Employee alleges former boss has left her penniless

A property developer who went bankrupt owing $32 million is being taken to the Employment Relations Authority by a former employee for more than $1m.

Remuera developer Steve Kelly went bust in 2008 following a string of failed property developments in upmarket Auckland suburbs.

His former project manager, Judi Davidson, agreed to continuing working for Kelly while he tried to get back on his feet. Davidson claims she also lent Kelly money to help him stave off losing his home.

Davidson said before meeting Kelly she had a successful career in business and a property portfolio but she had been left "penniless". "I am absolutely devastated," she said.


Kelly denies any wrongdoing, and said the payments made were property investments rather than loans. "I believe I have treated her pretty well, and time will tell," he said.

In 2003, Davidson was hired by Kelly's Volcanic Investments on a $50,000 salary and offered the chance to buy apartments at a discounted price.

Documents filed with the ERA show she bought an apartment for $555,000 in a development in Hargreaves St in Freemans Bay, Auckland, in 2004. Davidson claimed a $275,000 mortgage was placed on the property without her knowledge - and she only discovered this when she went to sell it.

Davidson also said she took pity on Kelly as he ran into financial trouble, claiming she paid $100,000 in council rates for him in 2005. When Kelly went bankrupt in 2008, owing around $32m, Davidson claims he asked her to continue working and alleges that he promised to make good any wages once he got back on his feet.

Kelly was discharged from his bankruptcy in 2011. Davidson claims he turned up at her door one night in 2011 saying he was about to lose his house and needed $25,000 for an emergency mortgage payment.

Davidson said she gave him the money, which went into the bank account of a company that was liquidated, preventing her taking legal steps to recoup the money.

"I've worked goddamn hard ... I just can't believe it."

Davidson wrote to Kelly's extended family to inform them of his actions. Kelly's son-in-law is one of the Smorgon family, one of Australia's richest families.

A letter from Kelly's lawyer, Michael Locke, said this would be reported to police as a form of blackmail.

In a statement, Kelly said Davidson's "allegations are substantially untrue, and that her claims are regarded as entirely lacking in any legal merit".

"[The] proceedings are defended and have not yet been determined, and Mr Kelly considers that it would be inappropriate for either party to discuss matters which are the subject of those proceedings while they are before the Employment Relations Authority."

Kelly owns a $1.2m Remuera townhouse, a flat in Melbourne and timeshare in South Africa.