It was a lawyers’ delight: the original developer of Gulf Harbour subdivision on Auckland’s Whangaparoa Peninsular was wound up at a loss; its supposed successor folded owing Westpac money; and then developer Inert Holdings Ltd boldly argued it was now the designated Gulf Harbour developer holding ‘super-voting’ rights with power to take control of disputed marina berthing rights. No it didn’t, the Court of Appeal ruled.
Inert Holdings Ltd and related company Western Arm Marina Ltd are both controlled by Whangaparoa resident Ian McKay. In 2014, Inert Holdings purchased 3.7 hectares of Gulf Harbour land and with Western Arm constructed 23 marina berths as part of a residential subdivision. Mr McKay’s right to allocate berthing rights is disputed by the Gulf Harbour residents association. To push his point, Mr McKay argued his companies had inherited the status of Gulf Harbour project developer and ‘controlling member’ giving them super-voting rights under Gulf Harbour’s constitution enabling him to outvote everyone else.
Lawyers blew dust off some ancient files as they dug into the history of Gulf Harbour.
Gulf Harbour’s original developers in the mid-1990s were Singaporean interests trading as Gulf Harbour Development Ltd. A residents’ association was created as part of the project. Each property owner has one vote, but the project developer, and its successors, hold super-voting rights which enable it to outvote all residents. This was necessary to block objections from current residents as Gulf Harbour was developed in stages. Singapore developers bowed out in 2008, their company liquidated with unsecured creditors receiving just under 26 cents in the dollar. Included as an unsecured creditor was Singapore project finance of some four million dollars not recovered from land sales.
A November 2012 rewrite of the Gulf Harbour constitution saw a company called Gulf Harbour Marlin Ltd described as the project developer and ‘controlling member.’ This was a mistake. There was never any residents’ vote to install Harbour Marlin as ‘controlling member.’ In any event, Harbour Marlin was later removed from the companies register in 2016 after a three year receivership leaving Westpac out of pocket; it financed this receivership to the tune of $72,000 for a nil return.
Gulf Harbour residents’ association owns the marina waterway. To get voting control of residents’ association decisions about marina berths, Mr McKay said his companies now filled the role of ‘controlling member.’ Both the High Court and the Court of Appeal ruled that Gulf Harbour currently has no developer with overarching control of the project. The land has been subdivided and sold. Mr McKay’s companies are not carrying out the development of Gulf Harbour; they are carrying out a development within Gulf Harbour, the courts decided. His project covers less than four per cent of Gulf Harbour land area. He had no status as ‘controlling member’ to override resident rights to control marina allocations, the courts ruled.
Inert Holdings Ltd v. Gulf Harbour Marine Village Residents’ Association Inc – Court of Appeal (15.08.22)
22.143