Litigation

Court Orders - 21 August 2013

On 26 August 2013 The Supreme Court of Queensland delivered final orders in relation to the Fund. A copy of the Order* is attached and should be read in full. The Order can be summarised as follows:-

LMIM has been directed to wind up the Fund subject to the appointment of David Whyte who has been appointed to:-

take responsibility for ensuring that the Fund is wound up in accordance with its constitution; and
(without prejudicing the rights of Receivers who were appointed from McGrathNichol on 11 July 2013) be the Receiver of the property of the Fund.

Investors of the Fund were notified of the Orders via email on 27 August 2013, as required by paragraph 8 of the Order.

Please click here to view the sealed orders made on 21 August 2013 with respect to the First Mortgage Income Fund.

To access BDO Australia's website (www.bdo.com.au) please click here

For updates on the progress of the winding up of the FMIF, please refer to the Receivers' website - www.lmfmif.com.

First Mortgage Income Fund Press Release - 8 August 2013

FTI Consulting Senior Managing Directors and Liquidators of LM Investment Management Limited ("LMIM"), Mr John Park and Ms Ginette Muller, noted the judgment of the Supreme Court of Queensland delivered today which orders LMIM to wind up the LM First Mortgage Income Fund.

The Liquidators of LMIM are pleased that Trilogy’s application to have itself appointed as temporary responsible entity of the LM First Mortgage Income Fund has been dismissed. The Judge accepted FTI’s submission that Trilogy’s application did not come within the Corporations Act. FTI Consulting also notes that the Court expressed reservations about whether it was necessary to appoint Trilogy in any case, even if the Court had the power to make such an appointment.

Consequently, the Court has dismissed Trilogy’s application to become responsible entity of the LM First Mortgage Income Fund.

FTI Consulting also welcomes the order that LMIM wind up the LM First Mortgage Income Fund, which could not be done while Trilogy and other parties’ litigation was proceeding.

Mr David Whyte will be appointed as an independent person to take responsibility for ensuring that the Fund is wound up in accordance with its constitution. He will be appointed receiver of fund assets for that purpose. Although there will be no work to be done while the Deutsche Bank receivers remain in office, LMIM and FTI Consulting look forward to working with Mr Whyte.

There are some disappointing aspects of the judgment from FTI Consulting’s standpoint and its legal advisers are closely reviewing the judgment.

First Mortgage Income Fund

As you are aware, on 2 May 2013, the Court heard an application brought by Raymond and Vicki Bruce to appoint Trilogy Funds Management Limited as responsible entity of the LM First Mortgage Income Fund ("FMIF"). At this hearing, Roger Shotton also appeared and sought that the FMIF be wound up and that David Whyte of BDO take responsibility for ensuring that the FMIF is wound up in accordance with its constitution.

This hearing has been adjourned and is scheduled to reconvene on Monday, 13 May 2013.

On 3 May 2013, The Australian Securities and Investments Commission ("ASIC") filed an interlocutory application seeking that FMIF be wound up and that Derrick Vickers, Darryl Kirk and Gregory Hall of PWC be appointed to be responsible for ensuring that the FMIF is wound up in accordance with its constitution as well as being appointed joint and several receivers of the property of FMIF.

The court material issued by all parties involved in these proceedings is posted below according to their designation and a summary of litigation can be found by clicking here

Applicants - Raymond Bruce and Vicki Bruce

Originating Application

Affidavit of Raymond Edward Bruce, sworn 14 April 2013

Affidavit of Paul Alexander Russell, sworn 3 May 2013

Affidavit of Nadine Bucher, sworn 3 May 2013

Affidavit of Michael James Baltins, sworn 3 May 2013

Exhibits to the Affidavit of Michael James Baltins, sworn 3 May 2013 - Part 1

Exhibits to the Affidavit of Michael James Baltins, sworn 3 May 2013 - Part 2

Exhibits to the Affidavit of Michael James Baltins, sworn 3 May 2013 - Part 3

Affidavit of Paul Wood , sworn 6 May 2013

Exhibits to the Affidavit of Paul Wood, sworn 6 May 2013 - Part 1

Exhibits to the Affidavit of Paul Wood, sworn 6 May 2013 - Part 2