Alex van Heeren loses long-running case   17 Apr 2015

Alex van Heeren loses long-running case, US$25 million interim payment ordered

By Fiona Rotherham

April 17 (BusinessDesk) - High-flying businessman Alex van Heeren has been ordered by the High Court at Auckland to pay US$25 million as an interim payment to his former business partner, Michael Kidd, and could be made to pay as much as US$50 million after losing a legal battle that has lasted almost two decades.

The near 20-year legal battle by the two men involves the end of their lengthy and lucrative business partnership.

In a written decision released this evening, Justice John Fogarty has ruled van Heeren, the former honorary consul for the Netherlands in New Zealand, should make the interim payment within a month and that an account is to be taken between the two former partners to determine the full amount owed. Van Heeren is also required to pay Kidd’s court costs.

In an interlocutory hearing in the High Court at Auckland, South African-based Kidd sought both the interim payment and the summary account which prevents the case having to go to a full High Court trial. He indicated the interim payment was a conservative assessment of about half of the likely present day value of the partnership assets, which are to be shared 50:50.

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. The assets include: the global award-winning Huka Lodge in New Zealand, which 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 US$16.8 million and US$20.7 million; offshore bank accounts around the world; and gold bars and bearer certificates.

Lawyers for van Heeren, who didn’t give evidence, argued the pair never had a formal partnership and that the indemnity settled what was owed between the two.

Kidd’s lawyer Stephen Mills told the court in the interlocutory hearing that Kidd believed the US$3 million was a dividend payment from the cash held in a joint company, one of three 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.

Kidd also signed an agreement which 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, 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. Van Heeren failed to get leave to appeal the South African case.

In his decision, Justice Fogarty said it was important to keep mind the high hurdle Kidd had to achieve in order to get the worldwide indemnity set aside by the courts on the grounds of misrepresentation.

“He read it. He signed it. To sustain an argument that the indemnity should be declared null and void it was crucial that the South African Court find that he was a partner, entitled to trust his co-partner, and that defendant’s silence, as a partner, was positively misleading, given the worldwide scope of the indemnity.”

He said: “If so much was not at stake, it would, by counter-reasoning, be unlikely that the defendant would have had the incentive to mislead his partner.”

Justice Fogarty said the notice of application didn’t rely on providing mutual accounts so each party could account to the other. Yet some degree of account may be required by Kidd, he said.

He said the mutual trust between the two partners effectively ended some time in 1991 so the court was looking at a period of about 24 years in which van Heeren had failed to account. “In law he continues to owe his trust obligation to Mr Kidd,” he said.

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. Kidd mainly handled the steel trading while van Heeren dealt with handling and investing the substantial profits that trading generated. Most of the profits, particularly from the international trading, were channelled through trusts and offshore bank accounts.

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.

(BusinessDesk)

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