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Stay suit over failed disclosure, says lawyer

Sydney Morning Herald

Friday February 18, 2011

Elisabeth Sexton

ONE.TEL'S special purpose liquidator left a NSW Supreme Court judge "under a misapprehension, to put it mildly", which wrongly led to an unfair delay in a $244 million damages case, the court heard yesterday.The failure to disclose all relevant information should result in a permanent stay of the suit against James Packer, Peter Yates, Lachlan Murdoch, Peter Macourt and companies associated with them, said Mr Yates's barrister, Neil Young, QC.Mr Young said Justice Reg Barrett would have insisted on the suit being served in 2008 if the liquidator, Paul Weston, had told him that he was seeking $58 million to run a case against only the Packer and Murdoch camps.Justice Barrett would have assumed the sum, which comprised $18 million for Mr Weston's own costs and a $40 million provision for any court order to pay the defendants' costs, was to cover suing all defendants named in the statement of claim, which Mr Weston filed in 2007 but did not serve until last year.Mr Weston had neglected to tell the judge that he had already decided not to proceed against several large firms including the lawyers Freehills, the accountants Ernst & Young and the insolvency practitioners Ferrier Hodgson, Mr Young said.Mr Weston's lawyers had told him he needed to put aside $8 million for any order to meet the costs of the Packer and Murdoch parties, and he had received an offer from a litigation funding syndicate for $12 million, plus his own costs.Mr Young said Mr Weston's "unreasonable pursuit of gilt-edged funding" imposed on Mr Yates "an inordinate delay in the service of the proceedings", which relate to events when One.Tel collapsed almost 10 years ago.He also said it was "frankly very surprising" that Mr Weston's barrister, John Karkar, QC, had on Wednesday raised issues about Mr Yates from the Australian Securities and Investments Commission's unsuccessful case against One.Tel executives Jodee Rich and Mark Silbermann.Mr Yates had been only a witness, had been given no opportunity during the ASIC case to reply to the issues aired on Wednesday and had been the subject of no formal findings by Justice Robert Austin in 2009, Mr Young said.Mr Packer's barrister, Tom Bathurst, QC, said yesterday that neither waiting for Justice Austin's decision nor waiting for litigation funding was a proper reason to delay the case.Mr Weston had "sworn to serious allegations" when he signed the statement of claim filed with the court in 2007, 2 years before the judgment, Mr Bathurst said.The NSW Court of Appeal had held that it was improper for a litigation funder, rather than the court, to determine when a case would begin, he said.

© 2011 Sydney Morning Herald

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