Wellington Capital PIF/Octaviar (MFS) PIF

[Dexter]

Friends of mine who have a sizable amount in PIF called their Financial Advisor last Friday for an update.

They were told not to join C.A. as they may have to contribute to legal costs if the case was lost. He also stated that their units were still valued at 44c, and they would appreciate to $1 over time.

They beleived him!

 

[selciper]

Seamisty poses a key question: “Any necessary PIF documentation can be accessed by order of discovery through the court or by subpoena so why hinder the process?”

Could it be that somebody is being too clever by half and heading for a humiliating tumble?

 

[Duped]

... WC state that WCL and MIL are two separate entities and there is no conflict of interest. ...

All: Yeah, maybe it is argueable there is no conflict of interest for the two LLC's per se but what about the individual directors? Directors can be personally liable for decisions they make. Bottom line IMLO is the individual directors are conflicted.

I've heard that individual directors often exclude themselves from board votes when they personally are conflicted. In our case that would mean NONE of the 3 directors of WCL could vote when WCL's (I.e. PIF's) interests conflict with those of WIML (MIL). Hence, WCL are likely incapable of always acting in the best interests of PIF investors.

Thanks for the excellent postings seamisty.

The question I asked myself some time ago is: if 'must act in the interests of ALL the investors' is such a rock solid arguement for not assisting the CA then why did WCL sign it in the first place and waste everyone's time and money. What game is WCL playing at? Or is it simply that WCL is not as good at this legal/business thing that it led me to believe in that it didn't anticipate the problem's the WCL-CA agreement would cause for PIF?

What is WC playing at? I suppose you don't need to take as much care when your spending OPM (other people's money). I.e. OUR money.

Besides all that. WCL can study the PIF unit register can't they? So it wouldn't take much for WCL to contact all post freeze purchasers of units and get consent to cooperate with the CA. (WCL wouldn't even have needed to get consent from investors who bought after the agreement between WCL and the CA went public) Even those that have opted out of the CA could give consent. (And as seamisty reported, all pre freeze unit holders can still join the action. Hence, it's in all pre freeze unit holders' interests for the CA to succeed)

But WCL doesn't do what WCL doesn't want to do.

Or maybe the WCL directors can't look at the PIF register because of the benefit it would give them as a WIML (MIL) director

BTW. Unit holders can and do merge holdings. Even easier to do under CHESS. And I know as a fact that some of the units sold on the NSX were bought by and remain with a pre freeze holder who has joined the CA and would be only too happy for the WCL-CA agreement to stand.

Oh and if 'must act in the interests of ALL the unit holders' is such a valid excuse - Don't the interests of groups of investors conflict on the issue of tax treatment of cash payments?

Based on all this knowledge seamisty, the excuse not to cooperate, that the CA is not in the interest of ALL the investors, is insulting to me.

 

[Duped]

The nobel aims of Legal Discovery has been fiddled with by lawyers over the years.

Basically it would be heaps easier for the CA just to be able to browse through the info held by our RE than rely on the process of Discovery.

See for example the paragraph under the heading 'Criticism of American discovery' at http://en.wikipedia.org/wiki/Discovery_(law)

"The use of discovery has been criticized as favoring the wealthier side, in that it enables parties to drain each other's financial resources in a war of attrition. For example, one can make information requests, which are expensive and time-consuming for the other side to fulfill; produce hundreds of thousands of documents of questionable relevance to the case; file requests for protective orders to prevent the deposition of key witnesses; and so on. In a scathing critique of the American legal profession, attorney and writer Cameron Stracher described a variety of unpleasant tactics common in the United States, and concluded:
“ With the noble sentiment of "levelling the playing field" so that no party has an undue information advantage, the writers of the discovery rules created a multilevel playing field where the information-rich can kick the information-poor in the head and escape unscathed. "Discovery" is anything but ... Hundreds of thousands of dollars to maintain the status quo, to preserve the information-rich at the expense of the information-poor. Thousands of lawyer hours to keep the discovery process as unrevealing as possible. The best minds of a generation thinking of new ways to manipulate, distort, and conceal.[4] ”

Tort reform supporters argue that such tactics are often used by plaintiffs' lawyers to impose costs on defendants to force settlements in unmeritorious cases to avoid the cost of discovery. Victim's rights advocates, on the other hand, believe that the opposite is true: defendants typically have greater resources than plaintiffs and, accordingly, they impose costs on parties deserving compensation by dragging out the litigation process as opposed to offering a fair settlement."

