The Supreme Court has granted a freezing order over a property linked to former PMM Group chief executive Gui De Castro to support a legal claim over his alleged failure to transfer $550,000 in shares.
The Supreme Court has granted a freezing order over a property linked to former PMM Group chief executive Gui De Castro this morning to support a legal claim over his alleged failure to transfer shares worth more than half a million dollars to his clients.
Perth businessmen Damien Rhodes and Ross Cargeeg launched legal action against Mount Hawthorn-based financial advisory firm PMM Group, Mr De Castro and his company, My Two Boys, in the state’s Supreme Court last month.
According to documents published by the Supreme Court, the pair claim Mr De Castro has failed to transfer his shares in global zircon producer PYX Resources, as per three oral agreements reached while he was employed by PMM, and that his conduct amounted to misleading and deceptive financial advice.
In giving evidence, Mr Rhodes alleged his former financial adviser of three years had encouraged him to purchase shares in PYX Resources in September 2020, offering to transfer the shares from his company, My Two Boys, at a cost of 40 cents per share the following month.
In the weeks that followed, Mr Rhodes handed over two cheques totalling $470,000 to Mr De Castro’s company in exchange for 1.175 million shares in PYX.
In October, Mr De Castro said he would provide Mr Rhodes bonus shares worth $50,000 in Malaga automotive engineering company Sprintex Limited; provided he found investors to purchase shares in PYX.
Despite having complied with the requirements, Mr Rhodes alleges he did not receive the shares.
One of those investors was Mr Cargeeg, who purchased $50,000 worth of shares in PYX in three tranches, with the share transfer to take place on February 28 2021.
Less than a fortnight later, Mr De Castro told Mr Cargeeg if he purchased additional shares in PYX Resources to the value of $60,000 he would transfer a bonus to him of shares to the value of $30,000 in Sprintex Limited at no cost. Mr Cargeeg agreed, transferring another $60,000.
According to the court document, despite transferring these funds, he claims he has not received the shares.
Between March and June 2021, Mr Rhodes exchanged several text messages with Mr De Castro regarding the share transfers.
Mr De Castro repeatedly promised to transfer the shares in PYX, transferring 275,000 shares on May 4. But the shares in Sprintex remain outstanding.
In June and July, the two parties appointed solicitors, who issued formal notices to PMM and its directors demanding transfer of the shares.
In the court document, the solicitors claimed they have not yet received a response, other than confirmation that Mr De Castro was no longer a director of PMM.
Mr Rhodes and Mr Cargeeg have since launched legal action against the three parties for the alleged breach of contract and making false representations under Consumer Law.
In a bid to recover their alleged losses, the pair sought and were granted a freezing order worth $750,000 over a Mount Pleasant property linked to Mr De Castro’s company.
Initially, the pair’s lawyers had sought a freezing order in the order of $1.05 million, but Justice Hill instead decided to fix the sum at $750,000, with $720,000 as the possible value of the claim and $25,000 to cover the legal costs.
Under the order, the company will only be able to access $600 per week and legal expenses worth $50,000.
In a Supreme Court judgement handed down this morning, Justice Jenni Hill said the freezing order sought was a drastic remedy, but one she considered appropriate.
Justice Hill said she did not consider there to be sufficient evidence that false representations were made on behalf of PMM Group.