Court orders Warkworth agent to repay $1.4 million

Warkworth real estate agent Duncan Napier has failed in his bid to overturn a High Court decision ordering him to repay more than $1.4 million to a former employer.

The Court of Appeal in Wellington dismissed the appeal on December 15. The court found that Mr Napier’s attempts to justify the very large amounts of money he took beyond his salary and permissible expenses “lacked veracity and did not withstand scrutiny”.

However, Mr Napier has applied for leave to appeal to the Supreme Court, as he maintains everything he did was “appropriate and right”.

The civil action between Mr and Mrs Napier and two directors of their former employer, Torbay Rest Home, was heard in the High Court in June and July 2015. Mr Napier was accused of embezzling $2.235 million between 2005 and 2012 while working as administrations manager at the rest home.

Michael Single and Mark Kayes, who are directors of Torbay Holdings, Torbay Rest Home and Sandspit Bay Holdings, brought the case.

 

Mr Napier represented himself at the original hearing and claimed the funds were legitimate repayments for business expenses and benefits, which he was contractually entitled to. However, he was unable to provide receipts to match the majority of the withdrawals he had made from the company’s account.

In his decision on October 9, 2015, Judge Mark Woolford said it had been difficult to determine the exact sum misappropriated due to poor book-keeping, but he found only about 30 per cent of the funds were legitimate.

 

At the end of the three-week hearing, he found Mr Napier liable for the sum of $1,419,351, Mrs Napier liable for $720,310 and the Napier Family Trust liable for a further $308,080. The total amounts of the collective judgements came to $2,235,396, but the net amount recoverable by the Torbay companies was $1,458,288, with other consequential orders..

Justice Woolford said Mr Napier wrote out 522 cash cheques totalling $509,341 between 2005 and 2012, “which are now impossible to trace or reconcile”.

“The rest home is not, however, a cash business. I find Mr Napier’s evidence and explanations for the large number of cash cheques to be unconvincing and contrived. This reflects on his general credibility.”

At least $233,000 was spent on buying a property in Whangaripo Valley and building a house on the land. This included $101,400 paid directly to suppliers building the house and $131,600 to service loans for the property. As a result, $233,000 of the Whangaripo property was put into a constructive trust for Torbay Holdings and Torbay Rest Home.

Mr Napier was also found liable for breaches of director’s duties and associated fiduciary duties.

While the Napiers did not dispute the figures involved, the fundamental issue was whether the payments were legitimate or not.

Mr Napier claimed he was entitled to five per cent from the sale of rest home units, but no evidence of such an agreement was produced and Justice Woolford said the proceeds from unit sales still did not explain the variations in the couples’ salaries.

Mrs Napier was a founding director of the companies, from 2001 to 2012, while Mr Napier was not appointed a director due to a previous personal debt.

The issues came to a head in 2011 after the Inland Revenue Department was unpaid nearly $200,000 and an investigation into the management of the business started in 2012. According to the evidence, Mr Napier left his employment within a month and then claimed he was unfairly dismissed.

Along with legal costs, the case could leave the couple with a debt of well over $2 million.

Mr Napier has been involved in some major real estate deals since moving to Warkworth in 2013. He sold the Hub in Mangawhai, the Saw Mill in Kaiwaka and Ascension Wine Estate. He served on the board of Matakana School, was the treasurer of the Omaha Beach Surf Life Saving Club and Mahurangi College Rugby Club, and was on the committee of the Warkworth A&P Society.