Daniel accepted pumping money into the two entities through companies he controls and proposed continuing to source funding to cover the companies’ operating expenses.
Daniel disputed the family’s misappropriation allegations and argued Henriette had engineered the deadlock, meaning she did not have “clean hands” in seeking liquidation.
However, Justice Grant Powell rejected Daniel’s “clean hands” argument, including his claim that the breakdown was “demonstrably caused by Henriette”.
“Neither trusts the other,” he said, as he ruled in favour of Henriette’s application to liquidate the debt-laden companies.
“Simply put, they do not mince words. The scale of the allegations is itself telling: Henriette and the rest of the immediate family contend that Daniel has already misappropriated at least $40m from the Nakhle Group.
“Daniel’s position is that he is entitled … to specific Nakhle Group assets worth in excess of $60m, debt free.”
Justice Powell said that since Henriette’s husband, Elias, had stepped back from the family business, Daniel had been able to “effectively sideline” his mother from managing the two defendant companies, Karaka Estate Ltd (KEL) and Byerley Park Ltd (BPL), of which the pair are joint directors.
Daniel’s position appeared to be based on the proposition that Henriette was “not entitled to question” the way he had run the companies with “tacit agreement” from his father.
But the judge said this misunderstood the role of a director. It would be wrong for Henriette to “acquiesce to Daniel’s decisions” in breach of her own professional responsibilities to the companies.
Justice Powell found both companies were heavily indebted, clearly insolvent and unable to pay debts as they fell due.
Much of the money was owed to the Nakhle Treasury Trust.
In ruling that liquidation was the appropriate outcome, the judge dismissed an application by Daniel to instead put the firms into receivership, saying this would “markedly advantage” Daniel, and “inevitably favour” his interests over those of his parents and siblings.
It has also emerged that after registering a new company, Ardmore Finance Ltd (AFL), and purchasing more than $7m in family debt from Westpac Bank on the eve of an April court hearing, AFL sent a letter signed by Daniel to a family trust demanding “immediate payment”.
The May 1 letter also advised that AFL “may look to commencing enforcement action under the securities and guarantees”.
His lawyers had earlier rejected suggestions the debt reassignment was a “pretty desperate last-minute tactic” designed to give Daniel “leverage” over his family, and now insist the letter of demand has “no bearing on the liquidation applications”.
However, Henriette argued it showed Daniel was taking a “different and more assertive approach” to that expressed earlier this year when he promised to grant a three-month reprieve on the loans.
The change in tactics was telling, Henriette submitted to the court.
“That Daniel/AFL immediately called up the debt and took enforcement steps strongly suggests anything but a wish to maintain the status quo for which Daniel was previously advocating.”
Her other sons, David and Roger, have now obtained without notice injunction orders to prevent AFL taking enforcement action, including if the companies were placed in liquidation by the court.
Bitter and protracted legal battle
The family’s dirty laundry is being aired publicly as part of a bitter and protracted legal dispute relating to the management and division of their considerable wealth.
The Nakhle family was once listed on the NBR richlist with an estimated fortune of $200m.
However, asked by Justice Powell for a “ballpark” figure as to how much was at stake, Daniel’s lawyer, Mark Sandelin, estimated the family’s current assets at around $120m.
The family have interests in a diverse portfolio of industries, including horse racing, property investment, early childhood education and quarrying.
They are also politically connected – National MP Rima Nakhle is a member of the family through marriage (she is not involved in the court action).
But the family’s financial success has been marred by infighting and legal skirmishes, which has driven a wedge between mother and son.
Daniel claims he is owed $60m in real estate assets after a family agreement was brokered a decade ago by friend and former Manukau mayor Sir Barry Curtis.
After falling out with his parents, he launched legal action in 2022 claiming his family had reneged on the deal.
The family, however, claim they are not bound by the terms of the Curtis agreement and launched counter-proceedings relating to millions of dollars advanced to the companies from the Nakhle Treasury Trust.
Henriette, who is Honorary Consul for Lebanon in New Zealand, says she has lost trust in Daniel and the family’s businesses are deadlocked because of an “irretrievable breakdown” in the relationship.
She applied to the High Court to have liquidators appointed to conduct an independent investigation of the two companies’ affairs.
But Daniel’s lawyers said the companies’ debts were disputed and there were no grounds to take the “drastic and final remedy” of liquidation.
While he told the court he was “independently wealthy” and had been putting his own funds into the companies, the source of that money has been under scrutiny.
Henriette feared Daniel was spending family money without authorisation, and Justice Powell questioned how he was able to “magic up” millions of dollars in a matter of days to purchase the Westpac debt.
“The concern is that the funds that are being offered are funds that have been misappropriated, because there is zero information about where they come from, other than Daniel’s assertion that they are from outside the group,” Henriette’s lawyer, Robert Stewart, KC, told the court.
However, Sandelin said allegations of misappropriation were “totally disputed” by Daniel.
Distributions from the family’s Nakhle Treasury Trust were “properly authorised” with the full knowledge of his parents.
Judge orders liquidation, labels son’s position ‘selective’
Justice Powell’s decision said Daniel had provided no details as to his own financial resources.
It was therefore unclear “whether the funds proposed to be used are monies Daniel has obtained from the Nakhle Group or whether they have been independently sourced”.
Daniel had also not provided information to back up his cash-flow projections for the companies and his analysis was “not realistic”.
Justice Powell said further related party lending to the companies would simply increase their significant debt.
Daniel’s proposal was a “selective position” that would allow the companies to continue trading “without addressing their underlying insolvency”.
Liquidation was the only way to prevent further risk of asset dissipation, the judge ruled.
Paul Vlasic and Derek Ah Sam were appointed liquidators. Daniel was ordered to pay costs to Henriette and the parties supporting her applications.
Mother welcomes decision, son says wider dispute yet to be resolved
In a statement to the Herald, Henriette and Elias said: “We are very obviously pleased with Justice Powell’s ruling, which confirms that Henriette’s application to have those entities liquidated was both necessary and appropriate.”
Asked how the family had become so fractured and whether reconciliation was possible, they said: “We have no further comment at this time.”
Daniel also issued a statement, expressing disappointment with the judgment.
He said the court found both entities were deadlocked at board level. He had favoured mediation and receivership, believing this would better protect the livelihoods of those involved at Byerley Park.
“These two entities have always been supported by family investment, so that is not new. At 92 now, and since stepping aside from his position, my father’s influence over these sorts of decisions is now one of the grey areas being litigated, alongside many others.”
The liquidation judgment did not resolve the wider family disputes and appropriate division of family assets.
Daniel said he rejected any allegations of impropriety.
“It is very sad to me that these private, family matters have escalated to this level and spilled over into the public domain.”
Lane Nichols is Auckland desk editor for the New Zealand Herald with more than 20 years’ experience in the industry.
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