All a disgraceful state of affairs really. One that many practitioners secrectly adore.

Lawyers cricticise judges for 'Legislating from the Bench' but then turn around and 'Campaign from Chambers.' Using OPM (i.e. their clients money) to persue their own legal adventures. Often to make a name for themselves

 

[marcom]

Information from the Bentley's Insolvency website regarding the Octaviar liquidation - http://www.bentleys.com.au/our_services/business___corporate_recovery_and_insolvency/creditor_inf

Key Milestones and Events

September 2009

* Secure Group assets and books and records
* Meet with key personnel within the Group, former liquidators, Deloitte, and other key parties

October 2009

* Asset realisations total $124.8M as at 16 October 2009
* Meeting of creditors held on 16 October 2009 and Committee of Inspection members elected
* Proceedings commenced by ASIC , subject to the Court granting leave to proceed against Octaviar Limited (In Liquidation) and Octaviar Castle Pty Limited (In Liquidation)
* Commenced investigations

November 2009

* Commenced realisation of stapled securities held in GEO Property Group Limited

December 2010

* Meeting of Committee of Inspection members held on 1 December 2009
* Vacated Hicks Street, Southport office premises
* Public examination summons issued to directors and officers of Octaviar Administration Pty Limited (In Liquidation)
* Asset realisations total $128.1M as at 1 December 2010
* By 31 December 2009, Kate Barnet and William Fletcher appointed as joint and several liquidators to a further 11 entities within the Octaviar Group

January 2010

* Meeting of Committee of Inspection members held on 12 January 2010

February 2010

* Marketing campaign commences for realisation of the Sunkids’ assets
* Production of documents in respect of Orders for Production

This last point may explain why WC has been a tad touchy about providing information.

 

[breaker1]

Friends of mine who have a sizable amount in PIF called their Financial Advisor last Friday for an update.

They were told not to join C.A. as they may have to contribute to legal costs if the case was lost. He also stated that their units were still valued at 44c, and they would appreciate to $1 over time.

They beleived him!

Seriously Dex, if they don't even know that units are only worth 39c, they can't be believed in something as complex as the class action. I'd like to know the FA name?

 

[breaker1]

Looks like from my sources that everybody should be getting out of the
Carney's Class action, as this action will fail and so all Plaintiffs in this Class
action will have to pay court costs, etc..

Hi Lawry

I am not aware of any significant problems with the class action and our reps are in regular contact with Carneys and IMF. With such dramatic statements one seriously needs to give specific proven detail. If there is anything you wish looked into, please email me on breaker7@optusnet.com.au or ring Carneys direct ?

Last time I spoke to Arthur Carney - he was very buoyant about how our case was going

*We have a class action that Tony Martin our advising barrister said has very good prospects of success
* We have KPMG in our sights for claim against their insurance
* We have former managers for claim against their insurance
* ASIC has listened to us and gone after 5 former MFS/PIF managers with another civil claim. They are still listening to us!
* When our CA amendments are given the go ahead via Justice Perram our lawyers can ask for certain PIF documents - no need for any exemption deals with WC here!
* We still have solid assets [if WC is correct] left in the fund worth 39% of our investment, say 35% to be conservative.

Further, do you not think that IMF are experts in their field? Would they take on a case [one of the largest CA's in recent history] with the possibility of losing 10's of millions [of their own money!!!] in a loss if their legal experts did not think we had a good chance of winning? They are the largest litigation funder in Australia! Of course no guarantee of success, but what a great wrap for our CA.

What is needed is a great deal of patience. These things take a lot of time to show fruit.

