This billionaire businessman stopped paying his mortgage and then sued the bank when they tried to sell his massive mansion. Here’s what happened next.
This billionaire businessman stopped paying his mortgage and then sued the bank when they tried to sell his massive mansion. Here’s what happened next.

Bank sells billionaire’s mansion over unpaid mortgage

ONE of China's richest men has lost a battle with a big bank he claimed sold his sprawling Gold Coast mansion well below its value after he fell hundreds of thousands of dollars behind on the mortgage.

Counted among the city's grandest mansions, the "Mediterranean-style masterpiece" at 1525 Riverdale Dr Hope Island was once listed for sale at $15 million - but last year it sold for a little over $5 million.

Court documents reveal the HSBC bank took possession of the four-bedroom property in 2019 after the owners, Jian Yi Wang, his wife Huifen Xie and their daughter Chuyue Wang, fell behind on the mortgage.

1525 Riverdale Dr, Hope Island.
1525 Riverdale Dr, Hope Island.

Mr Wang, 59, is chairman of Futong Group, which produces and sells optic fibre cables and other products, supplying much of China's telecommunications industry. His net worth is estimated around $1.84 billion.

The bank listed the home for sale but, after prospective purchasers signed a contract, the Wang family lodged a caveat preventing the sale being completed, claiming the bank had "not acted in good faith".

The Wangs, who live in China, claimed the sale price of $5.51 million significantly undervalued the property, saying marketing should have halted until Covid-induced economic conditions improved.

Property records indicate they paid $9 million for the property, which occupies its own 4982sq m waterfront peninsula in exclusive Hope Island Resort, in 2009.

HOPE ISLAND: 1525 Riverdale Drive, Hope Island resort. Supplied pic. - Real estate
HOPE ISLAND: 1525 Riverdale Drive, Hope Island resort. Supplied pic. - Real estate

The estate features a resort style pool, spa, full-size tennis court, several kitchens, cinema, marble tiles, stone columns and gold-plated finishes in the "presidential" master suite bathroom.

Court documents revealed the Wangs borrowed $4.5 million against the property, with HSBC registering a mortgage over it.

1525 RIVERDALE DRIVE, HOPE ISLAND RESORT. Supplied pic
1525 RIVERDALE DRIVE, HOPE ISLAND RESORT. Supplied pic

FULL DIGITAL ACCESS: JUST $1 FOR FIRST 28 DAYS

By early 2019, the loan was in arrears and after demands for payment were unmet, the bank took possession in December 2019 just as COVID-19 began its devastating rampage around the globe.

As of February 2021, the family owed the bank $4.4 million and were behind in payments by $553,000.

The court documents reveal the bank ordered two valuations - one in January 2020, before the impacts of the pandemic had been fully realised, valuing it between $5.5 million and $7.2 million.

Jian Yi Wang, chairman of Futong Group. Photo: Supplied
Jian Yi Wang, chairman of Futong Group. Photo: Supplied

The second valuation by the same valuer at the end of July came in lower at $5 million-$6.75 million.

The valuer said the price was likely to be impacted by the closed state and international borders and that buyers could be put off by the hefty $40,000-plus body corporate fees.

He warned a short sales campaign could result in a reduced price.

1525 Riverdale Dr, Hope Island. Photograph : Jason O'Brien
1525 Riverdale Dr, Hope Island. Photograph : Jason O'Brien

An appraisal by real estate agent Mark Carew was undertaken, with the agent identifying a raft of maintenance issues, including water damage to ceilings and carpets, exposed electrical wiring in the living areas, lack of a fence for the pool and spa and a need for repairs and repainting of the exterior and fences. Some of those matters were remedied, including cleaning the house, fencing the pool and rectifying the electrical and wiring problems.

Mr Carew's appraisal was between $7 and $7.7 million, the court documents said, and he was appointed to market the property, with $19,000 tipped into a short but an intensive campaign from late June 2020 for an auction date of August 8.

The bank set an auction reserve of $6.75 million, but the highest bid was $4.5 million and the property was passed in.

After the failed auction, the bank agreed to sell the property to Sydney-based Craig Scutella and his wife Iryna Mulligan for $5.51 million, in a contract due to settle on December 18 2020.

The auction at 1525 Riverdale Dr, Hope Island. Photograph : Jason O'Brien
The auction at 1525 Riverdale Dr, Hope Island. Photograph : Jason O'Brien

Three days before settlement, the Wang family lodged a caveat claiming an interest in the property and that the bank had "failed to act in good faith in the exercise of its power of sale by failing to properly market the property for sale, and by selling the property at a significant under value."

A representative of the bank said the offer was accepted because "there was no guarantee that a better offer would eventuate, the auction (had) been a failure and the many inspections having produced no real interest from prospective buyers and a good deal of negative feedback about some aspects of the property".

The bank contended that in August 2020, there was uncertainty about the future for the economy and the prestige property market, with the prospect of a prolonged downturn as Government stimulus payments and mortgage repayment deferrals came to an end. Added to that was uncertainty about when international borders would reopen.

To support their case, the Wang family tendered their own valuer's report on the property, which said it was worth closer to $10.7 million in December 2020.

1525 Riverdale Dr, Hope Island.
1525 Riverdale Dr, Hope Island.

The family also tendered a statement from a real estate agent who had unsuccessfully tendered to sell the property, who considered the sale price "significantly below market value".

In deciding in favour of the bank to lift the Wang's caveat on the sale, Supreme Court Judge Catherine Holmes wrote that even if the mansion was worth significantly more than what was paid for it, "the mere fact of a sale at an inadequate price does not demonstrate a lack of good faith".

"The applicant sold at a time when, with international borders closed and state borders being closed to different regions at different times, there was no reason to suppose that any improvement in the market was imminent."

Attendees of the auction at 1525 Riverdale Dr, Hope Island. Photograph : Jason O'Brien
Attendees of the auction at 1525 Riverdale Dr, Hope Island. Photograph : Jason O'Brien

The court was told the mansion's buyers had taken steps to move from Sydney to live in the home, including enrolling their son in a Gold Coast school.

Ms Mulligan and the couple's son have had to live in temporary accommodation on the Coast while "Mr Scutella remains in Sydney with possessions still packed and waiting to be transported".

The buyer also purchased a pontoon attached to the property, which was separately owned, leading to a recorded total purchase price of $5.75 million.

Judge Holmes ordered the caveat be removed to allow the sale to settle and that the Wangs pay the costs of the bank and the buyers.

kathleen.skene@news.com.au

 

 

 

 

Originally published as Bank sells billionaire's Gold Coast mansion over unpaid mortgage


ALDI: Construction workers to be on site by end of month

Premium Content ALDI: Construction workers to be on site by end of month

Permanent full-time and part-time jobs are on the cards for Lockyer locals when...

Dawn Service cancelled for second year in a row

Premium Content Dawn Service cancelled for second year in a row

Crowds are expected to be huge, but Gatton will be without a dawn service this...

Mum and daughter face animal cruelty charges

Premium Content Mum and daughter face animal cruelty charges

Mum and daughter among three in court for 50+ animal welfare charges