Barry
Brill controlled Tuscany Properties was ordered to pay $585,000 after
defaulting on a Westpac loan.
The High Court was told Mr Brill
purchased in 1997 a number of properties at Rifle Range Road, Taupo, some as
investment rentals, others operated as a motel.
Finance was provided by both Westpac and his family trust: the BE Brill
Trust. Problems arose in July 2013
following a missed Westpac interest payment.
The bank advised its $1.01 million term loan would not be rolled over on
maturity in three months unless Mr Brill guaranteed any new advance, provided further
security and there was evidence his company could meet future interest
payments. Mr Brill did not respond. After Westpac threatened a mortgagee sale, Mr
Brill made a counter proposal leading to a Westpac meeting in January
2014. The outcome of this meeting was
subject to conflicting evidence in the High Court. Mr Brill said Westpac had agreed to put any
mortgagee sale on hold while his proposal was considered. Westpac said it made clear that any
discussions did not prejudice its rights to sell and in any event the offered proposal
was not acceptable. It envisaged Westpac
capitalising interest on any new advance for the first two years, charging a
below market interest rate, increasing the loan by $30,000 with no further
security and Mr Brill not providing any personal guarantee. Compounding problems for Mr Brill was the
fact Westpac staff at the January 2014 meeting left the bank shortly after and
staff who took over the file had no knowledge of his counter proposal.
Justice Venning ruled there was no
agreement Westpac would delay any mortgagee sale. Westpac staff made it clear that any
discussion of refinancing proposals did not prejudice their rights. Westpac was justified in rejecting Mr Brill’s
counter proposal, he said.
Westpac sold the properties by tender for
$500,000. Mr Brill said the Bank failed
to get the best price reasonably obtainable.
It had failed to offer the properties singly where individual owners
might be interested and failed to promote the properties nationally and
internationally. This claim failed. A valuation prior to sale gave a forced sale valuation
at $680,000 plus GST. The price achieved
at sale was $105,000 short of this valuation.
Justice Venning ruled Mr Brill had failed to establish any deficiency in
the sale process. Pre-sale valuations
lose their significance when the property sold has been properly advertised, Justice
Venning said.
Westpac
v. Tuscany Properties – High Court (1.07.16)
16.102