By Chris Hutching
Friday 11th July 2003
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Major shareholder Tom Kain went to London two weeks ago with the appeal.
"The complaint is indeed highly contrived," according to the report by Lord Scott of Foscote. He was supported by Lord Rodger of Earlsferry, Lord Hobhouse of Woodborough, Lord Slynn of Hadlee and Lord Hutton.
Apple Fields was complaining about the sale of land it owned at Styx (now the Northwood subdivision) north of Christchurch by mortgagee Damesh Holdings, associated with businessman Ken Smith.
The Privy Council said the complaint was "staggering" in light of the benefits it gleaned Apple Fields and because the transaction was largely structured by then chairman and legal representative, Geoffrey Cone, who has since resigned (from the company.)
The essence of the complaint was that Mr Smith was associated with the mortgagee Damesh and with the purchaser of the land, Styx Developments, and therefore had a duty of care to obtain the best price but had failed to do so.
The claim offends both equity and common sense, according to the law lords. The benefit to Apple Fields was that $21 million was written off its debts because ANZ was prepared to write off a portion of what it was owed to help settle the deal, even though the land was worth about $13.4 million.
The $13.4 million figure was accepted in an earlier High Court judgment by Justice John Hansen after witnesses gave evidence of valuations ranging from $10 million to $25 million.
"There is no issue in the present case of [lack of] good faith [by Mr Smith]."
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