KPMG has fired a broadside against the Australian Securities and Investments Commission (ASIC) and Westpoint directors for their part in the $1.7 billion collapse of the property group.

In a bid to avoid paying compensation to investors of the failed property group, KPMG has launched a High Court challenge claiming ASIC’s powers are unconstitutional.

At a preliminary hearing in Melbourne last week, KPMG alleged powers used by ASIC to pursue KPMG for $200 million in damages are unconstitutional and therefore invalid.

The case is expected to move swiftly through the legal system and could be heard in the High Court in July.

KPMG is specifically contesting section 50 of the ASIC Act 2001, which allows the regulator to pursue damages on behalf of a person or companies. KPMG argues section 50 allows ASIC to take action on behalf of a company without seeking permission first.

Without section 50, the regulator would need to launch individual cases for each of the 20,000 Westpoint investors.

In papers lodged with the court, KPMG argues ASIC knew Westpoint’s investments were dubious and failed to exercise its duty of care. KPMG also blames Westpoint directors for not providing accurate figures on the state of the company.

ASIC in turn says that negligent conduct by KPMG over the three years it audited Westpoint was partly responsible for the investment company’s downfall.

Another hearing will be held on July 20.