A Bay of Plenty rich lister is at the centre of an estate dispute alleging he bought a Taupo farm significantly under value.

Taupo man Warwick Burgess is also questioning the "closeness" of the relationship between former Fonterra director and regular Tauranga NBR rich lister Colin Armer and an executor of Burgess' mother's estate.

A six-week hearing began in the High Court at Hamilton on Monday involving the sale of the Burgess' 1665ha property at Tihoi, on the northwestern side of Lake Taupo, to Armer who owns three farms surrounding the property.

Burgess' lawyer Damian Chesterman spent Monday making his opening address to Justice Paul Heath and outlined a series of concerns, including an Armer Farms (N.I) Ltd payment of $30,000 to trustee Tony Western's company Westex Ltd - just six weeks after a smaller portion of the property was sold for $4 million to Armer in 2009.

Advertisement

The money was paid as part of the redevelopment of Armer Farms' land in the area.

Armer's lawyer Campbell Walker QC refuted any inference that his client had paid Western a "backhander".

After guidance from Justice Heath, Chesterman accepted at this stage they simply had concerns about the "closeness" of the relationship between Armer and Western but he would be quizzing Armer if he took the stand.

"The invoice is rather vague but refers to the construction of a culvert and some tracks and is for the amount of $28,000 plus GST. The relevance of it from the plaintiff's perspective is that it happened so soon after the sale of the farm that it's part of the relationship between Mr Armer and Mr Western.

"We have made inquiries about exactly where the work was, what it was, but we have not received a clear response on that and I certainly will be cross examining on it but it is not pleaded as a dishonest payment," Chesterman told Justice Heath.

The Burgess family property includes a number of forestry plantations. The family also set up the Tihoi Trading Post general store and petrol station in 1947.

The property was settled by Burgess' grandfather William in the 1920s before it was sold to his son, Christian, in the 1950s.

Former Fonterra director Colin Armer, foreground, pictured outside the High Court at Hamilton today. Photo/Alan Gibson
Former Fonterra director Colin Armer, foreground, pictured outside the High Court at Hamilton today. Photo/Alan Gibson

Warwick Burgess lived on the farm with his parents Molly and Christian, neither of whom drew a salary, instead reinvesting the money back into the farm.

Burgess was of the belief that the farm would be handed down to him, as it had the two previous generations, but Chesterman says the estate's trustees will deny that.

One of the main claims directed at the trust by Burgess, is that they let it become rundown in the near 30 years before that sale.

If the property had been developed in the 1980s it could have brought in more cash - about $600,000 at the time - which they could have reinvested into the farm, raising its value to $15 million by the time it was eventually sold in 2009.

Chesterman said his client also questioned the relationship between Western and Armer because they were allegedly in constant contact from a month after Burgess' mother died in July 2007 until the property sold.

Chesterman submitted an email trail he said revealed Western was keeping Armer up to date on private discussions among trustees around the property sale.

"From the plaintiff's point of view, there was an unnecessary rush to sell this farm, which had been sitting in the trustees' hands for 29 years."

Also at the centre of the case, along with Western, is family lawyer Alasdair Morrison and accountant Philip Monk.

It's alleged Monk set up an estate plan and the farm was eventually signed over to the family's company, CTE Burgess Ltd, by Christian Burgess just before his death. However, this was without the knowledge of either Warwick or Molly Burgess, the court heard.

Chesterman said Morrison knew about this agreement but failed to disclose it to the mother and son, despite being questioned by Warwick Burgess.

Burgess never became aware of the agreement until his mother's death in 2007, the court heard.

In 1998, Chesterman claims Morrison also took it upon himself to draft up a new will for Molly Burgess, inserting a new clause allowing the trustees to sell the farm if they needed to.

Chesterman told Justice Heath that despite Molly Burgess instructing Morrison that she wanted to leave half of the 500ha native forestry block to Hilton Burgess and the remainder to Warwick Burgess, that never happened.

Western, who was also a family friend who had worked on the farm, eventually became a trustee.

He called not only Ministry for Primary Industries about the poor state of some animals but also police.

Two days before Armer made an offer of $6.2m to buy the farm, Western complained to MPI about the state of the farm and its animals, Chesterman told the court.

When Burgess learned Armer wanted to buy the property, he scrambled to find money to make his own offer on the family farm.

Armer's offer was several hundred thousand above Burgess' but this was not disclosed to Burgess for another two weeks, despite trustees agreeing to allow a month for Burgess to counter any offer, Chesterman said.

Instead, when Burgess was finally advised of the offer by Morrison, he was only given eight days, the court heard.

Despite the pressure, Burgess raised the necessary cash with the support of a syndicate, only for the price to increase by another $240,000, putting it out of reach.

Chesterman said he would also question why the property wasn't put up for auction despite interest from three other parties.

The defence will deliver their opening submissions today. The case is set down for six weeks.