Judge slams lawyers' 'scatter-gun' work
Lawyers of the 2000 investors who saw their class action against Timbercorp thrown out of court have been criticised by a Victorian Supreme Court judge.
LAWYERS of the 2000 investors who saw their class action against Timbercorp thrown out of court have been criticised by a Victorian Supreme Court judge.
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In a judgement of more than 300 pages, Justice James Judd criticised the "scatter-gun" way lawyers ran the class action for investors, and said the plaintiffs constructed an "elaborate and sometimes illusive web of allegations".
The investors, who borrowed more than $450 million to invest in scheme run by collapsed agribusiness group Timbercorp, are now likely to be followed up on their debts after the failed class action.
The Victorian Supreme Court yesterday denied damaged to investors in Timbercorp scheme. It also threw out the 2000 investors' aim to set aside loans from the group that financed their investments.
Justice Judd said the investors have failed to make the argument that they were not properly informed of the risks threatening their investments in the company's managed investment schemes.
Macpherson+Kelley principal Ron Willemsen, who led the class action on behalf of Timbercorp investors, said the decision handed down by Justice James Judd had come as a major disappointment to investors who had turned to the court for relief.
Willemsen suggested the firm is now looking at grounds for appeal.
“This is an important area of the law that affects thousands of investors. We will be closely scrutinising the judgment to determine whether there are any available grounds for appeal."
“We understand that many of the investors will be suffering continued hardship as a result of this decision, especially those facing ongoing loan obligations without any prospect of a return from their investments,” said Willemsen.
Justice Judd said evidence given by the two investors leading the case was "implausible".
He said the evidence "strained to diminish the importance of the tax benefit derived by them in favour of more laudable long-term investment objectives".
The judge said: "[The case] was complex, involving numerous separate claims for primary and accessorial liability. Every conceivable combination or permutation of statutory duty and remedy was explored.
"The plaintiff’s case was not concisely stated until trial. That is often the case, and in some circumstances may be justified. In this case, the complexity tended to mask a mercurial case. Had the plaintiff been required to narrow and confine his case at a much earlier stage, much of the complexity could have been avoided. While the case became capable of refinement and simplification, the plaintiff refused to abandon any aspect of his pleaded case."
However, the judge also praised the cooperation and minimal interlocutory disputes in the plaintiff's case. He said "the case was presented efficiently and within a shorter time frame than was initially anticipated." He also acknowledged the industry of counsel and solicitors in the preparation of the case for trial.
He said, however, "the unwillingness of the plaintiff to confine and simplify his case was disappointing".
The cost of the proceedings, which took 21 days and involved five senior counsel representing the investors, Timbercorp, Timbercorp Finance and the group's directors, are expected to reach $10 million. Willemsen told reporters outside the court that the costs would be divided equally by investors who signed up to the class action.
The law firm, Macpherson+Kelley, is currently working on 12 class actions for investors in all Great Southern managed investment schemes offered during 2005 to 2008, with the trial expected to begin next August. Bendigo and Adelaide Bank is facing claims that its loans are void due to misleading or deceptive conduct on the part of Great Southern in marketing the investment and loan package.