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Home / Business

The fight over Huka Lodge

NZ Herald
24 Oct, 2014 04:00 PM9 mins to read

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They allegedly amassed at least $50 million in 15 years but have now spent even longer fighting over the spoils.

One left school in Wales at 15 for the steel trade, where the pair would make a fortune.

The other became a diplomat in New Zealand and the owner of the world-renowned Huka Lodge - a luxurious resort near Taupo that hosts both royalty and rock stars.

One claims to have trusted his partner completely, leaving all of their finances up to him.

The other took advantage of that trust and cheated his colleague, according to a South African judge.

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Although they severed ties in 1991, Michael Kidd and Alexander van Heeren are still arguing over the carve-up of their business empire.

Kidd claims he got less than US$5 million ($6.3 million) when they split, while van Heeren allegedly held on to assets worth at least US$47.5 million - including Huka Lodge, Fiji's Dolphin Island retreat, and 32kg of gold.

Kidd wants a High Court judge to rule he had an interest in half of these and the partnership's other assets when they went their separate ways - a claim he has chased since 1996.

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The steel trader also wants a half share in profits from "unaccounted-for" assets, or compound interest in the alternative.

Van Heeren, the honorary Dutch consul in Auckland from 1985 until 2012, denies he owes anything.

Alexander van Heeren allegedly said partnership funds were used to buy Dolphin Island (above). Photo / Norrie Montgomery

He no longer lives in New Zealand and did not want to be interviewed, instead referring the Herald to his Queen's Counsel, Bruce Gray.

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"The claim is, 'In the 1980s, - which is 30 years ago - Mr van Heeren was associated with some entities which bought some of these assets and therefore I want them'. It's a bit of a stretch," Gray said this month.

"He thinks he's being pursued for a claim that has no basis ... he says in 1990 and 1991 there was an agreement between the parties in which all their assets were divided."

This is the same argument van Heeren made during litigation in South Africa - the country where the pair joined forces in 1975, sourcing local steel and selling it across the world.

Their enterprise was very successful but the tense environment of apartheid-era South Africa saw them look to other horizons.

It was this that brought them to New Zealand, where van Heeren moved in 1981 to set up another arm of the steel business.

Kidd, while purchasing a house here, stayed and worked from Johannesburg.

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More than geography divided the two businessmen - they also took responsibility for distinct sides of their operations.

Kidd busied himself with trading steel, while his partner handled their finances and investments.

"They were a remarkably complementary duo," said Peter Jones, who once worked for the pair.

"Alex in my view had this very powerful persona, a presence I mean. He had a certain strength of character which imbued those around him and he had a strong visionary sense.

"Mike, on the other hand, was very different in that he was the man who understood steel very well ... and could pick the eyes or the pocket of a steel mill very carefully and in well thought out ways.

"Collectively they were a very great team ... " Jones said in a Johannesburg court last year.

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Kidd told the same court that he and van Heeren were "body and shadow, shadow and body".

"My greatest skill was the ability to trade in steel ... [van Heeren's] greatest skill was his ability to network, to open doors for international trade, to identify good investment opportunities and to exploit them," Kidd said when giving evidence.

A number of those investments, according to Kidd, were made in New Zealand, where van Heeren would begin to build up a profile.

Among them was Huka Lodge, which Kidd claims he visited in 1984.

The purpose of this trip, he told the South African court, was to consider whether this luxurious property should be bought with the partnership's steel trading profits.

Kidd's name did not appear in any of the relevant documents during the subsequent purchase because "the politics of the day" dictated he should be kept "out of the picture totally".

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"We made sure that the South African tag would not appear anywhere ... ," he said when giving evidence.

The lodge was purchased for $1.3 million and more than twice this again was spent on renovations, based on records produced during the South Africa proceedings.

These funds, according to the judgment in that case, came from a Netherlands-based company jointly owned by the two businessman. Kidd never appears to have been referred to as the property's owner while van Heeren has long been associated with the resort.

