This article is from the Australian Property Journal archive
Westpoint investors will finally have their day court.
Yesterday, IMF Australia initiated the first class action against licensed financial planner Professional Investment Pty Ltd.
IMF Australia’s managing director John Walker said legal proceedings on behalf of the investors against Professional Investment Services have now been lodged in the Supreme Court of New South Wales.
The case against Professional Investment Services is set to be a test case.
“IMF plans to fund further class actions against other financial planning groups over the course of the next few months,” he added.
In February this year, IMF agreed to fund law firm Slater and Gordon to assist in an ongoing investigation of the various “mezzanine” schemes promoted by Westpoint Corporation Pty Ltd and, if thought appropriate, to fund litigation by investors against the financial planners who recommended investment in those schemes.
In June this year, Slater & Gordon begun Australia’s first legal action for investors affected by the Westpoint collapse.
Five test cases have been issued in the Supreme Court of Queensland on behalf of investors who lost a total of $1.6 million. They are seeking to recover amounts ranging from $150,000 to $610,000.
Slater & Gordon’s Mitchell Brown said investors in the test cases are funding their own legal action.
“We expect many other cases to follow this first batch. Slater & Gordon has been approached by hundreds of investors in all States and Territories,” Brown said. “Some will fund their own cases – like the present matters – while others may be supported by litigation funder IMF.”
An estimated 2000 investors lost more than $300 million in mezzanine financing schemes associated with the failed Westpoint Corporation, including couples with self-managed superannuation schemes, recent retirees and elderly people looking for a safe investment, and people who mortgaged their homes on financial advice to invest in Westpoint schemes.
Meanwhile, Westpoint’s former directors are currently under investigation by the Australian Securities and Investments Commission.
In April this year, Justice French, in Federal Court of Western Australian, ordered the seizure of properties, motor vehicles, maritime vessels owned in Australia and overseas by Westpoint directors.
In addition, Justice French ordered that until October 20, 2006, Oren Zohar, Brian McMaster and Mark Korda of KordaMentha Chartered Accountants, be appointed as individual receivers to all individual properties owned by Westpoint’s directors Norm Carey, Graeme Rundle, Richard Beck and John Dixon.
The Court has also ordered KordaMentha be appointed as corporate receivers to corporate properties owned by Richstar Enterprises Pty Ltd, Westpoint Realty Pty Ltd and Redchime Pty Ltd.
Westpoint’s foursome has also had travel restraint orders placed on them.
Justice French lambasted the foursome. In handing down his judgement and granting ASIC’s request.
“It is indicative of serious misconduct in the affairs of the companies and the very real possibility that there have been a number of there are aspects of the evidence suggestive of a ruthless disregard by the Westpoint Group’s controllers of the interests of investors and other creditors in the way in which funds invested and assets of companies within the Group have been dealt with.
“Other aspects of the evidence, particularly emerging from examination of the former directors of the Mezzanine Companies, are indicative of a degree of carelessness and indifference on their part to their duties as directors,” Justice French added.
By Nelson Yap
