Arrowtown’s New Orleans Hotel publicans in bitter dispute over funds

Kerry and Rob Andrews, shortly after purchasing Arrowtown's New Orleans Hotel in 2018. Photo / Todd Weeks

A newly released court decision has given a glimpse inside a bitter dispute between the business partners — and former friends — of Arrowtown’s New Orleans Hotel.

The decision was given by Justice Rachel Dunningham in the High Court at Invercargill on February 22 but only released this month.

It centres on an allegation by Arrowtown couple and the hotel’s publicans, Rob and Kerry Andrews, that their business partner, Auckland businessman Paul Lomax, has stolen just over $70,000 from their jointly owned company Arrow Hospitality Ltd.

The couple claims Lomax transferred the money from the company’s bank account to his family trust on February 17, knowing the payment was unauthorised.

The couple applied to the court seeking orders for the money to be repaid, to stop Lomax’s family trust from dissipating the money, and to prevent him from accessing Arrow’s bank account.

They also sought an order requiring the Lomax family trust to disclose all payments made from its bank account after February 17.

Lomax is a half-owner and director of Arrow, with the other shares held by the Andrews and a third family member.

Andrews is its other director.

In 2018, the Otago Daily Times reported the couple had taken over the lease of the 157-year-old hotel in partnership with their friend Lomax.

However, the relationship turned sour less than three years later.

The couple’s February application is merely the latest round in ongoing court proceedings arising from an earlier dispute.

In evidence filed as part of the latest application, Andrews said he refused a request in early 2021 by Lomax for Arrow’s directors to each be paid $60,000.

He did so because he thought the business should prioritise repaying debts.

In a memorandum to the court, Lomax denied stealing the funds.

As a director, he had the authority to make the payment, the company had remained solvent, and any issues over the payment should have been raised at a proposed directors’ meeting.

He alleged Andrews had made payments from Arrow’s bank account without his knowledge or approval, thereby waiving any requirement for such payments to be jointly authorised.

Lomax said the funds had been transferred to a law firm’s trust account, so were protected until the dispute was resolved.

In her decision, Justice Dunningham said there was a “clearly arguable case” the transfer had been unauthorised, and it was important the funds were protected until the issue was resolved.

Noting the “history of acrimony” between the parties, she favoured an order preserving the funds from being dispersed to Lomax or any associated party.

However, she was satisfied they would be protected in the law firm’s trust account, and ordered they remain there until further order of the court.

She set a timetable for the parties to file further applications and evidence to “progress the matter to hearing without delay”.