High Court of Australia backs ‘beauty parades’ for multiple class actions

The High Court has backed the idea that judges can conduct a “beauty parade” when there are multiple class actions afoot and select a law firm to run the case, but suggested that using a “special referee” could be a better way to solve the problem.

The court on Wednesday rejected an appeal by one of the losers in a selection process run by Justice Julie Ward in the NSW Supreme Court for those wanting to sue AMP over revelations at the banking royal commission.

Full story: AFR

Class action update: Blue Sky action push gets a boost

Momentum for a class action against Blue Sky has accelerated after a small shareholder obtained access to the collapsed fund manager’s books.

The investor, David Furniss, an accountant, also is being allowed by Queensland’s Supreme Court to view key insurance documents covering director’s indemnity.

The granting of rights to inspect investment, audit and insurance documents could help determine the viability of class-action lawsuits over the failure of ASX-listed Blue Sky Alternative Investments.

“This decision is important because it finally gives us access to Blue Sky’s books and records,” said Piper Alderman partner Lachlan Lamont, whose firm initiated the Supreme Court action.

“We can now conduct a forensic analysis of Blue Sky’s accounts and valuation procedures which will help us particularise the shareholders’ claims.”

Piper Alderman, Shine Lawyers and Gadens are among law firms investigating Blue Sky’s accounts to see if any questions arise about disclosures to investors in the former market-darling, which was once valued at more than $1 billion.

“We are still investigating and I am aware of that decision ... which I think is a good decision because ultimately it will probably save everyone time and costs if access to key documents is granted earlier rather than later,” Shine class actions practice leader and former Australian Securities and Investments Commission senior lawyer Craig Allsopp said.

Brisbane-based Blue Sky oversaw funds with assets from a burrito chain to property investments, posting rocketing profits and share prices.

But the wheels fell off after Glaucus Research, short-sellers that make money from share prices falling, dispatched research in March 2018 casting doubt on areas from how Blue Sky was valuing investments to the amount of assets under management.

Blue Sky rejected the claims but tumbled into administration in May 2019.

Justice Graeme Crow, in a decision handed down in Rockhampton last week, said that Mr Furniss had purchased 722 shares in Blue Sky at $13.80 per share, $9963.60 in total, on January 18, 2018. “Some 15 months later his shareholding was worthless,” he wrote.

“[Precedent] cases demonstrate that the pursuit of a reasonable suspicion of a breach of duty is a proper purpose for a substantial shareholder, and in my view, it is also a proper purpose ... for a small shareholder, despite the quantum being much smaller, the rights of the shareholders are the same.”

Justice Crow wrote that there was “substantial support” for the conclusion that there was a case for investigation based on some of Blue Sky’s own market statements after the short-selling critique.

That included Blue Sky stating in April that “it is clear that Blue Sky has fallen short of market and shareholder expectations around transparency and disclosure”. 

Another announcement Justice Crow cited was Blue Sky in May saying an “immediate priority is to rebuild trust with stakeholders by making significant changes to the business and management model”.

The court granted access to documents from July 1, 2015, to May 20, 2019, the day Blue Sky was placed into voluntary administration.

“Mr Furniss is not a stranger to Blue Sky, but rather a shareholder who has a right to inspect documents if he can prove, as he has, that he is acting in good faith and for a proper purpose,” Justice Crow wrote.

Mr Furniss has been granted access to look at any indemnity insurance policies that covered Blue Sky or any of its directors and executives between July 1, 2015, and June 30, 2020. The quantum of any insurance policies would outline what a potential class action could go to court to seek damages for.

However, Mr Allsop said shareholders looking to mount an action against Blue Sky and former directors or executives will likely have to wait for a deed of company arrangement, which has been in place since June 2019 and included a moratorium on claims against the company, to be executed or come off. It will also likely require leave from the court to launch a class action.

Former Blue Sky director and head of venture capital Elaine Stead, who was successful in defamation proceedings brought against The Australian Financial Review over two columns in 2019, gave testimony in her action that touched on Blue Sky’s legal requirements about disclosure of information.

Under cross-examination by defence barrister, Sandy Dawson, Dr Stead said an article published by the Financial Review that had previously been published in June 2017 was “incorrect”.

That Financial Review article stated Blue Sky’s $3 billion of assets were evenly split across property, real assets, such as infrastructure, and finally private equity and venture capital.

Full story: AFR

$150 million class action launched against SA Power Networks over Cudlee Creek bushfire in Adelaide Hills

A class action lawsuit seeking $150 million for victims of the 2019 Cudlee Creek bushfire in the Adelaide Hills has been lodged with the South Australian Supreme Court.

