The Supreme Court of Victoria has held that a shareholder class action brought by Melbourne City Investments ('MCI') against Myer Holdings Limited ('Myer'), was brought for an improper or collateral purpose.
In a 36 page Judgment, Justice Michael Sifris found that the predominate purpose of the case was not to vindicate legal rights but to generate income or revenue for interests associated with Mark Elliott ('Elliott'). Justice Sifris held that this predominant purpose was improper. As a result, the case was an abuse of the process of the Court and his Honour granted a permanent stay.
The proceeding was brought on behalf of MCI and all persons who acquired ordinary shares in Myer on or after 11 September 2014 and remained shareholders on 19 March 2015. Elliott was the sole shareholder of MCI until 9 September 2015 when BSL Litigations Partners Limited, a company associated with Elliott, became the sole shareholder of MCI.
MCI alleged that a significant fall in Myer's share price on and after 19 March 2015 was caused by the disclosure of information that should have been disclosed on or prior to 11 September 2014.
MCI purchased nominal shares in 199 listed companies on or about the day of its incorporation and has subsequently commenced multiple representative proceedings in respect of those shares. MCI has commenced at least five group proceedings in the Supreme Court of Victoria in the last three years. All proceedings relate to alleged breaches of the continuous disclosure requirements of the Corporations Act 2001 (Cth).
Myer contended that this proceeding was commenced and maintained by MCI pursuant to, and in furtherance of, a business model by which it purchases shares in listed companies and then seeks to commence group proceedings against those listed companies for a predominant purpose other than vindicating its rights by judgment or settlement.
NOTE: This summary is necessarily incomplete. The only authoritative pronouncement of the Court's reasons and conclusions is that contained in the published reasons for judgment.