More than 5000 investors will be eligible to share in a multimillion-dollar class action settlement after almost two years of legal wrangling.
Yesterday it was announced that the class action against Sandhurst Trustees Ltd, the trustees of the failed investment company Fincorp Investments Limited, was settled for an undisclosed sum.
Slater & Gordon acted for the plaintiffs, led by the head of commercial and project litigation, Ken Fowlie, practice group leader Ben Phi and associate Odette McDonald. Baker & McKenzie acted for Sandhurst, with the firm's Australian chair, Bruce Hambrett, and senior associate Andrew Hill involved.
"The total size and reach of the settlement claim ultimately depends on how many people decide to opt out of the matter," said Slaters associate Odette McDonald. "We are now in the process of going through the opt-out process and also notifying people of the proposed settlement and whether or not they are eligible."
Slater & Gordon would not comment on reports that the settlement was around $30 million.
McDonald said that Slaters would be directly mailing the 5,100 group members to the class to ascertain whether they will opt out.
McDonald confirmed that some members would be entitled to 75 cents in the dollar, or above in some instances. The lead plaintiffs, Mark and Rhonda Harrison of Queensland, who lost $330,000, can expect to receive about $293,000, which is about 89 cents in the dollar.
Class members also include unsecured noteholders who were not entitled to any funds after Fincorp went into liquidation and receivership.
McDonald said that one such unsecured noteholder, who lost $160,000 when Fincorp went under in 2007, was entitled to receive around $120,000 under the settlement.
The property company Fincorp collapsed in 2007 after owing nearly $200 million to 8000 investors. Fincorp Investments Ltd was used as a vehicle for the company to fund property investments. Sandhurst, a subsidiary of the Bendigo and Adelaide banks, was appointed trustee to Fincorp in March 2004 in respect of two trust deeds.
The class action, filed by Slater & Gordon in August 2009, alleged that Sandhurst did not fulfil certain obligations it had under the Corporations Act 2001.
"There are a number of other trustees that act in similar roles, and this action demonstrates that for any of them that are passive in their roles, it is worthwhile for them to be considered on notice," said McDonald. "We think that the provisions under the Act that deals with trustee responsibilities are pretty powerful."