Innes Creighton thought he had done everything right when he invested $200k of his life savings into Provident Capital Ltd in 2011.
Innes investigated the company, spoke to one of its directors and noted it had a wide portfolio of investments and. Innes had also spent his life centred around the financial sector, so he figured his investment would be safe and would provide a far better return than the bank interest currently being paid on his savings. His investment was also being overseen by a trustee called Australian Executor Trustees (AET) with a 170 year history, another reason to feel secure.
But, unbeknownst to him the company was using depositors funds to repay loans in default, and once that bad loan was cleared, they treated it as a new loan application, so it appeared as they had no loans in default.
At first the 88-year-old former mayor was none the wiser, and was receiving his monthly interest payments but they suddenly stopped when Provident collapsed in 2012.
A class action against AET offered Innes the only chance of getting any of his money back and seeing someone pay. In court it was argued that AET had failed in its duties to ensure that Provident would have sufficient property available to repay debenture holders when their investment came due. Had AET acted sooner, the action alleged, substantial losses could have been avoided for some investors and minimized for others.
Innes said: “What they did was wrong, and they knew it. It was deliberate. They knew when they took my money they were in trouble. It was really important to me that someone needed to be punished.
“I see criticism of class actions in the papers but I just can’t see how anyone could argue against them. They are there to help people who have been hurt, and in my case that was in a financial way. I firmly believe that class actions are needed when people are dishonest. There was also no way an individual would have the financial capacity to seek justice in this case.
It took around six years and Innes, as lead litigant, had to go to court a couple of times but at the end he did recoup some of his losses but more importantly to him the directors of the firm are now barred from ever being directors again.
“I think I knew at the start that I was unlikely to really get all my money back. So, to get anything back was a good result. I have reconciled that loss. “But this was a lot of money to lose and it has affected our lives. We are fortunate in that we still are able to lead a reasonable lifestyle, and whilst this loss has made us more careful, we are better off than many others affected by this company’s dishonesty.”
After a six year court battle, the Supreme Court of NSW approved a $28.5 million settlement in a class action in 2018 against AET. The action was brought by Slater and Gordon on a No Win No Fee basis on behalf of approximately 1,900 Australians who suffered financial losses.