Relationship Property: Mortyne & Ruke v. Moana Supertee

With the benefit of hindsight it was not a good idea using their Australian company to buy a New Zealand property.  After splitting up, Warwick Mortyne and Tracey Ruke are having trouble selling their Ahipara home as part of a relationship property settlement because it is owned by an Australian company that no longer exists.  Moana Supertee Pty Ltd has been struck off the Australian register   

The High Court was told the couple set up Moana Supertee while living in Queensland, to hold property investments.  They were joint directors and joint shareholders. In 2011, they purchased a site on Poseidon Way in Ahipara, Northland, later moving a relocatable house onto the site and shifting from Australia to live there.  Title to the section was put in the name of Moana Supertee.  They put their own money into moving a house on to the property and lived on site rent free, but paid all outgoings.  The fact the company owning the site was at law a separate legal person from themselves only became clear when their marriage came to an end in 2013.  Intentions to sell Poseidon Way and divide the proceeds foundered when it was realised Moana Supertee could not sign any legal documents; it no longer existed having been struck off the Australian companies register as an inactive company.

Under New Zealand law, the High Court has power to reinstate struck-off companies.  But these rules do not apply to foreign companies like Moana Supertee owning property in New Zealand.  If a New Zealand registered struck-off company owns land, this land reverts to the Crown under the old feudal concept of escheat.  Again, this does not apply to foreign companies owning land in New Zealand.  Government lawyers in Wellington said: nothing to do with us, contact Australia.

The High Court at Whangarei was told similar escheat rules apply in Australia for land held by struck-off companies.  The ownerless land vests in either the Australian Securities Investment Commission (ASIC) or the Australian federal government. Lawyers for Mr Mortyne and Ms Ruke had written to ASIC who replied reinstatement required the former directors to be living in Australia.  But the New Zealand courts could transfer the land to Moana Supertee’s former director/shareholders if it wanted, ASIC said.  Faced with ASIC’s response, Justice van Bohemen in the New Zealand High Court said he had no power to do so.  New Zealand company law does not allow such a transfer in respect of foreign-registered companies.  Neither does trust law; Moana Supertee as the supposed trustee no longer exists.  Mr Mortyne and Ms Ruke have to work through the Australian legal system and its Corporations Act to unravel their problem.

Mortyne & Ruke v. Moana Supertee Pty Ltd – High Court (16.10.18)

18.202

Lease: Precinct Properties v. OMV

OMV’s disputed cancellation of its Deloitte House lease in Wellington after the 2016 Kaikoura earthquake saw the High Court accept that misrepresentations over building earthquake ratings could justify cancellation.

Precinct Properties is claiming unpaid rent in excess of one million dollars from oil and gas conglomerate OMV New Zealand Ltd. OMV was signed up as tenant on a lease running to November 2020.  Tenants were locked out of Deloitte House for four months after the Kaikoura earthquake to enable damage assessment.  OMV refused to return having taken alternative commercial space in central Wellington.  OMV cancelled its Deloitte House lease, saying the building was ‘untenantable’.  Precinct says the OMV lease contains a ‘pay now argue later’ clause.  It sued for summary judgment, saying there was no dispute that ongoing rent is still payable. OMV says the lease no longer exists; there were valid grounds for cancellation.

Associate judge Johnston ruled OMV has an arguable defence that should go to a full trial.  When OMV signed up for its lease extension to 2020 it was told Deloitte House had a 100 per cent New Building Standard (NBS) rating; low risk for earthquake damage.  Engineering surveys undertaken for Precinct Properties after the Kaikoura earthquake identified Deloitte’s NBS rating was most likely in the range 36-60 per cent. This rating classifies Deloitte House as an earthquake-risk building.  OMV could not undertake its own survey.  Precinct did not allow OMV’s engineers beyond those parts of Deloitte House open to public access.  Deloitte House may be structurally sound, Judge Johnston said, but a full trial with detailed engineering reports is required.  Misrepresentations over earthquake ratings can justify lease cancellations.  

The High Court was told Precinct Properties wrote down the value of Deloitte House from $46.3 million to $20.2 million following the earthquake.  It subsequently sold Deloitte House to Prime Properties Ltd for $10.2 million.

Precinct Properties Holdings Ltd v. OMV New Zealand Ltd – High Court (15.10.18)

18.203

Tax: Inland Revenue v. Yorke

Michael Yorke’s attempts to claim tax debts were not his but those of a relative with the same name failed when he was bankrupted by Inland Revenue.

Michael Philip Graeme Yorke (born in 1958) shares the same name as his son (born in 1980).  Mr Yorke senior previously lived at Haruru in Northland.  When sued by Inland Revenue for unpaid income tax and arrears in student loan repayments Mr Yorke senior did nothing.  Armed with a default judgment for $46,400, Inland Revenue took steps to bankrupt him.  Mr Yorke then turned up in court, claiming the debt was not his.  The court file named him as operating an internet website service when he had never run any such business; he had been a truck driver and was now on ACC.  He alleged the debt was owed by ‘his nephew’ having the same name and who now lived in Australia.  Further evidence at a later court hearing identified that the ‘other’ Mr Yorke with the same name was in fact his son and that the claimed tax debt was owed by Mr Yorke senior.  Mr Yorke senior’s signature on court documents matched the signature on a student loan application he alleged belonged to ‘his nephew’.  He was bankrupted on both the unpaid student loan and the income tax arrears.

Associate judge Bell explained to Mr Yorke the effect of his bankruptcy is to wipe his tax debts.  As an ACC beneficiary, he did not have sufficient income to avoid bankruptcy through instalment payments with a summary instalment order.

Inland Revenue v. Yorke – High Court (15.10.18)

18.201

Family Trusts: MJ Romanes Trust v. JC Romanes Trust

The High Court refused to liquidate a partnership of mirror family trusts controlled separately by estranged husband and wife.  Better they come to some agreement, or failing that have the Family Court unravel their business affairs as part of a relationship property dispute, Associate judge Bell ruled.

Jo and Mike Romanes separated after thirty years marriage.  Two years on, settlement of relationship property issues has become acrimonious. Major assets include a Rotorua ‘hobby farm’ called Big Hill Farm having an estimated value of some four million dollars and properties on Kawau Island and at Lawrence in Otago.  Big Hill is owned by a partnership of two family trusts: the MJ Romanes Trust and the JC Romanes Trust.  Big Hill was used as the family home.  The Romanes personally did not have any rights of ownership.  A Family Court ruling held they had rights to occupy Big Hill as tenants.  It granted a tenancy order allowing Jo to live on the property until relationship property rights were resolved.  She has to meet occupation outgoings.  Mike’s family trust is appealing the tenancy order.

