ASIC v Piggott Wood & Baker [2015] FCA 18

Piggot Wood & Baker were running a contributory mortgage scheme involving some 300 investors.

In 2001, the Federal Court ordered the scheme to be wound up as an unregistered managed investment scheme and appointed a liquidator. 

The liquidator subsequently commenced proceedings against the law firm seeking damages in relation to moneys paid between 1991 and 1999 by investors in the contributory mortgage scheme. 

The liquidator and the law firm reached a settlement and the liquidator sought the Court’s approval for the terms.

The judge commented:

Piggott Wood & Baker is a long established Tasmanian firm of solicitors. The failure of its mortgage scheme and the circumstances surrounding that failure attracted very large public attention. The publicity, almost all of it negative, surrounding the collapse of the scheme was extensive. The standing and reputation of the Tasmanian legal profession was affected. The collapse of Piggott Wood & Baker’s mortgage scheme significantly depleted the funds in the Solicitors’ Trust (a fund operated by the law society to protect the clients of solicitors from such losses) because those funds had to be applied to reduce the large losses suffered by investors. Those facts are so notorious that I regard them as common knowledge in this locality.

The scale of the investors’ losses eventually proved beyond the capacity of many of the partners who at various times had constituted the firm of Piggott Wood & Baker. Six partners became bankrupt and one entered into a personal insolvency agreement in 2005.

The judge approved the settlement, noting that FAI, who was the main insurer of the solicitors, had some respectable arguments that may have got up.

The liquidator sought a non-publication order to which the judge held:

I am affirmatively satisfied that in the present instance the proper administration of justice requires this Court to incline towards the fullest possible disclosure and transparency rather than secrecy. The factors which have influenced me to reach that conclusion include

  1. the plight of investors caught up in the collapse of the mortgage scheme has been and remains the subject of considerable public interest;
  2. the management of the mortgage scheme involved a firm of legal practitioners;
  3. the delay between the collapse of the fund and settlement has been significant;
  4. the compromise will not result in full satisfaction of all investor claims; and, having regard to the above;
  5. there is some risk that failure to expose the reasons that justify the compromise, and the materials upon which the Court has relied, could be misunderstood as the legal profession protecting its own.

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