Banksia receiver cleared as court blocks investor lawsuit

The Supreme Court of New South Wales has declined to grant leave for a group of Victorian investors to pursue proceedings in the Supreme Court of Victoria against John Lindholm of KPMG, the special purpose receiver of Banksia Securities, finding that the investors’ proposed action would improperly interfere with the Court’s officer and the completion of the long-running receivership. The decision clears the way for the final distribution of funds to Banksia’s 16,000 mostly elderly debenture holders following years of complex litigation across two states arising from the failed non-bank lender’s collapse.

The Victorian applicants, led by Wendy Botsman, sought leave to continue a “Section 29 proceeding” under Victoria’s Civil Procedure Act, alleging that the receiver breached overarching obligations of honesty and candour in connection with a settlement approved by the Court in 2018 and a subsequent litigation funding commission that was found to be inappropriate. Justice Black held that the investors could not bring such claims without the NSW Court’s permission, as the receiver was appointed under s 283HB of the Corporations Act 2001 (Cth) and was therefore an officer of the Court. The Court found the proposed claims to be out of time, lacking factual foundation, and contrary to principles of finality, noting that multiple courts had already examined the receiver’s conduct and found it “commercial and pragmatic.”

Justice Black also released and discharged Mr Lindholm from his appointment, save for limited work to complete a final distribution and recover a small dividend from the Lehman Brothers Australia liquidation, and approved his final and future remuneration.

Read the decision here.

Jonathon Redwood SC of Banco Chambers and Mitchell Grady of Svenson Chambers (instructed by Maddocks) acted for the special purpose receiver, John Lindholm of KPMG. Michael Izzo SC of Eleven Wentworth, who appeared with Christina Trahanas of Omnia Chambers, was the Court-appointed contradictor. Bill Orow (instructed by Hartwell Legal) represented the investors.