Key points:

- The Cudlee Creek bushfire swept through the Adelaide Hills in December 2019

- It was caused by a tree falling on power lines

- A law firm is suing SA Power Networks for damages

Maddens Lawyers is seeking compensation for up to 1,000 victims of the blaze, which destroyed more than 90 homes and killed one person in December 2019.

It claims SA Power Networks' inadequate fault protection settings led to the bushfire, which started when a tree fell on power lines and then a fence.

Brendan Pendergast the Victorian law firm Maddens Lawyers said South Australia's energy distributor knew it was a catastrophic fire danger day, with a total fire ban in place.

"And yet we see in the Office of the Technical Regulator's report that the fault mechanisms were adjusted to normal settings and quite alarmingly the auto-reclose device operated twice so it de-energised the line and then re-energised it after the tree fell on the line and brought it down to the ground," he said.

Cudlee Creek bushfire burning in
the Adelaide Hills threatened the
 town of Lobethal.(ABC News)

In its report on the fire released in August, the Office of the Technical Regulator said it "could not identify any indicators that could have enabled a reasonable person to identify this tree failure prior to the event".

Mr Pendergast said he would present experts who said the tree was already "severely compromised" three years before the fire and should have been identified as "dead, dying or dangerous".
Range of losses from bushfire

He said losses went beyond the destroyed homes and 1,000 hectares in damaged vineyards.

"One person tragically lost their life, more than 50 firefighters were injured and many of the citizens living up there had suffered psychological or psychiatric injury as a result of the trauma of the bushfire experience," he said.

"So we're seeking to recover compensation for those aspects of the fire as well."

An SA Power Networks spokesman said the company had not yet seen "the detail of the claim" but would defend its actions.

"An independent government report concluded the fire start was due to a tree falling from outside the vegetation clearance zone surrounding power lines, and that SAPN had acted in accord with its bushfire and vegetation management procedures and equipment settings," he said.

SA Power Networks is controlled by Hong Kong billionaire Li Ka-Shing.

Maddens Lawyers is also representing victims of the November 2019 Yorketown bushfire, which was caused by a power network fault.

That case is heading to court-ordered mediation next month.

"We're optimistic that proper resolution can be achieved at that time rather than taking the matter before the court for a determination," Mr Pendergast said.

Mr Pendergast's firm has been involved in a number of lawsuits relating to bushfires, starting with the Ash Wednesday fire that struck the Adelaide Hills and parts of Victoria in 1983.

Full story: ABC News

Victorian public housing residents file class action after surviving off "nuts and beans"

Public housing tower residents have filed a class action over the lockdown in Victoria, claiming they survived off ‘nuts and beans’.

Residents and neighbours are shining a light on conditions in the nine locked-down housing commission towers through social media with one resident saying it was ‘worse than prison’.

Public housing tower residents shut inside their homes during Melbourne’s lockdown are suing the Victorian government claiming they were left without food and medication.

A claim was filed in the Victorian Supreme Court last week, alleging residents are owed damages for the “invalid”, “oppressive” and “degrading” lockdown that failed to consider human rights.

More than 3000 people were locked inside nine apartment towers from July 4 to either July 9 or July 18 last year, before the entire state went into hard lockdown on August 2.

The claim alleges lead plaintiff Idris Hassan and his family were supplied with “spoiled” food after being banned from buying groceries.

After being provided nothing for three days they were given four partially-defrosted sausage rolls, placed at the door step, that were “not fit for human consumption”, it alleges.

Ms Hassan and his nine-year-old son suffered asthma attacks after they ran out of medication, with the family surviving on “nuts and beans”, it alleges.

Victoria’s Deputy Chief Health Officer Annaliese van Dieman is named as the first respondent in the suit, along with Deputy Public Health Commander Finn Romanes, Chief Commissioner of Police Shane Patton, and the state of Victoria.

Residents were deprived of access to fresh air, exercise and occupational activities, it is claimed.

They were exposed to health risks as communal areas were not disinfected, and PPE was not provided, despite the presence of COVID-19 in the towers, it is alleged.

Government workers left bins overflowing and some residents lost their jobs after being unable to work during the lockdown, it is claimed.

The claim alleges they were “not consulted” about the lockdown, which banned them from leaving their homes without approval.

“Some time on 4 July 2020, prior to 3.30pm, (Victoria Police) decided to deploy hundreds of Victoria Police officers to the Estate Towers to enforce the detention of the residents of those towers,” the claim states.

It alleges Ms van Dieman had 15 minutes to review, sign, and consider the human rights implications of the lockdown before a press conference scheduled for 4pm on July 4.

