The High Court refused developer Murray Price’s request for a one month halt to mortgagee sales on a Wellington subdivision and Auckland properties including his Takapuna home. Over $18 million is owed with interest running at $350,000 per month, at a time when his daughter’s company was rewarded handsomely with consultancy fees.
Killarney Capital Ltd and its Hawkes Bay investors have lost patience. The High Court was told interests associated with Mr Price have proved uncooperative, failing to meet repayment deadlines and actively obstructing sales by Killarney as mortgagee.
Parklane Infrastruct Ltd is controlled by Mr Price. It is carrying out the Terraces residential subdivision at Wellington’s Crofton Downs. The company first faced a cashflow crisis and the prospect of a mortgagee sale back in 2016. Killarney Capital injected new funding. Since then, Parklane has been back frequently with its begging bowl, seeking further finance from Killarney, including cash for personal spending by the Prices and to buy properties in Auckland.
Killarney cried enough, calling in all loans with final date for payment in February 2023. Unpaid when this deadline passed, it called in its mortgages instructing real estate agents to progress sales of unsold lots at Crofton Downs plus three Auckland properties: in Takapuna, Grey Lynn and Parnell.
The court was told marketing was hampered by a refusal to provide tenancy details for Auckland properties which were rented and also by persons unknown tearing down advertising hoardings at Crofton Downs promoting the mortgagee sale.
By September 2023, real estate agents appointed by Killarney had sold all but two of the remaining lots at Crofton Downs; 39 lots. The collective price achieved for these 39 lots was better than prices tendered to buy the entire project.
Mr Price asked the High Court to impose a one month’s delay on further sales. Titles for Crofton Downs should be issued within a month; these sales would then be unconditional and the expected shortfall claimed by Killarney could be assessed, he said.
Separately, Mr Price alleges Killarney is in breach of the Property Law Act by not getting the best price possible when selling sections at Crofton Downs. If proved, this reduces the amount due to Killarney.
Justice Churchman ruled sale prices on offer four years ago are irrelevant to an assessment of current prices. The market has turned down. He was critical of Mr Price’s use of sale prices on conditional contracts which fell through as being evidence of the current market. He was dismissive of prices set in pre-sale contracts inked with a company controlled by Mr Price’s son-in-law, contracts that were an attempt to satisfy financiers’ requirements for a set level of pre-sales before funds for further development were released.
The court was told it is estimated there will be some four to five million dollars still owing after contracts for Crofton Downs sections currently sold by Killarney are settled.
Justice Churchman ruled there was no strong evidence that Killarney’s marketing was insufficient to recover the best price possible. It was not necessary for Killarney to first get registered valuations for Crofton Downs sections before selling, he said. Real estate agent estimates were sufficient. Mr Price’s application for a one month delay in progressing sales was refused.
A forced sale of the Auckland properties can proceed. Mr Price’s complaint that this could see him turfed out of his Takapuna home was countered by evidence that he has an interest in a block of Hamilton apartments and owns a property at the Coromandel seaside resort of Pauanui.
Killarney pointed out that Mr Price’s Parklane Infrastruct paid in the previous nine months nearly $400,000 in consultancy fees to a company controlled by his daughter.
Parkland Infrastruct Ltd is now in liquidation. Unsecured creditors are owed some four million dollars.
Price v. Killarney Capital Ltd – High Court (29.09.23)
23.173