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Litigation funding class order relief extended again

by Hilary Kincaid 22. February 2011 16:35

ASIC has once more extended the operation of the relief granted in CO 10/333 Funded representative proceedings and funded proof of debt arrangements, until 1 June 2011.

Our previous post on the subject sets out details of the Corporations Act requirements addressed by the relief.

A copy of the amending class order ([CO 11/128]) is available on the Comlaw site, together with explanatory material.


ASIC | Litigation

ASIC heads into the eye of the Storm

by Hilary Kincaid 6. January 2011 10:02

As flagged in a previous post, ASIC has commenced proceedings in the Federal Court in relation to the collapse of Storm Financial.

ASIC was unable to reach an acceptable commercial outcome with respect to compensation in its discussions with key bank parties.

There are three sets of proceedings in total:

  • Federal Court compensation proceedings in the name of ASIC and two former Storm investors against the Bank of Queensland, Senrac Pty Ltd (owner and franchisee of the North Ward branch of that bank), and Macquarie Bank Limited in relation to alleged breach of contract, contravention of the statutory unconscionable conduct prohibitions, and for liability as linked credit providers of Storm under s 73 of the Trade Practices Act 1974;
  • Federal Court proceedings against Storm, Commonwealth Bank of Australia, Bank of Queensland and Macquarie Bank in relation to Storm’s alleged operation of an unregistered managed investment scheme in which the banks were involved;  and
  • Federal Court civil penalty proceedings against Emmanuel and Julie Cassimatis for alleged breach of their obligations under s 180 of the Corporations Act.


ASIC | Litigation

Legal Services Expenditure Report 2009-10

by Hilary Kincaid 6. January 2011 09:58

The Attorney-General has released the 2009-2010 Legal Services Expenditure Report.

The report sets out expenditure by agencies regulated by the Financial Management and Accountability Act (FMA agencies) and the Commonwealth Authorities and Companies Act (CAC agencies).  Overall expenditure by both groups of agencies was $640.6m, in internal and external legal services.

The number of direct briefs to counsel has increased fivefold.

Both FMA and CAC agencies paid a total of $254.9m to law firms in professional fees. The AGS was the principal recipient (43%), with Clayton Utz (11%) and Blake Dawson (8%) following close behind. ASIC spent a total of approx $80m on legal services in 2009-2010, with $30m of that being external expenditure (ie payments to counsel and firms).

A full copy of the report is available from the Attorney-General’s website.


APRA | ASIC | Litigation

Guidance on obtaining ministerial consent to rely on extraterritorial conduct in private proceedings

by Hilary Kincaid 6. January 2011 09:48

Just before Christmas, Treasury released guidance in order to assist litigants and legal practitioners in relation to obtaining the consent of the Minister to rely on extraterritorial conduct in private proceedings commenced under s 12AC of the Australian Securities and Investments Commission Act 2001 and s 5 of the Competition and Consumer Act 2010 (the new name for the Trade Practices Act 1974 as of 1 January 2011).

The requirement of consent applies where:

  • A person seeking damages for breach of the CCA or the ASIC Act seeks to rely on evidence of foreign conduct;
  • A person seeks some other form of compensatory order – such as rescission of an agreement or transfer of property – in relation to such a breach and seeks to rely on evidence of foreign conduct.

In both cases, ministerial consent is required before making an application to the court.

The purpose of the provision, according to Treasury guidance, is to ensure that international relations are not disrupted by proceedings in Australian courts. This is principally because although the conduct complained of may be in breach of relevant Australian legislation, it may not be in breach of the laws of the foreign jurisdiction (and may in fact be expressly authorised by those laws).

The Assistant Treasurer and Minister for Financial Services and Superannuation, the Hon Bill Shorten MP, is the Minister ordinarily responsible for giving consent under s 12AC of the ASIC Act, and the Minister to whom a request should be directed in the first instance.

The request should:

·         be in the form of a letter;

·         be accompanied by a copy of the pleadings, with the letter identifying by reference to relevant paragraphs in the pleadings the conduct which was engaged in outside Australia (and upon which the applicant wishes to rely);

·         state the section or sections under which consent is requested;

·         be forwarded to other parties in the proceedings and also to Treasury; and

·         include confirmation that the forwarding has occurred.

The complete guidance (which also sets out procedure for the provision of advice to the Minister on issues of foreign law) is available to download from the Treasury site. The guidance is current as at 1 January 2011.

Subscribers are referred to the annotations to s 12AC in Austin and Black’s Annotations to the Corporations Act at [ASICA.12AC] for more information.


Austin and Black's Annotations to the Corporations Act | Compliance | Litigation

Stormy weather ahead as ASIC announces intention to commence proceedings in Storm Financial collapse

by Hilary Kincaid 28. November 2010 17:59

ASIC has announced that it intends to commence civil penalty proceedings against Emmanuel and Julie Cassimatis as directors of Storm Financial Limited (in liquidation) (recs and mgrs appted) in relation to alleged contraventions of s 180 of the Corporations Act.

ASIC will allege that the Cassimatises breached their duties by allowing Storm to become exposed to legal liability caused by their implementation of a financial services business model (the "Storm Model") which involved providing commoditised financial advice to investors that failed to take into account the personal circumstances of individual investors.

