Smith v Ball

[2020] NZHC 3485

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-2268

[2020] NZHC 3485

IN THE MATTER

of the Estate of RAYMOND ALEXANDER SMITH

BETWEEN

SAHRA LING SMITH

Plaintiff

AND

ROGER NEVILLE BALL

First Defendant

CRYSTAL MINT DEVELOPMENTS LIMITED

Second Defendant

CRYSTAL MINT LIMITED

Third Defendant

Hearing:	On the papers
Counsel:	K P McDonald and N Percy for the Plaintiff
Judgment:	21 December 2020

JUDGMENT OF GORDON J

This judgment was delivered by me

on 21 December 2020 at 4.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors:           Kevin McDonald & Associates, Auckland

SMITH v BALL [2020] NZHC 3485 [21 December 2020]

[1]                 In my judgment of 8 May 2020, I ordered an inquiry to be undertaken into the rental income received by the second defendant, Crystal Mint Developments Ltd (CMDL) for the residential properties at 3, 4 and 5/38 Dominion Street, Takapuna.1 This order followed from my finding that CMDL, as the registered proprietor of those three properties, held them on trust for the plaintiff, Sahra Smith. The three properties had been owned by Ms Smith’s father (since deceased) who had transferred them to CMDL. Ms Smith was the sole beneficiary of her father’s estate.

[2]                 I noted in my judgment that in his oral submissions at the substantive hearing, Mr McDonald, for Ms Smith, had referred to both the further delay and cost that would result if that order were to be made.2 He did not however abandon Ms Smith’s application for the order. The order was therefore made. But given Mr McDonald’s submission I directed him to file and serve a memorandum advising whether Ms Smith did in fact seek to implement the order. Mr McDonald confirmed that Ms Smith wished to proceed with the inquiry into rental income.

[3]                 In a subsequent telephone conference  on  27  August  2020,  attended  by  Mr McDonald for Ms Smith and Mr Ball, for all defendants, I indicated the orders I was minded to make regarding the process for the inquiry into rental income and I heard from each of them in response.

[4]                 The directions I made included the appointment of Mr Andrew Hill of BDO New Zealand Ltd to take an account of the rental income due to Ms Smith from CMDL for 3 and 4/38 Dominion Street (the properties).3 The inquiry was to establish the net rental income due to Ms Smith from CMDL from the commencement of the 2010 financial year to the end of the 2020 financial year. Ms Smith agreed with the gross rental income in CMDL’s financial statements for the 2010 to 2018 financial years. She also agreed with the expenses listed in the financial statements for those years, other than the expenses listed in the schedule annexed to this judgment. The inquiry was to address those disputed expenses and the other issues listed in the schedule, and reach a view on the net income due to Ms Smith.

1      Smith v Ball [2020] NZHC 944 at [236](d).

2 At [237].

3      It was clarified subsequent to my judgment that the rental inquiry would only concern 3 and 4/38 Dominion Street and not 5/38 Dominion Street.

[5]                 Among the orders made for the process of the inquiry was that Mr Hill’s costs would be met by CMDL. I ordered that CMDL pay into Court, by way of security, within 12 working days, the sum estimated by Mr Hill as the cost of the inquiry. CMDL failed to pay security for costs. Mr McDonald for Ms Smith filed a memorandum regarding this failure. In a minute of 28 October 2020 I gave Mr Ball the opportunity to respond by filing a memorandum by a nominated date. Mr Ball failed to do so.

[6]                 I subsequently issued a minute on 9 November 2020 recording that, in the absence of any response by Mr Ball on behalf of all defendants to my previous minute, and in the absence of any payment by CMDL of security for costs for the rental inquiry that was to be conducted by Mr Hill, the inquiry was unable to proceed.

[7]                 As a consequence I said I would determine the rental inquiry on a formal proof basis on the papers.

[8]The documents available to the Court were:

(a)A bundle of documents filed by Mr Ball on behalf of CMDL, purportedly in compliance with one of my orders made on 27 August 2020, that CMDL supply to Ms Smith all supporting documents, including, but not limited to, invoices, receipts and bank statements relating to the issues listed in the attached schedule. The documents were exhibited to an affidavit of Mr Ball, sworn 23 September 2020. There is no attempt in the affidavit to explain any of the documents. The affidavit simply records that there is a bundle of documents attached;

(b)An affidavit of Deborah Richards, a registered legal executive employed by Mr McDonald’s firm, annexing various documents and providing comment on them; and

(c)A memorandum of submissions dated 25 November 2020, on behalf of Ms Smith.

