Investors seek costs security before trial

Developer Robert McEwan has been trying to get investors to buy the Queenstown apartments for over a year. Photo / Supplied

Kelly Gregor Investors in a failed Robert McEwan property scheme are seeking security before the case goes to trial because the company they underwrote apartments for is now in liquidation.

McEwan's collapsed company Station Properties developed an apartment complex in Queenstown called Bowen View.

Several investors signed sale and purchase agreements for the apartments on the understanding the complex would be sold en masse to a third party. But the complex failed to secure a buyer.

McEwan has been trying to get the investors to buy the apartments, valued between $600,000 and $1 million, for over a year.

He was awarded a summary judgment against two at the High Court at Auckland last year.

A judgment delivered in December by Associate Judge David Robinson said the remaining five had a case to answer based on alleged misleading advice dispensed by McEwan through his investment advisory company Investors Forum.

A hearing will be held towards the end of the year to see whether McEwan can get all seven defendants to settle the sale and purchase agreements.

The investors are seeking costs because they believe if McEwan loses there is a chance he will not be able to pay the investors' costs.

The investors' lawyer Raelene Kelly said McEwan was not opposing an application for costs, the dispute is about how much should be set aside.

Kelly said the provision of full security is unlikely to prevent McEwan from proceeding with the case because BOS International was standing behind McEwan, therefore "adequate financial resources would not be an issue".

BOS is the development's main creditor; it is owed $21 million, and has pushed for the investors to settle the sale and purchase agreements.

According to the receivers Grant Graham and Brendon Gibson of Kordamentha, Dominion Finance is also owed $3.9 million and Inland Revenue is owed $1.6 million by Station Properties.