Misrepresentation: Munroe Trustee v. Wang

 

Auckland property purchaser, Dabin Wang, says a $1.07 million claim for loss on resale following his default on an Auckland purchase is far too high; misleading information about the level of buyer interest caused him to bid too high in a closed tender offer, he says.  The vendor has to accept responsibility for misrepresentations by its real estate agent, he claims.

Mr Wang defaulted on a $2.96 million purchase, losing his deposit.  The vendor later resold at $1.78 million.

Munroe Family Trust put its North Shore property at Forrest Hill up for sale in July 2021.  Barfoot & Thompson’s Milford branch was appointed agent.  Kai Deng from Barfoot drew Mr Wang’s attention to the listing.  The property had potential for subdivision into townhouses.

Mr Wang is an immigrant from China.  He speaks poor English.  Dealing through Mr Deng had the advantage they could converse in Mandarin.  The High Court was told Mr Wang had previously purchased at least three properties through Mr Deng.

When tenders closed for Forrest Hill in July 2021, Mr Wang’s $2.96 million was the highest offer.  He was to later learn the next highest bid was $610,000 less.

When sued for Munroe Trust’s loss on resale, Mr Wang claimed Barfoot’s Mr Deng had misled him.  He claims Mr Deng talked up the level of buyer interest alleging he was told active buyers were offering in the range $2.7 million to $2.9 million.  He alleges Mr Deng said a bid near three million dollars would be needed to secure the property.

Mr Deng says he has ‘no memory’ of making such comments.

After a High Court fast-track summary judgment hearing, Associate judge Brittain ruled it was arguable that Mr Deng was acting as agent for vendor Munroe Family Trust when making the alleged pre-contract misrepresentation and that the Trust had to accept responsibility, if the comments are true.     

A full court hearing is needed to resolve the conflict in evidence between Mr Wang and Mr Deng, Judge Brittain ruled.  The nuances of what Mr Deng said speaking in Mandarin needs to be considered when translated into English, he said.

As a side issue, Mr Wang claims Mr Deng was also at fault for not explaining at time of the sale any potential consequences of defaulting.  Mr Wang said in China the only penalty is loss of deposit.  The New Zealand rule is that a defaulting buyer loses not only the deposit paid but is also liable for any loss on resale.

Munroe Trustee Ltd v. Wang – High Court (19.02.24)

24.060

Family Trust: Logan v. Bishop

 

There is no public registry providing details of family trusts, forcing Auckland insolvency specialists Larissa Logan and Rhys Cain to get High Court orders requiring shareholders of insolvent Auckland recruitment agency BF7 Trading Ltd to identify trustee names for their family trust.

Without trustee names, BF7 liquidators cannot start legal proceedings to recover a $315,000 family trust debt allegedly owed the company.

BF7 was propelled into liquidation by Inland Revenue in 2021, claiming unpaid tax debts of some $480,000.  The recruitment company has gained unwanted media publicity over migrant worker employment issues.  Spencer Bishop is currently listed as BF7 director; Spencer together with Raymond Bishop as shareholders.

The High Court was told company financial statements list the Bishop Family Trust as a BF7 creditor owing some $315,000.  A liquidators’ letter requesting repayment was ignored.

At a liquidators’ formal interview, Spencer Bishop declined to name trustees of his family trust; needing time to check the documents, he said.  Follow-up requests for the information were ignored.  BF7’s bank did not know the trustees’ names.

Liquidators were in a bind.

To get into court and sue for recovery of the claimed loan, the person or persons being sued need to be identified and served with court papers.  Family trust records are private documents.  There is no public record listing trustees of family trusts.

Both Spencer and Raymond Bishop were sued to force disclosure.  They said it was a breach of privacy to force disclosure of private information about a family trust.

Associate judge Sussock said liquidators are under a Companies Act duty to realise and distribute company assets in a reasonable and efficient way.  The Bishops were ordered to disclose written documents in their control that identified terms of the $315,000 family trust loan together with the trustee’s names and contact details.

To forestall responses by the Bishops that they have no relevant documents ‘under their control,’ Judge Sussock said in the circumstances of a family-owned company dealing with a family trust it did not matter in what capacity the Bishops had access to relevant documents, disclosure was required.

If Spencer and Raymond are beneficiaries, they are in a position to know names of the trustees; the Trusts Act requires disclosure to beneficiaries of ‘basic trust information’ which includes details of who are the trustees.   

The disclosures required do not extend to disclosure of any assets held by the Bishop Family Trust, Judge Sussock emphasised.

