The brother of recently bankrupt businessman Joseph Gutnick has launched urgent legal action to stop being evicted from a property linked to his brother amid allegations the one-time mining magnate has been hiding assets from his creditors.
Abraham Gutnick is fighting a series of eviction notices served between May and June this year ordering him to leave his home of more than 10 years at 7 Balaclava Road, East St Kilda.
'Diamond Joe' loses his sparkle
Once a BRW rich-lister, mining magnate Joseph Gutnick has filed for bankruptcy.
The Supreme Court of Victoria heard on Thursday the eviction followed a "set of circumstances within the family", Abraham Gutnick's lawyer Kristine Hanscombe, QC, told the court.
Abraham Gutnick lives at the property with his wife, five children and 83-year old mother-in-law, the court heard.
Joseph Gutnick's brother Abraham leaving court on Thursday as he fights a series of eviction notices.
Joseph Gutnick's brother Abraham leaving court on Thursday as he fights a series of eviction notices. Photo: Sarah Danckert
Joseph ("Diamond Joe") Gutnick, who in July declared himself bankrupt owing creditors $275 million, and his wife Stera sold the property at 7 Balaclava Road to real estate agent David Besser and Renato Spinosa on July 27 last year for $1.85 million, according to land title records.
On the same day Mr Besser and Mr Spinosa established the company, Balaclava Heights. The eviction notices were served by Balaclava Heights.
The property sale came just after Joseph Gutnick lost a legal battle in Singapore on May 7, 2015, brought by the Indian Farmers Fertiliser Co-operative (IFFCO) that would end up costing him $54 million and sending him bankrupt.
Abraham Gutnick had no idea the house he lived in had been sold until several months after the transaction when he "heard rumours within the family that Joseph Gutnick was trying to hide assets", Dr Hanscombe told the court.
Joseph Gutnick declared himself bankrupt in July.
Joseph Gutnick declared himself bankrupt in July. Photo: Jesse Marlow
Dr Hanscombe told the court the lease agreement over the property was between two companies – the then owner of the property Edinox Pty Ltd and the tenant Mazal Properties – controlled by Joseph Gutnick, his wife Stera and son, and that the wheeling and dealing over the property was a "charade".
Company records show Joseph Gutnick transferred his shares in Mazal to his wife Stera five days before selling the property.
The court heard Mazal Properties paid the rent on the Balaclava Road property up until June this year.
Lawyer for Balaclava Heights Leslie Glick, QC, said Mazel signed a 12-month lease over the property in August last year to give Abraham Gutnick time to move out.
"Mr Gutnick, Joseph Gutnick was looking after his brother. His brother's charity has looked after him," Mr Glick told the court.
Mr Glick told the court the owners of the property had been trying to inspect the home for some time but had not been able to gain entry.
"Abraham Gutnick ignores us and won't let us in. What is he doing there? He's lived on the charity of his brother since 2003," Mr Glick said.
Mr Glick told the court his client, Balaclava Heights, "had nothing to do with Joseph Gutnick".
The Supreme Court application came after warrants were issued to take possession of the property within 48 hours this week. The warrant was issued after a Victorian Civil and Administrative Tribunal hearing this week.
Abraham Gutnick, who the court heard is due to have surgery next week, attended court with his wife and children. At times during the hearing he held his head in his hands. He declined to comment after the proceeding that could have left him homeless. Joseph Gutnick did not respond to request for comment.
The warrants have been stayed until a full hearing into the matter this month.
As revealed by Fairfax Media, Joseph Gutnick declared himself bankrupt on July 8 this year owing his creditors $275 million, including more than $130 million in debts to related parties or family members.
The former BRW Rich Lister claimed to have only $16,087 in cash, $2 million in superannuation and no other assets. He also claimed he made no asset transfers in the five years leading up to his bankruptcy, according to bankruptcy documents.
His decision to enter bankruptcy followed a bruising legal battle with IFFCO that found he owed the company $54 million.
IFFCO launched the legal action after a deal between the co-operative and Joseph Gutnick's company Legend International, to supply tonnes of phosphate to be used as fertiliser, went wrong.
Legend International has since been placed into administration as a worldwide search is conducted for Joseph Gutnick's assets.