Saturday, 12 May 2012

This lady’s veto is not for overturning

The property of bankrupt businessman Tony Morris,
which Andrew Wily can't sell without the consent
of Vanessa Morris.
SHE might be a “single mother on a pension” but she can still marshal top QCs and barristers in defense of her realm.

The lady in question is Vanessa Morris (Jackson), who this week saw off a challenge in the Federal Magistrates Court from Armstrong Wily's Andrew Wily.

If Wily's application had been successful, the Palm Beach mansion Mrs Morris occupies would have been sold without her having any say in the transaction.

But after a two day hearing the wife of accused English fraudster Tony Morris maintained her right to potentially veto any offer for the Whale Beach Road property.

Wily went to court as trustee in bankruptcy of the property of Tony Morris and must be regretting the consent orders he agreed to last year. It's expected he will shortly apply to relinquish his trusteeship over Tony Morris's share of the Whale Beach Road property.

Mrs Morris and the couple’s son have been living in the stunning cliff top home since Tony Morris was arrested and extradited to London in February 2011. Tony Morris has denied charges of fraud and is currently on trial.

During the course of Wily's application the court heard that the unserviced mortgage is accumulating at $30,000 per month, secured lender NAB is owed $5.187 million and the ballooning debt has swallowed all foreseeable equity. And it’s not only a problem for NAB.

Wily was appointed trustee to the Palm Beach property on October 5, 2011. Consent orders made on that day included the clause that he was entitled to sell the property on the condition he obtained written agreement from its occupant, Vanessa Morris.

The non-compliant, cliff-edge infinity pool threatened
with potential demolition by Pittwater Council.
His application this week to overturn Mrs Morris’s right of veto came after six months of attempts to sell the home culminated in a lone, highly conditional and decidedly miserly offer of $4.55 million from a mystery buyer, expiring at noon on Friday.

The reasons why such a property should be so difficult to shift are myriad and the court heard them all.

When Glenn Lee and David Eden of Raine & Horne Palm Beach won the exclusive agency agreement to sell the house late last year, they estimated they could attract up to $6.2 million.

This was well shy of the $7.45 million Tony Morris coughed up in 2006 but enough fo
r NAB to be paid in full and for Wily to recover hundreds of thousands of dollars for unsecured creditors.
Palm Beach property agents
Glenn Lee (L) and David Eden.
Photo: SiN Images

However with Christmas looming and repairs needed, Lee and Eden couldn’t get an acceptable offer over the line.

At the hearing Eden told the court that 2011 was the worst year he’d experienced in his real estate career.

Having working their contacts to no avail, he and Lee were forced to take the property public. And even as their marketing campaign kicking off in February, they were discovering more problems.

The most urgent involves the property’s infinity pool. It is a metre wider than Pittwater Council has approved for the site. It’s built on the edge of a cliff. On April 30, 2012 the council issued a notice requesting that the trustee and his reluctant co-title holder show cause why the pool should not be demolished. The council’s concerns are geotechnical. Might the pool fall into the Pacific? The notice needs to be responded to before the end of May.

This camel-back breaking straw came after the property had attracted just one bid of $3.5 million from a Mr Karroll at auction on March 20. Days after the April 30 council notice, Wily filed an affidavit supporting his application to have the consent orders altered.

During the hearing Wily and Eden were cross-examined by Paul Menzies QC, who turned up on Thursday with his Selbourne Chambers neighbour Bridie Nolan, Mrs Morris’s regular barrister.

Menzies grilled each man about what they knew of the pool’s size issues and when they might have known it. Nothing emerged in the exchanges to suggest either Wily or the estate agents knew about this non-compliant erection.

Nor did Wily or Eden know when they were marketing the property in February that fences and gardens encroached beyond the boundary lines of the property’s 816 square metres onto public recreation reserves.

Eden told the court that in his opinion the big issue is the uncertainty around the fate of the pool. He told the court the council’s issues with the pool could strip as much as $500,000 off the property’s sale price.

Discussion about recent and potentially comparable sales in Palm Beach followed. Menzies said 289 Whale Beach Road recently sold for $5.4 million, his point being that the trustee’s eagerness to accept $4.55 million might be hasty and that a higher price might yet be secured.

Eden disagreed. Although it’s only 300 metres from Mrs Morris’s home he said 289 Whale Beach Road was a bigger house and on 1200 square metres. Besides. “It looks straight down the gun barrel to Whale Beach”.

Menzies replied with the observation that the Morris property looked north, up Palm Beach to Barrenjoey Headland and beyond. Isn’t north facing better, he asked Eden?

Vanessa Morris's legal team. Paul
Menzies QC (L) and barrister
Bridie Nolan.
Photo: SiN Images
At one point Menzies suggested to Wily that he didn’t care what price he obtained for the property now there was no money left for Tony Morris's unsecured creditors. Wily rejected the assertion.

It’s been quite a saga. The cast of legal muscle representing both sides has been impressive. Nolan and Menzies for Mrs Morris. Wily has fielded plenty of artillery too. Barristers Jock Baird and Brian Skinner. Insolvency specialist Sally Nash. Her offsider Daniela Fazio.

But in the end Federal Magistrate Rolf Driver was not sufficiently moved by Wily’s arguments about an alarming absence of buyers and the critical urgency of the mystery offer.

Calculating that a reasonable offer would be between $5.215 million and $5.587 million, the Magistrate dismissed the application. Mrs Morris retains her right of veto, at least on low-ball offers, and a very luxurious roof over her head for the time being.

If a sale does not proceed and Wily relinquishes his trusteeship as indicated NAB could commence a mortgagee-in-possession sale at any time, a process Magistrate Driver said on Thursday usually led to a less satisfactory outcome than the current process, which he described as a “distress sale”.

The view from the upstairs bedroom.
But whomever NAB chooses to market the property may find themselves waiting.

Waiting until after Pittwater Council imposes its view of compliance upon the problematic pool and waiting for the end of Winter, which is a traditionally lousy time to flog an ocean front.

Nolan, who in a previous appearance on behalf of Vanessa Morris described her willowy client as a “single mother on a pension”, has surely earned herself an open invitation to admire the horizon from the property's infinity pool for as long as Vanessa Morris occupies the property.

NOTE: Tony Morris has pleaded not guilty to charges of conspiracy to defraud, theft and aiding and abetting fraud in relation to tens of millions of pounds that went missing from UK Pension funds in 2007 and 2008. His trial, which began in Southwark Crown Court, London on April 24, 2012, is continuing.

READ ABOUT: The day Andrew Wily seized Vanessa's jewels. Mr Wily and Mrs Morris

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