Justin Hemmes settles $37m Coogee Pavilion stoush

Paul Bibby
The Coogee Pavilion was the subject of a $12 million refurbishment.
The Coogee Pavilion was the subject of a $12 million refurbishment. Photo: Steven Siewert

Hotel baron Justin Hemmes looks set to formally take over the lucrative Coogee Pavilion after settling a bitter stoush with its current owner David Kingston.

The NSW Supreme Court heard on Monday that Hemmes and Kingston had reached an "in-principle settlement" under which ownership of the multistorey pub, previously known as the Beach Palace, would be "transferred" to Hemmes.

"It's been satisfactorily resolved," Hemmes said after the brief hearing, refusing to disclose any further details of the agreement.

"It's been a good day."

According to court documents, Hemmes reached an agreement with Kingston in March last year, to buy the hotel for $37 million.

Kingston, the former managing director of investment bank Rothschild, wanted the sale to be completed in two years by way of a put and call option, with Hemmes' $5 million deposit being treated as the option fee and the $1.5 million a year in rent being treated as the interest on the remaining $32 million.

Justin Hemmes at Coogee Pavilion in July 2014.
Justin Hemmes at Coogee Pavilion in July 2014. Photo: Mark Metcalfe

Drawing on his experience in transforming some of Sydney's ugly duckling pubs into money making swans, Hemmes poured $12 million into the three-storey hotel - a refurbishment that has reportedly doubled the venue's value.

But then things turned sour, with Kingston hitting the hotelier with a string of termination notices, firstly for the rent being two days late and then for what Kingston has described as "blatant and unauthorised works". 

Kingston claimed to have been hoodwinked about the type and size of building work Hemmes was undertaking, issuing one of the termination notices for "unauthorised building work".

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However, Hemmes said that, just last year, the owner had come to the opening of both the downstairs area and the rooftop bar and told acquaintances: "He's done a good job, hasn't he?"

The day after the eviction notice for the "unauthorised works", Hemmes lodged a caveat on the title, registering an "equitable interest" in the hotel.

He then sought a Supreme Court injunction and claimed that Kingston had engaged in "deceptive and misleading conduct" and that paying the rent two days late would have set Kingston back just $85.74.

A lobster roll at Coogee Pavilion.
A lobster roll at Coogee Pavilion. Photo: Sahlan Hayes

The court heard that the pair have now agreed on a settlement that will require no further court action and under which the Coogee Pavilion will be "transferred" to Hemmes.

It is not yet known how much of the remaining $35 million he will be required to pay. 

Though he declined to comment on the terms of the settlement, Hemmes appeared to be in a buoyant mood as he left court accompanied by his pregnant partner Kate Fowler.

"I'm over the moon," Hemmes said of becoming a father for the first time.

With Kate McClymont