Backed by an Australian leading litigation funder, IMF Bentham Limited thousands of Australian retirees, who lost everything after investing in a forestry scheme in the 1980s, will finally get their day in court against IOOF. The Supreme Court of NSW has scheduled the hearing over eight days from 1 July 2019. Source: Litigation Finance Journal
The investors’ lawyers, Piper Alderman, allege that IOOF subsidiary, Australian Executor Trustees (AET), failed in its duty as security trustee to protect the investors’ interests in the Southern Australian Perpetual Forests (Sapfor) scheme.
Investors in Sapfor, known as “Covenantholders”, were promised a safe long term investment into land and trees in Mount Gambier’s green triangle area, but in 2012 saw their investments reduced to nil as a string of corporate blunders allowed the scheme assets to be consumed in the insolvency of Tasmanian forestry giant Gunns.
It is claimed AET acted negligently and in breach of trust by prematurely releasing the scheme’s security arrangements before receiving sale proceeds worth $55m. The money was due to the Covenantholders, but never reached them – instead Gunns used it to repay its debts to bankers.
Covenantholder Peter Hickson, from Penrith, NSW, said:
“I purchased my 1983 covenant in early 1984 and paid it off over several years with some effort. The plan was deliberate to have a long-term investment in what I thought was a reputable company.
“I trusted them and feel betrayed. They wouldn’t tell me anything.”
“I rang them a lot of times and got absolutely nowhere. There didn’t seem to be anybody in particular looking after the matter. It seemed to float around the office.”
“I’m a registered nurse and if I ever stuff up I would have to go before the registration authority. These people should face the appropriate regulating body. They should be held accountable for their actions. They should have their credentials withdrawn.
“Following the sale of 30 years of timber plus land valuation naturally I expected a return.”
Mr Hickson said he and his family faced hardships in paying off the covenant.
“I had a young family at the time and I struggled to pay it off. I was delighted when I did. My wife got sick during the middle of it all and then, in 1990, she died. I didn’t have the money at the time and had two young children (two boys) and had to bring them up.”
“I didn’t do anything wrong but lost the lot because they pinched it.”
Another Covenantholder said
“We were a young couple with three small children and only one wage when we believed the SAPFORagent and his promise of benefits from growing trees which we love…my prayer is that there is justice for the many cheated of their rights”
The Covenantholders are represented by leading law firm, Piper Alderman. Partner Simon Morris said:
“This is a remarkably simple case. The bundle of rights that protected Covenantholders’ investment included Covenantholders holding security over the scheme assets. That security was to remain in place until Covenantholders received the proceeds from the sale of their assets. The negligence is that upon the sale of the scheme assets the security trustee, AET, as advised by Sparke Helmore lawyers, inexplicably consented to the security being released without the Covenantholders also receiving the proceeds from the sale of their assets. The result was the Covenantholders went from being secured for the full value of their investment to losing everything. These Covenantholders have been badly let down by the professionals whose job it was to look after their commercial interests. Fortunately our legal system allows third-party funding so these wronged individuals can afford to ‘have their day in court and achieve some redress’”.
Oliver Gayner of IMF Bentham said:
“Many Covenantholders lost their retirement funds when this scheme went under, but when they tried to enquire what had happened they were met with a ‘wall of silence’. IMF is proud to be standing behind the Covenantholders and Trustee David Kerr at RSM Partners. We hope with our support they will finally see the justice they deserve.”
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