Anybody care to send this to Wellington as a singing email? LOL
http://www.youtube.com/watch?v=9k5ooaufrLM

 

[breaker1]

http://www.perfecteconomy.com/pg-probability-of-worldwide-economic-collapse.html
Very interesting material and suggestions in the above link.
Therefore, what these poor individuals live on for approx 5 years, a CEO of an Australian Bank earns in ONE HOUR?????
Further, the 50% mostly produce real wealth (Goods or Food), while the CEOs
of banks mostly produce artificial DEBT , shuffle paper, produce little or no real goods or wealth, and probably do more harm than good by creating excess credit which
DILUTES all existing savings, creating in effect ever rising prices of most things/services,

etc.

Jadel - I particularily like President James Maddison's quote in your link above:

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance. The nation which reposes on the pillow of political confidence will sooner or later end its political existence in deadly lethargy.

It is proper to take alarm at the first experiment on our liberties. We hold this prudent jealousy to be the first duty of citizens, and one of the noblest characteristics of the late Revolution. The free men of America did not wait until usurped power had strengthened itself by exercise and entangled the question in precedents. They saw all the consequences in the principle, and they avoided the consequences by denying the principle."

I've read it before - as soon as those charging usuary come into power one's nation tends to suffer.

 

[marcom]

In the SUPREME COURT OF QUEENSLAND
COURT OF APPEAL
RE: OCTAVIER LIMITED
Justice Keane
Appeal Court
Floor 5 9:30AM
(Delivery of Judgment)

 

[seamisty]

Hi all, Below is my latest complaint to WC. I hope you are not getting sick of reading them!!!! Cheers, Seamisty


Dear WC,
I don't recall seeing a written correction concerning the original statement made by WC regarding distributions as opposed to cash payments, just the change of wording. Was it ever clarified to investors that WC still intended to collect mangement fees regardless of whether the 3 cent payment came from investors own capital or was in fact a genuine distribution as originally outlined? I do not need you to send me a copy of every time cash payment has been mentioned in WC correspondence, NSX announcements etc, that is not my question. My question is:::

Did WC EVER correct and clarify to PIF unitholders the future impact/consequences of the change of wording from 'distributions' to 'cash payments' ? Were PIF investors EVER clearly made aware that WC would have access to management fees regardless of how that proposed payment was made?


http://www.newpif.com.au/pifreports/InvestorInfoForumHandout.pdf


Distributions – 3 cents before Christmas

Following repayment of the current debt facility, Wellington

proposes to reintroduce unitholder distributions. The first

distribution is proposed for October 2008 and a further distribution

will be made in December 2008 and thereafter quarterly. The plan

is to distribute 3 cents per unit before Christmas.

Management fees

Wellington proposes to reintroduce management fees after the first

3 cents in distributions has been received by unitholders.

The proposed fee is 0.7% of the Funds under management.


If WC cannot answer that simple question please note this as an official complaint.

 

[mellifuous]

Hi all, Below is my latest complaint to WC. I hope you are not getting sick of reading them!!!! Cheers, Seamisty


Dear WC,
I don't recall seeing a written correction concerning the original statement made by WC regarding distributions as opposed to cash payments, just the change of wording. Was it ever clarified to investors that WC still intended to collect mangement fees regardless of whether the 3 cent payment came from investors own capital or was in fact a genuine distribution as originally outlined? I do not need you to send me a copy of every time cash payment has been mentioned in WC correspondence, NSX announcements etc, that is not my question. My question is:::

Did WC EVER correct and clarify to PIF unitholders the future impact/consequences of the change of wording from 'distributions' to 'cash payments' ? Were PIF investors EVER clearly made aware that WC would have access to management fees regardless of how that proposed payment was made?


http://www.newpif.com.au/pifreports/InvestorInfoForumHandout.pdf


Distributions – 3 cents before Christmas

Following repayment of the current debt facility, Wellington

proposes to reintroduce unitholder distributions. The first

distribution is proposed for October 2008 and a further distribution

will be made in December 2008 and thereafter quarterly. The plan

is to distribute 3 cents per unit before Christmas.

