Allegations of fraud and loss of family money lent on mortgage featured in what Justice Duffy called a unique case. Members of the Bolton family are left with mortgage securities registered over a Mount Maunganui property giving them some legal leverage even though their recorded loan of $1.7 million plus interest arrears is supposedly irrecoverable.
The saga begins in 1992 when Nelson and Judith Bell borrowed $250,000 from members of the Bolton family to finance their business. Ken Bolton negotiated the deal and helped prepare the paperwork, but provided no money himself; funds came from other family members: his mother, his brother and a niece. Lawyers were not involved in completing the paperwork, but the documents were signed off by a lawyer prior to registration of the mortgage against title to several Mount Maunganui properties. The High Court was told no interest was ever paid; loans were rolled over with unpaid interest capitalised into a series of replacement loans, with a further mortgage being registered. This culminated in a 2005 mortgage in Ken Bolton’s name securing a $1.7 million loan over a Bain Street property owned by the Bells’ company: Able Ventures Ltd. The Bells personally guaranteed repayment.
In 2021, Able Ventures applied to the High Court to have all the Bolton mortgages taken off title to Bain Street. Justice Duffy ruled time had expired; loans covered by the various registered mortgages were no longer recoverable. Limitation Act time limits, as they stood when the loans were made, specified that failure to take legal action within six years of failing to pay interest and within twelve years of failing to repay principal meant no money could be recovered. But Justice Duffy refused to remove the mortgages from title to the properties. The mortgages remained as statutory land charges, she said. The right to claim mortgage security remained, as did the right to force a mortgagee sale to recover what was owed. Leaving the mortgages registered prevents the Bells from refinancing without first negotiating terms for removal of the existing Bolton registered mortgages.
In parallel High Court proceedings, Justice Duffy ruled the Bolton family mortgages registered in Ken Bolton’s name be transferred into the names of those Bolton family members who had actually made the loans. They had left Ken to handle the details, but it was alleged he subsequently attempted to claim the loan money was his. He told the Bells he had ‘taken over’ the family loan when demanding in 2011 that the Bells pay $350,000 cash direct to him. The Bells refused, saying they had not borrowed anything from him. Justice Duffy ruled Ken Bolton held the mortgage securities on trust for family members. He did not appear in court to defend their claim.
Able Ventures Ltd v. Bolton – High Court (9.08.22)
22.139