Mike, through the MJ Romanes Family Trust, took steps to wind up their family trusts partnership.  Jo alleges this was done out of spite, to defeat her court-imposed tenancy order.  Unusually, Mike asked their partnership be liquidated using the Companies Act.  This asks the court for appointment of an outsider to take control of partnership assets, sell up and divide the proceeds. Each of the family trusts has a half share in surplus partnership assets.  Neither Jo nor Mike are beneficiaries of their own family trusts.  As is common with mirror family trusts, each is a discretionary beneficiary of their spouse’s family trust.

Judge Bell put any Companies Act liquidation order on hold.  The warring spouses must first consider other options, he said.  One option is a Partnership Act dissolution.  Any one partner can give notice under the Partnership Act dissolving their partnership.  The partners themselves then arrange for assets to be sold, to outsiders or to themselves, without the cost of a court-appointed official overseeing a sale.  Jo alleges Mike wants a Companies Act liquidator doing the job so her estranged husband can buy up partnership assets without her having a say and then forcing her out of Big Hill.  An alternative option, Judge Bell said, is to have their business partnership unwound as part of the relationship property dispute currently filed in the Family Court.

MJ Romanes Trust v. JC Romanes Trust – High Court (12.10.18)

18.198

Refinancing: Wallace Homes v. Pearlfisher Trustee

Auckland property developer Wallace Homes has to pay lender Pearlfisher Trustees fees totalling $345,000 on a refinancing deal Wallace claimed it never committed to.  Preliminary paper work signed by Wallace Homes was at law a contract committing Wallace to payment of loan establishment fees, even when it did not take up the loan.

Wallace Homes Ltd is currently undertaking an 18-property residential development at Mangere Bridge.  A $9.5 million credit line was sourced from Spinnaker Securities Ltd. Wallace directors were looking to refinance the Spinnaker debt.  Using broker Rachel Wang, Wallace opened discussions with second-tier lender: Pearlfisher Trustee Ltd.  As is common commercial practice, Pearlfisher sent an ‘indicative offer’ to Wallace. This enables borrower and lender to iron out commercially acceptable terms before time and money is spent working up a formal agreement.

The High Court was told this first indicative offer was not accepted.  Wallace negotiated down fees to be charged by Pearlfisher and in turn was willing to accept a higher interest rate.  A second ‘indicative offer’ was made.  It prescribed a $10,000 work fee payable ‘on acceptance of the indicative offer’, an arrangement fee of $100,000 payable ‘upon issue of a formal letter of offer’, and an establishment fee of $245,000 payable ‘upon acceptance of a formal letter of offer’.  Wallace signed this $9.85 million ‘indicative offer’.  A formal offer followed.  Wallace directors signed.  Two days later lawyers for Pearlfisher sent Wallace Homes a comprehensive Finance Facility Agreement for signature.  Wallace refused to sign, pulling out of the deal.  Spinnaker’s intention to charge a break fee for early repayment of its loan caused Wallace to reconsider its refinancing plans.  Wallace paid Pearlfisher’s $10,000 work fee, but refused to pay any more. Final contract terms were never agreed, Wallace said.  At best, there was only an agreement to agree.     

Associate judge Andrew ruled Wallace Homes was liable to pay Pearlfisher’s claimed further fees of $345,000.  Fee levels had been hammered out before the second ‘indicative offer’ was sent.  The second ‘indicative offer’ together with the signed offer set out the essential terms agreed.  Once signed by Wallace, Pearlfisher was committed to what was a conditional agreement to provide finance.  Wallace was committed to paying the agreed fees regardless of whether any loan was drawn down.  Pearlfisher’s later Facility Agreement, rejected unsigned, only fleshed out the essential terms agreed earlier.

Wallace Homes Ltd v. Pearlfisher Trustee Ltd – High Court (12.10.18)

18.197

Relationship Property: re Estate Rogers

John Rogers was ordered to pay $228,500 to his late wife’s estate after the High Court found he tried to defeat estate claims made by her children from an earlier relationship when he gave away proceeds from selling the Te Kauwhata family home: $100,000 given to a Michelle Ryder and the rest to his business, Portage Plumbing Ltd.

Shirley Anne Rogers died in 2013.  She had been married to John for a decade.  He was named as executor of her will and sole beneficiary.  The High Court was told John took no steps to get probate.  He just dealt informally with all her assets.  Three of Mrs Rogers children from an earlier relationship signalled they would be making a Family Protection Act claim against her estate. Getting no useful information from their stepfather, they had the Public Trust appointed to take control.  The High Court was told attempts by lawyers acting for Mrs Rogers’ three children were actively obstructed by Michelle Ryder when trying to get information about the Kopuku Road sale.  Lawyers later identified the proceeds had gone to Ms Ryder personally and to Mr Roger’s business.  Justice Powell ruled these payments were made for the purpose of defeating the stepchildren’s Family Protection claim.

To recover funds, the Public Trust made a Property Relationship Act claim on behalf of the estate.  Mr Rogers did not appear in court to defend this claim.  Justice Powell ruled the total value of the Rogers’ relationship property at the time of Mrs Roger’s death in 2013 was $457,069: being the equity in their Kopuku Road home and the value of his company, Portage Plumbing Ltd.  Mrs Rogers estate was entitled to half: $228,500.  Ms Ryder and Portage Plumbing were ordered to repay the money wrongfully received.  Mr Rogers is personally liable to make up the balance to ensure his late wife’s estate receives the full $228,500.

Companies Office records show Mr Rogers now lives in Taupo.

re Estate Shirley Anne Rogers – High Court (12.10.18)

18.199

Tax: Shortt v. Inland Revenue

Conviction and sentence of ten months home detention and 200 hours community service for tax fraud by Phillip Robert Shortt was confirmed on appeal with Justice Brewer saying this sentence was on the lenient side.

Shortt argued the trial judge was biased against him because he offered no evidence in defence.  A negative inference was wrongly drawn, Shortt said.  On appeal, Justice Brewer said Inland Revenue’s evidence was overwhelming and Shortt’s lawyer was invited by the trial judge to make submissions before sentence was passed about his client’s failure to give evidence.

Shortt, described as being very knowledgeable about tax affairs, was convicted on charges of GST and PAYE fraud.  He set up shell companies which were then billed exorbitant amounts for work which Justice Brewer described as not amounting to anything.  Some $46,400 was claimed in GST refunds.  Inland Revenue paid out $18,800 before becoming suspicious.  The PAYE fraud involved failure to account for $11,800.

Shortt v. Inland Revenue – High Court (12.10.18)

18.200

Leaky Home: Grant v. Ridgway Empire Ltd

Compensation totalling $474,100 was ordered for saying an Auckland home did not leak, when it did.  Damages are awarded for innocent misrepresentations inducing purchasers to buy.

