newsCO.com.au–The cheese maker, the home builder and the billion-dollar land deal gone wrong

December 8, 2017

One of the state’s biggest home builders is battling a cheese baron in the Supreme Court, over a prime slice of land on Melbourne’s northern fringe earmarked for a $1 billion new suburb.

Dennis Family Homes has been negotiating with landowners in Donnybrook for almost a decade to buy hundreds of hectares of empty paddocks to convert to new estates.

But one of the vendors, cheese millionaire Tom Montalto, argues he didn’t realise – despite multiple meetings, briefings and contracts he signed – he was selling all of the land he owns.

The Montalto family paid a touch over $1 million for hundreds of hectares of farmland in Donnybrook, near Whittlesea, in 1994. Back then, it was zoned green wedge, meaning multiple houses couldn’t be built on it.

Today, with Melbourne expanding forever outwards, the land has been rezoned for housing. It’s now worth $353 million. How do we know that precise figure?

Because that’s what Dennis Family Homes agreed to pay Mr Montalto for the land. He signed contracts with the company in 2013, after seven years of negotiations. The developer wants to build 5000 houses.

The 71-year-old might have signed contracts to sell the land – but in an epic 10-day court fight, he told Justice Ross Robson he didn’t read any of them.

He says he couldn’t because, despite the millions he has made running a booming business with 60 staff, he has the reading abilities of a grade three student.

He can read documents but only ones that are “simple – if they are simple”, he told Justice Robson. But not the sort of complicated contracts required by Dennis Family Homes.

Dennis Homes wants to call its new estate Peppercorn Hill.

Mr Montalto isn’t happy about that either. He thought it was going to be named Montalto Hill, and the subdivision’s streets named after members of his family, which emigrated from Italy in the 1950s.

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Dennis Family Homes argued that Mr Montalto could read quite well.

He was at school until year 10, could translate Italian into English, and understood precisely what was going on over years of negotiations for the land.

Mr Montalto drew his former law firm, Harwood Andrews, into the legal mess, saying they had failed to protect his interests properly.

Until the case is decided, Dennis Family Homes cannot develop the land.

Mr Montalto is happy to part with about three-quarters of his land, but wants to keep one corner for himself.

He doesn’t need Dennis Family Homes to help him sell that corner, he told the court.

“Why do I need you to find me the buyer? I’ll find my own buyer at auction,” he said.

The case finished late last month, and is understood to have cost all involved upwards of $3 million in legal fees so far.

On Tuesday, lawyers for the four parties in the dispute were back in the Supreme Court, after Dennis Family Homes returned for specific permission from Justice Robson to enter the land, to start building a sales offices.

The company was granted permission.

Justice Robson said Mr Montalto’s refusal to part with the final parcel of land came despite “an agreement which would bring on them riches beyond everybody’s wildest dream”.

Once the paddocks are carved into residential lots the total value of land sales is expected to be $1.1 billion, the court heard.

When the Montalto family bought the paddocks, there was nothing but farming land as far as the eye could see save for the odd farmhouse.

Now, houses are rapidly being built to the south, west and east, as Melbourne’s booming population sees it burst out from Craigieburn, Epping and Doreen.

In early November, the planning minister signed off on plans for two new suburbs, Donnybrook and Woodstock, 32 kilometres from the city centre.

They are two of 17 new suburbs the government says it will approve by next year, as the city continues to sprawl outwards.

The Montalto land was zoned green wedge until Labor, under Premier John Brumby, passed planning laws allowing Melbourne to sprawl thousands of hectares outwards by expanding the city’s urban growth boundaries.

Dennis Family Homes fought off other developers to win the right to develop the land – which suddenly was worth hundreds of times what it was bought for two decades earlier.

Mr Montalto told the Supreme Court that one part of the land was not ever for certain sale.

From 2011, “Dennis Family Corporation were on notice that Mr Montalto believed that [part of his land] was not developable,” Mr Montalto’s barrister, Stewart Anderson QC, told the court.

Mr Anderson said that Dennis Family Corporation had deliberately minimised any conversations about whether it was getting all of Mr Montalto’s land or just some of it.

“Because the more questions that were asked by Mr Montalto the more likely it was that Dennis Family Corporation wouldn’t achieve their objective, which was to have all of Mr Montalto’s land included in the development agreement,” he said in court.

Barrister for Dennis Family Homes, James Peters QC, on Tuesday said that the company urgently needed access to the land to begin building its sales centre.

“We’re shut out now your honour, and we seek to be let in,” he told Justice Robson, who on Tuesday granted access to the company.

A decision in the case is expected soon by Justice Robson.

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