Team Barry Limited v Forlong HC Auckland CIV 2003 404 5393

[2005] NZHC 1742

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2003 404 5393

BETWEEN  TEAM BARRY LIMITED

First Plaintiff

AND  TUAMAN INC LIMITED

Second Plaintiff

AND  MARTIN PUGH

Third Plaintiff

AND  KEVIN BARRY

Fourth Plaintiff

AND  ANTHONY J FORLONG

First Defendant

AND  LUKE ANDREW BOWELL KEMP

Second Defendant

AND  MAFAUFAU SITA (AKA DAVID TUA)

Third Defendant

Hearing:         7, 8, 9, 10 and 11 February 2005

Appearances:  Justin Toebes and Richard Gordon for Second Plaintiff to oppose A P Molloy QC and Luke Kemp for David Tua Third defendant No appearance for First, Third and Fourth Plaintiffs or for First and Second Defendants

Judgment:      29 April 2005

JUDGMENT OF WILLIAMS J

In accordance with r 540(4) of the High Court Rules I direct that the Registrar endorse this judgment with the delivery time of …3:00pm …on the …29th.. day of

……April........... 2005.

TEAM BARRY LIMITED And Ors V FORLONG And Ors HC AK CIV 2003 404 5393 [29 April 2005]

TABLE OF CONTENTS

Para

Issue:  6 April Visit and Tuaman Inc Purchase of Pakiri  [1]

Legal Principles  [8]

General  [15]

Events Prior to 6 April Visit:

(1)General  [17]

(2)Exclusive Management Agreement  [24]

(3)Tuaman Inc  [28]

(4)Mr Tua’s career and business arrangements  [29]

(5)Tuaman Inc finances after Lennox Lewis bout  [39]

(6)Mr Pugh’s interest in Pakiri land  [41]

(7)Mr Barry  [43]

(8)Mr Ede  [45]

Events After 6 April 2001 Visit:

(1)22 April 2001 visit  [46]

(2)Mr Macky  [48]

(3)Mr Hayman  [55]

(4)Mr Matheson  [57]

(5)Bank instructions re Pakiri  [58]

(6)GST refund  [62]

(7)Ms Grant  [64]

(8)       28 July 2003  [70]

(9)Mr Forlong  [72]

(10)12 August 2003 meeting  [73]

(11)Sports Tech Ltd, Mr Booth/Gregory

Baron & Lunar Trust and O’Neills Avenue  [83]

1. Publicity       [89]

2. Varying claims by Mr Tua  [91]

Submissions  [93]

Discussion and Conclusions  [108]

Visits  [110]

House site discussion  [111]

Purchase Negotiations  [112]

Investment policy and previous interest in land  [115]

Bank loan and guarantees  [117]
EMA and Tuaman Inc  [118]
The Pakiri land in Tuaman’s books  [124]
28 July 2003  [128]
12 August 2003  [129]
Claims by Mr Tua  [130]
Messrs Tua and Pugh  [131]

Result  [136]

Issue : 6 April 2001 Visit and Tuaman Inc Purchase of Pakiri

[1]                 David Tua, the third defendant in this proceeding (under his birth name, Mafaufau Sita) is currently New Zealand’s leading professional heavyweight boxer, a status he has enjoyed for a number of years. Messrs Pugh and Barry, the third and fourth plaintiffs, were respectively formerly Mr Tua’s manager and promoter/trainer. In the circumstances later described, the relationship between those persons came to an acrimonious end in mid-2003. Since then, despite ongoing litigation,  there remain a raft of unresolved issues between the opposing camps.

[2]                 Of that raft of issues, the parties agreed the Court would first be asked to decide the single issue with which this judgment is concerned: Does Tuaman Inc,  the second plaintiff, hold the beneficial interest in some coastal land at Pakiri, north of Auckland (“Pakiri” or “the Pakiri land”) on an express trust for Mr Tua alone?

[3]                 Mr Tua said Mr Pugh was aware of his interest in buying land for his family and himself from before he fought Lennox Lewis on 11 November 2000. On 6 April 2001 he visited Pakiri with Mr  Pugh  and  a  Mr  Ede,  a  real  estate  salesperson. He said :

We walked over the Matheson land for a couple of hours. I thought it was heaven. It reminded me of home in Samoa. I could see my kids running around on the beach. Right away I wanted to buy it.

Mr Ede then took me around the other side of the property. He showed me a view over other properties. But after I had seen the first one, the others  didn’t interest me.

I then left with Marty to drive back to Auckland. I said to him:  “Man, I  want to buy that property”. I wanted it for myself and my family. It was a place to retire to.

Marty said he would work on it with Mr Ede, to head off other buyers that Mr Ede had told us about.

[4]                 In cross-examination he said that on his return from the USA in late March 2001 following the Danell Nicholson fight, Mr Pugh advised him he had a block of land in which Mr Tua might be interested and they went to see it. He was unaware

of the asking price and accepted he never told Messrs Pugh or Barry or anyone else that he did not wish them to participate in the purchase. The evidence continued :

Q.You decided you wanted to buy it and that means you assumed it was being bought for you?

A.       Yes

[5]Of the 6 April meeting Mr Pugh said :

I explained how I had been chasing a piece of property that had finally come on the market and I wanted Tuaman to buy it as an investment.

Mr Tua and he drove to the Pakiri land that day, met Mr Ede and walked over the land for a couple of hours looking at access and potential building sites. A decision was made to buy. Mr Ede told them the price would be $7.5-$8m. Mr Pugh in his brief said :

At no time, at that meeting, or the trip up or back with David, did we ever discuss anything else except us buying the property – it was not me buying the property, it was not David buying the property. We both liked the property. We both said words like “I want it” but that is obvious. There  were never any words used by David like “only I am buying the property”; and I didn’t say those words either  – this  was  a  purchase  opportunity that I had obtained and I was bringing in potential partners for the purchase. If Tuaman Inc Limited was going to be involved in the purchase then that would have to be with the agreement of Kevin  and  David.   That is  why     I spoke to both of them –  I wouldn’t  have  involved  the  Company unless   I had both Kevin and David’s sign-off. If Kevin and David agreed (which they both did)  then it  was  going to  be a  purchase  by the  Company –  or  I would have found other business partners – nothing to do with Tuaman – to complete the purchase. (emphasis in original)

In cross-examination he put the matter rather more concisely :

“I … said to David “Here’s the property, what do you think?” He stood up on the sand dunes, threw his hands in the air and said “Yahoo” and that was it. Other than small-talk conversation.”

[6]                 On 11 April 2001 Tuaman Inc entered into a contract to buy 51.7273ha of land at Pakiri for $7.55m payable by way of a deposit of $3m on the contract becoming unconditional with the balance due three months thereafter. The vendors were the Matheson Trustees. The land was comprised in Certificates of Title 86/132 42B/3 and 42B/4 North Auckland Registry. The contract was declared unconditional on 30 April 2001. It settled on 4 May. Tuaman’s cash contribution of

$3,000,674.83 was provided by a cheque drawn on its ASB account on settlement date. No document was brought to attention as to how Tuaman treated that payment in its internal accounts, particularly whether it was debited to Mr Tua alone though Mr Pugh asserted the whole of the amount was met by Tuaman Inc and was not debited to Mr Tua. Vendor finance of $4.55m for three months interest free  provided the balance. Tuaman Inc Ltd became registered proprietor.

[7]                 The Minutes of Tuaman Inc relating to the purchase dated 20 April 2001 – though, like so much else in this case, their meaning and the date on which they were prepared and signed by Mr Pugh remains in contention - read :

Tuaman Inc will purchase a 51 ha Pakiri farming property.

The property will be purchased by Tuaman Inc for the intent of farming as its taxable activity.

Martin Pugh (Pugh group trustee) has reached agreement with Barry to be the beneficiary of Barry’s shares with respect to the Pakiri property purchase, David Tua will own 50% through his shareholding held on trust. Martin Pugh and David Tua will both execute personal guarantees.

Interest payments will be proportioned as per equity and expensed by Tuaman reducing the overseas manager service fee’s percentage of the proportioned party.

Baron and Lunar Trust will agree to supply a guarantee (on a commercial basis) for and on behalf of Tuaman or Martin Pugh (Pugh group trustee) if needed against any and all future Tuaman Inc properties purchased or approved credit facilities.

Legal principles

[8]                 To obtain a finding that Tuaman holds Pakiri for Mr Tua alone by reason of its having been purchased on an express trust for him, Mr Tua must prove the circumstances in which it acquired the Pakiri land satisfy the legal requirements for creation of an express trust. That, in its turn, requires proof of what the law calls the three “certainties” of intention, subject-matter and objects. As the learned authors of Butler et al: Equity and Trusts in New Zealand (2003 para 4.2.1 p 79) summarize it :

It must be established that the creator of the trust, the settlor or the testator, intended to create a trust. A difficulty arises because those who wish to create trusts may use the word “trust” in a non-technical way. Alternatively, the settlor or trustee may not use the word trust at all, but on a consideration of all the circumstances it might be clear that a trust was intended. If

certainty of intention is established, the next question is whether there is certainty of subject-matter. What property is to be held subject to the trust?

… If real property is the subject-matter of the trust the exact title or titles must be identified. Finally, there must be certainty of objects. This means it must be clear who is the beneficiary of the trust or what valid purpose is to benefit under the trust.

[9]                 In this case, the certainties of subject-matter and objects are not in contention: if Mr Tua is able to prove certainty of intention to the appropriate standard, the subject-matter of the trust is the whole of the beneficial interest in the Pakiri land and he alone is the object of the trust.

[10]            A gloss on that, however, is that express trusts of land should comply with the Property Law Act 1952 s 49A which relevantly reads :

49A. Certain instruments to be in writing –

(1)No legal interest in land may be created or disposed of except by writing signed by the person creating or conveying the same or by his agent lawfully authorised in writing in that behalf, or by will, or by operation of law.

(2)A declaration of trust respecting any land or any interest in land shall be manifested and proved by some writing signed by some person who is able to declare such trust or by his will.

[11]            Despite s 49A, an express trust is not required to be in writing as long as there is some written evidence of its creation. The legal requirements may be met with a combination of documents read together. The writing requirement can be satisfied by a document or documents signed by the trustee rather than the settlor (Butler op.cit. para 4.4.3(2) p 101). As the Court of Appeal put it in Mountain v Styak [1922] NZLR 131, 137 :

… a trust manifested and proved by a writing signed by the trustee admitting the trust and complying with the requisites mentioned by Lord Langdale in Knight v Knight [3 Beav 148; 49 ER 58] is sufficient to enable the Court to enforce the trust against him.

