PROMINENT real estate agent Russell Poliwka will appeal a recent Supreme Court judgement that ruled he should pay more than $2 million to a Perth investor in relation to failed business ventures.
In 2007, 23-year-old student and part-time worker Sherif Girgis won $30 million in what was at the time the biggest lotto win in WA history.
He then approached Mr Poliwka for some advice.
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READ NOW“When he came to me in October 2007 he was just finishing his university exams in property valuation,” Mr Poliwka, the now City of Joondalup deputy mayor, said.
“I said do nothing and come back to me after your exams.”
“I also said get a lawyer, an accountant and financial planner, which he did, and a private banker.”
Mr Poliwka said Mr Girgis revisited him early in 2008 saying he wanted to buy properties.
“From time to time Sherif called in at the office and on one such occasion I mentioned I was considering purchasing the Midland Hotel and Pub, which we ultimately purchased in equal shares as a partnership,” he said.
Mr Girgis argued he spent $1.335 million on it before it lost more than $1 million in three years.
“I lost more money because he stopped paying his share and I kept funding the project for a further year,” Mr Poliwka claimed.
Another purchase was a luxury charter boat for $880,000, which Mr Poliwka said was also bought in equal shares.
“We were aware the vessel needed maintenance given its age but we ran it as a charter business for a number of years and we broke even,” he said.
“So his claim in regards to the vessel and charter business failed.”
Mr Poliwka said that Mr Girgis’s claims regarding a property package that included a building on Boas Avenue in Joondalup, which once housed the Crush nightclub, and an ocean view block in Watermans Bay also failed.
“The package deal cost $4.165 million and at the time, those properties had a valuation of $5.65 million,” Mr Poliwka said.
It is believed by 2012, Mr Girgis was down to his last $5 million and two years later he launched legal action to try to recoup alleged losses of $3,441,815.03.
He alleges Mr Poliwka engaged in “misleading or deceptive conduct in trade or commerce”, and “made actionable negligent misrepresentations in breach of a duty to exercise reasonable care, skill and diligence” when giving investment advice to Mr Girgis.
Mr Poliwka denied the allegations.
“He (Mr Girgis) believes I should have done his due diligence,” he said.
“He was the director of his own company. When you buy an asset, you do your own due diligence.”
He also said real estate agents’ appraisals were “not considered legally binding by the courts” but “sworn valuations by valuers are considered by the courts to be authoritative”.
“It’s unfortunate the court found I was responsible for my co-investor’s due diligence but I never misled and I never deceived,” he said.
“I’ve been in business for over 35 years and he came to me.”
Mr Poliwka also counterclaimed that Mr Girgis had stopped making contributions for his 50 per cent share of the costs associated with the boat and charter business, and the pub.
He alleged he had paid $805,378 more than Mr Girgis, and issued a counterclaim for half the amount ($402,689).
He was awarded $50,000.
Mr Poliwka said the legal battle had so far cost him more than $1.6 million.