The last man standing after a failed retirement village development in Wānaka must repay the project’s financier $3.4 million after losing a court appeal.
The Court of Appeal has upheld a High Court decision from last November that ordered former Roy’s Bay Estate Ltd shareholder and director Chris Holmes, of Waiheke Island, to repay the money to aged care lender Senior Trust Capital Ltd.
The judgement continues the fallout from Roy’s Bay Estate’s long-standing and controversial plans to develop the village on a 1.8ha site in Kelliher Dr, near the township’s lakefront.
Although the Queenstown Lakes District Council turned down the application, the Environment Court gave the project the go-ahead in 2012 after mediation.
However, the project ran into difficulties in 2018, and Senior Trust finally turned off the funding tap in 2021.
Holmes and fellow Roy’s Bay Estate shareholder Tony Hannon, of Auckland, had provided personal guarantees for the loan facility with Senior Trust.
In 2021, the pair opted to sell the unbuilt-on 1.4ha portion of the land in an attempt to clear the debt.
They reached a conditional agreement with S5 Consulting Group for $22m, with settlement slated for early 2022.
However, Senior Trust proceeded with a mortgagee sale, striking an $18m deal with S5 subsidiary, Stoney Creek GCO Ltd, that left Holmes and Hannon in the gun for $3.4m in loan principal and default interest.
After completing and selling only 10 of the 63 homes it had consent for, Roy’s Bay Estate was placed in liquidation last year, and Senior Trust began court proceedings against Holmes and Hannon.
In the latest decision, which noted Hannon had settled with Senior Trust, the Court of Appeal rejected a series of claims by Holmes in seeking to overturn last November’s order.
Holmes argued Senior Trust acted in bad faith by selling the land to Stoney Creek, and the financial benefit it had gained from a finance agreement with the buyer should have been accounted for when calculating the remaining debt.
The court also rejected Holmes’ arguments that the calculation of the debt was defective, and the default interest charged was excessive.
The judgement means bankruptcy proceedings for Holmes are set to proceed next month.
Stoney Creek has progressed its own residential development since buying the land.
