This article is from the Australian Property Journal archive
ASIC has concluded the final class action into the long running Westpoint saga, some 14 years after the property investment scheme collapsed.
Westpoint collapsed in late 2005, owing some 3,000-4,000 investors around $388 million. The group promoted investments in a number of property development projects, including 10 projects using unsecured mezzanine finance.
ASIC last week recovered nearly $1.5 million to 201 former Westpoint investors who were members of a claim against Brighton Hall Securities Pty Ltd, which is in liquidation.
On 7 March 2019, the Federal Court in Perth dismissed proceedings brought by ASIC against Brighton Hall Securities seeking damages on behalf of a number of clients of Brighton Hall Securities after the company’s liquidator completed the distribution of entitlements arising from claims against the insurance money recovered by the liquidator.
The final dividend represented a return of 22.35 cents in the dollar on the group’s claim for $6,652,702.
This action was one of 19 civil actions brought by ASIC to recover funds on behalf of investors against Westpoint-related companies and their officers, the Westpoint auditor and financial services licensees whose advisers recommended Westpoint products.
Following this case, ASIC has recovered around $160 to $170 million of the $388 million in lossesmade up of approximately $78.5 million in recoveries from the liquidation process and Westpoint companies not in liquidation and nearly $93 million compensation from ASIC’s actions.
The largest settlement was from KPMG which paid $67.45 million, although that figure was the highest out of all the class actions, it fell well short of ASIC’s $200 million claim against the former auditor.
This was followed by $25.5 million paid by the State Trustees Limited, and the remainder were settlements with financial planners, including Masu Financial Management Pty Ltd; Professional Investment Services Pty Ltd ($5.9 million); Bongiorno Financial Advisers Pty Ltd and Bongiorno Financial Advisers (Aust) Ltd ($2.6 million); State Trustees Ltd ($13.5 million), Dukes Financial Services Pty Ltd and Joseph Dukes ($1 million) and Glenhurst Corporation Pty Ltd ($2.5 million).
Although ASIC has recovered around $160 to $170 million of the $388 million in losses from the collapse, the corporate regulator sensationally dropped legal action against former directors Norm Carey and Graeme Rundle in 2013, midway through a five-week long trial.
The decision came about when ASIC discovered a document during the course of the trial, which would have altered its case against Carey and Rundle, who were alleged to have breached their duties as officers of Westpoint.
ASIC did not reveal the contents of that document.
Australian Property Journal
