Three years on from the collapse of Accent On Construction Ltd’s new build in Auckland for Housing New Zealand, Accent director Ian Fistonich is fending off threats of personal bankruptcy on his guarantee of office rents.
Accent on Construction is in both receivership and liquidation with a list of unpaid creditors a mile long and no promises of early resolution. Accent on Construction leased office premises in Henderson, west Auckland. Mr Fistonich guaranteed the rent. In 2019, the landlord got a court order that he pay some $180,000 for rent unpaid after Accent on Construction went into liquidation. The landlord is having difficulty finding any assets owned by Mr Fistonich personally. It registered charging orders against titles to two properties in Henderson having names of Ian Fistonich and Graeme Halse listed as owners. Charging orders against land are used to secure payment of court orders. Mr Fistonich protested. He and Mr Halse are registered on the titles as trustees of a family trust, he said. The properties are not owned personally, he said. They cannot be sold to meet a personal debt. The landlord removed the charging orders one week later.
The High Court was told the landlord then served a bankruptcy notice on Mr Fistonich for the unpaid $180,000 rent. Bankruptcy follows failure to pay the amount claimed in a bankruptcy notice. Mr Fistonich applied to have the bankruptcy notice set aside. He had a valid cross-claim against the landlord, he said. Each owed the other money; he was quits on the unpaid guaranteed rental, he claimed.
Mr Fistonich told the court proposed refinancing of one of the trust properties was disrupted by the charging order registration. This led to a loss of substantial profits anticipated on a new project, he said. Finance was being sought for a proposed build of four houses in west Auckland. Financiers were scared off by the sudden appearance of a charging order on title to the property being offered as security, he alleged. The landlord was liable for this loss of profits, he claimed.
Associate judge Gardiner ruled Mr Fistonich did not have a genuine, triable cross-claim. His claim against the landlord was based on pure speculation, Judge Gardiner said. Speculation as to the possibility of successfully raising finance, speculation as to the possibility of the project going ahead and speculation as to the possibility of the project being profitable.
The fact Mr Fistonich did not proceed with proposed refinancing after the charging order was removed, despite the intended project being described as ‘certain and potentially lucrative,’ emphasised how speculative was his cross-claim, Judge Gardiner ruled.
The bankruptcy notice remained in place.
Calypso No.11 Ltd v. Fistonich – High Court (20.10.21)
21 172