Ownership dispute erupts over Sorrento’s redeveloped Continental Hotel
A legal dispute has broken out over the ownership and redevelopment of Sorrento’s landmark Continental Hotel, drawing in veteran publican Julian Gerner and an ownership group that includes the billionaire Smorgon family.
The venue, known locally as the Conti, is a cornerstone of the Mornington Peninsula hospitality scene and was recently listed for sale with an asking price of $150 million following a major redevelopment.
Gerner claims he is entitled to compensation after playing a key role in shaping the project before being excluded in 2020. The redevelopment transformed the historic pub into a luxury hospitality precinct featuring a 108-room InterContinental hotel, dining venues, event spaces, and a spa and bathhouse.
Now operating the nearby Koonya Hotel, Gerner has more than three decades of experience in Victoria’s pub sector and is no stranger to high-profile legal action.
According to documents filed in the Supreme Court of Victoria, the dispute centres on discussions between Gerner’s company, The Ocean Amphitheatre Company, and a Smorgon-backed consortium following the collapse of his previous joint venture partner in 2019.
After the project entered receivership, a deal room was opened containing redevelopment plans and preparatory work that Gerner says he had commissioned. He claims that in early 2020 he met with representatives of the consortium to discuss a proposal that would see him remain involved in the project with a 20 per cent stake.
At a meeting in Sorrento, Gerner alleges he was assured: “Don’t worry, we will not be doing this project without you.”
Gerner says he continued to assist the consortium with due diligence and agreed to remove a caveat over the property, allowing the sale to proceed. However, an entity linked to the consortium ultimately completed the acquisition directly from the receivers in May 2020, effectively cutting him out.
Gerner alleges the consortium “appropriated the lands and development project for themselves and excluded [Ocean Amphitheatre] therefrom without offering or paying [the company] any compensation”.
“The consortium lulled [Ocean Amphitheatre] into a false sense of security, causing them to believe that the terms sheet arrangement would be performed following the acquisition of the lands by a consortium entity,” the court filing states.
The claim also points to interest from Chemist Warehouse billionaire co-founder Mario Verrocchi at the time, arguing Gerner’s involvement was commercially significant given the tight timeframes involved.
Gerner is seeking compensation following the decision to sell the redeveloped asset but is not attempting to block a transaction.
“The statement of claim sets out my position. I will allow the court process to run its course,” Gerner said.
A defence has not yet been filed. A spokesperson for the consortium said it was aware of “the recently filed claim which relates to discussions that took place in early 2020”.
“We consider the allegations to be without merit and intend to vigorously defend the proceedings,” the spokesperson said.
Jonathan Jackson, 12th January 2025
