Wine boss slams spate of lawsuits
The chief executive of the world's biggest winemaker, Treasury Wine Estates, has lashed out at the rising tide of "crazy class actions" hurled at boardrooms, arguing they were being manufactured by self-interested litigators.
Treasury Wine boss Warwick Every-Burns told BusinessDay litigation funds and their law firm partners were usurping the role of regulatory authorities in their pursuit of boards, while companies could shy away from growth plans for fear of being slapped with a shareholder class action lawsuit.
"We will end up with companies almost being scared to do what they should be doing in the marketplace because they are continually feeling that they are going to have these crazy class actions," Mr Every-Burns said. "People will start to become almost risk-averse if we are not careful.
"[Those] out there trying to fund this litigation, and really just pursuing their own commercial interests ... it's not in the best interests of the country, not in the best interests of the shareholders overall and essentially it adds to costs and distracts companies."
Mr Every-Burns knows the sting of a shareholder class action lawsuit first hand. Treasury Wine is currently being menaced by two legal actions flowing from its damaging $160 million write-down in July of wine inventories in the US. Litigation funder IMF and law firm Maurice Blackburn are drumming up support among aggrieved shareholders for a potential $100 million class action, while a separate lawsuit is being pursued by former Minter Ellison partner Mark Elliott.
The class actions will argue Treasury Wine breached its continuous disclosure obligations over timely admissions on the sinking value of poor-quality wines held by its US distributors, which ultimately had to be poured down the drain.
In the period following Treasury Wine's shock announcement about the unwanted wine its shares dropped 20 per cent.
But if IMF and others believe Treasury Wine will buckle and settle the case after drawn-out court hearings and manoeuvres, Mr Every-Burns said his board was not for turning.
"We are fighting it, we are absolutely on the high ground here, we believe it has no merit at all."
Mr Every-Burns said litigators leading the charge on class actions were seeking to replace regulators.
"[What] annoys us more than anything is that Australia is set up very well in terms of having incumbent bodies and independent regulatory authorities that really are best placed to assess whether a listed company has breached [its] corporate governance obligations," he said.