Financial Review - 16/3/2011Investors who lost money in the...

Financial Review - 16/3/2011

Investors who lost money in the collapse of agribusiness group Great Southern will proceed with a class action against Bendigo and Adelaide Bank after a court accepted an amended claim.

Five months after it struck out the original case, the Victorian Supreme Court has ruled there is enough new information in the latest claim to warrant a case being brought against Bendigo and other lenders.

Great Southern, a Perth-based manager of olive, timber and almond agricultural schemes, collapsed in May 2009 leaving thousands of investors out of pocket.

More than 2000 people who borrowed money to pour into the schemes are trying to have loans from Bendigo and others declared void by alleging links between lenders and Great Southern companies.

Many investors have refused to make loan repayments while court proceedings play out, despite threats from Bendigo that their credit records would be tarnished.

Law firm Macpherson + Kelley, which is acting on behalf of investors, said it had overcome a major hurdle in the case after the court threw out the original claim in October, raising doubts about its viability.

"It is full steam ahead with the class action", M + K principal Ron Willemsen said. "This is a very significant outcome".

A spokeswoman for Bendigo, which has launched its own legal proceedings against some borrowers who have refused to repay loans, said the claim against the bank had no foundation and vowed to fight it in court.

"It has taken M + K almost a year to prepare a statement of claim that the court would allow to proceed", spokeswoman Lauren Treacy said.

"Bendigo and Adelaide Bank welcomes the opportunity to have the claims heard. The bank is satisfied these claims have no foundation and we will vigorously defend the claims."

The class action relates specifically to timber plantation schemes run by Great Southern in 2005 and 2006.

However, Mr Willemsen said it could be the first in a series of class actions against Bendigo and other lenders.

"Claims relating to other [Great Southern] schemes will be lining up behind this claim," he said.

"This is the first of what could be a dozen. It is a very significant breakthrough in the claim and we will be going ahead full steam."

Mr Willemsen said more investors could join the class action now that the court had opened the way for it to proceed.

"About 2000 investors have signed up to the claim to date," he said.

"In light of the court's decision, I expect that number could easily double rapidly. I'm aware of many investors have been staying on the sidelines, watching what happened... before deciding whether to join the case."