Harcourts franchisee ordered to repay $1m
Harcourts has won a legal battle to have one of its franchisees repay a $1 million loan.
Gurpreet and Ramnjit Grewal, who operated 10 Harcourts offices in Auckland, appeared in the High Court in the city last month. The judgment from Justice Roger Bell has now been released.
The pair operated Preet & Co Real Estate and an associated rentals business.
In the middle of last year, it was revealed that money was missing from the firm’s trust accounts.
The Grewals did not have enough money at hand to replace it, and Harcourts offered a loan to cover the shortfall.
Preet & Co was liquidated in April after being placed in voluntary administration five months earlier.
Harcourts took the liquidation to mean that the Grewals were defaulting on their loan. It made a demand based on their guarantee.
It also sought more than $250,000 in franchise fees it said were owing.
The Grewals told the court they admitted they gave guarantees on the loans but dis- puted liability for the fees. They claimed that Harcourts had undermined the value of the business in a potential sale, had access to information it should not have, and had pressured Gurpreet Grewal to sell half his shares.
These actions had led to administration, he said.
Grewal said he had lined up a buyer, JK Realty.
But he claimed Harcourts encouraged JK Realty to reduce the price. The administrators did not accept the low offer and the deal came to an end.
He said he was tricked into signing the loan guarantee in return for the promise of ongoing support for his companies, which failed to materialise. But the judge found there was nothing to suggest Harcourts intended to trick him.
He said Grewal had been shown not to have any defence to the claim under his guarantee of the loans and Harcourts was entitled to $1.012m plus default interest.
But Harcourts lacked the evidence to establish the indebtedness for unpaid franchise fees.
Meanwhile, two managers working for Grewals, Joseph Voordouw and Garry Mason, have been fined a combined $10,000 for misconduct in their handling of the missing $1m. the