http://www.investorsactiongroup.com.au/?page_id=19 The Phoenician
The Phoenician is a 234 home unit complex located in Broadbeach, the Gold Coast, Queensland.
A significant number of owners appointed a letting agent, Driftcove Pty Ltd (“Driftcove”), to rent out their home units to holiday makers on short term letting arrangements.
It is alleged that Driftcove put in place a company structure which allowed associated companies to deduct an undisclosed letting charge of up to 30% from rental income before the balance was passed on to the letting agent.
The Office of Fair Trading (OFT) brought 2821 charges against Driftcove and its managing director, Mr Chris Scott, for failing to fully disclose to the owners of the Phoenician the letting charges which applied to the bookings of holiday makers during 2005-2006. The OFT settled the charges against Driftcove in return of payment of OFT’s costs and owners compensation in the sum of a little more than $25,000. Mr Scott admitted guilt and was fined $130,000.
The executive director of OFT stated publicly: “the practice of charging booking fees or directing bookings to another company for the purpose of charging a booking fee is unlawful”. It is alleged that the practice of deducting undisclosed letting charges of up to 30% of rental income continues unabated.
The files held by OFT in connection with the prosecution against Driftcove and Mr Scott have been inspected by the action group’s lawyers.
Based on a review of that material and other available evidence, the action group’s lawyers have expressed the opinion that they have reasonable grounds to believe that there are viable claims available to current and former unit owners of the Phoenician against the letting agent and entities associated with that agent and that there are reasonable prospects of success of recovering the undisclosed commissions deducted from the rent paid as far back as 2006 and possibly earlier.
The legal advisers have also expressed the opinion that any class action would seek recovery of substantial damages or compensation for individual unit owners and would not be limited in the amounts recovered as was the case in the OFT prosecution.
Litigation Funding
IMF (Australia) Limited is providing interim funding support pending a decision concerning the commencement of the proceedings.
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