Setback for Storm litigants
Two clients of Storm Financial will have to draft fresh pleadings in legal action against Commonwealth Bank over the bank's alleged role in investment losses suffered by the pair.In the Federal Court, Justice Nye Perram ruled that various elements in the original pleadings of Mark Irving and Anthony Oliver must be struck out because of defects in the presentation of the legal argument by their lawyers.Irving and Oliver are seeking compensation from the bank over losses suffered in late 2008 when the bank closed out the margin loans provided to them.The two investors - both medical practitioners in Sydney - were clients of Storm Financial and borrowed A$24 million from Colonial to fund investments in listed shares. Commonwealth Bank's Colonial arm was a key provider of margin loans to Storm, a financial planning business that failed three years ago.Among other allegations, the two investors allege that the bank failed to act in good faith and that it acted unconscionably, both charges denied by the bank.The case is of interest because it may lead to a trial that will, in part, assess the alleged "system" for leveraged investments operated by Storm in conjunction with its preferred funders, in this case CBA.