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IMPORTANT NOTE FOR THE BENEFIT OF CLASS MEMBERS

These answers endeavour to answer the questions which have been most frequently asked by Banksia depositors (debenture holders). The answers given below are therefore in very general terms.

The answers are not given by way of, or in substitution for, legal, financial or any other sort of advice. They are not tailored in any way to any debenture holder’s individual circumstances. If you need legal, financial or other advice, it is strongly recommend that you speak to your solicitor, accountant or financial adviser.

Updates

UPDATE ON THE BANKSIA CLASS ACTION

Dear Banksia debenture holders

On 20 March 2018, Banksia debenture holder, Wendy Diane Botsman filed an application for leave to appeal the orders made by the Honourable Justice Croft on 30 January 2018 approving the settlement of claims made in the Banksia Proceedings in the amount of $64M.

The leave to appeal application was heard in the Supreme Court of Appeal over two days on 8 June 2018 and 19 June 2018.

The first, second, third, sixteenth, seventeenth and eighteenth respondent’s made written and oral submissions opposing the proposed grounds of appeal and supporting the terms of the Settlement Deed.

Judgment of the leave to appeal application is reserved.

Given the uncertainty surrounding the outcome of the appeal and the proximity to the new year, we do not expect to make any future distributions to debenture holders in 2018.

We will provide debenture holders with an update on the outcome of the appeal in due course.

Thank you for your continued support.

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On 30 January 2018, pursuant to sections 33V and 33ZF of the Supreme Court Act 1986 (Vic) (the Act), the Supreme Court of Victoria approved the settlement of the claims made in the Banksia Group Proceeding (S CI 2012 7185) by the Plaintiff claims against The Trust Company (Nominees) Limited (the Third Defendant) on the basis of the Deed of Settlement and Release executed by the Plaintiff, First and Third Defendants.

As well as settling the Plaintiff’s claim in the Banksia Group Proceeding, Banksia’s own claims against The Trust Company (Nominees) Limited brought in a separate proceeding (“Liquidators’ proceeding”) have been settled as part of the settlement.

To settle the claims made in both the Banksia Group Proceeding and the Liquidators’ proceeding, The Trust Company (Nominees) Limited will:

  • pay $64 million;
  • release Banksia from an existing claim for $3.96m for additional remuneration in respect of additional work performed by the trustee in a period of 16 months from 25 October 2012 to February 2014; and
  • release Banksia from any further claims for remuneration (as yet unquantified).

The Court has specifically approved the payment of the following sums from the sum to be paid by The Trust Company (Nominees) Limited:

  • the Plaintiff’s claim for reimbursement for legal costs and disbursements incurred by the Plaintiff’s litigation funder on behalf of the Plaintiff to the litigation funder;
  • the litigation funder’s commission; and
  • the Plaintiff’s claim for reimbursement.

The parties are to seek the Court’s approval of a settlement scheme for the distribution of the remainder as soon as possible.

The Court’s orders made on 30 January 2018 are available for download in respect of the Banksia Group Proceeding and the Liquidators’ proceeding.

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SETTLEMENT OF CLAIMS AGAINST THE TRUST COMPANY (NOMINEES) LIMITED (“TRUSTEE”)

11 December 2017

Settlement: The Plaintiff has entered into a settlement of his claims made against the trustee in the Banksia Group Proceeding. The Plaintiff’s claim against the trustee was to recover a sum in excess of $200 million (inclusive of interest from 24 December 2012).  The settlement will only take effect if it is approved by the Supreme Court of Victoria.

As well as settling the Plaintiff’s claim in the Banksia Group Proceeding, Banksia’s own claims against the trustee brought in a separate proceeding (“Liquidators’ proceeding”) will be settled as part of the settlement. Banksia’s claim against the trustee is for approximately $170 million.  The loss claimed by Banksia overlaps with the Plaintiff’s claim in the Banksia Group Proceeding.  The law prevents debenture holders recovering more than the total amount of their loss.

To settle the claims made in both the Banksia Group Proceeding and the Liquidators’ proceeding, the trustee will:

  • pay $64 million;
  • release Banksia from an existing claim for $3.96m for additional remuneration in respect of additional work performed by the trustee in a period of 16 months from 25 October 2012 to February 2014; and
  • release Banksia from any further claims for remuneration (as yet unquantified).

Settlement approval: The Court hearing of the Plaintiff’s application for the approval of the settlement has been listed for 30 January 2018 before the Honourable Justice Croft of the Supreme Court of Victoria.

Notice to group members: The notice to group members represented in the Banksia Group Proceeding approved by the Honourable Justice Croft at a hearing on 8 December 2017 is available for download here: DOWNLOAD NOTICE TO GROUP MEMBERS.  The notice to group members provides more details about the settlement.  If you wish to oppose the settlement, the notice to group members provides details of the steps you must take by 4pm on 19 January 2018.

Deed of settlement: Subject to their agreeing to keep its contents confidential, group members represented in the Banksia Group Proceeding are entitled to inspect the deed of settlement.  The deed is available for inspection during business hours at the offices of the Plaintiff’s solicitors, Portfolio Law at Level 3, 362 Little Collins Street, Melbourne VIC 3000.

Claims against Banksia: The Plaintiff has not settled his claims made against Banksia itself.  However, the prospect of any recovery from Banksia is uncertain as Banksia has been placed into liquidation and orders were made by the Supreme Court of Victoria on 1 May 2015 that the Plaintiff had leave to proceed against Banksia “provided that it shall not enforce judgment without leave of the Court”.

