KIWI INTERNET MARKETING LTD v TRENT [2017] NZHC 1374

KIWI INTERNET MARKETING LTD v TRENT [2017] NZHC 1374 [21 June 2017]PUBLICATION OF THE NAMES OF MR TRENT, MRS TRENT AND KIWIINTERNET MARKETING LIMITED, OR OF PARTICULARSIDENTIFYING ANY OR ALL OF THEM, IS PROHIBITED UNTIL 10AUGUST 2017.ANY RIGHT OR PERMISSION TO ACCESS THE COURT FILE OF THISPROCEEDING, OR ANY DOCUMENT ON IT, OR ANY PART OF THEFORMAL COURT RECORD CONFERRED BY THE HIGH COURT RULES,IS PROHIBITED UNTIL 10 AUGUST 2017.IN THE HIGH COURT OF NEW ZEALANDNELSON REGISTRYCIV-2015-442-000067[2017] NZHC 1374BETWEEN KIWI INTERNET MARKETINGLIMITEDApplicantAND SHELLY MARIE TRENTRespondentHearing: 29 & 30 May, 8 & 9 June 2017Appearances: P B Churchman QC and J R Sumner (on 29 & 30 May) forApplicantJ R Sumner and S Churstain (on 8 & 9 June) for ApplicantA Butler, A R Shaw and M W McMenamin for RespondentJudgment: 21 June 2017JUDGMENT OF ASSOCIATE JUDGE MATTHEWSIntroduction[1] Kiwi Internet Marketing Limited (Kiwi) is a privately owned company.Seventy-five per cent of its shares are owned by Mr A R Trent who is its sole director.The other 25 per cent of its shares are owned by the Petra Trust. Mr Trent and therespondent, Mrs S M Trent, are the trustees. Mr and Mrs Trent have been separatedsince July 2014.[2] Mr and Mrs Trent are each owed a significant sum by Kiwi. In its accounts toMarch 2014 the sum shown as owing to them jointly was $16,920,253. In March 2015the sum owing was recorded as $15,956,659 and at March 2016 it was $14,590,778.1[3] On 7 October 2015 Mrs Trent issued a statutory demand to Kiwi under s 289of the Companies Act 1993 (the Act) requiring Kiwi to pay her the sum of $8,460,000which represented a little less than half the balance of the joint advance which wassaid to then be owing. Kiwi applied to set aside the notice under s 290. It was commonground that the advance was initially a jointly-owned asset. By a judgment dated 28February 2017 the Court of Appeal determined that the joint tenancy in Mr and MrsTrent's advance to Kiwi had been severed by the course of the dealings between them,and that as a result one half of the loan was owed to Mrs Trent individually.Accordingly, the Court determined that her statutory demand should not be set aside.The Court remitted the case to the High Court to determine a reasonable time forcompliance with the notice.The nature of a statutory demand[4] Section 241 of the Act provides that a company may be put into liquidation bythe appointment of a liquidator. A liquidator may be appointed by a special resolutionof shareholders, by the board of the company on the occurrence of an event specifiedin the constitution, or by the Court on the application of one of a range of persons,including a creditor, whether present, contingent or prospective. The Court mayappoint a liquidator if it is satisfied that one or more of the grounds in s 241(4) hasbeen established. One of these grounds is that the company is unable to pay its debts.[5] Establishing each of these requirements is a matter of proof. In the presentcase it is established that Mrs Trent is a creditor. If she is able to establish that Kiwiis unable to pay its debts she may be entitled, on application, to an order that Kiwi beplaced into liquidation. On this point, a creditor may have the benefit of thepresumption created by s 287(a), which provides that a company is presumed to beunable to pay its debts if it has failed to comply with a statutory demand.1 Mr and Mrs Trent have treated their current accounts with Kiwi as a source of money for theirliving expenses. The balance owing at any time has varied accordingly.[6] A statutory demand is defined in s 289. It is a demand by a creditor in respectof a debt owing by a company, which complies with the requirements of the section.It must be in respect of a debt that is due, be in writing, and be served on the company.As well it must require the company to pay the debt, or enter into a compromise underPart 14 of the Act, or otherwise compound with the creditor, or give a charge over itsproperty to secure payment of the debt, to the reasonable satisfaction of the creditorwithin 15 working days of the date of service of the demand or such longer period asthe Court may order.[7] Mrs Trent took steps to invoke this presumption by issuing a statutory demandto Kiwi, as noted. This judgment determines, as directed by the Court of Appeal, theperiod within which the demand must be satisfied by one or other of the means allowedby s 289.[8] The use of the procedure provided by ss 287(a) and 289 does no more than setin place a means by which an evidentiary presumption may be established. Section288(2) provides that s 287 does not prevent proof by other means that a company isunable to pay its debts. In this context it is established that this question invokes thecash flow test of solvency, not the balance sheet test.2 Thus, failing to comply with astatutory demand creates a presumption of inability to pay debts on a cash flow basis.The Act sets a standard period of 15 days for compliance, after which the presumptionarises. The Court may order that a demand be met within a longer period, but the issueremains the same: can a debt which is due be met within a period which the Courtspecifies?[9] Thus on this application it is not relevant to assess the solvency of Kiwi on abalance sheet basis. Nonetheless extensive evidence was led on this point. Kiwi filedaffidavits by Mr David Vance, a chartered accountant and experienced insolvencypractitioner, and he was cross-examined. There was also extensive valuation evidencerelating to the principal asset of Kiwi, a large block of land in respect of which Kiwiholds resource consents permitting subdivision. Kiwi also owns a separate block ofland in Permin Road which is not part of the land to be subdivided. Mr Vance, in2 Re Tweeds Garages Ltd (1962) Ch 406.cross-examination, applied the valuation of the subdivisible property (which had beenundertaken by Mr Bennison of Duke & Cooke, a registered valuer), and the estimatedvalue of the Permin Road property, to the 2016 balance sheet of Kiwi. He concludedthat Kiwi has an excess of liabilities over assets of $1,255,000.[10] Of greater present relevance, however, Mr Vance also undertook (twice) adetailed analyses of cash flow which will become available to Kiwi as it proceeds withits intended seven-stage subdivision of its property. I will refer to this evidence furtherbecause it forms the basis of the case for Kiwi that the Court should set a period forcompliance with Mrs Trent's notice which reflects its ability to meet her debt fromcash flow created by proceeding with the subdivision. As will be seen, it wasnecessary for Mr Vance to undertake this exercise twice.[11] The financial position now, however, is established on the evidence withoutreference to this analysis. Mrs Trent has made it clear throughout this litigation thatshe does not wish her debt from Kiwi to remain outstanding while Kiwi undertakes itsintended subdivision. She wanted to be repaid in full before Kiwi started to undertakethis venture. She unequivocally signalled this position as long ago as October 2015by issuing her statutory demand. Kiwi, under the directorship of Mr Trent, has notmet the demand. In the meantime, however, it has pressed ahead with the subdivision,obtaining resource consent late in 2016 and undertaking physical works on site since.Again, I return to the evidence on this later in this judgment.[12] Kiwi has a financial facility with Westpac, presently limited to $3,000,000 andcurrently drawn to approximately $2,500,000.3 Mr Vance says in his evidence thatshould Westpac and the Trents not wish Kiwi to pursue the subdivision, and Kiwi beplaced in liquidation, the liquidator would examine shorter term realisation options.These would include selling all the land on an as is where is basis, or selling theexisting titles separately, but prior to subdivision into smaller lots. I need not look intothe consequence of either scenario at this point. Suffice it to say that it is clear thatKiwi can only meet Mrs Trent's demand if its assets are sold or funds are borrowed.Kiwi has not taken any material steps along either of these pathways in the 20 months3 The Court did not receive a current bank statement. Figures referred to were $2,200,000 and$2,500,000. The difference is presently immaterial.which have passed since the demand was issued.4 Rather, it has continued to utiliseavailable funding from Westpac to proceed with Stages 1 and 2 of the subdivision. MrTrent candidly stated in evidence that the only way to satisfy Mrs Trent's statutorydemand is by selling property, and immediate payment "has never been an option; noton inception of the loan, not now". Further, in cross-examination Mr Trent also said"I cannot pay her unless the subdivision continues so we can get the sales from thesubdivision to pay her." Late in his cross-examination, however, he altered hisposition on this, as I will relate.[13] There is, therefore, evidence before the Court now, from Kiwi, that Kiwi isunable to pay its debts. If Mrs Trent were to apply now for appointment of a liquidatorunder s 241 it is questionable whether she would need to rely on a presumption ofinability to pay debts which would be created by non-compliance with her notice unders 287. Nonetheless she still seeks to establish that presumption. At this point in thestatutory process, save for one statement by Mr Trent, the evidence from Kiwi itself isthat it cannot presently meet the demand, and will not be able to do so until thesubdivision has been at least partly completed. This forms the background to therespective positions of Kiwi and Mrs Trent on how long Kiwi should be given to meetthe demand.Principles to be applied when setting the period for an on demand debt to be met[14] The debt owing by Kiwi to Mrs Trent is payable on demand.5 The NewZealand authority on compliance with a demand for payment of an on demand debt isANZ Banking Group (NZ) Ltd v Gibson.6 In this case the Court of Appeal considereda provision in a debenture requiring payment of secured monies on demand. A numberof passages from the judgments of the Court are apposite.