Aug 11, 2016

Court hears Joe Gutnick tried to hide assets last year

Allegations bankrupt mining magnate Joe Gutnick started trying to hide assets last year have been aired in the Victorian Supreme Court this morning.
The court was hearing an urgent appeal by Mr Gutnick’s brother, Abraham Gutnick to stop him and his family being evicted from a property connected to Joe Gutnick, who declared himself bankrupt last month with debts of $275m.
This followed an order of the Victorian Civil and Administrative Tribunal on Monday ordering the property, on Balaclava Rd in Melbourne’s St Kilda East, vacated within a fortnight.
Counsel for Abraham Gutnick, Kristine Hanscombe, SC, told the court the attempted eviction arose “out of a set of circumstances within the family”.
“Abraham Gutnick had heard rumours within the family that Joseph Gutnick was trying to hide assets, back in November 2015,” she said.
Land title and company records show Edinox, a company run by Joe Gutnick sold the property to Balaclava Heights, a company of which he is not a director or shareholder, in late July last year for $1.85m.
But Dr Hanscombe raised the prospect Joseph Gutnick was somehow involved in the attempted eviction because a notice to vacate came in an envelope from the magnate’s company, Legend International.
She told the court that three days after the sale Edinox “purported to give a lease” over the property to another of Joe Gutnick’s companies, Mazal.
“Balaclava Heights has bought this house without ever inspecting,” she said.
“It never inspected before it bought it.”
Abraham Gutnick had “exclusive possession” of the property since 2003, lived in the house with his eight-member family, including his 83-year-old mother-in-law, and never had any dealings with Mazal, she said.
She said Abraham Gutnick received a series of eviction notices giving various reasons, including that the house was for sale and that rent was overdue.
The most recent, which was acted on by VCAT, alleged Mazal was in arrears and gave 14 days to vacate.
Abraham Gutnick challenged the notice as an “interested party”.
Dr Hanscombe said the Mazal lease was a sham and the legal attempts to evict her client through eviction notices and VCAT were “a prima facie case of abuse of process”.
“We say that was an abuse of process because Mazal had never been in possession of the property and Balaclava Heights knew it.”
She said the proceeding was brought for a collateral purpose, “to put Abraham Gutnick out of possession”.
If Balaclava Heights thought Abraham Gutnick was a squatter it had different legal options available to evict him.
“It doesn’t regard Abraham Gutnick as a squatter, it goes through this charade.”
Counsel for Balaclava Heights, Les Glick, QC, said Joe Gutnick paid all the outgoings on the property — about $5000 a month.
“We understand Joseph Gutnick was looking out for his brother in a familial way,” Mr Glick told the court.
“Abraham Gutnick has never paid a cent — not rent, not rates.
“He’s lived there on the charity of his brother since 2003.”
He said Balaclava Heights had “nothing to do with Joseph Gutnick” and wanted to redevelop the property.
However, he said Abraham Gutnick had not responded to efforts to evict him.
“We send him notices, we ring on the doorbell — Abraham Gutnick ignores us.”
Mr Glick said his client consented to putting a pause on the eviction.
Company documents show Balaclava Heights is run and owned by David Besser, who appears to be a local real estate agent, and Renato Spinosa of Elsternwick.
Joe Gutnick declared himself bankrupt last month with personal debts of $275m after a bruising legal battle with his former business partner, Indian fertiliser giant IFFCO.
In a statement of affairs lodged at the time he said he did not own any property.
He said he had just $16,000 cash in the bank and a superannuation fund worth about $2m.
Justice Cameron Macaulay granted orders staying the eviction ahead of a further hearing on August 25.

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