Developer gains injunction preventing mortgagee sale of building being turned into hotel

Thursday, 30 July 2020

The owner of a building being converted into an upmarket Napier hotel has been granted a High Court injunction preventing a mortgagee sale.

The injunction was granted on Friday, July 24 – the same day tenders closed for mortgagee sales of the building at 36 Munroe St, and another building at 62 Raffles St.

The buildings are owned by Napier developer Malcolm Herbert and associated parties.

The upper three floors of the Munroe St building is being converted into a hotel, with Sarin Investments planning to open Hilton DoubleTree hotel rooms and suites next year.

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The mortgagee sale tender for both buildings, run by Colliers, was to have closed last Friday afternoon.

The injunction was granted that day.

In the High Court at Napier on Thursday, lawyer for First Mortgage Custodians Ltd, David Fraundorfer, told Associate Judge Kenneth Johnston that his client sought urgency for the matter to be resolved.

First Mortgage Custodians was seeking a date to hear a summary judgment application and a separate date for a hearing to set the injunction aside.

“There is a degree of urgency from the plaintiff’s perspective because the injunction has prevented a mortgagee sale and the consequential losses are mounting,” Fraundorfer said.

“The injunction is preventing the marketing or entering into any arrangements to sell the underlying assets, so prevents a tender process,” he said.

The summary judgment sought vacant possession of the 36 Munroe St building.

Associate Judge Johnston set a hearing date for September.