Received from Christchurch Driver [CD]
Fri, 4 Mar 2016 at 10:42 p.m.
A preliminary, a disclaimer : Your correspondent is not Ms Ali Jones, or Felicity Ferret ….and is cut to the quick by such a comparison. (Well he isn’t actually sure who Ms Jones is but won’t let that get in the way of a good line). However, readers, he would never be so careless with the financial facts that affect Dunedites.
On a more serious note (unusual so early in a CD post), your correspondent has been shaken to the core with new information that has come to light in the last 2-3 days. By now you know the prerequisites : Strong tea, macaroons, and a big saucer. And today, some pepto-bismol. You will feel VERY queasy after this one.
Our correspondent has jump started the Delta long reach excavator and quickly unearthed a massive SOFT SPOT in Delta credibility.
Delta and the DCC are going to lose a lot of ratepayer funds at Noble. There is no happy ending, no handsome prince to kiss and revive Delta to financial health, where their $14.6M (11.3M + 3.3M) core debt will be paid. There is no bona fide mortgagee sale.
Let’s consider the statements of the DCC Group Chief Financial Officer at the full council meeting of February 22; he told the council there was no “relationship” between Delta and Gold Band Finance, the Noble First Mortgagee. Well now, that would depend on how one defines a “relationship”. In our modern world, it’s all about equality, having an equal voice in all matters. Both parties, facing the future, hand in hand, etc. And yes, by those rose tinted soft focus lights, no, there is not a Delta / Noble “relationship”. What there is, is a dictatorship. Gold Band will do whatever Delta say. This is in writing. It is in a thing called a “Partial assignment of Debt and security sharing deed”, and commits Gold Band to servitude to Delta. And readers, you can check for yourself the claims your correspondent makes about this document. The document is posted right here, below. Although there is no reason to doubt –-your correspondent does not work for Delta….
It is Delta that are behind the “mortgagee sale” of the Noble Subdivision.
Well and good, readers may say, we like that Delta are in control, and that fine Mr Crombie is steering the good ship Delta out of troubled waters. Really ? This correspondent thinks the ship is being steered…. straight into the High Court.
Your correspondent has been advised that a court action against Delta for CONSTRUCTIVE FRAUD (stress ! rattling cups !!) is imminent, from a party to the subdivision, due to this “security sharing agreement”.
This party has an “interest in the land”, in that the land is part of the same subdivision consent as that party’s subdivision. It was part of a complicated deal where parcels of rural land were sold by the effective parent of NIL, Apple Fields Ltd, who then had the right to buy back the 3.2 Hectares of each of the 4 Ha parcels of land from the new owners…. and for the amazing sum of $10 each, but only if and when NIL had gained rezoning and resource consent for the subdivision and for the consideration of the Owners’ inclusion in the subdivision. The terms were generous to NIL : They had a full 20 years to achieve this result before the buy-back provision was terminated. The Owners of each of the 4 Ha lots then got to retain 0.80 Ha (8000 m2) that they could then subdivide at minimal cost as the infrastructure was all in place for them, paid for by NIL. NIL’s side of the deal included an irrevocable commitment (in the sale and purchase agreement), to providing a vested road, full services and stormwater systems to the Owners’ remaining 0.8 Ha parcels of land. That was the deal that was signed. And a deal that remains, unfulfilled, 13-14 YEARS ON….
Readers, and our torporific Delta Directors (who could well be learning all this for the first time), should reflect on how incredibly dodgy this deal put together by NIL all is. (However Delta Management were fully aware and up to their ears in it). Let’s see : An entire 304 lot subdivision was being developed by a developer who didn’t own the land, having sold it off in parcels, realising we understand about $3M from the sale of those lots. They then soon after borrow $1.75M from Gold Band secured by the rights to purchase this land as above, for who knows what. It can’t have been to pay in full the Surveyors, Cardno, as they have a security over some land for monies owed as well. Then in 2008, well before the Resource Consent is issued in May 2009, NIL approach the land owners to transfer 25 Ha of the 40 Ha by way of the above payment of $10 per lot. This was before the Resource Consent is issued. The neighbours, fatally, agreed to this transfer “in good faith of the roading and services to come for the imminent Resource Consent”. Gold Band then registered their existing $1.75M loan as a first mortgage (which as noted in an earlier post, grew to $4M by 2013), against all those lots at the time of the transfer, before NIL had done any of the promised work.
The developers NIL, then reneged on all of their irrevocable commitments, did not build the road, and undersized all the stormwater drainage system that the road was meant to hook into. This means that huge parts of the stormwater drains (laid underneath the freshly laid asphalt, and +2m deep) will have to be dug up and re-laid, to fulfil commitments to the neighbours. As a (half) competent civil contractor, Delta would have known the system was undersized but kept silent.
NIL however didn’t keep silent. They continued to “assure” the residents the opposite. That their roading and subdivisions requirements inclusive of this stormwater provision were being provided for when they weren’t. NIL still needed the front part of the residents’ access lot for their own access and commercial area, so needed to keep assuring them they were provided for. NIL tried to entice the residents to transfer this further land, again ahead of promises for the considerations yet to come, but the residents by then had become weary. There was no need for this further transfer in advance of the promised road and services.
