A Supreme Court judge has cleared the way for 2000 Great Southern clients to proceed with class action claims against Bendigo and Adelaide Bank over unpaid loans.
On 11 March, Victorian Supreme Court judge Justice Clyde Croft said investors in the 2005 and 2006 Great Southern plantation schemes had earned the right to move ahead with their claims under various provisions of the Corporations Act and the ASIC Act.
Macpherson + Kelley (M+K) principal accredited commercial litigation specialist Ron Willemsen said last Friday's decision now allowed the firm to file its amended statement of claim and was a huge result for clients.
"This very significant breakthrough now clears the path for similarly based claims to be filed for all the scheme types sold by Great Southern through the years 2005 to 2008," Willemsen said.
He said many of the clients who invested in that project borrowed money from Great Southern Finance Pty Ltd and continued to challenge the validity of the loans, including the loans which were subsequently sold to Bendigo and Adelaide Bank or Javelin Asset Management.
Willemsen said according to an announcement to the Australian Securities Exchange on 4 August 2009, the bank's exposure to borrowers in Great Southern managed investment schemes stood at about $550 million.
"Those investors who are represented by Macpherson + Kelley will now press ahead with their available claims which, if ultimately successful, could see orders made declaring the subject loans void and requiring Bendigo and Adelaide Bank and others to fully or partially refund money previously paid under those loans," he said.
"The outcome will depend on proof that Great Southern Finance as the company which originated the loans acted unlawfully during the course of procuring and establishing those loans."
He said the class action case would also be looking to the directors of Great Southern Managers Australia Ltd - John Young, Cameron Rhodes and Philip Butlin - and the company itself for an award of damages on behalf of cash investors.
The case for cash investors would be based on claims ordinarily covered by professional indemnity insurance policies, he said.
Great Southern's sales revenue from just the 2005 plantation scheme alone was $241 million in its financial year ended 30 September 2005, M+K said.
In December last year, M+K was ordered to pass on an amended statement of claim to legal representatives of Bendigo and Adelaide Bank after the banking group was successful in striking out select information in the litigator's statement of claim.
