Gunns Tamar
Investors in Tasmania’s failed eucalypt plantation managed investment schemes are suing the estate of the late Gunns Ltd boss John Gay and former Tasmanian premier Robin Gray. The investors have also been given approval to sue two of Gunns’ insurers as well. Source: Timberbiz
The investor-growers say they lost “substantial amounts of money” in six of the flopped Woodlot Projects.
Gunns operated a number of the schemes across Tasmania, charging investors to manage and harvest the plantations and agreeing to buy the timber they produced.
But like many similar schemes, the Woodlot Projects were unsuccessful, and growers lost substantial amounts of money.
When the company collapsed in September 2012, it owed debts of an estimated $3 billion, making it one of the largest corporate collapses in recent decades. Thousands of ordinary investors and farmers lost their money.
From the time it became a top 200 company in the early 2000s, Gunns attracted controversy for its logging of Tasmania’s prized old growth forests, its poor environmental practices, its plans for a pulp mill and for its participation in a tax-minimisation plantation scheme.
In December last year, according to a newly published Supreme Court of NSW judgment, the controversial forester and its now-liquidated subsidiary Gunns Plantations Ltd (GPL) were removed from the proceedings.
That left nine defendants, including Robert Watson and Erica Gay representing the estate of the late John Gay – the Gunns’ managing director who died last year after the $2 billion pulp mill project failed and after he was convicted of insider trading.
Other defendants include former Gunns chairman and Liberal politician Robin Gray and GPL chairman Paul Teisseire and Gunns company secretary Wayne Chapman.
Now, the court has agreed that insurers Catlin Australia and Chubb Insurance can join the list of defendants that may potentially be forced to compensate investors.
It is alleged that the GPL directors failed to ensure performance of maintenance services and payment of the forestry right fees by requiring that sufficient funds be kept covering the costs, and by ensuring their agents were performing the required services.
It is also alleged that between 2002 and 2011, GPL breached its obligations by advancing about $486 million to Gunns from money it held in trust for growers.
The investors claim that between 2004 and 2009, GPL paid dividends to Gunns of $118 million and that the company’s directors caused losses to growers through “ineptitude and oversight”.
Justice Michael Ball said he didn’t accept an argument from the insurers that they were entitled to disclaim liability on the basis of a conflict of interest exclusion and a lenders liability exclusion.
However, he ordered the investors, represented by Giabal Pty Ltd and lawyer Geffrey Underwood, pay the first nine defendants’ court costs for amending their claim.
