A potential class action against Westpac and/or Wingate

Yesterday I wrote about the possibility of getting your deposits back from Westpac and/or Wingate.

Several investors have since contacted me to ask:

  1. How much will it cost?
  2. What will happen if you lose?
  3. What are the chances of you winning?
  4. How much will you recover?

How much will it cost?

The answer is that it will cost you nothing to fund and you will pay nothing if the claim fails. This is because I am proposing a class action funded by a litigation funder.

A class action is a special type of court case.

A class action is brought when a group of people who have suffered the same injury from the same wrongdoer bring a single action in court.

This means instead of there being 700 or more cases in court there is just one case brought on behalf of all the 700 or more investors.

A class action has many advantages. The most important advantage is that it is an attractive proposition for a litigation funder.

A litigation funder is a company that pays the legal fees required to bring the case to court. If the case is lost then the litigation funder pays the legal fees of the other side. The result is that the investor pays nothing and risks nothing.

There are many litigation funders in Australia. They commonly fund actions against companies that have made misleading statements about their affairs to the media which caused people to buy the shares and so lose money.

However they will fund any case where a lot of money has been lost as a result of a single legal wrong by one or more wrongdoers. They need a lot of money to have been lost in order to make it attractive to fund the litigation. This is because litigation funders as payment for the risk they take are entitled to a portion of the money recovered from the wrongdoer.

The usual amount which is paid to the funder is between 20% and 40% of the amount that is recovered. Thus if the class action proceeds, and if it is successful, you can expect to have to give the litigation funder 20-40% of what you recover.

Examples of litigation funders are the publically listed IMF Bentham (that has in the past funded an action brought by Bransgroves Lawyers) and Investor Claim Partners.

What will happen if we lose?

If someone loses a court case they normally have to pay the other side’s legal costs. However when a litigation funder is funding a class action the litigation funder must pay. Thus all the risk is taken by the litigation funder and for this reason they are entitled to 20-40% of what you recover.

What are the chances of us winning?

Litigation funders realize that some cases are lost and some are won. However they study the legal issues very carefully and only take on cases that they think they can win. Having a litigation funder back your claim is therefore a very good indication that you have a good case.

Recently in the United States a bank was held liable in a $72 million judgement for ignoring or not noticing that it was enabling a Ponzi-scheme.

Just yesterday a litigation funder won approval in New Zealand to sue the ANZ because it knew or ought to have known a fraudster called David Ross was operating a Ponzi Scheme.

For the reasons set out in my posting yesterday I think there is good reason to believe there may be a case against Ralan’s investors. The strength of the case may be increased because the grounds upon which they will be sued will not be negligence but breach of the Corporations Act. This is important because this will deny them the ability to reduce the payout by pointing to the wrongdoing of William O’Dwyer.

The strength of the claim of course will depend upon documents that we uncover from Ralan. In this regard we will need to the co-operation of the Administrator Grant Thornton. They will need to provide us with the Ralan Company records.

How much will you recover?

The way in which the claim is brought will be crucial to how much you recover. If the action is brought as simple negligence then the payout could be reduced by as much as 90% due to the wrongdoing by William O’Dwyer.

On the other hand if we can prove to the court that Westpac and/or Wingate and/or other lenders, knew or ought to have known that a breach of the Corporations Act was taking place, and they were benefitting from it, then they will be held liable as accessories. Then the sum recovered will be closer to 100% of your loss plus interest. Remember however that the litigation funder will take 20-40% of that money.

There is a question as to whether you can recover the 15% interest. Depending on the legal argument the judge may set interest at court rates instead, these are in the vicinity of 8%.

How do we make it happen?

Before I can move forward the most important step is for me to register enough investors to attract a litigation funder. So far I have only registered 47 investors. This is insufficient to appeal to a litigation funder.

My feeling is that we will need at least 300 investors before a litigation funder will look seriously at funding the litigation. For this reason I would like you to reach out to any other victims and ask them to register. You can also do a lot to help recover your money by going on WeChat and urging Ralan Investors to register.

There is no down side to registration. At the moment we are simply providing information to people who register. There is no agreement that has been entered into.

Later on if we get a litigation funder you will enter a no-win-no-fee agreement with the funder and Bransgroves.

At the creditors meeting I handed out over 500 cards. I think people have been reluctant to register because they think I will ask for money. I will not be asking for money from investors. I will only ask for money from a litigation funder.

If you hope other people will do the work for then you will have to blame yourself if the action against Westpac and / or Wingate never goes ahead.