Gympie subdivision developers to pay $4m after Supreme Court ruling

The now liquidated developers of the proposed new residential estate were at the centre of a class-action lawsuit brought by 100 investors

The company behind a proposed subdivision at the Southside, and another party involved in its contracts, has been ordered by the state’s Supreme Court to repay about 100 investors more than $40,000 each after it ruled their contracts had been breached. Photo: CoreLogic

The developers of a failed Southside subdivision have been ordered to repay investors more than $4 million for breaching their contracts.

David George Vicini brought the class action case against GM Investment Property (also known as The 2 Kings Gympie Trust) and Glen Taylor over GM Investment’s decision to use the Southside land as security for a $1.5 million loan.

According to Judge David Jackson’s ruling in the Brisbane Supreme Court, the company agreed to buy the land located between Sorensen and Groundwater Roads for $2.75 million in the middle of 2017.

It was advertised as future residential subdivision and Mr Vicini and the other investors entered a call option agreement to purchase blocks of land across the estate.

In March 2018, each investor paid $35,000 for the option with GM as the grantor and Mr Taylor as guarantor.

The investors had paid $35,000 as part of an agreement to secure blocks of land in the proposed estate.

However, in June 2018 (and five days before the contract settled) GM Investment used the land as security to borrow $1.5 million from seven lenders unrelated to those call option agreements.

As a result a mortgage was taken out over the land without consent from any of the investors.

GM Investment failed to repay the loan, which had a six-month deadline and carried an initial interest rate of 48 per cent, and in February 2020 the mortgage was transferred into the hands of a receiver.

Its subsequent sale in November 2020 failed to recover the cost; GM went into voluntary liquidation this month and Mr Vicini pursued the matter in court.

The Supreme Court ruled there was no evidence the developers had made any steps towards building the subdivision after they took ownership of the land.

Last week, Mr Jackson ruled in Mr Vicini and the investors’ favour, finding the mortgage broke their contracts and GM’s contract breach also broke Mr Taylor’s promise as guarantor.

“At no stage did the development ever progress,” Mr Jackson said in his published ruling.

“From the day after (GM Investments) became the registered owner of (the land) it had mortgaged that land for $1.5 million for purposes that were not suggested to be related to the development.

“The overall project of the development was dead in the water from that time, so far as the evidence showed.”

He ordered Mr Vicini and each of the 100 listed investors be repaid $35,495, plus $5022 in interest.

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Originally published as Gympie subdivision developers to pay $4m after Supreme Court ruling