❓ A WA parliamentary question seeks details on the costs associated with the government's defense against a court case related to the finance broker's scandal and the potential financial implications for the state. The Attorney General's response provides some cost information but avoids specifics on settlement considerations.
AnsweredQoN 478Legislative Assembly
QuestionView source ↗
(1) How much has it cost to date for the Government to defend the court case against the Insolvency Management Fund in relation to the finance broker’s scandal?
(2) What is the estimated cost before a trial date is set?
(3) What is the estimated trial case cost?
(4) If the State Government loses that case, what is the likely cost to the community of Western Australia?
(5) What are the projected final costs of the court case if the Government wins?
(6) Has the Government given any consideration to making an out of court settlement in relation to this matter; and
(a) if yes, how is this progressing; and
(b) if not, why not?
(2) What is the estimated cost before a trial date is set?
(3) What is the estimated trial case cost?
(4) If the State Government loses that case, what is the likely cost to the community of Western Australia?
(5) What are the projected final costs of the court case if the Government wins?
(6) Has the Government given any consideration to making an out of court settlement in relation to this matter; and
(a) if yes, how is this progressing; and
(b) if not, why not?
AnswerView source ↗
Answered
9 November 2005
Response time
21 days
(b) if not, why not?
(1) It is assumed that the case referred to is the Supreme Court action for damages brought against the Finance Brokers Supervisory Board by some 3,000 investors who claim that they suffered loss in consequence of investing in mortgages or schemes promoted by finance brokers. The investors' action is funded by litigation funder Insolvency Management Fund Ltd ("IMF"). The Board's defence of the action has been conducted to date by the State Solicitor's Office. That Office's disbursements, being for contracted para-legal support and photocopying expenses, total $170,765.03. There are costs orders against the Board in respect of a successful interlocutory application brought by the plaintiff investors, but the substantive matter in respect of which those costs orders were made are currently subject to appeal. Various costs orders have also been against the plaintiffs in favour of the Board. (2), (3) It is not possible at this stage to make any credible estimate of the likely cost of trial preparation or of the trial itself. It is clear, however, that trial preparation will be substantial and any trial lengthy. (4) The action against the Finance Brokers Supervisory Board cannot be seen in isolation. Actions have also been brought by the investors against six law firms involved in the preparation of relevant mortgage documentation. In addition, a firm of auditors has been sued. The progress and success or otherwise of those actions will have a significant bearing upon both the amount of any damages award which might be made and upon the proportion of damages which, if an investor's action were to succeed, would ultimately be payable by the Board itself. While there are some common elements in the investors' claims, the circumstances of each investment, the material conduct of the Board and its officers, the relevance of that conduct to particular investment decisions, and the extent to which any particular established loss can be said to have been caused by conduct of the Board, will vary from claim to claim. Accordingly, even if an investor were to succeed in his or her claim against the Board, it does not follow that all or any other investors would similarly succeed. Should an investor or investors succeed in recovering damages from the Board, the government would bear the amount of that award or those awards together with the amount of any taxed legal costs of the successful investors. The Board would bear its own costs. The total amount of damages awarded and associated costs will depend upon the nature of the individual claims and the content of the arrangements under which the investors' legal costs were funded. The total of the damages claimed by the plaintiffs is not yet fully particularised, and many claims are at this stage not capable of being finally assessed. However, the total is said to be of the order of $120 million. The costs of this action, including a lengthy trial, will be substantial. Moreover, given the amount at issue and, in particular, the legal significance of any liability findings in this case for the obligations and potential liabilities of regulatory agencies generally, there is a real possibility, depending on the circumstances of any particular claim in which liability is found, of the Board appealing against any such findings. (5) In the event that a claim by an investor or investors failed, the Board would ordinarily be entitled to its taxed costs of defending the action. The relevant investors and IMF are both likely to be liable for payment of those costs. Given the amount at issue, there would be a real possibility of an appeal by IMF on behalf of the investors against a dismissal of a significant number of the investors' claims. (6) Revealing whether the Government has given consideration to a settlement of the investors' claims against the Board would not be compatible with the proper management of the defence of those claims or the integrity of the trial process. In any event, if settlement discussions were to occur, it would be appropriate, from the perspective of all parties, that they be conducted on a confidential and without prejudice basis.
