After a successful appeal, foreign investors have once more dragged Wellington legal firm, Harkness Law, into a case involving Auckland housing development, Albany Heights.
The three investors, Adrian Ng, Alicia Go, and Matthew Lim – all currently living in Singapore – claim the law firm engaged in misleading and deceptive conduct under the Fair Trading Act.
The investors paid to obtain interests in residential lots such as Albany Heights. It later transpired the development was linked to bankrupt developers, Roderick Neilsen and Peter Chevin, as well as failed finance company director, Paul Bublitz.
After the project was cancelled, the development companies went into liquidation. The three investors say they lost hundreds of thousands of dollars. They sued Harkness Law as the firm had received their funds into its trust account. They also took action against the company’s principal lawyer, John Harkness, who acted for the developers.
After obtaining the funds, Harkness Law paid the money directly to the developers. The investors claim they were tricked into thinking their funds were safe in the firm’s trust account.
It is alleged the law firm lent its name to be used by the developers, allowed them to use the firm’s trust account despite not owning the land to be developed, and then paid deposit money out of the trust account without prior authorisation. This was claimed to be deceptive under the Fair Trading Act.
After the High Court threw out the investor’s claim, they successfully challenged the ruling at the Court of Appeal. While the Court admitted the claim could face difficulties, they said it was too early to strike out pleadings when it was possible they could be amended.
“On the evidence before the Associate Judge, we consider that the pleading was capable of amendment,” said Justice Jill Mallon. She also pointed out that further evidence had become available since the High Court had thrown out the case.