Justice Dixon ordered $11.7 million in compensation be paid to Banksia’s receivers which will ultimately be distributed to debenture holders.
Justice Dixon ordered that lawyers Norman O’Bryan SC and Michael Symons be struck off the practise roll while Anthony Zita and Alex Elliott will have to show cause at a later date as to why they should not be struck off.
The long-running litigation followed the appointment of a contradictor by the Supreme Court who raised issues of ‘disentitling conduct’.
Justice Dixon referred to an email, sent by Mr O’Bryan to Mr Symons, his instructing solicitor, Mr Zita, and the managing director of the litigation funder, Alex Elliott:
“Provided Mark [Elliott] can do a satisfactory and enforceable deal with Lindholm on the division of these spoils (which will be confirmed between them tomorrow), we can do this deal.”
Justice Dixon said the spoils, had they been obtained, would have been ill-gotten.
“The conduct in winning and dividing them was dishonourable,” he said.
“The truth was obfuscated. The perpetrators went to extraordinary lengths to conceal their misdeeds. Others stood by, failing in their duty to protect. About 16,000 elderly investors in a failed company had suffered substantial financial loss. The process of exposing these misdeeds was laborious, costly and delayed. The victim was the proper administration of justice.”
Two of the investors in the failed scheme refused to accept that the litigation funder and legal team were claiming reasonable and proportionate expenses and commissions.
“Their objections ultimately thwarted the proposed division of the spoils and exposed the misconduct,” Justice Dixon said.
The litigation funder, Australian Funding Partners Pty Ltd (AFP), sought court approval of a funding commission of $12.8 million (plus GST) and legal costs and disbursements of $4.75 million (plus GST) to be deducted from the settlement sum.
The contradictor’s case was that AFP was disentitled from recovering any amount (including its claims for costs) by reason of its dishonesty and misconduct, and the dishonesty and misconduct of its agents, Mr O’Bryan, Mr Symons, Mr Zita and his firm, Portfolio Law.
The same claims were made against Alex Elliott and expert witness Peter Trimbos.
Banksia Securities Ltd was an unlisted public company, previously based in Kyabram, that acted as a non-bank property lender.
In October 2012, Banksia collapsed, owing approximately $663 million to more than 16,000 debenture holders.
Banksia’s assets included its outstanding loans made to third party borrowers, which totalled approximately $527 million at the time of the receivers’ appointment.
Mark Elliott, father of Alex Elliott, died in February 2020.
Justice Dixon said in June 2020, Mr Trimbos, a costs lawyer who had filed four previous expert reports on behalf of AFP in the proceeding which opined that the legal costs claimed were fair and reasonable, issued a further supplementary expert report, in which he recanted his earlier reports, and claimed that he had been misled.
“Until that point, AFP had sought nearly $20 million in costs and commission in the remitter, and strenuously denied the contradictor’s allegations of disentitling conduct,” Justice Dixon said.
In July 2020, AFP filed a document that made extensive admissions, including of dishonesty by AFP, Mr O’Bryan and Mr Symons, but continued to press claims for legal costs and commission in a lesser sum of nearly $7 million.
“As my findings make clear, AFP never had a proper basis for its claim, which was a fraud,” Justice Dixon said.
The trial of the remitter commenced on July 27, 2020 and after the opening address both Mr O’Bryan, and later Mr Symons, withdrew any defence and consented to being struck off.
By August 2020, AFP abandoned its claim for a funding commission and most of its claim for legal costs and disbursements, claiming only $234,375.71.
Mr Trimbos died in September 2020.
In his conclusion Justice Dixon said the fraud had been uncovered through the “bravery” of Wendy Botsman and Keith Pitman, who refused to accept the costs claim.
“The falsified claim for costs that they identified ultimately failed,” he said.
“The civil justice system protected the litigants, but not without some damage in the public eye to its integrity. It is infinitely more difficult to regain the community’s trust than it is to condemn, in the strongest possible terms, the appalling conduct I have documented.”
