Queensland property investors sue over what they say is inflated price
The lawyer representing a couple from Denmark, Western Australia suing Queensland-based The Investors Club (TIC) over alleged misleading and deceptive conduct says other investors might also consider similar action.
"This is the first case that we have filed against The Investors Club, however is not inconceivable that there may be other similar cases,” says Carita Kazakoff from law firm Slater & Gordon.
Hugh Wilson and Marilee Coombs are suing TIC and two employees, Bryn Campbell and Brian Walters, after they were convinced to purchase a unit that they claim they later discovered was grossly overpriced.
Slater & Gordon has begun legal action in the Federal Court in Perth, with the case set to be heard on September 12.
They couple allege the company and the two staff members engaged in misleading and deceptive conduct when they advised them to purchase the property on the Gold Coast in 2007.
Kazakoff says Wilson and Coombs were told by TIC that the Kirribilli Heights unit in Highland Park was worth up to $1 million, and they would make an instant profit of $300,000 on settlement.
However, after the couple purchased the property an independent valuation revealed the unit was worth as little as $450,000 at the time of the deal.
“My clients, who are in their late 50s and 60s, wanted a secure investment for their future. They trusted the professional advice given to them by The Investors Club. However, after purchasing the Gold Coast property they are now hundreds of thousands of dollars out of pocket, and at risk of losing their family home.
“The Investors Club and its two staff members ought to have known that the purchase price of the property was well above market value, and that promises of an instant profit, and appreciation in value of $60,000 in the first year were unreasonable,” she says.
Coombs says she relied on the advice and assurances of The Investors Club and Campbell and Walters that this was a sound investment.
In a statement to Property Observer, The Investors Club says it is “concerned to hear that an investor is taking action against a branch manager and support member in Western Australia over information provided for a property purchase in Kirribilli Heights Complex, Queensland, before the global financial crisis in 2007”.
“The property was valued at the time of purchase by the lender’s valuer, a respected independent national valuer, at the sale price of $905,000. Six staff members at The Investors Club, including the branch manager who is presently being sued, also purchased property in the complex, with a similar valuation.
“The investor, who is now suing The Investors Club, struggled with the mortgage repayments and the line of credit they had taken on the loan when the global financial crisis hit. They had the property retrospectively valued (in the last 12 months), returning a $450,000 valuation. The valuation returned at a much lower price as another owner in the complex selling four units as mortgagee in possession sales, when the financial crisis hit, brought down prices for all the properties in the complex.
“Other investors in the complex are experiencing a similar fall in value and have followed The Investors Club strategy for investing in property for the long term, holding through this unexpected turn of events unique to this block. In its experience The Investors Club have seen house prices come back one to three years after forced sales have pushed them down.
“The Investors Club strategy is to make property investing as safe as possible; it recommended a broker to the investor who denied them the loan on the property.”
The club says it has helped over 9,700 investors, “without any complaint to a state tribunal in its 18 years of operation”.