Black Barn co-founder Andy Coltart has succeeded in the Court of Appeal to have restrictions on his home's title retained, paving the way for more High Court wrangling over the multi-million-dollar development near Havelock North on which it stands.
Mr Coltart placed caveats on the incomplete subdivision on the Tukituki River's Horseshoe Bend, where he had an option to purchase the original homestead from the property's owner GLW Group Ltd (GLW).
The caveats protected more than $1.5 million on improvements he said he made to the homestead. In January 2013 GLW agreed to sell several lots to Charlie's Juice Company co-founder Stefan Lepionka.
GLW defaulted on its $2.6 million Westpac mortgage.
Mr Lepionka had paid a deposit of $463,000 for the lots and to prevent potentially losing the money bought the mortgage from the bank.
As mortgagee Lepionka's company adopted the sale agreements for the Lepionka lots, agreeing to pay Lepionka more than $1.213 million if the subdivision did not proceed.
It also cancelled Mr Coltart's option to buy the homestead for $650,000, which Mr Lepionka told the court fell well below independent valuations of a forced sale of between $1.84 million and $2 million.
The Court of Appeal decision said Mr Lepionka's figures "did not quantify the discrete value of Mr Coltart's improvements to the property".
Mr Coltart is an architectural designer who worked with GLW in the early stages of the subdivision.
He made an offer to purchase the whole property for $6.93 million, which was declined by the Lepionka mortgagee which then successfully applied to the High Court to remove Mr Coltart's caveats.
The decision said the court was satisfied Mr Coltart arguably had an interest the value of the whole property above the mortgage amount.
If that was so then the mortgagee owed Mr Coltart a duty to act in good faith - it must predominantly use its powers to remove the debt and sell the property for the best price and "must not act in a manner which unfairly prejudices or wilfully and recklessly sacrifices the interests of parties like Mr Coltart with an interest in the equity of redemption".
The Lepionka mortgagee was arguably not entitled to cancel Mr Coltart's agreement and the mortgagee's actions "invite the inference that its predominant purpose was to secure collateral advantages for the Lepionka purchasers, not to recover its loan".
Mr Coltart's caveats must remain "until the High Court has heard and determined all the evidence relating to Mr Coltart's claim against the Lepionka mortgagee".
In earlier stages of the development Mr Coltart fell out with the former director of GLW, Garth Paterson, after a disagreement over costs relating to Mr Coltart's project management of the resource consent application and a house built for Mr Paterson.
Mr Paterson was last year bankrupted in Australia for unrelated developments.
On Wednesday Mr Paterson was bankrupted in New Zealand for debts relating to the Tukituki River development.
Mr Paterson's family members have lived in the house built for him since Christmas, despite Mr Lepionka's company being mortgagee in possession.
A Unison linesman was allegedly bit by GLW's director Liz O'Neil, Mr Paterson's former wife, when Mr Lepionka asked for the electricity supply to be disconnected in January.
Next month GLW appears in the High Court in Wellington over a disputed debt to Lepionka's company as GLW fights to avoid liquidation.