[9]I now turn to each of the seven issues set out in the attached schedule.

Issue 1: are the rates of $14,000 listed in the FY 2016 financial statements a legitimate expense that relates to the renting of the properties?

[10]              There are no rates invoices for the properties in the bundle of documents annexed to Mr Ball’s affidavit that would support the claim that CMDL incurred rates totalling $14,000 in the 2016 financial year.

[11]              By way of contrast to the sum of $14,000, the rates for the properties for the billing period 1 July 2018 to 30 June 2019, for which invoices were provided, were

$3,090.84 (3/38) and $2,897.12 (4/38). The total for the properties for that year is

$5,987.96, well short of the $14,000 claimed for FY 2016.4

[12]              In the absence of any supporting invoices, and having regard to Ms Smith’s position that she does not accept this claim, I do not accept the $14,000 is an expense relating to the renting of the properties for FY 2016.

Issue 2: are the legal expenses totalling $2,628.00 listed in the FY 2017 financial statements a legitimate expense relating to the renting of the properties?

[13]              There are no invoices provided by Mr Ball to support the claim that $2,628 is for legal expenses incurred in connection with renting the properties in the 2017 financial year.

[14]              In his submissions, Mr Percy, for Ms Smith, notes that in March 2016 Ms Smith issued proceedings in this Court to have Mr Ball removed as the executor of her father’s estate.5 Those proceedings were completed in late September/early October 2016.

[15]              I accept Mr Percy’s submission that there is an available inference that the legal expenses relate to the litigation to have Mr Ball removed as the executor. That litigation was unconnected with the renting of the properties. The proceeding in 2016

4      I have not included water rates in the calculation for the period 1 July 2018 to 30 June 2019 as an email from a tenant indicates that water rates were charged to the tenants.

5      Referred to in Smith v Ball, above n 1, at [49].

was brought against Mr Ball personally, in his capacity as the executor of the estate of Ms Smith’s father. Although that was part of the wider picture and general background to this litigation, the legal cost was not an expense incurred in renting the properties.

[16]              In the absence of any supporting documentation regarding the payment of those legal expenses, I do not accept, for present purposes, it is an expense deductible from the rental income from the properties.

Issue 3: are the legal expenses totalling $32,940 listed in the FY 2018 financial statements a legitimate expense that relates to the renting of the properties?

[17]There are no invoices to support this claimed expense.

[18]              Ms Smith issued these proceedings against the defendants in September 2017. This rental inquiry is the last part of the proceeding to be resolved. As referred to above, the claim by Ms Smith was that the properties were held by CMDL on trust, first for her father, and then, after his death, her father’s estate. The defendants denied the claim. Their position was that CMDL was the beneficial owner as well as the legal owner of the properties.

[19]              I accept Mr Percy’s submission that an available inference is that the legal fees of $32,940 relate to this litigation and I draw that inference. Although Mr Ball represented himself and the other defendants at the hearing before me, the defendants previously had legal representation. These legal expenses are not expenses that relate to the renting of the properties.

Issue 4: are the legal expenses totalling $31,953 listed in the FY 2019 financial statements a legitimate expense that relate to the renting of the properties?

[20]              There is a tax invoice dated 1 March 2019 from barrister Kevin Glover to the law firm Schnauer & Co. The invoice total, said to be due by 7 March 2019, is

$6,834.45. There is a schedule accompanying the invoice which contains details of two earlier invoices: one dated 31 October 2018 for $2,839.35 and a second dated 19 December 2018 for $6,130.65. The total due, including the invoice of 1 March 2019, was $15,804.45. This was said to be subject to a possible adjustment by way of a

deduction of $672.75 if all amounts were paid in full by 7 March 2019 and a notice of change of representation filed by the same date.

[21]              Mr Glover had represented the second defendant in these proceedings and Schnauer & Co were Mr Glover’s instructing solicitors.

[22]              It appears that these invoices, totalling $15,804.45, relate to this proceeding rather than the renting of the properties and I make that finding.

[23]There are no invoices for the balance of the total legal expenses of $31,953.

[24]              Accordingly, neither the total sum, nor the part sum for which invoices are available, is an expense that may be deducted from the rental income for the properties.