[15] First, Richardson J said:74 Liability to meet the demand was only established on 28 February 2017, when the Court of Appealreleased the judgment finding that the joint tenancy of Mr and Mrs Trent in their current accounthad been severed.5 Kiwi Internet Marketing Ltd v Trent [2016] NZHC 251 at [4].6 ANZ Banking Group (NZ) Ltd v Gibson [1986] 1 NZLR 556 (CA).7 At 564.The language of "demand" envisages a peremptory notice unaffected by anyquestions as to matters personal to the debtor or creditor such as are reflectedin some of Linden J's factors. And while the potential risk in somecircumstances of the disappearance of assets or their seizure by other creditorsduring any period of delay might well be a reason for the incorporation of anobligation to pay unqualified as to time, it does not follow that the parties evercontemplated that the presence or absence of any such risk at the time ofdemand or the subjective expectation of risk could then be used as a factor indetermining when the otherwise unqualified demand was to be met. But theparties must be taken to have accepted, particularly where the sums involvedin the overdraft accommodation were likely to be substantial, that thecompany would not be expected to have the money immediately to hand. Anyother conclusion would also frustrate the obvious object of overdrafts inproviding credit for the operation of the business.[16] His honour then said:8In my view the only proper justification for allowing any time for paymentafter the actual demand is made is the practical commercial consideration thatthe borrower is not expected to have large cash sums immediately at hand.However, he is expected to pay from resources which are presently accessibleto him but have to be converted into immediate cash or utilised within thesame time to obtain financial cover. It is the time reasonably required toachieve that, always bearing in mind that it is a demand liability which mustbe met. And further time to negotiate a loan with a third party is notcomprehended within that reasonable time. The test is objective and producesthe certainty which commercial parties require in order to be clear from theoutset as to their rights and obligations. To allow the elasticity and subjectivityinherent in the Canadian approach appears with respect to be contrary tocommercial reality in this country and to lead to undesirable uncertainty toborrower and lender alike.[17] To similar effect is a passage from the judgment of Somers J:9It is well settled that the obligation to pay on demand does not arise eo instantion the making of the demand. On any rational construction of such a promisethe debtor must be allowed a reasonable opportunity to pay before he can beheld to have failed to comply with the demand. And until that reasonable timehas elapsed the creditor may not enforce his security. What is a reasonabletime must depend upon the circumstances. This has been so stated in manycases. Thus Pigott B in Massey v Sladen said:"It is not necessary to define what time ought to elapse between the notice andthe seizure. It must be a question of the circumstances and relations of theparties, and it would be difficult, perhaps impossible, to lay down any rule oflaw on the subject, except that the interval must be a reasonable one."And earlier still in Comyns'Digest title Condition:8 At 565.9 At 567."But where a condition is to be performed immediately, he shall have areasonable time to perform it, according to the nature of the thing to be done.So, if it be to be performed on demand."(citations omitted)[18] The Court rejected the approach to this issue taken by Canadian Courts. CaseyJ said:10I also accept that the words "on demand" used in the debenture require thatthe company be given a reasonable time to comply. I see the distinctionbetween the English and Canadian cases as essentially that in some of thelatter, the Court has embarked on an analysis of relevant factors to determinereasonableness in the particular circumstances, without perhaps recognisingthe limits imposed by the peremptory nature of an "on demand" obligation.Indeed, the factors mentioned by Linden J in Mister Broadloom Corp (1968)Ltd v Bank of Montreal and cited at pp 562-563 of Richardson J's judgmentvirtually reduce the obligation to one of making payment on reasonable noticefrom the creditor.On the other hand, those English cases limiting the time for compliance to thatnecessary for the physical transfer of funds to the creditor can be regarded astoo restrictive in modern commercial conditions. However, they do recognisethe peremptory nature of the obligation and I believe that this must always beborne in mind when determining the question of a reasonable time forcompliance.(citations omitted)[19] In my opinion there is no material difference between how a requirement forpayment on demand in a debenture, and how a requirement to pay pursuant to ademand under s 289, should be interpreted. Both arise in the context of monies owedby a company to a creditor. The fact that one obligation exists under a security, andthe other arises on service of a notice under the Act does not create a materialdistinction from a commercial perspective. In the present case this is underscored bythe fact that the demand was issued pursuant to an obligation to repay Mrs Trent's debton demand, in the original loan contract.10 At 569-570.The respective positions of Kiwi and Mrs Trent[20] Section 289 stipulates a period of 15 working days for compliance with ademand. Mr Sumner accepts that it is for Kiwi to establish that the Court should fix alonger period for it to comply with Mrs Trent's demand. He submits that the Courtshould set a period of 24 months for compliance with the notice, from the date ofjudgment, with a condition imposed that Kiwi give to Mrs Trent a first registeredmortgage security over the titles to 10 properties valued in total at $6,770,000according to Tasman District Council rating values completed some three years ago.In an affidavit sworn in November 2015 Mr Vance expressed the view that these valuescould now be considered to be some 37 per cent higher. If that were so, the value ofthe securities offered would be some $9,274,000. Mr Sumner notes that theseproperties now also have the benefit of the resource consents held by Kiwi for theirsubdivision and development, a factor likely to have increased their value.11[21] A term of 24 months is sought because the evidence given by Mr Vance in anaffidavit dated 6 June 2017, presented to the Court between the first two days of thishearing, and the second two, is that there will be cash of $7,823,465 available to theshareholders of Kiwi by the time all the sections in Stages 1 and 2 of the subdivisionhave been sold. This conclusion is predicated on assumed costs of development andassessed sale prices in a valuation of the subdivisible land prepared by Mr Bennisonof Duke & Cooke. Mr Sumner asks the Court to accept, as the most reliable andaccurate estimate of the likely time for completion of these stages of the subdivision,a letter sent to Mr Vance on 6 June 2017 by Mr Jacobsen of Staig & Smith Limited,the consultants engaged by Kiwi to assist with the subdivision. Mr Jacobsen is alicensed surveyor. He says in the letter that based on his previous experience, the timerequired to obtain new titles for the first 19 lots in the subdivision should be nine to12 months from now, with title for the remaining 14 lots (thus the completion of Stages1 and 2) expected to take a further six to nine months.12 Allowing for the longer ofeach of these periods to apply, this suggests that title should be available from the firsttwo Stages of the subdivision within 21 months. Mr Sumner rounded this to 24 months11 See discussion in Kiwi Internet Marketing Ltd v Trent, above n 5, at [58].12 Mr Jacobsen did not give evidence.to allow for some slippage, a prudent position to take given recent developments towhich I will refer later in this judgment.[22] In seeking to rely on Mr Jacobsen's assessment of the likely time for titles tobe issued, Kiwi moved away from the postulations of Mr Trent on this issue, which Ialso refer to below.[23] Whilst this view adds to the picture the Court has on this issue, Mr Jacobsendid not give evidence, and acts for Kiwi, so is not an expert witness. And in givingthe view he expresses in his letter, he acknowledges that the position may be affectedby "a number of factors outside our control, including the performance of the parties."[24] Mr Butler, for Mrs Trent, submits that the Court should make an order under s291(1)(b) placing Kiwi into liquidation now, on the ground that it is alreadyestablished that it is unable to pay its debts, irrespective of the demand under s 289not having been met.[25] Mr Butler says that if the Court is not prepared to make that order, it should setthe period of time for compliance at 15 days, or 60 days, or 120 days for the followingreasons.13 As to the first, Mr Butler says Mrs Trent recognises that the Court of Appealhas indicated that a period longer than 15 days should be allowed. This recognitionfollows the discussion of this point in the judgment under appeal from this Court.14Mr Butler says, however, that the Court of Appeal did not have before it the extensiveevidence now before this Court. He says the evidence now shows that Kiwi will notbe able to meet the statutory demand at any point within the next two to three years, ifnot longer. He says extending the time period beyond 15 working days is thereforesimply putting off the inevitable. He also notes that Kiwi has had the benefit of 20months since the demand was issued, and that the evidence shows that it has not soughtto meet the demand during that period.13 Mr Butler's submissions do not specifically refer to working days but it is clear that the periodsthat he discussed are by reference to working days, because the first is 15 days, by reference tos 289 which refers to working days. As well, all his suggested periods are multiples of five days,not seven.14 Kiwi Internet Marketing Ltd v Trent, above n 5.