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.
- © Fairfax NZ News
Subscribe to a digital replica of The Southland Times.
Southland Times subscriber news and information.
Click here for information about advertising with The Southland Times.