JILTED development partner Consolidated Properties has launched Federal Court action seeking damages up to $1 million from cash-strapped CEC over their aborted joint venture property deal.
Consolidated lodged a statement of claim yesterday seeking recovery of hundreds of thousands of dollars it claims it spent on pursuing a deal with CEC on the proposed joint venture to develop 8000 residential lots between Townsville and Cairns.
As well as recovering the money it spent, Consolidated Properties managing director Don O’Rorke made it clear to The Cairns Post yesterday his company, a wholly owned subsidiary of listed property group Trinity, was seeking compensation for "loss of profit and reputational damage".
The statement of claim alleges CEC’s conduct where it pulled out of the deal less than a month after it was struck and sold one of the properties that was part of the deal was "misleading or deceptive, or likely to mislead or deceive, in contravention of Section 52 of the Trades Practices Act".
Mr O’Rorke said Consolidated had proceeded "full steam ahead" on the joint venture after it was announced on April 8, including obtaining valuations on the properties in the deal when CEC announced on May 6 it was terminating the agreement.
According to the statement of claim lodged by law firm Mallesons Stephen Jacques, in the Federal Court of Australia Queensland District registry, land that was part of the deal was sold by CEC on April 24 – almost two weeks before the deal was called off.
The land, known as Cooper’s Farm and which forms part of the new Mt Peter master planned area south of Edmonton, was sold by CEC for $7.6m to the Catholic Church. "This property was sold by CEC at valuation, which was the same terms as our heads of agreement," Mr O’Rorke said.
"We cannot get any clarity from CEC Group and are now forced to take legal action which we will pursue aggressively in line with Consolidated Properties’ history of honouring its contract agreements and those of its partners."
Mr O’Rorke said the joint venture was "plainly a good deal for us, a good deal for CEC, and for all unsecured creditors (reportedly owed $20 m)".
"It was a good deal for the construction industry, sub-contractors and the business community of Cairns and we were just gobsmacked when they (CEC) announced the deal wasn’t going ahead."
Late yesterday afternoon CEC chief executive Roy Lavis’ only comment to the Consolidated move was a short: "We are surprised and we will defend the action."
