The Lawyer's Lunchbox

The Big 247 Splash

posted by brett hayton @ 8:05 AM 0 comments

Westpoint Fallout

At Hayton Kosky Lawyers, we have acted for a couple of clients buying off-the-plan apartments connected with Westpoint's Bayshore development in Port Melbourne. (Westpoint collapsed with mums and dads investors losing millions - $300M to be more exact) These files are the oldest files lying around the office and possibly the weightiest files to boot. It is now just over 4 years since the clients executed the contracts and paid their deposits by way of Bank Guarantees. Well 4 years is up and our clients have elected to cancel the contracts as the Sunset Clause in the Contract is now invocable. Our clients have the option to proceed but their viewpoint is today's value of the apartments is less than the Contract Price. So much for the argument these apartments would apprecaite 10% per annum. Notices have been served canceling the Contracts but we are yet to get a reply or have the Bank Guarantees returned. Anyhow the Liquidators or the Receivers will now have some more apartments on their hands to sell.
Any Lessons here? One is you need to consider the terms of any Sunset Clause in off-the-plan contracts before signing. Sunset Clauses are usually a two edged sword. It is not unknown for developers to use the Sunset Clause provisions to cancel contracts in rising property markets to the chagrain of investors.

On another point Investors in Westpoint's mezzanine financing schemes can be justly angry and upset with any financial advisor who put their hard earned into such poorly construed investment vehicles. Such advisors need the blow torch applied to the soles of their feet.

posted by brett hayton @ 5:46 AM 0 comments