Mark Baranov, a former director of internet and telecommunications company Dodo, has lost his home after the Victorian Supreme Court ruled a lender was entitled to sell it.
Baranov, who left Dodo in 2002 established a number of property development operations. According to the Herald Sun, he was trying to fight an attempt by Perpetual Trustees, acting on behalf of lender Challenger Howard Mortgage Fund, to sell the $4 million house.
Baranov offered up his family home in the Melbourne suburb of Caulfield as security on loans to his property development company Beluga Developments. (According to ASIC records, Beluga Developments was placed in the hands of administrators in December 2009.)
According to the judgement from Supreme Court Associate Justice Nemeer Mukhtar, the Challenger fund eventually provided finance facilities of more than $8.6 million to Baranov, which were guaranteed by securities over a number of properties including retail shops in Melbourne and Sydney, some of which were owned by another Baranov company, Fundsfirst.
Challenger issued a default notice in December 2008 and then filed a writ in January 2009. According to the judgement, the total amount owing (including interest) was $9.7 million at the end of October.
Challenger has already sold four shops and taken control of another three, which are yet to be sold.
Baranov attempted to contest Challenger’s ability to sell his home on three issues: whether he had actually defaulted on the mortgage, whether the notice of default was adequate and whether Challenger had sold some of the assets for undervalued prices.
According to the judgement, Baranov claimed “he earns $700 per week to support him and his family, and he has no means of securing alternative accommodation”.
Baranov argued that he should be given the chance to refinance his funding arrangements to protect the family home.
“Even in the worst case scenario, if after the sale of all the properties, other than the matrimonial home, there is a shortfall to discharge the outstanding debt to the Plaintiff, there would still be millions of dollars left in equity in the matrimonial home, which I could use to refinance the shortfall of the debt owing to the Plaintiff or use the surplus from the sale of this asset to provide alternative accommodation for me and my family. Accordingly, the sought eviction is both premature and vindictive,” he says in the judgement.
But Justice Mukhtar disagreed.
“Naturally the Court is mindful that a person’s home is at stake but under the deed the defendant agreed to mortgage his home as part of a wider dealing and agreed unequivocally that the lender could sell his home without resort to other securities. I see no legal basis for the defendant to now require the lender to sell someone else’s property in order to save his. The Court is allowing no more to happen than what the defendant himself agreed could happen.”
According to a report in the Herald Sun, Baranov has faced a difficult few years. A storage company he founded, Bar Um, collapsed in January 2009.
ASIC documents show Fundsfist was placed in administration in June 2009.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
