Already faced with its own million-dollar legal bills, MTAA Super has been hit with an order from the Federal Court to pay legal costs incurred by its former chairman, John Rickus, after unsuccessfully suing him.
On February 26, the Federal Court judged that Rickus’ legal costs would be paid by MTAA Super on indemnification and ‘party-and-party’ grounds, which will see the former chair recoup about $840,000, according to documents from the ruling.
But MTAA Super’s legal costs from more than two years of proceedings are understood to be two or perhaps three times larger than those incurred by Rickus. Current financial accounts published by MTAA Super show increasingly large amounts of money spent on ‘Trustee Legal Fees’: in 2007, the fund paid $406,000 to lawyers, followed by $1.378 million in 2008 and $1.024 million in 2009. I&T News understands that trustees’ legal costs are usually related to asset purchases or amendments to fund constitutions, and range between $100,000 and $200,000 each year.
It is not clear whether MTAA Super will be able to claim its payout to Rickus through its trustee indemnity insurance policy, which covers claims arising from professional services to third parties, including professional indemnity claims related to current and former representatives of MTAA Super.
Michael Delaney, principal executive officer of MTAA Super, could not be reached before presstime due to the Canberra Day holiday in the ACT, and his deputy, Leeanne Turner, declined to comment.
The court ruled that Rickus’ costs for the initial proceedings – in which MTAA Super sued him for not providing the trustee with documents that he, while chairman of the fund, gave to the prudential regulator – be paid on an indemnity basis, while the subsequent cross-claim that Rickus launched in order to recoup his legal costs will be paid on ‘party-and-party’ grounds, said Leo Walsh of DMAW Layers, who represented Rickus during the proceedings.
‘Party-by-party’ reimbursements do not usually cover full legal costs. If lawyers for MTAA Super and Rickus cannot agree on the amounts to be paid under the two categories, a registrar of the court will be called in to determine what should be paid. The interest rate that will be prescribed to the repayments is expected to be about 10 per cent.
Rickus chaired MTAA Super from 1996 to 2006. He lost this position after he refused to hand the trustee documents that he gave to the Australian Prudential Regulation Authority (APRA) when it investigated the links between MTAA Super, which has no employees, and its provider of secretariat services, the Motor Trades Association of Australia (MTAA), which is also led by Delaney.