Luke Saraceni is set to launch an appeal in a bid to resume a $200 million claim against the Commonwealth Bank over the Raine Square project.
Luke Saraceni is set to launch an appeal in a bid to resume a $200 million claim against the Commonwealth Bank over the Raine Square project.
The Supreme Court of Western Australia earlier this year ruled against claims made by Westgem Investments, the property developer behind the $500 million Raine Square project, run by Luke Saraceni and his business partner Hossean Pourzand.
Westgem and its liquidator claimed damages against the Commonwealth Bank of Australia (CBA) and its subsidiary Bankwest in 2017, alleging the banks engaged in unfair conduct and had wrongfully driven Westgem into liquidation in 2012.
Justice Paul Tottle said in the August judgement that the issue was primarily in how the contract was constructed, summarily ruling the bank had abided by the terms of the financial agreement between the parties.
“At the heart of the case there was an issue of contractual construction on which the outcome of Westgem’s claims largely depended,” he said.
“That issue concerned the expressions ‘cost to complete’ and ‘cost overrun’ in the principal financing agreement.”
Justice Tottle rejected Westgem’s cost overrun claims, in part because he did not accept its definition of the term ‘cost to complete’.
“As defined in the agreement, cost to complete encompassed the construction costs required to achieve practical completion of the development and not merely practical completion of the Salta building contract,” he said.
However, the appeal by Mr Saraceni will focus on the classification of a strengthened security arrangement gained by CBA in November 2009.
In the judgement, Justice Tottle found the arrangement was a commercial transaction and that Mr Saraceni and Mr Pourzand could have sought sale or refinancing arrangements.
Robert Newlinds, who is representing Mr Saraceni and Westgem’s liquidators, said the appeal against the decision would focus on whether the arrangement should be characterised as uncommercial rather than commercial.
An uncommercial transaction is a transaction that is entered into by a company where it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction, by having regard to its benefits and/or detriments to the company.
They can occur when the receipt or purchase of assets from a company are to its detriment, or to the detriment of its creditors, perhaps as a result of acquisitions that are made for less than their fair value.
If an uncommercial transaction is established as having occurred, a liquidator is able to recover from the counterparty the property that has been received, or the difference between the value of the property and the price paid for its acquisition.
Mr Newlinds said the explanation for his appeal would likely require more than 150 pages due to the multiple distinct areas of law it covered.
Appeal judge Robert Mitchell gave Mr Newlinds until Christmas Eve to file his submissions.
