One.Tel creditors tilt again at CGU

The Age

Tuesday August 11, 2009

Elisabeth Sexton

CREDITORS of the collapsed telephone company One.Tel have launched a fresh assault on the insurance company CGU in a battle that began in the NSW Supreme Court eight years ago and has been three times to the Court of Appeal and twice to the High Court.The One.Tel liquidator, the Ferrier Hodgson partner Steve Sherman, is trying to prove that CGU is liable to pay compensation that was ordered by the Supreme Court for breaches of directors' duties. CGU has argued since One.Tel collapsed in 2001 that the policy was invalid because all relevant information was not disclosed before it was issued.Mr Sherman's latest move is a suit launched in the name of the trustee for a former One.Tel executive director, Brad Keeling, which began in the Supreme Court on Friday.The brief directions hearing occurred just before a fourth trip to the Court of Appeal for a challenge in the name of the trustee for the former One.Tel chairman, John Greaves. A two-day hearing of that began yesterday.Mr Keeling and Mr Greaves struck arrangements with their creditors in 2003 and 2004 after reaching settlements with the corporate regulator in a case alleging breaches of their duties to One.Tel.Mr Keeling agreed to an order that he would pay One.Tel compensation of $92 million. It was $20 million in Mr Greaves' case.One.Tel's creditors have so far received $273,000 from Mr Keeling's trustee, David Kerr, of RSM Bird Cameron, and $340,000 from Mr Greaves' trustee, David Watson, of Jones Partners.The appeal has potentially been complicated by the death of Mr Watson on July 18.Justice David Hodgson said yesterday the three appeal judges should hear submissions from lawyers for Mr Sherman and CGU and hand down a ruling, but not make orders until, if necessary, a replacement trustee had been appointed.

© 2009 The Age

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