The SR Group represents a group of 116 individuals and entities, each of whom was a client of disgraced Sydney based financial adviser. The financial adviser advised each of their clients to invest in the a managed investment scheme, without regard to each individual’s needs, wants or desired investment outcomes. The financial adviser did so without disclosing their close relationship with the managed investment scheme or the exorbitant commissions they received for promoting the scheme.
The Federal Court has clarified the scope of the releases that may be agreed by a lead applicant in a class action. It has stated very clearly that under the legislation governing class actions, the release can only relate to the claim the class action. The lead application has no power to grant a release in relation to things beyond the claim in the class action.
The issue arose in Dillon v RBS Group (Australia) Pty Limited (No 2)  FCA 395. Mrs Dillon sued RBS Group in relation to losses sustained by her and others in relation to exotic financial products known as ‘instalment warrants’. The case settled and as is typical in cases of this kind, RBS Group required each group member to sign a lengthy document containing, among other things, a release of RBS from any further liability by all group members in relation to issues raised in the proceedings.
The necessity of requiring group members to sign such a document prompted Lee J to consider the “important points of principle” about the scope of the proposed releases. It is an important point because defendants often ask for a release of all liability, whether or not connected with the issues in the case. A release of all liability would preclude group members from pursuing other claims they might have against a particular defendant. Lee J held that a release that went beyond the claim in the class action could not be maintained.
This decision has significant consequences. In the Great Southern litigation, a release was contained in the Deed of Settlement that clearly went beyond the scope of the class action. Bendigo and Adelaide Bank, in the course of its recovery action, has relied on that release to assert that borrowers have no defences to the bank’s demands for payment.
Lee J’s decision makes it plain that this is not correct and that the scope of any release must be construed in line with the content of the claim in the class action.
A DODGY investment destroyed this couple’s marriage. Now, with funding from the federal government, Peter Dimitrov is taking the financiers to the High Court — with his ex-wife’s support.
Mr Dimitrov is battling Bendigo and Adelaide Bank, which is chasing him for about $550,000, half of which is interest. He borrowed the money on the advice of failed financial adviser Steve Navra, who recommended he buy into agribusiness projects run by Great Southern between 2006 and 2008.
About 75,000 Australians invested $5 billion in agribusiness schemes, including $1.8 billion in Great Southern.
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