Investors win bid to sue Great SouthernRACHEL DONKIN, The West Australian March 19, 2010, 6:15 am
Investors have won their bid to sue failed agribusiness giant Great Southern and its directors over the ill-fated Project Transform, after a WA Supreme Court judge ruled there was a "solid foundation" for legal action.
More than 700 investors last year filed a lawsuit against Great Southern, a subsidiary and its directors in a bid to recoup nearly $60 million invested with managed cattle projects that were later converted to shares under a company-orchestrated restructure.
The investors, among them former WA premier Brian Burke, alleged Great Southern and its directors had breached their duties to act in investors' interests by winding up the schemes months before the company's collapse.
Under current law, investors must gain court approval before launching legal action against a company in administration or liquidation to prevent already limited funds being chewed up in long and costly legal actions.
Great Southern liquidator Ferrier Hodgson had opposed the investors' lawsuit, arguing the case was "premature" and that investors had failed to adequately prove the value of their claim.
But Justice Rene Le Miere this week granted the group leave to sue, more than six months after documents were first filed.
"I find that the amounts and seriousness of the plaintiffs' claims and the degree of complexity of the legal and factual issues involved makes it appropriate for their claims to proceed by (legal) action," Justice Le Miere said in his ruling.
He was satisfied that the investors had "sufficiently identified" their alleged loss and damage.
Hugh McLernon, of litigation funder IMF which is bankrolling the class action, said yesterday the developments proved it was becoming increasingly difficult to litigate in Australia. Under a new ruling by the Australian Securities and Investments Commission, class actions are classified as managed investment schemes and must be registered as such, unless ASIC exempts the lawsuit from the cumbersome restriction.
IMF is awaiting the watchdog's approval to file a similar lawsuit on behalf of investors in Great Southern's forestry schemes.