Issue 5: what is the correct rental income for FY 2019?

[25]              The issue as stated in the schedule is whether the rental income of $20,070, recorded in the FY 2019 financial statements, reflects the actual rent received for the properties. The rental for the properties for FY 2018 was $57,815. It appears that in FY 2019 the properties were either rented for less than current market value or the rental income generated by the properties was not correctly recorded in CMDL’s financial statements.

[26]              The bundle of documents annexed to Mr Ball’s affidavit of 23 September 2020 includes Excel spreadsheets. Those spreadsheets purport to set out the names of tenants in the properties at different periods and the rental income generated by the properties.

[27]              However, CMDL did not include a full set of bank accounts for the period     1 April 2018 to 31 March 2019. Without those accounts or sworn evidence, the Court is not in a position to accept that the spreadsheets accurately represent the rental income for FY 2019. Supporting documentary exhibits might have included, for example, tenancy agreements and any details of tenancy terminations.

[28]              CMDL was aware that the apparent drop in income for the FY 2019 was one of the issues to be considered in the rental inquiry. It is clearly stated in the schedule. But the information provided on behalf of CMDL is totally inadequate on this issue.

[29]              Mr Percy submits that it is appropriate for the rental income earned in FY 2017 ($58,585) and FY 2018 ($57,815) to be averaged to produce a sum for the rental earned during FY 2019. The average is $58,200.

[30]              In the absence of any explanation as to the purported reduction in rental income for FY 2019, I consider that the averaging of the two previous years rent is a fair way to assess the rental income for 2019. I accordingly adopt the figure of $58,200 as the rental income for FY 2019.

Issue 6: was the loan totalling $147,460.67 borrowed by CMDL from ASB Bank and secured by a mortgage against the properties, and the subsequent interest incurred, used for rent related expenses such as maintenance or the like?

[31]              The first point to note is that it is apparent from the relevant CMDL bank statement that the loan amount advanced was in fact $159,702.66, rather than

$147,460.67 which Ms Smith had understood was the amount of the loan.

[32]              The loan amount was advanced on 9 May 2019. By 18 November 2019, CMDL’s account was in overdraft by $964.56.

[33]              Ms Smith identifies  10  withdrawals  in  the  period  between  9  May  and  18 November 2019 which she submits are not expenses that relate to the renting of the properties. I note there were also deposits into the account during this period which I will discuss in the context of the 10th withdrawal. I now address each of the disputed withdrawals in turn.

14 May 2019 - $50,000 – Return R N Ball Loan (first transaction)

[34]              There is a withdrawal of $50,000 on 14 May 2019. The narration is “Return R N Ball Loan”.

[35]              It should be first noted that Mr Ball is the sole director of CMDL. He was the person who operated CMDL’s bank account. In the course of my judgment I considered Mr Ball’s financial contributions to and compensation from CMDL by way of drawings for the financial years between 1999 and 2019. I found that in that period Mr Ball took more money out of CMDL than he had contributed.6 It follows from that finding then, as at 31 March 2019, Mr Ball owed money to CMDL. CMDL did not owe him money.

[36]              Mr Ball and CMDL have not provided any evidence to establish that Mr Ball subsequently advanced $50,000 or any other amount after 31 March 2019 which would result in a debt being owed by CMDL to Mr Ball. Nor have they provided any evidence that would support the fact that the payment noted in the bank statement as a “loan” was an expense incurred in relation to the renting of the properties.

[37]              I therefore find the “loan” of $50,000 on 14 May 2019 was not an expense relating to the renting of the properties.

24 May 2019 - $10,000 – Return R N Ball Loan (second transaction)

[38]              On 24 May 2019, there was a transaction described in a similar way as “Return R N Ball Loan”. The amount on this occasion was $10,000. For the same reasons as set out above for the first transaction, I also find this amount of $10,000 was not an expense incurred in relation to the renting of the properties.

24 June 2019 - $3,000 (third transaction)

[39]              On 24 June 2019 there was a withdrawal of $3,000. The narration does not assist in enabling the Court to understand what the withdrawal was for. There are no documents in the bundle annexed to Mr Ball’s 23 September 2020 affidavit that assist either. In the absence of any evidence, I find the $3,000 was not an expense incurred in relation to the renting of the properties.