[26] Mr Butler says that if the Court does not agree to a period of 15 working days,a period of 30 to 60 working days could be sufficient for Kiwi to organise to raisesubstitute finance, as indicated in the evidence of Mr R H Strawbridge, a charteredaccountant, or to reorganise the inter-entity advances between Kiwi, its 25 per centshareholder the Petra Trust, the Cherry Hill Trust, and Cherry Hill Property Limited.These are all steps which could be undertaken in order to release sufficient funds toKiwi to pay Mrs Trent's demand. Mr Butler notes that Mr Trent accepted that thisrestructuring could occur within a period of three weeks.[27] Mr Butler says that if this period were not acceptable to the Court, a period of120 days would be sufficient to allow Kiwi not only to obtain substitute finance butalso to proceed with an orderly sale.[28] Finally, Mr Butler rejects any longer period as this would expose Mrs Trent tothe substantial risk, as he sees it, of not recovering all of her debt, or indeed any partof it, and it would be out of tune with the overriding fact that Mrs Trent's debt isrepayable on demand. It is for shareholders to leave their funds in a company while itconducts its business, not unwilling investors who have lent money on demand.The issue in this case[29] The positions taken by the parties at the close of evidence define the parameterswithin which the single issue before the Court must be decided. This issue was sentback to this Court by the Court of Appeal as a direction "to determine a reasonabletime for compliance with the notice of statutory demand".[30] Kiwi does not have cash in hand to meet the demand now. There is no questionthat if it is to be met Kiwi will need to either borrow money, or sell assets. It has oneasset available for immediate sale, a block of land in Permin Road in an area knownas the Golf Block. Sale of this is expected to realise approximately $1,200,000.15 AsI understand it the property is not presently on the market. In closing submissions MrButler said that Mrs Trent would accept a transfer of this property to her at the amount15 This is an estimate derived from the valuation by Duke & Cooke, by applying a per square metrerate, not by a specific assessment of the market value of the property.of a valuation established by Mr Bennison in partial satisfaction of her statutorydemand.[31] The only other assets of significance are the properties which a are in theprocess of being subdivided. In all, the seven intended stages of the subdivision willproduce nearly 100 sections over a period of some years. As noted, the evidence ofMr Vance, based on the propositions which I have recorded above, is that sufficientcash could be realised from the sales of all sections in Stages 1 and 2, once completed,to pay Mrs Trent in full. Because this assessment relies in part on informationprovided by Mr Trent, and the control of the business venture in which Kiwi is engagedis in the hands of Mr Trent solely, it is necessary to consider his evidence in detail inorder to make a decision on whether the time for compliance with Mrs Trent's noticeshould be set as Mr Sumner submits.The evidence of Mr Trent[32] As context for the evidence of Mr Trent I refer first to the expert evidence ofMs G P L Callaghan, a registered valuer of Wellington, and Mr C R Hamilton, a realestate agent with considerable experience in selling land within rural subdivisions inthe Tasman region. Both were witnesses called for Kiwi. Ms Callaghan was asked togive evidence in respect of a number of matters, including the process of subdivision.The setting for the evidence of Mr Trent is given by her general discussion of thechallenges facing entities embarking on subdivision of land, and the followingsummary:Returning to basic principles, there are general fundamental aspects which wesee contribute to successful subdivisions. These are as follows:35.1 Meticulous due diligence, planning, preparation, consultation andhomework.35.2 Accurate costings and upmost efforts to avoid surprises.1635.3 Funding with its financial implications if there are budgetaryconstraints (which there usually are).35.4 The reputation and track record of the developer and their team.16 Ms Callaghan went on to say that she had not seen any accurate costings or budgeting and that shewould have expected, and it would be normal to expect, consultations with quantity surveyors,land surveyors and contractors in relation to the preparation of costings.35.5 Timing within the subdivision programme, of the commencement ofmarketing.35.6 A very careful and delicate strategy around the marketing of theventure including possible discounting of a first tranche to help getthe ball rolling.[33] Kiwi did not produce to the Court a written business plan. I am satisfied onthe evidence that no such plan exists. As Mr Vance said in cross-examination, "[i]neffect the business plans and forecasts are figures and plans that sit in Mr Trent's headsubstantially". Carrying out a subdivision is conducting a business, the creation of aproduct to sell on completion. The financial formula for success must show that themonies received for the finished product exceed the costs of creating the product, if aprofit is to be derived. Elements of this formula can be extracted from various partsof the evidence. The only independent evidence on the costs of creating the sectionsin this subdivision are those relied on by Mr Bennison in his valuation. He assessedthe costs of development thus:17The costs of completing the development work had been based ondevelopment expenses incurred on similar developments on rolling hillcountry and in consultation with Staig & Smith surveyors who prepared thedevelopment plans and had provided comparable contract rates for the variouselements of the development.[34] This information has been carried forward into the assessment by Mr Vance ofcash flow to which I refer below. Significantly, no quotations from suppliers orcontractors were provided, and the workings and information of Staig & Smith reliedon by Mr Bennison were not produced in evidence by a witness from Staig & Smith.[35] Mr Bennison also gave independent evidence on the projected sale prices ofthe sections in the subdivision which, again, Mr Vance carried forward into his cashflow analysis.[36] Some information on the timing of possible receipt of the proceeds of sale ofcompleted sections was also given by Mr Jacobsen of Kiwi's surveyors, Staig &Smith. As I have said, he estimated completion of Stages 1 and 2 in up to 21 months.Evidence from Mr Hamilton is that:1817 Valuation of Duke & Cooke at 9.10.18 Affidavit dated 31 March 2017 at 33.No more than 11 sections should be released each year over a period of threeyears (for Stages 1 and 2) to ensure that the properties in this subdivision aresold at a good market price and within a reasonable timeframe.[37] Mr Hamilton said that putting all 33 sections in these Stages on the market atone time would flood the market and would result in significantly discounted saleprices, given that only 20 to 30 allotments have been sold each year in Rural 3 areasin recent years. Mr Hamilton backed this up by reference to specific subdivisions.[38] Mr Hamilton also said that based on his experience it would take 12 to 18months for physical completion of the works in Stage 1, with a further four monthsfor the Council to issue certificates under ss 223 and 224 of the Resource ManagementAct 1991. His estimates are based on marketing not occurring until the release of titlesis approaching, and he sees the likely period from now until title is available to bearound 22 months.19 This broadly accords with the estimate of Staig & Smith.[39] If Mr Hamilton's view is correct, that no more than 11 sections should beoffered for sale per annum, with marketing to start nearer to title, a period of threeyears from then seems necessary for all sections in Stages 1 and 2 to be completed.Putting this evidence together leads to a period of four to five years before all sectionsin Stages 1 and 2 are developed and sold.[40] I now turn to consider key elements of Mr Trent's evidence in the context ofthe evidence of these experts whom he called in support of Kiwi's case. I refer first tothe three aspects of this subdivision to which I have just referred: the cost of creatingthe sections, the time to completion, and sale prices.The cost of creating the sections[41] Mr Trent gave evidence on this in evidence-in-chief on 30 May 2017. At thatpoint the Court had before it a cash flow chart prepared by Mr Vance which wasreferred to as exhibit DSV1. That exhibit was prepared from the costings used by MrBennison, and showed expenses for Stages 1 and 2 totalling $2,345,634.20 Mr Trent19 Ms Callaghan also supports the view that the subdivision, or Stages of it, should be completedbefore being released to the market.20 The aggregate of the expenses shown in the columns for Coastal A and Coastal B.was asked how the actual development costs for the work that had been completed andpaid for to date compared with these notional estimates. Mr Trent said this:The estimates look like around two million. When Duke & Cooke did the, thevaluation they took into account that a normal developer would be doing thedevelopment work, not that I would be doing it, in this particular case I'm thedeveloper and the contractor, so the, the estimates are too high basically. So Ican do that for about 1.6 million and not, not two million, not 2.1 so I haveabout 600, $700,000 left to complete stage 1. I'm doing all the work myselfon the project.This estimate must be compared to the figure for Stage 1 used by Duke & Cooke of$1,213,484. It is roughly half that sum.