Wealthy Deague family sues investment banker over $120 million project
Melbourne’s wealthy Deague family is suing an investment banker and his British backed firm alleging they were duped into investing millions in a $120 million apartment project that turned out to have higher costs than expected.
The family’s investment arm Deague Capital has accused an Australian arm of family office manager Alvarium and its global group’s local managing director Bernard Treacy of providing untrue information that enticed them into making an investment.
The Supreme Court of Victoria writ filed late last month also accuses an Alvarium company and Mr Treacy, former Villawood and Commonwealth Bank executive, of misleading and deceptive conduct. Hong Kong-headquartered, British-owned Alvarium was known as Guggenheim Investment Advisors until 2019.
The helicopter-loving, high-flying Deagues are a property dynasty in Melbourne which has been oerating across five generations for more than 160 years. Previously Asia Pacific Group, Deague Group is led by patriarch David Deague and eldest son Will Deague.
The family is known for hotel developments (including the famed Art Series Hotels) as well commercial developments, residential investments and storage.
Family scion, Will Deague, who is named in the claim, was also the most high profile victim of the collapse of Sonray Capital which was founded by his Melbourne Grammar school chum Scott Murray – who was jailed over the broker’s collapse.
While best known as developers the Deague Group have also long been co-investors in other projects.
The Deague’s investment arm, Deague Capital, alleges in February this year Alvarium informed it of a development opportunity that was in the final stages of negotiation over a building contract that “should be closed out over the next week”.
The project is the Ambrose apartment complex in the inner-city Brisbane suburb of Milton.
Deague Capital alleges Will Deague told Mr Treacy the company was reluctant to invest in the development until the construction contract was signed. Mr Deague claims Mr Treacy told him over the phone on March 4 that the execution of the contact was a few days away and that it would be for $50 million.
Based on Mr Treacy’s assurances, the Deagues went ahead and invested $3 million in the project via a cash loan and the purchase of shares. But the Deagues allege they were misled into investing in the project which had a much larger construction cost than they were originally told.
“In fact, the representations (of Treacy) were untrue,” Deague Capital says in its writ.
“In mid-2018, Hutchinson Builders tendered for the project at a price in the range of $65 million to $72 million.” That quote was later reduced to $62 million on request.
“At no time had Hutchinson ever proposed a construction price in the range of $48,000,000 to $50,000,000.”
The Deagues say the contract was executed in July for $62 million. “If the representations had not been made, Deague Capital would not have made the investment alleged.”
Deague Capital alleges it sought a refund from Alvarium in July, claiming it had rescinded the deal, but the family office investment house refused to pay back the $3 million.
Deague Capital declined to comment as the matter was before the courts. Mr Tracey and Alvarium, who are yet to file their defences in the proceedings, were contacted for comment.
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Sarah Danckert is a business reporter.
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Source: Thanks smh.com