From predator to prey
Property developer Dave Henderson was once the hunted debtor. Now he is a creditor and he wants blood. Martin van Beynen reports.
In the middle of 2015, Robert Walker, a somewhat eccentric but meticulous liquidator and accountant, was feeling good about life. As good as someone who suffers from serious diabetes and severe anxiety can.
It was a typical Auckland day – showers interspersed with bright sunshine – at his modest address in Mt Roskill, where he lived with his wife and dog Daisy, very close to an enormous power pylon.
Victory in his knock-down, drag-out battle against Christchurch businessman and property developer Dave Henderson looked to be within his grasp.
Appointed liquidator of Henderson’s collapsed Property Ventures group in 2010, he could, after years of dogged, painstaking and generally unremunerative work, see payday on the horizon. Perhaps he was already thinking about a comfortable retirement in which he could look back on unravelling one of the country’s most complex liquidations.
I wrote a story about the bitter chess game between the two men in 2015. It was called The hunter and the hunted, which I thought was pretty clever, not realising it was the title of a 1982 song by Simple Minds. Six years later I’ve been drawn back into the story and find an incredible reversal of fortune.
Henderson is now hunting Walker, who has been suspended from the Institute of Chartered Accountants as the result of a complaint by Henderson.
Walker, mainly due to the stress of the liquidation, has had several nervous breakdowns and run out of money to pursue legal battles. He has moved from Mt Roskill to Titirangi, with mainly his pension as income. Daisy has died. He still has fight left in him, but he seems increasingly isolated and paranoid.
Contrastingly, Henderson has clawed his way back to a form of respectability, not that he cares about such terms. Through manoeuvres that make Machiavelli look like a novice nun, Henderson has millions at his disposal, is involved in several interesting projects and has never shifted from his penthouse in a heritage building in Christchurch.
NOTHING SIMPLE
Nothing about this story is short, simple or straightforward. Walker talks too much and tends to swamp you with information and theories. Henderson, who is assured and charming, rarely gives the whole story. Both are prone to what one judge has called the ‘‘imputation of sinister motives’’ and the blaming of government agencies for letting them down.
Walker’s main mistake might have been underestimating Henderson and overestimating the ability of the law and the courts to provide him with the support he assumed he was due.
Henderson is a fighter and, even when bruised and barely hanging on, he never gives up as many people and government agencies, including the Police and Inland Revenue, have found to their cost, and to the cost of the taxpayer. Henderson is one of very few New Zealand taxpayers who have special Inland Revenue staff dedicated to them.
He is also always ready to litigate and has learned how to weaponise the legal system.
But let’s backtrack for a moment. Before the global financial crisis (GFC), entities associated with Henderson had borrowed millions to pursue property developments including Sol Square in Christchurch and a massive project called Five Mile in Frankton, outside Queenstown. The umbrella company was Property Ventures Ltd, and it had a large number of subsidiaries.
With the GFC, the once unlimited credit dried up and Henderson’s entities couldn’t maintain their loan repayments. Henderson asked for time, saying, quite rightly as it turned out, that things would swing back and everyone would be paid. The banks and finance companies, owed between $140 and $200 million, were not prepared to wait.
Henderson had personally guaranteed the loans, despite not owning anything in his own name, which led to him being bankrupted in November 2010. He was discharged from bankruptcy under restrictions imposed by then Associate Judge Rob Osborne (now Justice Osborne) in January 2017.
The judge refused a full discharge, saying Henderson had been ‘‘grossly reckless’’ in giving out personal guarantees, ‘‘reckless’’ about personal tax responsibilities, and had demonstrated a ‘‘lack of insight’’ into his administrative ability. He also talked about Henderson’s ‘‘preparedness to dissimulate’’.
By 2012, despite efforts by Henderson to have him removed, Walker was in full swing as liquidator of many of the companies in the Property Ventures group.
To be effective as a liquidator, you need the full co-operation of directors and full access to records and information. Henderson and Walker were soon at each other’s throats, so Walker had to use his powers of coercion under the Companies Act to get records and that allowed a litigation chess game to occur. The bills started to pile up. He had staff and office costs and legal fees to pay and no money. Liquidators, he says, ‘‘only eat what they kill’’. He borrowed to keep going and this was not sustainable.
TO THE RESCUE
One avenue for raising cash was taking legal action against professionals whom he believed had contributed to the failure of Property Ventures.
The most promising targets were the company’s auditors, PricewaterhouseCoopers (PwC), directors and valuers, who were insured against this sort of action.
Walker turned to litigation funders for the cash to chase them. In November 2012 LPF Group Ltd, headed by former Supreme Court judge Bill Wilson, came on board to fund Walker’s investigations and any resulting legal action. Negotiations with PWC began, and the firm eventually settled for a confidential sum believed to be about $32m. Other settlements amounted to about another $8m.
With $40m in the kitty, the patient creditors of Property Ventures might have thought some money would finally end up in their pockets. But the liquidation had many bills to pay. For a start Walker had his own expenses. He hadn’t paid himself for seven years and
‘‘I either need them to withdraw the charges or bring them to trial, so I can properly clear my name. A stay just means they are on hold and hanging over my head.’’ Dave Henderson
took about $6m. He had to pay back money he had borrowed from the litigation funder, and he also had legal and other professional bills to pay. The litigation funder took $33m. There wasn’t much left over for creditors.
