Southern investors enmeshed in litigation over claims for settlement on the Pounamu apartment complex in Queenstown are joining a counter-claim group seeking more than $1 million from the developers and other associates.
The group action seeks to stop principal apartment lender Strategic Finance from claiming settlements through the High Court based on sale and purchase agreements, as well as to recover more than $100,000 each investor "loaned" to Pounamu Prime Ltd.
Of the 14 investors banding together, two each are from Queenstown and Invercargill and another two from Wanaka and Dunedin, including Mosgiel real estate agent Paul Baines.
Mr Baines late last week filed an application to set aside an earlier High Court of Dunedin judgement against him from Strategic Finance, which as principal Pounamu lender is owed more than $1 million by Mr Baines under a sale and purchase agreement for an apartment.
Auckland barrister Kerry Fulton, assisted by Wairarapa-based Gareth Bodle, are heading up the group claim, and actively seeking more former investors to come on board.
They want the claim and all the individual court actions of Strategic - of which there are seven under way - to be heard in Auckland.
The initial court action is that of Strategic Finance, which has taken control of 34 of 50 Pounamu apartments, which were formerly the interest of failed developer and now bankrupted Dan McEwan.
Strategic is taking seven High Court actions to force individual settlements based on sale and purchase agreements, understood to total up to $20 million in claims on the 24 apartments.
The group action is alleging breaching of the Securities Act and is to stop Strategic from relying on the sale and purchase agreements to make claims.
"Avoiding the sale and purchase agreements is the primary relief sought", by the investor group, Mr Fulton said.
The group action is against Pounamu Prime Ltd, including its director Steve Groves, Mr McEwan's son Kelly McEwan, law firm Carter Atmore and Strategic Nominees Ltd (Strategic Finance).
Mr Fulton noted that with Dan McEwan bankrupted there was no point persuing him.
The main two allegations are that Pounamu Prime offered equity security and debt securities to the public without a prospectus or investment statement which "makes the shares and loans void and of no effect", Mr Fulton claimed.
Dan McEwan was convicted on six Securities Act breaches last December, including not having provided a prospectus or investment statement for investments in two overseas developments by a Dunedin couple.
"We say that the investors in Pounamu Prime Ltd are in the same situation," Mr Fulton said.
He said the claim against law firm Carter Atmore was for breach of alleged duty owed to the investors.
"If Strategic succeed and enforce the agreements or win damages, those investors are looking to the lawyers they relied on to look after them for that loss," Mr Fulton said.
He said the "divide and conquer strategy" was often tried but he hoped Strategic would put "the litigation games to one side" and focus on getting the substance of the problem resolved in "the most just and efficient way".
"If not, we will have to formally pursue that in court," he said.
