In an application to the Court, KordaMentha said it believed LMIM had failed in its duty to investors in the way it conducted itself in relation to a loan to a property developer called Peregian Beach.
KordaMentha said if its application is successful it will look to sue LMIM, which is in receivership, for the full A$1.9m, plus costs.
In a three-part application, with annexed documents, KordaMentha partner Simon Vertullo set out the case, including details of how LMIM failed to act in the best interest as trustee of the Managed Performance Fund after it made a A$1.7m loan to Peregian Beach.
KordaMentha’s application is due to be heard on 19 November.
Last month, investors were warned by KordaMentha that they could face losses of up to 95% on their initial investment. At the time the trustee explained it had assessed the fund’s realisable assets to be between A$11.2m and A$13.7m which, relative to unitholders’ total original investment of A$330m, equates to a return of less than 5 cent in the dollar.
However, KordaMentha said this did not include any “planned legal action”, indicating that this most recent development could help to alter investors’ fortunes slightly for the better.