FEDERAL COURT OF AUSTRALIA
Jones v Treasury Wine Estates Limited (No 2) [2017] FCA 296
File number: NSD 660 of 2014 Judge: FOSTER J Date of judgment: 23 March 2017 Catchwords: PRACTICE AND PROCEDURE – class actions – whether personal service of a combined opt out and group registration notice should be effected upon group members having regard to the requirements of s 33Y(5) of the Federal Court of Australia Act 1976 (Cth) and the circumstances of the present case – whether, in an investor class action, as part of a claims registration process, group members should be required to furnish to the funder or the plaintiff’s solicitors trading information in relation to transactions in the securities the subject of the proceeding which took place after the period pleaded as the relevant period for the purposes of the proceeding – whether a class closure order and related preclusion order should be made at the present time for the purposes of upcoming settlement negotiations as well as for the purposes of the proceeding generally including in relation to judgment after a contested trial even though the initial trial has not yet commenced Legislation: Australian Consumer Law
Australian Securities and Investments Commission Act 2001 (Cth)
Corporations Act 2001 (Cth), s 674(2)
Federal Court of Australia Act 1976 (Cth), Pt IVA, ss 33J, 33V, 33X, 33Y and 33ZF
Supreme Court Act 1986 (Vic), s 33ZG
Cases cited: Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (2016) 243 FCR 474
Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469
Femcare Ltd v Bright (2000) 100 FCR 331
Matthews v SPI Electricity Pty Ltd (No 13) (2013) 39 VR 255
McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1
Mobil Oil Australia Pty Ltd v Victoria (2002) 211 CLR 1
Money Max Int Pty Ltd (Trustee) v QBE Insurance Group Ltd (2016) 338 ALR 188
P Dawson Nominees Pty Ltd v Brookfield Multiplex Ltd (No 2) [2010] FCA 176
Date of hearing: 9 August 2016 Date of last submissions: 10 August 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 64 Counsel for the Plaintiff: Mr MBJ Lee SC and Mr GA Donnellan Solicitor for the Plaintiff: Maurice Blackburn Counsel for the Defendant: Mr RA Dick SC and Mr MA Izzo Solicitor for the Defendant: Herbert Smith Freehills ORDERS
NSD 660 of 2014 BETWEEN: BRIAN JONES
Plaintiff
AND: TREASURY WINE ESTATES LIMITED (ACN 004 373 862)
Defendant
JUDGE:
FOSTER J
DATE OF ORDER:
23 MARCH 2017
THE COURT ORDERS THAT:
Opt Out Orders
1.Pursuant to s 33J of the Federal Court of Australia Act 1976 (Cth) (Act), 4.00 pm on 26 May 2017 be fixed as the date on or before which a group member may opt out of this proceeding (Class Deadline).
2.Pursuant to s 33ZF of the Act, any…
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- Case
- [2017] FCA 296
- Decision Date
CaseChat Overview and Summary
The court found that the existence of a related proceeding should not delay the finalisation of the group notice and its publication to group members. It approved the distribution of the group notice via personal service using TWE's share register, publication on the websites of Maurice Blackburn and the Federal Court, and inspection at District Registries of the Court. The court also decided that group members should provide transactional information for purchases and sales of TWE securities during the relevant period. The court made class closure and claim preclusion orders requiring group members to complete an online registration form by the class deadline. Members who engaged the plaintiff's solicitors or retained IMF Bentham Limited for litigation funding would be deemed to have registered. The court also granted leave to the plaintiff's and defendant's solicitors to inspect opt-out notices filed by group members. The final orders included setting the class deadline for opt-out, the method and cost of notice distribution, and the requirements for group member registration and settlement distribution.
Orders
Orders of the court
Opt Out Orders
1. Pursuant to s 33J of the Federal Court of Australia Act 1976 (Cth) (Act), 4.00 pm on 26 May 2017 be fixed as the date on or before which a group member may opt out of this proceeding (Class Deadline).
2. Pursuant to s 33ZF of the Act, any group member who wishes to opt out of this proceeding must, before the Class Deadline, deliver an opt out notice in the form of the opt out notice which is Schedule C to these Orders to the New South Wales District Registry of the Federal Court of Australia.
3. Pursuant to s 33X and s 33Y of the Act, the terms of the opt out and claim registration notice set out in Schedule A to these Orders (Notice) are approved.
4. Pursuant to s 33X and s 33Y of the Act, the terms of the notice set out in Schedule B to these Orders (Abridged Notice) are approved.
