'Retired' a dirty word, says Blue Chip adviser

Whangarei couple Bruce and Judy Bartle are seeking to have mortgages discharged. Photo / Martin Sykes

A former Blue Chip adviser has told the High Court that the group's advisory force was schooled not to describe investors as "retired" because of the difficulties in getting funding for them.

The court is hearing the case of Whangarei pensioners Bruce and Judy Bartle who have been left owing $629,000 following the collapse of the property investment scheme.

The Bartles say documents were changed to describe them as "self-employed investors" in order to get mortgages on their home and investment property approved - despite the fact that their only income is national superannuation.

The former adviser, who has come forward to give evidence in the case and does not wish to be named, sold the Bartles a Blue Chip "joint venture" in 2006. He told the court he did not know how the couple came to be described as self-employed investors.

The Bartle action seeks to have the mortgages in their name discharged. It targets the financier which lent to them, GE Custodians, mortgage broker Tasman Mortgages which arranged the loans, and the lawyer who advised them, Jonathan Mathias.

The former adviser said he recommended the Bartles go to Mathias because he had acted for a number of Blue Chip investors.

"We were also told never to take clients to external lawyers." This was on the grounds that they would not understand the Blue Chip products and would charge large legal bills for their work, he said.

Under the Blue Chip joint venture the Bartles mortgaged their home to invest in an apartment in Symonds St, Auckland. They were to get fortnightly payments of $451 for four years. After this the apartment would be sold and Blue Chip would get the capital gain on the property.

When the scheme collapsed in February 2008 the Bartles were left responsible for a $366,000 mortgage on the apartment plus $263,000 owing on their own home.

Bruce Bartle told the court he and his wife believed the only investment they needed to make was an initial $137,000 mortgage on their Whangarei house. They were under the impression the rest of the financing was Blue Chip's responsibility.

He claims Mathias breached his duty of care by not advising the couple that they were liable for the rest of the funding.

This was despite letters to the couple from Tasman informing them they had been approved for a further advance on their home, and the mortgage on the apartment. "Did that not set off alarm bells?" Justice Tony Randerson asked him. "Obviously it didn't. We were assured that there would be nothing asked of us," Bartle replied.

The lawyer representing Mathias asked the former Blue Chip adviser whether he had been concerned that a retired couple like the Bartles would be left exposed if Blue Chip failed. The former adviser said they had been assured that publicly listed Blue Chip was hugely profitable, with large backers.

"We were briefed on it being a safe, risk-free investment for retired people. At the time we weren't questioning what we were told."