Fraud: Ropitini v. Social Welfare

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

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

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

Ropitini v. Social Welfare – High Court (31.08.21)

21.144

Bankruptcy: FAI Money Ltd v. McKenna

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

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

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

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

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

21.146

Loan: Powell v. K2 Investment Group

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

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

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

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

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

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

21.143

Right of Way: Botev Trustee v. Tait

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

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

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

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

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

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

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

21.142

Subdivision: Reynolds Trust v. Parklands Properties

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

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

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

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

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

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

21.141

Deposit: Kinleith Land v. Bremworth

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

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

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

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

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

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

21.140

Leasehold: Paros Property v. Smith

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

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

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

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

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

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

21.139

Freezing Order: Kimiko Trust v. Walton 18 Ltd

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

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

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

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

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

21.138

Construction: Cain v. Rilean Construction

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

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

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

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

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

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

21.137

Leaky Building: 'The Links'

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

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

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

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

21.136

Fraud: Eight Mile Farms v. Bradley

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

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

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

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

21.134

Estate: McMahon v. Blind Foundation

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

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

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

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

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

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

21.135

Estate: Moleta v. Darlow

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

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

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

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

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

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

Moleta v. Darlow – High Court (5.08.21)

21.133

Bankruptcy: Paterson v. Lepionka & Co Investments

Bankrupted once in Australia and twice in New Zealand over a five year period, Hawkes Bay property developer Garth Bowkett Paterson was barred from ongoing litigation over a subdivision on the banks of the Tukituki River with his litigious behaviour described by the Court of Appeal as frivolous, vexatious and abusive. 

Paterson was bankrupted by Australian tax authorities in 2015.  Subsequent bankruptcies in New Zealand in 2016 and 2020 followed a failed subdivision of lifestyle blocks in Hawkes Bay and extensive litigation against interests associated with Stefan Lepionka who had bought lots in the subdivision and then bought out Westpac as first mortgagee when Paterson’s GLW Group Ltd ran out of cash to complete the subdivision.

Lepionka Investments bankrupted Paterson in 2016 for non-payment of a court costs order.  Lepionka Investments was later found by the High Court to have improperly benefitted from its exercise of Westpac’s rights to sell as mortgagee, but damages were left to be assessed after market prices were known on completion of the subdivision and sale of lifestyle blocks. Whilst bankrupt, Mr Paterson engineered a string of caveats over lots at the subdivision variously in the names of GLW Group and a supposed family trust claiming rights to the land.  The High Court ordered removal of the caveats, ruling there was no evidence to support the claims and that Mr Paterson was attempting to frustrate Lepionka Investments’ sale of lots in the subdivision. Despite a court order barring him from lodging any further caveats, further caveats were lodged by interests associated with Mr Paterson.  His second New Zealand bankruptcy in 2020 followed a failure to pay another court costs order awarded in favour of Lepionka.

Damages due to GLW Group by Lepionka Investments for its improper exercise of mortgagee sale powers were settled out of court after GLW Group went into liquidation.  The liquidator’s report identifies Lepionka agreed to pay $100,000 damages.

Mr Paterson, still bankrupt, took legal action attempting to have both Stefan Lepionka and Lepionka Investments convicted and fined for breaching the Property Law Act.  Terms of the $100,000 out of court settlement with GLW Group’s liquidator precluded any further legal action against either Stefan Lepionka or Lepionka Investments, the Court of Appeal ruled.

Paterson v. Lepionka & Co Investments Ltd – Court of Appeal (3.08.21)

21.132

Property: Xu v.Meng

It took a High Court order to remove intending purchasers Xing Meng and Huimin Guan from an Auckland property after they were allowed to move in before unsuccessfully seeking mortgage finance for a $1.78 million purchase 

The High Court was told Wei Xu had known Ms Guan for over twenty years.  In May 2018, he agreed to sell his property on Bayside Drive, Browns Bay, to Ms Guan and her husband for $1.78 million.  There was no written agreement.  The deal was conditional on the purchasers getting bank finance; meanwhile they were allowed to shift into the property.  They agreed to pay rates and insurance pending final settlement and to hand over a twenty per cent deposit when their own property was sold.  Five months elapsed before a reduced deposit of $200,000 was paid.