Logan v. Bishop – High Court (16.02.24)

24.059

Asset Forefeiture: McFarland v. Commissioner of Police

 

Gang culture with its strong ethic that you do not rip off fellow gang members saw police make use of Christchurch Head Hunters hand-written cash records in a Court of Appeal ruling confirming criminal proceeds confiscation of its Wigram gang pad; a property worth some half million dollars that Head Hunters inherited at no cost from previous owners, the disestablished Epitaph Riders.  

The court dismissed Head Hunter claims that the Vickerys Road property had not been renovated with funds generated by illegal activity and that confiscation would amount to undue hardship.

Evidence was given that West Auckland chapter of Head Hunters set up what in effect was an operating subsidiary in Christchurch following the 2015 demise of local gang, Epitaph Riders.  Most members of the Riders had left gang life; others ‘patched over,’ welcomed into Head Hunters.

At that time, Epitaph Riders headquarters in Wigram was all but abandoned.  Title to the property was held in name of Lincoln Property Investments Ltd.  Head Hunters’ members assumed ownership with a change in company personnel as directors and shareholders.

After senior members of Christchurch Head Hunters were jailed for drug dealing, police applied to have Vickery Road confiscated as ‘tainted property’ under the Criminal Proceeds (Recovery) Act.

Police claimed the gang headquarters was extensively renovated with profits from sale of methamphetamine, money extorted using standover tactics and profits from pokie machines sited at Vickery Road operated without a Gambling Act licence.

At a High Court hearing, evidence from a quantity surveyor valued cost of the renovations at some $180,000 on the assumption work was done by contractors at commercial rates.

Head Hunters claimed the work cost no more than $10,000.  Materials were gifted, or picked up cheap on TradeMe, they claimed.  Much of the work was done by gang members, using their trade skills, they said.

The renovations clearly cost more than $10,000, the Court of Appeal ruled.

At issue was source of the funds.

In evidence were notebooks seized by the police; a written record of gang cash transactions.  The gang had an appointed bookkeeper, keeping a tally of cash received and cash expended.  This was to ensure no member ‘ripped off’ their own gang.

The notebooks recorded sale of motor vehicles (which police wire taps identified as vehicles sold after being seized from its then owner), bar takings, raffle receipts, and pokie revenue, together with book entries of cash with no source references and other entries claimed to be donations.  In court, Head Hunters’ lawyer acknowledged the likelihood of anyone making cash donations to Head Hunters was ‘pretty slim, but not impossible.’

Notebooks’ content was accepted by the Court of Appeal as evidence of cash generated from illegal activities.  Attempts by Head Hunters to have the notebooks excluded as unreliable evidence were not successful.

Claims that confiscation of Vickery Road amounted to undue hardship was also dismissed.

Head Hunters said seizure of their half million dollar property was out of proportion to any illegally obtained cash spent on renovations. In contrast, ‘white-collar’ criminals having assets confiscated for tax evasion lose assets only to the value of the benefit wrongly obtained, they said.

Confiscation was no hardship, the Court said.  Head Hunters paid nothing when gaining ownership of Vickery Road from Epitaph Riders.         

McFarland v. Commissioner of Police – Court of Appeal (16.02.24)

24.058

Maori: re Estate Sapasui Fred

 

It had been the family home for some sixty years.  Following the death of their surviving parent Sapasui Fred in 2003, four children have been in conflict over continued use of their Auckland home; son Nooroa living at the property saying cultural traditions require the home stay in the family; his three siblings saying it should be sold to realise their joint inheritance.

A High Court application under the Property Law Act saw a sale ordered, but an actual sale delayed five months to give all siblings a chance to talk.

The court was told Ms Fred died without leaving a will.  Default rules in the Administration Act see her estate divided equally between her four biological children.  Other members of the family raised as whangai adoptions do not qualify for a share.

Son Nooroa currently occupies the family home in Auckland suburb Otara, together with his two whangai sisters, his son and two nephews.  Rates are in arrears.  Nooroa has not been charged rent by his late mother’s estate for the near two decades he has been in occupation.

Ms Fred was born in Niue; her late husband was Cook Island Maori.

Maori cultural norms see land as a cultural heritage, not a commodity to be bought and sold.  Land is expected to be passed from generation to generation; current occupiers are merely custodians.

Justice Tahana commented that these cultural views do not necessarily elevate individual economic benefits above family relationships and future generations.

