Receivers at Waterstone said creditors who are mainly first home buyers are owed $2.03m and it was one would-be buyer demanding their deposit back which triggered the receivership.
Botes is the Auckland High Court-appointed liquidator of Babich Rd, formerly Cassiny Homes, whose sole director is Hussain Ebrahim, also of Massey.
“We need a law change in New Zealand to protect young, first-time home buyers. We can’t have a situation where a developer is paid deposits when they haven’t even settled on the property,” Botes said.
The buyers had paid $75,000 to $100,000 each and his heart went out to them.
Money paid by depositors was not held in a separate solicitor’s trust account.
Botes’ report said: “There are a number of matters of concern to the liquidator which will be investigated in due course. The director has been unco-operative, offered no meaningful explanations to questions posed to him and the discussion with him elicited no meaningful information.”
“Further complicating matters, we understand that the project was initially going to be located at Red Hills Rd and this project did not materialise due to the company being unable to purchase the land,” he wrote.
Because the land had never even been bought, there is no construction work in progress, Botes said.
Ebrahim told Botes the venture had failed due to a change in planning rules for the site after Tropical Cyclone Gabrielle. That project could not work as a result, he said.
“We have had discussions with the solicitor acting for the petitioning creditor in this case who has expressed some disquiet at the actions of the director in the leadup to the liquidation. These issues will be pursued,” Botes wrote.
The business conducted the business of property development in west Auckland but Ebrahim said there were no staff employed.
A creditors’ list contained many names of people with their addresses withheld. A statement of financial affairs showed assets of $161,000 funds in the receivers’ trust account.
It is not yet known how much the deficit will be.
The site where the homes were to be built is greenfields, never having been built on before.
The director had paid a deposit on that land, enabling the company to potentially buy the land for the homes, but the deal was never settled.
Yet marketing had brought in many buyers, keen on the rapidly growing area near Westgate. Between 80 and 140 homes were said to be planned.
The company is also in receivership, with Adam Botterill and Damien Grant appointed and releasing their initial report in August.
They said deposits were accepted from late 2021 but became involved in a legal dispute about the purchase of the property.
The receivers’ report said $1.8m was the deficit estimated in August, with secured creditors owed $2,037,062.
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
