Part one of the $60m Trilogy trial begins today against former City Pacific Ltd directors
10 March 2014
Unit holders in the Pacific First Mortgage Fund, previously managed by the former ASX listed City Pacific Ltd, will be looking for justice through a Federal Court hearing, which begins today in Sydney, against former directors of the company.
Maurice Blackburn Lawyers is conducting the trial before Justice Wigney on behalf of Trilogy Funds Management Ltd, the new responsible entity for the Pacific First Mortgage Fund (previously known as the City Pacific First Mortgage Fund).
In July 2009 Trilogy replaced City Pacific Ltd as manager of the Fund. Trilogy's case alleges that the defendants failed to exercise care and diligence by not following the requirements of the Fund's lending criteria when making decisions to lend to property developer Atkinson Gore Agricultural Pty Ltd in 2006 and 2007.
The case alleges that a number of poor lending decisions caused significant loss to the Fund, which has over 10,000 investors.
By 1 July 2007, the Fund had advanced over $60 million to Atkinson Gore Agricultural on the security of rural land known as "Saddleback" in Canungra, Queensland. These rural lands were ultimately sold in 2012 for $7.627 million following the appointment of receivers and managers.
Maurice Blackburn Principal Jason Geisker said the case seeks compensation and interest of $60 million.
"It is fundamental to the fair and proper operation of any registered managed investment scheme that those entrusted with management of such schemes act with care and diligence and in the best interests of scheme members," Mr Geisker said.
"Investors are entitled to expect that scheme Managers and their officers comply with their statutory obligations at all times. Where managed investment schemes are operated beyond their intended scope, as set out in their constitution and Product Disclosure Statement, investors can be unknowingly exposed to significant additional financial risks."