The Otara property is not customary Maori land; it is held as general land with ownership registered under the Land Transfer Act.  Currently, all four siblings are registered as owners, holding title as trustees of their late mother’s estate.

Justice Tahana urged the four siblings meet to resolve their differences, suggesting a rental arrangement might be considered.

Failing any agreement, Nooroa and his extended family are required to vacate the property in June 2024 and the property sold.  Net proceeds of sale is to be divided equally between all four siblings.

re Estate Sapasui Fred – High Court (16.02.24)

24.057

Mortgage Fraud: Westpac v. New Dawn Holdings

 

The property deal did not go ahead, but lawyer Jesse Nguy still drew down $1.3 million bank finance supposedly to complete the purchase and then misappropriated the money.  Despite never seeing the money, borrower New Dawn Holdings Ltd and guarantor Colin Chu were still liable to repay Westpac, the Court of Appeal ruled. 

Liability for borrowings on the aborted Auckland property purchase turned on questions of agency law; who was bent lawyer Jesse Seang Ty Nguy acting for?

The court was told New Dawn Holdings committed to its purchase in late 2019.  Paperwork for a Westpac home loan was signed, with approval given for $1.32 million mortgage finance; a thirty year secured loan.  New Dawn and Mr Chu nominated as their lawyer Mr Nguy, a sole practitioner then operating out of Auckland’s central business district and trading as Jesse & Associates.

As is usual practice, Westpac sent instructions to the nominated lawyer to act as its agent in completing the paperwork, getting all legal documents signed and have the bank protected as first mortgagee with a mortgage registered against title to the property after settlement date.

Evidence was given that after receiving the lawyer’s signed certificates that all was ready to go, Westpac paid the loan finance into Mr Nguy trust account ready for settlement.  Unbeknown to the Bank, the purchase never went ahead.  The Bank continued to remain in the dark because interest was paid on the loan for some twelve months.  When interest payments stopped, the Bank discovered its supposed secured home loan was an unsecured loan with the money misappropriated by Mr Nguy.

Westpac sued.

In High Court fast-track summary judgment proceedings, Mr Nguy was ordered to pay damages to Westpac.  As agent for Westpac, he had failed to apply the mortgage funding as instructed.

The positions of borrower New Dawn Holdings and guarantor Mr Chu were less straightforward.  New Dawn had never received any money.  There was nothing to repay, they said.

The Court of Appeal ruled New Dawn as borrower and Mr Chu as guarantor were liable to make repayment to Westpac simply by terms of their Westpac loan contract.  Any failure by Mr Nguy to pass on the money was a matter between Mr Nguy and them.  Mr Nguy was acting as agent for New Dawn and Mr Chu at the time he misappropriated their money.

Mr Nguy was struck off the roll of solicitors in October 2021.

It came out in evidence that there was a close business relationship between Mr Chu and Mr Nguy at time of the aborted purchase.

While the loan application led Westpac to believe Mr Chu was sole shareholder of New Dawn Holdings, there was a side deal; Mr Chu held a 25 per cent stake only.  He held 75 per cent of New Dawn’s shareholdings as trustee for Mr Nguy.  The interest payments made to Westpac for just over a year were funded by both Mr Chu and Mr Nguy, the court was told.

Westpac v. New Dawn Holdings Ltd – Court of Appeal (14.02.24)

24.055

Property Sale: Blackwater Properties v. Crawford Group

 

Less than twenty four hours after Christchurch developer Crawford Group Ltd was ordered to pay more than $1.4 million damages for defaulting on a property purchase, director Harry Crawford tried to bury the corpse, changing Crawford Group’s name to CHCH Group Ltd. 

CHCH Group (formerly Crawford Group) took a punt on profitable redevelopment in Christchurch’s eastern suburbs in November 2021 with a deal landbanking four adjoining Phillipstown residential properties.  Settlement of the $3.5 million deal was due twelve months later.

The High Court was told CHCH Group found itself on the wrong side of a rapidly declining market.  Tentative discussions six months out from settlement date seeking a contract extension came to nothing.

Come the November 2022 payment deadline, CHCH Group defaulted.  The company accepted liability for breach of contract.  The High Court was asked to rule on damages; the difference between market prices at date of cancellation and the agreed purchase price.

Evidence was given that the market for residential property peaked in late 2021/early 2022, declining from that date.  The court was asked to rule on valuation of the Phillipstown properties as at May 2023, date the contracts were formally cancelled.  

Vendors’ valuer said the properties’ market value had declined by some forty per cent.  CHCH Group’s valuer said the drop was nearer twenty five per cent.