[12]            Given that there is nothing in writing in this case signed by Mr Tua which might constitute a declaration of trust, it is instructive to note that in Thexton v Thexton [2001] 1 NZLR 237, 246-247 para [52] the following appears :

There is no written document existing so other evidence of the existence of such a declaration is required. If the trust is not completely constituted then

absent consideration on the part of the beneficiary, the trust is not binding on the settlor: equity will not assist a volunteer. A declaration of trust does not require a technical form of expression, it is a question of construction whether the words used, taking into account the surrounding circumstances, amount to a clear declaration of trust. What is needed is the manifestation of an intention to declare a trust: Paul v Constance [1977] 1 All ER 195. Where no words exhibiting the necessary intent are used it may in exceptional cases be possible to infer a declaration of trust from acts showing that a person has constituted themselves as trustee …

(See also Butler op.cit. para 4.2.2(1)(2) p80-81).

[13]            To try to counter the absence of writing by Mr Tua in this case, Mr Molloy QC, senior counsel for him, relied on the reference to silence in Wallgrave v Tebbs (1855) 2 K & J 313, 322; 69 ER 800, 804 that :

Where a person, knowing that a testator in making a disposition in his favour intends it to be applied for purposes other than his own benefit, either expressly promises, or by silence implies, that he will carry the testator’s intention into effect, and the property is left to him upon the faith of that promise or undertaking, it is in effect a case of trust.

[14]            In addition, as Mr Molloy submitted, and as the learned authors of Equity and Trusts comment (para 4.4.3(6) p 103) :

… equity will not allow a statute to be used as an instrument of fraud. In many cases it has been found to be fraudulent for a trustee to hide behind the provisions of, for example, the Property Law Act 1952 and claim there was no trust when in fact a trust existed.

In Rochefoucauld v Boustead [[1897] 1 Ch 196, 206] Lindley LJ said :

[N]otwithstanding the [statutory requirements], it is competent for a person claiming land conveyed to another to prove by parol evidence that it was so conveyed upon trust for the claimant, and that the grantee, knowing the facts, is denying the trust and relying upon the form of conveyance and the statute, in order to keep the land himself.

General

[15]            It is necessary to compare the contrasting views of what occurred on 6 April 2001, assisted by a review of the surrounding circumstances, to decide whether     Mr Tua has satisfied the onus of proving that the whole of the beneficial interest in the Pakiri land is held by Tuaman Inc for him alone.

[16]            To do that, consideration must be given to events between these parties which precede the 6 April 2001 meeting – particularly the signing and operation of an Exclusive Management Agreement (“EMA”) dated 1 April 1999 - and events after   6 April 2001 to decide that single issue, though a strict temporal distinction is not always easy to draw.

Events Prior to 6 April 2001 Visit:

(1)General

[17]            Up until 1992, Mr Tua earned his livelihood as a kitchen-hand at an Auckland hotel. However, as an amateur, he won the bronze medal in the heavyweight division at the 1992 Olympic Games in Barcelona.

[18]            Until then, Mr Barry had been New Zealand’s most successful boxer for a long time. He, too, boxed for New Zealand. At the 1984 Olympics he won  the  silver medal. He approached Mr Tua after his Olympic success and was  instrumental in his turning professional. He said Mr Tua and he “have shared a common dream over the past 11 years and that was to see David become the heavyweight champion of the world”. However, although Mr Barry was involved in Mr Tua’s career from 1992-99, Mr Tua’s management agreement during that period was with two Americans, Messrs Duva and Finkel and their companies including one trading as Main Events. It was they who arranged his opponents and negotiated his purses. Over that period he was involved in 34 bouts, all but one of which he won.

[19]            For most of this period Mr Barry owned a boxing gym in New Zealand though he was in Mr Tua’s corner on occasions during his fights and helped promote two.

[20]            Professional boxing is an unusual occupation. It combines serious training leading up to a fight, then the fight itself, but with that being followed by what can be quite lengthy periods of training without fighting. Fighting is dangerous. It requires, as Mr Tua said, complete concentration for success and to avoid injury,

even death. Fighters therefore depend heavily on their promoters and managers to arrange fights for them for the best possible purse and astute trainers to improve their chances of success over their limited fighting life. The relationship between fighters and their handlers can be intense -–the evidence suggested Mr Tua lived for a time in the home of one of his American managers – and also requires considerable trust and reliance on the fighter’s part that the promoter/manager will act in his best interests in obtaining the fights that will best further the boxer’s career for the best purses. The boxer can then concentrate solely on training and fighting trusting all other matters, including financial matters, to his handlers.

[21]            It seems Messrs Tua and Barry had some form of agreement in 1992 but this was cancelled when, on 10 November 1992, Messrs Tua, Duva and Finkel signed management and exclusive promotion agreements. Though those agreements have now been supplanted, it is of interest to note that under the management agreement the co-manager was to be paid 30% of the purses paid to Mr Tua after deduction of “all reasonable and necessary training and travel expenses” including trainers’ fees, and that Mr Barry was to receive 5% of that sum. The co-managers also received 20% of all sums paid to Mr Tua for product endorsements or personal expenses with half being paid to Mr Barry. Mr Tua received a sign-on payment of $US25,000, part of which Mr Tua said went to Mr Barry with the balance being used as a deposit on a house for his parents. The promotion agreement required Main Events to negotiate a certain number of fights annually for Mr Tua, with certain minimum purses and with particular provisions becoming operative should Mr Tua be recognised as a world champion.

[22]            During the negotiations leading up to the execution  of  these  agreements,  Mr Tua said he took both Mr Barry and Mr Duva to meet his parents, something he regarded as a major step in recognising the mutual trust between all involved.

[23]            Probably about 1997-98 Mr Barry introduced Mr Tua to Mr Pugh, a “smart businessman” as he described him, as someone who was ideal to manage him and his finances and make investments for him. As a result, Messrs Tua, Barry and Pugh brought the Duva/Finkel management to an end and entered into the EMA.

(2)        Exclusive Management Agreement

[24]            An important feature of the background to the dispute between these parties is the EMA signed effectively between Tuaman Inc and Mr Tua and the way in which Messrs Tua, Pugh and Barry operated under that agreement.

[25]            Though undated, the EMA has a commencement date of 1 April 1999 – it may have been backdated from later that year, even from 2000 – and, on its face, is made between David Tua Inc Ltd and Mr Tua. However, because Mr Tua had incorporated a US company under the name David Tua Inc in 1992, execution of the EMA resulted in Tuaman Inc Ltd being incorporated and the parties have throughout treated the EMA as if Tuaman Inc was the manager thereunder.

[26]            Though aspects of the EMA remain in issue – not least whether Mr Tua was ever bound by it and whether his notice of cancellation of 10 October 2003 was effective – and the EMA has not yet been the subject of full evidence or submissions, provisions relevant for present purposes include :

a)Its term is for 5 years starting with the date of Mr Tua’s first bout under the agreement and is said to continue until terminated by notice under cl 9, essentially for breach or on six months’ notice. Mr Tua’s cancellation notice was based on cl 9 and asserted breach.

b)Amongst the fighter’s obligations in cl 4 is one to “act in good faith at all times towards the manager” and to “train to the standard of a champion”.

c)Clauses 5.4 and 5.5 read :

5.4Fighter acknowledges that the Manager will receive Thirty

(30) percent of the gross earnings of all Fighters purse earnings or up front signing fees or payments relating solely to this agreement or the selected Promoters agreement, Fighter further acknowledges that the Manager will be entitled to claim further payment from Fighter for all reasonable expenses relating to staff, training, insurance, travel, transport, accommodation, meals, communications, fan club management, legal advice or consultants, which

expenses were incurred by the Manager while performing its obligations under this agreement or in the sole interests of representing the Fighter on his behalf for any reason whatsoever.

5.5Fighter acknowledges that the Manager will receive Eighty

(80) percent of the gross earnings of all Fighters endorsement, media (in any form whatsoever) or public attendance earnings or up front signing fees, restraints or payments relating solely to this agreement.

d)Clause 6 sets out the duties of the manager and includes :

Manager will -

6.1… form a company David Tua Inc where 50% of the shares  will be allocated to Fighter who will be appointed as the Product Director, 25% to Kevin Barry who will be appointed as the Marketing Director and 25% to Martin Pugh who will be appointed as the Financial Director. …

6.4maintain reasonable records of transactions arising from its performance under this agreement.

6.5act in good faith at all times towards the Fighter and give the Fighter such assistance and co-operation as the Fighter reasonably requests.

e)Clause 8.1 includes a right of pre-emption over the company’s shares and a mechanism for resolving disputes between shareholders.

f)Clause 14 says a manager’s relationship with the fighter is that of an independent contractor.

[27]            Mr Pugh said Mr Tua negotiated reductions in the EMA payments to Messrs Pugh and Barry – something Mr Tua denied - and Mr Tua had the EMA in draft for about four weeks before it was signed, had the opportunity to take independent legal advice about it, and probably did so from his family’s lawyer. Other points of difference between the parties also relate to the course of the negotiations, whether Mr Tua knew anything of companies in general or the particular company structure set out in the EMA and whether, as cl 26 says, the agreement was prepared jointly or was prepared by Mr Pugh and signed by Mr Tua. There are also some contractual infelicities which may later require resolution – the repetition of the “up front signing fees” in cll 5.4 and 5.5 seems an obvious candidate – but nonetheless the

parties claim to have fulfilled their roles and conducted Mr Tua’s career under the EMA until mid-2003.

(3)        Tuaman Inc

[28]            Tuaman Inc was incorporated on 8 June 1999 and commenced business immediately. Mr Pugh is sole director. The probability is that Mr Tua holds 50% of the shares in Tuaman Inc and Messrs Pugh and Barry each own 25%. But agreements whereby Mr Pugh held Messrs Tua and Barry’s shares on trust formed part of the agreed documents and doubts were raised during the hearing as to the shareholdings, particularly whether Mr Barry was a shareholder. The purpose of the share trust agreements was not explained.

