Treasury Wine Estates has small win against shareholder class action litigator

Jul 23, 2014

(TheAge) - The Supreme Court of Victoria has fired a broadside at the business model of one-man shareholder litigator Mark Elliott, arguing the former partner with Minter Ellison had likely set up his Melbourne City Investments (MCI) vehicle for the purpose of launching class action law suits to generate legal fees for himself.

The decision could have an impact on the ability of investors to bring shareholder class actions against corporations with the courts flooded in recent years with shareholder litigation to create a major headache for company directors.

However, the court yesterday did not grant the wishes of defendants Treasury Wine Estates and Leighton Holdings to throw out Mr Elliott’s class actions against them on the grounds of abuse of power, rather allowing the cases to proceed if Mr Elliott ceases to act for MCI, or MCI is replaced as the representative plaintiff.

MCI was set up by Mr Elliott, formerly a senior executive at Computershare. He quickly began scooping up small parcels of shares in more than 145 publicly listed companies, sometimes investing less than $700 in each company.

In 2013 MCI began separate shareholder class actions against Treasury Wine, Leighton and WorleyParsons, claiming failure to properly disclose price sensitive information related to profit downgrades as well as misleading or deceptive conduct.

Treasury and Leighton banded together to have their cases thrown out of court citing abuse of process. They said the case was brought against them for generating legal fees for Mr Elliott, who was the solicitor for MCI as well as its sole director.

‘‘I do not think that the proceedings are an abuse of process,’’ said Judge Anne Ferguson in her written decision.


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