Associate judge Paulsen accepted the vendors’ valuation.  Recent sales in the suburb had been taken into account.  Judge Paulsen criticised CHCH Group’s valuer for relying on sale prices drawn from neighbouring suburbs at a time when the market was still near its peak and for assuming that a current sale could be made with all four properties sold as a job lot.  

CHCH Group’s failed Phillipstown purchase had seen it agreeing to buy three properties on Ollivers Road from Blackwater Properties Ltd for $2.5 million plus an adjoining property from homeowners Andrew and Yvonne Smith for $1.05 million.

CHCH Group was ordered to pay Blackwater Properties $942,000 damages; the Smiths $476,000.  Damages for the Smiths includes wasted expenditure of legal fees and a lost deposit on their intended purchase of a replacement home.  CHCH Group was aware that the Smiths would look to buy elsewhere and that CHCH’s failure to pay would cause these losses, Judge Paulsen ruled.

Evidence was given that Blackwater Properties had Mr Crawford sign a personal guarantee at the time CHCH agreed to buy.  Judge Paulsen ruled Mr Crawford personally is liable to pay Blackwater Properties $942,000 should CHCH Group go into liquidation insolvent.  The Smiths do not have a guarantee.

Blackwater Properties Ltd v. Crawford Group Ltd & Smith v. Crawford Group Ltd – High Court (14.02.24)

24.056

Bankruptcy: re Terry Alexander Davison

 

New Zealand and Australia are joined at the hip when it comes to trans-Tasman debtors looking to hide from creditors.  Insolvency Service has been appointed as agent to track down assets held in New Zealand by a Kiwi bankrupted in Australia.

In May 2019, Terry Alexander Davison was declared bankrupt by the Australian Federal Court sitting in Adelaide.  A representative of Oracle Insolvency Services Pty Ltd was appointed to handle his bankruptcy.

Enquiries identified that Mr Davison owned half share of a property in Queensland at Victoria Point, jointly with his spouse.  The two had recently separated.

Mr Davison’s claim that all his bankruptcy debts could be cleared by having his former spouse buying out his share of Victoria Point ran into a snag; a previously undeclared $55,559 debt unexpectedly surfaced.

Oracle Insolvency learnt the $55,559 was owed Avanti Finance Ltd in New Zealand, a loan raised by Mr Davison to buy a Mitsubishi Triton.  It also learnt this was not the only New Zealand asset potentially available to pay bankruptcy creditors; Mr Davison has property in New Zealand, a share in Maori freehold property.

Oracle Insolvency applied to the New Zealand High Court under the Insolvency (Cross Border) Act to have Mr Davison’s Australian bankruptcy ‘recognised,’ allowing Mr Davison’s New Zealand assets to be seized.

In New Zealand, Insolvency Service was appointed agent to act on Oracle Insolvency’s behalf.

Ownership of Mr Davison’s interest in freehold land is identifiable from the land title register.  The court was told the Mitsubishi Triton is currently in the possession of a New Zealand logging company, which itself is in liquidation.

re Bankruptcy of Terry Alexander Davison – High Court (13.02.24)

24.054

Immigration Scam: Bandara v. Police

 

Rose Bandara’s conviction for an immigration visa scam was overturned on appeal.  There was no evidence she took $10,000 from her brother-in-law with intent to deceive.

The criminal case had its origins in a March 2018 meeting at Auckland Airport between Ms Bandara and her Sir Lankan brother-in-law.  He said $10,000 was handed over.  Ms Bandara represented she could get him an immigration visa, he said.

With no visa forthcoming, he went to the police.  Ms Bandara denied there was any cash for visa deal; the money was payment for jewellery, she said.  At a later court hearing, this explanation was dismissed as untrue.

Charged with obtaining by deception, Ms Bandara faced a court hearing set down for July 2019.  It was adjourned at request of police.  The complainant was not available.

Six further hearing dates set down over the next four years were also adjourned, all at the request of Ms Bandara.  Reasons offered ranged from absence overseas, flight delays, covid infections and recuperation from a stroke.

In March 2023, a District Court judge cried enough; the charge was heard in open court with Ms Bandara absent.  She was convicted; ordered to repay $10,000 with further sentencing deferred for six months.

On appeal, Justice Cooke ruled the trial judge had not found any evidence of dishonesty.  Proof was required that Ms Bandara knew she was unable to assist in procuring a visa when she took the $10,000.

