An investment adviser to four large industry funds has been given 21 days to file a defence in response to a $14 million damages suit brought against the funds and the adviser by a former property manager for the funds.
Ray King and his company Sovereign Investment Research, acted as an adviser to Sunsuper, LUCRF, HESTA and Commonwealth Superannuation Corporation (as trustee for Military Super) in regards to two property development funds managed by Ashington Property Group.
Ashington was retired as manager of the two funds in 2009 with the plaintiff in the case, Mapeline Pty Ltd, of which Ashington founder Craig Anderson is a director, claimed the conditions of the retirement agreement were breached. In March of this year Ashington sought to have King and Sovereign added as defendants in the case.
In a hearing in the NSW Supreme Court on 2 May, King and Sovereign were ordered to lodge a defence, or commercial list response, by 23 May, effectively confirming their addition to the case as the fifth and sixth defendants after the four superannuation funds.
The four super funds have already filed commercial list responses in which they have questioned whether King had authority to act on their behalf.
Mapeline has claimed that if this was the case it would represent a breach of the warranty of authority and misleading and deceptive conduct, and would lead to Mapeline seeking losses and damages against King and/or Sovereign and the super funds.
Mapeline began proceedings against the four funds in November 2013 and is seeking $14 million in damages including the value of Ashington’s units in the funds at the time of $3.75 million; an unpaid wind-up fee of $2.5 million; ongoing operating costs of Ashington of $3.5 million; unpaid consultancy fees of $1.3 million; and accumulated interest on amounts outstanding of $2.95 million.
