Mahvash Ikram
Kenyon and Charlotte Clarke, the couple behind the collapsed Du Val group, say they should not be compelled to provide receivers with details of their financial affairs because the investigation they face is essentially criminal, not civil, meaning they have a right to remain silent.
Ron Mansfield KC
At a Court of Appeal hearing in Auckland on Monday, counsel for the Clarkes, Ron Mansfield KC, argued the High Court exceeded its authority when it ordered that the couple must face compulsory examination under oath by receivers PwC.
Mansfield said the order gave PwC “excessive and unnecessary powers”, arguing the High Court overlooked the relevance of s 23 of the New Zealand Bill of Rights Act 1990, which gives individuals the right to refrain from making a statement.
Mansfield told Justices Sarah Katz, Tracey Walker and Michael Robinson that the couple had no objections to being interviewed by the receivers but had concerns over the legality of the questioning.
The appeal stems from a High Court judgement earlier this year, in which Justice Jane Anderson — relying on the Financial Markets Conduct Act 2013 s 523(1)(h) — authorised PwC, to compel the Clarkes to be examined under oath about their finances. The section allows the Court to appoint receivers “having any powers that the court orders”.
The Clarkes were first ordered to submit to an interview in 2024 but refused to cooperate, leading to PwC obtaining the High Court ruling in April this year, which is now under appeal.
At Monday’s hearing, Mansfield cited s 63 of the Evidence Act 2006, which requires receivers to share information of concern with the Financial Markets Authority (FMA).
He said that the FMA and the receivers were overreaching by using civil mechanisms to obtain evidence that might later be used in a criminal case. The FMA has not laid any charges against the Clarkes and Mansfield told the court that the receiver’s powers should be narrowly confined until any criminal liability is determined.
Mansfield said appointing a receiver under the FMC Act 2013 did not automatically give that receiver every power available under the Receiverships Act 1993. He said s 523 of the FMC Act required the court to determine which powers were needed to deal with the situation, which the High Court had failed to do in this case.
Mansfield also said that s 25 of the FMC Act expressly allows the right to silence and privilege against self-incrimination when under questioning by the FMA. He said allowing receivers to compel the Clarkes to answer questions would allow the FMA to circumvent these protections, giving it access to information it could not lawfully obtain directly.
The Clarkes were put under asset-freeze and travel-ban orders last year.
FMA denies ‘criminal flavour’ to proceedings
Counsel for the FMA, Jenny Cooper KC said the proceedings are civil in nature, aimed at preserving assets for potential investor compensation – not at establishing criminal guilt.
She said the FMA emphatically rejected Mansfield’s claim that the proceedings had a “criminal flavour, arguing the receivership sits within the FMC Act 2013 framework for civil enforcement and the preservation of assets pending determination of liability.
Cooper also dismissed Mansfield’s argument that the receivers and the FMA operate as a single entity, saying PwC’s role was to secure and protect assets that may later be required to satisfy investor claims, not contribute to a criminal investigation.
Addressing concerns about self-incrimination, Cooper said the FMA was mindful that any information obtained through the receivers must not compromise the respondents’ rights under s 63 of the Evidence Act 2006, which sets out how information obtained by receivers can be handled.
Vague statements
Michael Arthur, counsel for the PwC, said the Clarkes’ statements about their financial position were vague and failed to provide the detail required under the Receiverships Act 1993.
Arthur said financial records remained incomplete as of March 2025 and the Clarkes had only acknowledged assets already identified by the receivers, with no details of current income or employment.
Arthur said the Clarkes had breached their obligations under s 12 of the Receiverships Act by declining to answer questions and failing to assist the receivers in understanding their overall financial position.
He said affidavit evidence from one receiver identified substantial funds received by the Clarkes and used to acquire assets. He said that the orders sought were intended to assist in locating assets and clarifying the couple’s financial position. The receivership, he said, was a collective procedure more akin to a liquidation than a private receivership.
The lead up to statutory management
In mid-2024, the Financial Markets Authority (FMA) raised serious concerns about the solvency and governance of more than 70 companies linked to the Du Val Group.
In August 2024, the High Court placed several entities into interim receivership and imposed asset-preservation orders over the Clarke’s personal assets. Less than three weeks later, the government, acting on the FMA’s recommendation, took the rare step of placing the wider group under statutory management pursuant to the Corporations (Investigation and Management) Act 1989.
PwC New Zealand was appointed statutory manager, a move that suspended ordinary insolvency procedures and transferred full control of Du Val’s affairs to PwC.
The statutory managers later reported incomplete financial records, extensive related-party transactions and poor segregation between company and personal funds.
Group-wide liabilities were estimated at $306 million, including investor capital, construction debts and tax arrears. A subsequent update in September 2025 recorded partial debt reduction to about $267 million following asset sales but warned that recoveries for investors would remain limited.
Du Val first came to the FMA’s attention 2021, when it issued a direction order under s 468 of the FMC Act 2013 that required Du Val to withdraw promotional material for its Mortgage Fund. The regulator found advertising claims such as “high security and high return” and “no fees” likely to mislead investors by implying a level of safety comparable to bank deposits.
Du Val unsuccessfully challenged the order in the High Court on the grounds that the ads were not misleading because they were targeted only at wholesale investors, a position the court rejected.
In March 2023, the FMA issued a further warning over Du Val’s debt-to-equity swap, saying the company misled investors about the suspension of cash distributions and their rights under the offer. The regulator’s concerns escalated into the 2024 enforcement actions that now form the basis of the Clarkes’ appeal.
The Du Val business model
Du Val’s operations combined property development, construction, and investment management through a network of more than 70 related companies and limited partnerships. The structure was designed to raise private capital for in-house residential projects while limiting risk on a project-by-project basis.
Investor funds were channelled primarily through the Du Val Mortgage Fund Limited Partnership and a series of similar investment vehicles marketed to wholesale investors under the Financial Markets Conduct Act 2013. Those partnerships then on-lent money to Du Val’s own development subsidiaries, which used the funds to acquire land and build residential projects in Auckland and Hamilton.
The business model promised investors fixed annual returns of about 6-8%, promoted as “secured” by mortgages over the properties being built. In practice, many of those securities were second-ranking, sitting behind bank finance, and investors’ returns depended on the success of Du Val’s property sales.
Duty-of-care litigation
A separate High Court proceeding in July 2025 tested whether the FMA owed a duty of care in negligence to individual Du Val investors. The claim was brought by a group of shareholders and limited partners who argued that the FMA, by first approving Du Val’s offers to wholesale investors and later intervening to freeze assets, had failed to prevent foreseeable losses.
Justice Greg Blanchard dismissed the claim, ruling that the FMA did not owe a duty of care to investors affected by its regulatory decisions. The court found that imposing such a duty would conflict with the FMA’s public interest mandate under the FMC Act, requiring it to balance market integrity and investor-confidence considerations.
The Court of Appeal reserved its decision after Monday’s hearing.
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