A new layer of confusion has befallen the compensation actions of Storm Financial clients with fresh questions raised over the status of a number of legal proceedings and potential taxation ramifications for client payouts.
Last week, legal firm Levitt Robinson Solicitors successfully challenged Commonwealth Bank of Australia (CBA) over the termination of the firm as a borrower lawyer of the bank’s resolution scheme, paving the way for new action against CBA.
Levitt Robinson Solicitors principal Stewart Levitt would not comment on specific details of the case, only stating it was now business as usual.
“We are continuing our class action and we are also negotiating if we can with the bank as part of the normal processes,” Levitt said.
“And that relationship has effectively been normalised between ourselves and the bank and that we’re now behaving like solicitors normally do and banks normally do when they are being sued.”
In a letter to clients, the legal firm said it had resolved proceedings against CBA in the Supreme Court of New South Wales.
Clients had until 15 October to decide whether they wanted to access legal advice from Levitt Robinson outside of the CBA Storm resolution scheme.
A CBA spokesperson confirmed the borrower lawyer proceedings against Levitt were finalised last week, however, due to the confidential basis of the outcome the bank could not comment further.
“Mr Levitt has also brought separate Federal Court proceedings against the bank on behalf of Dr Anthony Oliver. The bank is defending that claim, which is also at an early stage,” the spokesperson said.
All but a handful of the 1120 clients had resolved their claims against CBA, a spokesperson for law firm Slater and Gordon said.
Action against the banks had created much confusion for many of the advice firm’s ex-clients who were frustrated by the delay in closure, former Parliamentary Joint Committee chair Bernie Ripoll said.
“We continue to liaise with ASIC as the regulator in terms of its progress with the Storm case, but people need to understand at the same time there are a number of court cases, there is an investigation by ASIC itself,” Ripoll said.
“There will be some resolution obviously in due course, but I’d be cautious in trying to circumvent the court and judicial processes which are currently underway.”
Storm Investors and Consumer Action Group co-chair Mark Weir said another potential concern was how the settlement payouts under the resolution scheme would be dealt with by the Australian Taxation Office (ATO).
“ASIC has undertaken to make enquiries in that regard on behalf of our members and I have also encouraged our members to navigate their way through the ATO website and seek a private ruling because I would assume there would be several permutations as a result of the resolution scheme and it probably won’t be a generic solution,” Weir said.
