Other allegations, laid out in a judgment released on Thursday in the Supreme Court of Victoria, include backdating invoices for legal bills. None of those allegations have been tested in court, but rather, their validity was the subject of a legal challenge.
Justice John Dixon determined that the court-appointed contradictor had not overstepped his role when assessing the legal bills and funding commission charged for a class action run by litigation funder Australian Funding Partners Limited (AFPL).
AFPL was incorporated for the purpose of funding a class action against the trustee of Banksia to recover losses from debentures held by investors at the time of Banksia’s collapse.
The fee challenge followed a $64 million settlement sum awarded to debenture holders, out of which a deduction of almost $20 million would be awarded to AFPL for commission and legal costs.
The contradictor investigated those fees and compiled a list of issues he believed were relevant to assessing whether the legal costs and commission should be approved, including allegations of “disentitling conduct” that should result in the court disallowing some or all of the legal costs and funding commission.
Mr O’Bryan, Mr Elliott and others sought to challenge those allegations and the role of the contradictor on the grounds the contradictor went beyond the scope of the remitter. Justice Dixon disagreed and dismissed the applications. But he set aside a subpoena served on Mr O’Bryan that sought documents from other proceedings.
Banksia collapsed in late 2012 leaving 16,000 investors owed $660 million in funds.
At the time of its collapse, Banksia was the largest mortgage debenture company in Australia, collecting money from investors and lending residential and commercial property loans.
The debentures Banksia offered to investors were supposed to be similar to bonds offering the company’s clients a fixed return over a set term.
Banksia used investor money to then offer loans to developers.
According to the judgment, Mr O’Bryan took issue with various allegations, including one that he charged fees that “exceeded any proper entitlement in respect of the work undertaken”.
Other allegations were that he was retained on an impermissible contingent fee basis, with the size of his fees to be fixed according to the amount ultimately obtained by the fund; that he charged fees that were “not substantiated by work undertaken”; provided false and misleading information to the court; and facilitated and assisted significant alleged breaches of duty by Michael Symons, who formerly acted as counsel for the plaintiff, Mr Elliott and a solicitor.
Other allegations, which Mr O’Bryan contests, include that he advised the litigation funder AFPL about steps it could take to “deter or restrain (and intimidate)” a group member.
Justice Dixon, in a separate summary judgment said that “on the materials identified by the contradictor to date, there were serious questions raised for a trial regarding the conduct of the legal representatives that if proved at trial were pertinent considerations for the court’s deliberations”.
He said the allegations raised issues of breaches of fiduciary duty, breaches of professional conduct rules and breaches of funding agreements.
Mr Elliott, Mr O’Bryan and Mr Symons were unavailable for comment.
The proceeding has been listed for further directions on November 13.
Adele Ferguson is a Gold Walkley Award winning investigative journalist. She reports and comments on companies, markets and the economy.