(1) It is assumed that the case referred to is the Supreme Court action for damages brought against the Finance Brokers Supervisory Board by some 3,000 investors who claim that they suffered loss in consequence of investing in mortgages or schemes promoted by finance brokers. The investors' action is funded by litigation funder Insolvency Management Fund Ltd ("IMF"). The Board's defence of the action has been conducted to date by the State Solicitor's Office. That Office's disbursements, being for contracted para-legal support and photocopying expenses, total $170,765.03. There are costs orders against the Board in respect of a successful interlocutory application brought by the plaintiff investors, but the substantive matter in respect of which those costs orders were made are currently subject to appeal. Various costs orders have also been against the plaintiffs in favour of the Board. (2), (3) It is not possible at this stage to make any credible estimate of the likely cost of trial preparation or of the trial itself. It is clear, however, that trial preparation will be substantial and any trial lengthy. (4) The action against the Finance Brokers Supervisory Board cannot be seen in isolation. Actions have also been brought by the investors against six law firms involved in the preparation of relevant mortgage documentation. In addition, a firm of auditors has been sued. The progress and success or otherwise of those actions will have a significant bearing upon both the amount of any damages award which might be made and upon the proportion of damages which, if an investor's action were to succeed, would ultimately be payable by the Board itself. While there are some common elements in the investors' claims, the circumstances of each investment, the material conduct of the Board and its officers, the relevance of that conduct to particular investment decisions, and the extent to which any particular established loss can be said to have been caused by conduct of the Board, will vary from claim to claim. Accordingly, even if an investor were to succeed in his or her claim against the Board, it does not follow that all or any other investors would similarly succeed. Should an investor or investors succeed in recovering damages from the Board, the government would bear the amount of that award or those awards together with the amount of any taxed legal costs of the successful investors. The Board would bear its own costs. The total amount of damages awarded and associated costs will depend upon the nature of the individual claims and the content of the arrangements under which the investors' legal costs were funded. The total of the damages claimed by the plaintiffs is not yet fully particularised, and many claims are at this stage not capable of being finally assessed. However, the total is said to be of the order of $120 million. The costs of this action, including a lengthy trial, will be substantial. Moreover, given the amount at issue and, in particular, the legal significance of any liability findings in this case for the obligations and potential liabilities of regulatory agencies generally, there is a real possibility, depending on the circumstances of any particular claim in which liability is found, of the Board appealing against any such findings. (5) In the event that a claim by an investor or investors failed, the Board would ordinarily be entitled to its taxed costs of defending the action. The relevant investors and IMF are both likely to be liable for payment of those costs. Given the amount at issue, there would be a real possibility of an appeal by IMF on behalf of the investors against a dismissal of a significant number of the investors' claims. (6) Revealing whether the Government has given consideration to a settlement of the investors' claims against the Board would not be compatible with the proper management of the defence of those claims or the integrity of the trial process. In any event, if settlement discussions were to occur, it would be appropriate, from the perspective of all parties, that they be conducted on a confidential and without prejudice basis.
Explore WA Government Data
Search the full archive in the free dashboard, or query programmatically via API.
Explore more
Government Gazette
Appointments, regulatory notices, planning changes.
Hansard
Debates, questions, speeches and sentiment.
Tabled Papers
Reports and documents tabled in Parliament.
Committees
Committee profiles and recent reports.
Regulations
Subsidiary legislation with filters and summaries.
Bills
Proposed laws and parliamentary progress.
Acts
Current WA legislation and summaries.
Explanatory Memoranda
Bills with EMs (text/PDF) available.
Members
MP profiles, party breakdown and rankings.
Pollie Rankings
Data-driven rankings across 19 categories.
Amendment Chains
Track how schemes and regulations evolve over time.