Three years on: Mr Meng and Ms Guan were still in occupation; had not been able to get mortgage finance because of Mr Meng’s tenuous job prospects as an airline pilot; had stopped paying rates and insurance; and were refusing to budge until their $200,000 deposit was repaid.

They said they were tenants and could not be removed by High Court order; the Tenancy Tribunal has exclusive jurisdiction over tenancy disputes.

Associate judge Andrew ruled Mr Xu was entitled to possession.  Ms Guan was given 28 days to leave.  Mr Meng is currently in China.  Judge Andrew said they were never tenants. There was never any tenancy agreement; only an agreement to purchase which came to an end when they failed to find finance. Any argument over disputed return of the $200,000 deposit is a separate issue to rights of possession claimed over Bayside Drive, he said.

Xu v. Meng – High Court (29.07.21)

21.130

Financing: Keller v. Daisley

Facing a mortgagee sale, Northland contractor Jimmy Daisley was buoyed by an offer from neighbours the Kellers to step in and help with refinancing.  For the Kellers it set off a decade of disputes over what had been agreed. Ten years on, the Kellers were vindicated in three different sets of litigation on appeal to the Court of Appeal, dealing variously with allegations of Daisley not keeping promises, his removing buildings without authority and creating false invoices to inflate values of contracting equipment. 

In late 2009, Mr Daisley and his companies were under considerable financial pressure.  Westpac was threatening to call up a $1.5 million loan.  Another $110,000 was secured by second mortgage to a solicitor’s trust company.  At risk was Mr Daisley’s depot on Maungakaramea Road and rural properties in the district owned by him or his company SDD Ltd.

The Kellers offered to assist.  A deal was proposed having the Kellers pay off his mortgage debt, with Mr Daisley’s business assets tipped into a new company called Ark Contractors Ltd with shareholding split to reflect their respective contributions after allowance for a 25 per cent discount on the Daisley contribution to recognise he was being rescued from a mortgagee sale.  A taste of what was to come surfaced early when the Kellers learnt belatedly about the second mortgage debt of $110,000.  Westpac agreed to the Ark Contractors bail out and postponed its mortgagee sale, subject to the Kellers paying upfront $200,000 of Daisley’s Westpac debt.

The Court of Appeal was told that one day prior to Daisley’s first property going to mortgagee sale, the Kellers put their contracts for Ark Contractors’ purchase in front of Mr Daisley with an ultimatum: sign; take it or leave it.  He signed. The Kellers then paid the required $200,000 upfront to Westpac.  Balance of Daisley’s debt was to be paid from the Kellers’ savings and a Kiwibank refinancing loan.  Nearly two months later, Mr Daisley baulked on signing off on the Kiwibank loan; he was playing for time, exploring other options.  Mr Daisley used this delay as leverage to amend their prior Ark agreement. This time the Kellers were under pressure; they faced loss of $285,000 already put into the deal unless bank financing was completed.

Their relationship steadily slid downhill.  Mr Daisley failed to agree on or sign a shareholder agreement, needed before issuing to him shares in Ark Contractors. He stopped paying rent to Ark for his occupation of business premises at the Maungakaramea depot.  In September 2010, in league with son Scott, he set about removing office buildings from the depot.  The buildings were on skids; temporary structures not part of the land sold to Ark Contractors, Mr Daisley said.  Police intervened, preventing removal of a third building.  The Court of Appeal confirmed a High Court ruling that the buildings belonged to Ark; they were part of the land, affixed by a permanent electrical connection; and in any event were included in earlier negotiations as being amongst the assets sold to Ark.

Mr Daisley sued Mr Keller for conversion, claiming Mr Keller prevented access to some forty items on site at the depot having a replacement value of $225,000: contracting equipment, a tractor and trailer plus beams and poles.  Mr Keller, already angered by the buildings removal, demanded Mr Daisley provide proof of ownership.  With Mr Daisley’s contracting business then going into liquidation insolvent, Mr Keller was confronted by Daisley’s trade creditors and equipment suppliers all claiming rights of possession over various items on site.  In the High Court, Mr Daisley produced what were ruled to be suspiciously fabricated invoices to justify the value of goods allegedly converted: one for a forklift being held by Mr Keller; another invoice supposedly for the value of steel beams.

