An appeal in the Federal Court has been thrown out after former City Pacific chief executive Phil Sullivan and three other unsuccessful defendants failed to have the original judgment, which found them liable for losses in one of the company's funds, overturned.
Sullivan and other senior executives now face a $70 million bill in damages plus interest to investors in the Pacific First Mortgage Fund. There were more than 11,000 investors in the fund which has been frozen since 2009.
The fund was valued at $700 million before the collapse of Gold Coast property developer and fund manager City Pacific due to commercial property values plummeting, putting pressure on its mortgage book.
Maurice Blackburn principal Jason Geisker said the appeal decision again vindicates the resolute action taken on behalf of investors who wanted to hold Phil Sullivan and others involved in the breaches to account.
This decision represents an important victory for better corporate governance in Australia. Anyone entrusted with management of pooled schemes for investment is today again reminded of the significant responsibilities they are under to ensure they comply with our Corporations Act requirements."