‘Poetic licence’ in court, Yealands directors say
Two directors of Yealands Estate say the top lawyer representing the company was wrong to say Marlborough Lines would not have bought the wine business if fraudulent activity had been disclosed to it.
On Tuesday Yealands Estate, its high-profile former owner and two former top staff were handed large fines in the Blenheim District Court after pleading guilty to concealing the addition of sugar to post-fermentation wine destined for Europe.
Though adding sugar to wine during that stage in the process is allowed in most countries, it is illegal in Europe.
The Ministry for Primary Industries said the activity involved a sustained concealing of activity that senior staff knew was illegal, putting the reputation of New Zealand’s industry at risk.
At a sentencing hearing in November, when the matters were covered by a suppression order, Jonathan Eaton, QC, argued that Yealands Estate should be convicted and discharged, paying a large donation to a charity in place of a fine.
This reflected the fact that the charges related to a period before Yealands was acquired by Marlborough Lines, a communityowned lines company.
Eaton told Judge Bill Hastings that during the pre-sale due diligence, the offending was not disclosed to Marlborough Lines.
‘‘There’s no way Marlborough Lines would have purchased if it had known this was going on,’’ Eaton said.
Ultimately, Judge Hastings rejected Eaton’s argument, opting to fine Yealands Estate $400,000.
But Eaton’s claims came as a ‘‘surprise’’ to David Dew and Ken Forrest, the chairman and managing director of Marlborough Lines, who both sit on the board of Yealands Estate.
It was also noted by others observing the case, as it would appear to undermine statements made by Yealands shareholders.
Blenheim-based Marlborough Lines purchased a controlling stake in Yealands Estate in mid2015, taking the utility company into a such a different line of business that Kaiko¯ura MP Stuart Smith questioned whether the owners had the required skills to manage it.
Marlborough Lines has talked up the performance of Yealands Estate, during a period in which it has known about the falsifying of export records despite the matters remaining suppressed.
During the period it revalued the value of Yealands Estates’ assets upwards, including a $60 million paper gain in 2017.
In total Marlborough Lines has spent more than $100m buying 100 per cent of Yealands Wines, as well as taking on debt to fund further development.
It is now playing down the case’s potential fallout, saying it had been discussing the matter with its customers for 12 months.
Dew said Eaton had ‘‘used, what I would call, poetic licence’’ in making the statements, but they were not the position of the shareholders.
‘‘I don’t know where he got that from,’’ he said on Tuesday.
Dew said he could not say one way or another whether Marlborough Lines would have acted any differently had it known about the activity.
‘‘I don’t know what the answer is to that, frankly, if we’d known in advance. It’s speculation . . . It’s wrong for him [Eaton] to have said it because the issue’s never been addressed by us . . . It’s not correct to say it and we were surprised when he said it.’’
Eaton is a leading QC and has been involved in a number of high-profile cases. In 2015 he represented Mark Lundy at a second trial for killing his wife and child in Palmerston North in 2000.
In an email, Eaton said that ‘‘if’’ he said Marlborough Lines would not have bought Yealands, this was not in his written submissions and ‘‘was not made on instructions’’ from his client.
‘‘The point I intended making at sentencing … was that both parties engaged in extensive due diligence and it has never been suggested that the current board/ shareholders had any knowledge of the alleged offending.’’