Hapless Sydney property developer Gary Baker facing bankruptcy after blaming his valuers fails

The hapless debt-laden Sydney socialite property developer Gary Baker has lost his latest attempt to escape bankruptcy.

The Federal Court yesterday rejected his appeal that the April 2011 bankruptcy should be overturned because two lenders – Perpetual and Challenger – had misled him and sold his trophy properties off too cheaply.

The overly ambitious developer – best known for white zinc on his smiling lips while driving a 1957 Ford Thunderbird around Sydney’s eastern suburbs – particularly blamed a sky-high $5,595,000 apartment valuation given in 2007 for misleading him into thinking his prestige property empire was worth more than even he’d concluded.

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Baker’s case on appeal was based on his unchallenged evidence that but for the misleading valuation, he’d have offloaded a Bellevue Hill triplex apartment (pictured above) when offered $4.25 million in early 2008 rather than forlornly await offers closer to the $5,595,000 refinancing valuation.

But the Bellevue Hill apartment eventually yielded only $3,001,000 at a mortgagee 2010 sale to antiquarian booksellers – with Baker arguing that part of the $1,249,000 difference would have been sufficient for him to have avoided his financiers bankruptcy attempts in an outstanding damages claim.

Baker also argued Perpetual’s sale as a mortgagee in possession of an apartment in Notts Avenue, Bondi Beach, was at allegedly substantially less than it was worth, and that Perpetual was in breach of its duties as mortgagee and should pay him damages.

While Justice Anna Katzmann ruled partly in his favour, it was not enough to overturn the April 2011 bankruptcy sequestration order.

“Mr Baker has had a measure of success but, on the critical issue of the value of the claim he relies on to offset the debt the subject of the creditor’s petition, he has failed,” her honour ruled.

“Mr Darke was the lawyer, who although ultimately did not prevail, gave Mr Baker the best hope he had, and his submissions, both oral and in writing, were of a very high standard.”

Baker’s barrister Matthew Darke unsuccessfully argued there was sufficient cause to dismiss the creditor’s petition against him given his cross claim for damages.

It was argued the Federal Magistrate had erred in failing to dismiss or adjourn creditor’s petition because of debtor’s cross-claim.

His barrister also argued the Federal Magistrate erred in finding that the likely value of Baker’s cross-claim against his lenders fell significantly short of the judgment debt to the bankruptcy notice.

The appeal proceedings related mostly to matters relating to Baker’s Benelong Crescent, Bellevue Hill triplex project.

In March 2007 Baker engaged a real estate agent to sell them, with estimates that unit one would sell for $4.2 million, unit two for $4 million and unit three for $4.1 million.

In April 2007 they sold unit one for $4.2 million, and in May 2007, they sold unit two for $4.75 million, with unit three unsold.

In late 2007 Baker was considering refinancing a loan secured over unit three with the outstanding debt then being around $3.7 million.

Craig Hitchings of Challenger Commercial Lending Ltd offered a loan to Baker’s Garbake Pty Ltd from Challenger and Perpetual, which had a valuation by LandMark White (NSW) Pty Ltd of $5,595,000 (excl GST).

In early 2008 Baker rejected an offer to purchase for $4.25 million but it didnt then sell until late 2010 when sold in a mortgagee sale for $3,001,000.

Baker claimed by Hitchings’s conduct, Challenger had made a number of misrepresentations to Baker, including that the market value of unit three was $5,595,000 (when it was less than that), and that the LandMark White valuation was the product of due care and skill (when it was not).

Baker suggested the making of these misrepresentations was alleged to have constituted misleading and deceptive conduct by Challenger, which had caused Baker loss and damage by inducing him to reject the early 2008 offer to purchase the Benelong Crescent property for $4.25 million.

Gary Baker is married to Karin Upton Baker, the managing director in Australia of Hermes.

Buyers of his luxury apartments built in the eastern suburbs over the years included publicist Ro Markson, the Byron Bay identities Duncan and Sally Mount and the deputy treasurer of IAG Group, Mark Gold, and his wife, Deborah, the regional director of marketing at the Hilton.