Management fees

Wellington proposes to reintroduce management fees after the first

3 cents in distributions has been received by unitholders.

The proposed fee is 0.7% of the Funds under management.


If WC cannot answer that simple question please note this as an official complaint.

Hi Seamisty,

An interesting thing happened when the PIF was listed, and that was that investors lost any direct access to their respective investments.

If you look at the definition (in the explanatory memordanum) of 'distribution', it does include 'capital'. W.C. further defined any distribution paid by the PIF to investors as a 'cost of capital', an expense to the PIF, but assessable income in the hands of investors.

Distributions (or cash payments) could only have even been from your capital, and that is the point that I tried to convey several times before in my postings - there will never be net profit in the PIF from which a real distribution is able to be paid.

My guess is that W.C. would love to pay investors, because W.C. stands to start collecting fees, but W.C. isn't sure how to pay it. I would guess that most investors will really be peeved when they finally face the tax reality.

Danielle's questions to W.C. about the impact (inside and outside) the fund of payments, either as 'cash payments' or 'distribution', have remained unanswered for nearly 3 months.

As I've stated before, any money any of you receive from the PIF will be no more than the return of some of your respective investments, and you'll all probably have some tax to consider on it some time or other - some will pay same, some will not.


Thanks.

 

[simgrund]

#0001 "I am hoping that this thread may lead to many responses from Octaviar PIF / WPIF / Cash Enhanced Fund / Dynamic Growth Equity investors.
A forum has to be started somewhere for those investors feeling helpless and disenfranchised!! Lets hear from you!!"

The above quote is from breaker's first post.
Don't be intimidated by some interlopers; I am starved for news.

 

[Cookie1]

In the SUPREME COURT OF QUEENSLAND
COURT OF APPEAL
RE: OCTAVIER LIMITED
Justice Keane
Appeal Court
Floor 5 9:30AM
(Delivery of Judgment)

Here is the link to the Judgment in the case referred to above. Fortress's appeal was dismissed.

http://archive.sclqld.org.au/qjudgment/2010/QCA10-045.pdf

 

[simgrund]

Here is the link to the Judgment in the case referred to above. Fortress's appeal was dismissed.

http://archive.sclqld.org.au/qjudgment/2010/QCA10-045.pdf

So in a nutshell, Cookie, are we still in line for $50 mil Octaviar owes PIF?
The same millions that JH pledged to recover for us.

 

[mellifuous]

So in a nutshell, Cookie, are we still in line for $50 mil Octaviar owes PIF?
The same millions that JH pledged to recover for us.

Is that before or after tax Simgrund (in less than 2 words)?

 

[seamisty]

Is that before or after tax Simgrund (in less than 2 words)?

I can think of several two word answers mellifuous but I value this thread too much to post any of them!! Will you please stop goading PIF investors? Never since the inception of this thread and my involvement with it have I had more investors contact me personally on issues than with your postings. Great Dame pales into insignificance! Please refrain from annoying the few investors who regularly post on here. k. smith is an intelligent and valued investor/contributor who appears quite capable of representing themself. Our Fund issues are complex and being dealt with to the best of participating PIF investor ability. We would not like to have to limit thread participation to only unit PIF holders. Thanks, Seamisty

 

[mellifuous]

I can think of several two word answers mellifuous but I value this thread too much to post any of them!! Will you please stop goading PIF investors? Never since the inception of this thread and my involvement with it have I had more investors contact me personally on issues than with your postings. Great Dame pales into insignificance! Please refrain from annoying the few investors who regularly post on here. k. smith is an intelligent and valued investor/contributor who appears quite capable of representing themself. Our Fund issues are complex and being dealt with to the best of participating PIF investor ability. We would not like to have to limit thread participation to only unit PIF holders. Thanks, Seamisty

Gee thanks for the insight Seamisty.

1. I was goaded by your friend simgrund.
2. The question asked of Cookie1 was more unrealistic than my question of simgrund could ever have been.
3. I told you that I post here by proxy for two members who don't wish to post themselves and have asked me to do so.

