Allied Farmers wins claim against property developer

Photo / Greg Bowker

Allied Famers, the embattled owner of the Hanover and United Finance loan books, has won a summary judgement against property developer Tony Gapes.

Associate Judge Jeremy Doogue ruled in the High Court in Auckland that Fenton Projects and Gapes, as its guarantor, will have to pay $764,000 to a subsidiary of Allied.

The claim was in relation to a defaulted loan made to Fenton in 2007, secured by a second mortgage over a property in Newmarket.

Gapes personally guaranteed $600,000 of the debt, and Allied will seek to bankrupt him in its bid to enforce the judgement.

The loan related to a joint venture with Hanover Property Group, owned by Eric Watson and Mark Hotchin, to develop the Lion Breweries site on Auckland's Carlton Gore Rd.

As part of the deal, Hanover Property lent Fenton $1.16 million, which was later written down to $600,000 and switched to Hanover Finance.

The win is good news for Allied, which fell deeper into the red last year as it reported a $20.6 million loss in the six months ended December 31.

The firm's 'going concern' status is contingent on it continuing to sell Hanover assets and raising new capital.

Allied's shares fell 6.7 per cent to 1.4 cents in trading today.