Paritai Drive developer loses liquidation fight

South Canterbury Finance is entitled to enforce the rights of Auckland Finance as financier. Photo / Filephoto

The receivers of South Canterbury Finance liquidated two companies yesterday that are owned by Auckland developer John Williams in a bid to get its $8.5 million back.

SCF through Auckland Finance - which amalgamated in 2008 - loaned Williams funds for several property developments around Auckland.

Under the Companies Act, SCF is entitled to enforce the rights of Auckland Finance as financier.

Williams' company Huka was the borrower and his other companies Arundel Park, in receivership, and the two companies liquidated yesterday, QC Group and Victoria Three Trustee, and himself were guarantors of the loan.

Huka - a trustee of Huka Trust - had been undertaking a property development at 10 Huka Rd on the North Shore. It signed a revolving credit contract with Auckland Finance for advances of up to $7.3 million.

In December 2009, it was agreed between Huka and SCF that the company would subdivide the land it was developing into five lots.

On one lot, four townhouses were to be built and sold, and the remaining four lots would be sold at a total price of $2.28 million; all the proceeds from all the sales were to go to SCF.

SCF also funded Arundel Park's development on Paritai Drive - the company holds the rights to the development. Arundel Park was owned by Victoria Three Trustee, now in liquidation.

SCF sued the defendants for $9.1 million plus interest at 24 per cent a year, compounded monthly, and costs. This was later reduced to $8.5 million.

In November, High Court Associate Judge Roger Bell awarded SCF a judgment against all the defendants for $8.5 million plus interest at 24 per cent compounded monthly from January 31, 2010. SCF was also awarded costs.

Defence lawyer William McCartney said while the liquidation was not opposed, the amount SCF claimed it was owed was disputed.

In February last year, SCF alleged the defendants defaulted on the contract under the term loan agreement including abandoning the property, refusing to allow a quantity surveyor access to records and causing subcontractors to cease work on the construction of the property.

But the defendants claimed they had been misrepresented when they entered into the contract with SCF.

They were led to believe that SCF was solvent and was financially able to fund the Huka and Paritai projects to completion. This was not the case.

SCF was put into receivership on August 31, which led to a Government payout of $1.775 billion to depositors and first-ranking creditors.