Business reporter for the NZ Herald

Rich-lister in Remuera property loan scrap

Pyne Gould Corporation director and major shareholder George Kerr.
Pyne Gould Corporation director and major shareholder George Kerr.

Rich-lister George Kerr has the all clear from a High Court judge to force a mortagee sale of a $5 million Remuera property he helped a former friend buy.

Before they fell out, Kerr and Michael Carolan were close business associates who held each other in "high mutual respect", said Justice John Fogarty.

Carolan resigned from Macquarie Bank in 2007 to work for Kerr in the Equity Partner group of companies and both thought they could make a lot of money.

Carolan later also became a director of Pye Gould Corporation, which Kerr controls.

Carolan, in 2007, had remarried and wanted to buy a $5m house for himself and his new wife.

He asked Kerr for assistance to buy the property before he settled up with Macquarie but both men understimated how much would be needed.

One of Kerr's companies advanced $480,000 to pay the deposit for the house.

However, in the following months another $685,000 was needed. It was subsequently advanced.

The men later fell out.

That was after Carolan, when serving as a director of an Equity Partner company, effectively blocked the appointment of another board member favoured by Kerr, a judge said.

Carolan resigned from Pyne Gould Corporation and a month later - in August 2014 - Kerr requested the debt be repaid with interest.

The following year, a Kerr-related company which held a mortgage over the Remuera property served a notice to Carolan about a default.

Carolan then launched High Court action seeking orders to stop the Kerr-related company from selling the property.

He contended that he was not indebted to the firm and that the money advanced was written off.

Kerr and his companies, during the same dispute, sought orders they were owed $1.17m plus interest.

They also sought orders that the notices served on Carolan were valid and that they were entitled to exercise a power of sale on their mortgage.

Justice Fogarty, who heard the dispute, said there were no agreed terms for the advance.
"The two gentlemen did not need to take it past a handshake," the judge said.

He found that Kerr had proven all the advances were a loan.

"It has not been proved by Mr Carolan on the probabilities that the loan was ever written off or the intention never to enforce the loan was a decision ever made by any of the Kerr Entities or by Mr Kerr," Justice Fogarty said.

The judge ruled Kerr and his companies were owed $1.17m, as well as interest of 7.5 per cent per year from October 2014.

Kerr and the companies are also entitled to exercise the power of sale in relation to their mortgage, Justice Fogarty said.

- NZ Herald

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