High Court hears details of FMA’s inquiries into Du Val property group, then suppresses them

Wednesday, 18 June 2025

The High Court in Auckland was told about the ongoing investigations into the dealings of the Du Val group, which is now in the hands of statutory managers.

The Auckland High Court has heard details of the Financial Market Authority Te Mana Tā tai Hokohoko’s investigations into the Du Val property group, however they were suppressed by Judge Jane Anderson.

The hearing on Monday and Tuesday was held for the court to decide whether orders binding its founders Charlotte and Kenyon Clarke, should remain in place, or be varied.

The Clarkes are challenging the decision to appoint receivers over them, and want orders preventing them from dealing with their assets, or travelling overseas without permission of the court, to be lifted.

Ron Mansfield, the lawyer representing the Clarkes, sought suppression orders, arguing that reporting of evidence and submissions at the hearing could affect his clients’ right to a fair trial, if charges were ever laid.

Jenny Cooper, acting for the Financial Markets Authority (FMA), argued the orders should remain in place while the regulator concluded its investigations into Du Val group.

The property development and investment group is made up of about 70 companies, limited partnerships, trusts and funds, several of which raised money from investors.

Lawyer lays out Du Val investors' woes

The group was put into receivership last year, before Commerce and Consumer Affairs Minister Andrew Bayly ordered it into statutory management. Its debts have now mounted to more than $300 million.

The FMA’s investigations were ongoing, and no charges had been laid against any individual, the court heard.

Mansfield said the Clarkes’ position was that the FMA’s move to appoint receivers was never justified, and that it was the FMA’s actions, and the subsequent actions of the statutory managers, which had caused any losses that investors with Du Val eventually suffered.

Cooper called that “complete nonsense”, and an “assertion without any substance”.

It was also rejected by Janko Marcetic, counsel for the receivers.

However, Mansfield said: “If there was a need for intervention, and that's certainly not accepted, it must have always been the case that a less drastic remedy would suffice.”

The Clarkes’ position was that there was never good grounds for an FMA investigation, and they would “at the appropriate time take action”, Mansfield said.

Arguing for lifting the receivership of the Clarkes’, Mansfield said there was a potential conflict of interest that the statutory managers - John Fisk, Stephen White and Lara Bennett of PWC - were both the receivers for the Clarkes and also the statutory managers of the Du Val group.

The court heard that the Clarkes had not received any money for living expenses since late last year from the receivership as the assets held be receivers had run out, but the court heard no evidence on what they were living on.

Kenyon and Charlotte Clarke, founders of the Du Val property group, photographed before the group was put into receivership, and then statutory management.

The Clarkes were allowed $3000 a week, the court heard.

Receivership and statutory managers’ reports on Du Val were in the public domain and not suppressed, Justice Anderson ruled.

The latest six-monthly statutory manager’s report from Fisk, White and Bennett, published in March, reported “a number of areas of concern regarding the Du Val Group’s activities that warranted further investigation”.

It said: “The Du Val Group’s accounting records are materially incomplete, with a large volume of related party transactions, requiring extensive further forensic accounting analysis.”

Areas of concern to the statutory managers included what it referred to as the “intellectual property transaction”.

“The financial accounts for Du Val Group NZ Limited indicated the purchase of intellectual property from the JK & CM Clarke Trust… for $15m in a historical transaction, creating a corresponding loan balance owing to the Trust,” the statutory managers’ report said.

Lakewood Plaza in South Auckland was developed by Du Val.

The value of that loan balance was subsequently been reduced to about $5.5m, it said.

The statutory managers had not located any documents or information which provided support for the value attributed to the transaction.

The statutory manager was also looking into a “large number of transactions” across multiple entities within the Du Val Group recorded in the accounting records as payments to, or on behalf of, either Kenyon Clarke, Charlotte Clarke, or both.

“In some historical instances, accounting journal entries have subsequently been entered, ultimately resulting in those transactions being recorded as a reduction in the loan balance owed by Du Val Group NZ Limited to the Clarke Trust,” it said.

The statutory managers reported they now had possession of some of those assets, but there was an ongoing dispute over who really owned them.

The nature of the assets was discussed in the High Court hearing, but that information was suppressed, despite being previously reported in media.

“Our investigations suggest that many of the assets were paid for directly or indirectly by various Du Val Group entities,” the statutory managers’ report said.

The statutory managers also reported “significant concerns” over transactions involving GST, which had led to several Du Val entities entering into schemes of arrangement with the Inland Revenue Te Tari Taake.