$15.9m shortfall forecast for Takapuna's Sargeson apartment developer

The Sargeson Apartments on Anzac St at Takapuna. Photo / file

The company behind the high-profile Takapuna apartments on The Block site is forecast to have a financial shortfall of $15.9 million, even though all 92 units at the new project have been sold.

Auburn Development, the company behind The Sargeson Apartments on Anzac St near the Auburn St intersection in Takapuna's heart, is in the hands of Bryan Williams of BWA Insolvency after a decision by the board of directors last year.

Williams' first report said the final shortfall would be $15.9m and although all the apartments are sold, four of those sales are yet to settle.

Before settlement of the sale of the last eight apartments, including the final four, Kai Iwi Tavern lodged a caveat on all eight titles, Williams said.

"It claims to hold a general security interest over all the company's assets, which extends to a mortgage interest over those eight apartments. In order to release the caveat, to allow the properties to be transferred to the respective buyers, I provided an undertaking to hold the net proceeds of those last eight apartments separately, and not to disburse them until the claim by Kai Iwi Tavern is resolved," Williams wrote.

The accounts showed the tavern company claimed $9.4m and although funds expected to be on hand totalled $3m, a further $6.3m was due to Inland Revenue as a preferential creditor for unpaid GST.

Two possible scenarios were outlined: the first with the tavern as a secured creditor giving a $15.9m shortfall and the second with it as an unsecured creditor but classed as a related party.

Williams said: "I consider there to be a serious question to be resolved as to whether the December 2018 general security agreement, relied on by Kai Iwi Tavern, should be set aside."

Companies Office records show the tavern company's sole director is David James Oliphant of St Heliers. He is also the sole director and shareholder of Auburn Development, the company in liquidation. The tavern company's shareholders are Gwenyth Small of Remuera and Douglas Eliffe of Orakei.

The Herald reported in July how North Shore agency Harcourts Cooper & Co was owed about $400,000 by Auburn.

Martin Cooper of the agency said: "It's a sad story. The mortgagee has taken over. We are owed money for the sales, close to $400,000. We sold 30 of them and were paid some money. We settled properties and people moved in but the lawyers have instructed not to pay commissions."

Sixteen units remained unsold at that time mid-last year, Cooper said in July. His business was the main selling agency moving many of the units, although other agencies also sold the apartments.

Another real estate agency boss said his company was also owed money on apartments sales at The Sargeson.

But more went wrong before then.

In 2018, Last November, Auburn Development wrote to buyers seeking more money to settle purchases. Due to building costs rising and development finance becoming "virtually unavailable", buyers must pay more, letters said.

Pre-purchasers were then asked to pay a further 8 per cent.

A list of creditors was released in the first liquidation report and that showed Prestige Realty claiming money along with Gulf View Real Estate, CMP Construction, Mark Tatton Architecture, Natural Habitats, Unlimited Potential Real Estate, Envivo, Contact Energy, ANZ, Armourguard Security, Alexander Dorrington Lawyers, Renaissance Property Consulting Group and others.