Investors target Gunns

Gay’s estate, former premier sued over Woodlot disaster

THE estate of the late Gunns boss, John Gay, and former Tasmanian premier Robin Gray are being sued over the widely publicised — but disastrously failed — eucalypt planation managed investment schemes.

And now the investorgrowers who say they lost “substantial amounts of money” through six of the flopped Woodlot Projects, have been given the green light

AMBER WILSON

to sue two of Gunns’ insurers as well.

Gunns, which collapsed in September 2012, operated a number of the schemes across Tasmania, charging investors to manage and harvest the plantations and agreeing to buy the timber they produced.

But, like many similar schemes, the Woodlot Projects were unsuccessful and growers lost substantial amounts of money.

In December, according to a newly published Supreme

Court of NSW judgment, the controversial forester and its now-liquidated subsidiary, Gunns Plantations Ltd (GPL), were removed from the proceedings.

That left nine defendants, including Robert Watson and Erica Gay representing the estate of the late John Gay — the Gunns managing director who died last year after the highly publicised $2bn pulp mill project failed and after he was convicted of insider trading.

Other defendants include former Gunns chairman and Liberal politician Mr Gray, who has recently released his memoir, plus GPL chairman Paul Teisseire and Gunns company secretary Wayne Chapman.

The court has now agreed that insurers Catlin Australia and Chubb Insurance can join the list of defendants that may potentially be forced to compensate investors.

It is alleged the GPL directors failed to ensure performance of maintenance services and payment of the forestry right fees by requiring that sufficient funds be kept to cover the costs, and by ensuring their agents were performing the required services.

It is also alleged that between 2002 and 2011, GPL breached its obligations by advancing about $486m to Gunns from money it held in trust for growers. The investors claim that between 2004 and 2009, GPL paid dividends to Gunns of $118m and Gunns directors caused losses to growers through “ineptitude and oversight”.

Justice Michael Ball said he didn’t accept an argument from the insurers that they were entitled to disclaim liability on the basis of a conflict of interest exclusion and a lenders liability exclusion.

However, he ordered the investors – represented by Giabal Pty Ltd and lawyer Geffrey Underwood – pay the first nine defendants’ court costs for amending their claim.