Auditing giant KPMG and research house Property Investment Research (PIR) are facing legal action over the collapse of the Westpoint property group.
Shepparton-based Wealthcare Financial Planning, which is being sued by two former clients over Westpoint, has applied to the Federal Court in Melbourne to bring KPMG and PIR into the proceedings to reduce its own liability.
KPMG was an auditor for Westpoint while PIR issued research about the group.
Former pharmacist Trevor Pollard and wife Joyce are suing Wealthcare and its principal Greg Roberts over failed investments in Westpoint’s York Street and Market Street mezzanine funds.
The Pollards lost $600,000 after investing part of a retirement nest egg in the Sydney properties.
Wealthcare is relying on recent changes to the Victorian Wrongs Act that has introduced the concept of proportional liability in negligence claims.
Under the changes, each person who is to blame for a loss has their liability proportioned to their actual responsibility.
The previous approach saw claims brought against those people with money to pay despite their level of blame.
Slater and Gordon lawyer Ben Phi, acting on behalf of the Pollards, has argued that the couple never saw KPMG or PIR reports and the Wrongs Act does not apply to the claims.
“The effect of this is that if Wealthcare is found to have substantially contributed to our loss, then they will be required to pay 100 per cent,” Phi said.
“To the extent that other parties – such as KPMG – contributed to that loss, then Wealthcare would be entitled to sue them in third party proceedings.”
The case is continuing.