Aaron Ridgway denied liability for comments made prior to his company selling in 2009 a three-level Clifton Road townhouse overlooking Takapuna beach to Jill Grant for $1.46 million.  Before signing up she asked him directly whether the building leaked. He said it didn’t.  He did not qualify his answer.  There had been repairs to the building in the past after water ingress was discovered, but Mr Ridgeway said he was unaware of any further leaks at the time he made the statement.

Ms Grant purchased one of five connected townhouses. Entities associated with Mr Ridgeway have owned four of the townhouses at various times.  The High Court was told water leaks from a third floor deck on the townhouse purchased by Ms Grant were discovered by Mr Ridgeway in 2004 when he carried out kitchen alterations.  The deck surface was replaced.  After her purchase, Ms Grant discovered leaks in the ceiling below the repaired third floor deck.  Flashings had deteriorated.  Replacement of the entire deck and adjoining walls was needed.  When repairs got underway, it was discovered water damage had spread further than earlier thought.  After protective shrink wrap on the building was removed at the conclusion of Ms Grant’s repair, Mr Ridgeway complained water was leaking into his adjoining unit.  Further investigation identified long-term water damage to Mr Ridgeway’s unit, damage which pre-dated Ms Grants purchase.

Justice Palmer ruled Mr Ridgeway’s negative response to the question of whether the building leaked was an unqualified representation of a material fact that induced Ms Grant to purchase.  He was liable for the consequences.  He did not qualify his answer with an honest explanation of his experience with the property.  Damages were awarded against Mr Ridgway’s company, Ridgway Empire Ltd, under the Contract and Commercial Law Act.  Damages of $474,100 were calculated on $186,800 for remedial work done, $66,600 for professional fees and Council consents, $195,500 for further remedial work required and $25,000 damages for stress and anxiety.

The High Court was told there is an ongoing dispute between Ms Grant and Mr Ridgway over damage arising from her earlier repair and the adequacy of proposed further repairs.  Shrink-wrap remains over her townhouse, obscuring all sea views. 

Grant v. Ridgway Empire Ltd – High Court (11.10.18)

18.196

Insolvency: re Kiwi Deposit Building Society

Set up by Lachlan Williams and Scott Macaw and used by off-shore investors to park European property holdings, Kiwi Deposit Building Society is insolvent with Society banking customers getting back less than sixty cents in the dollar on their $26 million deposited. Off-shore investors complain their property investments have been snatched off them.

Taking advantage of wider latitudes now allowed under the Building Societies Act, Kiwi Deposit was set up in 2009.  In what was a bespoke operation, Williams and Macaw were the driving force behind 19 of the 20 corporates signing up as founding Society members.  The twentieth was Aequus Trust Pte Ltd, based in Singapore.  Kiwi Deposit’s auditor was signalling potential cashflow difficulties as early as the Society’s 2010 annual report.

Society membership was sold to off-shore investors on the basis that they could hold ‘tracking shares’ which linked returns to specific assets.  Danish interests took up tracking shares tied to property interests they owned variously in Sweden and England.  A Swiss asset management company fronted for the true owners.  The ultimate beneficial owners have not been disclosed.

The High Court was told Kiwi Deposit management decided to dissolve the Society in 2013.  The dissolution resolution stated that Kiwi Deposit was solvent.  It appointed Paul Sargison and Simon Dalton as trustees to wind down the business.  They found much of the Society’s assets were tied up in unsecured loans and shareholdings in unprofitable overseas businesses.  Offshore property holdings tied to Danish tracking shares were sold off. The Society proved to be insolvent with insufficient funds to repay in full Society creditors, including its depositors, with no return for Society members which includes those holding tracking shares.

The Danish interests sued, alleging they had first claim on sale proceeds from ‘their’ property holdings.  Associate judge Bell ruled Society creditors had priority.  Off-shore property assets were owned by the Society. Danish investors’ rights were as members of the Society through their holdings of tracking shares.  As shareholders, the Danish interests ranked behind Society creditors.  It made no difference that Kiwi Deposit is being dissolved, rather than liquidated. Attempts to liquidate the Society have proved fruitless; a member resolution is not possible because a majority of corporate members have been struck off and no longer exist, and no creditor has taken steps to force liquidation.

Danish investors can proceed with their claim alleging trustees sold property assets at an undervalue, Judge Bell ruled.  But any proved shortfall recovered will go first to Kiwi Deposit creditors still unpaid, not the Danish investors, he pointed out.

re Kiwi Deposit Building Society – High Court (5.10.18)

18.195

CBL: re CBL Insurance Ltd

Interim liquidators of CBL Insurance did not have the power to cut a deal with Gibraltar-based Elite Insurance Ltd which would have seen some 85 per cent of CBL’s cash sent offshore to wind back CBL’s reinsurance obligations.  Better that all CBL creditors get a say, Justice Courtney ruled.

CBL has been in limbo for most of the year after interim liquidators were appointed at the request of insurance regulator, the Reserve Bank.  There has been feverish behind-the scenes activity with attempts to restructure CBL without it formally going into liquidation.  Not all creditors have agreed with proposals put forward.

Interim liquidators Andrew Grenfell and Kare Johnstone from McGrathNicol asked the High Court whether they had power to approve a deal with Elite Insurance on behalf of CBL, without other creditors having to approve.  Evidence was given that Elite is CBL’s biggest creditor.  CBL is registered in New Zealand but its greatest exposure is as reinsurer of risks written in overseas jurisdictions.  Much of that business is reinsurance of French construction industry risks underwritten by Elite.  It was intervention by the Gibralar regulator in 2017, requiring Elite to wind down its business, that led to concerns in New Zealand about CBL’s financial stability.  The court was told CBL’s ‘tail’ of reinsurance liabilities could run on for at least ten years.  The interim liquidators proposed crystallising CBL’s potential liability to Elite by commuting the reinsurance contract; cash and other assets would be transferred to Elite and in return Elite would have no further claims against CBL. Details of the proposed commutation agreement were suppressed.  Justice Courtney disclosed Elite is CBL’s largest creditor, accounting for about 68 per cent of its liabilities.  The intended deal would see 85 per cent of CBL’s cash heading offshore, together with release of collateral held with US insurers and the National Bank of Samoa. Doubts were expressed about the possibility of getting any of this back if the commutation agreement were successfully challenged on CBL’s liquidation, given that Elite itself is in financial difficulty.