[42] Mr Trent went on to explain that he owns all the equipment needed to undertakethe subdivision with the exception of machinery needed to do asphalting.[43] When asked how much cash would be needed to completely finish Stage 1 tothe point of getting titles, Mr Trent said $500,000 to $600,000, with a further $300,000likely to be needed to complete Stage 2. He told the Court that around $1,000,000 hadbeen spent so far, thus implying a total outlay of $1,800,000 to $1,900,000.[44] Mr Trent was cross-examined on this when the Court reconvened on 8 June.He was taken through the figures that he had given, and he confirmed them: "that'swhat I said and that's true". Mr Trent was then taken to the affidavit of Mr Vancewhich had also been filed between the two periods of the hearing, to which wasannexed an email Mr Trent sent to Ms Parkes, the office manager of Kiwi, on 1 June2017. In this email he informed Ms Parkes, evidently to enable her to respond to aninquiry from Kiwi's legal advisors, of the following:Rough projection: cash needed for the next 6 months.● Roading = 350K● Power = 150K● Fibre = 40K● Equipment/Mark/extras = 150K● *Plus legal and other expenses = ? ? but let's say 200KThis gets us to Title on 10 sections and then another 200K gets us another 9sections a few months later (takes us to March of next year).[45] These figures add to $890,000 for the first six months and a total of $1,090,000up until March 2019.21 Mr Butler in cross-examination drew attention to the way inwhich these figures differ from those which Mr Trent had given in evidence just threedays before this email was sent. His explanations varied. The first was that in theearlier figures he had not included legal expenses of $200,000. If that is so, it isextraordinary, because his earlier evidence was that Stages 1 and 2 could becompletely finished for $900,000. He describes the obvious difficulty these figurescreated thus: "it's not apples and apples is my answer".[46] Nothing in the subsequent passages of Mr Trent's evidence, where he wastaken through these figures a number of times, gives me any confidence at all that hehas made a detailed assessment of the likely costs of completing Stages 1 and 2 of thesubdivision. He confirmed that the Court should see the cash commitment of$1,090,000 as a maximum, but then said:I believe in my evidence I do have kind of a higher number of around a millionI think in my affidavit and may be a low of – by 600,000 for kind of somecosts to get the subdivision finished, not counting some overhead costs but.So depending on how I'm looking at the budgeting and what I'm includingwould be different numbers. I would be giving probably in different places.So the five or 600,000 from a week ago was basically that's what it's going tocost me to do the subdivision. I'm not thinking of all the other possibleexpenses. For cash flow, when she asked me I'm like, "Hey look there ispossible of other cash flow situations. Calculate the million dollars of cashflow possible so we can have that as a budget. If we only use 600,000 or700,000 of it that's great but if we don't do I have access to one million dollars,that's what this email was for I thought. It was a cash flow projection on amaximum amount that we might need to run the company.[47] As Mr Trent gave this evidence I gained a clear impression that the figureswere not based on any detailed analysis of cost from any advisors or other externalsources, or even his own calculations. His evidence on this point was completelyunconvincing. Whilst I accept the proposition that there may be some saving ofexpense for Kiwi by Mr Trent physically undertaking earthworks on site, there was noanalysis of the extent of these savings beyond the most general descriptions which Mr21 Statements in evidence of the number of sections in Stage 1 varied, either 21 or 19; it seems thatin this passage Mr Trent thinks there will be 19 in Stage 1. There are to be 33 altogether in Stages1 and 2.Trent gave. Further, Mr Jacobsen's letter refers to construction of a stormwaterdetention basin, which is not mentioned in Mr Trent's emailed list of expenses. Nordoes he say whether his list of expenses is inclusive or exclusive of GST. I find thatKiwi does not have a competently calculated assessment of the projected costs ofcompleting Stages 1 and 2 of the subdivision. The Court can place little reliance onMr Trent's varying assertions.Time to completion of Stages 1 and 2[48] I start by looking at how far advanced work on the subdivision is now. On30 May 2017 Mr Trent was asked by his counsel how much of the development workin relation to Stage 1 (21 sections) had already been completed. His answer was thatStage 1 is approximately 80 per cent finished. Shortly after that he elaborated bysaying that: most of the work's already been completed, I've done that over the courseof the last 10 years, all the waterways, the deep water bores, the lakes, thelandscaping all been completed, so right now we're building the road. Theroad is the last thing, the road and the power, so besides putting the powercable itself in and doing the asphalt every other job I'm doing physically withmy own crew.[49] When the hearing reconvened on 8 June, Mr Butler cross-examined Mr Trentin relation to the conditions on Kiwi's resource consent. He was asked about acondition requiring that a construction management plan be submitted by Kiwi beforework commences. Mr Butler informed him that the construction management planKiwi had submitted had been rejected. Mr Trent said he did not know of this, and thathe had been in contact with the Council that morning. I return to the question of theconstruction management plan later in this judgment.[50] After this reference to it Mr Trent was asked whether Kiwi had breached anyconditions of the resource consent, to his knowledge. The Court's notes of evidencerecord the following exchange:A. Not to my knowledge, no. I haven't started the subdivision yet.Q. Has KIML [Kiwi] conducted works on the subdivision?A. No.Q. So works have not commenced on the subdivision?A. Not earthworks, no. Testing, landscaping, all the pre-stuff has been done,it's all ready. But road and power in, done.Q. So putting a question another way, you have not been advised by thecouncil have you that any construction management plan has beenaccepted by it in respect of the subdivision have you?A. As of this morning they are reviewing the plan and they were supposedto let me know next week and we were going to have a meeting onsite tostart the subdivision. That's what I know from this morning.[51] Mr Trent continued to describe a possible issue with the storm water plan, butthen continued:A. ... But as far as I know it's being completely finished in the next weekand then I've got 20 working days and then I can start working. That's allI know. I know nothing about a rejection at all.[52] Mr Trent was asked about the self-evident disparity between these portions ofhis evidence on the issue of works completed on the subdivision. The followingpassage appears in the notes of evidence:Q. Well what you then go on to say is that most of the work has already beencompleted?A. That's correct.Q. So is His Honour to understand that you haven't started the subdivisionbut most of the work is already completed?A. That's correct.Q. You go on to say that all the waterways, the deep water bores, the lakes,the landscaping have all been completed, is that correct?A. The landscaping still needs some grass and things so that's probably partof the 70 and 70% I was saying.Q. Well let's just be clear. That's not what you told His Honour. You saidto His Honour did you not, that among other things the landscaping hadall been completed, correct?A. I don't remember saying all the landscaping's been completed. Where isit so I can look at that.Q. Well line 12?A. Line 12. Yes that's what I said but there's still some grass and things.Q. But it's not – so it's not true to say that all landscaping has beencompleted?A. That's not 100% true. I mean all the landscaping is not done. All thecontouring is done. It's just the grass and few trees that's true.[53] Again, it is impossible to reconcile on any sensible basis the two passages ofevidence given by Mr Trent on the extent to which subdivision work has beencompleted. His explanation given in the second passage of evidence cannot plausiblybe reconciled with his evidence recorded in the first passage. I find that I am leftwithout any reliable understanding of the extent of progress on the physical worksrequired for Stages 1 and 2 of the subdivision. The position is further obscured by thefollowing passage:A. I haven't started the earthworks. The subdivision had been started 10years ago. So it depends on again what angle you're looking at it from.From the (inaudible) angle I have not started the subdivision. From myangle it is 10 years old.[54] My clear recollection of the inaudible passage is that this was a reference tothe position of the Tasman District Council. Mr Trent seems to be saying that as faras the Council is concerned work has not started, but that as far as he is concerned ithas.22[55] Against this background I turn to Mr Trent's estimates of how long it will taketo complete Stages 1 and 2 of the subdivision. When asked about Mr Hamilton'sestimate of time,23 he advised that he totally disagreed with Mr Hamilton. One issuehe disagreed on was Mr Hamilton's estimate that it would take around four months fortitles to be issued after completion of works. Mr Trent's response was: in reality it does not take 4 months to get a title for me. Maybe for everyoneelse. It takes me 3 weeks. So yes, in reality, what they say is true, but I mean,in what they think is reality is true, but in reality reality it's not true, but theydon't know that.