Investors to sue company

Property developer Martin Hutchin at one of his sites. Photo / Herald on Sunday

Dozens of people who claim they are missing up to $60,000 each on property deals are planning a class legal action after a judge described one of the scheme's contracts as "crafty".

The case has been greeted as a victory for those who have struggled for years with Wealth Buy Property Ltd.

Whangarei's Terry Adams said legal moves by other investors would now follow.

"That's great," he said. "It means we can take a class action against the company."

In 2007, Adams paid a $36,000 deposit to the company for a house to be built in Huntly by the next year. He now owes more than $50,000 with the interest on the mortgage taken out to pay the deposit - and still no home.

A letter on April 9, 2010 from the Waikato District Council showed the subdivision where the house was to be built had not been created.

The struggle against Wealth Buy Property Ltd has exhausted Adams and his wife Rita Servay-Adams, especially after it stretched over the year in which they lost their son to cancer.

North Shore District Court judge Lawrence Hinton this week ordered the company to refund $29,800 to a Whangarei couple who signed up to the scheme.

Under the agreement, they paid the money as a deposit in August 2007 for a house that was meant to be built by January 31, 2009. The property was one of hundreds developed or under development by the company.

The date passed and the building consent was not approved until three weeks after the house was meant to be completed. In court documents, they claimed they had been "misled" by the company.

But company owner Martin Hutchin told the court that delays with clearing trees and developing the property meant it could not be made ready in time, even though the best efforts had been made.

The company's argument hinged on the way the contract was phrased.

It claimed that trying to get the job done - even unsuccessfully - meant it had met its end of the deal. It also argued that the wording of the contract meant investors had no right to cancel it, and that the company was the only party that could pull out.

But Hinton ruled Wealth Buy Property was in breach of the contract clause that required it to have council certificates needed to get building underway. He said the "common sense view" was that the couple had the right to cancel.

He said he did not accept "as a matter of commercial judgment that the purchasers accepted this crafty reduction of their rights".

Wealth Buy Property will face a fresh legal challenge this week with another investor seeking a decision in the Disputes Tribunal.

Northland academic Dr Mike Mullany will ask the tribunal to order the return of a $6995 fee paid to the company for its financial plan.

The plan set out a deal he signed in November 2007 for a house to be built in Invercargill by December 2008, according to papers filed with the tribunal.

The house has still not been built - which Mullany will argue was a breach of the plan and that the money paid for it should be returned.

Company owner Martin Hutchin said he was unaware of the judgment and would not respond to questions over other deals.

The company does have some satisfied customers.

Mangere heavy truck driver John Hunter said he paid a deposit and signed with the company in June last year.

The house was completed six months later and now has tenants who - along with a tax arrangement managed by Wealth Buy Property Ltd - cover the mortgage.

Property management company used tenants' bonds to stay afloat

A court order has blocked the closure of the former property management partner of Wealth Buy Property, with claims bond money was spent to keep the business running.

The Crown Law Office sought the High Court order after a string of complaints to the Department of Building and Housing that tenants were not getting bond payments back.

It was found the "unlawful" failure to lodge bonds "must have been ... systemic [and] ... intentional".

The company attempting to remove itself from the Companies register was Easy Start Rental Management Ltd - until last year the business partner of Wealth Buy Property.

Its job was to find tenants and manage rental agreements for investment properties built by Wealth Buy Property.

Dozens of tenants who took their cases to the Tenancy Tribunal said bond payments of thousands of dollars had never been lodged in a trust account.

By law, landlords should lodge bonds with the Department of Building and Housing within 23 days of a new tenancy. But, in one case a tenant had been told "bond monies received from tenants were being used to fund the company".

Building and Housing department deputy chief executive Maria Robertson said the court case was taken to stop the company winding up, preserving the chance for tenants to collect bond money they were owed.

Wealth Buy Property has since severed its relationship with Easy Start Rental Management Ltd.

Until April 30, 2009, Easy Start Rental Management Ltd was 51 per cent owned by another company, owned and directed by North Shore lawyer John Cox, who also acts for Wealth Buy Property Ltd.

The complaints stem from before the change of ownership.

* Have you dealt with Wealth Buy Property? Email david.fisher@hos.co.nz