More than 170 investors caught up in the collapse of property group Westpoint have been dealt another blow, with the Federal Court giving big ticket insolvency firm KordaMentha first dibs at a $2 million insurance payout.
In the face of objections from the corporate watchdog, Justice Neil McKerracher has ruled that KordaMentha executive director Russell Morgan sits at the top of the pecking order because of his efforts as liquidator of failed planning firm Brighton Hall.
Mr Morgan has secured a $2 million payout from Allianz Australia as settlement of claims by former clients who had put their savings into apartment development finance schemes promoted by Westpoint and a network of supportive financial planners.
Westpoint collapsed in November, 2005, facing a major investigation by the Australian Securities and Investments Commission. Investors lost most of their money amid long delays in projects and concerns about the stability and sustainability of its finance scheme.
Brighton Hall had advised 171-plus clients to invest in Westpoint schemes, ultimately exposing it to claims of more than $14 million from clients angered at being put into products allegedly providing only a moderate return for very significant risk. It went into liquidation in September, 2007.
The $2 million Allianz payout represents the best chance of a return for clients.
The Corporations Act dictates that after expenses incurred in getting a payout are taken out, the proceeds must be paid to the actual claimants.
Mr Morgan argued in the Federal Court that the term expenses should included his own remuneration and that of his staff. ASIC vigorously opposed this claim.
Justice McKerracher said each client had depended on Mr Morgan to pursue their claims and to recover money from Allianz.
As a result of Mr Morgan's labours, the claimants would receive a benefit they would not have otherwise received.