In the courts they trust
A toxic property deal between John Tamihere's Waipareira Trust and his one-time property developer friend has sunk further into the legal mire, with liquidators claiming the taxpayer-funded trust inadvertently waived securities worth more than $1 million.
Waipareira said it would contest the liquidators' claims in court, bringing the number of current legal actions in the bitter dispute to three.
Waipareira and developer Brent Ivil's West Harbour Holdings (WHH) entered into a joint-venture agreement in 2008 to build a 20-storey hotel, but the deal - and the friendship between trust chief executive Tamihere and Ivil - soured, leading to legal actions costing both parties hundreds of thousands of dollars.
The legal action kicked off with Ivil's WHH taking proceedings against its joint-venture partner in 2011.
That case was dismissed earlier this year after the development company was unable to meet a court ruling to provide security to demonstrate it had enough money to cover the costs of the case.
But shortly before the case folded, Ivil appointed Waterstone as liquidators of WHH. It reported the company owed creditors more than $10.1m, and had assets of less than $5m.
Waipareira has mortgage securities over three townhouses and two apartments developed by WHH, but it appears likely the trust - owed $4.6m - can expect to recover only $2.5m.
The liquidation was complicated by Waipareira failing in a bid to replace Waterstone as administrator.
After Waipareira's lawyer, David Morrison, voted in favour of ousting Waterstone at the creditors' meeting, the liquidator then claimed Waipareira's mortgage security had been waived, as the meeting allowed only unsecured creditors to vote.
The liquidator has placed caveats on Waipareira's mortgages in an attempt to assert control, frustrating mortgagee sales expected to be settled this week.
According to Sunday-Star Times calculations, if the securities were waived and Waipareira's claim moved into the unsecured pool, the trusts' losses from its investments in WHH would increase by $1m.
But Morrison said the liquidator's latest contention would be challenged in court.
"The respective positions of Waipareira and the liquidators are diametrically opposed. As a consequence, a declaration from the court will be obtained."
Liquidator Kirsten Smith said numerous court actions made the liquidation "complex" and communications with Waipareira had been conducted almost solely through lawyers.
The second of the three legal actions involves Waipareira pushing ahead with summary judgment proceedings to try to recover $1.3m, including $302,000 of legal costs, from Ivil relating to personal guarantees he provided for some advances the trust made to WHH. That claim is set for a High Court hearing in Auckland on August 9.
The third action concerns WHH liquidators seeking repayment of a $500,000 loan to Tamihere.
The loan followed Waipareira waiving mortgage security it held over a townhouse owned by WHH, allowing the property to be sold and proceeds on-lent to Tamihere in May 2008 to help him buy a $1.36m Te Atatu house. The mortgage waiver, following the joint venture's subsequent collapse, worsened Waipareira's losses.
Tamihere argued through his lawyers the loan should be offset by an earlier $210,000 advance from himself to Ivil, and it was unclear which Ivil entity should be repaid.
A summary judgment application seeking the $500,000 was dismissed in May, with a High Court judge concluding conflicting evidence required a full hearing. WHH's liquidators are still pursuing the claim, and expect the case to be heard early next year.
Tamihere has said he will defend the claim. His lawyer is seeking security for costs from WHH, stating its legal bills for defending this action, are likely to amount to $50,000.
Questions sent to Waipareira concerning the total legal bill from its myriad disputes with Ivil went unanswered.
Waipareira's lawyer said the $500,000 claim was a "private matter" and Tamihere had kept the trust fully informed of developments.
- © Fairfax NZ News
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