(4)        Mr Tua’s Career and Business Arrangements

[29]            Mr Tua’s professional boxing career has been a lucrative one pursuant to which, though subject to heavy expenses - training camps  and  preparation  are costly - his purses have earned in the region of $20m. Between June 2000 and  March 2003, Mr Tua fought 10 and won 7 bouts under Tuaman Inc’s management, drawing another. The most prestigious was against Lennox Lewis, the then world heavyweight champion, on 11 November 2000. He lost that fight on points. Not  only did the company obtain better purses but Tuaman Inc also negotiated a promotion contract with “America Presents” for a sign-on fee of at least $US1m. It  is also of relevance that US law, under which all Mr Tua’s bouts were conducted, requires payment of purses, net of certain expenses, direct to the fighter personally within days of the bout for him to do as he wishes, subject, of course, in Mr Tua’s case, to him dealing with the proceeds in accordance with his contractual obligations under the EMA. During the currency of the EMA, Tuaman Inc had no source of income other than the percentages of Mr Tua’s purses paid under it and Mr Barry – and, perhaps to a lesser extent, Mr Pugh - had, it appears, relatively modest earnings from sources other than Tuaman.

[30]            The biggest purse Mr Tua received was $US3.7m paid for the Lennox Lewis fight, only some five months before Pakiri was bought. He next fought

Danell Nicholson on 23 March 2001 for $US300,000, returning to New Zealand  only days before the Pakiri visit on 6 April 2001.

[31]            It seems reasonably clear that Mr Tua (or his US company, David Tua Inc) regularly remitted the net purses received from fights to Tuaman Inc. But what was not clear from evidence at this hearing was whether Mr Tua paid the whole of his net purses to Tuaman Inc or only the 30% and 80% of the earnings as defined in cll. 5.4 and 5.5.

[32]            What then appears to have occurred is that Tuaman Inc distributed – or nominally distributed - the funds it received net after all management fees and expenses, to Messrs Tua, Pugh and Barry, as set out in cll. 5.4 and 5.5 in accordance with the proportion their shareholdings bore to the company’s capital.

[33]            The shareholders then adopted the practice of lending their net earnings under the EMA back to Tuaman and thereafter debiting their expenses to the company either to be met by the company in accordance with the EMA or debited, if the expenditure was personal, to their personal accounts.

[34]            Although the meaning is by no means clear, that arrangement seems to have been reflected in Tuaman Inc Minutes dated 18 June 1999 which relevantly read :

The Tuaman Inc shares are to be held in trust by Martin Pugh for the benefit of shareholders 50% David Tua and 50% for Barry and Pugh group. …

Any shareholder loans or repayments made on behalf of the shareholders to or from the company shall be credited or debited to the shareholder account and or secured against shareholder asset equity.

Its agreed that Barry Pugh … Group … and David Tua … will be entitled (after Tuaman expenses) to a maximum of 97% (or greater if agreed from time to time) of the balance of the Tuaman manager fee, and expensed by Tuaman as equal to the US source for the overseas management services (management services outside the terms of the Tuaman management agreement) and in the capacity as managers (not as shareholders) 50% David Tua … and 50% to the Barry and Pugh group … and to be “expensed plus GST if any, but in the expectation that no GST will be payable”. Any Tuaman Inc net profit shall be paid out on a dividend basis to the shareholders upon reasonable agreement. For any agreed Tuaman Inc investment opportunities funds will be loaned back.

Any expenses paid by Tuaman Inc for investments will reduce the manager service fees entitlement of the correct shareholder.

Each shareholder will be reasonably entitled to register security over any company assets or future income to secure any income entitlement, advances, liquidated asset shareholder entitlements, loans or personal guarantees.

Tuaman Inc will advance and or pay on behalf of David Tua all personal and family expenses immediately upon David Tua request and will record these amounts as having been paid on behalf of David Tua.

Jetz will supply reasonably priced shared office services, storage and IT support to Tuaman Inc on behalf of David Tua, this will be charged to Tuaman Inc by Jetz and or credited against any advances.

Jetz is also said to be a company controlled by Mr Pugh.

[35]            The three shareholders seem to have  lived  well.  Certainly,  according to   Mr Pugh, Mr Tua lived a lifestyle which was costly to finance. Whether that assertion is correct is one of the many financial issues yet for determination but he says that Mr Tua debited to Tuaman about 8000 transactions totalling over $14m over the four years the EMA was on foot.

[36]            The parties are diametrically opposed on the question whether Tuaman and Mr Pugh have complied with the former’s obligation under paras 6.4 and 6.5 of the EMA to “maintain reasonable records of transactions” under the agreement and to “act in good faith at all times”.

[37]            Mr Pugh, not unnaturally, takes the view that although formal company accounts and tax returns may not have been prepared or not timeously prepared, every transaction through the company has been properly documented and accounted for. He said accounting for all transactions and preparing proper records  was difficult due to the scale of Mr Tua’s drawings on the company resulting from his lifestyle and his family’s financial demands coupled with his refusal to accept that he was over-spending at a time when his purses were reducing and the company’s finances were not as strong as previously. Mr Pugh said :

It got to a stage in 2002 where David’s spending was so high that there was a cash crisis – he had run out of money advanced for his current and future expenses and the company was going to have to meet all his future training

expenses from its own historic earnings with him repaying the company when the fights for the big purses finally came.

[38]Following the falling-out between the parties, Mr Pugh gives it as his view :

Instead of boxing David has chosen a career of pursuing Kevin and I in a desperate attempt to break the EMA; chopping and changing his story completely all the time and in a way that is beyond belief and even his Express Trust claim to ownership of the Pakiri Property is simply a last minute creation because David Tua and his advisors have realised that David Tua has decided not to fight again and that there is more money in him owning the whole of the Pakiri Property; then [sic] 50% of the Company. This is because he has spent all the money that he has earned from his fighting career.

(5)        Tuaman Inc Finances After Lennox Lewis Bout

[39]            In early 2001, following the Lennox Lewis fight, Tuaman Inc was about $6m in credit in its ASB account. After its payment of $3,000,674.83 on 4 May it  was still nearly $1.7m in credit and even at 31 July, after payment of nearly $860,000 to complete the re-financing and investing $270,000, there was still nearly $270,000 in its account.

[40]            But the loss to Lennox Lewis diminished the purses able to be obtained for Mr Tua. That was particularly so after the loss to Chris Byrd on 18 August 2001 to the point where, as an example, Mr Pugh said Mr Tua’s purse for the Garing Lane fight on 19 December 2001 was only $US10,000 gross ($NZ23,529) and the expenses considerably exceeded that sum. Mr Tua and his supporters all hoped for better returns in the future – and the gross returns for the Hasim Rahman fight  on  29 March 2003 were apparently $US1.74m – but big purses are only paid to successful fighters with high world rankings and Mr Tua’s career since the Lennox Lewis fight has been less successful than before that bout.

(6)        Mr Pugh’s Interest in Pakiri Land

[41]            By contrast with Mr Tua’s interest in land before April 2001 being only general and non-specific, it seems Mr Pugh was interested in buying beachfront land at Pakiri somewhat earlier.

[42]            In 1998, he inspected one block with his partner. He told a friend, Mr Gill, as much in 1998 (though Mr Gill did not appear to give evidence and was thus not cross-examined). In September-October 2000 he tried to buy one lot  in  a subdivision at Pakiri which Mr Spencer, an Auckland property developer, was in the process of acquiring and he spoke  with a  solicitor  who  owns  land  at  Pakiri,  a  Mr Macky. He also said he kept in touch with Mr Ede.

(7)        Mr Barry

[43]            Mr Barry said he was aware of Mr Pugh’s interest in Pakiri land from 1997. He said Mr Pugh suggested to the two other shareholders in April 2000 that Tuaman should invest in property and arranged “come and go” finance to enable that to occur. In about August 2000 Mr Pugh took him to Pakiri, pointed out properties that were on the market or likely soon to be, and explained his, Mr Pugh’s, wish to purchase a small block for himself. Of the adjacent block, the Pakiri land, Mr Barry said Mr Pugh indicated he intended to involve Tuaman if both Messrs Tua and he expressed interest. Mr Barry was enthusiastic and indicated on returning from the Danell Nicholson fight he was prepared to agree to the purchase having regard to its potential and his 25% holding in Tuaman. He said he would have been “absolutely amazed” had Mr Pugh arranged for Tuaman to buy the Pakiri land for Mr Tua alone, given Mr Pugh’s long-standing interest in Pakiri and his visits to the area. His view was supported by the fact that if Tuaman Inc bought Pakiri for Mr Tua alone,  he,  Mr Barry, would have no share in the land despite his enthusiasm and shareholding.

[44]            Mr Pugh said he did not discuss the Pakiri land possibility with Mr Tua in August 2000 as no land was then on the market but he confirmed Mr Barry’s wish to be involved on his return from the Danell Nicholson fight and he said he spoke to  Mr Tua at the same time and “explained how I had been chasing a piece of property that had finally come on the market and I wanted Tuaman to buy it as an investment”.

(5) Mr Ede

[45]            Though present at the 6 April 2001 meeting, Mr Ede did not give evidence. He made an affidavit on Tuaman’s  behalf  to  support  its  application  to  remove Mr Tua’s caveat over the home at 18 O’Neills Avenue, Takapuna, which is owned

by the Baron & Lunar Trust and in which Mr Pugh and his partner, Ms Cross, live. Pakiri not being the focus of that application, all he said in relation to the 6 April 2001 visit was to confirm it was Mr Tua’s first visit to the land and that he, Mr Ede, emphasised how quickly a purchaser would need to move to secure the property given its subdivisional history and the interest in the land.

Events after 6 April 2001 visit :

(1)22 April 2001 Visit

[46]            Mr Tua visited Pakiri again. This visit was on 22 April 2001, after the contract was signed but while it was still conditional.   He was accompanied by     Mr Pugh and they met Messrs  Macky,  Matheson  and  Mr Matheson’s  surveyor, Mr Hayman, at the site.  Mr Matheson drove them over the property and showed   Mr Tua a house site. Mr Tua said he told Mr Matheson “how the property reminded me of home and how I could see myself retiring there and growing a bit  of  taro”. He said at the end of the visit Mr Pugh said he, Mr Tua, should put the property “through the company for tax purposes” and because “the company would protect me if I got sued or if my wife tried to get half of everything”, remarks which – though denied by Mr Pugh - were consistent with what he said were Mr Pugh’s repeated assurances to him that he was “protecting” Mr Tua. He summed up his stance as follows :

Marty [Pugh] never said that he was buying the Pakiri property with me.

There was never a “me and you” will buy it, or a “we” will buy it. The conversation was about the land being bought for me. …

The whole reason for being up at Pakiri in the first place was that Marty was showing me a block of land for me to buy. To buy for my family and for my retirement security.

The deal was only to be “put through” the company. He said nothing about the deal being switched from my deal, to the company’s own deal.

