Peter Chevin, currently disqualified from acting as a company director, is alleged to have used false advertising to lure investors into a proposed property development. Investors had $260,000 held in a Kiwibank account frozen by High Court order.
Portman Project Ltd was set up in September 2020 as a single purpose company to carry out a fifteen lot subdivision. Stephen Lunn was sole director, holding a five per cent stake through his company Lunbros Ltd; balance of the shares were held by a company called Totara Sea Trustee Ltd, a company described as holding shares on trust for Mr Chevin.
The High Court was told a November 2020 Trade Me advertisement called for a new investor willing to put up $260,000 to replace a current Portman investor who wished to sell out for personal reasons. Reference to a ‘current investor’ was a complete fiction; cash was needed urgently to pay a deposit on the land to be subdivided. Mr Lunn challenged Mr Chevin about the fact of the Trade Me advertisement and its content. He had never been consulted. Investors who had seen the advertisement had by then already met with Mr Chevin, later signing an investor agreement and paying $260,000. These investors demanded their money back. There was no binding contract with the company, they said.
At a time when Mr Lunn was sole director, the investors’ contract was signed on behalf of Portman Project by an Alexander Russell Constable. Described by Mr Lunn as being a ‘mere bookkeeper’ for Portman, Mr Constable had no authority to sign on behalf of the company, he said. Evidence was given of Mr Chevin and Mr Constable conniving to change the company register to show Mr Constable as Portman’s sole director. This change to the register was filed one day after the date of the investors’ disputed contract. Mr Constable was never validly appointed as a director, the investors say. Mr Lunn disputes Mr Constable’s claim to be a director.
Investors also claim the funding arrangement was based on a misleading advertisement in breach of the Fair Trading Act.
Justice Duffy ruled the investors have a good arguable case for return of their money. Pending trial, the $260,000 freezing order was confirmed.
Millionaire Makers International Ltd v. Portman Project Ltd – High Court (1.07.21)
21.111