Westgem Investments, the property developer behind the $500 million Raine Square project, has lost its battle over damages claims relating to the project, with the Supreme Court ruling in favour of the Commonwealth Bank.
Westgem Investments, the property developer behind the $500 million Raine Square project, has lost its battle over damages claims relating to the project, with the Supreme Court ruling in favour of the Commonwealth Bank of Australia (CBA).
The court handed down its verdict today, ruling Westgem’s damages claims had failed.
That included claims that Bankswest and parent company CBA had engaged in unfair conduct, with Westgem stating Bankwest had wrongly said it had run over budget during construction.
Westgem Investments, which was run by Luke Saraceni and his business partner Hossean Pourzand, was put into receivership in 2011 after missing two loan repayments for the Raine Square project, worth $50 million.
In 2012, Westgem was put into liquidation. That was followed by the sale of multiple property assets held by Mr Saraceni to cover debts to the CBA, which included receivers seizing the The New Esplanade Hotel near Elizabeth Quay, where Mr Saraceni planned a $150 million development, as well as the former Ace Cinema site in Subiaco, for which he also had development plans.
Mr Saraceni filed a lawsuit against the CBA in 2017, seeking undisclosed damages for the estimated losses that followed as a result of the breakdown of the Raine Square project.
The CBA then claimed Westgem owed $200 million in unpaid interest, as well as other fees and penalties.
Within his more than 530-page decision, Justice Paul Tottle ruled that the bank had abided by the terms of the financial agreement between the parties.
A CBA spokesperson told Business News it welcomed the judgement of the Supreme Court in relation to the longstanding proceedings brought by Westgem.
"We are considering the detailed decision and as the matter is still before the courts, it is not appropriate for us to comment further at this stage," they said.
His former business partner, Mr Pourzand, was jailed last year in relation to an attempted multi-million-dollar insurance claim involving the deliberate burning down of his Welshpool property.
Business News contacted Saracen Properties project director Joel Saraceni.
"Westgem, set up by the Saraceni Group as a special purpose vehicle to develop Raine Square, went into liquidation before construction was completed," they said.
"Westgem’s liquidators, Luke Saraceni and individuals and entities associated with him, all alleged that the project financiers had wrongfully, misleadingly and unconscionably driven Westgem into liquidation and improperly called on Mr Saraceni’s and related guarantees.
"The wrongdoing alleged was, broadly, that the financiers exercised their rights triggered by cost overruns as defined in the financing facilities where, it was argued, no such cost overruns existed.
"Justice Tottle found that the cost overruns did in fact exist and therefore, the financiers’ conduct was not wrongful in any of the ways alleged.
"Basically, the banks prevailed over everyone: Westgem, its other creditors, Luke Saraceni, the related entities and individuals.
"It remains to be seen whether there will be any appeal."