Financier wins $753,000 for LandCo deal

Financier Money Managers has won a case in the High Court at Auckland, which has ruled a contributory mortgage broker must pay $753,000 in commission on a property deal.

Justice Geoffrey Venning's decision on last month's five-day hearing ruled that National Mortgage Brokers must pay all the funds sought by Money Managers.

At issue were fees on a $36.5 million contributory mortgage raised for property developer Greg Olliver on his controversial Long Bay project north of Auckland.

Money Managers sued National for commission due on the LandCo funding deal, marketed to clients throughout Money Managers' 48-office franchised business.

National had used Money Managers exclusively to market the contributory mortgage and raise the $36.5 million but the relationship between the firms steadily worsened in the first year. Justice Venning said this was because:

* Money Managers wanted to establish an investment fund that would compete with National.

* Money Managers' clients had problems with National's contributory mortgages and were complaining.

* Money Managers chief Doug Somers-Edgar made derogatory comments about National on Radio Pacific in October 2001.

Justice Venning said the crux of the case was whether National had agreed to pay a commission for the second year of the mortgage, after it agreed to pay a 2.25 per cent commission for the first year.

He was more inclined to accept evidence from Money Managers' marketing manager, Alasdair Scott, than National executive Neil Nicholls, now a shareholder in Capital + Merchant Finance.

He rejected submissions that Scott was evasive or unreliable and found there was clear agreement that National would pay Money Managers a 2.25 per cent fee on funds raised for the second year of the mortgage. However, Scott had over-stated Money Managers' authority on its ability to call up the investments.

Nicholls said yesterday he was "disappointed" with the finding and was considering appealing.

He said National stopped offering mortgages in 2002 and paid out its last investors in July this year. It had stopped trading and was winding up its affairs.

Scott said he was pleased the court had upheld his position and it was significant that the court accepted Money Managers' evidence on key points.

NATIONAL CHARGES

* Procurement fee: $1,095,000.

* Loan establishment fee of $50,000.

* Interest rate of 9.25 per cent when retail interest rates were about 6 per cent.

* From these fees, National paid Lloyd's on the loan and costs.