Court orders DFO executives David Goldberger and David Wieland to pay interest to investors

The Victorian Supreme Court has ordered millionaires David Goldberger and David Wieland to pay millions in unpaid interest to the investors behind the troubled DFO South Wharf project.

In yesterday’s judgement, judge Tony Pagone said the two men, along with DFO executives Geoff Porz and Frank De Rango, should pay up although the South Wharf’s backers didn’t fulfil a previous agreement to lend $60 million.

Rich listers Goldberger and Wieland now owe unpaid interest to Mirvac Capital Investments and Ausmezz, which is also owned by the Singaporean Government. The two companies launched their claim last year, seeking $14 million.

The DFO group has had a troubled year, nearing collapse in 2010 after it suffered a significant debt crisis.

The incident began way back in 2008. All four DFO executives had backed a development loan with personal guarantees, after they were told that $60 million would be made available to construct the South Wharf shopping complex.

However, the backers only put up $46 million.

“I accept that the plaintiffs represented that the plaintiffs would have available $60 million for drawdown. I accept that the defendants entered into the guarantee in reliance upon the representation and that the representation was false,” judge Pagone said yesterday.

“It follows that without the representation the Borrower would not have entered into the Facility Agreement on September 19, 2008 and that the Guarantors would not have given the guarantees which they gave.”

However, Pagone also said development group Austexx borrowed $46 million and it didn’t have to pay interest on its own money after 2008.

”In my view, the appropriate order to make would be such as best reflected so much of the bargain actually made as was in fact performed,” he said.

The case is ongoing, with a separate hearing to take place tomorrow to determine how much interest should be paid by each party.

The DFO chain nearly collapsed last year, but Colonial First State Retail opted to buy four outlets for $500 million.