[56] So far as the time required to complete the physical works is concerned, thethrust of Mr Trent's evidence is that he believes that Kiwi can complete the subdivisionin time periods considerably less than those estimated by his expert advisors.22 In relation to the Council's view, see [68]-[72] below.23 Above, at [38].[57] The passage of evidence in relation to timing, which I have just quoted, isunintelligible and of no assistance to the Court in accepting Mr Trent's estimate of thelikely duration for completing the subdivision. To the contrary, it strongly suggeststhat Mr Trent has a profound level of determination but little if any understanding ofthe true time it takes for matters of that kind to be completed.[58] In this context, the evidence contains a further attempt by Mr Trent tocircumvent evidence which he had given previously. As I have said Mr Hamilton wascalled as an expert to support Kiwi's case. In an affidavit sworn on 11 April 2017 MrTrent stated that he had read the sworn affidavit of Mr Hamilton dated 31 March 2017and agreed with it in its entirety. Aspects of Mr Hamilton's evidence were put to MrTrent. In relation to Mr Trent's estimate of the likely time for the subdivisioncompleted, Mr Trent was asked whether he was now saying to the Court that he didnot agree with the opinion expressed by Mr Hamilton. The evidence records thefollowing exchange:A. I believe Mr Hamilton wrote down what he felt. I think he was honestand he wrote down what he thought. It's not my job to argue with himbut I do believe, yes that he wrote down what he believes is honest andtrue. I don't know all the facts, I don't know how long these subdivisionstook, but I believe what he wrote down is true. Am I missing something?Q. What you told his Honour is that you agree with the affidavit in itsentirety.A. Meaning that I agree with everything he said?Q. That's what I'm putting to you yes.A. Yeah, I, I do agree, but I believe he believe – that Greg Hamilton believeswhat he wrote and he was not lying. I don't agree with everything he hasin here as far as timing because it's subjective. It's weather dependent;it's a lot of depending. He wouldn't know that I can do things faster thanthis. What he says is correct but reality is something different.[59] It was later pointed out to Mr Trent that, contrary to the evidence he had givenabout Kiwi's plan being processed through the council Stages, after completion ofphysical works, in some four weeks, he had also said that it would take "a few extramonths". He responded:Like I said, the council supposedly takes four months to give titles. They toldme they wouldn't do that, so I put in here well maybe they, maybe theychanged their mind in six months, so I tried to be honest and say it might takea few extra months.[60] Mr Trent has completed two subdivisions previously, one creating five separateallotments and one creating four. He maintains that completing the presentsubdivision is no different:So they're really the same size and scope of engineering work. There's a littlebit more dirt work involved. But the roads and the power are the same size ofone. So 33 equals one of the other ones. The same roading and work. Sothat's why I can do 21 sections right now at the same time as I can do four,because the infrastructure is exact same, so I can easily do 21 or four. That'sthe same thing. It's just you put more driveways in.[61] Without any evidence from an independent and reliable source, giving acomparison of the physical works on the former two subdivisions and the subdivisionpresently underway, I cannot definitively assess whether this evidence is soundlybased. It seems reasonable to draw an inference, however, that it is not. The presentsubdivision involves seven Stages, to create nearly 100 sections. Appendix 2 to theresource consent contains 55 pages of conditions. It is a substantial project. As well,although assessment of compliance with these conditions will be undertaken at varioustimes during the course of completing subdivision work, compliance will also befinally assessed at the end of the process, before the Council issues its certificate ofcompliance, which is required before the District Land Registrar will proceed with thefinal Stages of the work required to issue titles. I think it extremely unlikely that theexpert assessment of likely time for these steps is wrong, and note that there is nogiven basis for Mr Trent's personal assessment.[62] I find Mr Trent's evidence on the time it is likely to take to complete thephysical work to create the sections in Stages 1 and 2, and to have titles issued forthem to be unreliable.Sale prices[63] When giving supplementary evidence-in-chief Mr Trent informed the Courtthat he had sold 10 sections from Stage 1 of the subdivision. When pressed on thepoint, and ordered to produce the contracts for sale and purchase, he produced justthree. The Court was then informed that there are seven other interested buyers whohold drafted written contracts, which they have not yet signed. The three contractsproduced to the Court all contain a number of conditions. Two are from a closepersonal friend of Mr Trent. The third is from the parents of his present partner. Theprices shown in the contracts bear little relation to the prices assessed by Kiwi's valuer,Mr Bennison. As an average, they are eight to nine per cent less. Whilst Mr Trentsays that these are enforceable contracts, and that Kiwi would not hesitate to enforcethem if necessary, there is an element of doubt over how valid they are. Assumingthey are valid, though, for present purposes, they show that Kiwi is prepared to sell itssections below the valuations provided by its own expert, thus directly impactingnegatively on the cash flow analysis of Mr Vance on which it relies to show thatMrs Trent may be paid in full from cash generated from completion of sales of allsections in Stages 1 and 2. Mr Trent told the Court he had not taken any account ofMr Bennison's valuations when setting the prices for these three sections.Consequence of the evidence on these three issues[64] The consequence of the findings just recorded in relation to the costs ofcreating the sections, the time to completion of the subdivision, and the sale prices, isthat the Court does not have a clear picture of how long this subdivision will take tocomplete, what it will cost to complete, and how much the sale of sections in Stages 1and 2 will realise.[65] Mr Vance produced a schedule which was referred to in evidence as DSV1,which showed that cash would be available from Stages 1 and 2 in a total sum of$7,840,981. In the second phase of the hearing he produced an amended schedule,which was referred to as DSV3, into which he had fed the figures given by Mr Trentto his office manager, Ms Parkes, referred to above.24 He also added, as an expense,a salary for Mr Trent of $180,000, as this is the annual sum he is being paid by Kiwifor the work he is undertaking in relation to the subdivision. He allowed for this figureonce, though recognised that the actual cost of Mr Trent's services may be more ifStages 1 and 2 of the subdivision take longer than one year to complete. He alsoconfirmed that he had not made any allowance for interest either to Westpac, or to MrsTrent whose loan is bearing interest at nine per cent per annum. Nor had he made any24 Above, at [43].allowance for cash payments by Kiwi to Mrs Trent in accordance with an order of theFamily Court.25[66] Leaving out these costs, the schedule shows likely cash receipts at the end ofStage 2 of $7,823,465, much the same as in DSV1. But putting them in makes asubstantial difference. If Stages 1 and 2 of the subdivision take two years, another$180,000 will be incurred for Mr Trent's salary. There will also be two years interestat nine per cent on Mrs Trent's advance and two years interest at bank rates on thepresent advance from Westpac of (say) $2,200,000. There will be interest at bank rateson borrowing from either Westpac or another source of a further $1,600,000 (using thedevelopment costs in Mr Vance's schedule DVS3) for varying periods as funds aredrawn down to pay expenses incurred. Mr Vance did not calculate the precise effectof these additional expenses. Approximate figures can be readily calculated. Twoyears interest on Mrs Trent's advance alone is approximately $1,260,000, and intereston the present Westpac loan at, say, six per cent is another $300,000. Thus, it is notunreasonable to add an interest cost of at least $1,500,000 on present borrowing overtwo years, as well as another year's salary for Mr Trent, $180,000. Deducting thesesums from the net forecast cash return of $7,823,000, reduces it to a little over$6,100,000, insufficient to pay Mrs Trent her advance in full.