Same when we were with Mr Matheson: Marty didn’t say anything about a house site for him or for Kevin [Barry] or for the company. …

Pakiri was for me and my family, and there was no way I wanted Marty involved in that. No way would I have agreed to having Marty or Kevin or the company in on this deal.

I had nothing to do with any of the legal stuff. I didn’t sign anything. I just left everything up to Marty to sort out. There were no further talks with either Mr Matheson or with Marty.

As well as the legal details, I left Marty to manage the financing. He had my money in the company. I assumed he knew how much money I had after he had taken out the company’s share and the fight expenses. He was the guy who knew how much I had, how much I was going to earn, and how I would be able to pay the land off.

I had had a good payday from the Lewis fight about five months ago. I had just beaten Danell Nicholson. My world ranking was good. There would be more big money fights ahead.

There was nothing to make me think that I would have any problem paying off between 7 and 8 million dollars for this property over the next few years.

…

[47]            Mr Pugh described the 22 April 2001 meeting as something of a public relations trip. Of the discussion that day, Mr Pugh says :

Putting the purchase in the name of the Company and paying for the property from Company funds was not some sort of device to prevent David being the 100% owner of the Property – it was never agreed or discussed with me that he was to be the 100% owner of the Property. We (Tuaman shareholders) were always the ones who were going to buy the property. I did not say at that meeting to David Tua or anyone that he should put it through the company for tax purposes; and that putting it through the company would protect David Tua if he got sued, if his wife tried to get half of everything.

(2)        Mr Macky

[48]            Mr Macky first met Mr Pugh and Ms Cross socially in February 2000 and, on becoming aware of his interest in Pakiri, discussed properties Mr Pugh had inspected in the area. Mr Macky lived next door to the Mathesons and knew of their subdivision efforts. He suggested Mr Pugh should talk with them. Mr Macky later suggested Mr Pugh speak with one of his clients who might sell Pakiri land. It was not beachfront. Mr Pugh was uninterested.

[49]            On 16 or 17 September 2000 Mr  Macky arranged  for  Mr  Pugh  to  meet  Mr Matheson to discuss possible purchase. He said Mr Pugh advised those present that Tuaman would be involved with the purchase. Mr Pugh instructed Mr Macky to act in the negotiations, something he did over ensuing months. Sale plans were delayed by subdivisional problems.

[50]            Mr Pugh confirmed his acquaintanceship with Mr Macky from early 2000, the visit to the Pakiri land on 16 or 17 September with Messrs Macky and Matheson, and Mr Macky’s evidence about what Mr Pugh told them. He made a further offer for part of Mr Spencer’s land in January 2001 and responded positively to Mr Ede’s advice that the Matheson land would come on the market at between $7-8m. He said he told Mr Ede a partner would be involved, either Mr Tua or someone else. Although he claimed he could have funded the purchase without a partner, he was more comfortable with the latter course.

[51]            Mr Macky became aware in late March 2001 that the Matheson property was about to come on the market. He told Mr Pugh. Mr Pugh again instructed him to negotiate over price and prepare any necessary documents.

[52]            Mr Macky first met Mr Tua on 22 April 2001 when he arranged for the surveyor to take him over the property so Mr Matheson could meet Mr Tua.

[53]            Mr Macky said Messrs Tua and Pugh moved to one side out of earshot during this visit. He therefore did not  hear,  as  Mr  Tua  asserts  occurred,  Mr Pugh  tell Mr Tua he would buy Pakiri for him in the name of Tuaman. Mr Macky did, however, overhear discussions about Mr Tua building a “castle” on a ridge top with ocean views, Mr Pugh saying he would upgrade a dilapidated barn for a house for himself and talk about a possible house site for Mr Barry.   In  cross-examination   Mr Macky said the party was together when building plans were discussed, but were a “loose grid” within vision but not necessarily earshot at other times. Mr Macky said at no time during the 22 April visit or at social events attended by Messrs Tua, Pugh and himself since that time, has there been any suggestion that Pakiri was bought other than by the company for the three who were “effectively partners in the purchase … by way of their shareholdings”.

[54]            It should be noted that Mr Macky’s evidence just summarised was not confirmed, other than in a general sense, by Mr Pugh in his evidence.

(3)        Mr Hayman

[55]            Mr Hayman attended the 22 April 2001 meeting to point out the boundaries of the property to Mr Tua, the paper roads, the proposed subdivisional lot boundaries, and possible house sites. He had no discussion with Mr Pugh about building and as far as he was aware “Mr Tua was the sole purchaser” though he accepted in cross-examination that was his assumption rather than a view resting on fact. By 23 May 2001 he was aware that the property had been “recently purchased by Tuaman Inc” and he charged the company for his services.

[56]            Mr Pugh denied any basis from which Mr Hayman might have inferred that Mr Tua was the “sole purchaser”. Certainly, he said, he made no statement to that effect in Mr Hayman’s hearing, though his denial loses something by his inability to remember the detail and his view that Mr Hayman’s presence was irrelevant.

(4)        Mr Matheson

[57]In an affidavit agreed to form part of Mr Tua’s case, Mr Matheson said :

I recall David Tua saying that he intended to live on the land at some stage and run cattle and grow taro. He asked if I would be prepared to continue grazing the property and looking after the land for at least 2 years and I agreed to that proposal. I left the meeting early and do not recall any other conversations held at that meeting.

(5)        Bank instructions re Pakiri

[58]            When the ASB favourably viewed Tuaman’s mortgage application in July 2001 to replace the vendor finance, it recorded that the “long term possibility was to build a holiday house on the bigger property for David Tua and another one for Martin Pugh on the smaller property”. Mr Pugh said that comment arose from his advice to the bank. It plainly conflicts with  Mr  Tua’s  position  and  implies  that Mr Pugh, at any rate, did not regard Tuaman as holding the whole of Pakiri in trust for Mr Tua alone.

[59]            On 17 July 2001 the ASB offered Tuaman Inc $3.7m to repay the vendor finance. The advance was required to be guaranteed by Messrs Pugh and Tua.

Mr Pugh signed in New Zealand. Mr Tua was then in Las Vegas in the USA and signed his guarantee there in front of a Notary Public on 25 July 2001. The bank advance repaid the vendor’s mortgage on 2 August 2001. As part of that, Tuaman Inc paid the difference required to settle of $859,196.30 on 31 July 2001 to Mr Macky. Mr Pugh again claimed no part of that payment was debited to Mr Tua.

[60]            Mr Pugh said the Bank required Mr Tua’s guarantee because his purses provided almost all Tuaman Inc’s income and his guarantee was required to secure that and provide funds for the proposed purchase by Tuaman Inc of an apartment at Level 15, 27-35 Victoria Street, Auckland. His, Mr Pugh’s, guarantee was required, he said, because the trustees of the Baron & Lunar Trust had agreed to guarantee to ASB all Tuaman Inc’s borrowings and mortgaged 18 O’Neills Avenue as security. For reasons later discussed the inter-relationship between Tuaman Inc, the Baron & Lunar Trust and a company called Sports Tech Ltd will require investigation in a subsequent trial but the plausibility of Mr Pugh’s explanation for his being required to guarantee Tuaman Inc’s loan from the ASB for Pakiri is undermined by the fact that he was neither a trustee nor a beneficiary of the Baron & Lunar Trust.

[61]            On 8 November 2001 Mr Pugh instructed Mr Macky to prepare a second mortgage over the Pakiri land in Mr Tua’s favour and a third mortgage over the land in favour of Sports Tech Ltd, a company of which the shareholder and director appears to be a Mr Booth (also known as Gregory) but which is said to be controlled by  Mr  Pugh.   Interestingly,   when  Mr  Macky  asked  the  Bank’s  solicitors  on   8 November 2001 to produce the titles to enable registration, he said the mortgages arose from advances by Mr Tua and Sports Tech Ltd “to enable the Tuaman Inc … purchase to proceed” though the Bank’s internal memorandum of 15 November said the need for Mr Tua’s mortgage was “based on compliance arrangements arising from Tuaman’s insurance cover in the USA … to the value of $10m” and that “the insurance company requirements are that they protect their assets via personal mortgages and debentures”. Those comments could only have come from Mr Pugh but the Tuaman Inc Minutes relating to that matter dated 29 November 2001 read :

Tuaman Inc will execute (equally ranked) reasonable security on behalf of David Tua to protect liquidated equity or damages. Tuaman Inc will execute (equally ranked) reasonable security (to protect liquidated equity or

damages) on behalf of Martin Pugh (Pugh group trustee) through a nominee trust company.

Tuaman will pay a bond of $800,000 to Baron and Lunar, any interest payable on this bond portion of the loan will be the responsibility of Martin Pugh “Trustee” and expensed by Tuaman reducing the overseas manager service fee’s percentage of Martin Pugh (Pugh group trustee) by such amounts.

(6)        GST Refund

[62]            As part of filing its GST return as at 31 July Tuaman applied to the IRD for refund of the GST paid on purchase of Pakiri. Verification of the payment of Tuaman’s contribution towards the purchase price was furnished by a copy of its ASB account and a  refund  of  $517,797.35  was  paid  by  the  IRD  on  or  about  27 September 2001. Ms Grant, who was in charge of Tuaman’s accounts, said in evidence that the GST return had been filed on the basis that Tuaman was the purchaser of the property but said that was “on behalf of David Tua”. Acknowledging the payment was by Tuaman, she said :

“It was the company’s money but it was David’s money. The company was owned by David. That’s always what was represented to me. … The company, the land purchase was David’s, everything else purchased was David’s.”

[63]            Again, there was no evidence and no documents were brought to attention to indicate how that payment was processed by Tuaman internally or to which account or accounts it may have been credited.

(7)        Ms Grant

[64]            Mr Pugh’s view as to Mr Tua’s motivation in seeking to re-negotiate the EMA in late 2000-early 2001 was vigorously refuted by Mr Tua and his supporters, particularly a Ms Grant who was employed to deal with all aspects of administration and accounting for Tuaman over the period of the EMA. In her affidavits and evidence she specified a “number of instances of what appeared to me to be fraud by Mr Pugh on Mr Tua and of forgery by Mr Pugh”.

[65]            Ms Grant said that, throughout the period of her employment by Tuaman, she was led by Mr Pugh to believe the company was entirely owned by Mr Tua. She  was even unaware Messrs Pugh and Barry were shareholders, knew nothing of the EMA and was unaware share trust agreements existed.

