Group behind Crofton Downs development fail to stop sales

Three Auckland properties can be sold to meet guarantees given for financing for those behind a Wellington subdivision that led to a mortgagee sale, a judge says.

Parklane Infrastruct Ltd, was the owner of the land in the development known as The Terraces, on Silverstream Rd, Crofton Downs. The company is now in liquidation.

In a decision from the High Court in Napier Justice Peter Churchman said Murray and Sharron Price as trustees of the Price Karaka Trust, their son-in-law Trent Cary and Lyon Trustee No. 10 Ltd controlled Parklane.

Parklane and personal borrowing from Killarney Capital stood at about $18m at the end of September, with interest accruing at $350,000 a month, the judge said.

Section sales looked like being $4m to $5m below what was needed to repay Killarney. Liquidators thought Parklane owed perhaps another $4m to unsecured trade and other creditors, he said.

The final date to repay Killarney was February 11, 2023.

Killarney exercised its right to sell the remaining 41 lots, two of them large “super lots”. The judge was told the group behind Parklane did not co-operate with the sale process, blocking access to the land and removing signs promoting the mortgagee sales.

By the time of a court hearing on September 26 Killarney had unconditional sale agreements in place for all but two of the lots. Five offers were made to buy the whole development but even the highest was lower than the total offered for the 37 regular-sized lots.

The sales were expected to make about $14.5m.

The group behind Parklane had originally wanted to stop the sale of the Crofton Downs sections, and a property in Grey Lynn, Auckland, but then abandoned the attempt.

But they tried to at least delay for a month the sale of the Takapuna house that the Prices lived in, and a rental apartment Cary owned in Parnell, for the proceeds from the section sales to be known.

However the judge rejected the attempt. He said there was no suggestion that the Prices would have nowhere to go if the Takapuna house was sold.

The group behind Parklane criticised Killarney’s sale of the sections, saying it had a duty to get the best price reasonably obtainable for the sections and had failed to use the most effective marketing.

The judge said that, not withstanding the obstructive efforts of the group behind Parklane, a real estate company had achieved sale prices not much different to those that two companies had estimated.

Given Killarney’s potential exposure it defied commonsense that it would have done anything other than try for the best sale price available in the circumstances, the judge said.

The judge noted that the people behind Parklane were experienced property developers and some of the borrowings secured against the Auckland properties had nothing to do with the Crofton Downs subdivision. Some of it was to help pay for a villa for the Carys in Herne Bay, for instance.

The judge said there was evidence that Cary bought one of the sections in early 2022 and immediately sold it for about $200,000 more so that he had the benefit of that $200,000 rather than the development company.

There was also evidence that in the past nine months the development company had paid $400,000 consultancy fees to itself and to a company of Cary’s wife. The money should have gone into progressing the development or paying trade creditors, the judge said.