$30m-plus Kawarau Falls cases coming to court


Lawyers are hovering over the commercial carcass of Queens­town’s collapsed billion-dollar Kawarau Falls complex. 

Court documents sighted by Mountain Scene reveal two lawsuits under way. 

Both claim refunds of deposits on big chunks of the Kelvin Heights lakeshore mega-development which crashed in 2009. 

One claim totals “more than $20 million [deposits] and damages”, documents say, while the other claim is for $9.5m of deposits. 

The $20m-plus case begins on October 29 in the High Court at Auckland. 

The two plaintiffs are a company called GDF I LLP and an individual named Alan Fall. Both are believed to be British, with Fall said to be a pharmaceutical importer. 

They’re suing a former company of Kawarau Falls promoter Nigel McKenna which was put into receivership by project financier Bank of Scotland International (BOSI). 

GDF was to buy seven of the 13 buildings in the three-stage Kawarau Falls masterplan – including InterContinental and Quay West hotels in stages two and three. Separately, Fall was to buy a stage one Westin hotel – now Hilton Queenstown. 

When BOSI took over Kawarau Falls, its receivers decided to complete stage one and abandon stages two and three. 

Westin was removed and Hilton appointed to operate the stage-one hotel and other buildings, mainly apartments. 

In a preliminary High Court hearing this June, Judge Rodney Hansen said the termination of Westin and Hilton’s appointment will “be a focus of evidence in the proceedings”. 

The other Kawarau Falls lawsuit involves 109 plaintiffs – mostly Singaporean and Malaysian – who agreed to buy 114 apartments at about $750,000 each. 

Putting down deposits averaging $83,000, they subsequently refused to settle when the apartments were finished and their deposited $9.5m is now frozen with lawyers Russell McVeagh. 

The non-buyers are taking ex-McKenna BOSI companies to court to void purchase agreements and get their deposits back. 

They allege misrepresentations by Kawarau Falls’ South East Asian sales agent, including unmet promises of 80 per cent finance. 

However, in a preliminary High Court hearing this May, a judge didn’t rate their chances. 

“[The buyers’ case] is arguable but I do not consider it is at all strong, based on the evidence currently before me,” Judge Gilbert noted. 

He poured cold water on alleged finance misrepresentations, saying there’s no evidence any buyer asked for vendor finance: “It’s clear none of the plaintiffs wishes to settle.” 

Judge Gilbert ruled that to proceed, almost all the Asian buyers must post about $23,500 each as security for opposition costs in case they lose. 

Another preliminary hearing is due on November 29.