Professional Investment Services (PIS) has derailed a multi-million class action by former clients who invested in failed property group Westpoint.
In a judgement handed down on December 12, which was under appeal yesterday, New South Wales Supreme Court judge Peter Young stopped 41 investors suing PIS as a group on the grounds that their argument lacked “commonality of representation and reliance”.
Lead plaintiff Bruce Noel Jameson was in court yesterday appealing an order to pay legal costs.
Each investor in the class action, which is backed by listed litigation funder IMF and law firm Slater and Gordon, will now have to sue PIS in separate claims.
The investors lost an average of $100,000 each when Westpoint’s Ann Street project in Brisbane collapsed in late 2005.
They claim PIS planners gave them inappropriate advice and made misleading statements about the project, which was later found to be an unregistered management investment scheme.
The investors were allegedly given guarantees from the planners that the product was safe but none received a product disclosure statement.
In July Deacons lawyer Paul Robinson, acting for PIS, sought an order to stop the investors from pursuing the company together, arguing that there were “very different settings in which advice was delivered and the guarantee representations made”.
PIS set aside a $17.5 million last year to defend Westpoint claims, which caused an 84 per cent drop in its 2006/07 net profit to $1.7 million.
“We’ve always said that each of these cases are individual cases and shouldn’t be combined. The court’s decision vindicated that,” PIS managing director Graeme Evans said.
In November ASIC announced it intended to sue PIS on behalf of 247 investors for $22.8 million.
Around 825 investors lost $77.5 million in Ann Street, of which $27.7 million was channelled through financial planners.
