Grounds for FRUSTRATION
Cornwall Park Trust Board trustees have applied to the High Court to protect themselves from personal liability as fury from the events industry rages over multimillion-dollar losses due to the closure of the Auckland Showgrounds. Jane Phare reports
Businesspeople who claim they are losing millions of dollars in revenue due to the closure of the Auckland Showgrounds have taken legal action to stop Cornwall Park Trust Board (CPTB) trustees from protecting or insuring themselves against claims.
The board applied to the High Court to amend the trust documents to allow for the ability to indemnify the trustees — chair Adrienne YoungCooper, Keith Smith, John Duncan and Alastair Carruthers — or buy insurance against potential liability, using the trust’s property. The trust documents do not currently allow for indemnity.
But a group of nine businesspeople and exhibitions companies, whose revenue has been severely affected by the showgrounds’ closure since June 30 this year, has opposed the application, which was heard in the High Court this week.
Group member Darryl Clarke, whose Tauranga-based direct-toconsumer retail business Show TV is a major exhibitor at consumer exhibitions such as the Auckland Home Show, acknowledges that pandemic restrictions “hammered” the events industry. But he and others in the industry are angry that the showgrounds have been closed for four months with no indication of when they might reopen.
Clarke’s group wants to hold the CPTB trustees to account after the industry suffered multimillion-dollar losses from the closure, and forward show bookings were cancelled. He accuses the trust board of mismanaging the showgrounds at a time when virtually every other major centre in the world was back in business for exhibitions and events.
“The economic devastation that comes from not having that is huge.”
The group is still considering what “single or group legal action” they may pursue against the board, he said.
Bye-bye Hollywood
In May this year the CPTB signed a lease with film company Xytech Studio Management, a decision that was challenged in the High Court by Brent Spillane, managing director of XPO Exhibitions which stages major shows throughout New Zealand. Last week Justice Mary Peters ruled that the board had contravened the Cornwall Park Endowment and Recreation Land Act 1982 by entering into a lease arrangement with the film company. The lease was cancelled in August.
Justice Peters awarded costs to Spillane to be paid by the trust board. Spillane, who has spent several hundred thousand dollars fighting to stop the CPTB from turning the showgrounds over to the film industry, says he thinks the amount awarded will be in the order of $60,000. Despite the cost, Spillane said he was prepared to challenge the CPTB with a fresh injunction if the board enters into another film-backed proposal — proceedings he expects to win.
In addition, the Environment Court is yet to rule after the New Zealand Gift Trade Association, which represents more than 300 businesses, asked for clarification of the site’s allowed uses.
Chief executive of the trust board, Murray Reade, would not say how much it had spent on legal expenses in regard to the showgrounds. However the trust’s accounts show legal and professional fees amounted to $610,000 for the year ending May 31, 2022.
Given CPTB’s negotiations with Xytech, which leased part of the showgrounds on a temporary basis this year, some in the events industry have questioned if trustee Alastair Carruthers, who was this year appointed as chair of the NZ Film Commission, should declare a conflict of interest.
When the Weekend Herald asked about a potential conflict, a board spokesman responded with a firm “no”.
Nowhere to show
Spillane, Clarke and others in the industry are angry that the showgrounds are still closed despite offers to continue to exhibit on a temporary basis. The financial impact for Auckland was hundreds of millions of dollars a year if the facility remained closed, Clarke said.
“The decision that they’ve made to not allow these events on site affects thousands of businesses, and tens of thousands of families. It leaves our largest city without a major exhibition and events centre. Who in their right mind would not want for the city of Auckland to get back to business?”
When the Auckland Home Show was cancelled in September, his company alone cancelled 150 hotel beds.
“And that doesn’t include the 40-odd Ubers they would be using and the several hundred meals they would have consumed.”
During the last Home Show his company, which sells a wide range of products across New Zealand and Australia, took 14 booths. Typically Show TV takes part in 100 consumer events across Australasia.
Clarke questioned whether the current trustees were the right people for the role.
“Based on the fact that the judge has come back and ruled that the current lease that they’ve signed is unlawful, the decisions that the board has been making appear to be outside the powers of the board.”
He wants trustees to be committed to honouring the legacy left by Sir John Logan Campbell, who donated the land for Cornwall Park and the showgrounds to the city. He describes the CPTB’s attempt to change trust documents that have been in place for 120 years as “outrageous”.
“There are generations and generations of trustees before them that haven’t required this level of insurance or protection they are now seeking.”
But Reade said in a statement that having insurance for voluntary trustees overseeing a high-value asset base was standard in modern trust deeds and that the application was supported by Crown Law. The process of seeking indemnity began in
April 2021 and was not related to the negotiations to lease the showgrounds.
Clarke questioned whether the insurance industry would be prepared to insure the trustees given the amount of litigation around the future of the showgrounds.
“You can’t just ring an insurance company up while there’s a fire burning and say ‘hey I’d like to insure myself against this’.”
Showgrounds’ future
Meanwhile, the future of the Auckland Showgrounds is still unknown. Reade would not be drawn on plans for the site or when, or if, it would reopen for exhibitions. Nor would he say if an arrangement with a film industry was off the table.
“Several parties” had expressed interest in operating the site and the board was working hard to get a solution as soon as possible, he said.
The board was focused on finding an operator who could provide a realistic commercial return at a reasonable level of risk. (The board relies on income from the showgrounds to contribute to the maintenance of Cornwall Park.)
Reade said the board would consider any viable proposal that met its legal and commercial criteria.
“We are confident we will be able to achieve a workable solution within the constraints set by Justice Peters’ decision.”
He did not discount reopening the showgrounds on a temporary basis while considering the best longerterm solution.
Spillane and Clarke cannot understand the board’s reluctance to consider the only other tender in the proceedings, from major events supplier Coast Group. Spillane said Coast Group’s proposal, which was backed by his company and others in the industry, was financially viable and offered a longer lease than that offered by Xytech. It was also the only offer on the table that complied with the 1982 act and the Auckland Unitary Plan Precinct.
As the owners of the showgrounds’ buildings, the CPTB needed to concentrate on carrying out urgent repairs to be ready for the 2023 events calendar, he said.
Revenue of between $1.5 million and $2m that the board could have earned from exhibitions between June and the end of the year would have contributed significantly to those costs had the showgrounds remained open.