Bank funds legal defence

Westpac is funding the developer of a central Auckland apartment block trying to force Blue Chip victims to pay for apartments they can't afford.

It's emerged Westpac has funded developer Turn and Wave Limited's legal defence in a case brought by a group of Blue Chip investors.

When the property scheme collapsed, hundreds of investors were stuck with sale-and-purchase agreements on units in several developments including the Bianco.

The bank holds a first mortgage over the Bianco and stands to lose out if the Blue Chip investors can't settle.

In a letter to investors in March, Turn and Wave confirmed the arrangement over its legal bills.

"The cost of defending [the] court actions has been borne by our main funder Westpac by way of an increase in the loan facility to TWL," the letter said.

In the High Court last year a representative group of investors argued they should be allowed to cancel the agreements because they were misled about the unusual investments.

The Blue Chip products involved investors putting down deposits on yet-to-be-built apartments. They were told they'd never own the properties because Blue Chip would purchase them on completion. The developers now want settlement on the finished apartments.

In November the High Court ruled the sale-and-purchase agreements were valid. The investors are appealing.

Tauranga couple Lang and Aileen Pringle are liable for six apartments, including two in the Bianco, worth $2.7 million. They live on the pension. "It's ludicrous," Lang Pringle said.

He has written repeatedly to Westpac.

"We are of the opinion that Westpac seem to have some input into the position we find ourselves in ... Does Westpac support the totally antagonistic approach that the developers are taking?" he said in March.

The bank last week said: "This issue is currently subject to litigation and it would not be appropriate for us to comment at this point."