The collapse of an $8 million property sale has the troubled Tainui tribe caught in a debilitating lawsuit, just as tribal leaders front up to a meeting to explain the tribe's financial turmoil.

The former Kingseat psychiatric facility in South Auckland, now owned by Tainui, is the subject of a legal battle by Auckland-based Prince Corporation, which is blocking the Waikato iwi from selling the 60ha property.

Tainui, forced to restructure with a $40-million writedown and debts of $31 million, also faces unrelated court challenges from:


* A former tenant at Kingseat, who is suing for hundreds of thousands of dollars in damages, alleging the iwi failed as the landlord to maintain his leased workshop as promised.

* At least two former Tainui staff who have lodged personal grievance cases, while dumped executives Jeff Green and Greg Parker are soon to file their own claims in the Employment Court. Mr Green lost his job as the tribe's high-flying special projects manager on January 1, and is understood to be seeking more than $1.5 million in compensation.

The Kingseat sale problems are outlined in a Tainui memo obtained by the Herald. Prince Corporation director Danny Chung had a contract to buy the Kingseat site for $8.1 million and paid an $800,000 deposit.

Tainui is suing for the balance while Mr Chung's company is counter-suing for misrepresentation.

Mr Chung could not be contacted for comment but the tribe's legal adviser, Shane Solomon, is optimistic the case will be settled out of court.

A hearing originally scheduled for last October was delayed until early this year.

"Hopefully, he'll [Mr Chung] buy it," says Mr Solomon.

Kingseat was renamed the Grand Estate when it was sold to the now-defunct Tainui Maori Trust Board in 1995 for close to $7 million.


Most of the 20-odd buildings are vacant, with reports of theft as well as blocked drains, burst pipes, broken windows, graffiti and damage caused by birds and possums.

Mr Solomon acknowledges the property has fallen into disrepair but says: "Everything deteriorates."

Today, Tainui's leader, Sir Robert Mahuta, and financial adviser Michael Stiassny will attend a crucial meeting at Hopuhopu to explain a financial rescue package to more than 180 marae delegates.

Five years after the $170 million raupatu settlement, the tribe is selling land, businesses and assets in a bid to halve its debt within six months. Up to a third of the 100-plus staff will lose their jobs.

Sir Robert blames high-paid tribal executives for mismanaging the multimillion-dollar asset base.

Disgruntled members of Tainui's new governing body, Te Kauhanganui, will be powerless to launch a leadership coup at today's hui, despite mounting calls for Sir Robert to resign.

However, former MP Tukoroirangi Morgan, one of the tribe's 43,000 beneficiaries, claims the 60-year-old knight is "in for a bit of a scrap."