[66]            She was instructed to bank the whole of Mr Tua’s fight revenue from America Presents as company income from which she paid training expenses of

$2,000-$2,500 per week to Mr Barry, office expenses to Jetz, and $400 per week - later $800 – to Mr Booth/Gregory and Sports Tech Ltd. Later, in 2001 when she had prepared draft annual accounts, Mr Pugh told her Messrs Barry and Pugh were each entitled to a share of Tuaman’s funds so she set up a loan account for each, debiting their purchases to them as, she thought, independent contractors. The accounts she prepared for Tuaman Inc as at 30 April 2001 show the company owing Mr Tua

$405,713.59 on his loan at that date, well short of the cash contribution to the Pakiri purchase. Even if further loans from Mr Tua described as “restraint”  ($2,107,722.44)  and  from  David  Tua  Inc  ($207,314.06)  are  added,  the  total  of

$2,721,750.09 is still well short of the cash contribution to the Pakiri purchase. That tells significantly against Mr Tua having been able to finance the cash contribution towards the purchase of Pakiri from his loans to Tuaman Inc.

[67]            Ms Grant said part of her job was to provide Mr Tua with money for his expenditure or meet accounts he charged to Tuaman but that Messrs Pugh and Barry dissuaded her from disclosing financial matters to Mr Tua beyond that.

[68]            She said after Pakiri was bought, Mr Tua frequently spoke of it as being “his land”.  At that stage Mr Pugh confirmed the land as belonging to Mr Tua but told  Ms Grant the company would be able to deduct the interest paid against tax and recover the GST as Mr Tua was not GST registered. However, about December 2002, she was surprised when Mr Pugh told her that he, not Tuaman or Mr Tua, had received an offer to buy the land for $15m. When she quizzed him about it, he first said he had not discussed the proposed sale with Mr Tua and then, in February 2003, told her after he had referred to Pakiri as “his” land, that he and Mr Tua had come to an arrangement concerning the land under which, as she understood it, Mr Pugh was

to receive half. She never heard that arrangement discussed in any conversation with Messrs Pugh and Tua both present.

[69]            Up to that point, because she understood Mr Tua entirely owned Tuaman, interest and other expenses on the land had been charged to the company. However, when she asked Mr Pugh whether he should be meeting half the expenses in light of the suggested arrangement, he told her not to alter the existing arrangement. Her uneasiness in all respects combined with her concern that Tuaman was paying people and expenses seemingly unrelated to the company’s business, led, she said, to her resignation on 23 July 2003. Messrs Pugh and Barry say she was dismissed for unsatisfactory performance and Mr Tua agreed with that course.

(8)       28 July 2003

[70]            Two days later Ms Grant met Mr Tua and his wife to discuss their financial affairs. In answer to questions as  to the ownership of Pakiri, Ms Grant told  them  Mr Pugh had told her he claimed he owned half although she disbelieved his assertion, and that the Victoria Street apartment in which they were living was in Tuaman’s name. Mr Tua was upset by these revelations. His concern  was heightened when Ms Grant told  them  Tuaman  had  been  paying  money  to  Messrs Pugh and Barry for their private purposes and of concerns she had concerning Tuaman’s management. As a  result,  on  28  July,  Ms  Grant  assisted Mr Tua in withdrawing what she said was his share of the funds in Tuaman’s Westpac account. They then went to Tuaman’s office and uplifted the company’s files. Those actions led to the commencement of this claim.

[71]            Mr Pugh’s view was that these events occurred as a result of a conspiracy between Ms Grant, resulting from her dismissal, and Mr Tua’s wife discovering funds had been exhausted.

(9)        Mr Forlong

[72]            When Mr Forlong, an accountant retained by Mr Tua, tried to piece together Tuaman’s financial position from the documents Mr Tua uplifted on 28 July 2001 to

calculate what had become of Mr Tua’s earnings over the course of the EMA, he found the records disorganised, the codification of data and completion of annual accounts inadequate, the financial statements signed off by Mr Pugh and filed with Inland Revenue for the March 2001 year incorrect and what appeared to be significant but irregular outflows of money from the company. In particular, he was concerned the EMA appeared not to have been followed: the whole of the gross proceeds from fights and endorsements and the fight expenses were all shown as Tuaman income or expenditure. Mr Tua’s personal financial affairs had not been kept separate, the company’s purchase of the apartment and its 100% mortgage from ASB Bank were not disclosed in the accounts and there was apparent lack of internal control over financial matters. Overall, Mr Forlong’s conclusion was that the company’s records and accounts were confused to the point of being meaningless.

(10)      12 August 2003 meeting

[73]            Mr Tua was friendly with a former All Black and professional rugby league player, Mr Tuigamala. The latter said in evidence that, during his playing career, he considered he was cheated out of a large sum of money by one of his managers and, partly as a result, once his playing career ended he set up a consultancy negotiating and mediating between players and their clubs. Messrs Tua and Tuigamala met in July 2003 to discuss Mr Tua’s position as described  by Ms Grant.   As  a  result,   Mr Tuigamala said he arranged a meeting between Messrs Tua, Forlong, Pugh and himself. The meeting took place on 12 August 2003.

[74]            Before considering what occurred at the meeting, it is necessary to deal with Mr Pugh’s assertion that the meeting was conducted on a “without prejudice” basis and accordingly whatever was said was inadmissible in evidence.

[75]            Mr Tua said the meeting was arranged by the parties’ solicitors but there were no lawyers present at Mr Pugh’s request

[76]            Mr Pugh said the meeting was convened after Mr Tua telephoned and asked him to attend. He said he agreed as long as Ms Grant was absent and the meeting

was “on a  good  faith without   prejudice basis”.    All the others present deny any suggestion the meeting was on that basis.

[77]            The “without prejudice” claim was based on an email sent by Mr  Barry to Mr Pugh on 10 August 2003 and Mr Pugh’s reply the following day. In the former, Mr Barry expressed his concern about Mr Pugh “attending this meeting by yourself with  any  representation”  (presumably  intending   “with”   to   read   “without”). Mr Pugh’s reply said :

Do not worry about me being at the meeting by myself with Tua and his accountant as we have all agreed that this meeting and all communications are on a without prejudice basis.

[78]            Though counsel made submissions on the topic, and Mr Molloy in particular referred to the discussion in Vaver: “‘Without Prejudice’ Communications – their Admissibility and Effect” (1974) 9 U.Brit.Colum. L.Rev 85, no extended discussion on the point is necessary since the Court concludes, without difficulty, that the meeting was not held on a “without prejudice” basis.

[79]            Though it is understandable that, for reasons of expense or otherwise, the parties agreed their lawyers would not attend, that is an indication against the meeting being on a “without prejudice” basis rather than the contrary. It is also understandable that, given the way Messrs Pugh and Barry felt – and still feel – about Ms Grant’s position, they would not want her there but that, too, gives no indication the meeting was to be “without prejudice”. The fact that Mr Pugh used  the phrase “without prejudice” in his email to Mr Barry is a self-serving comment which does not assist in deciding whether he and Mr Tua had expressly agreed the meeting was to be on that basis. From the viewpoint of Mr Tua and his supporters it was, as much as anything, a fact-finding meeting to try and ascertain the true financial position of Tuaman and Mr Tua. Where a meeting is arranged between lay people whose knowledge and understanding of issues is nowhere near equal but where those less well informed are seeking information to which they are entitled from the one attendee better informed, such a meeting will not usually be regarded as being conducted on the basis that all the parties’ statements and admissions are not to be held against them. Further, “without prejudice” meetings are normally  ones where parties, fully armed with the facts, endeavour to negotiate settlement of the

many issues between them and thus avoid litigation. (Rush & Tompkins Ltd v Greater London Council [1989] 1 AC 1280, 1299; Foskett: The Law and Practice of Compromise 5^th ed 2002 para 27-04 p 276). This was not such a meeting.

[80]            The meeting began with Mr Forlong quizzing Mr Pugh as to Tuaman’s financial position and Mr Pugh agreeing to assist in preparation of proper accounts. Mr Pugh blamed Ms Grant for the problem. Mr Forlong was particularly concerned to ensure the company’s financial affairs mirrored the EMA.

[81]            Mr Forlong went on to say that when he asked Mr Pugh about the Pakiri land he was told that he had been looking to buy the property personally but had inadequate  funds  and  decided  it  would  be  a   good  investment  for  Mr  Tua.   Mr Forlong or Mr Tua then asked Mr Pugh who owned the Pakiri land. Messrs Tua, Tuigamala and Forlong all say that a conversation occurred with Mr Pugh replying along the lines of :

“It’s David’s land, but I have an interest in it because I used my house at O’Neills Avenue, Takapuna, as security”.

Mr Tua responded by saying that he had always believed that the land was :

“Mine, not ours, not Kevin Barry’s, not Tuaman Inc’s, not Martin Pugh’s but mine as an investment for me and my family”.

Mr Pugh responded by saying :

“Yes Dave, it is your land but I’ve got an invested interest in it because my house is used as a guarantor”.

[82]Mr Pugh’s version of that conversation is that Mr Tua asked him :

“Who owns Pakiri and the apartment?”

and he replied :

“Tuaman does.”

Mr Tua then asked him something like :

“I thought I owned it. It is all for me and my family”

to which Mr Pugh replied :

“They are for you, David, you are part of Tuaman.”

Mr Pugh said Mr Tua then commented :

“I thought the company was my company and the property is for me.”

to which he replied :

“Come on David, I found the property and the company paid for it with its own money.”

(11)      Sports Tech Ltd, Mr Booth/Gregory, Baron & Lunar Trust and 18 O’Neills Avenue

[83]            One of the many items canvassed at length in evidence related to the transfer of $925,000 from Tuaman Inc’s Westpac account to a Sports Tech bank account in Vanuatu on 18 December 2001.

[84]            The necessity for and propriety of that payment were strongly contested. No decision on it is required at this stage. Indeed, Mr Pugh said on a number of occasions that he had “200” pages of evidence supporting the propriety of the payment which would be adduced at a future hearing to determine the issue.

[85]            The payment is irrelevant to the single issue to be decided at this stage except to the extent it may reflect on credibility. Even then, caution needs to be exercised given that not all the evidence was before the Court.

[86]            What seems incontestable is that the $925,000 was transferred to Sports Tech’s Vanuatu account on 18 December 2001 pursuant to a direction from Mr Pugh saying the sum was “Capital input from Tuaman Inc” and was “repayment of a loan from Sports Tech”. Ms Grant said that, from Sports Tech’s Vanuatu account,

$20,000 was transferred to each of four  USD  dollar  accounts  in  Mr  Pugh’s  or  Mr Gregory’s  names  and  $809,000  was  transferred  back  to  New  Zealand  on 21 January 2002 and credited to the Baron & Lunar Trust’s account with the ASB. Ms Grant said that at the same time Mr Pugh arranged with the bank in Vanuatu to

issue EFTPOS cards to each of Mr and Mrs Barry, Mr Pugh, Ms Cross, Mr Gregory and a friend of Mr Pugh, a Mr Kinraid.

