In a long-awaited ruling, Australian Executor Trustees is expected to be ordered to pay $80 million in compensation plus costs to victims of the SEAS Sapfor forestry scheme.
On 27 September, the Supreme Court of New South Wales ruled in favour of David Kerr in his capacity as additional trustee of the SEAS Sapfor forestry scheme on behalf of the covenant-holders.
The SEAS Sapfor scheme invested in timber on behalf of covenant-holders but investors ended up losing the entirety of their investment.
Australian Executor Trustees was formerly owned by IOOF until it was sold to Sargon last year.
Litigation funding company IMF Bentham’s investment manager, Oliver Gayner, said: “Naturally we are delighted on behalf of the covenant-holders that the injustice they have suffered has been recognised by the Court, and the trustee whose sole job was to protect their interests has been found liable to pay them compensation. Given the Court’s clear and unambiguous ruling we hope the matter can now be quickly and finally resolved in the interests of all stakeholders.”
Simon Morris, partner at commercial law firm Piper Alderman, said: “This is a hugely satisfying and long-awaited outcome for covenant-holders who, as found by Justice Stevenson, have been let down by the professional trustee they entrusted to protect their investment.
“For lawyers and corporate trustees this decision will rebound for the things it says about the responsibilities of corporate trustees, their advisers and equitable compensation. There are salutary lessons here for corporate trustees about the consequences of their failures when but for their breach a loss would not have been suffered.”