Blue Chip investors to appeal decision

Bruce and Judy Bartle maintain they were unaware they would be borrowing more than their home was worth. Photo / Martin Sykes

Two Whangarei pensioners who failed in a bid to have their Blue Chip-related mortgages set aside are appealing against the decision.

Last week Bruce and Judy Bartle lost their High Court case against finance company GE Custodians over $639,000 in loans made to them so that they could invest in Blue Chip.

The amount was more than their home was worth.

They believed that they were borrowing only $137,000 and that Blue Chip would put up the rest under the terms of the joint venture agreement they signed.

With the failure of the property investment scheme they have been left liable for the total.

The Bartles argued that the loans were "unconscionable" and "oppressive", and that the company that arranged them - Tasman Mortgages, at the time owned by Blue Chip - altered the loan documents to describe them as "self-employed investors" so that they would qualify.

The action has been seen as a test case for dozens of other victims of the Blue Chip collapse.

But Justice Tony Randerson said that GE did not know anything about the terms of the Blue Chip investment or that the Bartles could not support the loans.

He said Tasman was not the agent of GE, and there was no evidence it was trying to mislead.

The Bartles themselves accepted that they might have signed the documents with the term "self-employed investor" on them without noticing.

Paul Dale, the barrister acting for the Bartles, said yesterday that he had already filed an appeal and was seeking an urgent hearing.

He said an Australian decision just out was helpful to their case.

The judgment from the New South Wales Supreme Court relates to a property investment scheme very similar to Blue Chip called Streetwise.

The case, heard at about the same time as the Bartle matter, concerned three couples who took out large mortgages on their homes to enter into joint ventures with Streetwise.

Like the Blue Chip joint ventures, the idea was that the couples would make capital gain on investment properties and Streetwise would contribute to the servicing of the loans.

The loans came from a financier arranged through Streetwise, and investors were urged to use Streetwise's lawyers.

The court ruled that the mortgages be set aside.