And Huka Lodge was not the only luxury property allegedly paid for with partnership funds - Kidd claims he was told by van Heeren that US$500,000 was used to buy Dolphin Island in 1986.

This Fijian retreat is now billed as Huka Lodge's sister property, offering the "ultimate Pacific Island experience on an exclusive-use basis".

Houses in New Zealand and England, millions of dollars worth of shares, 92kg of gold, 50kg of silver, and "a number of Brazilian cut aquamarines" are also said to have been purchased with partnership money.

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But the great Kidd-van Heeren team was not to last.

In early 1991, Kidd - then living in England - claims he flew to Johannesburg when van Heeren threatened to liquidate one of their South African firms.

It was there that Kidd signed documents that would derail his fight with the honorary Dutch consul for some 17 years.

Along with agreeing to buy the shares in eight companies from van Heeren, Kidd allegedly accepted that this settled "all disputes between the parties anywhere in the world".

Five years later, when Michael Kidd brought his action in the New Zealand courts over the two men's alleged common holdings, his former partner raised this document as his defence.

The New Zealand litigation was then put on hold, while the parties went to the South African courts to determine the scope and validity of this "indemnity" document.

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That matter crawled along until last year, where in a Johannesburg court Kidd gave evidence at length but van Heeren chose not to.

One of Kidd's claims was that the indemnity was never intended by him to cover any other assets than the shares sold to him in 1991.

He also sought to have the document declared void.

Judge Kathy Satchwell - in her decision - said it was not unreasonable for Kidd to rely on his partner.

"All of the evidence before me is that Kidd was the steel trader and van Heeren the financial partner. Kidd had, over many years, left the documentation side of the partnership in van Heeren's very able hands and the partnership had done well as a result ... it was not unreasonable for Kidd to place every reliance upon van Heeren," Judge Satchwell said.

"I am satisfied that van Heeren took advantage of Kidd - in Kidd's trust in his partner, in Kidd's 15-year reliance upon the financial acumen of his partner," she said.

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"Van Heeren's behaviour over a period of years suggest that he started treating [partnership companies] Genan and Prime NZ profits for the benefit of himself alone and, in doing so, cheating Kidd," the judge said.

Judge Satchwell did not believe Kidd would have signed the indemnity document had he known its true content and also was of the view "there was an entire concatenation of (mis)representations by van Heeren to Kidd".

"It would be preferable to be able to make a finding that these representations were either innocently or negligently made.

"Yet I can only conclude that there were misrepresentations which were deliberately made," she said.

Kidd was induced to sign the indemnity through these deliberate misrepresentations, as any reasonable person would have, said the judge, in finding the indemnity document to be void and of no effect.

Seventeen years on, the local litigation is now back on foot and both sides are due in the High Court at Auckland in February for the next round.

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And while the indemnity document may not be the defence van Heeren first hoped, he is also arguing Kidd's action comes too late.

"To the extent that any of the claims made in the second amended statement of claim are additional to or different from claims made in the statement of claim dated 20 February 1996 they are time barred, and that in any event the claims made in statement of claim dated 20 February 1996 are also time barred," van Heeren's statement of defence said.

Battle lines

The partie
sMichael Kidd, steel trader and former business partner of Alexander van Heeren, owner of Huka Lodge and former honorary Dutch consul in Auckland.

The scrap
They allegedly amassed at least $50 million in 15 years but Kidd claims he got less than US$5 million ($6.37 million) when they split.

What happens next
Kidd wants a High Court judge to rule he had an interest in half of the partnership's assets when they went their separate ways -- a claim he has chased since 1996.

What they said
"[Alexander van Heeren] thinks he's being pursued for a claim that has no basis ... he says in 1990 and 1991 there was an agreement between the parties in which all their assets were divided."
- Bruce Gray for Alexander van Heeren

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"My greatest skill was the ability to trade in steel ... [van Heeren's] greatest skill was his ability to network, to open doors for international trade, to identify good investment opportunities and to exploit them."
- Michael Kidd

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