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…
Warwick Every-Burns, the chief executive of Treasury Wine Estates, criticized shareholder class actions by saying that litigation funds and their law-firm partners are taking over the role of regulatory authorities. He expressed concern that companies might avoid growth plans due to the fear of being targeted by class action lawsuits.
Maurice Blackburn, through managing principal Ben Slade, dismissed the criticism as a 'glass-jaw reaction.' They argue that if directors and corporations fulfill their duties and comply with the Corporations Act, they have nothing to fear from class actions. They believe class actions hold companies accountable and benefit shareholders and institutional investors.
Class actions account for 0.1% of all litigation in Australia, with about 14 class actions starting on average each year.
Maurice Blackburn suggests that class actions lead to more rigorous business practices, ultimately benefiting shareholders and institutional investors. Companies are aware they can be held accountable through class actions, which encourages them to adhere to proper standards.
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 litigation funder IMF and Maurice Blackburn, and the other is a separate lawsuit pursued by former Minter Ellison partner Mark Elliott.
Class actions are seen as crucial because they allow victims to seek compensation and hold big businesses accountable for wrongdoing. Without class actions, many individuals would not have the means to challenge corporate misconduct.
ASIC, the regulatory authority, is limited in its ability to recover money for superannuants who have suffered losses. As a result, private actions like class actions become necessary for affected individuals to seek compensation.
Class actions benefit everyday investors by ensuring that companies adhere to legal and ethical standards. They provide a mechanism for investors to seek compensation and hold companies accountable for any wrongdoing, thereby protecting their investments.
Call 1300 880 160
Start a chat
Schedule a call
