Matt Nippert is a business investigations journalist.

Henderson, Hide and the what the judge said

Secrecy has been lifted in the case against Christchurch property developer.
David Henderson. Photo / David Alexander
David Henderson. Photo / David Alexander

The latest twist in the epic struggle between bankrupt Christchurch developer David Henderson and tax and company authorities has seen the High Court blame him for having to pull the shroud from his latest set of criminal charges.

The High Court at Christchurch heard Henderson has been charged with running a business while bankrupt. Rulings by Associate Judge Rob Osborne, adjudicating an application by the Official Assignee to extend the term of Henderson's bankruptcy, said a four-week trial by jury at the Christchurch District Court hearing from 27 witnesses was expected to begin in the latter half of this year.

Henderson had faced similar charges in 2014 but months later the prosecution withdrew the charges.

Henderson denies the charge and claims the prosecution is part of a long-running vendetta by the Official Assignee. "They are desperate to try and get a conviction against me, and they've spent a million dollars trying to do it," Henderson said.

This latest development was only made public following a convoluted sideshow featuring listed accounting software company Xero and Rodney Hide.

The company's chief executive, Rod Drury, and the former MP have traded public barbs with Hide alleging Xero needlessly breached the privacy of Henderson's wife Kristina Buxton, and Drury countering his accuser was waging a "misguided campaign".

This stoush became the basis for an unusual request in December by the Official Assignee to lift a non-publication order revealing details of its investigations into the developer and the fresh criminal prosecution.

Rod Drury. Photo / Jason Oxenham
Rod Drury. Photo / Jason Oxenham

To fully get to grips with this saga, that contains equal parts legal labyrinth and libertarian grievance, it is worth recounting the Sisyphean journey of our protagonists.

Henderson has long been a thorn in the side of authorities, and gained public fame during the 1990s for his partly successful battles with Inland Revenue. These clashes, which saw him bankrupted but beat fraud charges and turn a million-dollar tax bill into a small credit, were later turned into the film We're Here to Help.

After a roller-coaster political career - including being a contestant on Dancing with the Stars - Hide was forced out of the Act Party leadership by Don Brash. He subsequently left Parliament in 2011.

To a certain extent the success and profile of the pair have been linked - the MP's early career in Parliament was notable for its championing of Henderson's cause, but the pair have had a much lower public profile of late.

Henderson's property empire collapsed in the aftermath of the global financial crisis and he was bankrupted in November 2010 owing what the court heard was $142 million. Henderson disputes the figure, arguing penalty interest inflated the amount and his real losses lay closer to $20 million.

Data privacy is so fundamental to our business.

Hide has kept up his support for Henderson in his ongoing battles in the courts with the Official Assignee and Inland Revenue (he was found guilty on seven tax evasion charges last year) with the former MP saying he covered recent hearings from the press bench.

Henderson told the Herald his regular appearances in court are caused by his divisive personality, but he was arguing for important principles that needed to be upheld. "I just happen to be a catalyst to raise people's enmities - but you get sick and tired of government and companies like Xero being bullies. This won't stop," he said.

The arcane details of one such interlocutory hearing came into the public arena courtesy of Hide, who covered the proceedings in the Herald on Sunday and the National Business Review detailing what he considered were breaches of law by the Official Assignee and criticisms of Xero's handling of customer information in the case.

Rodney Hide.  Photo / NZPA
Rodney Hide. Photo / NZPA

The hearings heard criticism on the NZX-listed company centred around the handing over of information to the Official Assignee relating to two companies directed by Buxton, AFB Treasury and Spinach Design.

As it happens, this wasn't the first time this issue and many of these arguments had been raised. Henderson had progressed many of them in court in July, and suffered a resounding defeat.

Associate Judge Osborne had heard evidence of what lay behind the request for information on those two companies, and concluded that the information sought was of "obvious and justified" interest to the Official Assignee.

The reasons behind this suspicion were further outlined: A formal interview by the Official Assignee with Henderson's former accountant had heard evidence that the bankrupt developer was the beneficiary of funds from the companies and was pulling their strings.

... you get sick of government and companies like Xero being bullies.
David Henderson

"Mr Henderson [not Ms Buxton] would provide the instruction in relation to payments and receipts," the court heard.

He dismissed Henderson's bid to have this request for information ruled unlawful.

