Golf resort injunction confirmed
Posted: 25th February 2013
The High Court has confirmed a worldwide asset freezing injunction against property developers who promoted a luxury wine, golf and boutique hotel resort in Argentina. The court ruled that an investor in the project had a good arguable case that the developers had made representations prior to the execution of a £1 million loan agreement that were either fraudulent or reckless.
The developers agreed that the planned 775-acre project in the country's Mendoza wine region had been adversely affected by the economic recession. However, they denied having fraudulently or recklessly induced the investor to enter into the loan agreement with the company behind the project, of which the developers are directors and majority shareholders.
An asset freezing injunction was issued against the developers and the company on an emergency basis in October 2012 and, in refusing to lift that order, the High Court noted that the loan agreement was in default. The investor had a strongly arguable case that it had been misled about the planning status of the project and that explicit representations that its interest would be secured by a charge over part of the planned resort had not been honoured.
Ruling that there were ‘strong reasons’ for extending the order, the court observed that there was evidence that the developers had ‘never intended’ to grant the investor the agreed security, that they had ‘behaved at least recklessly’ and that they had ‘engaged in a series of delaying tactics with excuses for inaction’. There was also a real risk of dissipation of assets and that lifting the order would ‘work a real injustice’ to the investor.