It claims she “felt constrained” to approve the directions and “considered that she could not delay signing” before the press conference, which she appeared in alongside Premier Daniel Andrews.

“(She) allowed the decisions of third parties, or their actions and attitudes, to control the way she exercised her discretion,” the claim alleges.

The lockdown was not explained at the time to the residents of the towers, according to the claim.

“The decision not to inform the residents of these matters was not governed by questions of practicability, but was a deliberate decision made to ensure that the residents did not go elsewhere,” it alleges.

“Intimidating conduct” by Victoria Police officers also began “triggering pre-existing trauma” in some residents, the claim alleges.

The lead plaintiff, Mr Hassan, is a Somalian refugee who arrived in Australia after fleeing civil war.

He fled his village in 1990 when it was targeted by soldiers and made his way to Australia with his six siblings, making it to Australia in 1998.

At the time of the lockdown he lived in the public housing tower in Sutton Street, North Melbourne, with his wife and three children aged 9, 7 and 4.

About an hour after the lockdown began Mr Hassan asked a police officer for permission to buy groceries and medical supplies and was refused, it is alleged.

No food deliveries were made to him for several days and authorities “refused the Australian Muslim Social Services Agency permission to deliver culturally-appropriate food supplies to the residents”, it is alleged.

He ran out of asthma medication and despite calling a hotline number played on television, was not delivered medication in time and suffered asthma attacks, the claim alleges.

The medication was supplied on July 8, four days after they were locked inside the towers, the claim says.

Food supplied was not halal, a requirement of their Muslim faith, and Somali interpreters were not engaged in explaining why they had to go COVID-19 testing, it is alleged.

Residents were tested for COVID-19 “without giving their full, free and informed consent and, or in the alternative, under duress”, the claim alleges.

The class action is being run by solicitor Serene Teffaha of law firm Advocate Me.

It will be heard in the Supreme Court at a date to be set.

Full story: News.com.au

$25M Dick Smith Holdings class action settlement approved but judge says "disappointing"

The $25 million settlement resulting from class actions launched against Dick Smith Holdings (DSHE Holdings), the entity remaining after the collapse of electronics retailer Dick Smith, and insurer Alliance, has been approved, but only a small portion will end up in the hands of shareholders.

The cases were launched after the collapse of the retailer in early 2016, along with the closure of its stores, which followed closely on from a $60 million inventory write-down revealed in late 2015.

A rebate-focused inventory buying policy was one of the main triggers of the company’s collapse, according to a subsequent creditors’ report.

It should be noted that online retailer Kogan.com purchased the Dick Smith online retail business in 2016, taking over from June that year. 

The online business is unrelated to Dick Smith Holdings, the entity at the centre of the class actions.

Two of three proceedings were brought against DSHE Holdings Ltd and Dick Smith’s then executive directors, Nick Abboud and Michael Potts, and its auditor, David White of Deloitte Touche Tohmatsu. 

The other action was brought against Allianz Australia Insurance.

Broadly, two of the proceedings were securities class actions, with the plaintiffs representing people or entities that had purchased shares in Dick Smith. 

These actions alleged misleading or deceptive conduct of Dick Smith, Abboud, Potts and Deloitte.

The proceedings settled in principle on 3 December 2020, with the settlement involving a payment by several defendants of a total amount of $25 million.

Now, Supreme Court of NSW justice James Stevenson has approved the settlement, which he described as “disappointing”.

Full story: ARN from IDG

Seqwater still fighting Supreme Court decision holding them responsible for the 2011 Brisbane River flood

Wivenhoe Dam

The 2011 Brisbane River Class action continues with SunWater finally capitulating and agreeing to pay their 30 percent of the Supreme Court ordered damages to the successful 6800 class action claimants.

This finalises Sunwater's legal obligation, subject to approval by the New South Wales Supreme Court where the class action was initiated and payment of the agreed damages.

The Queensland Government did not appeal the November 2019 judgment and has subsequently agreed to pay its court-ordered 20 percent of damages.

This leaves the third defendant - the recalcitrant Seqwater - to continue with its appeal to the NSW Court of Appeal in May 2021 - still trying to overturn the original 2019 judgment.

Goodna Flood 2011

Seqwater was judged 50 percent liable for the flooding of the Brisbane and Bremer Rivers from 11- 14 January 2011 as a direct result of the operation of its Wivenhoe and Somerset Dams in breach of the water corporation's own operating manuals.

Both SunWater and Seqwater are wholly owned by the Queensland Government.

The persistence of Maurice Blackburn lawyers and their associated litigation funders Omni Bridgeway, formerly IMF Bentham, in this matter is testament to the powerful nature of class actions and the only way battlers across Australia can seek genuine justice.

Full story: ABC News