Receivers seek $6.3m in interest from former director and property developer.
The receivers of a failed finance firm are seeking $6.3 million in compound interest on top of their $8.6 million claim against a former director of the company and a terminally-ill property developer.
Justice John Fogarty yesterday indicated he would enter judgment in favour of Belgrave Finance's receivers for the $8.6 million but that he hadn't decided on compound interest.
Belgrave's 2008 collapse left more than 1200 investors $22 million out of pocket. Investors have got back 17.4c in the dollar of their principal, according to the latest receivers' report.
A lawyer for Belgrave's receivers, Michael Arthur, told the High Court at Auckland yesterday that the firm's former director, Shane Buckley, breached his duties to the company by facilitating related-party loans.
Arthur said between August 2005 and May 2008 numerous advances were made from Belgrave to interests associated with property developer Raymond Tasman Schofield, who in substance was the finance company's ultimate owner.
Arthur said these loans breached restrictions in Belgrave's trust deed, which dictates the rules on how investor funds are to be dealt with.
These loans were not arms-length and outside the terms of Belgrave's lending policy, Arthur said.
As well as its claim against Buckley, the company alleges Schofield dishonestly assisted with the director's breach of duties.
The pair's actions caused losses of $8.6 million for which Belgrave is seeking judgment against Buckley and Schofield, Arthur said.
Arthur also sought compound interest of $6.29 million, bringing the total claim against the pair to almost $15 million.
Buckley was jailed for three years in 2012 after pleading guilty to more than 20 charges brought by the Serious Fraud Office and the Financial Markets Authority.
Schofield was charged by these authorities but in December 2012 was granted a stay on prosecution because of a terminal illness.
Neither Buckley nor Schofield were represented in court yesterday.
While indicating he would grant the judgment, Justice Fogarty formally reserved his decision.
The receivers had also targeted former Belgrave director Stephen Smith in their claim but he was declared bankrupt in September 2011. Smith pleaded guilty to SFO and FMA charges and was sentenced to four years in prison in 2013.