Banksia is pursuing claims against its insurance broker and insurers and Banksia is hopeful of recovery in those actions (insurance claims).  The Liquidators (acting as Special Purpose Receivers) hold approximately $14 million.  While some of those funds will be used to meet the costs of running the insurance claims and in conducting the liquidation, the remainder supplemented by any sum awarded in the event of success in the insurance claims is expected to be available for distribution upon the conclusion of the insurance claims.  The Plaintiff continues to claim an entitlement to all surplus money available from the Liquidators / Special Purpose Receivers, and is hopeful of facilitating a further distribution to debenture holders in due course.  Based on the Plaintiff’s understanding, such a distribution is expected to be in excess of a further 2 cents for each dollar of debentures.  Further updates concerning the claims made against Banksia will be made via this website.

Trial: As a consequence of the Plaintiff entering into the settlement with the trustee, the trial of the Banksia Group Proceeding which had been scheduled to commence on 12 February 2018 has been vacated by the Supreme Court of Victoria.  If the settlement is not approved, new dates for the trial of the Plaintiff’s claims will need to be set down by the Court.

Change of address details

Should you wish to notify of any change of address details, please do not hesitate to contact Link Market Services on 1300 554 474 or banksia(Replace this parenthesis with the @ sign)linkmarketservices.com.au for BSL debenture holders and (02) 8280 7920 or cherry(Replace this parenthesis with the @ sign)linkmarketservices.com.au">cherry(Replace this parenthesis with the @ sign)linkmarketservices.com.au for CFL debenture holders.

What is a group proceeding and is it the same as a class action?

Class actions and group proceedings are really the same thing.  They are different ways of describing legal proceedings whereby one or a small number of representative plaintiffs can take legal action on behalf of all persons who have similar claims.  The Banksia Class Action is a good example of such proceedings.  All of the more than 16,000 depositors in Banksia Securities (the debenture holders) have essentially the same claims against the same defendants.  The only differences between them are the amounts they have lost.

Could I be liable for costs?

No.  Represented class members cannot be made liable for the costs of a class action.  Only the named plaintiff(s) can be liable for adverse costs orders. If the case is successful, the legal costs incurred in running the case will be recovered from the amount paid by the defendants. No member of the represented class will be asked to pay anything by way of legal costs out of their own pocket.

What will I get if we win?

If the case is successful (whether by court judgment or settlement), there will be an amount of money to be paid by the defendants (or some of them). It is not possible at this stage to estimate how much the amount of money may be.  We expect that the amount recovered (less the costs of running the case and any fee payable to a litigation funder) will be shared pro-rata between all the members of the Banksia class action. In other words, all members of the class will likely receive the same number of cents in every dollar they have lost in the collapse of Banksia Securities Limited.

How long will the case take?

How long the case will take depends upon a number of variable factors which are presently unknown.  It is therefore difficult to estimate how long it will take for the case to conclude.  We expect that the case will go to a fully contested court hearing at a trial commencing on 12 February 2018.  The trial will last for between 10 -12 weeks.  There is then the possibility of an appeal, which might extend the time for resolution of the case to as much as 2 further years.

Is there a litigation funder involved in the case and what will their fee be?

Mr Laurence Bolitho, in his capacity as representative plaintiff and following receipt of independent legal advice, has agreed to appoint BSL Litigation Partners Limited (“BSLLP”) as the Banksia Class Action funder and to enter into a Litigation Funding Agreement with BSLLP on mutually acceptable terms and conditions. A Sample Litigation Funding Agreement on the same terms has been sent to all debenture holders. We are asking each group member of the Banksia Class Action to enter into the same Funding Agreement with BSLLP.

The Funding Agreement contemplates among other things that, subject to Court approval, BSLLP will be entitled to the recovery of the legal costs and disbursements which it has funded plus a success fee of a maximum 30% out of the net settlement or judgment proceeds, if the class action is successful. If the class action is unsuccessful then BSLLP will not be entitled to recover any money it has expended on the case.

BSLLP now pays for all legal costs plus disbursements (such as Counsels’ fees and witness expenses) and will pay any amounts which are ordered against Mr Bolitho by way of security for or payment of costs. Only Mr Bolitho can be made liable to pay or give security for costs, not any other member of the Banksia Class Action group.

How can I be sure that your legal fees are reasonable?

The legal fees which are charged (including all disbursements paid to barristers, witnesses etc.) are subject to a process known as taxation which is undertaken by an Associate Justice of the Supreme Court of Victoria whose job it is to ensure that the fees charged are reasonable and proper.

Who are you suing?

The plaintiffs are suing Banksia Securities Ltd and the trustee company which acted as the trustee for debentureholders of Banksia, The Trust Company (Nominees) Ltd.

Why are you suing them?

The case alleges a number of breaches of duty by each of the defendants, including statutory duties arising under the Corporations Act, and common law and equitable duties which are owed by persons in their positions to the depositors in Banksia.

What 3 things make you confident of winning?

  1. The Banksia receivers have concluded that the audited accounts of Banksia and therefore its prospectuses (which heavily relied on the audited accounts) were very seriously wrong.
  2. The trust company ought to have known that the audited accounts and the prospectuses of Banksia were very seriously wrong well before Banksia collapsed.
  3. The extent of the losses and the speed with which Banksia collapsed strongly suggest that there were serious failures of management and prudential oversight of Banksia by the defendants prior to their collapse.

How much are you claiming?

The plaintiffs are claiming all of the losses which will ultimately be suffered by the debenture holders of Banksia. At the moment those losses are estimated by the receivers to be approximately $120 million in total.