[87]            Ms Grant said Sports Tech never lent money to Tuaman Inc  even  though  Mr Pugh mortgaged Tuaman Inc’s Pakiri land to Sports Tech on 2 November 2001 for a priority sum of $5m. In affidavits in support of an application that Mr Tua’s caveat over 18 O’Neills Avenue lapse, Ms Cross said :

On 23 April 2001, the Trust entered into a agreement with Tuaman Inc Limited to allow Tuaman Inc Limited the right to pledge or secure up to  80% of the Trust’s assets as a guarantee for all future Tuaman Inc Limited property loans and credit facilities. In consideration of granting the guarantee, the Trust was entitled to receive a bond payment – which it did in the sum of $809,000 (“the Bond”) when the Trust executed a guarantee in favour of ASB Bank Limited of the borrowings by Tuaman Inc Limited  from that Bank..

I confirm on behalf of both trustees that upon discharge of the Trust’s guarantee of the indebtedness of Tuaman Inc Limited to ASB that the bond sum of $809,000 will be repaid (reduced only to the extent that it is the Trust that has had to make payment to ASB Bank Limited pursuant to the guarantee).

She also said that $743,000 of the $809,000 was used to repay a Baron & Lunar term loan that, in its turn, having arisen through funds advanced to pay “entities relating to my private businesses and arising from a previous relationship and had nothing to do with David Pugh or Tuaman Inc.”

[88]            Ms Grant said she knew nothing of the suggested agreement of 23 April 2001 and noted the ASB loan offer to Tuaman Inc of 17 July sought no guarantee from the Baron & Lunar Trust. The ASB Bank said it was not until September 2002 that it first sought a guarantee from the Baron & Lunar Trust of Tuaman Inc’s accounts.  Ms Grant said had the $925,000 not been transferred out of Tuaman Inc’s account on 18 December 2001 the 100% bank borrowing by Tuaman Inc in December 2002 to purchase the Victoria Street apartment for $1.1m would not have been necessary. In fact, Tuaman Inc contracted to buy the apartment on 19 July 2001 but negotiated an extended settlement date until 4 December 2002, renting the apartment in the meantime. In Cross and Gill v Sita (HC Auckland CIV.2004-404-001704 11 June 2004) the application by the Baron & Lunar Trust for an order that Mr Tua’s caveat lapse, the evidence led Venning J to describe (at [34]) the $809,000 as a “bond

payment” from Tuaman to the Baron & Lunar Trust pursuant to the 23 April 2001 agreement. The Judge noted the coincidence between the $809,000 and the

$808,817.79 sum by which the Baron & Lunar Trust was in overdraft to the ASB bank when it received the payment. In that case – as in this – the suggested agreement of 23 April 2001 was not produced.

(12)      Publicity

[89]            The evidence included a number of Press releases, items of publicity, transcripts of radio interviews and the like involving Messrs Tua, Pugh and Barry. Ownership of the Pakiri land was variously described in that material. Sometimes it was said to be Mr Tua’s, sometimes the company’s, sometimes all three were involved.

[90]            No great reliance was placed on that material during the hearing, including by counsel, nor can it be a reliable indicator either way in relation to the issue with which this judgment is concerned. It is ephemeral material produced for quite a different purpose so the views reported as to the ownership of Pakiri cannot be regarded as considered opinions on that topic.

(13)      Varying Claims by Mr Tua

[91]            An aspect of Mr Toebes’ submissions for Tuaman against an express trust finding was that, though Mr Tua made a number of claims concerning Mr Pugh and the company, he had advanced his claim to ownership of the Pakiri land on the sole basis of an express trust only very shortly before this hearing. That, Mr Toebes submitted, militated against the evidence proving such a trust.

[92]            Mr Tua has always claimed an interest in the Pakiri land but it is correct that the legal basis for that claim has varied. Despite his relating the conversation at the

12 August meeting about the ownership of Pakiri to his solicitor, Mr Kemp, immediately after the meeting occurred, those variations include at least the following :

a)On 3 November 2003 Mr Tua caveated the Pakiri land titles claiming a “beneficial interest in the … land by virtue of a constructive trust”.

b)Mr Tua’s defence and counterclaim filed on 30 October 2003 sought relief by way of an order that title to the Pakiri land be transferred to Mr Tua unencumbered by the $5.5m mortgage to Sports Tech or any charge associated with the plaintiffs.

c)The thrust of the defendants’ statement of issues dated 30 November 2003 is noteworthy for the fact that it nowhere discussed the Pakiri land or suggested it was owned by the company wholly in trust for  Mr Tua. That stance was repeated in Mr Tua’s latest counterclaim filed on 30 June 2004.

d)On 10 and 28 November 2003 Mr Kemp wrote to the solicitors acting for the proposed buyer of the Pakiri land saying that Mr Tua “has both a direct and indirect interest” in the land.

e)On 3 December 2003 Mr Kemp’s letter said Mr Tua was a “50% shareholder in Tuaman … at the least” and suggested that in the then current Court proceedings “Tuaman Inc is arguably a trustee as to 100% of the value of the land held for David Tua beneficially” because the Tuaman funds used in the purchase were “arguably 100% from  David’s  current  account”.  While  this  letter  is  a  claim  to  Mr Tua’s entire ownership of the Pakiri land, the letter was incorrect in suggesting that stance was already part of this claim.

f)On 9 February 2004 Mr Kemp wrote to the chartered accountants appointed by this Court on 14 November 2003 to prepare Tuaman’s financial statements in ways reflecting the parties’ opposing contentions saying the Pakiri land and apartment were “owned legally by the company” And in a further lengthy letter dated 10 March 2004 to the accountants, Mr Kemp suggested the accounts should “put the

beneficial interest in the Pakiri and apartment property into David Tua’s current account”.

g)In a 20 July 2004 statement of the fundamental issues in the claim from Mr Tua’s viewpoint, the ownership of the Pakiri land and the apartment was put on the basis that in light of the relationship  between Mr Tua and the plaintiffs and the circumstances surrounding the acquisition of the property “each property belongs in equity solely to Mr Tua subject to his repayment of any money advanced from the funds of the company”, an allegation which falls somewhat short of claiming an express trust claim to entire ownership of Pakiri.

h)Further, whilst an issues statement filed on 6 August 2004 asserted that Tuaman purchased the Pakiri land on an express trust for Mr Tua, alternative arguments advanced also suggested Tuaman held the land on either a constructive trust or on a resulting trust or both. Reliance on constructive or resulting trusts was abandoned on 15 October 2004 and the express trust argument confirmed.

Submissions

[93]            Mr Molloy filed extensive opening submissions but, because of shortage of time had to restrict his closing remarks. It is therefore more appropriate to focus on the former.

[94]            After stating the basis of the express trust claim, Mr Molloy made clear that, if Mr Tua fails in the present hearing, he will proceed with his claim the EMA is voidable. If accepted, that could require considerable redistribution of the financial arrangements between the three principal parties, especially given Mr Pugh’s obligations as sole director of Tuaman throughout the relevant period.

[95]            Mr Molloy particularly relied on the decision of the English Court of Appeal in Warren v Mendy [1989] 1 WLR 853, an application by the former manager of a boxer to restrain the boxer’s new manager from acting. The former manager’s

appeal against discharge of an injunction was unsuccessful, partly because of obligations of mutual trust and confidence, partly (at 867) because an injunction ought not to enforce negative obligations if enforcement effectively compels someone to perform positive obligations under the contract and also because, as the Judge of first instance had considered, (at 868) :

… the trade of a professional boxer was a very specialist one, requiring dedication, extensive training and expertise and that his professional life was comparatively short. He readily accepted that a high degree of mutual trust and confidence was required between boxer and manager. There were duties of a personal and fiduciary nature to be performed by the manager.

[96]            After referring to a number of fictive and other accounts of boxing coupled with some observations of Mr Barry’s, Mr Molloy submitted it was essential for boxers to depend on their managers, promoters and handlers to free their mind to engage in a dangerous, sometimes even deadly, occupation.

[97]            Mr Molloy also dealt at length with events leading up to the 1992 contract and the EMA and Mr Pugh’s management of Mr Tua’s financial affairs since the latter. He drew attention to the draft accounts prepared by the Court-appointed accountants which, though contested, generally showed Mr Tua as a significant creditor of Tuaman but Messrs Pugh and Barry as debtors of the company in sizeable sums.

[98]             Mr Molloy dealt at some length with Mr Pugh’s obligations as sole director of Tuaman during the relevant period under the Companies Act 1993 s 194 and the Financial Reporting Act 1993 ss 2, 10, 11 and 12. There had, he submitted, been a wholesale breach of his statutory obligations. Mr Pugh was additionally in breach,  he submitted, of his fiduciary obligations under paras 6.4 and 6.5 of the EMA as construed by authority such as Warren v Mendy, O’Sullivan v Management Agency & Music Ltd [1985] QB 428 and Bristol and West Building Society v Mothew [1998] Ch 1, 18. He had mixed Mr Tua’s earnings and Tuaman funds with other moneys and had failed to hold and account for money held for Mr Tua’s use as his beneficial property. The onus was therefore on Mr Pugh and Tuaman to prove which parts of the mixed funds were not Mr Tua’s money to avoid the whole of the funds accruing to Mr Tua by default (Lupton v White (1808) 15 Ves.Jun. 432, 33 ER 817).

While that may yet turn out to be correct, this is not an issue which can – or needs to be – decided at this stage.

[99]            Mr Molloy was derogatory of Mr Pugh’s assertion in emails and in evidence that all his actions were undertaken to protect Mr Tua. The reality, he submitted,  was that Mr Tua completely trusted  Mr  Pugh  and,  in  a  lesser  fiduciary  sense, Mr Barry, but the financial and other evidence to date strongly suggested they had taken advantage of him and his earnings.

[100]        Unsurprisingly, Mr Molloy placed particular reliance on Ms Grant’s evidence of financial mismanagement, misappropriation, dissembling and possible fraudulent or criminal conduct.

