The bitter dispute between the Parramatta Eels rugby league club and its former major sponsor Dyldam will be played out in court after the club launched legal action in the District Court over Dyldam's alleged failure to meet its financial commitments.
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The controversial developer, recently announced as a major sponsor of the Central Coast Mariners, is being pursued by the Australian Taxation Office after investigations by insolvency expert Stephen Hathway found what he told Fairfax Media was an attempt to mislead the ATO by deliberately misstating the true nature of financial dealings within the Dyldam empire.
Dyldam, one of the country's largest privately owned residential developers, has splashed out close to a billion dollars on property acquisitions over the past two years.
Only recently the developer paid an estimated $70 million buying the Thomson Ford site in Parramatta from Roosters' supremo Nick Politis, and in July it paid $175 million for a St Leonards development site.
Meanwhile, the Dyldam dollars have not been flowing into the Parramatta league club's coffers. For the past five years, Dyldam has been the club's major sponsor in a deal estimated at $1 million a year.
Over the years, club officials have regularly complained about the tardiness of Dyldam meeting payment schedules.
It is understood Dyldam recently tried to get a discount on the money it owes the club, claiming it had suffered reputational damage over its association after a year of damaging headlines ranging from salary cap scandals to board sackings.
The club's temporary administrator Max Donnelly of Ferrier Hodgson rejected these claims and the club filed a statement of claim against Dyldam in the District Court on October 4. It is understood the developer still owes more than $250,000.
The company is claiming it is too cash-strapped to pay out Carol Khattar, the widow of George Khattar, who owned 25 per cent of Dyldam. Mrs Khattar is embroiled in a Supreme Court stoush in an attempt to get her husband's siblings, who now own Dyldam, to finalise the estate of her late husband, who died in 2010 aged 44.
The development company is also being pursued by the ATO over millions of dollars in unpaid GST.
A Fairfax Media investigation, prompted by the mysterious discovery of a body in a bathroom, previously revealed that more than a dozen of Dyldam-related companies run by Joe Khattar and his brother-in-law Sam Fayad had gone bust, owing the ATO millions.
There is a pattern to their bad luck. Upon completion of a development, having paid Dyldam handsomely for construction services, several apartments are transferred to their family and friends and shortly after the company goes down the gurgler owing the Tax Office money.
Before the corporate undertakers are called in, the two men exit as directors and a group of women are installed to run the troubled entities.They include Mr Fayad's wife Maria, who is the sister of Joe Khattar, and Joe and Maria's sister Sultaney Khattar.
Mrs Fayad was appointed the sole director and secretary of Plaza West just before it went bust in late 2012 owing $28 million, including almost $5 million to the ATO. Plaza West had built an apartment complex and shopping centre, now called Entrada, in Parramatta.
The ATO is currently funding Mr Hathway of insolvency firm Helm Advisory in his legal action to recover money from Plaza West after irregularities were uncovered in money movements between related companies.
Mr and Mrs Fayad and Mr Khattar did not respond to Fairfax Media's calls.
