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NSW class action stumbles but not dead
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NSW class action stumbles but not dead

A NSW class action by investors in Great Southern's agricultural schemes has stumbled at its first hurdle.

A New South Wales class action by investors in Great Southern's agricultural schemes has stumbled at its first hurdle.

At the first directions hearing the Federal Court last week, Sydney lawfirm DC Legal discontinued a class action against Bendigo and Adelaide Bank, just two days after a Victorian judge struck out a similar claim.

The law firm agreed to ''completely redraft'' its statement of claimagainst the remaining three defendants, former Great Southern directors Phillip Butlin, Cameron Rhodes and John Young.

Nearly 2000 investors in the Great Southern Group’s Managed Investment Schemes launched the class action to recover losses from Great Southern director, or the bankers who lent them money to invest in the failed schemes.

About 260 of those investors, via DC Legal, asked the Federal Court to set aside the loans they took out and to be reimbursed for all costs.

“The action claims recovery of all funds lost in these projects including themanagement fees and insurance fees paid; and for borrowers, the setting aside of the loans and all monies paid pursuant to the loans to Great Southern Finance Pty Ltd and its successor, BABL,” DC Legal solicitor Bruce Dennis said.?

Justice Clyde Croft threw out a class action against the bank run by law firm Macpherson + Kelley in the Victorian Supreme Court.

But some law firms are maintaining the class actions are not dead, despite the stumble. M+K principal Ron Willemsen told Investor Daily the company's litigation is "very far from dead and buried". 

"The fact they are keen to chop them off at the knees and not take any part in the case, they challenged a few paragraphs in the statement of claim .. and in the end the judge did a couple of days ago say the claim ought to be represented with further detail.

"He gave permission to us to submit a substitute statement and claim with extra details," Willemsen said. 

A court order made in a Melbourne court on Friday has given the investors until 23 November to deliver and amended claim. 

The Bank’s managing director Mike Hirst said the bank was not surprised by the withdrawal of the DC Legal class action.

If the Victorian class action is renewed, the next directions hearing inthe NSW case is expected to consider whether the two should be consolidated.

Hirst said the court developments vindicated ''the bank's conduct during the collapse of Great Southern and its subsequent dealings with borrowers''.

He said the clients of the two law firms should reconsider their decisions to default on their loans.

Dennis had said a recent Senate Select Committee Report said such Scheme“have a tendency to develop a ponzi-like character, where new capital is constantlyrequired to prop up the under performance of previous projects.”

 

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