Court to rule on leftover funds from sale of Mainstreet Lodge in Kaitaia

A court will rule how just over $100,000 left from the sale of Mainstreet Lodge in Kaitaia should be divided up. Photo / Peter de Graaf

The High Court will decide how leftover funds from the sale of Mainstreet Lodge in Kaitaia is to be divided up.

The backpackers lodge came to prominence after its former owner Michael Harris drugged and indecently assaulted 19 male guests there between 2005 and 2014. The 59-year-old was jailed last July for eight years after he pleaded guilty to his offences.

The lodge, which included the manager's residence, was sold for $600,000 to new owners and a neighbouring building also owned by Harris for $350,000 under a mortgagee sale last year.

Harris was the sole shareholder and director of two companies that owned both buildings. Just over $100,000 is left after ASB as the mortgagee and others were paid from the sale.

Costs of the Official Assignee will be paid ahead of others such as the Legal Services Agency, Harris' victims and the Crown.

A hearing on the forfeiture of proceeds of sale took place before Justice Edwin Wylie in the High Court at Whangarei last month.

Crown prosecutor Bernadette O'Connor said Harris' offending began just over a month after he took ownership of the lodge in early 2012 and continued until his arrest in September 2014.

"But for the lodge, this would not have been able to occur. Considering the fact it was the lodge that drew them there, the Crown say forfeiture is appropriate," she said.

Harris' lawyer Natalie Town opposed the forfeiture application, saying he ran a legitimate business and the vast majority of guests who stayed at the lodge did not have any problems. Harris did not modify his business to gain access to his victims, she said.

Forfeiture would cause undue hardship to Harris when he was released from prison as he had no other property or money. Justice Wylie has reserved his ruling.

Daniel Fasnacht and his partner Stefanie Ruscigno bought the lodge and renamed it Beachcomber Lodge. They already own the Beachcomber Restaurant across the street.