to consider Omuriwaka’s claims.    

Tuhoe told the High Court some members of the marae claim they hold ‘aboriginal title’ to the forest, stating this gives them the status of Maori customary ownership to the exclusion of Tuhoe’s registered land ownership.

They have intimidated both members of their own marae and Tuhoe management challenging their claim to customary ownership, Tuhoe says.

Evidence was given that similar claims to customary ownership of Matahi forest by Omuriwaka members were dismissed by the Maori Land Court back in 2017.

Tuhoe-Te Uru Taumatua Trust v. Mason – High Court (21.02.25)

25.070

Overseas Investment: Land Information v. Jarvis

 

Setting up a trust structure to work around Overseas Investment Act rules controlling purchase of land by offshore residents cost Auckland lawyer Andrew James Jarvis $275,000; a civil penalty imposed following his assistance in having two Singaporean residents purchase forestry assets in New Zealand without first getting overseas investment approval. 

The forestry blocks were purchased in 2011 and 2014, with Jarvis acting for two separate clients.  The High Court was told Jarvis had no specific expertise at the time in dealing with Overseas Investment Act issues.  He responded to one client’s query about compliance with the Act by stating ‘on the face of it’ the deal he set up did not contravene the Act.

The arrangement he recommended saw formation of a New Zealand incorporated company for each deal, with a New Zealand national as controlling shareholder.  Each investor then lent money to this company for purchase of forestry assets.

Jarvis took the view that each investor was simply a creditor; Overseas Investment Act rules on purchase did not apply.

Evidence was given of a back-up understanding that the controlling shareholder in each case would be answerable to the creditor/investor who would later take full control of ‘his’ company and with it, full control of the forestry asset.  This trust arrangement amounted to an offence; evading or circumventing operation of the Act.

Land Information New Zealand enforces the rules.

The High Court approved an agreed settlement between Jarvis and Land Information with Jarvis admitting liability and paying a $275,000 penalty.

Land Information New Zealand v. Jarvis – High Court (20.02.25)

25.068