For her part, Buxton told the Herald her husband had no role in the operation of the companies in question. Henderson himself said the same, but added one of the companies was dormant and some of its bank accounts related to a family trust, which was not covered by his bankruptcy prohibitions.

But this hearing, undercutting many of Hide's claims, was suppressed and covered by a non-publication order in order to let other investigations and prosecutions of Henderson proceed undisturbed.

In December, after hearing applications to lift this order, Associate Judge Osborne was critical of Hide.

"By publishing his own analysis of what the Assignee is or is not permitted to do ... Hide effectively left Xero and the Assignee to defend their positions by reference to limited facts," he said. "Xero has a legitimate interest in being able to refer to the judgment."

Xero's general counsel Matt Vaughan told the Herald it had been frustrating having their ability to defend themselves curtailed.

"We were restricted from commenting fairly and feel it was very incorrectly reported in the media over the past few months. We always knew we had acted appropriately and we are very clear in how we treat these statutory requests for data: And we push back where it's justified," he said.

See the Court ruling:

"Data privacy is so fundamental to our business. It's simply incorrect to suggest we'd run against that."

Despite the comments from the bench, both Henderson and Hide are far from conceding. The pair advanced opinions to the Herald that some of their arguments were so powerful it was not necessary for a mere associate judge to talk about them.

"He's not even a full judge, only an administrative one," Henderson said of Associate Judge Osborne, claiming only a full judge of the High Court had jurisdiction to hear his claims that documents had been seized illegally.

Henderson was also adamant that Xero had breached its own privacy policy, had failed to tell Buxton of the data request and claimed the company had lied when asked.

Vaughan strongly rejected these claims and said while its policy was to, where possible, advise users if information was disclosed in this case the Official Assignee had requested confidentiality as it concerned an ongoing investigation.

Vaughan also said Buxton had corresponded with a customer support person who had answered honestly, but was unaware of correspondence between Xero and the Official Assignee.

Hide remains combative and argues Associate Judge Osborne's ruling didn't mean the Official Assignee or Xero's actions in sourcing documents were lawful.

"He only said Mr Henderson didn't persuade him they were unlawful," Hide said.

Hide rejected claims the ruling vindicated either Xero or the Official Assignee, and continued to reiterate many of Henderson's arguments, including that a close reading of the Insolvency Act showed the notices issued by the official assignee could only be issued to people and not companies.

In his ruling Associate Judge Osborne had heard - and dismissed - this argument, ruling the phrase "any other person" was a "literal catch-all ... to fulfil its purpose it cannot matter whether the person is an individual or company".

Hide also went on to claim that answers to parliamentary questions stating the Official Assignee had only requested documents from Xero a handful of times over the past decade were lies ("It's false, there's more to come," he said) and, given the Supreme Court recently suggested information was property, it was possible to argue that the saga was evidence a crime of theft had been committed.

Such claims of criminality, however, haven't been advanced in court. And, so far, the only criminal proceedings in this case are Henderson's upcoming trial. The developer had argued against the Osborne rulings being made public on the grounds that publicising claims he ran AFB and Spinach while bankrupt would hurt his chances of a fair trial. But in a final ironic turn, Associate Judge Osborne dismissed Henderson's objections and said he largely had himself to blame for any prejudice.

The court heard the developer had advance knowledge of Hide's articles criticising Xero and the Official Assignee.

The ruling said their relationship as friends meant it was "unlikely that Hide would have published his article if Henderson had voiced his concerns to Hide. But for Hide's article, this issue would not have been before the court at this point".

The players

• Developer David Henderson was known for buildings in Christchurch and battling with Inland Revenue. His court struggles - and victories - in the 1990s were turned into a film but in November 2010 he was bankrupted owing $142 million.

• His earlier battles against authority figures were renewed almost immediately, with Inland Revenue convicting him - after a drawn-out trail stretching almost a year - of non-payment of $163,000 in taxes.

• In parallel the Official Assignee also started a probe, drafting a report recommending his three-year ban on being involved in businesses be extended and prosecuting him, but later dropping the charges, over claims he ran a business while bankrupt.

• Henderson, often representing himself in court, has fought tooth-and-nail against his accusers. A public campaign involving his friend and ex-MP Rodney Hide has seen the swathe of legal action blamed on vendettas by authority figures and that authorities were relying on illegal searches.

See the revised ruling:

- NZ Herald

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