Former top sportsman-come-developer Matthew Ridge gave written evidence for the Crown in the Dominion Finance trial, which opened at Auckland High Court today.
As the Crown opened its fraud case against Dominion's boss Paul Cropp, Robert Barry Whale and another executive who has name suppression, the court heard how Mr Ridge, an ex-Kiwi league player, borrowed from Dominion for his ill-fated luxury apartment development on swanky Bassett Rd, in the Auckland suburb of Remuera.
Ridge says Basset Rd development could have made him bankrupt
Facing major problems with the Bassett Rd luxury apartment development in 2004, Matthew Ridge knew there was a real risk it could bankrupt him.
In his written evidence for the Crown, read by a court registrar this afternoon, Mr Ridge described the development as a 20-foot hole in the ground, owing $6 million to Dominion.
He said he wanted to sell the development because he was just an investor and, with no background in construction, was unable to complete the apartments himself.
Mr Ridge's company M3, of which he was the sole director and shareholder, bought land at 2 Bassett Rd, Remuera for $2,577,000 with a $2,580,000 loan from Dominion Finance.
The loan was fully repaid in May 2003.
But, at the same time another property development in Remuera, in which Mr Ridge was also a shareholder but not involved in the day-to-day operations, ran over time - resulting in M3 being placed in liquidation in March 2004.
M3's interest in the Bassett Rd development was sold to another company formed by Mr Ridge, Basset Rd Ltd [sic], for $2,928,000 - funded by a loan from Dominion Finance.
Mr Ridge said he wanted to sell the Bassett Rd development and was worried, given his personal guarantee over the loan, there was a "real risk he could be banrupted" by the project.
He told Dominion Finance director Terry Butler he didn't have expertise to finish the project
Mr Ridge said he did not know how the buyer, John Robert Williams, came to be known by Dominion Finance, or if there was a prior relationship between the parties.
Mr Ridge sold the unfinished development to Mr Williams and then borrowed money from ASB to repay a $600,000 shortfall.
Mr Ridge said his dealings with Dominion Finance included contact with director Terry Butler several times and lending manager Brendon Wilson.
The trial, before Justice Pamela Andrews, continues.
Mr Ridge's company M3 bought land for the Bassett Rd development in 2002 with a loan from Dominion. Mr Ridge personally guaranteed the loan.
In 2003 the development was sold by M3 to another Ridge company called Basset Rd Ltd. Dominion lent to Bassett Rd Ltd.
Crown Prosecutor Brian Dickey earlier today said by 2004 the development was a big hole in the ground, filled with water and Mr Ridge's company Basset Rd owed Dominion about $6 million.
Mr Ridge then wanted to sell the development and met with Dominion's Terrence Butler and Brendon Wilson to see if they knew anyone who might be interested in buying and completing the development.
Auckland "ratbag" developer" John Williams emerged and Mr Ridge accepted his offer of $5 million, personally repaying Dominion the shortfall of about $600,000 he owed.
Mr Williams agreed to front the development through a new entity Norfolk Manor. There was an underlying joint venture agreement between Mr Butler and Mr Williams whereby each was responsible for underwriting certain units.
Dominion fully financed the deal by the loan to Norfolk. Because the development was difficult and costly, numerous loan advances and extensions were made by Dominion until completion.
By February 2008 the outstanding loan owed by Norfolk Manor to Dominion was $8,429,485
Not all the apartments were sold and therefore, under the joint venture, Mr Butler had to buy them.
Mr Williams went on to short-change South Canterbury Finance on the Arundel Park townhouse development on Paratai Drive.
The large debt owed by Norfolk to Dominion was being rolled over and was in default without approval of the corporate trustee Perpetual.
The court heard that Dominion ultimately shifted liability to another venture, WAFD, set up in March 2008, to take over the liability of Norfolk Manor for the Bassett Rd Development.
Mr Dickey said the loan from Dominion to WAFD was undoubedly a related party loan in breach of the trust deed.
Dominion essentially replaced Norfolk and 'bad loan' with a 'fresh' loan to a new related, but disguised, party borrower WAFD, Mr Dickey said.
"It was pure balance date 'window dressing' to present a more favourable reported view of Dominion's financial position than was the truth."
Mr Dickey said each of the accused were involved in that cover-up and had deceived the trustee by misreporting the transaction.
"This is a classic case of two independent directors and two senior managers of subsidiary finance companies knowingly and deliberately using public funds obtained by the companies for unauthorised and highly improdent purposes," Mr Dickey said in his opening statement.
"In law, such use amounts to theft."
The trial, before Justice Pamela Andrews alone, continues.
Matthew Ridge surveys his Bassett Rd development
This article is tagged with the following keywords. Find out more about MyNBR Tags
- Shareholders approve completing $400m Central Plains irrigation scheme in 2018
- Court rules against Chinese investor over $7.3m Auckland property deal
- EQC boss Ian Simpson to leave at the end of the year to head up GNS
- Marlborough displaces Central Otago for best Pinot Noir in world competition
- READER POLL RESULT: Who won the first presidential debate?
Most listened to
- Ironically, Trump showed the lack of stamina he had accused Clinton of, says NBR's Rob Hosking
- NZX market surveillance manager Fraser Wyeth gives evidence at the Warminger trial
- Hellaby shareholder Aaron Bhatnagar says why he thinks Bapcor's offer is too low
- No knockout blows in first presidential debate, says NBR's Nevil Gibson
- Intueri's problems raise questions for the board, says Martin Watson of the Shareholders Association