Sharechat Logo

Robt Jones Holdings ordered to refund rental payments from former Blue Chip unit Northern Crest

Thursday 14th September 2017

Text too small?

Robt Jones Holdings will have to pay some $752,000 plus six years of interest to the liquidators of Northern Crest Investments after the High Court ruled Bob Jones's real estate firm jumped the queue in a liquidation of the failed Blue Chip company. 

In the High Court in Auckland, Justice Christine Gordon ruled in favour of Northern Crest liquidators Anthony McCullagh and Stephen Lawrence of PKF Corporate Recovery & Insolvency that payments to the Wellington property mogul's real estate vehicle in 2010 were made when the former Blue Chip unit was insolvent and could be clawed back in the liquidation. The litigation had its origins in the years leading up to Northern Crest's 2011 liquidation when two related parties covered unpaid rents after RJH stepped up demands when the firm fell behind its rental payments on an Auckland Queen St lease. 

The liquidators claimed the payments to discharge the debt to RJH were a "redirection of licence fees owed to NCI (Northern Crest)"  at a time when the company was insolvent and were voidable transactions, the Sept. 8 judgment said. 

Justice Gordon agreed, saying it was clear the payments "enabled RJH to receive more in satisfaction of NCI's debt that RJH would have received in NCI's liquidation," where unsecured creditors were owed $10 million and contingent claims totalled $36 million. 

The judge rejected RJH's contention the liquidators abused the process by not investigating licence and loan arrangements deeply enough before filing the court application, which the real estate firm said was "for the purpose of recovering their fees incurred" knowing that "there was no prospect of any recovery for the pool of creditors". 

Justice Gordon said there was no evidence that the application "was motivated by any improper or illegitimate purpose" and the fact that funds received would be absorbed by the liquidators' fees was "irrelevant" given their legal obligations

RJH was ordered to pay Northern Crest $751,941.52, plus interest at an annual rate of 5 percent from the date of the liquidator's June 2011 appointment. The judge reserved her decision on costs. 

Northern Crest had been part of the Blue Chip group and licensed property investment services. It relocated to Australia, where it was listed on the ASX, after making its last payment to RJH, However, liquidators were appointed in 2011 when a former Blue Chip employee's claim on the business was upheld, with Associate Judge Tony Christiansen deeming the firm was insolvent and that there were "significant reasons to expedite liquidation". 

The Blue Chip group of companies failed in 2008 owing $84 million to more than 2,000 investors and became a pin-up for regulatory failures of the time when the Securities Commission said property investment schemes fell outside the law requiring an offer document.

The Supreme Court later rejected that view in ruling the investment scheme marketing between 2005 and 2007 required a prospectus, however, the Financial Markets Authority didn't go further than reviewing the case, instead deciding it wasn't in the public interest because Blue Chip-funded developers reached a settlement with investors.

(BusinessDesk)

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar headed for 1.3% weekly gain on expectations of a Fed rate cut
RBNZ knock-back gives Resolution chance to low-ball AMP - Jarden
Rail hubs may not boost Napier Port log trade
O'Connor looks to overhaul Biosecurity Act, improve animal tracing
Denton Morrell undefended at liquidation hearing
Contact steam to heat Norske Skog pellet business secured
Air NZ to amend booking engine after lawyer’s complaint
Ross McEwan to take helm at NAB
KPMG says bank capital proposals will wreck havoc on dairy farmers
Mild weather saps Vector's June-qtr volumes

IRG See IRG research reports