‘Being nice’ not key to Liberman family’s ethical investment fund case, court hears
The lawyer for the Liberman family’s ethical investment group says the test on whether the group acted unfairly towards investors should be based on what the contract allows, not whether they were nice to their investment partners.
Yet, the way the Danny Almagor and Berry Liberman-backed Impact Investment Group handled a group of investors was of such concern to a senior executive inside the ethical investment house, she sent a blistering email to other staff lambasting the treatment of investors.
Investors in one of Impact’s property funds are suing the group in the Supreme Court of Victoria, alleging they were treated unfairly when they did not receive any of the $10.9 million profit made when Impact sold an office tower it purchased using investor money as a deposit.
Impact onsold the building, fully leased to University of Technology Sydney in the Central Park educational precinct, to MTAA Super for $70 million in 2018. Impact returned the money put in by investors, plus interest. But investors, who had been expecting to own the building through a property syndicate alongside other investors, say they should have been allowed to share in the profit from the sale given Impact had promised them the opportunity to do so.
Counsel for Impact, Philip Crutchfield, QC, told Justice Peter Riordan it was a simple contract dispute and Impact acted in line with its contract, which did not stipulate it had to go ahead with an equity raising.
“As you said your honour, this case is about whether or not our clients were entitled to do what they did, not whether they were nice about it.”
“In a nutshell, your honour, with respect, should not be swayed by any underlying value judgments here,” Mr Crutchfield said.
The Supreme Court heard on Tuesday that Impact’s chief operating officer at the time, Ingrid van Dijken, took Impact chief executive Daniel Madhavan to task over email because of how Impact had handled investors in the scheme, which included the parents of a then staff member at Impact.
Counsel for investors, Christopher Caleo, QC, said Ms van Dijken wrote in the email the profit should be shared.
“Even in the meeting that was held the proceeding day, everyone had always agreed that it was clear in the presentation that we would syndicate the agreement,” Mr Caleo said Ms van Dijken’s email read.
“An equitable compensation seen from that point of view is a fair option when you take into consideration that this substantial windfall has only been made possible by people who had funded the deposit for IIG (Impact).”
Mr Caleo told the court Impact had modelled the returns to it under the syndicate agreement as well as under a quick sale deal and found the latter option provided more profit immediately to Impact.
The case continues. Mediation has been scheduled between the parties.
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Sarah Danckert is a business reporter.
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Source: Thanks smh.com