[67] If the estimate of expenses relied on by Mr Bennison, and used by Mr Vancein preparation of DSV1 instead of those in DSV3 (the projections by Mr Trent givento his office manager), expenses for Stages 1 and 2 increase by approximately$750,000, further reducing the cash which may be produced at the conclusion of Stage2. As I consider Mr Trent's evidence to be unreliable I prefer to use the assessmentsgiven by independent experts called on Kiwi's behalf, and to consider the resultingcash flow assessment DSV3 to be reduced by another $750,000 as a result. This meansthat the projected yield from these two Stages should be reduced to approximately$5,400,000. If sales continue at below the valuation figures used in the cash flows thenet cash produced will reduce further. I have not attempted to calculate interest costson future borrowing to complete the subdivision, but it will be incurred and will alsoreduce the cash return.25 Mrs Trent receives $14,000 per month as maintenance and $10,000 per month on account of heradvance.Position of the Tasman District Council[68] I have set out above the evidence Mr Trent gave about his recent contact withthe Tasman District Council.26 On 9 June Mr J L Hancock, a registered valuer inNelson, was called for cross-examination. Before cross-examination started, he gavefurther evidence-in-chief. Part of this related to material Mr Hancock had obtainedfrom the Tasman District Council. He produced an email he had received fromMr C Cheeseman, the coordinator of monitoring and compliance at the Council, at10.07 that morning. This referred to a request Mr Hancock had made for informationabout the subdivision. He provided information pursuant to the Official InformationAct 1982, and advised that an abatement notice had been issued on 7 June, andforwarded to Kiwi with copies to Mr Trent and Mr Jacobsen of Staig & Smith. Theemail had the abatement notice attached, and was produced in court.[69] The notice begins by referring to conditions of the resource consent held byKiwi, requiring notice in writing at least three days in advance of commencement ofworks on site, and the submission of a construction management plan at least 20 daysprior to the intended commencement date of activities authorised by the consent,addressing matters such as dust, erosion and sediment control. The notice then advisesthat an inspection on 6 June had indicated that an area of approximately 20 ha hadbeen disturbed, including the stripping of topsoil, the formation of a number ofbuilding platforms, disturbance of stream beds and excavation of soft ground. Someof the disturbed ground falls within areas identified on the Council's hazardousactivities or industries list, which are identified on a plan attached to Kiwi's resourceconsent. The notice goes on to advise that the construction management plan requiredby condition 11 had not been received at the Council, so had not been certified by thecoordinator of compliance monitoring as required by the condition. It notes receipt ofa complaint from a member of the public in relation to sediment-laden runoff enteringa stream adjacent to Aporo Road from the subdivision site, and sections of theResource Management Act 1991 which make failure to comply with conditions of aconsent, and uncontrolled discharge of sediment to surface water, a breach of that Actand an offence, respectively. The notice further states that it has been issued as it is26 Above, at [49]-[54].necessary to avoid, remedy, or mitigate any actual or likely adverse effects on theenvironment as a result of the earthworks that are occurring on the property.[70] The abatement notice requires Kiwi to cease all mechanical land disturbanceon the land to which the notice relates until such time as the construction managementplan required by condition 11 of its resource consent has been submitted for approvaland certified as being adequate. It applies to some, only, of the land owned by Kiwi.[71] There is no further evidence before the Court on the present application on howthis affects the timing of completion of the necessary physical works onsite. However,it is an obvious inference that works will be held up until such time as an acceptableconstruction management plan has been certified by the Council's monitoring andcompliance manager.[72] Given that this document was sent to Kiwi via its advisor, Landmark LileLimited, and also to Mr Trent and to Mr Jacobsen of Staig & Smith on 7 June, the daybefore Mr Trent gave extensive evidence including evidence in relation to worksonsite, the likely time to completion, and the construction management plan,Mr Trent's lack of reference to this document is surprising, and unsatisfactory. Whilstthe extent to which it casts doubt on timing and cost issues cannot be assessed on theevidence the Court has, it is clear evidence of Kiwi proceeding with work over 20 haof land without complying with a condition of its resource consent, and thisdemonstrates that Kiwi is undertaking its business of subdividing its land irresponsiblyand unlawfully.Funding for the subdivision works[73] As noted, the present financial facility held by Kiwi is with Westpac. It islimited to $3,000,000. Although the exact extent to which it is presently drawn on isunclear, with both $2,200,000 and $2,500,000 being mentioned in evidence, it is plainthat there is no more than $800,000 available under the present facility.[74] The total costs estimated by Mr Bennison for the completion of Stages 1 and 2amount to $2,345,634. It is difficult, on the evidence presented by Mr Trent and otherwitnesses, to estimate how much money remains to be spent. This is discussedabove.27 The only point which, in my opinion, is clear is that it will be more than thefirst estimates given by Mr Trent of $500,000-$600,000 to complete Stage 1. Even heaccepted that it could cost $1,090,000 as a maximum.28 Further, when this evidencewas being given in court no mention had been made of the abatement notice, nodescription therefore given of the works which will be required to comply with it, andthus no estimate of the cost of so doing.[75] Mr Trent's estimates are therefore unreliable. Mr Vance accepted in evidencethat allowing for the expenses estimated by Mr Bennison, two years of drawings forMr and Mrs Trent, and $800,000 remaining in the Westpac facility, Kiwi needs another$2,000,000 to be available on top of the present facility of $3,000,000 to completeStages 1 and 2. There is therefore sufficient evidence before the Court to find that theexisting Westpac facility is inadequate by a significant margin for the costs ofcompleting Stages 1 and 2.[76] Mr Trent has applied to Westpac to lift the cap on the facility to $4,000,000.Mr Vance produced an email dated 31 May 2017 from a Mr R Christensen who isdescribed as a private advisor, private wealth management with Westpac. This emailsays that in a recent discussion with Mr Trent they had discussed confirmation of afacility at $4,000,000, and removal from their security of the family home situated at90 Aporo Road owned by the Petra Trust, provided it is replaced by three sectionsowned by Cherry Hill, and all the land included in Stage 1 of the development.Mr Christensen says that this proposal represents a commercial development, and assuch will be subject to slightly different pricing and structure terms. He says the bankwill provide more detail around this once approval is in place. Mr Christensen saysthat he has had a preliminary discussion with the credit manager who has indicated hissupport for the proposal.[77] The email records that the next step in the process is for an application to thecredit team to be put together in order to formalise approval. Mr Christensen advisesthat the bank will need confirmation that the "matrimonial property relationshipsettlement that is currently underway" will not impinge adversely on Westpac's27 At [41]-[46].28 At [45].security position, and an understanding of Mr Trent's obligations as part of thematrimonial property relationship settlement.[78] There are evident difficulties in the way of Kiwi being in a position to satisfythese requirements. Relationship property issues between Mr and Mrs Trent are notresolved, so Mr Trent is not in a position to provide Westpac with an understanding ofhis obligations under a relationship property settlement. Nor does it seem that it canyet be stated, either way, whether any settlement that might be achieved will impingeadversely on Westpac's security position.[79] A further requirement noted by Westpac is confirmation that all existing andproposed security is offered on a first and exclusive basis, that is, not subject to anymatrimonial claim. It is not clear what Westpac may require in this regard. Certainly,Kiwi is subject to a claim by way of the notice presently under consideration, whichhas arisen as a result of severance of the previously jointly held advances of Mr andMrs Trent, consequent on their separation. Whether it can be said that this conditioncan be met is at best moot.[80] I also note, in this context, that Mrs Trent is a guarantor of the Westpac facility.It is by no means clear that her guarantee will be available on an ongoing basis, forfurther advances, as her position in relation to the debt she is owed clearly enunciatesan intention not to be involved in the subdivision in any way at all.[81] In cross-examination Mr Trent was as confident of arranging a $4,000,000facility with Westpac as he was on all other topics raised with him. Notwithstandingthat he knows that matrimonial property issues are not resolved with Mrs Trent, andindeed that the Family Court has not yet allocated a fixture for the proceedings beforethat court, he told the Court, in relation to the facility, "I assume right now it is$4,000,000". Pressed on this opinion not being reflected by the Westpac letter,Mr Trent's responses ranged from the letter not being entirely true, to his not beingworried about getting the credit from Westpac, to the letter representing one proposalfrom the bank but there being multiple proposals from the bank (none of which hesought to describe), to the Westpac cap "in theory" being lifted to $4,000,000. Heconcluded by telling the Court that he has plenty of cash to last until "these guys figureout the way they want to set it up", and reiterated that he was not worried about gettingthe credit.[82] In the end, Mr Trent's confidence on this point may be justified, but it is not atthe present time. The best evidence before the Court is that there is no facility in placebeyond $3,000,000, that there are major hurdles standing in the way of Westpac liftingits credit which may not be able to be surmounted before the Family Court has finallyresolved relationship property issues (and any appeals are also decided) and that theamount of money required to proceed to the end of Stages 1 and 2, whatever the finalfigure may be, is not presently available from Westpac.