The residents didn’t find out until four years later that their stormwater provisions had never been provided for, neither in applications or physical works, and that their promised road and subdivisions had been made impossible before they transferred their 3.2 Ha of land in consideration for these.
There has been years of litigation between the neighbours, NIL, Gold Band, over this and other matters.
The lesson from this dismal tale is tread warily of Christchurch Private School Old Boys bearing the gifts of free subdivision work. The revolutionary disregard for the normal and necessary strictures of commerce, district plans, engineering standards, NZTA safety standards, the rule of law, would make Ayn Rand blush.
Delta have worked very hard to find the single most dysfunctional subdivision deal in Christchurch. (And probably beyond).
But readers, our concern is not the dismal NIL. Delta were their henchmen, and were complicit with them every step of the way once they started on site. Delta had found a new friend. Delta were the tri-axle (tri-hard) trailer to the NIL tractor unit, to put it in earthmoving terms. Dunedin Ratepayers are paying for many years of child support for this failed romance with a deadbeat.
The onsite Delta team were acutely aware of the problems. At one point the site manager went to Delta Management to explain that the neighbours problems could be resolved by building the road NIL owed them as part of the subdivision, which he could whip out in less than three months. Presto, the caveats would come off, everyone would win.
Delta Management told the site team to take a hike, they had “gone too far” and were “too close” to the neighbours.
After that, the neighbours had offered to remove their caveats on the titles for the benefit of all parties, provided their road and services was assured in the first stage of vesting as required by their contracts. The single condition being that Delta would guarantee to the neighbours that they would build the road. A memorandum of understanding (MoU) that was drawn up even provided that NIL would provide an all important first mortgage security of $900K for Delta for this work. Delta refused to sign it.
Delta yet again, enabled NIL’s despicable behaviour. Delta worked with NIL to circumvent or defeat the neighbours’ interest at many points.
Yes readers, I know you are restless, I can hear your complaints, “get to the point, we are only interested in Delta and their debt ! (and their stupidity).
The kicker to this story is that there was light at the end of the tunnel. Last year, the neighbours offered to buy the first mortgage at full value from Gold Band to avoid the court action over the caveats that Gold Band wanted removed in the event of a mortgagee sale. Gold Band were keen to do business. But Gold Band were not allowed to sell ….because Delta would not let them under the terms of the security sharing deed.
This is the cause of the action for constructive fraud that is imminent. The reason Delta will very likely be found liable is from the precedent set in a case called Instant Funding vs Greenwich Property Holdings Ltd HC Auckland CIV 2007-404-6806, where the factual narrative is exactly the same : A finance company, sought a mortgagee sale of a property. A party who had carried out extensive improvements, and clearly had an interest in the property, offered to fully repay the first mortgage. The first mortgagee agreed, but was then “influenced” by another party not to deal with the person that had a vested interest in the property but to sell to another party instead.
(Memo To Delta : Get some better lawyers : This Correspondent is getting tired of providing you with legal and other advice for nothing ! Unlike Delta, he doesn’t think working for nothing is a business strategy).
Delta cannot “influence” Gold Band by way of insisting that they refuse to deal with a party who has an interest in the land that ranks ahead of them, just because they want to protect their (enormous) lower ranked securities. However, the security sharing deed goes beyond “influence”, it “requires” Gold Band to do as Delta instructs. The security sharing deed was drawn up by Delta’s own lawyers —and NIL, Gold Band and Delta are all parties to it. The whole agreement was prepared, it appears, to attempt to defeat the caveats that ranked ahead of them. The caveats are specifically mentioned in the agreement. This would make the deed null and void, unenforceable. It would also be an abuse of power by a Local Government entity to enter into an investment and then attempt to defeat the prior known interests of private citizens in it.
Who wrote these @&#!! deeds you ask ? Who has made Delta’s precious security very likely unenforceable ? Delta’s lawyers of course. And lawyers only write into deeds what their clients tell them to write, and in this case also what NIL and Gold Band apparently wanted them to write.
Further proof of Delta’s profound stupidity : a) Your correspondent has been advised that one of the Delta second mortgages is not even a registered mortgage but merely an “agreement to mortgage” and therefore Delta’s “security” that Mr Crombie crows about is a lot less certain than he would have us believe. b) It appears the Delta second mortgage and their further credit advances provide that the debt will be repaid from section sales. There is no time limit, or other restrictions, so now, into its seventh year, with no payment on the mortgage at all, the mortgage is still not in default.