There was evidence that Ms Bandara had previously been involved in a scheme bringing Sri Lankan immigrants to New Zealand where they had obtained visas after completing training programmes.  She was paid for this work.  While the training scheme/visa route stopped after changes to immigration policy in 2010, that by itself did not mean Ms Bandara acted dishonestly when taking the $10,000, Justice Cooke ruled.

Ms Bandara’s separate appeal against conviction on grounds she did not get a fair trial, with the hearing held in her absence, was dismissed.  Reasons offered for the final adjournment lacked credibility and were not supported by credible evidence, Justice Cooke ruled.

Bandara v. Police – High Court (9.02.24)

24.052

Radio Spectrum: Cayman Spectrum v. Spark New Zealand Trading

 

Facing strict ‘use it or lose it’ rules governing use of radio spectrum, Boyd Craig committed joint venture company Cayman Spectrum to a Spark deal without authority to do so.  The frantic wheeling and dealing was exposed in a week long High Court hearing: Craig held to have got the best deal he could have in the circumstances; Spark left with a contract it could not enforce.

Nearly twenty years ago, further spectrum management rights were up for auction, creating private property rights over allocated radio frequencies.  This initiative super-charged internet connectivity in New Zealand.  For providers, it was a land-grab; fighting for the best territory.

The High Court was told Ministry of Business, Innovation and Employment set strict rules for auction of what was recognised as a scarce economic resource: exclusive management of slices divvied out of radio spectrum.

Successful bidders had strict timelimits to become fully operative.  Failure to do so would see spectrum rights lost.  There was to be no sitting on an asset, seeking to make a profit with a later sale.    

MBIE frowned on successful bidders later cuddling up with rivals. This could lead to competition issues and monopoly pricing; issues policed by the Commerce Commission.

There was one area where collusion with rivals was allowed; installation of so-called ‘guard bands.’  High-powered transmission in one spectrum has the effect of disrupting lower-powered transmission on neighbouring spectrum.  Neighbours are allowed to negotiate how power output on boundaries can best be managed.

The High Court dispute was primarily an argument between two joint venture partners each owning a half share of Cayman Spectrum (NZ) Ltd.  Cayman held two blocks in the 2.5 GHz spectrum.

On Cayman’s board, Mr Craig represented Craig Wireless, based in Canada; Rahul Prakash represented Everest LP, based in the United States.  Everest LP later came under control of telco entrepreneur Malcolm Dick.

In November 2015, Cayman was at grave risk of losing its spectrum allocation.  It had neither the time nor the money to fully roll out its promised services.

Behind Everest’s back, Mr Craig negotiated a network services agreement with Spark, allowing Cayman to use nominated towers controlled by Spark.  This short-term fix enabled Cayman to achieve coverage required by its spectrum contract, avoiding loss of its spectrum allocation.

The agreement came at a price.

Mr Craig committed Cayman to handing over twenty per cent of the gross proceeds from any future sale of Cayman’s spectrum rights.  At the same time, Mr Craig agreed on behalf of Cayman that previous guard band restrictions requiring Spark use lower power levels on the MHz bands adjacent to Cayman’s spectrum could be lifted.

Later learning of these arrangements, Everest was apoplectic.  It sued Mr Craig, alleging as Cayman director he put his own personal interests ahead of the company and was in breach of his fiduciary duties.  These allegations followed Mr Craig’ s negotiations with Spark over sale of management rights for 2.3 GHz spectrum that Mr Craig owned separately from his Cayman joint venture ownership of 2.5 GHz spectrum.

It was alleged Mr Craig was sacrificing Cayman to benefit his own separate interests.

Mr Craig’s sale of his 2.3 GHz rights to Spark was inextricably linked with the Spark/Cayman side deals, Everest alleged.  Benefits to Spark at Cayman’s expense on both the 2.5 GHz coverage compliance and the lifting of guard bands assisted Mr Craig in negotiation of his separate sale of 2.3 GHz management rights, Everest claimed.      

Justice Lang ruled there was no link.

Mr Craig’s separate sale of his 2.3 GHz interests to Spark could have been agreed on the same terms without Spark’s parallel agreements with Cayman, he ruled.  Craig Wireless did not derive a benefit at Cayman’s expense.

Justice Lang further ruled there had been no failure by Mr Craig to act in best interests of Cayman.  He was able to preserve Cayman’s only asset at a time when it was at risk of being forfeited for non-compliance.  Cayman was in a weak bargaining position.  Spark initially sought fifty per cent of sale proceeds from any onward sale by Cayman of its 2.5 GHz management rights in return for use of its towers.  Mr Craig did manage to negotiate this percentage down to twenty per cent.  He did the best he could, Justice Lang said.

