Neil Polley has a series of debilitating medical conditions including paraplegia.
According to the judgment of District Court Justice Paul Slattery made last week, Polley has dyslexia and is easily confused by documents, and – although no medical evidence was presented to the court on the subject – also suffers some intellectual deficits.
Polley was trying to develop specialist accommodation for people with disabilities when he first became aware of Alex Zollo.
Zollo introduced himself to Polley as a builder, despite the fact that his building licence had been cancelled 15 years earlier, according to Slattery’s judgment.
The two men were introduced in 2012 – the same year that, after being prosecuted for his role in failed building companies, Zollo gave an undertaking to the District Court that he would not in future act as a director of any licensed building contractor or developer.
Zollo was involved in helping Polley seek council approval for his proposed development, which was never granted.
The pair met again two years later and entered into a joint venture together.
Under the arrangement, Zollo agreed provide his building and development expertise to identify suitable blocks of land in Adelaide, while Polley agreed to provide finance for disability housing developments on those properties.
Zollo failed to tell Polley that he was incapable of fulfilling any of his obligations under the joint venture because of his undertaking to the court, according to the judgment.
He also failed to tell Polley that the Commissioner for Consumer Affairs was investigating his company Built It Ltd, and cancelled the company’s licence because of his conduct.
In December 2014, Zollo and Polley registered a corporate entity in which Polley was the director, to carry out the aims of the joint venture.
The judgment – in the civil case, bought by Polley and his superannuation fund – says that although Polley was the registered director of the joint venture, he deferred to Zollo’s skill, expertise and experience as a builder in the operation of that company.
Zollo acted as director despite the undertaking he had given to the court, the judgment reads.
He recommended to Polley that the joint venture should buy a property on Whysall Road in Greenacres.
Polley agreed to the plan, and purchased the property for $345,000 through his self-managed superannuation fund.
In February the following year, Zollo suggested to Polley that the joint venture buy another property – at Muller Road in Greenacres – and that the property should be held in the names of the trustees of their respective self-managed super funds.
Polley eventually paid the purchase price and stamp duty for Muller Road property, through his super fund.
Zollo’s trustee had become a 24/100 part-owner of the property as part of the transaction, despite Polley not understanding at the time that there was to be an absolute conveyance of a proportionate interest in that land to Zollo’s interest.
Zollo then suggested the joint venture purchase another nearby property, this time at North East Road Hillcrest.
According to Slattery’s judgement, Zollo told Polley that:
- The vendor (property owner) was known to him.
- The vendor was in a position of financial difficulty and had to sell the Hillcrest property at a favourable price.
- The vendor was indebted to Build It Pty Ltd, Zollo’s building company.
Zollo knew that none of these claims was true, according to Slattery’s judgment.
Without informing Polley, Zollo then entered into contracts for the purchase of the Hillcrest land and agreed to assign the contracts to the joint venture in consideration of Polley’s payment of $130,000 to him.
At that time Polley believed the $130,000 was a part payment for the purchase of the Hillcrest land.
Zollo knew Polley believed this to be the case, the judgment says,
But in fact, the $130,000 was a payment directly to Zollo – a fee for the assignment of the contracts to purchase the Hillcrest land.
Slattery found that Zollo’s statements to Polley about the transaction were untrue and misleading, and breached his legal duties.
“Each of the representations made by Mr Zollo to the plaintiffs (Polley and his self-managed super fund) in relation to the Hillcrest property were untrue: especially that there was no basis for the payment of any assignment fee because no work had been done by Mr Zollo as represented to the plaintiffs.”
Slattery found that there was no evidence Polley lacked the mental capacity to enter into any of the transactions in relation to the joint venture.
The judge found he was acting under the effect of Zollo’s “misleading conduct” and “I would not find that he did not understand the nature of the transactions as I have described above”.
Zollo was asked in court whether he had given the undertaking to the District Court, in 2012, not to be a director of a building company.
According to Slattery’s judgment, Zollo said that his lawyer had mistakenly given such an undertaking, suggesting implicitly that he did not ever give such an undertaking.
Slattery found Zollo was deliberately misleading the court.
“I am unable to accept the denials of Mr Zollo that he never gave an undertaking to the District Court,” the judgment reads.
“I consider that this evidence is manifestly untrue and deliberately so.”
Zollo also claimed during the proceedings that he was merely an employee of Built It Pty Ltd.
“I reject this evidence as spurious,” the judgment reads.
“The evidence before the Court satisfies me that he was no mere employee but was the guiding hand and mind of Built It Pty Ltd.
“In effect, he was the company.”
Slattery ordered Zollo to pay $130,000 back to Polley’s superannuation fund and that Zollo’s fund transfer its 24/100 part ownership of the Muller Road property to Polley’s super fund.
Zollo and his super fund are also required to pay damages to Polley’s super fund for breach of financial duties under Australian consumer law.
The court will hear the parties as to consequential and other orders and in relation to costs and interest.
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