[83] I record that I expressly asked Mr Trent whether Westpac was aware that Kiwihad been served with a demand for payment of over $8,000,000 by Mrs Trent, and heinformed me that it is. If Westpac was made aware of this prior to the email of 31May, which was issued the day after the first two days of the hearing on thisapplication, I would have expected there to have been reference to it in the email, giventhat Mr Trent's issues with Mrs Trent are expressly mentioned in the list of the bank'srequirements. As Kiwi does not have either cash, or an agreed facility from Westpacor any other identified source available to meet the notice, an element of doubt hangsover whether the significance of the notice had been realised by Mr Christensen at thetime he wrote the email. I have little doubt that its significance will be recognised bythe credit team when it turns its mind to Kiwi's application to increase the facility.Conclusions in relation to the subdivision[84] For the reasons given, the evidence presented by Kiwi in relation to the cost ofcreating the subdivision, the time to elapse before title is issued, and the likely sumsto be achieved from Stages 1 and 2 and funding to complete these Stages are all issueson which there is considerable material doubt. Mr Trent gave misleading andfrequently contradictory evidence in relation to estimated costs of creating thesections, estimated time for completion, estimated time for processing of theapplication by the Council and Lands & Survey after completion of the subdivision,Kiwi's compliance with its resource consent conditions, and in relation to whatMr Trent described as sales, three of which were highly conditioned agreementssigned on the same day with close associates, and seven of which are not sales at all.Not only is Mr Trent's evidence unreliable on all these issues, but the evidence of theexperts on the costs of creating the sections, and on the time to likely completion, iscast into further doubt by the recent issue of the abatement notice. This will causedelays, as will works to be undertaken to remedy the adverse environmental effectsidentified by the Council, at a cost which is also unknown.[85] Mr Trent presented in evidence as a man of enormous self confidence. Whilsthis other activities in life may give him sound reasons to be confident in his ownability, the evidence29 and the knowledge of the Court show that undertaking asubstantial subdivision over seven Stages pursuant to a complex resource consent is abusiness project on which expertise is required, and if not held by the developer ashere, advice must be taken and followed.[86] The combined effect of Mr Trent's inexperience with undertaking subdivisionsof this size, his evident disregard of the conditions of the resource consent, his lack ofa structured business plan, the lack of any evident source of additional finance for theworks that must be completed for Stages 1 and 2, his misleading evidence to the Court,his lack of regard as a company director to the pressing imperative of a notice issuedunder s 289, his continuing to trade the company whilst insolvent both on a cash flowbasis and on an assets and liabilities basis, and his disregard of professionally-assessedvaluation evidence to establish sale prices for sections, give the Court no confidencethat this subdivision can be completed by Kiwi at all, under the direction of Mr Trent,let alone at the cost which has been used as the basis for Mr Vance's assessment ofavailable funds to meet Mrs Trent's notice, or within the time Kiwi seeks to do so.[87] I find that there is not a sound evidentiary basis on which the Court canconclude that funds will become available to Mrs Trent to meet her statutory demandwithin two years, the period requested by Kiwi.29 See [32] in relation to evidence given for Kiwi on this issue.The sum which is to be paid if the demand is to be satisfied in cash[88] In paragraph [2] I have recorded that in the March 2016 accounts for Kiwi thejointly owned debt to Mr and Mrs Trent was recorded as $14,590,778.[89] Draft accounts to March 2017 have been prepared. Mrs Trent has a draftshowing a total debt to Mr and Mrs Trent of $14,310,946.77.30 Now the debt is ownedseverally, the accounts should show a separate debt to Mrs Trent of $7,155,473.39.Mrs Trent does not accept that this is accurate as she has not had any input into theaccounts. For the purposes of assessing the amount to be paid in order to satisfy herstatutory demand, however, she accepts this as a starting point. She also accepts adeduction, for present purposes, of a loan made to her and shown in the 2017 draftfinancial statements of $74,322.21. Thus, she says that as at 31 March 2017, andassuming for present purposes that the figures I have just quoted are correct, her loanhas a net value at that date of $7,081,151.18.[90] To that, Mrs Trent has added interest at nine per cent for each of April and May2017, and deducted monthly loan withdrawals as approved by the Family Court of$10,000 for each of those months. This alters the balance of her loan as at 31 May to$7,167,691.76.[91] From this, Mrs Trent has deducted a monthly withdrawal for June of $10,000.She therefore says that as at 2 June 2017 the sum she is owed is $7,157,691.76,assuming the opening figures to be correct. She says this is the sum to which herstatutory demand now relates.[92] Mr Sumner says that Mr Trent does not accept that this is the correct amountowing to her. This must mean that he does not accept Kiwi's draft financial statements,as the figures which lead to Mrs Trent's assessment stem from that document, andinterest calculations are based on it. Both the rate of interest and the amount of themonthly withdrawals are beyond argument.30 Two sets of draft accounts exist. Mrs Trent used a set in her possession. Another produced as anexhibit, shows a debt of $14,590,778.25. For present purposes the lower figure used by Mrs Trentmay be adopted.[93] The best evidence the Court has on the amount now owing is the sumcalculated by Mrs Trent. I find that for the notice to be satisfied, the figure to whichKiwi must respond is $7,157,691.76. This does not mean that this is the correct sumwhich Kiwi actually owes to Mrs Trent. This figure will emerge when the finalaccounts have been struck by Kiwi's accountants, and any challenge to their accuracyhas been resolved.Can Kiwi arrange to pay Mrs Trent in a shorter period?[94] As on other significant issues, Mr Trent's evidence on whether Kiwi canarrange to pay Mrs Trent before completion of Stages 1 and 2 of the subdivision alteredas the case proceeded.31[95] It was not until Mr Sumner presented his closing submissions that Kiwidisclosed the length of time that it asked the Court to give it to meet Mrs Trent's notice.Both the cash flow analyses by Mr Vance (DSV1 and DSV3) disclosed sums of around$7,800,000 available in cash at the conclusion of sales of all of the sections in Stages1 and 2, but as I have discussed, the facts that will dictate when and whether that mightcome about are issues on which various views are held, all by way of conjecture.Consistent with Kiwi's position that this must be the source of funding, Mr Sumnerunderstandably adopted a period which he maintained would allow payment from thissource to be achievable. As I have said, I do not agree. Mr Butler says that delayingliquidation of Kiwi for any period is delaying the inevitable. There is, however, someevidence before the Court that Kiwi may be able to arrange monies in comparativelyshort order to pay Mrs Trent's demand.[96] First, there may be a prospect of the financial affairs of not only Kiwi but alsothe Petra Trust and other Trent-owned or operated companies being rearranged in orderto release funds. In Mrs Trent's affidavit dated 7 June 2017 she undertook anassessment of the present quantum of the debt owed to her, and then set out a methodinvolving other entities by which this might be met. This included transfers of variousproperties, and rearrangement of inter-entity advances. Mrs Trent plainly believes that31 See [12] above.her debt could be met by this method, or largely so. This would depend on the actualvalues of certain properties which might be transferred to her in partial satisfaction.[97] Secondly, as I have recorded, Mr Trent did not entirely exclude there being ameans by which Mrs Trent's debt might be met. Most of this evidence was difficultto place any meaning on, for example:Q. But to get her money out she needs to be repaid by the company does shenot?A. Not necessarily. She could be paid from someone else outside for herassets that she owns which is her share in the company. Not shares but –so the question is the timing of when to pay, when she gets paid, not thatshe's gonna get paid or not. So the spirit behind that was that there's noway to pay her. I cannot pay her the money unless the subdivisioncontinues so we can get the sales from the subdivision to pay her.Q. So therefore her leaving her money in the company is crucial to thesuccess of the subdivision as of today, correct?A. Yes, if she demanded her money today and I had to pay it today we'dhave a problem. Doesn't mean it's insurmountable but it is a problemyes.[98] In response to a question I then asked, Mr Trent clarified the position in thisway: "It's a surmountable problem but it's not impossible is what I meant. That there'sassets there. It's just a matter of how to do it".[99] That was the first time that Mr Trent had given any indication that he may beable to arrange to pay Mrs Trent's debt without completing Stages 1 and 2 of thesubdivision, even though it flatly contradicted what he had said a few sentences earlier,as quoted.