Perpetual Trust lawsuit back on track

Adam Feeley described the collapse of Capital+Merchant as among the worst failures in the sector. Photo / Dean Purcell

C+M Finance receiver sued Perpetual Trust and law firm for alleged breach of duties.

A lawsuit against Perpetual Trust to try to recover money for investors of a failed finance company is understood to be back on track, and a dispute over whether the case had in fact been settled is no longer an issue.

The action - the first time a finance company trustee has been sued to recover funds - was derailed for a year while the parties argued about whether they had reached a settlement.

KordaMentha, which is the receiver of Capital+Merchant Finance, has sued Perpetual Trust and law firm Stace Hammond for an alleged breach of duties.

The action is understood to relate to certain loans made from the firm, which collapsed in 2007 owing 7000 investors $167 million.

Adam Feeley, then boss of the Serious Fraud Office, described the collapse of Capital+Merchant as among the worst failures in the sector and two C+M directors and its chief executives were later jailed for lengthy periods.

Perpetual Trust, formerly owned by Pyne Gould Corporation, was C+M's trustee, tasked with protecting the interest of investors.

On the morning the lawsuit against it and Stace Hammond was due to begin last September, a source told the Herald that the parties had reached a conditional settlement.

Perpetual and Stace Hammond, according to a subsequent High Court judgment, claimed the matter was conditionally settled in an oral agreement between the Queen's Counsel for the receiver, Bruce Stewart, and their lawyer.

Stewart denied he conveyed any offer to the defendants or that any offer was accepted.

The argument over whether this settlement had occurred was due to go before a judge this month.

But a person close to the matter has told the Herald that Perpetual and Stace Hammond are no longer pursuing the claim over the settlement.

Another person associated with the case, who did not wish to be named, confirmed that the matter would not be in court later this month, but would not say if it was finally resolved.

In any event, just who pays for court costs is likely to remain an issue for the parties.

Partners at KordaMentha did not reply to emails on the matter. A spokesperson for Perpetual would not comment.

C+M Finance

• Collapsed in 2007 owing 7000 investors $167 million.

• Two directors of C+M serving longest jail sentences handed out to finance company bosses but are now out on parole.

• Unclear what return in the dollar investors will get.