National | Stuff

Judge to businesswoman - sell your mansion to pay your $10m debt

Photo: Annemarie Quill / Waikato Times

An award-winning businesswoman has been ordered to sell her multi-million dollar Bay of Plenty homes to settle a debt of $10 million, involving what a judge described as her “record” profit from “improper activities”.

Attempting to bring an end to a 15-year bitter family saga and many court hearings in Māori Land Court jurisdiction, on March 1, High Court Judge Harvey agreed to an enforcement order against Rae Beverley Adlam, which includes the sale of two properties in Tauranga and Pukehina valued at $4-5 million.

Proceeds of the sale would go to trustees of Savage Papakāinga Land Trust to partly settle the money Adlam owed from siphoning money from geothermal plants on trust-owned land in Kawerau for her personal use.

Adlam was originally ordered to repay the trust amounts totalling approximately $15 million in a 2014 Māori Land Court judgment.

To date, the trust has received $4.7 million, and trustees sought the latest High Court judgement to enforce the outstanding judgment debt of $10,453,491, by way of the sale of her two properties.

Adlam lives in one property, a home in Tauriko, while her son lives in the beachfront home in Pukehina. Her lawyers argued that a sale would leave her “homeless” as a 76-year-old superannuant with limited assets and income.

Led Ngati Tuwharetoa settlement

Adlam was made a member of the New Zealand Order of Merit for services to business in 2008. She was named businesswoman of the year in 1986.

She was the driving force behind the $10.5m Ngati Tuwharetoa (Bay of Plenty) Treaty of Waitangi settlement in 2005, and became the settlement trust's chairwoman.

In 2008, she was suspended by the Māori Land Court as a trustee of the Savage Papakāinga Land Trust after she admitted taking trust funds for her own use.

Adlam did not dispute that there were findings against her of breach of trust and accepted that the Māori Land Court found she profited from her role as a trustee, when she managed investments in geothermal properties in Kawerau.

She argued that without “her skill and expertise” the development would not have happened, and pointed out that the trust received annual income.

She disputed that she had used all the money for her own benefit, but the court heard that she may have received personally approximately $5 million, of which some $2 million was spent on legal costs.

Record-keeping 'not satisfactory'

Adlam’s lawyer said that due to issues over record keeping, she could not account for what happened to the rest of the money.

Judge Harvey said this was not a “satisfactory situation”.

“Indeed, in the circumstances, given what was at stake, it seems surprising that more care was not taken to secure and preserve such important records.”

Adlam’s lawyer also requested that principles of tikanga – which could involve resolution outside court – should apply, given that Adlam and the trustees were all close whānau, that she had acknowledged her “error” and had attempted within her present means to repay as much of the debt as possible.

Judge Harvey disagreed, noting previous attempts at mediation had failed, and that Adlam’s wrongdoings were a record in Maori Land Court proceedings.

“At a minimum, Mrs Adlam has acknowledged that she has profited by $3 million from her breaches of the most fundamental of trust obligations – the duty of non-conflict and the duty not to profit. That must be a record in the Māori Land Court jurisdiction, in modern times at least, for any fiduciary to have profited from improper activities to such a degree,” he said.

Trustees deprived

“Tikanga cannot provide a haven for such misconduct.”

The only just ruling under both tikanga and the law, would be to allow the trustees to pursue the debt, forcing Adlam to sell her properties, he said.

“The alternative would be to allow Mrs Adlam to effectively avoid responsibility to the trust for in excess of $10 million in circumstances where she continues to fail to provide a proper accounting for the loss or use of those funds. That can hardly be a just outcome, either in ture Pākehā or tikanga terms.”

In delivering his ruling, Judge Harvey noted the trustees had been deprived of their money, while Adlam and her family continued to live in the houses.

“It is difficult to see how it can be justified that the trust, being deprived of so much of its money for so long, should countenance the prospect of Mrs Adlam’s family continuing to benefit from her misconduct in circumstances where, even if the properties are eventually sold, the trust will still be receiving less than the full amount of the judgment debt.”

As well as the five court hearings involving the disputed debt, Adlam is a convicted fraudster.

In 2012, she was convicted of 24 charges brought under the Tax Administration Act and fined $75,000.

She was convicted and discharged on nine charges of knowingly filing false GST and income returns in the name of Onepu Geothermal Energy and was ordered to pay Inland Revenue $133,000 in reparations.

When asked for comment at her Bethlehem home, Adlam said: “All is not as it seems, there’s more truth to come out.”

She declined to elaborate but, when asked what she thought of her house having to be sold, she said: “They will be.”

- Stuff