At the High Court trial, Mr Daisley was awarded $541,700 for breach of fiduciary duty since he was never issued shares in Ark Contractors. This was calculated as the value of his equity contribution to Ark.  This ruling was overturned by the Court of Appeal.  The Kellers at no point owed any fidicuary duty to Mr Daisley.  Their agreement to have shares in Ark issued to Mr Daisley remains open.  He has to first sign a shareholders’ agreement.  Valuation of his interest in Ark will be problematic given the years of litigation.  The court was told Ark currently has a net worth of about $500,000.

Keller v. Daisley – Court of Appeal (29.07.21)

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Mako Networks: Banks v. Farmer

Having lost $3.2 million lent to Mako Networks, Adam Banks failed in attempts to recover from directors: there was no liability for their representations about Mako’s potential future profitability and while directors did trade Mako whilst insolvent Mr Bank’s investment by that date was already lost.

Mako Networks Holdings Ltd was born out of the help desk at Telecom’s then new internet service provider: Xtra.  Simon Gamble and Chris Massam from Telecom teamed up with Bill Farmer and his business: E-Force.  Their genius was in devising a simplified and cheap procedure for updating network security, a potentially profitable area when businesses worldwide were adapting to internet connectivity.  Telecom provided working capital for what became Mako Networks.  Mako grew rapidly, expanding into the US market; too rapidly, eventually running out of cash.  In 2015, Telecom pushed Mako into receivership, recovering $2.5 million out of $26.9 million owed.

Also out of pocket was Adam Banks, having lent Mako $3.2 million dollars in three separate transactions between 2011 and 2014.  As an unsecured creditor, these funds were lost. He sued Mako directors.

Mr Banks argued Mako directors were in breach of the Securities Act offering investments to the public without first issuing a prospectus. Justice Moore ruled there was never any offer to the public.  Mako did circulate a private placement memorandum.  This was carefully worded, making it clear the target was ‘habitual investors.’  Mr Banks claim not to be a ‘habitual investor’ was prejudiced when forensic evidence identified he forged emails to disguise funds previously sent overseas for investment as supposedly being funding for a university research project.

Justice Moore ruled Mako directors were in breach of the Companies Act by continuing to trade when Mako was insolvent with no chance of recovery.  This point arose in April 2014 when a proposed deal with US telco Sprint fell apart; a deal promising Mako potential revenue of $42 million over two years.  Sprint refused to pre-pay; Mako had insufficient working capital to fund manufacture of the necessary hardware.  Mr Banks could not claim damages because his loans were advanced before this date, Justice Moore ruled.      

Fair Trading Act claims were also dismissed.  Comments made to Mr Banks by Mako director Bill Farmer about Mako’s potential future profitability were honestly held opinion. They were not factual representations. Even if there were breaches of the Fair Trading Act, Justice Moore said, Mr Banks presented himself as a man who thoroughly researched business opportunities and would have advanced funds regardless of what Mr Farmer said.

Banks v. Farmer – High Court (28.07.21)

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Asset Forfeiture: Snowden v. Commissioner of Police

At a time of rapidly escalating property values, the Court of Appeal emphasised proceeds of crime legislation allows any capital gain to also be confiscated when criminal profits are laundered through real estate.

Paul Andrew Snowden was sentenced to six years three months following conviction on methamphetamine supply charges.  He is fighting civil action taken by police under the Criminal Proceeds (Recovery) Act to seize a lifestyle property on Karaka Road in south Auckland owned by a family trust he controls.  Following a High Court trial, the property was ordered to be sold with $743,300 forfeited as proceeds of crime.  After clearing a mortgage over Karaka Road, a surplus of some $90,000 would remain if sold as at January 2018 values.  The property was originally purchased in 2001 for $460,000.

On appeal, Snowden claimed the forfeiture figure of $743,300 was a gross overestimate of cash generated from methamphetamine dealing. In challenging police estimates, proceeds of crime legislation required Snowden to prove what is the correct figure, the Court of Appeal said.  He provided no convincing evidence.  It is uncommon for drug dealers to keep precise accounting records.

Any capital gain derived from ‘tainted’ property is also potentially available for forfeiture as proceeds of crime, the court said.  At the High Court trial, it was determined cash from drug dealing was used in part to pay down the mortgage on Karaka Road; the property was ‘tainted.’

Karaka Road is owned by a family trust.  Snowden and close relatives are named beneficiaries. Police said on appeal that while the trial judge did order sale of Karaka Road to free up cash for a criminal proceeds forfeiture order, it was a mistake for the judge to then rule the property itself was not forfeit on grounds of ‘undue hardship;’ doing so meant Snowden as a Trust beneficiary could access the surplus following sale.

