Seventh Information Bulletin

URGENT

INFORMATION BULLETIN NUMBER 7

TO ALL LEVITT ROBINSON (STORM VICTIM)

CLIENTS, 7^th July, 2010

RE:       STORM FINANCIAL LIMITED AND THE BANKS

On 1^st July 2010, Levitt Robinson filed a class action in the Federal Court of Australia at Sydney.  It is the first in a series of class actions and individual claims which Levitt Robinson will be bringing against financial institutions who carry responsibility to their customers for the Storm débàcle.

The case will first come before His Honour, Mr Justice Arthur Emmett in the Federal Court at Sydney at 9.30 am on Friday, 30^th July 2010. 

1. DESCRIPTION OF GROUP/CLASS MEMBERS

Everyone who:

• was a client of Storm Financial and entered into a margin loan from CGI or

• increased their borrowings from CGI after 18th May 2007 or

• invested money in one or more of the Storm-Branded Indexed Funds, whether managed by Colonial First State Limited or Challenger and

• was sold down by CBA between about October and about December, 2008

is a member of the Class and stands to receive the benefit  of the Class Action if the case is successful, whether through a verdict, judgment or settlement.

The Class being represented in the Class Action is not limited to existing clients of Levitt Robinson, Solicitors and Attorneys.  What matters is whether you fit the description of a Group Member in “A” above.

To be excluded from being covered by the Class Action you have to file an “Opt Out Notice”.

If a client of Levitt Robinson is expelled from the CBA Resolution Scheme as a result of being covered by the Class Action against the Bank, then the same, in fairness,  should apply equally  to every other Storm customer of the CBA, whether represented by Slater & Gordon or some other firm.

At present and until you take a deliberate step to “opt out” of the Class Action, if you fit the description of a person described in paragraph A (above), then you are all in the same boat. 

The most important claim in the Class Action filed in the Federal Court, if successful, would result in each Class Member being compensated for:-

“The loss and damage suffered by each Group Member (everyone who fits the description in paragraph “A” above) being:

1.         The equity contributed by each Group Member and invested in the Storm Branded-Indexed Funds;

2.         The amount of the net indebtedness of each Group Member to CBA pursuant to Margin Loan Agreements, after the sale of the units held by you in the Storm – Branded Indexed Funds; and

3.         The loss of opportunity to invest the equity contributed by each Group Member  in alternative investments.”

If successful, this claim should bring you much more than is being offered by the CBA under its Resolution Scheme.

If you accept or have already accepted an offer under the CBA Resolution Scheme, then you will not be able to share in the benefits which could be gained by you through the Class Action. 

Each Participant in the CBA Storm Resolution Scheme will have to give serious consideration to where they stand with regard to the Scheme and to the Class Action.

While Slater & Gordon have suggested that the Class Action may be difficult, take too long and be costly, it should be recalled that Slater & Gordon have a record for bringing Class Actions themselves.

No firm which depends for its revenue on bringing class actions would have much of a business if their consistent advice to their clients was not to bring them.  Do Slater & Gordon usually recommend against Class Actions or is this case against CBA a special case? 

Slater & Gordon was paid a pre-negotiated fee, under an agreement with CBA that its fees would not and have not depended upon the results which Slater & Gordon achieved for Storm CBA customers. 

You would appreciate that the Levitt Robinson Class Action Statement of Claim was drafted and settled by prominent Senior Counsel from both Melbourne and Sydney, including by eminent retired Federal Court Judge, Ron Merkel QC, who himself presided in Class Actions before the Federal Court, during his tenure as a Justice of the Federal Court.

The Class Action is the product of many months of painstaking effort and intellectual input.  We held off filing it until we were satisfied that Dr Brendan French, the CBA’s General Manager of Customer Relation, was not ready or willing to negotiate a better deal for CBA Borrowers.

What Happens If I Do Not Participate In The Storm Resolution Scheme?

1. We are confident that we can obtain an injunction against the CBA from moving against your assets, while the Class Action case is proceeding through the Courts. 

1. Since the very arrangements which CBA would seek to rely on to enforce payment of your “debts” are being challenged in the Federal Court, in our opinion, CBA will not be in a position to prejudge the outcome of our proceedings by purporting to behave as if it has won them. 

1. Don’t allow yourself to be fooled into believing that large institutions including banks, only settle cases through Resolution Schemes.  Very many cases between individuals and large institutions, including banks, are settled after legal proceedings have been brought to Court – unless a deal is struck through unrestricted negotiations prior to the commencement of proceedings – not the kind of Clayton’s negotiations which have characterised the way in which  some lawyers, other than ourselves, have “negotiated” on behalf of Borrowers with the CBA. 

Levitt Robinson remains committed to seeking a negotiated settlement which does not sell Borrowers short, whether through the CBA Resolution Scheme or outside of it.

1. The CBA Resolution Scheme, as it has been managed by CBA and Slater & Gordon,  is based on a narrow framework which does not permit the legal system to operate normally  or legal principles to be applied in the usual way. 

Whatever posturing may be engaged in by Bank representatives, you may be confident that, ultimately, cool and commercial heads will prevail and institutions, large and small, would much prefer to settle a claim rather than to have the embarrassment of the Banks’ Senior Officers being dragged through the Courts and subjected to rigorous cross-examination in full public view – not through an Inquiry but rather, in adversarial proceedings where your team’s barristers will fight hard and effectively  to ensure that any lack of frankness, untruths or mistakes – including evidence contradicting other testimony given elsewhere (for example, before the Parliamentary Inquiry) – will not only be highlighted but given the fullest possible exposure.

If you stand firm, the Banks’ shareholders and possibly, ASIC, too, will ultimately ensure that the banks “do the right thing”, according to law.

We recommend that you make a full commitment now to backing the Class Action and that if you do not believe that you will get what you justly deserve from the CBA Resolution Scheme, to withdraw from it.  We, at Levitt Robinson, will help you with whatever you choose to do. 

As always, we remain committed to attempting to negotiate the best possible settlement for you which, in our opinion, is likely to be more achievable through the Class Action than through the CBA Resolution Scheme.

For those who want to withdraw from the CBA Resolution Scheme, we attach “Annexure F – Withdrawal Notice”, for your signature and return to us for lodgment with CBA.

For those who want to stay within the Scheme, we will arrange alternative representation for you with an allied firm.  We will provide you with information concerning that firm and an Annexure “G”, “Appointment of New Borrower Lawyer”, if you ask for it, at your request:  if you want to accept a CBA settlement offer and to exclude yourself from any possible Class Action benefits.

In the meantime, we are challenging the attempt of CBA to expel Levitt Robinson from the Resolution Scheme (and you thought this was a free country!).

Also attached:

1. Letter to me from Charles Tilley dated 2 July, 2010;

1. Letter from me to Charles Tilley dated 6 July, 2010 (without attachment);

1. CBA Bulletin to Levitt Robinson clients from Brendan French received 7 July, 2010; and

1. Reply from me to Charles Tilley and Brendan French of CBA dated 7 July, 2010 with attachments.

With Compliments,

LEVITT ROBINSON

STEWART A. LEVITT

Principal Solicitor & Advocate