what does this mean

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Opes client loses court bid
Email Print Normal font Large font AdvertisementChris Zappone
May 2, 2008 - 10:55AM
Page 1 of 2
Clients of collapsed stockbroker Opes Prime learned they do not have a legal claim to recovering their shares, according to a Federal Court ruling this morning.

Justice Ray Finkelstein rejected the argument of lawyers for Beconwood Securities, who claimed that their client retained ownership of shares seized by secured creditor ANZ Bank in the wake of the stockbroker's failure in late March.

In a 26-page ruling released this morning in the Federal Court in Melbourne, Justice Finkelstein found that the agreement signed by Beconswood Securities was valid and the plaintiff had "equity of redemption or other equitable estate or equitable interest" once the shares were lent to the stockbroker.

The ruling dashes expectations that clients could eventually sue to recover their shares from ANZ.

ANZ shares rose as much as 4.1%, or 90 cents, to $22.57 in early trade, tracking gains made in the financial sector this morning.

Beconwood Managing Director Paul Choiselat said he was disappointed and was yet to decide whether to appeal.

The ruling "was not totally unexpected because the document was an amended form of a document used extensively in the market," Mr Choiselat said.

"We thought there were holes in it," he said. "The judge obviously has a different view."

But Mr Choiselat hinted at the nature of future potential litigation against ANZ, saying today's ruling could bolster arguments made about ANZ's position as legal shareholder.

"We felt they should have lodged substantial shareholder's notification for what (ANZ) alleged," he said. "Now what they (ANZ) alleged has been supported by court."

The Opes Prime client sought to force ANZ to stop its fire sale of shares related to the $1.3 billion collapse of the Melbourne-based stockbroker.

The test case was expected to provide legal grounding for further court cases arising from Opes Prime's failure by determining if Opes clients who lent shares to ANZ retain a right to get their property back.

The test case in the matter was initiated by Mr Choiselat who vested with Opes shares valued at $7 million when he borrowed $1.35 million to buy more shares.

ANZ Bank's direct total exposure to Opes Prime is about $700 million. The bank's receiver, Deloitte, said recent calculations put the cost $50 million higher than estimated after the stockbroker's collapse.

Today's judgement follows two legal decisions that could tip the field of future litigation against ANZ.

Yesterday Justice Finkelstein granted a temporary injunction halting an Opes Prime-related entity from selling 1.23 million shares of Restaurant Brands of New Zealand allegedly belonging to holding company Phisci.

Gary Higgon of Warrandyte, who has been heavily involved in Pizza Hut and KFC chains in Australia, wants the Federal Court to force Opes Prime's receivers to accept $394,826 and erase his debt to Opes.

The injunction will expire on May 7.

Those court orders came days after the announcement of a Takeovers Panel decision that could have ramifications for future ANZ-related cases.

On Monday the Takeovers Panel found ANZ fell afoul of the law when it failed to lodge a substantial shareholder notice after it took control of 26% of biotech company BioProspect.

The Takeovers Panel declined to take further action after ANZ agreed to sell down its stake in the Brisbane company to under 5% within one year and abstain from voting any BioProspect shares.

The bank also pledged to hand over the remaining shares in the company after one year if it holds more than 5% of the thinly traded stock.

ANZ has also promised to sell down shares on the ASX in lots no greater than 5% of BioProspect shares, over three-day periods.


BusinessDay with Leonie Wood, The Age