All this was of more than academic interest to Henderson. Entities associated with him had quietly moved on Property Ventures subsidiaries that still owed money. Essentially by doing strategic deals, Henderson’s associated entities bought debts and ended up with securities, property and interests in things like insurance claims. For instance, in 2015 one of his associated companies paid $100,000 for a $10m debt owed by a subsidiary of Property Ventures. Insurance payments and the sale of the property left the Henderson-linked, debt-buying entity with a surplus of $3.5m.
Henderson managed to get hold of accounts that showed the amounts paid to Walker and the litigation funder. He believes the amounts ‘‘are appalling’’. Last year various entities associated with him began legal action against Walker and the funder in the High Court in Auckland. A hearing is scheduled for July next year.
‘‘I’m not saying give me a chunk of money,’’ Henderson says. ‘‘I am saying the money needs to go back into the company and a proper liquidator needs to be paying it out, so all creditors can be beneficiaries.’’
Henderson says Walker’s fees are exorbitant. Liquidators are by statute allowed to charge $200 an hour. Do the maths, he says.
Walker makes no apology for his fees, which compare favourably with far simpler liquidations, he says. The money was not just for him – he had to pay staff and expenses – and he had to be compensated for the risk he was taking on.
‘‘Think about the skills you would need to take down the world’s biggest accounting firm without the needed information and using the legal process. Very few people . . . could have done it. Probably only one. Me.’’
THE HUNTER NEVER STOPS
Henderson has also moved against Walker, who says he is an accountant in his soul, where it hurts.
In July 2019 he complained, not for the first time, to Walker’s professional institute, alleging unprofessional conduct by Walker during the Property Ventures liquidation. The institute’s professional conduct committee was obliged to investigate.
Walker, who was past caring at the time, failed to provide required information and also sent the institute a memorandum he had filed in High Court proceedings revealing a number of mental health difficulties.
The conduct committee asked the institute’s disciplinary tribunal for an interim order suspending Walker, citing concerns about his fitness to practise due to his mental health and his failure to cooperate with the investigation. The order was made in August this year.
Walker is seeking revocation of the order and says he has a number of arguments showing how the institute broke its own rules. He says he has mostly recovered from his mental disorders with the help of medication.
Walker looks back on the last 10 years with some regret and accepts some blame for the brutal reversal of fortune. However, he mainly blames government agencies, which he believes failed to prosecute Henderson.
But did his focus on Henderson, rather than collection of money for Property Ventures’ creditors, lead him astray? Walker says there’s ‘‘absolutely no evidence’’ he had any vendetta against
Henderson. ‘‘All I was doing was my job.’’
NEVER SAY DIE
Henderson puts the reversal of fortune down to an attitude of ‘‘never say die’’.
‘‘Perseverance is a very high value, and you just keep going and be determined to pull your way out of a hole.’’ He harks back to his dust-up with Inland Revenue in the 1990s, when the department claimed $1m in tax owed and ended up paying him $65,000. The saga became a book and a film.
‘‘If I hadn’t put in an enormous effort, that would have been the end of the story. I then had the situation with the police where they conducted unlawful raids on my offices and took away my computer and distributed material. It took me four years, and they settled for a significant sum. I’ve also had an apology from the chief executive of MBIE (Ministry of Business, Innovation and Employment).
‘‘You just get sick of being a whipping boy and sick of being treated this way. The Crown acting lawfully, and appropriately, I think is of critical importance, and I’m willing to stand up. I’m not afraid to go the distance.’’
With Walker on the ropes, isn’t it time to pull back and wait for the count? ‘‘If he approached me I would certainly be up for a discussion along those lines,’’ Henderson says. ‘‘He has made a career out of attacking and chasing me, my family and friends. I always saw it as appropriate to conclude this on my terms.
‘‘There’s a lot for everyone to learn here. There’s a lot for the accountants’ institute, for the courts. I’ve been to court countless times identifying this behaviour and the courts have ignored me.’’
Unusually he also wants MBIE to proceed to trial over three charges laid against him under the Insolvency Act in 2015 and 2016. Henderson pleaded not guilty to running a business while bankrupt and providing false information, and elected trial by jury.
The matters dragged on and by May 2018, nothing much had happened. On April 6 this year, the ministry filed a stay of proceedings, saying it was not in the public interest to proceed, but it would not be dropping or withdrawing the charges.
An Official Information Act request from Henderson’s friend, former politician Rodney Hide, revealed MBIE had spent $670,000 on a forensic accountant to build the case. MBIE says the deputy solicitor-general decided to stay the proceedings because of the delays in prosecuting the charges and the effect of the delays on Henderson. The resources required and the prioritising of trials where defendants were either in custody or at serious risk of loss of liberty were other factors.
Henderson is seeking a judicial review of the decision to stay the charges and a declaration the ministry breached provisions of the Bill of Rights Act – namely his right to a trial.
‘‘I’ve always considered the charges were malicious . . . So, I either need them to withdraw the charges or bring them to trial, so I can properly clear my name,’’ he says.
‘‘A stay just means they are on hold and hanging over my head.
‘‘They are thugs and certainly not the paragons of high ethics they claim to be. You can see my frustration with the way the state treats me.’’
Some might wonder at the way Henderson treats the state, especially his tax responsibilities. But the wily businessman remains adamant he wants to have the last word.