General Finance chases Terry Serepisos' mum for $275,000

General Finance has sought summary judgment in the High Court at Wellington against the mother of discharged bankrupt Terry Serepisos over $275,000 owed on a defaulted mortgage but her lawyer argues the mortgage lender "sabotaged" the sale of the apartment and is to blame for the outstanding money.

Alliki Serepisos was the owner of a Wellington apartment financed via a mortgage with General Finance but soon defaulted on the payments and the property was put up for sale.

It sold in early May 2016 for $580,000, well below the valuation on which the mortgage had been provided. Before real estate company, Harcourts won the listing, it had appraised the apartment's value at $995,000 and evidence was given of a 2014 valuation by Telfer Young for about $715,000.

While there is no argument from the Serepisos family that the mortgage was in default, their lawyer Kevin Smith argued the mortgagee was the architect of its own misfortune by taking 18 months to sell the apartment and then failing to respond to a potential higher offer – before it had signed the sale and purchase agreement – that would have left Mrs Serepisos owing little.

Terry Serepisos was bankrupted in September 2011, when his portfolio of about 150 residential properties and commercial buildings was valued at $232.5 million, while his debts stood at $204 million.

He was discharged from bankruptcy in October 2014. He became a high-profile celebrity in his heydey, holding the licence for the Wellington Phoenix football team and sponsoring the 2009 Wellington Cup at Trentham racecourse. He is in the US, Mr Smith told the court.

He told the court Mrs Serepisos was too elderly and frail to attend the hearing. He had initially sought an adjournment of the hearing and to rule himself out as her lawyer because he had acted for family members of the Harcourts Real Estate agent who handled the apartment sale,

However, the hearing went ahead after Associate Judge Warwick Smith gave him a matter of hours to produce an affidavit, which Mr Smith said wasn't enough time.

The sale process

The lawyer argued General Finance hadn't carried out its obligations as mortgagee in exercising the power of sale because it had failed to pursue a potentially higher offer.

He said a Mr Chin had indicated in early May that he was interested in buying the apartment and was prepared to offer about $800,000 but had been unable to get access for a viewing.

Mr Smith said the real estate agent had told Mr Chin she didn't have the key, an assertion later shown to be false. Associate Judge Smith repeatedly asked General Finance's lawyer, Sean McAnally, why it hadn't followed up on the potentially higher offer before signing for the lower price.

Mr McAnally said there was an offer on the table that might have been lost and that Mr Chin hadn't yet done due diligence on an apartment that was in a block which faced a range of issues including a low earthquake rating, leaky building concerns and high body corporate fees. "There was no reason to think Mr Chin was in a position to make an immediate offer," he said.

The court heard there were a number of offers and one firm agreement before the apartment was eventually sold. They included one at $630,000 that was to settle in July 2015 but failed to close and proceedings were filed to recover the deposit, which would have been about $63,000. Mr McAnally said the potential buyer is now involved in bankruptcy proceedings in Palmerston North.

Mr McAnally said Mr Chin was a friend of Terry Serepisos, which the defendant's lawyer Mr Smith denied. Mr Smith also said there was no evidence the potential offer from Mr Chin was a sham.

"He was very interested and wanted to proceed. The agent informed him they didn't have a key. That effectively sabotaged the arrangement of a possible offer from Mr Chin. Perhaps a dishonesty in respect of that point. One wonders why."

Associate Judge Smith reserved his decision.

(BusinessDesk)