6      At [178](b).

19 July 2019 - $50,000 – Return R N Ball Loan (fourth transaction)

[40]              On 19 July 2019 there is a withdrawal of $50,000 with the narration “Return R N Ball Loan”. For the same reasons as set out in relation to the first transaction, I find this alleged loan of $50,000 was not an expense in relation to the renting of the properties.

29 July 2019 - $3,176 – K P McDonald (fifth transaction)

[41]              On 27 June 2019 the defendants were ordered to pay Ms Smith costs of $3,176 for failure to comply with timetable orders regarding discovery in this proceeding. On

29  July  2019  there  is  a  withdrawal  of  $3,176  with  the  narration  “Deposit16  K P McDonald”.

[42]              I accept that the coincidence of both the timing of the withdrawal and the amount, following the order of the Court, indicates that this payment was the payment of the sum of costs ordered to be paid on 27 June 2019. The payment of costs in this proceeding is not an expense related to the renting of the properties.

31 July 2019 - $672.75 – K T Glover invoice (sixth transaction)

[43]              CMDL’s bank statement records a withdrawal of $672.75 on 31 July 2019. The narration states “K T Glover Invoice”. There was no copy of the invoice in the documents annexed to Mr Ball’s 23 September 2020 affidavit. However, as noted above, Mr Glover is a barrister who, for a period, acted for CMDL in this proceeding. In the absence of any evidence to prove otherwise the proper inference to be drawn is that this amount relates to the defendants’ legal costs in this proceeding. I find accordingly. Those legal costs incurred in this dispute are not an expense that relates to the renting of the properties.

31 July 2019 - $2,357.50 – Schnauer & Co invoice (seventh transaction)

[44]              On 31 July 2019 there was a withdrawal of $2,357.50 from CMDL’s bank account. The narration on the bank statement for the withdrawal is “Schnauer Co Invoice 00776”. As noted above, Schnauer & Co were the solicitors for the defendant at one stage in this litigation. The affidavit of Ms Richards annexes an invoice from

Schnauer & Co. The invoice number is 776 and the total amount said to be due is

$2,357.50. Both those details correspond with the details in the bank statement. The narration in the invoice, which is directed to CMDL’s director Mr Ball, is “Oppose Summary Judgment Proceedings”. That was part of this proceeding.

[45]              I find, as with the other legal expenses referred to above, this expense incurred in defending Ms Smith’s claim is not an expense related to the renting of the properties.

29 August 2019 - $2,800 – Return R N Ball Loan (eighth transaction)

[46]              On 29 August 2019, there is a withdrawal of $2,800 from CMDL’s account. The narration for the withdrawal is “Return R N Ball Loan”.

[47]              For the same reasons given in relation to the first transaction, I find that this sum is not an expense relating to the renting of the properties.

29 October 2019 - $4,887.50 (ninth transaction)

[48]              On 29 October 2019 there was a withdrawal of $4,887.50 from CMDL’s account. The narration is “Inv 01159”. There is no invoice or any other documentation included in the documents annexed to Mr Ball’s affidavit of 23 September 2020 providing any further details.

[49]              In the absence of evidence to support the withdrawal, I find that this withdrawal was not an expense related to the renting of the properties.

14 November 2019 - $30,000 – (tenth transaction)

[50]              There  was  a  withdrawal  of  $30,000  from  CMDL’s  bank  account   on   14 November 2019. The narration reads “Deposit”. Annexed to Ms Richards’ affidavit is a statement issued by the law firm Turner Hopkins dated 29 November 2019 which Ms Richards says was provided on discovery. Turner Hopkins acted for CMDL in late 2019 and early 2020 in this litigation. The Turner Hopkins statement records that on 15 November 2019 Turner Hopkins received from CMDL funds of

$30,000  on  account.   This  was  said  to  be  payment  of  Turner  Hopkins’ costs of

$26,714.38 leaving a credit balance of $3,285.62.

[51]              The coincidence as between the timing of the withdrawal and the date of payment, and the amount paid and received, indicates that the $30,000 withdrawn from CMDL’s bank account was the $30,000 paid to Turner Hopkins as legal fees in defending Ms Smith’s claim in this proceeding. I find that such payment of legal fees is not an expense relating to the renting of the properties.

