Piggott Wood & Baker: 20-plus year liquidation nears finish line

More than two decades after one of Tasmania’s most infamous financial collapses involving law firm Piggott Wood & Baker’s mortgage fund, the liquidation is just months from completion.

Protest outside Piggott Wood & Baker’s Macquarie St office, December 14, 2021. Picture: File

More than two decades after the infamous collapse of a Hobart law firm’s investment scheme that lost mum-and-dad investors millions, the liquidator winding the company up is about to call it case closed.

The scheme, a contributory mortgage fund operated by Piggott Wood & Baker (PWB), collapsed into insolvency in October 1998, leading to a Tasmania Police investigation not closed until 2010.

Last week, Federal Court Justice Shaun McElwaine ruled that the company’s liquidator, Barry Hamilton of Barry Hamilton & Associates, could be discharged upon fulfilling a few last duties, including advertising in newspapers to find creditors owed nearly $230,000 of unclaimed money.

The collapse of PWB’s fund, which led to public protests outside the firm’s Macquarie St office, was due to “imprudent lending practices,” Justice McElwaine said.

Nearly one-third of the $60m worth of loans had been lent to borrowers who were in default in their interest payments, risky mortgages known as subprime (later one of the root causes of the Global Financial Crisis in 2008).

In November 2001, PWB partners John Thomas Turner and Grant Edward Keach, the pair with overall responsibility for the fund, were found guilty by Supreme Court Justice Ewan Crawford of unprofessional conduct, in a case brought by The Law Society of Tasmania.

“Most” of the firm’s partners also became personally insolvent due to the fund’s collapse, Justice McElwaine said in his March 10 decision on Mr Hamilton’s discharge.

Piggott Wood & Baker principal Grant Edward Kench found guilty of unprofessional conduct. Picture: File

“Much litigation ensued, including claims by the bankrupt partners for indemnity from top up professional indemnity insurers,” Justice McElwaine said.

The firm’s liquidation was complicated by the subsequent collapse of its primary professional insurer, HIH Insurance Ltd, and each of its subsidiaries, in March 2001. It was only on October 14, 2021, that PWB liquidator Mr Hamilton received PWB’s last dividend payment from HIH’s liquidators.

Protesters outside Piggott Wood & Baker in Macquarie Street wave signs at passing motorists. Wendy Stephens makes noise and holds a sign. December 14, 2001. Picture: File

According to Justice McElwaine, Mr Hamilton has thus far repaid PWB investors $1,555,148.61, on account of interest; $1,125,284 to the Solicitors’ Trust, it being the entity which guaranteed most of the money lost by investors; and $107,236.37 as a second dividend to investors on account of interest.

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One of the final barriers to Mr Hamilton being able to destroy his voluminous library of PWB company books and other materials, and be released from his duties, is $227,528.89 “due to investors that he has not been able to locate or who have not banked dividend cheques”.

“Mr Hamilton states that he intends to publish advertisements in newspapers listing the names of the investors on whose account he holds unclaimed dividends with advice to lodge a claim within 30 days,” Justice McElwaine said.

Piggott Wood & Baker liquidators Barry Hamilton left, and John Woods, 13 December, 2001. Picture: File

“If after that period he continues to hold investor funds, he intends to transfer the moneys to the Australian Securities & Investments Commission (ASIC) as unclaimed money.”

Justice McElwaine ordered that the liquidation be finalised pending the advertisement of the unclaimed money and the lodgement of the “final cash book” with ASIC.

The collapsed law firm was subsequently bought out and rechristened PWB Lawyers Hobart. It continues to trade at Elizabeth St. PWB Lawyers had no role in the previous collapse, nor has there ever been any allegation of impropriety involving the firm.

On November 3, 2010, Tasmania Police announced its multi-year investigation into the mortgage fund’s collapse had not borne fruit.

“The complaints, of stealing and acquiring a financial advantage by deception, were thoroughly investigated, and that investigation revealed breaches of fiduciary duties but no criminal conduct,” said former Acting Deputy Commissioner Scott Tilyard at the time.