5. Pursuant to s 33Y of the Act, the Notice and the Abridged Notice be given to group members according to the following procedure:
(a) On or before 29 March 2017, the plaintiff cause the Notice to be displayed on the website of the plaintiff’s solicitors, http://www.mauriceblackburn.com.au, and to remain so displayed on and until 29 May 2017;
(b) On or before 29 March 2017, the defendant cause the Notice to be sent to each person or entity listed in the defendant’s share register as having purchased shares in the defendant between 17 August 2012 and 15 July 2013 inclusive, such Notices to be sent by email where an email address is available, or failing that, by ordinary mail;
(c) On or before 29 March 2017, the District Registrar of the New South Wales District Registry of the Federal Court of Australia cause the Notice to be:
(i) Posted on the Federal Court website; and
(ii) Available for inspection at the District Registry of the Federal Court in Sydney, Melbourne, Canberra, Brisbane, Adelaide, Perth, Hobart and Darwin.
(d) On or before 13 April 2017, the plaintiff cause an advertisement in the terms of the Abridged Notice to be published in the legal notices or equivalent section in one weekday edition of each of the following newspapers, namely:
(i) The Australian; and
(ii) The Australian Financial Review.
6. On or before 29 March 2017, the plaintiff cause the opt out notice that is Schedule C to these Orders to be made available on the website of the plaintiff’s solicitors and to remain so until 29 May 2017.
7. The costs of and incidental to the procedure set out in Orders 5 and 6 above be initially borne by the plaintiff but on the basis that those costs will subsequently fall to be dealt with by the Court as part of the costs of the proceeding.
8. Both parties have liberty to apply on short notice concerning the quantum and method of payment of the said costs.
9. If, on or before the Class Deadline, the solicitors for either party receive a notice purporting to be an opt out notice referable to this proceeding, the solicitors file such notice in the New South Wales District Registry of the Federal Court of Australia within fourteen (14) days of receipt and the notice shall be treated as an opt out notice received by the Court at the time when it was received by the solicitors.
Class Closure and Claim Preclusion Orders
10. Subject to Order 12 below, pursuant to s 33ZF of the Act, any group member who wishes to participate in any distribution of any amount agreed in a settlement of this proceeding be obliged, by the Class Deadline, to complete an online TWE Group Member Registration Form at the domain hosted by IMF Bentham Limited www.tweclassaction.com.au (Registration Form).
11. In completing the Registration Form, and in order to register for the purpose of Order 10 above, each group member (other than those who are deemed to have registered by Order 12 below) be required to submit:
(a) The group member’s name, address and email address;
(b) Any relevant and available Holder Identification Number (HIN) or Security Reference Number (SRN);
(c) The number of Treasury Wine Estates Limited securities (TWE securities) held by the group member immediately prior to the commencement of trade on 17 August 2012;
(d) For each purchase by the group member of TWE securities during the period from 17 August 2012 to the date of submission of the Registration Form, all transactional information regarding the purchase, including in respect of each such purchase:
(i) The date of purchase;
(ii) The quantity of securities purchased; and
(iii) The consideration paid (including brokerage); and
(e) For each sale by the group member of TWE securities during the period from 17 August 2012 to the date of submission of the Registration Form, all transactional information regarding the sale, including in respect of each such sale:
(i) The date of sale;
(ii) The quantity of securities sold; and
(iii) The consideration received (net of brokerage).
12. A group member be deemed to have complied with Order 10 above if, by 29 March 2017, the group member has:
(a) Engaged the plaintiff’s solicitors in writing to act for that group member in connection with this proceeding; and/or
(b) Retained IMF Bentham Limited in writing to provide litigation funding services to that group member in connection with this proceeding.
13. Group members who are deemed to have registered by the operation of Order 12 above be required to submit to IMF Bentham Limited as soon as practicable but, in any event, by no later than 26 May 2017, and to the extent that they have not already done so, the same information as other group members are required to submit to IMF Bentham Limited pursuant to Order 11(a) to (e) above.
