Wine chief a whine chief on shareholder actions, lawyers say
Treasury Wine chief executive Warwick Every-Burns told BusinessDay last week 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.
But law firm Maurice Blackburn managing principal Ben Slade said Mr Every-Burns had missed the point.
"If directors and corporations fulfil their proper duties and comply with the Corporations Act they will have nothing to fear from a robust class actions regime," Mr Slade said.
He said class actions accounted for 0.1 per cent of all litigation in Australia. About 14 class actions started on average each year, with about half being supported by litigation funders.
"There is strong anecdotal evidence that business practices are becoming more rigorous and ultimately benefiting shareholders and institutional investors alike because companies know they can be held to account via class actions," he said.
"This has become blatantly evident ... with the glass-jaw reaction from Treasury Wines Estate chief executive Warwick Every-Burns."
Treasury Wine is the target of two legal actions flowing from its damaging $160 million write-down in July of wine inventories in the US. Litigation funder IMF and Maurice Blackburn are representing aggrieved shareholders for a potential $100 million class action, while a separate lawsuit is being pursued by former Minter Ellison partner Mark Elliott.
"On its face, it looks pretty bad. ASIC will not get money back for those superannuants who have lost so much, so it's left to them to take private action," Mr Slade said.
"Big business affects many people. Those that fail to do the right thing should be held to account. They should compensate their victims. ASIC is able to force compliance only too rarely.
"The class action mechanism helps victims to make that happen; otherwise thousands of people would not be able to stand up to corporate wrongdoing."
Frequently Asked Questions about this Article…
The chief of Treasury Wine Estates, Warwick Every-Burns, criticized shareholder class actions, claiming that litigation funds and their law-firm partners are taking over the role of regulatory authorities and that companies might avoid growth plans due to fear of lawsuits.
Maurice Blackburn, through managing principal Ben Slade, dismissed the criticism as a 'glass-jaw reaction' and emphasized that if directors and corporations comply with their duties and the Corporations Act, they have nothing to fear from class actions.
Class actions account for 0.1% of all litigation in Australia, with about 14 class actions starting on average each year.
Class actions encourage more rigorous business practices, ultimately benefiting shareholders and institutional investors by holding companies accountable for their actions.
Treasury Wine Estates is facing two legal actions related to a $160 million write-down of wine inventories in the US. One is a potential $100 million class action represented by IMF and Maurice Blackburn, and the other is a separate lawsuit pursued by former Minter Ellison partner Mark Elliott.
Class actions are important because they provide a mechanism for victims to hold big businesses accountable for wrongdoing, ensuring that those affected can seek compensation when regulatory bodies like ASIC are unable to recover losses.
ASIC is responsible for enforcing compliance, but it is often unable to recover money for affected superannuants, leaving private actions like class actions as a necessary tool for shareholder protection.
The class action mechanism allows thousands of individuals to collectively stand up against corporate wrongdoing, ensuring that companies are held accountable and victims are compensated.
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