The cash surplus on sale is also forfeit, the Court of Appeal ruled.  Relief from forfeiture on ‘undue hardship’ grounds required proof Snowden as a beneficiary of the Trust would be prejudiced.  No such evidence was given at the High Court hearing.

Snowden v. Commissioner of Police – Court of Appeal (26.07.21)

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Relationship Property: Turkmani v. Mlouk

Attempts to force her husband to the negotiating table in a relationship property dispute failed when the High Court ruled Relationship Property Act notices could not be registered against sixty-six different properties owned by two companies her husband controlled.  Registration would have the effect of blocking sales, with potential to force husband Mohamed Turkmani into negotiations with estranged spouse Salwa Mlouk.

Real estate owned by BW Rentals Ltd and BW (2004) Ltd had a market value in excess of $45 million as at late 2020.  These properties are heavily mortgaged.  Mr Turkmani is sole director and shareholder of the two companies.

The couple came to New Zealand from Syria, separating in 2020 after sixteen years marriage.  The High Court was told attempts to reach a relationship property settlement have been unsuccessful.  Ms Mlouk says her husband has threatened to run down his New Zealand business interests and move to Sydney.  Relationship Property Act notices of claim were registered against title to the sixty-six properties owned by her husband’s companies.  Ms Mlouk says relationship money was used to buy company assets, entitling her to share in their value.

Justice van Bohemen ordered the notices of claim be removed from all property titles.  Mr Turkmani is sole director and shareholder of the companies, but his ownership interest is in the company shares he owns.  He has no direct ownership interest in the sixty-six properties; they are assets of his two companies.  At law, both BW Rentals and BW (2004) are legal persons separate from Mr Turkmani. The fact Mr Turmani has absolute control over each company’s operations does not mean the companies’ assets become his own, Justice van Bohemen ruled.

Ms Mlouk’s claim in respect of relationship money used for business purposes was restricted to a claim against the value of shares held by her husband in BW Rentals and BW (2004).  

Turkmani v. Mlouk – High Court (26.07.21)

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Greg Olliver: BBG Holdings v. CIT Holdings

Auckland developer Greg Olliver ran into legal difficulties trying to pick and choose how best to extract money claimed from his failed Auckland property development.

A Waimarie Street project in Auckland suburb St Heliers had to be restructured in 2009 when Mr Olliver ran into financial difficulty. A multitude of court cases followed involving Mr Olliver, his then spouse Sarah Sparks and secured creditor Bank of New Zealand.  A rising property market helped.  A decade on: the Waimarie properties were sold to Oceania retirement group for $20.5 million; BNZ was repaid in full; and liquidators of CIT Holdings Ltd (former owner of the Waimarie site and the vehicle established in 2009 to steer around Mr Olliver’s then financial difficulties) are holding some $3.8 million available to pay unsecured creditors who between them claim $5.8 million. Mr Olliver has been shopping around, to identify the best way to benefit from this $3.8 million.

The High Court was told Mr Olliver is owed $836,000 for earthworks carried out on Waimarie Street prior to CIT’s liquidation. Initially, Mr Olliver used BBG Holdings Ltd (a company he controlled) to make the $836,000 claim against CIT. This claim as an unsecured creditor was accepted by CIT liquidators after receiving paperwork in support. One year later and before CIT liquidators had made any payment to unsecured creditors, BBG Holdings itself was in liquidation with insolvency practitioner Damien Grant appointed liquidator. Mr Olliver told Mr Grant BBG owed him some eight million dollars.  Mr Grant required proof.  He did not accept as sufficient evidence accounting spreadsheets supplied by Mr Olliver. Detailed documentation with formal proofs of debt were required.

Mr Olliver changed tack.  He said BBG had carried out the earthworks when it had no right to be on site.  He contacted CIT liquidators telling them the $836,000 unsecured claim put in by BBG Holdings should be rejected.  As a consequence, Mr Olliver would likely achieve a higher payout, the High Court was told. Mr Grant responded with a High Court order that BBG’s claim against CIT Holdings for $836,000 stand.

Associate judge Sussock ruled a contract did exist between CIT and BBG for the earthworks.  As an unpaid creditor, BBG was entitled to claim $836,000 in CIT’s liquidation.

