Real
estate valued in excess of $10 million is the focus of a drawn out battle
between estranged husband and wife. She
complains he is trying to get a sneaky advantage buying up the properties
cheaply; he complains she took out loans against the properties for personal
spending. The High Court refused to
remove caveats lodged by the wife to block any immediate sale.
A string of adjoining properties
in Auckland’s suburb of St Heliers is owned by a company called CIT
Holdings. CIT holds title as a bare
trustee. The beneficial owners are
interests associated with estranged couple: Gregory Martin Olliver and Sarah
Patricia Sparks.
The High Court was told ten
residential properties in Waimarie Street, St Heliers were purchased in 2009
for a total of $10.4 million. Plans for
redevelopment were hindered by Mr Olliver getting into financial difficulty
then putting an insolvency scheme to his creditors. Evidence was given that Mr Olliver’s and Ms
Sparks’ relationship subsequently deteriorated.
They separated mid-2012. Ms Sparks had been in sole control of the
Waimarie Street project during Mr
Olliver’s financial difficulties. She
transferred title for some of the properties into a trust she alone controlled
and used these assets as security for further borrowings. This included some $152,000 borrowed for her own
personal use. It took a series of court
cases in 2013 to force Ms Sparks to return the transferred properties to CIT
Holdings.
Purchase of the Waimarie Street
properties was funded with a $6.75 million loan from the Bank of New
Zealand. By early 2013, the Bank was
taking steps to force a mortgagee sale.
The loan plus interest arrears and legal costs had ballooned out to
$10.1 million by late 2014. In addition,
liability for GST amounting to $2.9 million is claimed by Inland Revenue.
The Court was told attempts to
sell by tender failed. There was
interest in individual properties, but no interest in all properties being
offered collectively as a job lot.
An early 2014 valuation obtained
by CIT Holdings valued the properties collectively at $10.5 million on a sale
at market, but $8.4 million if sold in a forced sale. CIT Holdings invited Ms Sparks to make an
offer which would satisfy the Bank. No
offer was made. Two months later,
interests associated with Mr Olliver offered to buy at $10.5 million. Any sale to Mr Olliver was blocked by caveats
lodged against the property titles by Ms Sparks’ trust. CIT Holdings applied to have the caveats
removed.
Associate Judge Osborne ruled the
caveats should stay. Ms Sparks’ trust
has a beneficial interest in the profits from any sales by virtue of a 2009
joint venture agreement governing the Waimarie Street development. He said it was grounds to remove the caveats
if there were to be no profits from a sale.
Little by way of profit for the
joint venture was likely with the offer promoted by Mr Olliver at $10.5
million. Additional interest and costs
on loans are running at some $2000 per day.
Ms Spark alleged the $10.5 million offer undervalued the
properties. Recent Auckland City rating
revaluations valued the properties in aggregate at $16.9 million. The court was told an objection has been
lodged to this valuation. Judge Osborne
said he cannot be completely satisfied that the properties’ current market
value is as low as $10.5 million.
Meanwhile, the caveats remain and
a sale at $10.5 million to interests associated with Mr Olliver is blocked.
CIT
Holdings v. Glover No.2 Ltd – High Court (5.12.14)
14.055