Merewether property developer Brien Cornwell has been criticised in Federal Parliament by Senators Barnaby Joyce and Nick Xenophon, who have accused him of living in luxury and refusing to pay creditors owed more than $750,000.
But Mr Cornwell has rebutted their criticisms, saying they failed to check any of their claims or give him the common courtesy of saying they were going to raise them.
He said the money was owed on a planned redevelopment of the former Palais Royale site in Hunter Street, Newcastle.
He said the Palais plans failed in large part because of the huge financial impact of a drainage fight with Port Stephens Council over another of his developments – the $75million Lagoons Executive Estate (formerly Melaleuca Estate) at Nelson Bay.
He said the seven Palais creditors knew he’d been ‘‘wiped out’’ by the Nelson Bay fight and that he had no money and no assets and was living on the goodwill of family and friends.
Port Stephens Council and the Cornwell camp have both spent millions of dollars in a widely reported case over council drainage work on adjoining land that left water flowing on to the Lagoons estate.
The council agreed to pay $1.5million in December 2007 to settle the case but had still not done so and Mr Cornwell’s company, Melaleuca Estate, went into liquidation last year.
The estate’s New Zealand financier has begun a $10million damages case against the council and Mr Cornwell said he hoped to get enough from this to pay his Palais creditors.
‘‘I will pay the investors their money when I get it,’’ Mr Cornwell said last week.
The claims about him were made on June 1 in a Senate estimates committee hearing, in which the two senators also took aim at the Australian Securities and Investments Commission (ASIC) for failing to chase up an ‘‘enforceable undertaking’’ that Mr Cornwell signed in 2008.
The undertaking was signed by Mr Cornwell and his 20per cent partner in the Palais development, Blue Mountains man Kenneth Watson.
ASIC went to the Supreme Court last week seeking orders against a Cornwell company, Newcastle Palais Holdings, and a Watson company, Empower Invest, for alleged breaches of the undertaking.
The matter is due back in court tomorrow.
In a statement this week, ASIC said the two men had operated an unregistered investment scheme without a financial services licence and it was seeking compensation for unpaid investors.
ASIC said its action concerned $769,000 raised from 10 investors.
At the estimates hearing on June 1, Senator Joyce said ‘‘this gentleman has come to my notice because he is living in a hilltop house overlooking Newcastle’’.
‘‘He seems to be living a pretty comfortable life yet there is a whole range of people around him who are basically broke because of him,’’ Senator Joyce said under parliamentary privilege.
‘‘He is back in business.
‘‘What are we doing wrong that we cannot chase these people down?
‘‘Are we missing the resources? Are we missing the laws?’’
Mr Cornwell said he had funded the Palais redevelopment from 1999 with his own resources but had sold 20per cent of the project to Mr Watson in 2006, when Mr Watson came to him saying he had people who wanted to invest.
He said he signed the ASIC undertaking ‘‘against his better judgment’’.
Mr Cornwell, 64, said he been developing property for most of his adult life.
He obtained a law degree in 1984 and ran his own legal firm, Cornwell’s, in Watt Street, Newcastle, until 2002.
Mr Cornwell also built and established the MJ Finnegan’s pub in Darby Street, Newcastle.
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