The normal role of interim liquidators is to preserve the status quo. The proposed commutation agreement sees some 85 per cent of CBL’s cash paid to the company’s largest creditor at a time when the impact on other creditors is unknown or, at least, disputed, Justice Courtney said.  Creditors dispute the amount claimed by Elite and the value of assets intended to be transferred.  The proposed commutation agreement went beyond what the Companies Act permitted interim liquidators to do, Justice Courtney ruled.  Any deal should either be voted on by all creditors as part of a scheme of arrangement or be left to a liquidator should the company go into liquidation, she decided.  Liquidators are required to act in the interest of all creditors.

Post judgment note: CBL Insurance was placed into liquidation in November 2018.  Andrew Grenfell and Kare Johnstone from McGrathNicol were appointed liquidators.

re CBL Insurance Ltd – High Court (1.10.18)

18.194

Estate: re Matthes

Seventh-day Adventist Church stood back from claiming three-quarters of a Samoan widow’s estate who died without leaving a will but had signed a preliminary ‘personal profile document’ prepared by Church staff leaving the bulk of her assets to the Church.

Pepe Matthes lived in Mangere, Auckland.  She died in 2017.  Conflict arose on the one side between two of her children who applied to the High Court for letters of administration to handle her estate and on the other her brother Tipi who asked that a Seventh-day Adventist ‘profile document’ signed by his sister some eighteenth months prior to her death be validated as her intended will.  Tipi is a member of the Seventh-day Adventist Church.

Justice Davidson was to rule the ‘profile document’ could not stand as her will and that Auckland lawyer Mr Peter Oliver be appointed to administer Pepe Matthes estate.

The Church gave evidence that it assisted adherents in drafting wills.  Staff had adherents sign a ‘profile document’ setting out their wishes as an interim measure. A formal will was then prepared and posted out for signature.  The ‘profile document’ signed by Ms Matthes in July 2015 expressed her intention to bequeath three-quarters of her assets to various branches of the Church and the remaining quarter for the education of her nieces and nephews.  The document stated she made no provision for her children as they had been adopted by her and had now returned to their natural families. This statement was later challenged in the High Court.  Evidence was given that three of the children were adopted from Samoa in 1994 for the express purpose of bringing them to New Zealand.  A fourth was adopted as an informal whangai adoption.

The court was told that Ms Matthes did not respond to multiple Church letters requesting she return a signed copy of her draft will confirming her bequests.  The Church said it would not press for validation of the ‘personal profile document’ as being her final wishes.  Justice Davidson refused Tipi’s application for validation.  Ms Matthes inertia in responding to the Church’s requests for final signature raised a very real doubt as to whether the Church document signed earlier remained her testamentary intent, he said.

Justice Davidson highlighted that Mr Oliver, now appointed as the independent administrator of Ms Matthes estate, has number of complicated issues to resolve.  Eviction proceedings are underway to remove from Ms Matthes’ home two people who were living with her at the time of her death.  And there is the question of $300,000 cash withdrawn from her bank account two weeks before she died.  Evidence points to this money being invested in a cryptocurrency called Onecoin.

Re Estate of Matthes – High Court (28.09.18)

18.193

Money Laundering: Commissioner of Police v. Snook

Two generations of the Snook family forfeit assets totalling some $284,000 after laundering drug profits generated by Mongrel Mob activities.  Snook family members have not been charged with any criminal offences, it is enough they received tainted money the High Court ruled.

In 2015 Tracey Snook agreed to sell her Wellington home in Roberts Street Tawa to Mongrel Mob member Steven Blance.  Blance is now serving a fourteen year sentence following conviction on methamphetamine charges.  There was no written sale agreement.  She was paid in cash by instalments.  The full purchase price paid in cash was disputed.  Police put the figure at about $270,000.  The High Court was told Mrs Snook remained as the registered owner and continued to live at the property for a further two months while Blance treated it as his own.  Justice Ellis was to describe Ms Snook as a naïve and highly susceptible woman who had the great misfortune to come under the thrall of Mongrel Mob members. Communication intercepts by police identified Ms Snook knew the cash purchase price came from drug deals.  The fact of money laundering surfaced when she took about $170,000 cash in a plastic shopping bag to Westpac intending to lodge the money in her bank account.  Westpac refused to accept the deposit.  Police were notified when she failed to provide any written evidence of her Roberts Street sale to Blance.

Justice Ellis declined to order immediate forfeiture of the full sale proceeds from Roberts Street as laundering proceeds of crime. Ms Snook had swapped one asset for another: her house for cash.  The full extent to which she should be penalised is best left to the asset forfeiture proceedings currently underway against Blance, Her Honour said.  A total of $109,154 held in Ms Snook’s name in two bank accounts was ordered forfeit under the Criminal Proceeds (Recovery) Act as the product of money laundering.  This cash had been deposited in discreet lots of less than ten thousand dollars to avoid again alerting banking authorities.

Evidence was given that Ms Snook used some of the cash to help her son Jayde Snook and his partner Sarah Colledge purchase a home in Jillett Street, Tawa.  Jayde raised a $264,000 ANZ mortgage for this purchase on the basis he would be putting in $21,500 from his Kiwisaver account together with $44,500 gifted by his grandfather.  Any gift from his grandfather was a lie; it was money received from his mother. Jayde fabricated a letter purporting to evidence his grandfather’s gift.  This forgery amounted to obtaining a loan by deception, by itself grounds for asset forfeiture under the Criminal Proceeds (Recovery) Act, Justice Ellis ruled. A bank balance of $24,900 in Jayde’s name was ordered forfeit.  Sale of Jillett Street was also ordered with the net equity forfeit to government after repayment of the ANZ mortgage and reinstatement of $25,000 in a Kiwisaver account in Jayden’s name.  Equity in Jillett Street was estimated at about $150,000.

Commissioner of Police v. Snook – High Court (27.09.18)

18.192

Tax: Hong v. Inland Revenue

Loans made in a private capacity by Auckland lawyer Boon Gunn Hong could not be written off against his professional income the High Court ruled, disallowing write-offs totalling $172,280.

Inland Revenue audited Mr Hong’s tax affairs after he failed to file returns for the five year period 2006-2010.  His tax return for the 2011 year, at issue before the High Court, was subsequently also filed late in conjunction with the earlier required returns.  The court was told Mr Hong wrote off two loans made to clients of his legal practice against taxable income for the 2011 year: $50,000 advanced to a Mr Chan and a further $122,280 being part of a $300,000 loan described in court as the “Tololi’ loan. Mr Hong claimed these were expenses for tax purposes; bad debt write-offs.