JG Civil Ltd, owned by Orewa contactor Joel Giddy, in turn claims $836,000 as an unsecured creditor in BBG’s liquidation; it carried out the earthworks at Waimarie Street under contract to BBG Holdings.

BBG Holdings Ltd v. CIT Holdings Ltd – High Court (23.07.21)

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Bride Price: Almarzooqi v. Salih

Marrying in Dubai under Sharia law, Rafid Salih paid an immediate bride price of $12,700 to his new wife Rahla Almarzooqi, promising a deferred bride price of $212,000 should they later divorce. They divorced three years later. An order of the Dubai courts that Mr Salih pay the deferred amount could not be enforced in New Zealand because he did not appear at the Dubai hearing.

New Zealand courts have signalled a willingness to follow the practice in England courts and recognise Islamic traditions around marriage and divorce, but Ms Almarzooqi’s claim in the New Zealand courts to a deferred bride price foundered on technical issues of jurisdiction: rules governing enforcement of an order made by a foreign court.

In New Zealand, the Court of Appeal said the Dubai court order pronouncing their divorce would be recognised (this was a change of status) but not the order Mr Salih pay a sum of money (that required him to have been under jurisdiction of the Dubai court).       

The two live in New Zealand.  They first met on an Islamic dating website, when she was living in Australia and he in New Zealand.  She is a UAE citizen and a NZ resident; he is Iranian and a NZ citizen.  They travelled to Dubai, marrying according to Sharia law with their marriage contract providing for payment of both an immediate and a deferred bride price.  They separated within six months.

As a UAE citizen, Ms Almarzooqi applied to the Dubai courts for a divorce.  Divorce papers were served on Mr Salih in New Zealand.  The Dubai court rejected papers filed by Mr Salih in response; he had to either appear in person or have a lawyer appear on his behalf, the court said. Mr Salih did neither.  The divorce hearing proceeded without any further input from him.

In New Zealand, the Court of Appeal ruled Mr Salih had never submitted to Dubai jurisdiction; having court papers rejected by Dubai courts and then doing nothing did not bring him under Dubai jurisdiction.   The Dubai court judgment ordering payment of the deferred bride price could not be enforced in New Zealand. 

Almarzooqi v. Salih – Court of Appeal (23.07.21)

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Deadlock: McGehan v. Clarke

With conflicting aims for their joint venture project, Michael McGehan and Jeffrey Clarke fell out, coming to blows over plans for their Te Hoe subdivision in north Waikato.  With no agreement on a price at which either would buy out the other, Te Hoe Dairies Ltd was ordered into liquidation by the High Court.   

Te Hoe lies in rolling farmland between Huntly and Morrinsville.  In 2017, the McGehans and the Clarkes joined forces with plans to purchase a local farm and subdivide the property into lifestyle blocks.  Jeff Clarke had farming experience; Michael McGehan had previously been his bank manager.  Te Hoe Dairies Ltd was set up as a joint venture company, owned 50/50 by the two families.  The property was leased to the Clarkes for farming whilst subdivision plans were progressed.

The High Court was told differences arose over marketing plans after council approval was given to split off three rural lifestyle sections.  These were eventually sold in early 2020.  The Clarkes leased the remaining 35 hectares as a run-off dairy unit.  The Clarkes had separately purchased a neighbouring farm, intending to amalgamate the two.  Things got ugly, with Mr McGehan alleging the Clarkes were using joint venture resources for capital works benefitting a future farm amalgamation. Police were called after a physical confrontation over arguments about ownership and use of machinery on site. Mr McGehan was arrested and issued with a pre-charge warning.  The Clarkes trespassed Mr McGehan from the farm.  The Clarkes later stopped paying farm lease rentals to the joint venture company. There were complaints the Clarkes were renting out a farmhouse on the joint venture property and were keeping the rent.  No agreement could be reached over a price for one to buy out the other because of disagreement over what each owed the company or is owed by the company.  Each side accuses the other of acting in their own interests, to the detriment of the other.

Associate judge Andrew ruled the only way out of the impasse was to order Te Hoe Dairies Ltd into liquidation with an independent liquidator appointed to sell the remaining 35 hectares and sort out who owes who how much.

