RHG remains in a trading halt following a ruling last week by the NSW Supreme Court that it had defaulted on repayments on $300 million in notes used to finance mortgages.
In the court ruling, Justice Robert McDougall said the company had employed a “through the looking glass” approach to its calculations about mortgages and that its methodology for calculating the amount of late payments, or arrears had been “both conceptually and methodologically flawed.”
''The [RHG] calculation of arrears excludes certain overdue payments that, on the ordinary English meaning of the word "arrears", are in arrears,'' Justice McDougall said in his ruling.
The finding opens the way for the mortgages to be sold off by a receiver to repay the lender, German bank HVB.
Under the notes sold to German bank HVB in January last year, an event of default occurred if more than 1 per cent of the outstanding loan balance of the mortgages was overdue by more than 90 days.
HVB had claimed an event of default had occurred in December last year. The claim was supported by the trustee responsible for the notes, BNY Trust of Australia, after it had commissioned a report by accounting firm McGrathNicol.