Church takes legal action on property feud
The trustees act in a voluntary capacity [and] are not remunerated. Trustee spokesman
The dispute has broken out over control of the income from a 99-year lease of a prime Russell Street property that will become the $150 million headquarters for Westpac and the redevelopment of the historic Assembly Hall building on Collins Street.
The writ filed in the Supreme Court claims that the trustees of the Scots Church Properties Trust have made "unauthorised" deductions from commercial rental income, used church property to secure a multimillion-dollar loan without permission, and failed to pay commissions or maintain proper accounts.
The trustees own and control multiple CBD properties on behalf of the Presbyterian Church of Victoria's Trust Corporation, including the Scots Church at the corner of Russell and Collins streets, a car park and commercial premises behind the church, and the former Georges Building at 162 Collins Street.
In 2008, the trustees leased the car park site to APN Property Group, which is developing the property, along with Grocon, into Westpac's new Melbourne headquarters.
The 99-year lease paid $5.5 million upfront, of which $4.5 million was used by the trustees to then fund the purchase of the neighbouring Assembly Hall building from the Presbyterian Church's Trust Corporation.
The writ alleges that the trustees then used the Assembly Hall - which houses a mixture of commercial tenants and church-related groups - as an "unauthorised security" to borrow more than $5 million from Westpac in June 2009, which was used to fund a redevelopment of the building.
"The trustees failed or refused to obtain the consent of either the General Assembly or the Presbytery to either the redevelopment of the Assembly Hall or the grant of the mortgage over the Assembly Hall," court documents say.
Other allegations include that the trustees made "unauthorised deductions" for expenses from the income generated by the church's commercial property holdings, breached their trusts and duties, and failed to maintain proper accounts.
Presbyterian Church of Victoria's Trust Corporation is seeking a declaration that specifies the powers of the trustees and unspecified financial damages.
A spokesman for trustees of the Scots Church Properties Trust said they were "disappointed" by the legal action and intended to defend the proceeding, which he said centred on a dispute about the proper interpretation of a complex trust deed made in 1891.
"They consider that at all times they have acted honestly, with integrity and in the best interest of Scots Church congregation, the PCV Trust Corporation and the Presbyterian Church," he said.
"The trustees act in a voluntary capacity, are not remunerated, and that there has been no allegation made, or suggestion, that they have in any way obtained a personal advantage from the matters the subject of the litigation."
The Presbyterian Church of Victoria did not respond for comment.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free