[52]              However, account needs to be taken of deposits into CMDL’s bank account during the period in which Ms Smith has argued there were withdrawals unrelated to the rental of the properties (14 May to 14 November 2019). Those deposits consisted of one payment by Mr Ball of $2,300 on 14 November 2019 and 12 fortnightly rental payments of $1,500. Applying the rule of “first in: first out”7 of the $30,000 withdrawn, $9,700 is the residue of the loan amount deposited into CMDL’s bank account on 9 May 2019 and the balance of $20,300 consists of the deposits referred to in this paragraph ($2,300 plus 12 times $1,500).

[53]              Finally, and for completeness, I note that there was a withdrawal of $100 from CMDL’s account on 29 August 2019 with the narration “Return R N Ball  Loan”.  Ms Richards did not make any comment in her affidavit regarding this withdrawal, nor did Mr Percy make any submissions either. I therefore do not make a finding in favour of Ms Smith in relation to this (small) amount.

CMDL’s financial statements for FY 2020

[54]              Among the documents Mr Ball annexed to his affidavit of 23 September 2020 were the financial statements for CMDL for FY 2020 which have become available since the hearing. Ms Smith accepts that the financial statements can be used for determining the net surplus for FY 2020. She accepts the rental earned by CMDL of

$45,652 as recorded in the financial statements for FY 2020 is correct. However, she says the legal expenses recorded as legal fees do not constitute an expense relating to the renting of the properties.

7      Claytons Case [1816] 1 Mer 571.

[55]              Annexed to Ms Richards’ affidavit there is a statement from Turner Hopkins, solicitors, for accounts totalling $47,880.05. I accept that these invoices all relate to the proceeding brought by Ms Smith against CMDL.

[56]              The amount for legal expenses in the financial statements is $38,196. It is not clear how this figure was calculated. However, I accept that in the absence of evidence to the contrary, these legal expenses relate to the costs incurred by CMDL in defending Ms Smith’s claim in this proceeding. Such legal expenses are not an expense that relates to the renting of the properties.

[57]              Ms Smith takes issue with other aspects of the FY 2020 financial statements but it is not necessary to address those matters for the purposes of this judgment.

Issue 7: for each year, including and after FY 2010, if the properties generated a surplus after all legitimate expenses were paid, what was the amount of the surplus and to whom was it paid?

[58]              I will first address the amount of the surplus for each year and after that, the recipient.

FY 2010 to FY 2015

[59]              Ms Smith accepts the surplus figures in the financial statements for CMDL for the financial years 2010 to 2015. She also accepts that all expenses deducted from the gross surpluses as detailed in the financial statements for these years were legitimate expenses relating to the renting of the properties. The sum of the net surpluses is

$53,895 made up as follows:

(a)    FY 2010 - nil (CMDL made a loss) (b) FY 2011 - $10,821

(c)       FY2012 - $6,720 (d)     FY 2013 - $14,182 (e)     FY 2014 - $10,798 (f)           FY 2015 - $11,374

FY 2016

[60]              I have accepted Ms Smith’s challenge to expenses of $14,000 for FY 2016. As a consequence, the loss of $4,593 in the financial statements for that year should be a surplus of $9,407.

FY 2017

[61]              I have accepted Ms Smith’s challenge to the amount of $2,628 for legal expenses. As a consequence, the surplus for FY 2017 increases from $15,104 to

$17,732.

FY 2018

[62]              I have accepted Ms Smith’s challenge to the legal expenses totalling $32,940. As a consequence, the net loss of $17,888 in the financial statements for FY 2018 becomes a net surplus of $15,052.

FY 2019

[63]              I have accepted Ms Smith’s challenge to the rental figure of $20,070 and I have determined the FY 2019 rental figure to be $58,200. I have also accepted Ms Smith’s challenge to the legal expenses of $31,953 contained in the FY 2019 financial statements. As a consequence, the surplus for the FY 2019 year was $14,841, made up as follows:

(a)Adjusted rent of $58,200;

(b)Total expenses of $75,312 less legal expenses of $31,953, giving total expenses of $43,359; and

(c)Adjusted rent of $58,200 less adjusted expenses of $43,359, giving a total of $14,841.

FY 2020

[64]              I have accepted Ms Smith’s challenge to the legal fees of $38,196 as a deductible expense in relation to the renting of the properties and her challenge to the

two unexplained withdrawals of $3,000 on 24 June 2019 and $4,887.50 on 29 October 2019.

