Bronwynne Durney left legal carnage in her wake after splitting with Gabor Kemeny: she borrowed $100,000 to help fund her relationship property dispute in Australia; promised Richard Powell mortgage security over her property company’s assets for his $100,000 loan and then proceeded to strip cash out of the company in advance of an Australian Family Court ruling that the company’s assets be handed over to Gabor Kemeny. Meanwhile the unpaid Powell loan was accruing default interest at 180 per cent per annum.
At a time when they were living together, Bron Durney and Gabor Kemeny set about constructing apartments in Napier and Hastings to form part of the Quest accommodation chain. K2 Investment Group Ltd, with Ms Durney as sole director and sole shareholder, was set up as their joint investment vehicle. The High Court was told that after the two separated in 2011 Ms Durney set about extracting cash from K2 Investment. According to K2 Investment’s financial statements she owes $1.7 million.
Through an intermediary, Kaiapoi financier Richard Powell learnt she was looking for funds to finance Australian relationship property litigation against her former spouse. In 2012, Mr Powell agreed to a short term six month loan of $100,000, to be repaid out of her expected relationship property settlement. She agreed to a mortgage over K2 Investment’s assets and was described in the loan agreement as guarantor. There proved to be no guarantee; she did not sign as guarantor, signing only as director of K2 Investment. The Australia Family Court ruling saw all assets in K2 Investments put into Mr Kemeny’s hands and Ms Durney awarded cash insufficient to repay the $100,000 loan. This left Mr Powell and Mr Kemeny each claiming prior rights to K2 Investment’s assets.
In the High Court, Justice Osborne ruled Mr Powell had first claim. Ms Durney’s agreement to mortgage K2 Investment’s assets was valid; she was at the time the company’s sole director. When the Australia Family Court awarded control of K2 Investment assets to Mr Kemeny he was aware of the Powell loan and was also aware of Mr Powell’s right to claim a mortgage over the same assets.
Mr Powell was entitled to have his mortgage registered over K2 Investment assets. Terms of his $100,000 loan were varied. Amount owing had ballooned out by time of the trial; default interest was running at 180 per cent per annum. The default interest rate was left unchanged, but application suspended for a period of 39 months, reflecting Mr Powell’s delays enforcing his loan. In total, Mr Powell was owed $1.03 million, Justice Osborne ruled.
Powell v. K2 Investment Group Ltd – High Court (30.08.21)
21.143