Finally : Let’s look at this mortgage security, and what it reveals about NIL’s intentions. Mr Crombie and Mr Cameron have long reassured ratepayers they have security. NIL, for the $1.75M Gold Band first mortgage, gave security to Gold Band over 9 titles of land, ie with a total of 25 Ha. On the other hand, Delta were given security for a $5M second mortgage, over just 1 lot of 3.2 Ha. Hmm : 25 Ha for $ 1.75M for their favoured financier : 3.2 Ha for $5M to the desperates at Delta. That is a Friends : Fools security ratio of 22 : 1. Apparently, there are some cunningly inserted words that make it appear there is a priority swap from Gold Band to Delta over all the land, but a closer reading will show that it is limited to just Lot 14.
As noted, numbers, counting and reading comprehension are all problem areas for Delta. These failures are very likely to have consequences of epic proportions for Delta. No amount of running around by ex Delta Director Mr Mike Coburn (yes he has been involved, no time tonight to go into that mud pit) is going to change a (highly likely) illegal deed into an enforceable one.
Your correspondent wrote in an earlier post that Delta were too stupid/ dense/ naive to realise that when they began to act in concert with NIL to defeat the interests of the neighbours, alarm bells needed to ring. A developer that would “clothesline” or ignore its commitments to one party would have no hesitation doing the same to their cling-on contractor….
NIL and Gold Band are not Delta’s allies. The awful truth is surely beginning to dawn on Delta. They’ve been given the static clothesline.
What is the way forward now ? Your correspondent is horrified by what has been revealed or learned these past few weeks. Delta have created a stinking, noxious mess : on the ground, in the Yaldhurst Community, in the Courts and with Dunedin Public Funds. They are so desperate they will consider ANY plan to attempt to redeem the poisoned fruits of their past stupidity, legal or illegal.
Your correspondent thinks that Dunedin City Council should urgently seek a legal opinion on the constructive fraud issue noted above. A genuine, objective, legal opinion far from Dunedin, Christchurch or the South Island, from a respected practitioner. And make it public. If the review confirms your correspondent’s post, then don’t wait for the court case. Get rid of the board, Mr Coburn, and Mr Cameron.
More to come, readers.
● Gold Band Finance Prospectus No. 31 Dated 22 April 2015
View this 126pp document via the NZ Companies website at: https://www.business.govt.nz/companies/app/ui/pages/companies/321896/documents — go to Prospectus uploaded 23 Apr 2015 14:33
New Zealand Companies register: Delta Utility Services Limited (453486)
█ Directors: David John Frow (appointed 25 Oct 2012), Trevor John Kempton (01 Nov 2013), Stuart James McLauchlan (01 Jun 2007), Ian Murray Parton (25 Oct 2012)
Related Posts and Comments:
● 4.3.16 Delta —Noble Subdivision #EpicStorm Heading OUR WAY
● 4.3.16 Delta #EpicFail Noble Subdivision : Councillors know NOTHING
● 2.3.16 Delta #EpicFail Noble Subdivision : A Dog, or a RAVING YAPPER?….
● 1.3.16 Delta #EpicFail… —The Little Finance Company that did (Delta).
● 29.2.16 Delta #EpicFail Noble Subdivision : NBR interested in bidders
● 28.2.16 Delta #EpicFail Noble… If I were a
rich man / Delta Director
● 27.2.16 Delta #EpicFail Noble Subdivision Consent : Strictly Optional
● 27.2.16 Delta #NUCLEAR EpicFail —Noble Subdivision : Incompetent…
● 25.2.16 Delta #EpicFail: Mayor Cull —Forced Sale Fundamentals 101
● 24.2.16 Delta #EpicFail —Noble Subdivision : Cameron, Crombie & McKenzie
● 23.2.16 DCC: DCHL half year result to 31 December 2015
19.2.16 Delta: Update on Yaldhurst subdivision debt recovery
15.2.16 Delta / DCHL not broadcasting position on subdivision mortgagee tender
30.1.16 DCC Rates: LOCAL CONTEXT not Stats —Delta and Hippopotamuses
● 29.1.16 Delta #EpicFail —Yaldhurst Subdivision ● Some forensics
● 21.1.16 Delta #EpicFail —Yaldhurst Subdivision
21.1.16 DCC LTAP 2016/17 budget discussion #ultrahelpfulhints
10.1.16 Infrastructure ‘open to facile misinterpretation’…. or local ignore
15.12.15 Noble property subdivision aka Yaldhurst Village | Mortgagee Tender
21.9.15 DCC: Not shite (?) hitting the fan but DVL
20.7.15 Noble property subdivision —DELTA #LGOIMA
1.4.15 Christchurch subdivisions: Heat gone?
24.3.15 Noble property subdivision —DELTA
23.3.15 Noble property subdivision: “Denials suggest that we have not learned.”
17.3.15 DCC —Delta, Jacks Point Luggate II…. Noble property subdivision
● 14.5.14 (via DCC website) Larsen Report February 2012
A recent governance review of the Dunedin City Council companies was conducted by Warren Larsen.
● 20.3.14 Delta: Report from Office of the Auditor-General
Inquiry into property investments by Delta Utility Services Limited at Luggate and Jacks Point
█ For more, enter the term *delta* in the search box at right.
Posted by Elizabeth Kerr
Election Year. This post is offered in the public interest.