Huka Lodge owner appeal dismissed, Court of Appeal orders $US25m payment to ex business partner

Alex Van Heeren has failed his Court of Appeal bid to overturn a ruling that he pay $US25 million as an interim measure to former business partner Michael Kidd until they can agree on the full amount owed.

The order, made by Auckland's High Court last April, prevents Mr van Heeren from denying he is in formal partnership with Kidd and that they accumulated assets worldwide, as was found in the South Gauteng High Court of South Africa in 2013. In April this year, Mr van Heeren's lawyers argued for this to be overturned, saying the High Court judge had "erred in adopting a broad approach to estoppel" and there was not a clear legal partnership between van Heeren and Kidd but a "trust relationship."

When the 16-year partnership ended in 1991, Mr Kidd signed an agreement which saw him receive just $US3 million as his share of the assets. Those assets include the global award-winning Huka Lodge in New Zealand, which Mr Kidd has put a caveat on to prevent its sale; Dolphin Island in Fiji; shares in various New Zealand and South African companies; half the proceeds from the 1987 sale of nearly 14,000 shares in Wellesley Resources in New Zealand variously estimated to have been worth between $US16.8 million and $US20.7 million; offshore bank accounts around the world; and gold bars and bearer certificates.

In the High Court, Mr van Heeren's lawyers argued the pair never had a formal partnership and that the indemnity settled what was owed between the two. Mr Kidd's lawyer, Stephen Mills, told the court there was at least an $US18 million shortfall in what his client should have received when the partnership ended, and Mr Kidd believed the $US3 million was a dividend payment from the cash held in a joint company but never intended that would be the full payout for his share of their assets.

In the High Court judgment, Justice John Fogarty ordered that Mr van Heeren make an interim payment to Kidd of $US25 million and that an account be taken between the two former partners to determine the full amount owed. Mr Van Heeren was also required to cover Kidd's court costs.

Mr Kidd also signed an agreement that not only indemnified van Heeren against any future claims by his former business partner but also said subsequent disputes had to be settled in South African courts.

In 1996, Mr Kidd sued van Heeren for half of his New Zealand assets. In a 1997 ruling, Justice Robert Smellie said both agreements Kidd signed were an absolute defence against his claims in New Zealand but that the South African courts must decide if the documents Mr Kidd signed meant he had no case. The matter was heard in a South African High Court in 2013 and the judge ruled the documents were void. Mr Van Heeren failed to get leave to appeal the South African case.

"It would be unjust to deny Mr Kidd the fruits of his success in the South African proceeding where the partnership and assets issues were squarely in issue, as Mr van Heeren well knew," Court of Appeal Justices Rhys Harrison, Forrest Miller and Mark Cooper said in their judgment. "There was nothing to prevent him calling evidence in relation to any of the issues he now says he wishes to contest."

The Court of Appeal bench said it saw no basis for disturbing Justice Fogarty's payment order, and ordered van Heeren to pay Kidd's costs.

"As Justice Fogarty found, it is unlikely that Mr van Heeren will be able to displace the presumption that the partnership anticipated equal sharing in the profits," the judges said. "Finally, because the order for payment of $US25 million was conservative, we think it unlikely that it would need to be disturbed in the event that the mutual accounting process proves Mr Browning's estimate wrong."

In a further judgment from the High Court in October 2015, where an application for stay from van Heeren was dismissed, Justice Fogarty said both lawyers indicated it was likely that whoever lost in the Court of Appeal would seek leave to appeal to the Supreme Court, leaving the process capable of going "well into 2017."

(BusinessDesk)

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