[65]              The rental for FY 2020 was $45,652. The expenses listed in the FY 2020 financial statements total $94,307. When that figure is adjusted by deducting the legal expenses and the two unexplained withdrawals, and that sum is deducted from the rental of $45,652, there is no surplus in relation to rental income.

Total surplus from FY 2010 to FY 2020

[66]              The total surplus CMDL earned from renting the properties from FY 2010 to FY 2020 is $110,927 calculated as follows:

FY 2010	Nil – CMDL made a loss
FY 2011	$10,821
FY 2012	$6,720
FY 2013	$14,182
FY 2014	$10,798
FY 2015	$11,374
FY 2016	$9,407
FY 2017	$17,732
FY 2018	$15,052
FY 2019	$14,841
FY 2020	Nil – CMDL made a loss
Total	$110,927

[67]              I accept Mr Percy’s submission that however the total sum of $112,800 paid out to Mr Ball is classified (e.g. whether a loan to Mr Ball by CMDL or drawings taken by Mr Ball) is irrelevant for the purpose of this rental inquiry. The amount of $112,800 does not affect either the gross rental figure or the expenses figure in the FY 2020 financial statements. That sum is therefore neutral in this rental inquiry.

Who received the surplus?

[68]              As set out above the total surplus CMDL earned from renting the properties from FY 2010 to FY 2020 is $110,927. Of that amount Ms Smith accepts that

$37,614.18 was paid to her father.8 I note that the commencement of the period for

the various payments  totalling  $37,614.18  to  Ms  Smith’s  father  is  recorded  as  5 January 2009. That is several months before the commencement of FY 2010. However, as Ms Smith does not take issue with this, I will proceed on the basis that the correct figure for payments to Mr Smith is $37,614.18.

[69]              The balance of $73,312.82 is owed by CMDL to Ms Smith for unpaid net rental generated by the properties between FY 2010 and FY 2020.

Orders

[70]I make orders that;

(a)CMDL pay Ms Smith the sum of $73,312.82 for unpaid net rental generated by the properties between FY 2010 and FY 2020;

(b)CMDL pay simple interest:9

(i)From 31 March, being the last day of each financial year, for the financial years listed at [66] on the amount specified for each financial year to the date of this judgment;

(ii)The rates of interest are:

(1)To 31 March 2016: 3.5 per cent per annum;

(2)From 1 April 2016 to 31 March 2020: 2.5 per cent per annum;

8      Smith v Ball, above n 1, at [226] and [227].

9      Judicature Act 1908, s 87(1). This follows my approach in Reid v Castleton-Reid [2020] NZHC 2313 at [217]. See also General Communications v Development Finance Corporation of New Zealand Ltd [1990] 3 NZLR 406 (CA) at 436 and Rama v Millar [1996] 1 NZLR 257 (PC) at 262.

(3)From 1 April 2020 to date of judgment: 1.5 per cent per annum.

Gordon J

SCHEDULE

The specific issues the accountant will need to enquire into are as follows:

(i)Whether the rates claimed of $14,000 listed in the FY 2016 financial statements are a legitimate expense that relates to the renting of the Properties.

(ii)Whether the legal expenses totalling $2,628.00 listed in FY 2017 financial statements are a legitimate expense that relates to the renting of the Properties.

(iii)Whether the legal expenses totalling $32,940.0010 listed in FY 2018 financial statements are a legitimate expense that relates to the renting of the Properties.

(iv)Whether the legal expenses totalling $31,953.00 listed in FY 2019 financial statements are a legitimate expense that relates to the renting of the Properties.

(v)Whether the legal income of $20,070.00 recorded in the FY 2019 financial statements reflects the actual rent received for the Properties. The rental for the Properties for FY 2018 was $57,815.00. It appears that in FY 2019 the Properties were either rented for less than current market value or the rental income generated by the Properties was not correctly recorded in the Second Defendant’s financial statements.

(vi)Whether the loan totalling $147,460.67, and the subsequent interest incurred, borrowed by the Second Defendant from a mortgage facility granted by ASB Bank secured against the Properties was used for rent related expenses such as maintenance or the like.

10     A version of this schedule was annexed to my minute of 27 August 2020. That version incorrectly stated the legal expenses as $32,914.00. The correct figure is $32,940.00.

(vii)For each financial year including and after FY 2010, if the Properties generated a surplus after all legitimate expenses were paid, what was the amount of the surplus, and to whom was it paid.