Assisting investors in a failed forestry scheme to recover losses from a negligent security trustee
More than 5000 'Mums and Dads' investors placed their savings into the SEAS Sapfor forestry scheme in South Australia. The scheme was administered by companies that became part of the Gunns group, with Australian Executor Trustees (SA) Ltd (a subsidiary of the listed IOOF Group) acting as security trustee. In 2012, the Gunns group collapsed into insolvency and the investors (known as Covenantholders) lost the entirety of their investment after AET prematurely released the scheme’s security arrangements.
With funding from Omni Bridgeway, the Covenantholders were able to appoint an additional trustee to investigate and pursue their claim; in October 2019, the claim succeeded on all points at first instance with a damages award of A$77m plus indemnity costs: David Kerr v Australian Executor Trustees (SA) Ltd  NSWSC 1279.
Simon Morris, Partner, Piper Alderman