Strategic wins ruling on Duff debt

Failed lender Strategic Finance has won a court ruling ordering Christchurch property developer Dave Henderson to pay almost $2.4 million to cover debt on a property development once owned by author Alan Duff.

Justice Christine French said Henderson didn’t have a "tenable defence" as to whether he personally guaranteed the loan, according to the August 16 judgement from the High Court in Christchurch.

Henderson had argued that there was no gain for him in helping his friend Duff, by buying the Havelock North site to avert a mortgagee sale of the property.

"What Mr Henderson does say is that everyone knew there was no personal benefit to him, but that is a very different thing from contending there was an express promise to the effect no personal guarantee was required," Justice French said.

"There was no commercial or legal purpose for requiring a guarantee from Mr Henderson, other than to ensure he had personal liability to Strategic."

Henderson claimed he had been told by then-chief executive Kerry Finnigan that he faced no personal liability, and that the lender didn’t have the right to enforce the guarantee, a view the judge dismissed.

The loan was meant to allow a more orderly sale of a Havelock North real estate development owned by Duff after the author got into financial straits and was facing a mortgagee sale. Henderson got involved in 2007, arranging the loan from Strategic and buying the property from Duff and taking on a personal guarantee.

The author didn’t complete the renovations and left the house in 2008, and Henderson’s vehicle Cleaver Factors missed its guaranteed loan repayment under the terms of the guarantee.

Strategic sold the property for $920,000 in June last, and sued Henderson for the difference between the loan and the sale price.

The lender was sent to the receivers in March by trustee Perpetual Trust, ending a moratorium arrangement that had been in place since December 2008. The finance company missed its milestone repayment on January 7 after it failed to generate enough loan recoveries, and later had a liquidator appointed. The firm has a book value deficit of $195.5 million, according to the first report from the liquidators.

- BusinessDesk