FEDERAL COURT OF AUSTRALIA
Excel Texel Pty Ltd v Wilson [2022] FCA 1577
File numbers: NSD 1983 of 2017
NSD 862 of 2018Judgment of: LEE J Date of judgment: 23 December 2022 Date of publication of reasons: 10 January 2023 Catchwords: PRACTICE AND PROCEDURE – contested application for the vacation of lengthy securities class actions hearing – whether hearing should be vacated pending delivery of reserved judgment in regulatory proceedings – where proceedings involve overlapping factual substratum – whether the interests of justice require the hearing to be vacated – relevance of risk of multiplicity of proceedings and inconsistent findings Legislation: Corporations Act2001 (Cth) ss 180, 674, 1041E, 1317F, 1317G(1)(b)(i)
Evidence Act 1995 (Cth) s 91
Federal Court of Australia Act 1976 (Cth) Pt IVA, VB; s 37M
Cases cited: Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175
Davis v Quintis Ltd (Subject to Deed of Company Arrangement) [2022] FCA 806
Frigger v Trenfield (No 7) [2020] FCA 1740
GetSwift Limited v Webb [2021] FCAFC 26; (2021) 283 FCR 328
National Australia Bank Limited v Human Group Pty Ltd [2019] NSWSC 1404
Marriner v Australian Super Developments Pty Ltd [2016] VSCA 141
Perera v GetSwift Limited [2018] FCA 732; (2018) 263 FCR 1
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 42 Date of hearing: 23 December 2022 Proceeding NSD 1983 of 2017: Counsel for the Applicants: Mr A Edwards Solicitor for the Applicants: Gadens Counsel for the Respondent: Mr G Donaldson SC with Mr J Sippe Solicitor for the Respondent: Mizen + Mizen Proceeding NSD 862 of 2018: Counsel for the Applicants: Mr J Giles SC with Mr C McMeniman Solicitor for the Applicants: Piper Alderman Counsel for the Second Respondent: Mr G Donaldson SC with Mr J Sippe Solicitor for the Second Respondent: Mizen + Mizen Counsel for the Third Respondent: Mr J Williams SC with Mr J Entwisle Solicitor for the Third Respondent: Corrs Chambers Westgarth ORDERS
NSD 1983 of 2017 BETWEEN: EXCEL TEXEL PTY LTD (ACN 082 642 742) (AS TRUSTEE FOR THE MANDEX FAMILY TRUST)
First Applicant
ANDREW JOHN WYMA
Second Applicant
AND: FRANK CULLITY WILSON
Respondent
NSD 862 of 2018 BETWEEN: GEOFFREY PETER DAVIS
First Applicant
GEOFFREY WILLIAM DAVIS
Second Applicant
AND: FRANK CULLITY WILSON
Second Respondent
ERNST & YOUNG (A FIRM) (ABN 75 288 172 742)
Third Respondent
ORDER MADE BY:
LEE J
DATE OF ORDER:
23 DECEMBER 2022
THE COURT ORDERS THAT:
In the Excel Texel (NSD 1983 of 2017) and Davis Proceedings (NSD 862 of 2018):
1.The initial trial listed to commence at 10:15am on 13 February 2023 be…
Continue reading Excel Texel Pty Ltd v Wilson
Sign in free to access the full text
- AGLC
- Excel Texel Pty Ltd v Wilson [2022] FCA 1577
- Case
- [2022] FCA 1577
- Decision Date
CaseChat Overview and Summary
The legal issues included the applicability of section 1317F of the Corporations Act 2001 (Cth), which provides for the conclusive effect of any declarations of contravention in the ASIC Proceeding. The applicants argued that any declaration in the ASIC Proceeding would not prejudice Mr Wilson, and the proceedings should be finalised as soon as possible. EY, the third respondent in the Davis Proceeding, suggested that it might be preferable for the parties to have the benefit of the judgment in the ASIC Proceeding before the hearing of the class actions but raised concerns about the possibility of the hearing being deferred for an extended period of time. The court had to weigh these submissions and determine the best course of action to facilitate the overarching purpose of the litigation.
The court concluded that the current hearing dates ought to be vacated. It recognised that the parties in the Davis Proceeding did not consider it efficient or appropriate for those proceedings to be heard separately from the Excel Texel Proceeding. The court determined that the adjournment was the course that best facilitated the overarching purpose and was one of the vicissitudes of litigation, despite the complications arising through no fault of the parties. The court further noted that any declarations of contravention as a result of the ASIC Proceeding would be conclusive evidence of the stated conduct in other proceedings, pursuant to section 1317F of the Corporations Act.
In light of these considerations, the court made several orders to facilitate the proceedings. These included adjourning the initial trial, mandating a mediation before the delivery of judgment in the ASIC Proceeding, extending the deadlines for filing and serving various submissions, and varying the security requirements for the respondents’ costs. The court also noted that the applicants in the Davis Proceeding intended to include group members who registered after a specific date as group members who would share in any monetary compensation gained from a settlement or judgment.
Orders
Orders of the court
In the Excel Texel (NSD 1983 of 2017) and Davis Proceedings (NSD 862 of 2018):
1. The initial trial listed to commence at 10:15am on 13 February 2023 be adjourned to a date for hearing as soon as practicable following the completion of the mediation referred to in Order 2.