Cayman later sold its 2.5GHz spectrum rights for USD 10 million.  Spark claimed it was entitled to USD 2 million.  Spark’s claim was dismissed by Justice Lang.

Mr Craig had no authority to commit Cayman to a deal splitting sale proceeds, ruled Justice Lang.  Cayman’s registered constitution explicitly states that such transactions require the consent of all directors and all shareholders.  Everest had no knowledge of the negotiations.  It never agreed to the deal.

Justice Lang ruled that while there was no enforceable contract permitting Spark to recover USD 2 million, Spark is entitled to compensation at market rates for the eight month period Cayman used Spark’s towers.  He invited the two sides to reach agreement on an appropriate figure.

Cayman Spectrum (NZ) Co v. Spark New Zealand Trading Ltd – High Court (8.02.24)

24.050

 

Addendum: In contrast to the 2024 New Zealand High Court case, a 2018 arbitration in Canada between Everest and Craig Wireless saw an arbitrator rule that Mr Craig was in breach of fiduciary duties owed Cayman.

Justice Lang suggested the Canada arbitrator did not have the full picture; there was no evidence from Spark at the arbitration.

Justice Lang indicated Malcolm Dick launched into the arbitration with a complete misunderstanding as to the sale price received by Mr Craig personally for separate sale to Spark of his 2.3 GHz spectrum rights; a factual issue that went to the heart of Everest’s claim against Mr Craig.   Mr Dick mistakenly believed Spark had paid Mr Craig three times over the then market price for his 2.3 GHz spectrum.   

The Canada arbitration saw Craig Wireless ordered to pay damages in excess of NZD 4.9 million.  Payment was made by Craig Wireless transferring to interests associated with Mr Dick its half share in Cayman with a cash adjustment of USD one million paid in return to Craig Wireless.

Loan: Time Rich Asia Investment v. Zhou

 

Lying to Hong Kong investors about the financial status of his business led to Xin Zhou being held personally liable to repay a HKD 24.6 million loan poured into one of his Auckland property developments.

The High Court was told Mr Zhou met with representatives of Time Rich Asia Investment Ltd first in 2018 and later in 2019.  After a May 2019 meeting in Hong Kong, Time Rich agreed to support Mr Zhou’s completion of a central city apartment construction called the ‘Epsom project.’

Time Rich was told only nine residential apartments remained unsold in the 37 unit block.

Evidence was given of Mr Zhou talking up his three current projects as all being in superb locations where the properties would be well-sought after on completion.  The Time Rich loan was needed to accommodate some temporary ‘financial stress’ with the Epsom project, he said.  Comfort was provided with a promise to repay Time Rich, if necessary, out of funds totalling some $15 million shortly expected from sales at another project in the neighbouring suburb of Remuera.

The truth was that the Epsom project was in dire financial difficulty.  There was a risk apartment buyers would cancel.  At the time, Epsom was being propped up with related party loans; cash was being moved from project to project as needed.

The Time Rich loan fell due for repayment in May 2020.  No payment was made.  Time Rich representatives found work on the Epsom project had been suspended.  Cash generated from Remuera sales had been used elsewhere by Mr Zhou.

While the loan had been made to one of Mr Zhou’s companies, Justice O’Gorman ruled Mr Zhou was personally liable under the Fair Trading Act for false and misleading statements made to Time Rich at time of the loan about the financial viability of his business.  He was ordered personally to repay the HKD 24.6 million his business borrowed from Time Rich; about NZD 4.75 million.

Mr Zhou did not appear in court.  He was barred from defending the case after repeatedly failing to comply with earlier court orders governing progress of the impending hearing.

Time Rich Asia Investment Ltd v. Zhou – High Court (8.02.24)

24.051

Treaty: Sth Pacific Forestry v. Pihema

 

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

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

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

She did not appear in court to defend the application.

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

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

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

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

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

24.049

Will: re Estate Ian Condie

 

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

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

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

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

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

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

re Estate Ian Condie – High Court (5.02.24)

24.048

Partnership: Bei v. B & Z Trades Company

 

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

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

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

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

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

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

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

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

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

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

24.047

Asset Forfeiture: Commissioner of Police v. Hughes

 

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

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

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

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

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

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

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

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

24.046

Cryptopia: Epic Trust Ltd v. Ruscoe

 

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

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

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

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

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

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

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

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

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

24.045