McGehan v. Clarke – High Court (22.07.21)

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Charitable Trust: Lusty v. Thorburn

Six hectares of land on the Weiti River near Whangaparaoa Peninsular was settled on a charitable trust by Andrew Weatherspoon in 1901.  His descendants improperly treated the land as their own, in breach of trust, ruled the High Court when current trustees challenged a lease over the property.

The land on Duck Creek Road at Stillwater was transferred by Andrew Weatherspoon on trust to his two sons Robert and Andrew in July 1901. Terms of the trust required the land to be used as a burial ground generally for local inhabitants and specifically for members of the Weatherspoon family.  The trust allowed part of the land to be leased, earning income for upkeep and maintenance of the burial ground.  At the time the trust was created, Andrew’s first wife and their eldest daughter had pre-deceased him and were both buried on the property. Andrew (senior) joined them, buried on the land when he died a few months after setting up the trust.  

The High Court was told Andrew senior’s sons as trustees made little effort to comply with terms of the trust.  They leased out the land, but rentals were not used to maintain the burial sites.  Headstones were at one point buried to accommodate stock management.  Following Andrew senior’s burial, no one else was ever interred at the site.  The Trust was left without trustees after Robert and Andrew junior died without appointing replacement trustees.

Attempts to sell the land in 1987 triggered a recognition that the land was held in trust.  High Court orders followed; Fred Thorburn, a descendant of Andrew senior, was appointed as replacement trustee.  The Trust was confirmed to be a charitable trust.  It promised a benefit for the local community as a burial ground, though in fact it had never been used as such.

More than a century after the Trust was established, current trustees Craig (son of Fred Thorburn) and Carly Thorburn challenged terms of a lease signed by Craig’s father as prior trustee.  It transpired Fred had leased the Duck Creek property in perpetuity at a below market rental coupled with a side deal in which he received $250,000.  This side deal roughly equated to the then market value of the property, but was described as being compensation to Fred for his costs in maintaining the land and payment of rates.  On Fred’s death, Duck Creek lease payments were paid to his widow.  In the High Court, Justice Powell ruled the in perpetuity lease breached terms of the Trust: it did not physically separate the burial ground from farming activities and a requirement to fence blocked public access. A below market rental frustrated aims of the Trust.  Current trustees indicated they were open to negotiating new lease terms which did comply with the Trust.

Lusty v. Thorburn – High Court (15.07.21)

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Mining: Bathurst Resources v. L&M Holdings

Having warned against the danger of judges departing from the plain wording of commercial contracts, a majority of judges in the Supreme Court decided a US$80 million contract dispute between Bathurst Resources and L&M Holdings was in part resolved by making some judicial assumptions about the mining companies commercial motives.  

Two Supreme Court justices decided Bathurst was in breach of contract with US$80 million still owing for its 2010 purchase of West Coast coal mining concessions.  Three justices decided otherwise; US$40 million only was outstanding. 

Bathurst purchased the Denniston and Stockton mining permits on the West Coast with the international price for coking coal peaking at US$330 per tonne in mid-2011, sinking to a low point of US$80 over the next five years.  When Bathurst was looking to raise capital to finance mine expansion, its potential revenue stream was shrinking.

Bathurst’s 2010 purchase from L&M Holdings required payment of US$40 million upfront with subsequent payments triggered when stated volumes of coal were ‘shipped’ from the permit areas.  Claims by Bathurst that ‘shipped’ meant exported offshore were dismissed by the Supreme Court; ‘shipped’ meant sold and transported from the mine site.  Domestic sales of 25,000 tonnes of coal counted, triggering a US$40 million payment.

The Supreme Court was told of further agreements negotiated between Bathurst and L&M Holdings intended to assist Bathurst in its capital raising:  failure to pay on time lump sum scheduled amounts as Bathurst ramped up production would not be treated as a ‘default;’ payments were rescheduled with royalty rates increased as compensation for late payment.  The effect of these further agreements was thrashed out in the Supreme Court after Bathurst suspended mining on the West Coast, concentrating on other mining concessions taken over after the break-up of government-controlled Solid Energy.  The earlier rescheduling assisted Bathurst when raising some A$165 million through two equity raising rounds in the 2010/11 financial year.

