Dangers In A Legal Jungle

Investors who have been ripped off on a grand scale can take their case to court but the financial and emotional costs can be high

- Susan Hely

It was supposed to deliver the 380 clients of jailed financial planner Bradley Sherwin some compensation after he defrauded them of their $60 million life savings. But the class action against the Bank of Queensland and its agent DDH Graham delivered them only $12 million, a payout that was almost matched by the $11.75 million bill from their lawyers, funders and administrators. The service providers wanted 98% of their payout, leaving the claimants with a miserly $250,000. The dudded investors, who had been in the courts for six years, felt screwed over once again, says Beth Spence, who together with her husband, Mick, lost their retirement nest egg of $500,000. But this time it was by the very people who claimed to be “on their side”.

“To get nothing or minuscule amounts takes away any trust. It makes us think, why did we bother?” says Beth.

While some class actions go according to plan, often they don’t. As the Spences point out, the claimants were expecting a payout more in the order of $80 million to compensate for the lost earnings and financial hardship.

Thankfully, the costs bill was cut to $8 million by Justice Murphy of the Federal Court and the paltry $250,000 was upped to $4 million – still a long way from the $60 million lost. In a further blow, only 53 claimants received any money because conditions (statutes of limitations) about timing and ruling out any further legal claims agreed to in mediation cut out 75% of claimants.

Beth says the result for the claimants “is as devastating as when this all started almost six years ago”.