Hamish Fletcher

Business reporter for the NZ Herald

Mortgage trust wins $3.1m case

Judgment goes against firm part-owned by a bankrupt property developer who was previously behind a failed golf resort.

Robert Cribb bought this Katikati golf course - along with a clubhouse and residential sections - with the plan to develop it until his company went into receivership.
Robert Cribb bought this Katikati golf course - along with a clubhouse and residential sections - with the plan to develop it until his company went into receivership.

An Auckland mortgage trust has won a $3.1 million High Court claim against a company part-owned by a bankrupt property developer who was previously behind a failed Bay of Plenty golf resort development that left $13 million of debt.

FM Custodians, on behalf of the Auckland Mortgage Trust, was awarded a judgment for $3.1 million in a case they took last month against Hamilton-based SOS Investments, which failed to provide an arguable defence to the claim.

Associate Judge Jeremy Doogue's decision reveals SOS Investments borrowed $2.5 million from the trust, which claimed this amount and $631,000 for interest and expenses when the case went to the High Court.

One of SOS's arguments in defence was that the trust had waived its right to pursue the repayment because of the delay in issuing proceedings, brought years after the defendant defaulted on the loans.

SOS also argued the trust had waived its right to chase the repayment because of an "arrangement" the parties had made last year.

Former SOS director and part-shareholder Robert Cribb told the court the mortgage trust had agreed to wait for the company to recover funds from an Austrian company, which he had obtained a $33 million judgment against on behalf of a family trust.

However, Associate Judge Doogue said there was an "absence of evidence" in Cribb's affidavit which made these claims.

"I consider that it does not pass the threshold of credibility required to provide support of the defendant's claims," the judge said.

While the length of time in taking the action was an "unusual feature" of the case, Associate Judge Doogue accepted a submission from the mortgage trust that a delay did not affect the lender's exercise of powers under the loan agreement.

Companies Office records say Cribb stepped down as director of SOS in 2012, the same year he was declared bankrupt by the High Court.

The creditor which pursued Cribb to bankruptcy was Evia Rural Finance, which lent him $800,000 as part of his Kaimai Palms development, which Cribb's company bought from a receiver in 2001.

Cribb bought a Katikati golf course - along with a clubhouse and residential sections - and had wanted to build a three-level hotel and restaurant, two tennis courts, bowling green, gymnasium, heated swimming pool, and use it as a health spa.

But his company, Kaimai Palms Golf Resort, was put into receivership in 2010 by its creditor, Guardian Asset Securities.

At the end of the receivership, after the vast bulk of the assets were sold, Guardian was still owed $3.19 million.

Other secured creditors, including Evia, were owed $9.7 million.

The Auckland Mortgage Trust, which won its court claim against SOS last month, has been winding up since 2009.

The trust's Bruce Rasmussen said this was "very close to completion", with only four loans left to deal with.

About 66c in the dollar had been returned to the trust's investors and Rasmussen said he hoped the final return would be over 80c in the dollar.

- NZ Herald

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