Farmers lose claim over bank loan

Last updated 05:00 21/11/2012

Relevant offers

A Central Otago farming family have been ordered to pay $2 million to Southland Building Society after loan-related legal proceedings.

The Allison family, who own and lease a 467-hectare farm at Hawea Flat, wanted a new bank and the manager of SBS Cromwell prepared an agribusiness loan report in November 2007 for funding of $4.35 million.

An SBS lending committee rejected William and Catherine Allison's first application, and a second version, then the funding request was reduced to $4.15m, which SBS agreed to.

Court documents say $3.52m of principal was advanced and Mr and Mrs Allison acted as guarantors, but they defaulted last year, leaving a $2m shortfall.

The Allisons filed a statement of defence and counterclaim saying they were owed a duty of care by the bank to ensure loans were prudent and lending was based on unduly optimistic and unsustainable forecasts. They pleaded an overall loss of shareholder funds of $3m.

However, associate Judge Rob Osborne rejected the claim and ruled in favour of an SBS application to strike out the Allisons' claim.

At a hearing in the High Court in Dunedin this month he ordered judgment in favour of SBS for $2.091m plus interest of $73,331.

Ad Feedback

- The Southland Times

Comments

Special offers

Featured Promotions

Sponsored Content

Social Media
The Southland Times on Facebook

Subscribe to a digital replica of The Southland Times.

Digital edition

Subscribe to a digital replica of The Southland Times.

Click here to read our free community newspapers from around the region.

Community newspapers

Click here to read our free community newspapers from around the region online.

Southland Times subscriber news and information.

Subscriber services

Southland Times subscriber news and information.

Click here for information about advertising with The Southland Times.

Advertise

Click here for information about advertising with The Southland Times.