2. Not later than two weeks after the delivery of judgment in Federal Court proceeding WAD 259 of 2018 (Australian Securities and Investments Commission v Wilson), the parties attend a mediation before a Registrar of the Court or other agreed mediator.
3. The date by which the respondents/cross-claimants are to file and serve their opening submissions pursuant to Order 45 of the Orders dated 14 June 2022 (June Orders) be extended to 17 February 2023.
4. The date by which the cross-respondents are to file and serve their opening submissions pursuant to Order 46 of the June Orders be extended to 3 March 2023.
5. The date by which the cross-claimants are to provide their reply to the opening submissions of the cross-respondents pursuant to Order 48 of the June Orders be extended to 17 March 2023.
6. The date by which the applicants are to provide their replies to the opening submissions of the respondents pursuant to Order 47 of the June Orders be extended to 24 March 2023.
7. The dates in Orders 50, 52, 53 and 54 of the June Orders be extended to dates to be determined by the Court.
In the Excel Texel Proceeding:
8. Order 1(a) of the Orders dated 2 November 2022 (November Orders) be varied such that the applicants provide tranche 1 of further security for the respondent’s costs by 16 January 2023.
9. If security is not provided in accordance with Order 1 of the November Orders as amended by Order 8 of these Orders, the proceeding as against the respondent be stayed until such security is paid.
In the Davis Proceeding:
10. By 4pm on 23 December 2022, the third respondent file and serve its amended defence to the third further amended statement of claim.
THE COURT NOTES THAT:
In the Excel Texel and Davis Proceedings:
11. After the delivery of judgment in Australian Securities and Investments Commission v Wilson, the Chambers of the Judge hearing the initial trial will contact the parties concerning a hearing date in the event of an unsuccessful further mediation.
In the Davis Proceeding:
12. Notwithstanding [19] of the Davis Notice (as defined in Order 16 of the June Orders), the applicants do not intend to seek an order that group members who had not registered by 5 August 2022 (before the mediation that occurred in October 2022) will be bound by any judgment or settlement agreement but will not be entitled to any share of any monetary compensation gained from any settlement occurring before four weeks prior to the first date of the final hearing.
13. The applicants intend to include group members who registered after 5 August 2022 as group members who will share in any monetary compensation gained from a settlement or judgment.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Secondly, as an exception to the general principle in s 91 of the Evidence Act 1995 (Cth), any declarations of contravention as a result of the ASIC Proceeding will be conclusive evidence of the stated conduct pursuant to s 1317F of the Corporations Act2001 (Cth) (Corporations Act) in other proceedings. It is not in dispute that any declaration in the ASIC Proceeding may well impact the conduct of, and the evidence to be led at, the hearing in the class actions. By way of a broad summary, the applicants contend that, notwithstanding the likelihood that judgment in the ASIC Proceeding will not be delivered before trial, this does not cause any additional prejudice to Mr Wilson. In the light of the long procedural history of the matter, they submit that priority should be given to finalising the proceedings as soon as possible. The Excel Texel applicants go so far as to say that the conclusive effect of s 1317F is essentially a matter for them, and they wish to proceed without the potential benefit of any declaration of contravention. EY, the third respondent in the Davis Proceeding, submitted that it is “likely to be preferable” for the parties to have the benefit of judgment in the ASIC Proceeding before the hearing of the two class actions, but raised concerns as to the possibility of the hearing being deferred for an extended period of time. I will return to the consideration of the strength of these submissions below, but before doing that, I should say something about the issues in the proceedings and the likely overlap between them.D GENERAL OBSERVATIONS CONCERNING THE PROCEEDINGS Mr Wilson was a managing director of Quintis, a company that operated an agricultural managed investment scheme, which oversaw Indian Sandalwood plantations and operated a sandalwood oil distillation facility. Quintis was listed on the Australian Securities Exchange (ASX) and had continuous disclosure obligations pursuant to s 674 of the Corporations Act and the ASX Listing Rules. Quintis’ business included the supply of pharmaceutical-grade sandalwood oil. On 20 February 2014, Santalis Pharmaceuticals Inc (Santalis), a United States subsidiary of Quintis, entered into licence and supply agreements with Galderma SA (Galderma) (a subsidiary of Nestlé) for, among other things, the sale of sandalwood oil to Galderma over a 20-year period (Galderma Agreements). On 16 December 2016, Santalis and Galderma entered into an agreement terminating the Galderma Agreements (Termination Agreement). The extent of the commonality in the contested substratum of fact can readily be seen from the pleadings. By way of a broad overview, ASIC alleges that Mr Wilson knew that Galderma wanted to terminate the supply agreement from December 2016, and was subsequently made aware of the execution of the Termination Agreement by February 2017, but did not inform the other members of Quintis’ board of directors. ASIC also alleged that, on 6 June 2017, Mr Wilson authorised and approved a market announcement about the Galderma Agreements that was potentially misleading or deceptive. It is said that the other members of Quintis’ board of directors did not find out about the Termination Agreement until May 2017, soon after which a market announcement was made disclosing the Termination Agreement. ASIC claims that Mr Wilson’s conduct was in breach of s 180 of the Corporations Act and his duties as a director for the purposes of s 1317G(1)(b)(i) of the Corporations Act.