Developer in legal stoush
Prominent developer Simonds Homes has been accused of waging a dirty tricks campaign against a former business partner in a bid to boost homes sales to mainland Chinese property investors.
A bitter legal stoush has broken out between the family-run group and a Hong Kong-based real estate sales firm over allegations Simonds Homes "misused" confidential information, poached key staff and blacklisted its representatives as part of a plan to set up a rival sales operation in China.
Affluent Investment (Hong Kong) Ltd is suing Simonds Homes for $6.74 million in lost income following claims the developer reneged on a 2011 agreement making it the exclusive referral agent for prospective home buyers from Guangdong province.
The firm was allegedly promised a $25,000 to $50,000 fee for each house and land package sold, a commission rate industry sources say is up to three times more than on sales to Australian buyers.
But the lucrative deal broke down within a matter of months, with Simonds Homes allegedly poaching four employees and instructing its staff to stop accepting sales referrals from Affluent Investment.
"[The former employees] possessed a large amount of confidential information belonging to [Affluent Investment], which they are now using to the detriment of [Affluent Investment]," according to a Supreme Court writ.
Simonds Homes' decision to terminate the referral agreement was also done in "bad faith" as a way to force Affluent Investment to renegotiate it on less favourable terms, it has been claimed.
But Simonds Homes chief executive Paul McMahon said the case was a "try on" by an aggrieved former subcontractor.
The developer, which opened an office in Beijing and established joint-venture arrangements with agents in Shanghai and Guangzhou in 2013, said it sells less than 80 homes a year to Chinese customers.
"[The $6.7 million claim] is ridiculous. We paid them a sum in terms of commissions that were owed to them and they accepted that sum as a final payment. I'm not sure why it's come up again," he said.
"There was one staff member who is with us who had elected to walk away and the owner of Affluent has always been a little bit aggrieved by that."
Affluent Investment has acknowledged receiving a payment of $348,000 in 2012 but is now claiming it was deprived of $6.7 million in income it would have earned from the original agreement.
Simonds Homes is yet to file a defence in the proceeding.