ASIC has also announced its intention to commence proceedings against parties, including the Commonwealth Bank and Macquarie Bank, currently seeking compensation for investors affected by the Storm collapse.

A short period will be allowed before actually filing proceedings in order to allow settlement proceedings with the bank parties to reach an acceptable commercial outcome.

More detail, particularly regarding the action that ASIC intends to take against the banks, is available on the ASIC official site.


ASIC | Litigation

Federal Court expresses concerns about Civil Dispute Resolution bill

by Hilary Kincaid 27. October 2010 16:35

In a submission to the Senate Legal and Constitutional Affairs Committee, the Federal Court has flagged its serious concerns with the reforms proposed in the Civil Dispute Resolution Bill 2010.

Although the Committee's report is not due until 22 November 2010 (today is the closing date for submissions), submissions already received are publicly available.

In short, the court is concerned that the reforms as set out in the Bill :

  • are neither necessary nor desirable;
  • are not suitable for the nature of much of the court's work;
  • will increase costs and delays without corresponding benefit;
  • run the risk of creating satellite litigation - litigation about litigation; and
  • employ terminology which may be in conflict with the case management principles implemented in the Access to Justice (Civil Litigation Reforms) Act 2009, and case management reforms introduced in state jurisdictions. 

The submission also points out that the operation of the reforms in a personal or corporate insolvency context is unclear. 

The submission proposes an alternative approach of enacting legislation requiring a party contemplating litigation to serve a short statement outlining the factual and legal basis of its claim upon a potential respondent. If that step were taken, the court could then be given jurisdiction over ADR of the matter and the parties would be able to access court-annexed mediation (which is generally cheaper than external mediation, and integrated with existing case management powers).   

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Law reform | Litigation | Parliament

Civil Dispute Resolution bill reintroduced

by Hilary Kincaid 30. September 2010 11:49

The Bill, which essentially requires parties to take "genuine steps to seek to resolve their dispute where possible, before commencing proceedings in the Federal Court or Federal Magistrates Court", was reintroduced into the House of Representatives this morning.

The Attorney-General, Robert McClelland, gave the second reading speech. The bill is presented as a logical next step, following the case management powers introduced by the last Parliament.

Whether the Bill succeed in moving us "from the adversarial culture of litigation to one where resolution is actively sought", as the reading speech rather nobly hopes, remains to be seen. However, we note the recent passage of the Civil Procedure Bill 2010 in Victoria, which contains similar measures.


Law reform | Litigation | Parliament

Careful with your catch-all pleadings

by Hilary Kincaid 29. September 2010 15:04

The High Court handed down its decision in Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited [2010] HCA 31 earlier today.

The judgment of French CJ and Kiefel J contains a particularly elegant little warning against the lazy litigator's traditional fallback of pleading breach of the TPA (at [5]):

The cause of action for contravention of statutory prohibitions against conduct in trade or commerce that is misleading or deceptive or is likely to mislead or deceive has become a staple of civil litigation in Australian courts at all levels. Its frequent invocation, in cases to which it is applicable, reflects its simplicity relative to the torts of negligence, deceit and passing off. Its pleading, however, requires consideration of the words of the relevant statute and their judicial exposition since the cause of action first entered Australian law in 1974. It requires a clear identification of the conduct said to be misleading or deceptive. Where silence or non-disclosure is relied upon, the pleading should identify whether it is alleged of itself to be, in the circumstances of the case, misleading or deceptive conduct or whether it is an element of conduct, including other acts or omissions, said to be misleading or deceptive.

For authoritative commentary regarding statutory liability for misleading and deceptive conduct in a corporations context, subscribers are referred to [22.450] of Ford's Principles of Corporations Law.

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Insolvency | Litigation | Ford's Principles of Corporations Law

Federal Court issues new practice note

by Hilary Kincaid 29. September 2010 10:31

The Federal Court has issued a new practice note, CORP 3 - Schemes of Arrangement.

The practice note, which is concise, states that when making an order under s 411(1) of the Corporations Act the court requires that the explanatory statement prominently displays a notice. The notice is to the effect that an order for convening a meeting does not indicate that the court has formed any view as to the merits of the scheme, and approval of the explanatory statement does not indicate that the court has prepared or is responsible for that statement's content.

For detailed practical guidance regarding schemes of arrangement in a takeovers context, subscribers are referred to Chapter 16 of Takeovers and Reconstructions.



Compliance | Litigation | Takeovers and Reconstructions

ASIC extends interim class order relief for funded proceedings

by Hilary Kincaid 7. September 2010 18:47

ASIC has extended the operation of the relief granted in CO 10/333 Funded representative proceedings and funded proof of debt arrangements until 1 March 2011.

The aim of the relief is to enable the temporary operation of funded representative proceedings and funded proof of debt arrangements without compliance with the requirements of the Corporations Act 2001, and to allow the incoming government time to consider the form of the future exemption of those schemes from compliance by regulation.

The Corporations Act requirements that would otherwise be applicable include:  

  • registering the scheme with ASIC;
  • adopting a complying constitution and compliance plan for the scheme;
  • appointing an AFS licensed public company as ‘responsible entity’;
  • preparing a Product Disclosure Statement; and 
  • providing ongoing disclosure to members of the scheme.

More information is available on the official ASIC site.


ASIC | Litigation


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