Waters v Mercedes Holdings Pty Ltd

Waters v Mercedes Holdings Pty Ltd involved a dispute concerning the interpretation and application of section 208(1)(e) of the Corporations Act 2001 (Cth) as modified by section 601LC, specifically regarding the onus of proof for exceptions to the prohibition against financial benefits to related entities in the context of managed investment schemes. The primary issue was whether the onus of proving an exception within the meaning of section 208(1)(e) (as modified) lies on the party alleging a contravention of section 208 or on the party relying upon the exception.

The court concluded that the party who claims a contravention of section 208(1)(e) (as modified) is not required to plead and bear the onus of proving that the exceptions set out in sections 210–216 as modified apply. Instead, the onus lies on those who seek to rely upon an “exception” to plead and prove the facts which bring the case within the exception. The court dismissed the argument that a distinction should be drawn between cases where the cause of action is a contravention of section 208(1) (as modified) and those where it is negligence and breach of statutory duty by failing to detect and report alleged contraventions of section 208 (as modified). The court held that such a distinction is without substance.

Leave to appeal was granted to the applicants, but the appeal was ultimately dismissed. The court ordered that the applicants for leave to appeal pay the respondents' costs of and incidental to their application for leave to appeal and the appeal. The court emphasised that the decision should not be followed to the extent that it is inconsistent with the present conclusion.