Allco’s Gordon Fell Sues As Fijian Resort Deal Sours:
Six Senses Fiji is located at Vunabaka Bay on Malolo Island
Since his Rubicon Asset Management collapsed in the arms of its new owner Allco Finance Group in 2008, financial engineering prodigy Gordon Fell has kept an extremely low profile.
His final legal stoush over that matter – a US$140 million (FJ$314m) claim against him by Allco’s receivers Ferrier Hodgson – was settled in December 2015.
The extraordinary meltdown of his US$5 billion (FJ$11bn) empire in the Global Financial Crisis left Fell somewhat unpopular.
When he was asked to consider giving some of the estimated US$100m (FJ$224m) he made back to his investors, who’d lost everything, he answered incredulously, “Would you do that?
“No one’s children were kidnapped and held up at gun point until they invested in the trusts.”
Trading
He now dabbles in private investments from his famous Point Piper home, Routala, briefly Australia’s most expensive residential property at his 2007 purchase price of US$28.7m (FJ$64.45m).
One of those investments is the Six Senses resort on Fiji’s Malolo Island, which only opened its doors for the first time in April, 2018.
Through his entity Sequitur Hotels, Fell agreed in December 2017 to invest FJ$20m for a 50 per cent stake in the resort. Another 24 per cent is owned by former SurfAid chief executive officer Andrew
Griffiths.
Griffiths also owns 31.7 per cent of the wider Vunabaka Bay development, within which Six Senses sits.
Despite profitable trading and inclusion in Time’s “World’s Greatest Places 2018”, things soured very badly between Fell and Griffiths.
Court proceedings
In October 2019, Fell’s entities launched proceedings in Fiji’s High Court, claiming losses of FJ$11.2 million as a result of construction cost overruns and an alleged breakdown in trust between Griffiths and Vunabaka Bay.
Fell’s entities immediately sought (and were granted) onerous ex parte orders on Griffiths, including the freezing of Satori’s assets and the court seizure of an extensive range of documents.
But five months later, on April 3, Justice Alan Stuart discharged those orders “on the basis that they were made following and as a result of non-disclosure by the plaintiffs of material facts”.
He noted that Fell’s entities were aware of the project’s cost overruns well before the completion of the investment and “went ahead with the transaction with their eyes open”.
Justice Stuart was “inclined to suspect … that the plaintiff ’s approach to this dispute is a calculated tactic to overwhelm and intimidate the defendants by the volume and number of proceedings in Fiji and New Zealand, and by the degree to which they can cause the defendants inconvenience and force them to incur expense, possibly with a view to obtaining further advantage in negotiations over the future of their joint business ventures”.
Fell’s entities initiated simultaneous proceedings in New Zealand’s High Court on November 5, claiming losses of FJ$17m, which Justice Stuart reckoned “takes on the appearance of a step to secure claims by the plaintiff that greatly exceed the amount of his investment in the joint venture”.
With the ex parte orders set aside, the dispute can now inch towards its substantive consideration by the court – after a long and expensive discovery process, of course. Griffiths has applied to have the matter dismissed in New Zealand on the basis of duplication. That will be heard in Auckland on June 25.
And all while their resort sits empty, yet another victim of COVID-19.
Australian Financial Review