Justice Jagose ruled Mr Hong was not in the business of making loans.  The bad debts could not be written off against his income as a lawyer. Arranging infrequent ad hoc loans did not amount to a finance business.  He did not take security for loans or derive any significant income from lending.  Loans were made out of a charitable fund Mr Hong established: Benevolence on the Conscience Loan Fund.  The two loans in question appeared to lack a philanthropic purpose.  One was repayable on demand with interest payable at ten per cent and was used to cover cost overruns in the client’s restaurant renovation; the other was described as repayable on demand with ‘fair interest’ due on repayment.

Also at issue before the High Court was a question as to when the two debts had been supposedly written off.  Inland Revenue said an audit of metadata from Mr Hong’s spreadsheet showed the claimed write off took place after the end of the 2011 tax year.   Inland Revenue is justified in charging Mr Hong with Tax Administration Act shortfall penalties for ‘not taking reasonable care’, Justice Jagose ruled.  Mr Hong fell well short of the standard of care expected of taxpayers generally, he said.

Hong v. Inland Revenue – High Court (27.09.18)

18.191

Mortgagee Sale: Coronation Gardens v. Small (2005) Ltd

Developer Neville Mahon alleges fellow developer Tim Edney acting as mortgagee sold off at an undervalue his Auckland Coronation Gardens project.  The two are still at arms-length in a dispute over what the project is worth.

The two have a long history of co-operating in property developments.  A terraced townhouse development on Coronation Road in Mangere did not prove profitable.  The High Court was told Mr Edney’s company, Small (2005) Ltd, initially sold the Coronation Road site to Mr Mahon’s Coronation Gardens Ltd in 2014 for $14.6 million.  Funding was provided by Bank of New Zealand together with a mortgage back by Mr Edney’s Small Ltd.  Mr Mahon personally guaranteed repayment of part of the Small mortgage.  The project ran into financial difficulty.  Inland Revenue had Coronation Gardens put into liquidation in September 2018 for unpaid GST and PAYE.  Meanwhile, Coronation Gardens had defaulted on both the BNZ and Small mortgages.  Mr Edney was then in control as the major secured creditor, through his Small mortgage and having bought the BNZ mortgage from the Bank.

Evidence was given that Mr Edney’s attempts to sell the project through a mortgagee sale met with little success.  A July 2017 tender round saw 120 expressions of interest, only one unconditional offer at nine million dollars and conditional offers ranging from $6.4 million to $17.3 million.  No sale was finalised.  A further tender round in May 2018 resulted in only one conditional offer at seven million dollars plus sundry expressions of interest without any further offers. In July 2018, Mr Edney formed a new company, Golden Belt Mining Co Ltd, and sold Coronation Garden’s land to his new company for $11.75 million.  The land has since been offered back to Coronation Gardens at a price of $17.25 million, described by Mr Edney as being at an approximate discount of $500,000 on what Coronation Gardens owes.

Mr Mahon sued asking the High Court for an interim injunction to stop Mr Edney further dealing with the land.  He alleges Mr Edney’s sale to a related party was at an undervalue and prejudices Coronation Gardens.  Justice Jagose refused an injunction.  If there was a sale at an undervalue, Coronation Gardens gets damages, he said.  That will require a further court hearing.  With Coronation Gardens now in liquidation, it is not Mr Mahon’s decision whether his company continues with court action; this decision now lies with the liquidator.

Coronation Gardens Ltd v. Small (2005) Ltd – High Court (26.09.18)

18.190

Trust: Singh v. Singh

Common practice within the Sikh community of making cash loans with no written record required Gary Singh to produce a detailed accounting trail to prove his part ownership of a Tauranga house that sister Jaspal and her husband claimed was theirs alone.

A Pooles Road property in Greerton was purchased for $350,000 in April 2007: $100,00 cash and a $250,000 bank loan.  Harvinder Singh and Jaspal Kaur were registered as owners.  They claim the property is theirs.  Relatives, Gurminder (Gary) Singh and Rupinder Kaur, claim they are part owners with a one-half share.  Justice Courtney was left to sort out who owned Pooles Road.

Justice Courtney ruled Gary’s evidence was consistent with his claim to a half share.  There was evidence his $50,000 cash contribution came from savings, a loan from a friend and repayment of a loan made by him.  Witnesses corroborated details of the loans.  Deposits in the bank account of Harvinder and Jaspal in the days after instalments of Gary’s $50,000 were said to have been handed over matched his evidence.  Gary said he left Harvinder to finalise the purchase as Harvinder was older and senior to him in Sikh culture.  There was also evidence from the accountant employed by Gary’s auto mechanic business of regular payments made towards the ASB mortgage raised to purchase Pooles Road. These payments were recorded as personal drawings, not a business expense.  Harvinder and Jaspal hold a half share of Pooles Street on trust for Gary and Rupinder, Justice Courtney ruled.

The High Court was told Pooles Street had been rented out to a succession of tenants, including at one time an employee of Gary. Gary and Rupinder have been tenants for the last four years, paying rent.  Action taken in the Tenancy Tribunal by Harvinder and Jaspal to evict them has been on hold pending a High Court ruling on ownership of Pooles Road.  Evidence was given that there had been a falling out between the two families during 2016 in a dispute over a loan Harvinder and Jaspal made to Gary’s auto mechanic business.

Singh v. Singh – High Court (25.09.18)

18.189

Asset Forfeiture: Commissioner of Police v. Wellington & Moana

Riki William Wellington and Christiana Kaneihana Moana agreed to surrender assets valued at $176,000 as proceeds of crime.

Wellington was sentenced to thirteen years imprisonment on charges of methamphetamine possession and supply.  This followed a police bust in 2016 when cash and cars were seized during raids in Auckland and at the Christchurch home of Wellington and Moana.  Ms Moana denied all knowledge of the nearly $159,000 cash found in a bag in their wardrobe.  Police raids were the culmination of a ten year investigation: Operation Virunga. Police allege both Wellington and Ms Moana earned drug profits in excess of the assets seized but police took a pragmatic approach since no other assets purchased with the proceeds of crime were found.  The court was told the two received minimal legitimate income in the previous seven years. It was agreed no profit forfeiture orders would be sought if the two surrendered both $160,240 cash seized in the 2016 drug raids and proceeds of sale of three motor vehicles seized at the same time: a Toyota Mark X, an Audi 8 and a Toyota Hiace.  The agreed settlement was approved by Justice Muir under the Criminal Proceeds (Recovery) Act.  Ms Moana was paid the $4400 realised from the sale of a seized Volkswagen Touareg.  She said she owned the Touareg, despite it being registered in Wellington’s name, and that she had not purchased the vehicle with tainted money.

Commissioner of Police v. Wellington & Moana – High Court (24.09.18)

18.188

Trade Mark: Australasian Conference Association v. Little Bit of Britain

With survey evidence showing nearly one-third of respondents who had lived in the UK confused the New Zealand cereal brand ‘Weet-Bix’ with the UK product ‘Weetabix’ the High Court ordered imports could be put on sale only after covering the UK brand.

