Judge rules Blenheim couple must pay millions after court loss

A Blenheim couple will have to pay $2.7 million to the liquidator of their company after a judge ruled they tried to hide company assets.

High Court Judge Justice Jason McHerron has found against Peter and Jeannie Mark, owners of PMT 2010 Ltd (In Liquidation).

The ruling means a family who have nearly spent 20 years fighting for compensation from the company should now receive the $102,551 owed.

Justice McHerron ruled in favour of the plaintiffs in respect of nine causes of action heard in Blenheim High Court in July.

The initial dispute began when Kaikōura husband and wife Tom and Jan Harnett refused to pay the balance of $32,835 for sub-standard tiling in their new house.

Peter Mark, then a co-owner with his wife Jeannie Mark, of Peter Mark Floorpride in Blenheim, initiated court proceedings against the pair for the outstanding balance.

But the Harnetts launched a successful counterclaim, with a court judgment ruling in their favour in 2013.

The judge awarded Mr and Mrs Harnett $102,551 but Peter Mark claimed in a court examination in 2014 that the company could not pay.

The company had $5,000 in assets he said. Mr and Mrs Harnett had the company placed into liquidation in March 2015.

But in his judgement, released on Monday, Judge McHerron agreed with the liquidator’s submission that the Marks had moved assets out of the company to avoid paying the Harnetts.

Their failure to provide information to the liquidator in a timely matter amounted to fraud, the judge said.

It is a bittersweet victory for the Harnett family as Tom died in 2017 at the age of 78 years old, never having seen a cent of the money owed.

One of the key claims against the defendants was they knowingly paid $680,000 to themselves weeks after the liquidation commenced in March 2015.

The $680,000 was the final balance of the sale price of the business.

Judge McHerron also found $2,700,000 of assets had been removed from the company’s balance sheet.

There were several parties involved in the removal of the company’s assets including the directors of the company, the company’s accountant David Boon and David Clark from the company’s solicitor firm.

It was an attempt not to pay the Harnett family, the Judge said.

Peter Mark Floorpride was sold in 2008 for $2.3 million to current owners Glen and Lawrelle Morrison along with other shareholders.

After selling its business, PMT 2010 Limited ceased trading.

Under the sale agreement, PMT 2010 Limited advanced to the buyer of the business a vendor finance loan of $680,000, at five per cent per annum for a term of seven years.

In court, Glen and Peter Mark described each other as “family.”

“In a revealing moment in Mr Morrison’s cross examination, he agreed that the “family position” was not to tell the liquidator about funds due to PMT because that would mean the Harnett’s would get paid,” Judge McHerron said in his ruling.

“Shortly after Mr Mark was served with the application for financial assessment in July 2014, his solicitor David Clark created and printed a deed of assignment of the $680,000 vendor finance loan.

“The deed was backdated to March 2012,” the judgement says.

He said assets had been deliberately moved to the Mark Family Trust and paperwork backdated to make it look like all transactions were above board.

What should have been money payable to the company instead became a personal payment to the Marks.

The plaintiffs alleged the disposition of that property was for no other reason than to avoid paying the Harnett’s judgment debt.

“I find that Mr Clark assisted Mr Mark to conceal the deed of consignment from the liquidator in breach of PMT’s disclosure obligations.

“It was a co-ordinated strategy to prevent the Harnett’s from receiving any money.”

Judge McHerron also said claims by the defendants that the liquidator first appointed to the case, Murray Allott, had not conducted the case in a timely manner was a result of their own actions.

The judge found the liquidator had not been informed of matters by the directors in an appropriate time frame.

“I agree with the plaintiffs’ submission that Mr and Mrs Mark dishonestly concealed information they had a duty to disclose.

“Any mistake of fact by the liquidator is understandable given the Marks’ dishonest concealment,” he said.