[100] Mr Trent himself accepted, later in cross-examination, that it might be possibleto arrange for the transfer of properties owned by the Petra Trust to Mrs Trent, insatisfaction of her statutory demand, through a means of restructuring. Mr Trentagreed this could be done within a relatively short space of time and agreed that thismight be three weeks, when that period was suggested by counsel.[101] Based on the evidence of both Mr and Mrs Trent, there does seem to be someprospect that Kiwi could meet the demand by rearrangement of assets within the widerTrent family portfolio, and a level of acceptance by Mr Trent that this could beachieved within three weeks.[102] Thirdly, there is evidence from a Mr Strawbridge, indicating that "a majornational financial institution that is regularly involved in the financing of propertydevelopments" would give serious consideration to lending Kiwi up to $7,500,000,with a decision on an application for such finance generally to be expected within 30to 60 days of application.[103] This evidence is of little assistance. The financier was not named and theinformation Mr Strawbridge gave was based on a conversation, and was hearsay. Itconflicts with evidence given by Mr Trent that he had attempted to arrange financeand the most he had been able to arrange was $5,000,000 from a personal friend (as ithappens, the named purchaser on two of the agreements for sale and purchase, referredto earlier). Adding the present Westpac facility ($3,000,000) to the amount requiredto pay out Mrs Trent at her revised estimate of liability ($7,100,000) means Kiwirequires a financial facility of $10,100,000. Duke & Cooke values the entire propertyat $15,460,000. The lending ratio for total advances of $10,100,000 would be around65 per cent. Whilst that might not, of itself, seem to be an unacceptable lending ratio,no evidence was presented to show whether any specific lender might in factfavourably entertain an application, an exercise which would no doubt involveconsideration of numerous financial issues other than the security ratio. Debtservicing is an obvious issue as Kiwi does not have any inward cash flow. On theevidence before me I am not prepared to give any weight to the prospect of Kiwi beingable to raise funding promptly from an external lender.[104] Finally, there was evidence before the Court that there are major institutionsinterested in investing in subdivisions. The evidence was not given by a representativeof any such institution and does not materially advance the position. On the evidencebefore me there is no sound basis upon which to find that Kiwi could sell itssubdivision, or sufficient a share in it, to meet Mrs Trent's demand, in the reasonablynear future.Decision[105] I decline Kiwi's request that it be given a period of two years to meet thedemand, for the reasons set out in this judgment.[106] I decline Mrs Trent's submission that the Court should make an order placingKiwi into liquidation now. Section 291(1)(b) empowers the Court to dismiss anapplication to set aside a statutory demand, "and forthwith make an order unders 241(4) of this Act putting the company into liquidation". The application wasdismissed by the Court of Appeal: in para [49] of its judgment dated 28 February theCourt recorded that it allowed the appeal, and specifically reinstated the notice ofstatutory demand. That in effect dismissed the application, if not in so many words.The Court did not make a further order placing the company into liquidation. Itexpressly referred the issue of the time within which the notice should be met to thisCourt. That direction is inconsistent with it being in prospect that this Court wouldthen make an order putting the company into liquidation without allowing time for thenotice to be met.[107] The evidence directs me to a conclusion that Kiwi should have a period of timeto meet the notice within which it can, as Mr Trent accepts, rearrange its financialaffairs and those of other Trent family entities or interests to put it in a position tosatisfy the notice in cash or by transfer of assets to Mrs Trent at valuation. These stepswould likely require one or more properties to be valued and would requiredocumentation. Mr Trent accepts that three weeks would be sufficient for this to occur.That may be a little optimistic in the absence of any indication of time fromprofessionals who would be involved. I consider that the requisite work could beconcluded within 30 working days.[108] As noted earlier in this judgment there is some evidence that a buyer may beavailable for all, or a major share, of the subdivisible land. There is also evidence thata new financier may be prepared to step in and lend sufficient to pay out Mrs Trent'sdebt, as assessed in accordance with the amended sum required to satisfy her notice.[109] Both of these steps would take longer than 30 working days. The evidencewas largely hearsay, and was very general. I am also mindful that Mr Trent criticisesthe evidence on these two prospects, and was adamant in his own evidence that he hasmade endeavours to achieve outside funding and an equity partner, without successbeyond a level of $5,000,000. Kiwi has also had nearly four months to rearrange itsfinancial affairs by one or other of these methods since the decision of the Court ofAppeal was released on 28 February 2017. For these reasons I am not prepared toallow a longer period for these possibilities to be explored.[110] Based on the evidence, I consider the greatest prospect of Kiwi being able tomeet the demand lies in rearranging Trent family affairs. A period of 30 working dayswill allow Kiwi ample time to meet the demand by whichever means it finds possible,without Mrs Trent being required to wait until the completion of any stage of thesubdivision, or while Kiwi tries again to find funding by borrowing or selling all orpart of the subdivision. In terms of the principle enunciated in ANZ Banking Group(NZ) Ltd v Gibson,32 I find this to be a period which, in this case, gives Kiwi areasonable opportunity to meet the demand.[111] I fix the period of time within which Mrs Trent's statutory demand is to be metas 30 working days as from the date of this judgment.Costs[112] Costs will be paid by Kiwi to Mrs Trent in accordance with the result in thiscase. Mr Butler dealt briefly with costs in his submissions and produced a scheduleof costs which he seeks, which include assessments of costs on the basis of Category2, Schedules B and C, together with an uplift of 100 per cent in relation to the hearingon 29 and 30 May, though not on 8 and 9 June.[113] Mr Sumner did not cover costs in any detail, and only received Mr Butler'sassessment of costs during the last day of the hearing when Mr Butler produced hissubmissions. I do not consider that Mr Sumner has had an adequate opportunity toaddress this issue.32 ANZ Banking Group (NZ) Ltd v Gibson, above n 6.[114] The issue of quantum of costs is therefore reserved. I ask for a briefmemorandum from Mr Butler, first, outlining the reasons he seeks an uplift of costs,and briefly, his reasons for seeking costs in band C. This should be limited to no morethan five pages and filed and served within seven working days.[115] Mr Sumner may then file a memorandum in response dealing with Mr Butler'sschedule, already produced, and his memorandum. This is also to be limited to fivepages, plus a schedule of one page if he elects to produce one, and is to be filed andserved within a further seven working days of the date of judgment.Publication[116] To date, both the High Court and the Court of Appeal have made ordersrestricting publication of their judgments in relation to Kiwi's application to set asideMrs Trent's statutory demand. I did not hear argument on this point, and accordinglyI am issuing this judgment with the same restrictions on publication in place as havebeen imposed to date.[117] I have, however, some misgivings about this course. Although dispute overrepayment of the debt has its origins in a relationship property context, the point hasnow been reached where Kiwi faces a statutory demand which it has failed to meet fornearly four months, and a period has been set for it to be satisfied. This is an issueunder the Act, and as noted earlier in this judgment the intention of the notice is tocreate a presumption of inability to pay a current debt, if the notice is not met. Thereis an issue of wider public interest in a company facing such a notice, and certainlythere is a wider public interest in any proceedings for liquidation that seek to establishthat a company is unable to pay its debts. Apart from anything else, there is amandatory requirement that such a proceeding be advertised.33 Kiwi is currentlyengaged in a substantial business. Although Mr Trent says he is carrying out thegreater part of the physical works on site, either personally or with the assistance ofan employee of Kiwi, it is clear that Kiwi is already contracting the services of a firmof surveyors, and will need the services of other parties for laying of cables and otherservices, and as Mr Trent accepted, asphalting. In addition Kiwi is offering sections33 Rule 31.9(1) High Court Rules.for sale. Its activities, therefore, involve other persons and entities within the financialcommunity, including its banker, Westpac.[118] For these reasons the restrictions on publication of this judgment apply onlyfor a period of 30 working days to coincide with the deadline for Mrs Trent's notice tobe met.[119] As this issue was not the subject of submissions I reserve leave to Kiwi and MrTrent to apply to the Court by memorandum to extend this period._______________________J G MatthewsAssociate JudgeSolicitors:Ford Sumner Lawyers, WellingtonC & F Legal Limited, Nelson