A classic David and Goliath battle was played out in the media when Sanitarium, manufacturer of Weet-Bix in New Zealand, sued Canterbury niche retailer A Little Bit of Britain Ltd for importation of Weetabix from the United Kingdom.  Sanitarium claims its trade mark is breached.  Britain Ltd said it sells to ex-pats and Anglophiles who are willing to pay two and half times the price for an equivalent Sanitarium product just for the pleasure of identifying with the UK.  Sanitarium was hesitant to elevate Britain Ltd to martyrdom, but feared failing to take a principled stand would potentially result in major retailers also stocking the UK product.  Britain Ltd rejected Sanitarium’s offer to allow sales provided the Weetabix name was covered over on packaging.

Britain Ltd scored a minor victory when Justice Gendall ruled the two brand names were not identical.  Spelling is different and one is pronounced with two syllables, the other with three.  But imported Weetabix did breach the Trade Marks Act because the brand names were similar and likely to cause confusion.  About half of New Zealand households purchase Weet-Bix.  If Weetabix were given shelf space in retail stores most customers would be unaware it was a product different from Weet-Bix, Justice Gendall decided.  An online survey identified that a significant minority of five hundred consumers surveyed, all of whom had at some time lived in the UK, were unaware of the difference.

Justice Gendall ruled that sale of UK’s Weetabix in New Zealand breached Sanitarium’s trademark for Weet-bix, but the product could be sold by Britain Ltd’s niche business provided the UK brand name was covered over.

Australasian Conference Association Ltd v. A Little Bit of Britain Ltd – High Court (24.09.18)

18.187

Asset Forfeiture: Commissioner of Police v. Sun

Twice convicted of drug offending and serving cumulative jail sentences of ten years, Jia Sun did a deal with the authorities who threatened to sell his family home, confiscate $77,100 cash seized during drug busts and to slap on him a two million dollar profit forfeiture order.  In a court-approved settlement under the Criminal Proceeds (Recovery) Act he surrendered the cash and former wife Angie Guo gets to keep the house once the two stump up $422,700.

Sun is the registered owner of a home on Laurel Oak Drive at Schnapper Rock on Auckland’s North Shore.  Its current rateable value is $1.4 million.  There is a $661,000 mortgage registered against the title.  Police found cash totalling $67,800 at the property during a drug bust.  A further $9300 cash was found at his offices in Auckland’s Queen Street.  Police allege the cash and equity in Laurel Oak came from dealing in pseudoephedrine, ephedrine and methamphetamine.  In 2015 he was sentenced to six years jail for possession and dealing.  In 2017, a further four years jail time was added for drug offences committed whilst on bail prior to the first sentencing.  The High Court was told for the six tax years prior to his arrest, Sun’s declared income to Inland Revenue totalled $65,800.  In four of those tax years, he declared no income.

In the agreed settlement, Sun agreed to confiscation of the cash found at Laurel Oak and at his offices.  Ms Guo and her stepmother Shi Wen take ownership of Laurel Oak on payment of $422,777 to government.  Mrs Guo strongly denies any knowledge of or benefit from her former husband’s offending.  As part of the agreed settlement, police agreed not to pursue profit forfeiture orders against either Sun or Ms Guo.

Commissioner of Police v. Sun – High Court (21.09.18)

18.184

Enduring Powers of Attorney: re Fitzgerald

Two sisters breached the Protection of Personal Property Act by using their mother’s enduring power of attorney to sell a 125 acre Taranaki farm, splitting the proceeds between themselves and three other sisters in what Justice Dobson said was a stratagem to remove assets from their mother’s estate prior to death.  It is unlawful to use enduring powers of attorney for your own benefit.

Doreen Fitzgerald died in 2014.  Her death crystallised family enmities going back last century.  She had been widowed for over thirty years.  The High Court was told of her disappointment at receiving nothing from the estate of her husband, known as DJ, following his 1983 death.  One witness described her as poring over estate papers stating: ‘the bastard left me nothing’.  DJ left proceeds of a life policy valued at some $21,000 to their elder son Daniel (living in Australia), a life interest in his farm to their second son Arnold (with Arnold’s children to then inherit) and little to their five daughters.  Widow Doreen and the daughters were left with a right to occupy the farm homestead; the daughters until they married.

Doreen owned in her own right a 125 acre farm six kilometres away in Rowan Road, Kaponga.  In 2011, while Doreen was still alive but suffering from dementia, daughters Marie and Angela used an enduring power of attorney to sell Rowan Road to a third sister, Louise and her husband.  Louise had been sharemilking on the property at various times since 2003.  The agreed price was $2.26 million which was then divvied up: $450,974 to each of Doreen’s five daughters, including Marie and Angela who had signed off on the sale.

Colouring family dynamics was evidence of Arnold assisting his mother at Rowan Road for over two decades with the construction of hay barns, replacing fencing and refurbishment of the milking shed, cow yard and effluent ponds.  Justice Dobson was to rule that this work supported a claim by Arnold under the Law Reform (Testamentary Promises) Act.  Family discussions at the time of the work pointed to Arnold being given first right to buy Rowan Road after Doreen’s death on easy terms; he would have to buy at market price but payment to his siblings of their share could be delayed up to five years.  This was pre-empted when Maria and Angela sold up using their mother’s enduring power of attorney at a time when she was diagnosed with dementia.  They did not tell Arnold of the $2.26 million being gifted, rather than being kept as an asset of their mother.  He found out after his mother’s death.

Arnold’s testamentary promises claim was bitterly fought, with ten days of evidence in the High Court seeing fifty years of family washing hung out for inspection.  Past disputes against distant relatives and between family members all got an airing. 

Justice Dobson ruled Arnold was entitled to $50,000 from his mother’s estate: $40,000 for his testamentary promises claim based on his loss of the right to buy Rowan Road and a further $10,000 for a related family protection claim arising from the fact his mother’s estate was now notionally worth some $3.35 million with value of the unlawful gifting following sale of Rowan Road to Louise added back in.  Louise keeps Rowan Road, but the $450,974 received by each of the daughters is liable for repayment.  Daniel was awarded $20,000 in a similar family protection claim under the Family Protection Act.  Justice Dobson ordered the five daughters as residuary beneficiaries of their late mother’s estate bear both the estate costs of all the litigation and the damages awarded to each of Arnold and Daniel.  Estate payouts have been frozen since litigation was threatened.  Separately, Doreen’s will leaves $50,000 each to both Daniel and Arnold; the balance equally to her daughters.

re Fitzgerald – High Court (21.09.18)

18.186

Westgate: Westgate Town Centre v. Auckland City

Westgate Town Centre Ltd must pay Auckland City $11.8 million as its share of undergrounding high voltage transmission lines near the west Auckland retail project despite Westgate’s complaints Auckland messed up the entire development.

