KEY POINTS:
Legal action is being taken against several solicitors over the advice they gave to burned Blue Chip investors.
Auckland law firm Ellis Law, acting for hundreds of victims of the Blue Chip property investment collapse, has started proceedings against the solicitors for negligence.
It is also taking action against several valuers over the valuations they did on properties sold through the Blue Chip scheme.
At least 24 Blue Chip-related companies are in liquidation and a Serious Fraud Office investigation is under way, following the highly public collapse of the scheme in February this year. Blue Chip targeted thousands of investors who mortgaged their family homes in order to invest in apartments sourced by the property group.
Many now stand to lose their homes. While in some cases the income from the rental properties does not cover their mortgages, for others it is far worse - some have lost deposits on apartments that never materialised, and hundreds more are being forced to settle on properties they have no hope of affording.
In many cases Blue Chip salespeople offered the investment as a package deal - complete with legal adviser, and mortgage through Tasman Mortgages which Blue Chip owned at the time. Some solicitors handled tranches of Blue Chip clients.
Ellis Law principal Brian Ellis said there were a number of concerns surrounding the solicitors' actions, including:
* The size of the deposits investors were required to make.
* The immediate release of investors' deposits.
* The lack of explanation in the documentation about who actually owned the property and who was developing it.
Ellis said that Section 225 of the Resource Management Act, which allows for a cooling off period when buying a property off the plans, could be a useful comeback for some Blue Chip investors. Ellis Law has also written to the developers of several Auckland apartment complexes - including The Stadium on Beach Road, still under construction, and the newly completed Barclay on Albert Street - requesting that Blue Chip investors' contracts be cancelled and their deposits returned.
The investors put deposits on the apartments but had agreements with Blue Chip that they personally would never have to own the properties. They have been left holding sale and purchase agreements which many are in no position to complete.
Ellis said so far all the developers were "vigorously defending" their positions, and court action was likely.
CALL TO CO-ORDINATE LEGAL AID EFFORT
Lawyers acting for Blue Chip investors have asked the Government for a co-ordinated approach towards legal aid for victims of the scheme's collapse.
Barrister Paul Dale and Ellis Law principal Brian Ellis say many out-of-pocket investors could be eligible for legal aid.
Ellis said there was "real merit" in the various proceedings following the collapse being centralised, and any legally aided person becoming part of that.
Ellis Law was offering office facilities for suitable personnel to process legal aid applications.
Ellis said a co-ordinated effort would avoid duplication.
Other than acknowledging the lawyers' request the Government has not yet responded.
Ellis said many affected Blue Chip investors could not afford the $2000 retainer the lawyers were charging. "We think there's a large number who have done nothing."
He knew of people in their 70s and 80s who had no idea what to do, and who were struggling to even write a straightforward narrative of their situation.
Ellis said concerned investors could contact his office on 0800 800 932.
