Business Editor for the NZ Herald

$740k scrap heading to court

Judge refuses to place order over 9000sq m Queenstown property as parties ready for hearing next month.

The $740k was used to buy a block of land at Jack's Pt in Queenstown (pictured). Photo / supplied
The $740k was used to buy a block of land at Jack's Pt in Queenstown (pictured). Photo / supplied

A judge has refused to place a court order over a 9000sq m property in a picturesque Queenstown settlement as a liquidator chases $740,000 used to buy the land.

A South Island property development company, James Developments, was put in liquidation in 2009 and still owes creditors about $1.5 million. The liquidation followed the company agreeing to buy a property in Central Otago in 2007 and failing to complete settlement.

The year before this deal, things were going well for director Chris James, and his family trust decided to buy an 8925sq m block of land at Jack's Pt in Queenstown in order to build a "very substantial home".

A promotional website for Jack's Pt claims the settlement is "set in a spectacular location" in view of the Remarkables mountain range and has "a unique community for people looking for an exceptional lifestyle".

To finance the purchase, James Developments advanced $740,000 to the trustees of his family trust, a court judgment last year said.

When James Developments was heading for liquidation, it was decided by the company that the $740,000 transaction was to be "re-documented".

This change said that transaction was "incorrectly narrated" in James Developments' financial statements as an advance to the trust.

Instead, this $740,000 was to be recorded as a repayment of advances from Chris James and a company he owned.

After investigating James Developments' affairs, liquidator Grant Reynolds demanded the trustees pay the $740,000 along with interest. The trustees denied there was any basis for this demand and Reynolds issued court action to recover the $740,000.

Reynolds last year brought an application for summary judgment in the High Court at Dunedin but this was dismissed.

A more substantial hearing over the $740,000 is due to be argued in the same court next month.

Ahead of this wrangle, Reynolds applied for a charging order against the Jack's Pt land. This type of order charges land with payment of the amount which an entitled party has or may obtained judgment for.

Reynolds, in the application, argued the defendants were "continuing to dispose of their property to defeat the plaintiff" - which is one of the requirements to gain a charging order before judgment has been entered by the court. Justice Rachel Dunningham said in her decision last week that Reynolds' application failed to establish that a charging order was necessary.

The judge said there was already a caveat on the property.

"The caveat has held the status quo for the past year and a half," Justice Dunningham said. "Accordingly, I see no need to issue a pre-judgment charging order now when there is no current evidence of attempts to remove, conceal or dispose of the defendants' property, and when the substantive proceedings are scheduled to be heard in less than two months."

- NZ Herald

Get the news delivered straight to your inbox

Receive the day’s news, sport and entertainment in our daily email newsletter


© Copyright 2017, NZME. Publishing Limited

Assembled by: (static) on production bpcf03 at 28 Apr 2017 02:20:08 Processing Time: 494ms