Westgate says it will be forced to borrow the entire eleven million dollars at commercial rates to make payment while it has its own $33 million claim against Auckland still outstanding.  Westgate alleges Auckland is dragging the chain on contractual obligations to support its retail development.  Westgate has its origin in deals struck with the former Waitakere City Council in 2004.  Waitakere was later absorbed into an expanded Auckland supercity.  The High Court was told Westgate construction is now governed by some 23 separate contracts between Auckland City and joint venture developers, NZ Retail Property Group. These contracts were signed variously between 2004 and 2017.

Westgate Town Centre sued alleging Auckland had not carried out its part of the deal.  In particular, it says Auckland has hampered traffic in and around the development after establishing roading with high-volume traffic flows that hinder promised ready access to community and retail facilities.  It also says Auckland has failed to provide a promised bus interchange and has delayed construction of promised library and community centre facilities.  Westgate says it has been left with a dysfunctional commercial precinct instead of the compact, integrated town centre promised.

Westgate sued Auckland for $33 million, including a demand for return of $2.6 million part-payment already made for its share of power undergrounding costs.  Westgate argued it was only liable for undergrounding if the town centre was developed as agreed.  Auckland City counterpunched with an $11.8 million summary judgment claim for Westgate’s remaining share of undergrounding costs.  Auckland has paid Transpower in full for the work.  Justice Wylie ordered Westgate pay the $11.8 million.  There was no argument the money was due and owing, he ruled.  Westgate’s share of the undergrounding cost had a drop-dead final payment date in October 2017, Justice Wylie said.  The contract was not subject to any conditions or right of set-off.     

Westgate has to go to a later full court hearing on its separate $33 million damages claim against Auckland City.

Westgate Town Centre Ltd v. Auckland City – High Court (21.09.18)

18.185

Mainzeal: Mainzeal Property v. Yan

Directors attempts to knock Mainzeal’s liquidator out of contention before legal action against them even got into court has failed.

In 2013, Mainzeal Property and Construction Ltd went into liquidation.  To date, liquidators have accepted creditor claims totalling $117 million.  Insolvency specialists at BDO were appointed liquidators. They are suing Mainzeal directors alleging reckless trading and breaches of directors’ duties during Mainzeal restructuring.

Before the case got to trial, directors applied to knock out evidence intended to be given by liquidator Andrew Bethell.  He lacked independence, they said.  Mainzeal liquidators have signed up to a liquidation funding agreement covering costs of legal action against directors.  They are required to ‘use their reasonable endeavours to maximise settlement or judgment proceeds’.  This does not prejudice the liquidators’ position, Justice Cooke ruled. Liquidators are under a general obligation in any event to maximise returns for Mainzeal creditors.

Directors also criticised the tone of Mr Bethell’s proposed evidence.  He could give evidence of fact they said, but not offer opinion evidence about directors’ knowledge and the timing of insolvency.  In complex commercial litigation, the dividing line between fact and opinion becomes less clear, Justice Cooke said.  Mr Bethell, as an insolvency specialist, is qualified to give expert opinion evidence about matters within his area of expertise, Justice Cooke ruled.

Most of the heavy lifting in winding down Mainzeal’s construction activities was carried out by PwC appointed as receiver to recover funds advanced by secured creditor, Bank of New Zealand.  Receiver’s final report dated May 2017 show that at the end of the receivership PwC handed over eight million dollars to BDO as liquidator.  

Mainzeal Property and Construction Ltd v. Yan – High Court (20.9.18)

18.183

Dumping: NZ Steel v. Commerce

Ministry of Commerce did not take into account credible overseas studies detailing levels of state subsidy for Chinese steel production when declining requests for countervailing duties on imported steel. The High Court ordered a reconsideration.

Commerce made material errors in determining the extent to which Chinese steel producers benefit from being state controlled and state funded, Justice Mallon ruled on a review filed by NZ Steel. 

Australian-listed company Bluescope owns NZ Steel.  It has operations in seventeen countries worldwide. Bluescope was surprised to learn a 2017 Commerce investigation concluded that any subsidy on Chinese steel exported to New Zealand was slight.  No anti-dumping duties would be imposed. Reversing the analogy beloved of economists describing how surprising events can upset preconceived views, Bluescope said Commerce’s decision was the equivalent of saying Chinese steel producers qualified as white swans when the rest of the world had seen only black swans.

Commerce staff investigated Chinese steel imports after a complaint was laid by NZ Steel in 2016.  Its Glenbrook plant is the sole New Zealand producer of galvanised steel coil. Equivalent steel product is imported, predominately from Taiwan, Japan, South Korea and China.  NZ Steel said China had 22 per cent of the import market by volume in 2015.  It alleged Chinese suppliers were undercutting prices with the sale of subsidised steel, causing material injury to its business.  Having to meet Chinese prices meant profitability, return on capital and ability to raise capital were prejudiced, it claimed.

The High Court was told Commerce received a very limited response to questions posed to Chinese authorities.  The government of China expressed ‘concern’ that an investigation had been initiated on the basis of ‘insufficient and unsubstantiated information’ before providing little more than a general denial the state subsidies were provided.

Justice Mallon said Commerce was in error by rejecting evidence of Chinese state subsidies identified by earlier Australian and US investigations.  Commerce presumed, incorrectly, these overseas findings were not based on first-hand evidence.  In fact, investigators had relied on data provided directly from Chinese suppliers and had made verification visits to China.  A US study assessed the level of subsidy at 38.99% arising from a raft of below market charges for loans, land use, electricity and raw materials, coupled with subsidies in the form of export credits.

NZ Steel Ltd v. Commerce & Consumer Affairs – High Court (18.09.18)

18.182

Liquidation: Abedi v. Sultan Kebab

Failing to recognise his one-man company was a legal person separate from himself will potentially cost Fakhrodin Abedi $143,000.  With cash from his takeaway shop either pocketed or paid into his personal bank account and then later used to pay company debts he could not claim a set-off when ordered to hand over the cash drawings.  

West Auckland takeaway business Sultan Kebab Ltd did not keep good accounting records.  Tax compliance was no better.  The High Court was told no GST returns or income tax returns were filed for a number of years.  After the company folded, the liquidator found cash takings had not been paid into a company bank account.  Mr Abedi was sued by the liquidator, demanding repayment of the company’s money. Mr Abedi’s defence was that he had used this money to pay company expenses.  He claimed a set-off.