14. By 4.00 pm on 7 June 2017, the plaintiff:
(a) Deliver to the solicitors for the defendant a list of all persons who completed a Registration Form pursuant to Order 10 above or who are deemed to have done so by Order 12 above (Registered Group Members), which list shall contain:
(i) A unique identification number for each listed Registered Group Member;
(ii) The information referred to in Orders 11(b), (c), (d) and (e) above for each listed Registered Group Member; and
(iii) Any amendments to the above information as notified to the solicitors for the plaintiff by that date,
but which shall not identify the Group Members other than by the identification numbers described in Order 14(a)(i) above;
(b) File, in a sealed envelope marked “Confidential List of Group Members – Not to be Opened without leave of the Court or a Judge”, a list of Registered Group Members, which list shall contain:
(i) A unique identification number for each listed Registered Group Member;
(ii) The information referred to in Orders 11(b), (c), (d) and (e) above for each listed Registered Group Member; and
(iii) Any amendments to that information as notified to the solicitors for the plaintiff by that date.
15. Pursuant to s 33ZF of the Act, any group member who does not opt out and who is not a Registered Group Member:
(a) Remain a group member for all purposes, including for the purpose of being bound by any judgment in this proceeding and being entitled to participate in any award of damages by the Court if this proceeding does not settle; but
(b) Subject to any further order of the Court, will not be entitled to receive a distribution from any settlement of this proceeding.
16. The plaintiff’s solicitors be granted leave to inspect the Court file and to copy any opt out notices filed by group members.
17. The defendant’s solicitors be granted leave to inspect the Court file and to copy any opt out notices filed by group members (but the defendant’s solicitors not be permitted to view the Confidential List of Group Members described in Order 14(b) above without further order of the Court).
Other Orders
18. The parties have general liberty to apply on 48 hours’ written notice.
19. The costs of and incidental to the applications determined this day (23 March 2017) be costs in the proceeding.
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
The plaintiff, Mr Jones, sues the defendant, Treasury Wine Estates Limited (TWE) for statutory compensation pursuant to causes of action based upon provisions of the Corporations Act 2001 (Cth) (Corporations Act), the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and the New South Wales and Victorian analogues of the Australian Consumer Law. Mr Jones alleges that TWE engaged in misleading and deceptive conduct and also failed to comply with its continuous disclosure obligations under s 674(2) of the Corporations Act. Mr Jones brings this proceeding on his own behalf and on behalf of the members of the following group:[persons or entities] who or which:(i)obtained an interest in TWE Securities during the period from 17 August 2012 to 9:30 am on 15 July 2013 (Relevant Period) by the purchase of those Securities on the financial market operated by ASX;(ii)[deleted](iii)suffered loss or damage by reason of the Relevant Subsisting Contraventions; and(iv)are not any of the following:A.a related party (as defined by section 228 of the Corporations Act 2001 (Cth) (Corporations Act)) of TWE; B.a related body corporate (as defined by section 50 of the Corporations Act) of TWE;C.an associated entity (as defined by section 50AAA of the Corporations Act) of TWE; orD.an officer or a close associate (as defined by section 9 of the Corporations Act) of TWE. (See par 1(b) of Mr Jones’ Further Amended Statement of Claim filed on 23 December 2015 (FASOC)). The proceeding was, therefore, commenced as a representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 (Cth) (FCA Act). It continues to be such a proceeding. At the present time, the parties are engaged in preparing for the initial trial which is currently fixed to commence on 28 August 2017 with an estimated duration of six weeks. They are also planning to conduct a mediation of the dispute in June 2017. The parties agree that a combined opt out and group member registration notice (group notice) should be issued in relation to this proceeding as soon as possible and that some form of “class closure” order should be made now. Unfortunately, they are not in agreement as to the form of the proposed group notice nor are they in complete agreement as to the manner of distribution of the group notice, the scope of information required to be provided by group members as part of the contemplated registration process or the form of class closure and related orders to be made by the Court. By these Reasons for Judgment I address these areas of dispute and resolve them by appropriate orders. MR JONES’ CASE Mr Jones alleges that, in the period from 17 August 2012 to 14 July 2013, TWE failed to advise the Australian Securities Exchange (ASX) of information which was likely to have a material impact on the value of shares in TWE listed on that Exchange and also made statements from time to time that misled or deceived the market about TWE’s expected earnings. According to Mr Jones, the substance of the information that was not disclosed was that, at all times from about mid-2012, TWE’s US distributors were holding stock (wine) which was substantially in excess of their needs, which was rapidly becoming obsolete and which would, in the near future, become worthless. It is Mr Jones’ contention that the alleged concealment by TWE of the true position concerning the retention of stock came to an end on 15 July 2013 when TWE announced expected provisions to its FY13 financial statements and lower than expected earnings growth for FY14. These announcements were made in an ASX Release published by TWE on 15 July 2013. In that Release, TWE said that it had determined to take action in respect of excessive wine inventory held by its US distributors.