UPDATED: Van Heeren's former business partner Michael Kidd seeks US$25m

UPDATED: South Africa-based Michael Kidd is seeking US$25 million from his former partner, high-flying businessman Alex van Heeren, who is disputing they ever had a formal partnership.

In an interlocutory hearing in the High Court at Auckland, Kidd is seeking both the payment and to have a summary account which, if granted, would prevent the case having to go to a full High Court trial.

When the 16-year partnership ended in 1991 Kidd signed an agreement which saw him receive just US$3 million as his share of the assets which are now conservatively valued at US$47.5 million. The assets include the Huka Lodge in New Zealand which Kidd has put a caveat on to prevent its sale, Dolphin Island in Fiji, shares in various companies, offshore bank accounts, and gold bars.

Kidd’s lawyer Stephen Mills told the court that Kidd believed the US$3 million was a dividend payment from the cash held in a joint company, Gaynan, one of three companies used as pots to handle the substantial profits the pair were making from steel trading in South Africa and Zimbabwe.

He never intended that would be the full payout for his share of their assets.

There was at least an US$18 million shortfall on what Kidd had been paid when the partnership ended and what he was due, the court was told.  But there is still some uncertainty over the full extent of the assets built up under the partnership because of the complexity of the arrangements for handling the money.

Kidd also signed an agreement which both 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 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 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. 

In court today, Mills presented evidence from several sources given during previous hearings on the issue, including from van Heeren’s previous legal counsel, that indicated the major points under dispute - such as the extent of the business partnership - would be dealt with by the South African courts.

“The judge found that the partnership extended beyond steel trading which was at the core of the relationship and generated the money that was then invested and that the partnership included both steel trading, investments and the profits,” he said. “The judge also found that at the date of the indemnity agreement there were substantial undistributed profits from the partnership.”

The pair were principally involved in steel trading in South Africa and Zimbabwe, with the steel sold both within South Africa and to offshore markets. The court heard today that Kidd mainly handled the steel trading while van Heeren dealt with handling and investing the substantial profits that trading generating. Most of the profits, particularly from the international trading, were channelled through trusts and offshore bank accounts.

The court was told the Huka Lodge was bought by Worldwide Leisure Ltd but the money came substantially from Gaynan, which is an amalgam of the two partners’ wives’ names, and the balance from Prime NZ, another of their companies.  Prime NZ was involved in steel trading with Algeria, which the court was told today the New Zealand government had a hand in facilitating because it wanted to boost trade with Algeria.

Both partners were meant to shift to New Zealand in 1980 due to the political uncertainty in South Africa but in the end only van Heeren came here while Kidd stayed in South Africa.

Van Heeren, the honorary counsul for the Netherlands in New Zealand until two years ago, made a brief appearance in court today, sitting on the opposite side of the gallery from his former business partner. The hearing is scheduled to continue for the rest of the week.

(BusinessDesk)