Actually, I thought simgrund's question of cookie1 was quite over-the-top.

Cookie1 merely reported the link and nothing more. I'm sure simgrund and yourself are well aware of the legal ramifications from Fortress' lost appeal, and there is no way that anything about any amount of $50m is able to be gleamed from the decision.

I get the impression that both you and simgrund don't really want to discuss issues, and for some reason you seem to attack anyone who comes up and quesitons anything.

My postings are always respectful and directed to issues, but simgrund is just too pointed with his posts for my liking. The issues I raise are issues that I've been asked to raise to present my perspective.

With respect, you struggle with ideas too, and the truth is, we all do.

So, that's it in a nutshell Seamisty.

 

[seamisty]

Quote mellifuous 'My postings are always respectful and directed to issues, but simgrund is just too pointed with his posts for my liking':

With all due respect mellifuous if it was only 'simgrund' who has a problem with your postings why are so many other PIF UNITHOLDERS contacting me and other PIF AG reps with complaints as to your postings? Please show some respect to a thread which does not have a personal monopoly regarding moderation on the posts made. The PIF AG will continue to represent the majority of members concerns. Thanks, Seamisty

 

[mellifuous]

Quote mellifuous 'My postings are always respectful and directed to issues, but simgrund is just too pointed with his posts for my liking':

With all due respect mellifuous if it was only 'simgrund' who has a problem with your postings why are so many other PIF UNITHOLDERS contacting me and other PIF AG reps with complaints as to your postings? Please show some respect to a thread which does not have a personal monopoly regarding moderation on the posts made. The PIF AG will continue to represent the majority of members concerns. Thanks, Seamisty

Ok, so complaints are made to you, because you're the leader, is that right?

And the complaints are about me raising the issues of tax? redemptions? distributions? listing? capital payments? To my mind, and those I post for, these issues are legitimate issue that should be discussed.

I don't quite understand why you say 'the PIF AG will continue to ... members concerns' - actually I wouldn't have thought otherwise.

It seems that the real problem is that no one is explaining issues to members - so, if you (and sigmgund) go ahead and give explanations about the issues of tax, capital, distributions, redemptions then there would be no need for my contributions.

Simgrund might start by explaining the recent court case re: Fortress' failed appeal.

I'd be suprised if very few actually understand those issues, but on the other hand, if you think it's better that people don't understand, then so be it.

I look forward to some good reading.

Thanks.

 

[Cookie1]

This article of interest about Class Actions appeared in The Australian today.

http://www.theaustralian.com.au/bus...-retail-investor/story-e6frg8zx-1225838879023

"When a MIS is as good as a mile for the retail investor
Bryan Frith From:The Australian March 10, 2010 12:00AM

WHETHER or not the Full Federal Court was right in its recent controversial ruling that funded class actions constitute managed investment schemes (MIS) the consequences that flow from the decision cannot have been the intention of the legislature.

While the ruling is a setback for litigation funders, retail investors are the parties who stand to be most disadvantaged, yet they are the very people class actions are designed to protect.

Litigation funder IMF (Australia) this week announced that it proposed to fund a class action by current and former shareholders of Transpacific Industries (TPI). The claims relate to alleged misleading or deceptive conduct and breaches of TPI's continuous disclosure obligations over a 12-month period, between February 28, 2008 and February 16, 2009. However, as a direct result of the recent court ruling, IMF will only proceed with claims on behalf of sophisticated and professional investors. Retail investors will be excluded.

Typically, retail investors make up the bulk of the claimants but represent a small portion of the value of the claim. It is the existence of the institutional base of claimants which enable the litigation funders to include retail investors in a class action.

From a financial viewpoint the litigation funders would not be harmed by the exclusion of retail investors, and may even be disadvantaged because they would much lower administrative costs.

But the litigation funders from the outset have taken the pragmatic view that offering to fund all claimants, and not just the big end of town, would be better received by the courts, the public and the media. It's also the right thing to do.

