The executives behind failed finance company City Pacific face a bill for $70 million after failing in their attempt to have a judgment against them overturned.
Almost two years after the original judgment against former, City Pacific chief executive Philip Sullivan and other senior executives Sullivan's had their Federal Court appeal unanimously thrown out on Monday, a statement from Maurice Blackburn said.
Trilogy Funds Management Ltd brought the case as the responsible entity of the Pacific First Mortgage Fund and Maurice Blackburn said it now had the right to recover $70 million from Mr Sullivan and the other unsuccessful defendants.
The original 2015 judgment found four former credit committee members including Mr Sullivan, Stephen McCormick, Ian Donaldson and Thomas Swan were liable for the losses.
The losses were incurred by the Pacific First Mortgage Fund, which at its height was valued at $700 million before City Pacific's collapse in August 2009 after the value of its mortgage book came under pressure when commercial property values plummeted.
The fund has been frozen since 2009, affecting more than 11,000 investors, many of them elderly. The fund's 2014 annual report shows write downs had taken the value of its mortgage book to a little more than $60 million.
The executives had claimed during the appeal that they had not received a fair hearing in the initial trial and made allegations about "fabricated documents", the appeal court judgment said.
But the judges found that the trial judge had not erred in ruling the defendants had contravened the Corporations Act and "that the appellants should not be exonerated from those contraventions in the circumstances of the case".
Maurice Blackburn principal Jason Geisker said the appeal vindicated the action taken on behalf of investors who wanted to hold Mr 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," Mr Geisker said.
"Australia has very robust investment and corporate governance laws but they are only ever as good as they are enforced. Today's decision is a timely reminder of the very serious personal consequences awaiting those who disregard Australia's corporate laws.
"Investors wanted a judgment in this case, and they received one that excoriated the behaviour of those in charge in the strongest possible way. They have won this litigation at every step and it's now time for those responsible to compensate investors."
