Great Southern investors try on second bank suit
INVESTORS who lost money when Great Southern collapsed in 2009 have launched a fresh attempt in the New South Wales Supreme Court to set aside loans from Bendigo and Adelaide Bank.
INVESTORS who lost money when Great Southern collapsed in 2009 have launched a fresh attempt in the New South Wales Supreme Court to set aside loans from Bendigo and Adelaide Bank.The bank is suing a large group of its customers who stopped paying interest on loans they took out for investments in agricultural schemes. The customers want to cross-claim against the bank and allege that its links with Great Southern make it liable for claimed misleading and deceptive conduct by Great Southern.In June, Justice Clifford Einstein summarily dismissed cross-claims by two borrowers, Adam Cairncross and Elite Advertising Group Pty Ltd.On Friday, Mr Cairncross and Elite, who lead a group of 300 borrowers advised by solicitors ERA Legal, applied for leave to file reformulated cross-claims.Their barrister, Robert Newlinds, SC, told Associate Justice Richard Macready that the matter had "an unfortunate history".Not only had Justice Einstein dismissed their attempt to bring cross-claims, but another group of ERA clients in substantially the same position "made a similar application to the County Court in Victoria and lost", Mr Newlinds said.The Victorian decision was handed down on August 26.There were "large differences" between the pleadings in the dismissed cross-claims and the new ones, he said.Mr Cairncross and Elite each borrowed about $500,000 in 2007 from Adelaide Bank, which later merged with Bendigo Bank, fortax-effective investments in Great Southern wine-grape and olive schemes. The bank sued in September 2010 and the borrowers filed cross-claims in December, which were amended several times before Justice Einstein dismissed them.Mr Newlinds said Great Southern referred prospective investors to the bank, a "preferred financier", and the bank knew or ought to have known that the product disclosure statements for the schemes were misleading or deceptive.A feature of his clients' case was "a rather complicated and surprising power-of-attorney system" under which Mr Cairncross's loan agreement with the bank was signed on his behalf by Great Southern executives.Nicholas Kidd, barrister for the bank, said that after "propounding claims which the court has found to be untenable", the borrowers were "now seeking in effect to commence the procedure again"."In our submission, the borrowers have had their opportunity and there's no justification in anything that's before your honour today for why yet a further indulgence should be given to the borrowers a year after the proceedings were commenced," Mr Kiddsaid.Associate Justice Macready reserved his decision.