Writs filed in the Supreme Court of Victoria document the default of numerous loans to finance developments and allege that investors suffered loss and damage due to the conduct and actions of Oliver Hume.
The relief sought includes fair financial compensation, including payment of interest owed and the removal of Oliver Hume as trustee of the mortgage fund. They are also asking Oliver Hume to pay their legal costs.
In one declarationGadens law firm, which represents the three investors, said separate proceedings have been filed against Oliver Hume Corporation and its directors, including its chief executive, Michael Duster, and its managing director of real estate funds, David Rogers.
Gadens said he understands “further claims will be brought against Oliver Hume shortly in the Supreme Court of Victoria.”
“Overseas investors claim the trustee of the Oliver Hume Australia Property Income Fund made imprudent loans to Oliver Hume-related entities containing interest rates and other key terms that were inconsistent with previous statements made to investors .”
“Afraid of receiving only a fraction of their initial $12 million investment, the investors allege that when the borrowers of the imprudent loans went into default, the trustee failed to recall the loans and protect the interests of the investors” , Gadens said.
“Instead, they allege the trustee breached its fiduciary and legal duties by allowing the borrowers to remain in default.”
A spokesman for Oliver Hume said: “Oliver Hume, as a leading real estate company, has always acted in the best interests of its unitholders, investors and stakeholders.
“We will continue to do so as we have done for the past 68 years. The allegations are baseless. All defendants will defend the allegations.”
Launched in late 2013, the mortgage fund’s minimum investment was $1 million with a targeted annual pre-tax return of 7.5%.
The minimum investment period was four years, after which investors could request the withdrawal of their investment.
According to a copy of the investor memorandum obtained by the Financial analysis“the borrower of any loan [from the fund] must be an entity operated by Oliver Hume or Oliver Hume Property Funds or otherwise connected with a property development project managed by Oliver Hume or Oliver Hume Property Funds.”
Both Mr. Duster and Mr. Rogers are directors of the trustee and most related entities that have received loans from the fund, Gadens said.
Gadens’ partner Simon Theodore, who is leading the case, said: “This case will be important in demonstrating to overseas investors that Australia has a strong legal system that enables them to enforce their rights where investments are not not managed appropriately.”