Winery owner ordered to pay $2.3m after losing High Court battle

The owner of a New Zealand winery that slipped into receivership earlier this year has been ordered to pay NZ$2.3m (US$3.3m) after a judge ruled he misled two former business partners over their investment in the winery.

Nelson’s Mahana Estates winery was put up for sale in July of this year after a High Court judge ruled against a bid to freeze the company’s assets, amid a lawsuit filed against its owner by two Las Vegas executives. With no buyer, the winery went into receivership earlier this year. 

James Murren (chairman and CEO of MGM Resorts International) and Daniel Lee (CEO of Palms hotel-casino in Las Vegas), took legal action against owner Glenn Schaeffer, who is an American-born hotelier who formerly headed the Mandalay Resort group in the US, in 2015, bringing the case to the New Zealand High Court.

According to court documents, the pair invested a combined NZ$2.3m in the winery in the belief that they were to become partners in the business and shareholders. The lawsuit accused Schaeffer of not using the investments as promised, but instead for the assets he held as a shareholder of New Zealand company Woollaston Estates Holdings, later changed to Mahana.

They claimed that Schaeffer committed “negligent misstatement, deceit and fraudulent misrepresentation” of the investment deal in Mahana.

Following a 10-day hearing, the Justice David Collins ruled that Schaeffer had made misleading statements to the pair, ordering him to pay US$2.3 million ($3.3m) to two Las Vegas executives.

As reported by the New Zealand Herald, the judge said: “I have also concluded that Mr Schaeffer is liable in relation to causes of action brought under the Fair Trading Act 1986 and the Nevada Deceptive Trade Practices Act,” the judge said.

“None of the affirmative defences alleged by Mr Schaeffer have merit. Accordingly, I find Mr Schaeffer is liable for the damages sought plus interest. Judgement is entered in favour of Mr Murren for US$1,600,813.92 plus interest and USD 700,406.96 plus interest for Mr Lee.”

Still in receivership, Mahana’s estate, which includes a 21ha vineyard planted with Pinot Noir, Pinot Gris, Riesling and Chardonnay, a winery with cellar door and tasting room, remain up for sale.