Court throws out Willmott forestry scheme class-action settlement
The Federal Court has refused to approve a piecemeal class-action settlement for victims in the Willmott Forests managed investment schemes after finding it was not fair and that returns to investors did not match the millions they had paid to fund the law firm running the case.
More than 3500 investors were caught up in the collapse of Willmott Forests which went under in 2010 owing its banks, most notably the Commonwealth Bank, about $200 million. Investors had ploughed $400 million into Willmott Forests schemes.
The settlement offer was put forward by Macpherson and Kelley Lawyers (also known as M+K), which were representing some of the investors in the four separate class actions. The four class actions were heard together by Federal Court judge Bernard Murphy.
The court's refusal of the Willmott settlement comes after the court approved a highly controversial deal put forward by M+K in 2014 in relation to the Great Southern schemes, which saw the law firm take $20 million of the $23 million compensation in legal fees.
M+K was recently criticised over its handling of the Great Southern class action in a recent Senate Inquiry report on the failure of managed investments schemes that focused on the 2009 collapses of Timbercorp and Great Southern.
On Monday, Justice Murphy found the Willmott settlement gave preference to M+K clients over those who had chosen not to be represented by the law firm in the matter.
"The Court will not approve a settlement unless it is satisfied that the settlement is fair and reasonable having regard to the interests of the class members who will be bound to it, including by not preferring one group of class members over another," Justice Murphy said.
Justice Murphy also found the settlement offer put forward by M+K gave preference to investors who had participated in M+K and even then the payout dwarfed the legal fees paid by investors to M+K Lawyers.