In the Supreme Court, two justices ruled Bathurst still owed L&M US$80 million, unpaid as part of the purchase price. The other three justices ruled only US$40 million was due for the tonnage ‘shipped;’ the remaining US$40 million was not part of the purchase price but rather a scheduled ‘performance payment’.  L&M was not bargaining up front for an agreed purchase price payable by instalments; its economic return was tied to Bathurst’s ability to exploit the mining concession, they decided.    L&M Holdings’ motive in agreeing to reschedule further performance payments was to assist Bathurst’s capital raising, they said. It was in L&M’s interest to see Bathurst increase mine production.  As part of the rescheduling, L&M did not impose any legal obligation on Bathurst to actually ramp up production on the West Coast.  No further payment was due if production stopped.  It was up to an experienced mining investor like L& M to protect itself from that potential downside, the majority said.  It was not for the court to read extra terms into the contract to protect L&M against that eventuality, they ruled.

Of the US$120 million potentially payable by Bathurst: US$40 million was paid on signing the 2010 contract; US$40 million was ordered to be paid with Bathurst having ‘shipped’ 25,000 tonnes of coal following domestic sales; the final tranche of US$40 million was not payable because Bathurst shut down production.

Bathurst Resources Ltd v. L & M Holdings Ltd – Supreme Court (14.07.21)

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Fraud: Tollemache v. R

With a low risk of reoffending and having taken steps to deal with methamphetamine and gambling addictions, Kelly Samantha Tollemache’s prison sentence for a $187,000 social welfare fraud was reduced to home detention.

Tollemache was sentenced to two years three months’ imprisonment in May 2021 after pleading guilty to a ten year benefit fraud. She claimed to be single when living in a de facto relationship.  It was not a particularly sophisticated fraud: her public social media pages showed she was living in a de facto relationship; benefits paid separately to both her and her partner were paid into the same bank account.

The High Court was told Tollemache’s partner had to resign from his job following her imprisonment in order to look after a twelve year old daughter.  Now back on a benefit, reparation deductions were being made for his earlier benefit fraud. Tollemache gave birth just weeks before being sentenced to prison.

Justice Gault ruled the trial judge failed to give sufficient weight to Tollemache’s low risk of reoffending and personal steps taken towards rehabilitation.  Her partner could return to paid work should Tollemache’s prison sentence be quashed. She was resentenced to nine months’ home detention together with sixty hours community work.  The period of home detention took account two months of her initial sentence served in prison.

Tollemache v. R. – High Court (14.07.21)

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Millbrook: X-Ray Trust v. Millbrook Country Club

Free membership of Millbrook Country Club near Arrowtown with access to its golf course plus a $5000 monthly membership credit were the opening gambit by neighbours Nathan Branch and Brian Cartmell challenging Millbrook’s plans to build an on-course halfway house refreshment facility one hundred metres from their property.  Millbrook called their bluff, seeing off their High Court challenge to construction plans.   

Through their company X-Ray Trust Ltd, neighbours Nathan Branch and Brian Cartmell already had some leverage over Millbrook. In 2014, Millbrook purchased the adjoining Dalgleish Farm as part of its golf course expansion.  Golf course construction required rezoning Dalgleish Farm; rural general to Millbrook resort zone.  X-Ray challenged the rezoning, claiming it would destroy the rural character and privacy of its property.  A deal was thrashed out.  X-Ray withdrew its objection.  In turn, Millbrook registered covenants over the Dalgleish land, holding it to specified building restrictions and landscaping requirements. 

Subsequent negotiations saw a further agreement in June 2018. X-Ray agreed to Millbrook’s construction on the golf course of a halfway house; a small toilet block and service building limited to forty square metres. In return, Cartmell and Branch were given the right to play golf at Millbrook free of charge.  X-Ray later argued Millbrook’s plans to construct a café with outdoor seating alongside a toilet was outside the 2018 agreement.  Legal action was threatened. X-Ray offered to back off if free membership and a $5000 monthly credit was extended to anyone owning the property currently owned by X-Ray.  This would extend the playing concession previously granted to Cartmell and Branch personally and would markedly increase the resale value of X-Ray’s land.

In the High Court, Justice Nation refused X-Ray’s application for an injunction seeking to stop Millbrook’s construction of the half-way house.  Only the ridgeline of the proposed halfway house would be visible from X-Ray’s land. Landscaping already in place provided extensive privacy.  X-Ray Trust was seeking to gain a commercial advantage from the agreements it had originally negotiated, using them as leverage for monetary gain, Justice Nation said.

X-Ray Trust Ltd v. Millbrook Country Club Ltd – High Court (13.07.21)

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