In a case management hearing in the Federal Court Friday, Justice Michael Lee approved SMBC’s bid to include losses stemming from a 2020 agreement between the bank and Forum Group. To date the case had claimed losses only from a 2018 agreement between SMBC and Humm unit Flexirent.

SMBC’s case alleges Flexirent made “material representations” to the bank about receivables that did not exist, engaged in misleading and deceptive conduct and negligently offered the receivables to the Japanese bank.

Justice Lee said there was no need for SMBC to apply to the court to include the 2020 agreement, saying in the interests of time he would  allow it.

“I just want to get this case going”, he said.  “I just want to spare unnecessary steps – they’re going to get leave”. 

The judge said Flexirent could try to strike out the additional claim if it proved “vexing”, but he said in his view “strike out applications are the world’s least sensible interlocutory application”. 

A trial date has not been set, but Justice Lee said it would not be until next year. 

SMBC had foreshadowed an intention to bring more claims in January. At the time, counsel for SMBC Emma Beechey indicated the extra claim would be against Forum Group directly, and not involve Flexirent. 

“Flexirent was not contractually involved in the 2020 arrangements…they were directly between SMBC and Forum. But we foresee the potential for a claim with respect to losses we suffered in the 2020 arrangement,” she said at the time.

SMBC, French bank Societe Generale and Westpac have all filed proceedings to recoup a total of more than $550 million loaned to Forum as part of what Justice Lee has said appeared to be an “elaborate” fraud.

Westpac alleges it was defrauded of more than $450 million in falsified loans to Forum. The case names Forum founder Bill Papas as a respondent; along with Forum Finance director Vince Tesoriero; Papas’ partner, Louisa Agostino; Papas’ cousin, Eric Constantinidis; Tesoriero’s father, Giovanni Tesoriero; and 42 companies associated with the Forum Group.

According to SMBC’s proceedings, filed last July against Flexirent, SMBC agreed in August 2018 to buy receivables and related assets from Flexirent that arose under alleged contracts between Forum Enviro and Veolia Environmental Services.

But Forum gave forged agreements to Flexirent showing it had contracts with Veolia, according to the suit.

While SMBC alleges Forum Enviro acted fraudulently by showing Flexirent agreements for assets which did not exist, it claims Flexirent is on the hook for loss and damage totalling $33.6 million because it indemnified the bank against any loss caused by Forum failing to comply with the agreement.

In the 2018 offer letters to SMBC, Flexirent engaged in misleading and deceptive conduct by claiming agreements had been made between Forum and Veolia, the lawsuit alleges.

In a defence filed last September, Humm admitted to making “misrepresentations” to SMBC over the allegedly worthless receivables linked to Forum but denied it was negligent and claimed Forum should share the burden of paying any damages.

Humm argued Forum failed to tell Flexirent that agreements underpinning the receivables were forged, leading it to believe it had given SMBC “valid and true” information.

It argued Forum and Papas were concurrent wrongdoers in causing SMBC’s alleged loss and should contribute to any judgment awarded to the bank.

SMBC is represented by Michael Izzo SC and Emma Beechey, instructed by Jones Day. Humm is represented by John Anderson, instructed by Bridges Lawyers.

The case is SMBC Leasing & Finance Inc v Flexirent Capital & Anor.