[101]        Given  the  absence  of  proper  financial  records,  Mr  Tua  was  unable,    Mr Molloy submitted, to ascertain his position and particularly unable to discover what counsel submitted was misappropriation by Mr Pugh with payments to those without entitlement. That especially referred to Mr Booth/Gregory and Sports Tech Ltd and the $925,000. That documentary trail was, Mr Molloy submitted, blurred even though the funds must have been fight proceeds payable to Mr Tua. In relation to this transaction, Mr Molloy particularly relied on the decision in Cross and Gill v Sita. Mr Molloy also submitted that payments from Tuaman, including that  to Sports Tech could never have been justified as distributions or dividends given Tuaman’s likely financial state.

[102]        Mr Molloy also submitted that Mr Pugh had been guilty of forgery or altering documents with intent to deceive. Mr Pugh’s admissions in evidence go some considerable way to supporting that contention.

[103]        Mr Molloy then submitted Mr Pugh’s failure to comply with requirements as to Tuaman’s financial accounting and failing to file income tax returns had exposed the company and all three shareholders to considerable tax liabilities.

[104]        Basing his submission on the omissions from the EMA of any reference to Tuaman’s involvement in business or investment, Mr Molloy submitted that if the

company intended to involve itself in such activities, it was incumbent on Mr Pugh to ensure Mr Tua received separate legal advice, particularly having regard to the terms of the share trust agreement, because his own interests as shareholder conflicted with his fiduciary duties in relation to Mr Tua’s shares.

[105]        In closing, he again relied on Rochefoucauld in submitting that no particular form of words were necessary to constitute an express trust. He conceded that a trustee was entitled to reimbursement of moneys paid in relation to land. He dealt with a number of evidentiary aspects which, he submitted, supported Mr Tua’s position as against that of Mr Pugh to conclude with a submission that Mr Pugh was an “opportunistic lying forger who thrived on the atmosphere he created of keeping people in the dark with a lack of accounts”.   His evidence as to what occurred on     6 April 2001 should therefore be “scorned as of no value”. He submitted there was no doubt Mr Pugh had “lusted” after land at Pakiri but lacked funds to buy.

[106]        Mr Toebes’ principal submissions were in closing. Even if the “Man, I want it” comment was accepted as being made, he submitted that did not justify Mr Tua assuming the land was being bought on trust for him alone. Mr Toebes pointed to a number of other inconsistencies in the evidence and passages which, he submitted, supported that view. Those have been discussed throughout this judgment.

[107]        Mr Toebes submitted a declaration of trust in respect of land or any interest  in it must be proved in writing and signed by the settlor. Evidence of a declaration  of trust suffices as long as there is, at some stage, writing containing the material terms. He submitted Mr Tua had failed to discharge the onus of proving certainty as to the intention of the settlor. Here, he submitted, there was no evidence of an intention to buy the property for Mr Tua alone, no declaration of trust and nothing in writing supporting Mr Tua’s contention the land was held in trust for him alone. Acknowledging that where no words exhibiting the necessary intent were used a trust may nonetheless result, he pointed to authority (Thexton supra) that such arose only in exceptional cases.

Discussion and Conclusions

[108]        It is now necessary to draw all those threads together. It is convenient to do so roughly in the order in which they have been discussed in this judgment.

[109]         If Mr Tua intended his statements on 6 April 2001 and the actions taken by Mr Pugh and Tuaman Inc thereafter to amount to the creation of an express trust of the whole of the beneficial interest in the Pakiri land in his favour, a number of observations warrant making.

[110]        Visits:  In the first place, apart from the 6 and 22 April visits (and another undated visit to make “sure that there is no garage” on the  property)  Mr Tua has never again visited the Pakiri land and never taken his wife or family to see it. He said that was because he wanted to surprise them and the time did not  seem right but, nonetheless, for a person as strongly family-oriented as Mr Tua never to have taken his wife, parents or family to a large piece of prime coastal land which he claimed to own, either before or after this dispute erupted in July 2003, seems strange if his claim to ownership is genuine. If this was to be his retirement land, it might have been expected that he would take his family to visit and discuss sites for his “castle”. Even if the land was let for grazing, it might also have been expected they would have tried to use the land for holidays. Even more, once the disputes between the parties arose in mid-2003, it might have been expected that Mr Tua would take his family to visit the land as an assertion that it was in effect wholly owned by him. Yet nothing of that sort occurred. That undermines Mr Tua’s claim  to some degree although, on the other hand, there is no evidence that Messrs Pugh or Barry have visited the land since April 2001, yet they also claim an interest in it.

[111]        House site discussion:           Although Mr Tua denied there was any discussion about house sites during the 22 April 2001 visit, the evidence of others who participated, especially Mr Macky, was convincing that there was such a discussion and that it related not just to a house site for Mr Tua but refurbishment of a building on the property as a house for Mr Pugh and a more general discussion as to a possible site for a house for Mr Barry. At that stage, when the contract had been signed and was progressing smoothly towards settlement, it would be entirely natural

for the parties to discuss house sites. But that discussion should have alerted Mr Tua to the fact that, even if he regarded what occurred on 6 April and since as a direction that Tuaman’s purchase of the land would be wholly in trust for him, it should have been plain that Mr Pugh at least did not so regard it and was not acting in accordance with his direction. A discussion about house sites for Messrs Pugh and Barry should have caused Mr Tua to realise the land was not being purchased solely in trust for him. Yet he did nothing to challenge the position on 22 April 2001 or afterwards.

[112]        Purchase negotiations:     Even if Mr Tua left the negotiations over Pakiri to Mr Pugh as he had done in relation to fights, purses and finances, it is nonetheless surprising Mr Tua did not know the price of the land nor did he inquire into the course of the negotiations. Despite the fact that, on his view, Mr Pugh was committing him to expenditure of a large proportion of the money he had accumulated throughout his fighting career, he never, it seems, enquired how much of his money was being spent, how much was left to support his family and himself, or even whether money was to be borrowed and, if so, how much and how the interest would be met. Even though Mr Tua was confident that future purses would be adequate to fund the purchase, his lack of inquiry tells against the declaration he is seeking in this proceeding. And it is also surprising, if he intended Pakiri to be purchased for him alone, that he wanted the purchase to be in the name of Tuaman Inc, a company in which he knew both Messrs Pugh and Barry had interests. If he did not wish them to participate in the purchase, why did he not say so? All of that, too, is an indicator against the view for which Mr Tua contended in this hearing.

[113]        It is also to be recalled that, even if Mr Tua’s description of what he said to Mr Pugh on 6 April 2001 is accepted, it amounted to no more than a wish – “man, I want to buy that property” – yet there is no evidence of him ever following up on his wish to see if it was being realised.

[114]        Then again, Mr Pugh’s version of events must be set against what Mr Tua claims he said. That particularly relates to the comments by Mr Pugh to others and, he claims, to Mr Tua, that Tuaman Inc would buy the land.

[115]        Investment policy and previous interest in land: Much was made during the hearing of a suggestion the EMA did not authorize investments, particularly in land. There is little in that argument since although the EMA governed distribution of the fight purses and thus, given the way the parties operated Tuaman Inc, the company’s income, it was the company which undertook the investments and there could be no doubt it had power so to do.

[116]        More particularly, although Mr Tua expressed a general interest in buying land before the 6 April 2001 visit, it was non-specific and it seems he did nothing to further that interest. He gave no evidence of ever telephoning real estate agents, visiting land for sale or doing anything to act in accordance with his broad intention. By contrast, however, it is reasonably clear Mr Pugh had a long-standing interest in buying land before 6 April 2001, an interest focused on land at Pakiri. While there was no evidence as to whether his financial circumstances were such he could have bought on his own or found a partner sufficiently affluent to assist, his prior involvement in land in the area, his visits, his contact with agents and his earlier offers, mean it would have been surprising had he agreed that Tuaman Inc would  buy the Pakiri land in trust for Mr Tua alone. That would have extinguished both his and Mr Barry’s long-term interest in buying land at Pakiri. That also tells against the Court making in Mr Tua’s favour the orders which he seeks.

[117]        Bank loan and guarantees: Although the Bank’s understanding as to what was to occur in relation to Tuaman Inc’s investments and, in particular, the siting of houses on Pakiri all came from Mr Pugh, when Mr Tua found out both he and       Mr Pugh had to guarantee the bank’s loan, that should also have alerted him to the possibility Pakiri was not being held by Tuaman Inc wholly for him. Yet he raised  no objection and made no inquiry. This is not to overlook that Mr Tua was in the USA training for a fight and thus not focusing on financial matters but nonetheless had he paused to think why Mr Pugh’s guarantee was required by the bank, it should have suggested his intentions as regards the beneficial interest may not have been carried out.

[118]        EMA and Tuaman Inc:                   The way in which the parties, Mr Pugh in particular, operated the EMA and the financial affairs of Tuaman Inc were the

subject of searching cross-examination at the hearing and much criticism. It is unnecessary to reach detailed views on much of that material but some of the issues reflect on the outcome of this hearing and accordingly require consideration.

[119]        The manner in which Messrs Tua, Pugh and Barry decided to operate the EMA and Tuaman Inc was earlier described. While there was no convincing explanation as to why they decided that the funds to which each may have been personally entitled should be lent to the company with their expenditure thereafter operating through the company, there is nothing illegal or improper about such an arrangement. However, while it can be accepted that the flow of funds into and out of the company, including the 8000 payments on Mr Tua’s behalf to which Mr Pugh frequently referred, were properly documented in a cash flow sense, the internal treatment of those receipts and payments and the overall management of Tuaman Inc’s financial accounts left a great deal to be desired. Mr Pugh, as Tuaman Inc’s sole director, must accept prime responsibility for that. Ms Grant’s evidence was compelling that she coded various receipts and payments as instructed by Mr Pugh and that he adopted a policy of telling Mr Tua (and, perhaps, Mr Barry) as little as possible about the way the company was being run and its financial position. True, there is no evidence Mr Tua was concerned or inquired about the matter although he said he was suspicious of Mr Pugh from the outset, but, that notwithstanding, he left Mr Pugh in charge of Tuaman Inc’s funds and the flow of funds through the EMA.

[120]        There can be little doubt that Mr Pugh’s management of Tuaman Inc’s finances as its sole director fell well short of his statutory obligations under the Companies Act 1993 and the Financial Reporting Act 1993. His knowledge of the requirements of directors under those statutes was rudimentary. Consequently his compliance with the obligation to have accurate financial statements as to the company’s available position at all times, particularly when it was undertaking major transactions, was lacking. Mr Forlong’s view is to be accepted that when he  received the wealth of material uplifted by Mr Tua and Ms Grant on 28 July 2003, the financial records and Tuaman Inc’s accounts were confused to the point of being meaningless.

