Freeze on start-up founder’s $10m Mosman mansion after business collapses

A Sydney entrepreneur’s house has been caught up in the collapse of his start-up after two separate freezes were placed on his $10.5 million Mosman mansion.

Marketing technology company Metigy abruptly collapsed in July, leaving its 75 staff stunned. Some employees had been recruited only a month before the collapse and the company was still advertising jobs when it went into administration at the behest of investors. Metigy, which was co-founded by entrepreneur David Fairfull, raised $20 million in 2020 and was reportedly trying to raise capital earlier this year at a valuation of $1 billion.

Metigy founder David Fairfull.
Metigy founder David Fairfull.

The Australian Financial Review was first to report on the company’s collapse into administration, which it said was triggered by investors eager to see a full audit of Metigy’s finances.

But last week some investors went further. On Monday, entities associated with investment funds Five V Capital and Regal Funds Management engaged lawyers at Allens to lodge a caveat over Fairfull’s Mosman property. On Tuesday, Metigy’s administrators had their lawyers, Addisons, lodge a similar caveat.

The six bedroom, five-bathroom trophy home with expansive harbour views was sold in September last year to Fairfull, and a woman who appears to be his wife, legal records show.

At the time, Metigy was riding high with tens of millions banked from investors who believed in its plans to use artificial intelligence to improve digital marketing and its partnerships with web giant Google and telecommunications network Optus.

On its website and in media stories, Metigy spruiked a “reseller partnership” in which the telecommunications giant would offer Metigy’s marketing products to its more than 400,000 small business clients.

The harbour view from the $10m home that is subject to a caveat relating to Metigy, a failed AI marketing start-up.
The harbour view from the $10m home that is subject to a caveat relating to Metigy, a failed AI marketing start-up.Credit:Domain

In response, an Optus spokesman issued a brief statement on Monday saying that it had facilitated networking opportunities for Australian start-ups and small businesses in 2018. “Metigy participated, but as of today there is no active contractual arrangements,” the spokesman said.

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It is highly unusual for personal assets such as real estate to be caught up in the collapse of a start-up business backed by professional investors.

A caveat is a legal tool that anyone claiming a legal interest in a property can lodge in Australia’s land title system which restricts how property can be bought and sold. It is not clear exactly why the investors and Metigy have taken out the caveats, or whether their interests could actually be enforced against Fairfull. No other legal proceedings have been commenced.

In one document, Five V and Regal claim they have an “equitable interest in the land”. In a qualification to the restrictions they are seeking on the land, the funds say “the registered proprietor funded the purchase price for the land using monies held on constructive trust for the caveator”.

Metigy only says that it has an “equitable interest arising from implied trust”. It refers to an “agreement” between the company and the Fairfulls in November to support its claim, but provides no details beyond that.

An Allens spokeswoman declined to comment, saying the firm did not discuss client matters. Five V and Regal declined to comment.

Fairfull (not the David Fairfull who chairs accountancy Hall Chadwick) did not respond to emails to his Metigy address, an attempt to make contact via LinkedIn or calls and texts to a phone number associated with a property listed as his address on corporate documents. A spokeswoman for administrator Simon Cathro, of Cathro & Partners, also declined to comment.

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Source: Thanks smh.com