Investors await court ruling

A pair of high-flying United States businessmen should know by Christmas whether they have been successful in a bid to recover their investment in a Nelson winery.

A High Court dispute between James Murren and Daniel Lee over their investment in the Mahana Estates winery, owned by Glenn Schaeffer, has come to a close more than three years after legal proceedings began.

Justice David Collins reserved his judgment on Wednesday in the High Court at Nelson, and said he hoped to release a decision by Christmas.

The men brought forward four causes of action, including a direction for repayment of their money plus interest, and a breach of the Fair Trading Act.

They claimed Schaeffer had breached a duty of care he owed them, and that he knew he was making false representations.

In his closing address, Schaeffer’s lawyer, Andrew Shaw, said the legal action was a case of Murren and Lee simply trying to recoup a bad investment.

‘‘The reality is these men were friends – they had a high degree of trust in Mr Schaeffer. Such that they invested millions of dollars collectively without viewing or requesting financial statements and legal documents evidencing the operation and ownership of the winery, its profitability or its debt structure until the relationship began to sour on or about 2013, some 11 years after the first investment.’’

Shaw told the court Schaeffer had no intention to mislead or deceive Murren and Lee, and that their investments had not been misrepresented, which was evident as the partnership continued to own an 80 per cent interest in the winery and vineyard.

Shaw said much was made of Schaeffer’s involvement in applications to the Overseas Investment Office, but he had maintained they were handled by then Woollaston Estates director Philip Woollaston who had obtained legal advice on the matter.

He said Schaeffer had also invested money alongside the investors, an amount that totalled around US$11.2 million as at December 2008.

Under the 2006 agreement, Schaeffer, as the general partner, had the rights to structure the ownership of the assets in Kiwi Ventures as he saw fit, Shaw said.

But Murren’s lawyer, Andrew Horne, said both Murren and Lee had relied on the assertion that they were investing money along with Schaeffer’s own in a registered partnership that would own a winery and vineyard.

However, Schaeffer had kept the shares in the companies that owned the winery and vineyard in his own name and treated the assets as his own.

Murren and Lee maintained that if they had known they would not own a percentage of the shares in the winery, they would not have invested with Schaeffer,, Horne said.

‘‘Furthermore, they say he knowingly concealed his continued ownership of the winery assets from them, and he dealt with those assets in a way that wasn’t consistent with the Kiwi Ventures partnership.’’

Horne said that under crossexamination, he put it to Schaeffer that Murren and Lee had no idea the assets were in his name, because he knew they would object if they found out.

‘‘He wasn’t prepared to accept this, but he gave no other explanation as to why there were no records of either of them being told.’’

Horne said Schaeffer also denied that tax and regulatory complications were the reason he did not transfer the shares into the partnership, as he was acting on legal advice sought by Woollaston. ‘‘This was one of many occasions on which Mr Schaeffer claimed that it was all the responsibility of someone else.’’

‘‘These men were friends – they had a high degree of trust in Mr Schaeffer. Such that they invested millions of dollars collectively without viewing or requesting financial statements and legal documents.’’

Andrew Shaw, lawyer for defendant Glenn Schaeffer