[121]        In addition, it seems Mr Pugh’s stewardship of Tuaman Inc’s financial position paid little regard to its tax obligations. It seems only one tax return – that  for the 2001 year – was filed and that was both late and inaccurate. Mr Pugh’s attitude is demonstrated by his suggestion that “taxation and the methodology position is decided by the shareholders” and “I lapsed in my duty as a director to sign off those accounts and file them with the IRD” and, further, that in relation to tax “there was a no-harm no-foul policy adopted by me”. He even went so far as to suggest that Tuaman Inc obtained expert tax advice from him when there was no evidence of his having any expertise in that regard.

[122]        And when Mr Pugh asserted on several occasions that “friendship will make me do anything” and all his actions were to “protect” Mr Tua, that hardly inspires confidence that he would cleave to and rigorously comply with the legal requirements of company and trustee law if he felt the dictates of friendship required otherwise. That is particularly the case given Mr Pugh’s acknowledgement of signing other persons’ names to formal documents on a number of occasions and, in relation to a Mr Masoe, even affixing his signature from one document onto another and then photocopying the latter to make it appear as a signed original.

[123]        However, aside from its impact on the assessment of Mr Pugh’s credibility, all those issues can be put to one side in deciding the one matter with which this judgment is concerned.

[124]        The Pakiri land in Tuaman Inc’s books: Ms Grant sought directions from Mr Pugh as to how the cash payment towards the Pakiri purchase was to be coded in Tuaman Inc’s books. Although there was ample evidence of his directing her how to deal with other receipts and payments, tellingly, there was no evidence of a response to this important request.

[125]        It is clear that Tuaman Inc has paid the interest, rates and other outgoings on Pakiri since the purchase and the company has also received such modest income from the property by way of grazing which has accrued since that time.

[126]        But what is lacking is evidence as to the way that income and expenditure was internally handled in Tuaman Inc’s books at least up to July 2003. Had the cash contribution been debited in Tuaman Inc’s books to Mr Tua alone, that plainly  would have provided a potent indicator that Mr Pugh had committed the company to act as trustee of the land for Mr Tua alone. That would have gained additional force if the interest and other payments had been wholly debited to Mr Tua’s account and the grazing credited to it. If, however, the receipts and payments have been simply treated as part of Tuaman Inc’s financial affairs generally, that would have been a similarly potent indicator  against  the  order  for  which  Mr  Tua  now  contends.  Mr Pugh, unsurprisingly, suggested the latter was the way in which those matters  had been handled but pointed to nothing in the financial records to support his assertion.

[127]        It is perhaps unfortunate that evidence on this topic was not adduced. The assumption must accordingly be that the receipts and payments under discussion were not wholly paid into and out of Mr Tua’s account with Tuaman Inc.

[128]        28 July 2003:             Despite the views earlier expressed about matters which should have indicated to Mr Tua that his intention that Pakiri be bought by Tuaman Inc for him alone were not being honoured, it appears from his reaction to what Ms Grant told him on 28 July 2003 that he still then thought his interest in Pakiri was greater than 50%.

[129]        12 August 2003: Whichever version of  the  conversations  at  the  12  August 2003 is accepted, it is clear that, first, Mr Tua thought that effectively he owned the whole of Pakiri but that, secondly, Mr Pugh made clear that Tuaman owned the land but he claimed an interest in it. However, it is significant, first, that Mr Pugh did not assert that any interest in Pakiri was held by Mr Barry and, more importantly, that his assertion of an interest in Pakiri was based not on the EMA, not on how Tuaman Inc’s finances had been handled and not on how the purchase had been treated in its books, but solely because he said 18 O’Neills Avenue had been used as security. It is important that, when first confronted by essentially the precise issue with which this hearing is concerned, Mr Pugh did not assert he had any interest in Pakiri arising on any other basis.

[130]        Claims by Mr Tua:              In light of all the circumstances, particularly what occurred at the 12 August 2003 meeting, it is surprising that when Mr Tua received legal advice and claims were made on his behalf, although the possibility of an express trust as to 100% claim was raised, other claims were more forcefully advanced on Mr Tua’s behalf and it was not until very shortly before the hearing that the express trust as to 100% claim appeared as the sole basis on which this hearing was to proceed. That is open to the inference that Mr Tua and his advisers were doubtful as to the legal and evidential basis for the express trust as to 100% claim as opposed to a claim for a 50% interest or some other percentage or an alternative claim based on constructive trust or some other cause of action.

[131]        Messrs Tua and Pugh:     Finally,  in  fairly large  measure  the  resolution of the question the Court is asked to decide comes down to an assessment of the evidence given by the two principal protagonists.

[132]        Mr Tua impressed as a genuine and sincere witness, one who took considerable satisfaction, as he was entitled to do, from his success in the ring but one who recognised his limitations in understanding the complexities of company and trustee law, particularly as it related to the EMA and Tuaman Inc. Since he has participated to a degree in the affairs of David Tua Inc in the USA and Tuaman Inc (and other companies) in this country, he could not say he was entirely unaware what was required by the incorporation of a company, its management and its financial obligations. But, at all times relevant to this matter, he essentially left everything in that regard to those on whom he relied, Mr Pugh and Ms Grant. When he took  advice on financial or legal matters he did so from persons he trusted such as his parents and his parents’ lawyer. In that regard, although he had been extensively involved with his parents’ lawyer in late 2000-early 2001 trying to re-negotiate the EMA with Messrs Pugh and Barry and had consulted the lawyer for a number of years prior to that time it is curious that he did not approach either his parents or his parents’ lawyer to discuss the Pakiri purchase or get the lawyer to act or at least advise him if he believed the land was being bought for him alone.

[133]        That notwithstanding, Mr Tua came across as a convincing witness within the areas in which he had been involved.

[134]        Mr Barry, too, came across as a fairly convincing witness. In this  litigation he has chosen to align himself with Mr Pugh but, even so, his participation in the events with which this judgment is concerned has largely been confined to training – and training successfully – Mr Tua and other boxers, and being involved in fight promotion, publicity and the like. He, too, almost entirely left the financial affairs of Tuaman to Mr Pugh and, apart from his saying he visited Pakiri with Mr Pugh before 6 April 2001, his evidence was not able to be directed to the matter in issue at the hearing.

[135]        A number of observations have already been made about Mr Pugh’s evidence and his management of the EMA and Tuaman Inc. Substantial questions remain to be answered by him including settling the final accounts for the company for the whole of the period the EMA operated, and the propriety of the $925,000 transfer to Sports Tech. Given that further hearings are likely to be necessary to resolve other aspects of the many disputes between these parties, it would not be right to go into detail about Mr Pugh’s demeanour in giving evidence. It is sufficient for present purposes to say that on the matters in issue in this hearing he presented as a far from convincing witness.

Result

[136]        Balancing all those issues, one against the other and standing back the conclusion must be that what Mr Tua said on 6 April, even accepting his version, was equivocal in the sense it was an expression of his desire to buy the Pakiri land, not a direction to Mr Pugh to utilise the funds Mr Tua had lent Tuaman Inc in buying it. He admitted that his view that the land was being bought for him alone was no more than his assumption in the circumstances. Accordingly, though he may have intended Pakiri to be bought by Tuaman Inc for him alone he failed to make that clear. And, when he should have been alerted to the fact that what he said he intended was not being actioned, he did nothing about it.

[137]        Even accepting Mr Tua’s expression of his wish to buy the Pakiri land for himself alone was accurate, because the instruction was ambiguous Mr Pugh was not bound to honour it. Even if he understood Mr Tua wanted Tuaman Inc to buy Pakiri

for himself alone, it was clear Mr Pugh was not prepared to commit the company to the purchase on that basis. Had he done so, it would have meant abandoning his long-term interest in Pakiri land and reneging on his arrangement with Mr Barry.

[138]        The first question in considering the legal requirements for an express trust is whether there is anything in writing signed by Mr Tua. There is nothing.

[139]        Next, is there a manifestation of an intention to declare a trust? Again, the answer must be “No”, since he expressed no more than a wish to buy the Pakiri land and expressed it in equivocal terms. Further, Mr Tua could have had no  idea whether his wish would be realised and did not check.

[140]        The next question is whether an intention to create a trust can be inferred from Mr Tua’s conduct. Again, the answer must be “No”, given the lack of inquiry and follow-up.

[141]        Finally, in signing the contract for Tuaman Inc to buy the Pakiri land, was  Mr Pugh signing a document admitting the trust thus complying with the requirements for the constitution of an express trust? Again, the answer must be “No” given Mr Pugh’s evidence that he never intended so to do and the fact that, had he done so, he would have extinguished his long-standing wish to acquire land at Pakiri and Mr Barry’s interest as well. In addition, the signing of the contract and settlement of the purchase did not comply with the requirement that a trustee’s declaration of an express trust must include the material terms of the trust. How long was it to last? In what circumstances could it be terminated? Were there additional obligations on the trustee beyond those in the Trustee Act 1956? All those, and all others, were left unresolved.

[142]        For the sake of completeness, it should be recorded that Mr Pugh’s actions in relation to the purchase of the Pakiri land did not, in the Court’s view, imply by silence that he would carry Mr Tua’s intentions into effect or that his actions amounted to equitable fraud within the meaning of the authorities earlier discussed. Mr Tua should have been alerted and made inquiries as to what was happening and

the ambiguity and precatory nature of his statement on 6 April 2001 show that neither was the case.

[143]        The result must be that Mr Tua has failed to persuade the Court to the required standard that Mr Pugh’s actions in committing Tuaman Inc to the purchase of the Pakiri land created an express trust of the whole of the beneficial interest in the land for him alone. What occurred, put simply, was altogether too slender a basis to satisfy the legal requirements for the constitution of an express trust.

[144]        That is not to say he will not, in the ultimate result, be found entitled to a share in the Pakiri land – conceivably, even up to 100% - but if that result occurs it will not occur through the route chosen by him and his advisers for this hearing, an express trust.

[145]In the result therefore :

a)The application by Mr Tua for a declaration that Tuaman Inc holds the whole of the beneficial interest in the Pakiri land on an express trust for him alone is not granted.

b)The parties will need to consider their positions in light of this judgment and decide how to proceed towards resolution of the many remaining issues in this litigation. To that end there will be a telephone conference with counsel on 24 May 2005 at 9:00am.

………………………………..

WILLIAMS J

Solicitors:

Buddle Findlay, P O Box 2694 Wellington, for plaintiffs

Kemp, Barristers & Solicitors, P O Box 600 Kumeu, for defendants

Counsel:

A P Molloy QC, P O Box 4338, Auckland