After mediation fails, Investors Club dispute headed for court

After mediation fails, Investors Club dispute headed for court
After mediation fails, Investors Club dispute headed for court

The legal dispute between Queensland-based advisory group The Investors Club and WA couple Marilee Coombs and Hugh Wilson will be heard in a Perth court next year after two attempts at a mediated resolution failed.

A closed hearing took place in the Federal Court of Western Australia on November 4 following a first court mediation taking place on September 12.

A spokesperson for Slater and Gordon, the law firm representing the Denmark, WA couple, told Property Observer that papers have been filed and the case is heading for trial.

“We are waiting for a date but are hopeful the case will be heard early next year,” the spokesperson says, adding that the case would be closely followed by other people who purchased property through the club and are “concerned about the value of their homes”.

In August this year Coombs and Wilson launched a claim against the property investment company and two staff members alleging they had been advised to purchase a three-bedroom bushland house in Highland Park on the Gold Coast that they later discovered was grossly overpriced. 

Coombs and Wilson allege the company engaged in misleading and deceptive conduct when it advised them to purchase the property. 

The property reputedly cost $630,000 when the couple bought it in 2007, though official records show a public sale price of $905,000. 

The Investors Club also negotiated a $60,000 discount for the couple on the sale price.

However, after the couple purchased the property they say an independent valuation revealed the unit was worth as little as $450,000 at the time of the deal.

Coombs says she relied on the advice and assurances of The Investors Club and that this was a sound investment.

In October the couple crystallised their loss when the property was sold for $391,000. 

The couple are represented by Slater and Gordon lawyer Carita Kazakoff, who says Wilson and Coombs were told by The Investors Club that the Kirribilli Heights house in Highland Park was worth up to $1 million, and they would make an instant profit of $300,000 on settlement. 

“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,” Kazakoff said in August. 

“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. 

A spokesperson for The Investors Club confirmed the dispute was heading for trial. The club denies the allegations. 

In September the club issued the following statement to Property Observer

“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.

“Six staff members at The Investors Club, including the branch manager who is presently being sued, also purchased property in the complex. The valuations for The Investors Club staff were completed by two different respected national valuers and came back at a similar valuation to the contract price. The investor who is taking action used a different lender to The Investors Club staff, who would have also insisted on a valuation and appointed an independent valuation company to complete, as is standard practice.”

“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 much lower valuation.

“The retrospective valuation returned a much lower price as number of owners in the complex had units sold as mortgagee in possession when the financial crisis hit, bringing down prices for all the properties in the complex.  The retrospective valuation places this valuation at a significant discount to the construction cost for the property as compared to the construction chartered quantity surveyor as used by the construction lender.

“The subject property is not a normal townhouse development, it is an internationally awarded development with 270-degree views of the Gold Coast coastline and is the last remaining approved development along the hinterland escapement and as such is a very unique property.”

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

Comments

Be the first one to comment on this article
What would you like to say about this project?