Chris Arbuckle’s Crown Finance Ltd was ordered to compensate Matvin Group after unilaterally taking over a joint property development at Auckland’s Hobsonville Point, using all of Matvin’s planning and preliminary work for a retail and residential development.
The High Court was told Kevin Clark and Matt Ellingham at Matvin Group spent much of 2013 dealing with zoning and consent requirements for a project at 122 Hobsonville Road under a loose arrangement with Crown Finance, expecting Crown to join them providing project funding. Matvin was squeezed out at the last minute with Crown taking over the project through related company, Viscount Investment Corporation Ltd. Matvin was incensed.
The High Court heard several weeks of evidence with Crown Finance arguing it was merely a bystander providing mezzanine finance rescuing the project while Matvin said Crown was a joint venture partner which had misused confidential information.
Matvin Group purchased the former Buljan vineyard in Hobsonville for $14.5 million in July 2013; 4.5 hectares of undeveloped land. Both the purchase and a later payment of a $1.45 million deposit was conditional on due diligence. Evidence was given of earlier discussions with Crown Finance over potential funding and then of ongoing communications as Matvin reported on progress with planning and consent issues plus potential retail leasing prospects. All looked encouraging. The first hint for Matvin that not all was going to plan arose when Crown Finance was late in providing the necessary $1.45 million deposit. Matvin paid a holding fee to get time extended. Matvin was also concerned about increasingly onerous loan requirements Crown was putting forward as part of negotiations for a formal joint venture agreement. In late October, Buljan told Matvin its purchase was cancelled. Stalled negotiations with Crown about joint venture terms meant Matvin did not have the funds to complete a $14.5 million purchase. Matvin then learnt Viscount Investment had signed up the next day to buy 122 Hobsonville with an unconditional contract at the same price as the cancelled Matvin deal.
Justice Duffy ruled Crown Finance had misused confidential planning and consenting information provided by Matvin and that Viscount Investment had knowingly used that confidential information for its own benefit. Mr Arbuckle controls both Crown and Viscount. It was only because of the preparatory work undertaken by Matvin that Viscount was able to sign up so quickly, Justice Duffy ruled. Viscount also knew Matvin had no other source of funds; a squeeze was on. Crown Finance could not claim to be a disinterested arms-length financier when it was actively involved from the outset in planning the proposed development.
A further court hearing is required to determine profits made by Crown Finance and Viscount from the Hobsonville development and to establish how this profit is to be shared with Matvin.
Matvin Group Ltd v. Crown Finance Ltd & Viscount Investment Corp Ltd – High Court (2.09.22)
22.156