Business Insider: Car no bargain at $56,000, rules judge

A BMW racing car like the one at the centre of the court claim. Photo / AP

A New Zealand motor racing enthusiast has been denied a High Court appeal against BMW, over the sale of a car which he says was the same as the vehicle that won a world motorsport championship.

BMW Financial Services lent Michael Delmont a little over $150,000 in 2008 so he could buy a 2003-04 BMW 320i IE46 racing car made by the German company.

Delmont did not buy the car to race, and regarded it as a collector's item.

Delmont previously told the High Court that Spanish driver Antonio Garcia had raced the car for the Italian ROAL team and that it was the same as the car in which Britain's Andy Priaulx won the World Touring Car title in 2004-05.

But after he bought the car, Delmont's business activities ran into problems and in July 2009 he defaulted on the BMW loan.

After Delmont could not sell the car to service the loan, BMW asked Turners Auctions to do so. They valued it at between $40,000 and $60,000. The vehicle was sold for $56,000, leaving Delmont owing BMW $125,244. Delmont, who was found liable for this sum in the Auckland District Court, was given leave to appeal.

His case came before Justice Mark Woolford on Thursday in the High Court. The sole issue was whether BMW Finance sold the car for less than it was worth and breached its duty to get the best possible price for the vehicle.

The argument was that BMW had failed to recognise the true value of the car as a collector's item.

However, Justice Woolford said there was no evidence that the vehicle had more value as a keepsake rather than as a race car.

"The car was not grossly undervalued at the sale price of $56,000," he said.

Back on the register

A foreign exchange company that fell foul of New Zealand's market watchdog still owes customers US$15.8 million ($22.8 million), a High Court judge has been told.

Auckland's Union Markets, owned by a Cyprus-based businessman, was kicked off the Financial Service Providers Register (FSPR) by regulators last September.

It is just one of the companies to suffer such a fate after the Financial Markets Authority (FMA) announced a series of expulsions, saying it was concerned that some firms were taking advantage of New Zealand's reputation as a good place to do business.

While the Companies Office maintains the register, the FMA can remove companies from the list where it is likely that a firm is giving a false or misleading impression about the extent to which it is regulated in New Zealand.

The FMA subsequently put out a warning about Union Markets and how it was claiming to be registered on the FSPR when it had been given the boot. Enter Registrar of Companies Mandy McDonald, who at the beginning of this year moved to strike off Union Markets because she believed it was not carrying on business in this country.

However, a Singaporean foreign exchange broker has now intervened and went to the High Court at Auckland this month in a bid to keep Union Markets on the companies register.

That broker, Singliworld, introduced customers to Union Markets and says it placed customer funds in the Auckland company's accounts.

Once Union Markets was removed from the FSPR, Singliworld says it requested a refund of all customer money.

Almost US$16 million remains outstanding, it told Justice John Faire.

The judge granted Singliworld's request and made an order that Union Markets should not be removed from the Register of Companies.

Still scrubbing

John Russell. Photo / Jason Oxenham

Having bankrupted its so-called "public enemy number one", the taxman is still cleaning up in the wake of 81-year-old accountant John Russell.

Russell, who developed an infamous template that the Court of Appeal once described as a "blatant tax-avoidance scheme", was issued a $75 million bill by Inland Revenue in 2003 when $15 million earned by companies between 1985 and 2000 was reassessed to him personally.

That amount, of which only $5 million is core tax, ballooned to about $500 million thanks to penalties and compound interest. The former merchant banker was declared bankrupt last November.

The following month, Inland Revenue sought to liquidate Kensington Developments - a company which has been in receivership since 1994 - over a $5.5 million claim.

Russell, until recently, was the receiver of that firm, which according to a High Court judge now has no arguable defence to IRD's liquidation bid.

The case will come back to the court this month, when a liquidator may be appointed.

Valiant efforts

Creditors are personally pursuing the director of three property companies that failed owing more than $6 million.

Building supplies and hardware company Bunnings has brought bankruptcy action against Hamish James Clarke, who directed Auckland-based Valiant Homes and other firms.

Valiant had been working on 13 building sites across the city but went into liquidation and receivership last March, owing more than $4 million, with suppliers and other unsecured creditors claiming more than $1 million of that amount.

Bunnings' lawyer told Associate Judge Roger Bell during a bankruptcy hearing on Thursday that a settlement had been canvassed with Clarke, who was not present or represented at court.

Westpac also appeared as a creditor during the short court session in Auckland.

Meanwhile, Valiant Homes' liquidators said this week that they still can't track down Clarke and propose to complete the company's wind-up this year.

"The last six months have been spent trying to locate the director / shareholder of the company without any success despite the best endeavours of the liquidators," Pritesh Patel said.

Clarke was believed to be in Europe as of last September and didn't leave behind company records for the liquidators to work through.