Theoretically, retail investors who are excluded from funded multi-party actions (class actions) could initiate their own representative actions, but the escalating cost of litigation would put it beyond the reach of most, which is one of the reasons why class actions have been introduced.

The practical effect of excluding retail investors from class will be to deny them access to justice.

It need not have come to this as the corporate regulator, ASIC, has the power to exempt a class action from having to comply with the requirements for an MIS.

IMF sought an exemption for the TPI action but it was rejected by ASIC.

ASIC has granted exemptions for some class actions, including some by IMF, but they appear to be actions brought before November 4. Exemptions sought for cases initiated after that date have been rejected, although some are still pending.

The significance of November 4 last year appears to be that it was the date the Full Federal Court brought down its ruling on Brookfield Multiplex v International Litigation Funding Partners (ILF), which related to alleged failures of disclosure in relation to the redevelopment of London's Wembley Stadium.

ASIC's stance is curious, if not regrettable. IMF actually applied for an exemption for all of its class actions in late 2008 after Brookfield first contended that the funding arrangements constituted an MIS (a possibility not considered in the many earlier class actions).

ASIC declined, waiting to see the outcome of the court case but it approved IMF with a "no action" letter to enable it to continue running its class actions on the basis that they were not bound by the MIS requirements. Under a funded class action each claimant enters into a funding agreement under which the claimants are not out of pocket. Brookfield Multiplex contended the funding agreement constituted an MIS. The major features of an MIS are that people contribute money or "money's worth" to acquire an interest in benefits produced by the scheme, the contributions are pooled or used in a common enterprise to produce benefits and the members do not have day to day control over the operation of the scheme.

MIS's generally have to be registered. They must have an RE (responsible entity) that is authorised by an Australian Financial Services licence to operate an MIS. An MIS must also have a constitution and a compliance plan and parties must be given a PDS (product disclosure statement) before becoming a member of the MIS.

Moreover, the RE must prepare annual reports and hold annual meetings, though what purpose that would serve for class actions, often in limbo for several years waiting for the litigation to get underway, is difficult to fathom. However, an MIS does not have to be registered if the MIS is offered exclusively to wholesale clients (sophisticated and professional investors who do not need a PDS). IMF is now running its action against TPI as an unregistered MIS.

It is expected to allege that TPI breached its continuous disclosure requirements and/or engaged in misleading or deceptive conduct in relation to its 2008 and 2009 earnings forecasts..

Judge Ray Finkelstein ruled that a class action did not satisfy all of the features of an MIS and, therefore, was not an MIS.

Brookfield appealed to the Full Court which, by a 2-1 majority over-ruled Finkelstein and held that the funding arrangements for the class action constituted an MIS. Justices Alan Sundberg and John Dowsett considered that the definition of an MIS was deliberately wide and they should not read it down, particularly as several matters were specifically excluded, such as superannuation, and the legislation provided for further exclusions via the Corporations Act.

In addition, ASIC has the power to grant exemptions.

Justice Peter Jacobson agreed with Finkelstein that a class action was not an MIS.

That means two Federal Court judges have found class actions constitute an MIS and two have found that they don't.

But the majority decision prevails and is currently the law.

ILF has sought leave to appeal to the High Court and if it overturns the Full Federal Court decision that will determine the issue. But it could take several months to be decided, and unless the government amends the Corporations Act (by legislation or regulation) to stipulate that class actions are not MIS's, or ASIC reverses its current stance and provides an exemption for all class actions, then litigation funders will have little choice but to follow IMF's lead and exclude retail investors (the majority of claimants) from class actions.

The Law Council supports class actions as "an effective and efficient means of ensuring access to justice". It also believes that third-party litigation funding arrangements are important to ensure class actions are able to proceed. The government seems to recognise there is a problem as Treasury has formed a stake to examine the issue and to consider with parties, including litigation funders and plaintiff and defence lawyers. The Law Council is also working with Treasury and other stakeholders "to resolve the uncertainty around funded class actions". In the meantime, it is unfortunate ASIC did not see fit to provide some certainty (and effectively disenfranchised retail investors) until the matter is resolved.

bfrith@acenet.com.au"