The Companies Act prohibits director/shareholders of small companies from claiming any set off for transactions in the two years prior to liquidation, unless they can prove their company was solvent at the time.  Mr Abedi did not deny his company was insolvent.  Justice Hinton ruled Mr Abedi could claim the benefit of company expenses he paid personally if he could prove he acted as an intermediary; funds flowed contemporaneously through his personal bank account in payment of company expenses.  Mr Abedi had no documentation to prove this had happened, except in relation to a few payments totalling $9,896.  Mr Abedi was held liable to return $143,468 to Sultan Kebab’s liquidator.  He is left to prove as an unsecured creditor in the liquidation.

Abedi v. Sultan Kebab Ltd (14.09.18)

18.181

Receivership: Harris v. BNZ

The deal had its genesis in asset shuffling designed to keep assets away from creditors of property developer Gregory Olliver.  It is ending with former spouse Sarah Sparks successfully arguing over $3.5 million remains under her control, not their joint control.

A decade ago, Mr Olliver had grand plans for redevelopment of nine sites on Waimaire Street in Auckland’s seaside suburb St Heliers. His then personal financial difficulties were a stumbling block.  He owned no assets personally and had committed to a court-approved Insolvency Act scheme.

Ten years on, assets of the failed redevelopment have been sold and receivers are holding some $3.8 million for distribution. Unsure of the legal status of about $3.6 million cash put up to start the project, receivers went to the High Court for a ruling: was the $3.6 million equity (to be shared by the joint venture partners but deferred after payment of all debts) or a loan (to rank with payment due to other creditors)?  Justice Jagose ruled the $3.6 million was a loan, advanced by Glover No.2 Ltd, a company controlled by Ms Sparks.

The High Court was told the Waimarie Street project was initiated with a 2009 joint venture agreement between Mr Olliver and Ms Sparks.  The two separated some three years later.  The agreed joint venture saw Ms Sparks putting in cash and Mr Olliver putting in land.  It was intended they would reside on one of the Waimarie Street properties as a family home and Mr Olliver would oversee development of the rest.

Harris v. BNZ – High Court (11.09.18)

18.179

Liquidation: Patterson v. McConnell Dowell

Creditors funding liquidators’ legal actions to recover assets in an insolvent liquidation get a reward; they have first claim on funds recovered.  The High Court ruled McConnell Dowell had priority ahead of other creditors over the $1.1 million clawed back from interests associated with David Browne, owner of Polyethylene Pipe Systems Ltd, after his company was pushed into liquidation following pipe-weld failures on a Christchurch sewer outfall project. 

Polyethylene Pipe went into liquidation in 2009. McConnell Dowell, head contractor for the sewer outfall project, is a major creditor having been awarded $2.9 million damages following a claim for faulty pipe-welds.  McConnell put up $297,750 of its own cash for the liquidator to chase down funds extracted from Polyethylene Pipes by interests associated with Mr Browne after the magnitude of McConnell’s claim became apparent. This recovery was fought through the High Court, Court of Appeal and Supreme Court.

To be eligible for the bounty, creditors must have a legally enforceable claim against an insolvent company.  The support provided must be cash or an indemnity against legal costs, not supply of goods or services.  The funding commitment must arise after liquidation commences.  The Companies Act then allows funding creditors to claim against recoveries for their debt plus legal costs advanced to the liquidator.  Associate judge Bell ruled McConnell Dowell had priority for $1.4 million: the $1.1 million clawed back plus $297,750 paid for liquidator’s legal fees.  The purpose of this rule is to encourage assistance by offering a reward, he said.

Mr Browne’s similar claim failed.  As a supposed secured creditor of Polyethylene Pipe he took legal action against Bosch Irrigation resulting in a $201,250 out-of-court settlement.  This money was handed over to Polyethylene’s liquidator after his supposed security was invalidated by the courts in the legal action funded by McConnell Dowell.  The claim against Bosch was not brought for the benefit of creditors generally, Judge Bell said.  It was solely for the benefit of Mr Browne who at the time presumed he was a secured creditor.

Petterson v. McConnell Dowell – High Court (11.09.18)

18.180

Bankruptcy: re Nottingham

Self-styled justice campaigner Dermot Nottingham has been bankrupted on an unpaid $15,000 court costs order.  It is in the public interest to put a stop to his practice of commencing groundless private criminal prosecutions, Associate judge Johnston said.

Described as wreaking havoc with the lives of those wrongly accused of criminal activity, Mr Nottingham failed in a last ditch stand to prevent bankruptcy with a failed Insolvency Act scheme offering creditors deferred part payment.  He claims to have no assets and debts in the order of two million dollars.

While the Insolvency Act proposal appeared to get sufficient creditor votes for approval, Judge Johnston disqualified from the count all those who voted in favour; they did not provide sufficient detail evidencing either their identity or the circumstances of the amount claimed.  A two-line claim stating a name, an amount and a cryptic description of a debt did not suffice.  The only creditors whose votes did count were judgment creditors with court judgments against Mr Nottingham.  They did provide sufficient details of their claim when voting and all voted against the proposal.

Judge Johnston ruled failure to pay the $15,000 costs order and offers to make part-payment to creditors were both evidence of Mr Nottingham’s insolvency.  Bankruptcy will enable Insolvency Service to investigate why Mr Nottingham claims to have no assets at a time when recent dealings totalled two million dollars, he said.

re Nottingham – High Court (11.09.18)

18.178

Asset Forfeiture: Commissioner of Police v. Hines

Denying all knowledge and involvement in a Head Hunters drug ring, Leng Han agreed to confiscation of his Auckland property in Marua Road Ellerslie under the Criminal Proceeds (Recovery) Act provided he received $500,000 from a forced sale.

Mr Han was sole director and shareholder of Tiny Big World Ltd, owner of Marua Road.  Companies Office registration describes the company’s business as internet consultancy. Police told the High Court Marua Road was used by members of the Head Hunters gang to store vehicles.  Earlier court cases identified vehicles were purchased to launder profits from gang dealing in methamphetamine and ephedrine.  Police said Tiny Big World purchased Marua Road in 2015 for $1.024 million. Mr Han said his cash for the purchase came from China. Jia Sun contributed $730,000 towards the purchase price.  Mr Sun was imprisoned after convictions in 2015 on charges of possession and supply.

Mr Han told the High Court he was in China at the time of the Marua Road purchase.  Mr Sun was his business manager, organising renovations and finding tenants.  Mr Han denied meeting or having any contact with Head Hunter members occupying Marua Road.  An agreed settlement between Police and Mr Han, approved by the High Court, sees Marua Road sold with $500,000 paid to Mr Han, the balance forfeited to government.

Commissioner of Police v. Hines – High Court (10.09.18)

18.177