Multiplex arms AWB

The grains traders barrister, Charles Scerri, QC, told a pretrial hearing in the Federal Court yesterday that his client would file a suit next week claiming that a group of its shareholders was being funded by an unregistered managed investment scheme.

Justice Lindsay Foster said he would need to be persuaded that the Multiplex decision made it inevitable that the AWB case could not proceed as scheduled on November 30.

Justice Foster raised the possibility that the AWB case could go ahead as an action solely by the lead plaintiffs, two NSW Riverina investors, John and Kaye Watson. The judge also floated the potential cure of an independent authority being appointed to look after the interests of the members of the class action.

I would have thought, untutored or unassisted by submissions or arguments, that the beneficiaries of the scheme could be protected by an appropriate order which would be in the nature of either a receiver or liquidator or some protective device, he said.

The court also heard yesterday that the solicitors for the plaintiffs in both class actions, Maurice Blackburn, would seek leave to appeal to the High Court and in the meantime had applied to the Australian Securities and Investments Commission for exemptions.

A full bench of the Federal Court on October 20 upheld an appeal by Multiplex that the funding arrangement provided by a Canadian-backed Singapore funder, International Litigation Fundings Partners Pte Ltd, and the plaintiffs retainer with Maurice Blackburn constituted a managed investment scheme.

The Corporations Act requires managed investment schemes to be registered, unless ASIC grants an exemption. No orders have yet been made about the consequences for the Multiplex case. Submissions are due to be filed by November 10.

Mr Scerri said the similar features of the AWB class action, which is being funded by IMF (Australia), meant that it seems clear on the full court authority that a scheme like this is unlawful.

He did not ask for the trial date to be abandoned, but said it would be a very strange thing if we could be having a hearing on November 30 without this issue being resolved. If the prosecution of this proceeding contravenes the Corporations Act, none of us ought to be involved in it. The case against AWB seeks more than $100 million in compensation for losses allegedly caused by the Iraqi kickbacks scandal. No hearing date has been set for the $200 million Multiplex suit, which relates to construction problems at Londons Wembley Stadium.