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Auckland developer David Henderson is being sued over a $7 million tax bill claimed on the sale of apartments in an upmarket high-rise apartment block.
A telephone conference was scheduled for yesterday at the High Court at Auckland between Precinct Apartments Ltd, represented by lawyer Anthony Johnson, and Henderson over Inland Revenue's claim for tax on apartments he sold.
Bernie Montgomerie, of Montgomerie and Associates, was liquidating the Henderson company. The Auckland-based developer is Precinct's sole shareholder and director.
The action comes well after the event: the Precinct block between the Whitcoulls corner and Albert Park was finished in 2006 and apartments were earlier sold off-plan to enable construction to start.
Montgomerie said the issue stemmed back to his appointment on August 2 as the company liquidator and he was now seeking to recover outstanding debts.
Henderson had appointed him liquidator, Montgomerie said, but he was obliged to work in the interests of the major creditor which was IRD, seeking the $7 million from Henderson for the goods and services tax owed on the sale of apartments.
In his analysis of the company, Montgomerie uncovered a number of other problems with the building's planning and development.
His first report showed how various problems were encountered during construction, including the loss of 11 apartments planned to be built there but barred due to various issues.
An error was made in the shading calculation based on the building's adverse effects on Albert Park, Montgomerie wrote.
Delays in construction were also caused, partly because of an additional $1.3 million in piling costs.
Then the site was found to be contaminated because it was once used as a petrol station.
"There have been ongoing neighbour disputes over matters including cross-contamination of the soil, structural damage, light and air easements and concern regarding alleged damage to adjacent owners' roofs," Montgomerie wrote.
The company had some assets in the form of retentions owed under sale and purchase agreements, he found. IRD was a preferential creditor but Montgomerie had a grim outlook for payment.
"There will be insufficient funds for any dividend payable to unsecured creditors," he wrote, predicting less than 20c in the dollar.
Henderson could not be reached for comment about the Precinct case yesterday.
He was one of Auckland's most active developers, building on Princes Wharf as well as a range of apartment and industrial projects.
He was expected to redevelop the historic Victoria Park Markets in a $130 million makeover but work has yet to begin at the markets Henderson bought in 2003.
He has kept a low profile for many months. Staff have left his Kitchener Group and last year he put his Princes Wharf apartment on the market. The apartment spans an entire floor of the seaside block with the Hilton Hotel beneath. Agents expected the property to fetch about $10 million but no sale was ever announced.
