The case, involving Dunedin builder and property developer Russell Hyslop and developer Lindsay Clark, whose business relationship broke down in acrimony in 2002, is being heard by Justice Chisholm.
It is the second time the judge has been asked to rule on legal issues between the pair.
In 2004, he was asked to decide whether the two men were in a partnership or profit-sharing agreement during a series of business ventures between 1997 and 2002.
He concluded the business relationship between Mr Hyslop and Mr Clark was a partnership between Mr Clark and Mr Hyslop's company, Libra Developments.
Yesterday, the court heard opening arguments from Peter Churchman for Mr Hyslop and Len Andersen for Mr Clark, as well as evidence from two witnesses.
Mr Churchman said there were five projects, four residential and one commercial (the hotel conversion of Cargill House) involved in the partnership.
Some projects were almost complete and others not started.
The real issues were who had absolute control over what happened or did not happen with those projects and the interest payments on loans, he said.
Mr Hyslop had been physically excluded from the sites of these projects, making any further input to complete the projects impossible.
The potential profits from these developments should be taken into account, Mr Churchman said.
Some of the projects were not completed and it appeared the Mr Clark deliberately decided to delay completion of the project until he "got rid of these proceedings" in court, Mr Churchman said.
In the meantime, the property market had crashed, so the consequences of the "wilful delay" meant the returns from the timely development of the properties would have been much greater had they not been delayed.
"Sub-issues", such as any profits Mr Clark made through his indirect ownership of Wood Solutions, the joinery firm which did much of the work on the Cargill House refurbishment and which was acquired by using partnership assets, should also be taken into consideration, Mr Churchman said, as should the significantly higher amounts paid to Mr Clark's builder son-in-law who worked on the Cargill House project.
Details of financial figures relating to Scenic Circle, which runs Hotel Dunedin City in Cargill House, and its involvement in the hotel development have been suppressed.
For Mr Clark, Mr Andersen said the issue for the court was the assessment of profits but the realisation of those profits would not be "for some time to come".
A date needed to be properly fixed for the dissolution of the partnership so property could be valued at an appropriate date.
Southern Development, the company in which Mr Clark and Mr Hyslop were involved, had a projected 2011 deficit of $208,000.
Mr Clark did not accept he had an obligation to embark on new projects using partnership assets, to develop the balance of the partnership's Eastbourne St project or to begin to develop its Haggart Alexander Dr property, Mr Andersen said.
"The partnership has been dissolved."
There was no basis to say Mr Clark had a fiduciary obligation to start the projects contemplated when the partnership was together, he said.
Because he would not be available later in the week, defence witness Earl Hagaman, Christchurch director of the company which owns Scenic Circle Dunedin City Hotel, was permitted to give his evidence yesterday before evidence from the plaintiff.
Mr Hagaman said he was involved "at the governance level" with the joint venture arrangements and Cargill Hotel, the joint venture company established to acquire the land and building at the corner of Princes and Dowling Sts and convert it into a hotel.
He did not get involved in detail or day-to-day management, leaving that to others.
He and his wife, also a director of Scenic Hotels, were involved in the discussions with Mr Clark about the proposed joint venture.
They first met Mr Hyslop when he came to some of the meetings at which the proposed joint venture was discussed and quickly formed the view he was not someone Scenic Hotels could work with.
They did not want him involved with anything to do with the proposed hotel, Mr Hagaman said.
Scenic Hotels felt it had a good relationship with Mr Clark and could work with him on the project, but it could not work with Mr Hyslop and would not have become involved in the proposed hotel if he had been involved in any management or ownership capacity.
The hearing continues today.











