The Harkham brothers, former owners of Noah’s Backpackers in Bondi Beach, are fighting in court over tens of millions of dollars
NSW court documents show that Efrem and Terry, and sometimes their filmmaker brother Uri, formed investment partnerships that bought up properties across Sydney from 1978 onwards.
The Harkhams bought Noah’s overlooking Bondi from Campbell Parade in 1997 for $5.6 million. Uri sold the partnership to Efrem and Terry in 2012.
The Harkhams added the $8.5 million building next door in 2020 and sold the combined block to a bar owner for $68 million last year.
Terry was responsible for day-to-day running of the partnership. But Efrem’s legal team told the court that Terry hired his wife, Geraldine, as director and shareholder “without Efrem’s knowledge or consent.”
“This resulted in significant amounts of [partnership] Funds will be paid to those interests,” Judge Stephen Robb concluded in a ruling this week.
“When Efrem discovered these things, a quarrel arose between the brothers.”
In the case, there was no indication that Terry’s dealings or Geraldine’s appointment were invalid or misappropriated.
Rather, Efrem asked Judge Robb to impose the partnership with freeze orders until Efrem’s attorneys could determine and recover his share.
The hotelier also claimed a staggering $50 million, $46.5 million and $17 million worth of commercial loans were secured behind his back with Harkham real estate.
“I never knew about these loans. I was not consulted on these loans,” Efrem told the court.
He further claimed that $50.8 million went to Terry’s company without his consent.
The alleged “transactions of concern” included $6.2 million to Terry, Geraldine and their children, $1.3 million to Harkham Wineries, $2.5 million in credit cards and $6.2 million in Dollars for an “unknown purpose”.
Terry’s attorneys countered that all transactions were properly accounted for in the financial reports sent to Efrem for his 100-page US tax return.
Judge Robb concluded that there was no evidence that either Terry or Geraldine’s funds were dishonestly embezzled.
The court heard that Efrem did not investigate the inner workings of the companies as these were handled by his accountants.
“My team knew my deep connection to Terry, my trust in Terry, so you have to keep that in mind when you say I knew the numbers,” Efrem told the court.
Terry and Geraldine agreed that the partnership should sell their four properties and hold the money in trust. They requested that $10 million be released from the trust fund to pay off a loan from one of Terry’s companies.
The court agreed, and Terry and Geraldine’s more than $20 million home in Vaucluse was pledged as security for the deal.
When Efrem sued his brother in Sydney, he faced two $50 million lawsuits from Terry and his brother Ben, who claimed he “broke a contract” worth more than double Noah’s in Sydney .
Terry and Ben alleged in nearly identical court filings that Efrem denied them the “fruits of their investments” at the Luxe Rodeo — the only hotel on Beverly Hills’ iconic and most prized street.
The three Harkham brothers, along with another couple, bought the 88-room hotel for $12.25 million in 1995. In 2002 they took full control with Efrem being the majority owner.
Terry and Ben claim they were asked to contribute more money to transform the Luxe Rodeo into the hotel empire’s “flagship” hotel, thereby attracting brands like Rolex and Ferrari to its retail spaces.
They claimed that Efrem and his agents misrepresented the Luxe Rodeo as unprofitable so that he wouldn’t have to pay his brothers their share of the profits.
“[Terry] trusted Efrem to look after his financial interests in Los Angeles with an unyielding loyalty, which Efrem owed to Plaintiff as his brother and controlling business partner,” Terry’s filings read.
“My dear brother, I am calling you to turn the whole situation into a joyful one where two brothers can rejoice in abundance.”
Ben Harkham to Efrem
Terry and Ben accused Efrem and his son Aron of taking out a $38 million loan and violating its terms, resulting in millions of dollars in repayments in 2021. The hotel was closed in 2020 due to the pandemic.
The Harkhams sold the hotel in December 2021 for $200 million for an overall profit of $160 million. But Terry and Ben claim it was undervalued and sold in a “fire sale” to avoid credit.
“[Their] “The forced sale also took place at a time when hotel operations were halted due to a global pandemic, further reducing market demand and lowering the final sale price,” the court filings said.
Terry and Ben both claimed Efrem and his son “conspired” to keep them out of the sale and “accomplished their theft” by pouring the $160 million into US real estate.
The filing alleges that industrial buildings across California and apartment blocks in Manhattan were purchased by Efrem and Aron’s companies as the “final act” of the conspiracy in early 2022.
Weeks later, an email from Ben landed in Efrem’s inbox – as with all Harkham family feuds, trust issues and staggering dollar amounts played a large part.
“When I sent you the money I was sending it to my brother and in dealing with a brother I did not think it appropriate to involve lawyers or accountants,” Ben wrote.
“We did very well at Rodeo Drive.”
Ben asked Efrem to deposit $5 million into his bank account, pointing out that he was owed a total of $25 million.
“My dear brother, I am calling on you to transform the entire situation into a joyful one in which two brothers can rejoice in the bounty bestowed upon us by much higher forces,” Ben said.
A month later, in July 2022, the legal letters started flying.
Court documents show Ben’s US lawsuit was settled this month. Terry goes on.
Efrem is fighting Terry’s case, claiming his brother failed to properly spell out the terms of the Luxe Rodeo contract and failed to disclose when he was injured in the past 28 years.
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