March Construction ordered to pay rent for dirt pile bought from Dave Henderson and left behind

Wednesday 17th August 2016

Queenstown-based construction company March Construction must pay for leaving about 268,000 cubic metres of ground material on land it didn't own, having bought the material in an attempt to get a hold over well-known developer David Henderson who owed them money, Christchurch's High Court has ruled.

In 2006, March Construction excavated a large amount of ground material, or fill, from land owned by Henderson's company Five Mile Holdings at Frankton near Queenstown Airport and placed it on adjacent land, also owned by Five Mile, leaving an area known as "Hendo's Hole". The following year, March bought the fill from Five Mile and other companies run by Henderson for $100,000, a deal which included a put option meaning it could require the sellers to take back ownership.

Five Mile was placed in receivership in 2008, and two years later development company Queenstown Central (QCL) bought the land where the fill had been placed, with a clause in the sale and purchase agreement stating that March owned the excess fill. In 2011, QCL asked March to get rid of the fill so a commercial development could go ahead, something March refused saying it didn't own it and wasn't responsible. This back-and-forth continued until 2015, with some of the fill sold over that time, although about 143,000 cubic metres remains.

QCL asked the High Court to find March liable for trespass and to require March to pay it $7.2 million in rent for storing the fill for years.

March, who Justice Nicholas Davidson said had "adopted an inconsistent stance as to ownership of the fill over several years", had a number of defences for that claim. It argued that the fill had become part of the land, but said even if it hadn't, the company which bought the land from which the fill had been excavated owned the fill.

Justice Davidson ruled the fill had not become part of the land and had never stopped being a chattel. The judge held that March had bought the fill as leverage against Henderson when his companies owed them money, had asserted ownership of the fill several times over the years, and had only changed its position once it realised nobody wanted the fill and it would cost the company several million dollars to remove it.

"March's position changed when it realised the fill was neither an asset nor a valuable security, as it had thought, but a troublesome and expensive liability," Justice Davidson said.

March said a third defence was that it had transferred ownership of the fill to another company within the March Group, Collins Rd Developments, and so wasn't directly liable.

But in considering whether the transfer to Collins Rd Developments was a sham, the judge ruled that it "should not be recognised by the court as an orthodox commercial transaction".

"March sought to get off the hook as owner: the purpose of the transaction was simply to transfer a liability and avoid the implications of judgment," Justice Davidson said.

The judge ruled March must pay rent for the use of the land and rates on the land for the time the fill was there, and must remove the fill. He did not give a figure for the rent payable as that will depend how much longer March leaves the fill on-site, but based it on the rates given by March's valuer of between $250 and nearly $400 per month from June 2011 onwards.

The judge reserved costs.

BusinessDesk.co.nz

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