KEY POINTS:
A large group of Blue Chip victims who bought into the huge Bianco apartment project being developed in Auckland begin litigation today in an attempt to escape buying units.
Daniel Grove, a barrister acting for the investors, said 50 people who bought 90 Bianco apartments would seek an injunction in the High Court at Auckland to stop the release of deposits they had paid for the apartments going to a developer.
The money was paid by the Blue Chip investors for units in the 157-unit Bianco, which is nearing completion.
The group wants to cancel agreements on sales in the two towers of 14 and 17 storeys at the corner of Turner and Waverley Sts just off Queen St above Mayoral Drive.
The block was developed by Tim Manning's Norwich Enterprises and funded by Westpac _ reported as having secured up to $73 million over it _ and Boston Finance, with security up to $27 million.
Today's court action is fallout from the Blue Chip collapse, which has left about 2000 creditors claiming more than $80 million.
Paul Dale and Grove are acting for more than 200 Blue Chip investors who want to cancel contracts they signed with various businesses.
These contracts bind them to settle purchases of apartments they cannot now afford and many of the investors face losing their family homes if the deals go ahead.
Dale has already started similar proceedings on behalf of 49 investors who want to cancel contracts for apartments in the just-finished Barclay building on Albert St.
Last week, Dale had a partial victory in this case. The 49 investors refusing to settle on about 60 apartments in the 111-unit central city block got developer Greenstone Barclay to agree that their deposits will remain in a solicitor's trust account until the matter is resolved.
The two cases are the tip of an iceberg, with further action pending over a number of other Auckland developments nearing completion.
The Barclay and Bianco cases are the first of five expected to reach the courts and involving more than 250 Blue Chip investors who signed legal agreements on apartments they never intended to buy.
The contracts were part of the controversial and complicated Premium Income Product or Joint Venture schemes Blue Chip promoted.
Many of the contracts were promoted with inflated valuations, an issue which became clear only after inner-city Auckland apartments began to sell for less than half their original sale price of a few years ago.
But the developers are expected to vigorously defend their right to have the courts uphold the contracts.
They started construction only after certain levels of pre-sales and are now faced with the falling apartment market as well as demands from financiers for money to be repaid.
Blue Chip liquidators Meltzer Mason Heath said the Bianco development, Turner Waverley, was later resold as Uptown. Properties were sold to investors through a company called Lanark Ltd, now in liquidation.
"The development was being undertaken by Rockfort, a subsidiary of Ingot Holdings," Meltzer said.
Rockfort was not able to proceed with the development and investors needed to submit a claim to the liquidator of Lanark.
"The property is now being completed by a different developer under the name of Uptown and has been sold to other investors. Investors in the original deal sold by Lanark may have no rights against the new developer, which is not an associated company of Blue Chip."
