The High Court at Timaru has appointed liquidators to a Papamoa property development over some $2.5 million owed to the frozen Aorangi Securities.
Associate Judge Rob Osborne appointed Kenneth Brown and Paul Manning of RHB Chartered Accountants as liquidators of Emerald Shores, according to a June 28 judgment that was published on the Justice Ministry's website this week.
The judge upheld the claim that Bay of Plenty businessman Peter Cameron's swapping of property assets out of Emerald Shores and into Emerald Shores (2011) amounted to a "hive-down" and that the transaction would "force Aorangi to wait further for its money".
The company was set up in 2001 when Cameron approached Allan Hubbard about a potential joint venture over a subdivision in Papamoa.
Cameron ran the property development's operation and sales, and left Hubbard to "make the financing arrangements and attend to the books", the judgment said. "Mr Cameron's evidence is that he also had no knowledge even of bank statements as he did not need to access them, trusting Mr Hubbard,"
The outstanding debt came from $4.8 million advanced to cover prior loans from South Canterbury Finance and Bank of New Zealand.
"Precisely how the additional debt (both to South Canterbury Finance and through current account to the Bank of New Zealand) built up between 2001 and 2006 is not demonstrated by the documentary evidence," the judgment said.
"What is clear from the documentary record is that on 25 June 2007 Aorangi received real money for refinancing purposes and repaid real money to South Canterbury Finance."
Over the years the balance owed to Aorangi fluctuated though the judge said it wasn't clear whether that was from additional development costs, Emerald falling behind interest repayments, or both.
"I have found (contrary to Emerald Shores' pleadings) that Emerald Shores was indebted to Aorangi and that the debt had not been fully repaid," the judge said. "Any discussions or protests which Mr Cameron made to Mr Hubbard in 2010 do not alter the fact that the debt existed."
Associate Judge Osborne was satisfied the debt flowed from actual payments, and wasn't created "by the stroke of a pen" as submitted by Cameron's lawyer.
After Hubbard, his wife Jean and Aorangi were placed into statutory management, Cameron was left to raise funds to progress the subdivision elsewhere, securing a $1 million loan from Basecorp Finance.
"Mr Cameron's decision in November 2010 to obtain further finance from Basecorp Finance Ltd was an understandable step in the interests of Emerald Shores," the judge said.
"But when in October 2011 Mr Cameron undertook a hive down of the remaining assets of Emerald Shores to Emerald Shores (2011) Ltd, thereby stripping Emerald Shores of its remaining real assets, he would have brought to an end any claim Emerald Shores may have had in equity to force Aorangi to wait further for its money," the judgment said.
Cameron also managed the Hubbard-backed Woodbury Rise property development in Tauranga, and is being pursued personally by the liquidators of that project for the loan balance, according to their second report.
Woodbury Rise owed $4 million to Aorangi, $315,000 to Hubbard personally, and $35,000 to Southbury Group when it was put into liquidation last year.