This is a shareholder class action on behalf of persons who purchased shares in Arrium Ltd between August 2014 and April 2016. The plaintiffs allege that during the relevant period Arrium’s financial accounts did not give a true and fair view of its financial position and performance or comply with Australian accounting standards, and that Arrium’s directors and its auditor (KPMG) made misleading statements of opinion supporting the reports.
In this decision, Nichols J made orders reserving the following three questions for consideration by the Court of Appeal:
1. In exercising the discretion to transfer proceedings to another court under s 1337H(2) of the Corporations Act 2001 (Cth) (Corporations Act), is the fact that the Supreme Court of Victoria has made a group costs order under s 33ZDA of the Supreme Court Act 1986 (Vic) relevant?
2. If the proceedings are transferred to the Supreme Court of New South Wales (NSWSC):
(a) will the Group Costs Order (GCO) made by the Supreme Court of Victoria on 3 May 2022 remain in force and be capable of being enforced by the NSWSC, subject to any order of that Court; and
(b) if the GCO will remain in force, does the NSWSC have power to vary or revoke the GCO?
3. Should this proceeding be transferred to the NSWSC pursuant to s 1337H of the Corporations Act, as sought by KPMG?
The above questions arose because KPMG sought an order transferring the proceeding to the Supreme Court of New South Wales (NSWSC) under s 1337H(2) of the Corporations Act. In relation to question (1), KPMG intends to challenge the correctness of several first instance decisions characterising procedural advantages to a plaintiff as relevant to a transfer application. It will also contend that that the making of a GCO is not relevant in the exercise of the discretion under s 1337H(2) of the Corporations Act, either generally or in this case. In relation to question (2), KPMG will contend that, even if the existence of a GCO might permissibly be considered, it should be assessed as a neutral factor because it is capable of being enforced by the NSWSC.
Her Honour was satisfied that it was appropriate to reserve questions (1), (2) and (3) for consideration by the Court of Appeal, including because: question (1) is of general importance; question (2) is of real importance to the parties, because a single judge of the NSWSC would be bound by a decision of the Victorian Court of Appeal unless persuaded it was clearly wrong, but would not be bound by the decision of a single judge; and question (3) would not require the resolution of factual disputes by the Court of Appeal (because of the effect of an agreed statement of facts filed by the parties), and the answers to questions (1) and (2) would likely be significant in the disposition of KPMG’s transfer application as a whole.
Supreme Court of Victoria, Nichols J,
7 March 2023
Plaintiffs’ Solicitors: Banton Group
Fifth Defendant’s Solicitors: Ashurst
Applicant’s Funder: Equite Capital No 1 Pty Ltd
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