A Sydney law firm has garnered almost 600 expressions of interest for a new class action to challenge settlement terms agreed to in 2014 that handcuffed investors in the collapsed Great Southern scheme to years of loan repayments.
EQ Law director Sasha Ivantsoff told Investor Daily sister publication ifa the class action would challenge the validity of loans entered into by investors, either directly through Adelaide Bank Limited (ABL) or through the collapsed managed investment scheme’s subsidiary, Great Southern Finance (GSF), loan obligations of which are also owned by Bendigo Adelaide.
“In the  class action, group members were defined as people who had a loan with GSF or ABL, so you go into the question of is there a valid loan,” Mr Ivantsoff said.
“To prove you were a group member you have to prove there is a valid loan, you have to show the loan deed was validly executed, that there was a loan advance or a valid assignment, so if you can’t prove all those things you can’t prove the existence of a loan and if you can’t prove that you can’t be a group member.”
Following the collapse of Great Southern in 2009, Macpherson+Kelley Lawyers ran a failed class action against Bendigo and Adelaide Bank on behalf of 5500 investors who had outstanding loans with the bank relating to the investment scheme.
Settlement terms in the case tied all borrowers to the class and prevented any further legal action against the bank in relation to Great Southern loans.
“Armed with that [settlement] deed, the bank set out to recover outstanding loans and asserted the deed resulted in the loans being valid and that borrowers weren’t entitled to make any counter claims,” Mr Ivantsoff said.
“They sent out letters through solicitors containing representations to that effect that resulted in most people paying up.”
Mr Ivantsoff said EQ Law’s case would contend that the representations made by Bendigo and Adelaide were misleading, as subsequent cases had thrown open the validity of other investors’ loan documents.
“In 2018 there was a case of Howard against the bank and what Mr Howard said was ‘I don’t believe these loans are valid and you have to prove that they are’,” he said.
“What that resulted in was the bank being unable to prove the loan deeds were validly executed - they couldn't prove there was an advance from the lender to Great Southern and they couldn't prove the loans had been validly assigned. There were a series of other cases in NSW, Victoria and South Australia where the borrowers got the same results.”
Mr Ivantsoff said the firm had contacted more than 18,500 former investors in Great Southern, which had collapsed in 2009 owing more than $600 million to a significant number of advice clients.
“We’ve started a registration and as of 1:00 [Wednesday] we have 577 registered. We have indicated that we need 600 to make the case viable so we are more or less there,” he said.
“There’s been widespread support for the case - the investors are still aggrieved by what’s happened and they perceive an injustice in the way the case was resolved. They perceive an injustice in not being able to argue defences that would have otherwise been available to them but for the class action.”
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