Legal action set for failed Queenstown property scheme

Investors had reportedly paid deposits to buy properties in developer Nigel McKenna's planned $2 billion Kawarau Falls scheme.

A group of 109 people - mainly Singaporean and Malaysian - are taking legal action over a failed Queenstown property scheme they bought into last decade.

Phil Creagh of Auckland's Anderson Creagh Lai said he represented more than 40 of the investors and a Court of Appeal hearing had been scheduled for August next year.

The investors had paid $10 million deposits, he said. That money is now in a Russell McVeagh trust account and frozen because of an injunction.

"We're trying to get that back and overturn a High Court judgement against the investors," Creagh said.

The investors had paid deposits to buy properties in developer Nigel McKenna's planned $2 billion Kawarau Falls scheme.

McKenna was subsequently declared bankrupt but the investors then faced court action from the receivers.

In February, the High Court decided Kawarau Village Holdings was entitled to deposits.

The case has been reported in Singapore's Straits Times which quotes one couple saying they paid $70,000 in deposits by 2007.

Housewife Lisa, 48, said:

We were promised a guaranteed rental yield of 6 per cent a year after completion. And we were told that we would be able to stay in the apartment for two to three days a year.

Businessman Alex, 50, added: "We wanted to own a second property but we could not afford one here. So we looked for one overseas... we thought the worst-case scenario would be to lose our deposits."

Another Singaporean who declined to be named said he travelled to Queenstown before sinking about $150,000 in deposit for a two-bedroom apartment at Lakeside View, costing over $1 million.

He faces about $700,000 in damages, and says he has already spent $30,000 in legal fees," the Straits Times reported.