Warring clubs head for court

The chances of a happy ending in the long-running Club Palmerston saga have been dealt a blow as the increasingly messy dispute heads toward court.

The Palmerston North Cosmopolitan, Squash and Bowls clubs were supposed to merge as far back as 2006 and operate from the same Linton St complex. However, the merger didn’t happen and a deep rift has developed between the Cosmopolitan Club and the sports clubs, which now say the chances of a happy union are slim.

“The [sports] clubs have, in a joint committee meeting, accepted the position that there is little likelihood of a merger going ahead,” said David Petterson, who acts as spokesman for the sports clubs.

A Cosmopolitan Club spokesman declined to comment because of uncertainty surrounding the situation.

The Linton St land is owned by the sports clubs, but the Cosmopolitan Club owns its building. The three organisations have a combined membership of more than 2000 people.

Last year, the Cosmopolitan Club lodged a civil suit against the sports clubs, while the sports clubs lodged a counter claim.

The numbers are difficult to quantify, but both sides have indicated their claims could exceed $1 million.

On June 15, a hearing to debate security of costs will be heard at the High Court in Palmerston North.

The sports clubs were working on inviting other organisations to join Club Palmerston, an idea the sports clubs were still committed to, Mr Petterson said. “The reality is for the last two years squash and bowls have been trying to get this merger through for the benefit of the three lots of club members.”

Mr Petterson said the Cosmopolitan Club management committee had put a brake on merger plans, and the sports clubs would not merge while that committee remained in place.

Tensions blew up in late 2010, when the bowls club issued a demand to the Cosmopolitan Club for a $260,000 loan.

The Cosmopolitan Club repaid it, but was later locked out of its clubrooms in an effort by the sports clubs to get the parties to mediation.

Talks broke down and correspondence obtained by the Manawatu Standard indicates deep divisions between the two sides.

One issue causing problems is the status of a Bank of New Zealand loan to the Cosmopolitan Club and guaranteed by the sports clubs.

In a report to Cosmopolitan Club members, manager Desiree Garrigan said the BNZ this year called in $140,000. However, it had not been paid as the club was disputing whether the loan was legally allowed to be made to a friendly society such as itself.

An affidavit lodged with the court from Mr Petterson said the sports clubs would repay the money if required, but would then seek to cancel the Cosmopolitan Club’s lease at Linton St on the basis it was insolvent if it couldn’t pay the bank.

Ms Garrigan said this would be “essentially kicking the Cosmopolitan Club out of its premises” and had forced the club to ask the courts to stop this.

That issue would also be debated on June 15, her report said. “[The sports clubs] have thrown an awful lot at us this past year but we are still here and we are not insolvent.”

Article sourced from: http://www.stuff.co.nz/manawatu-standard/news/6945735/Warring-clubs-head-for-court