TrackNet class action

The TrackNet managed investment scheme promised in its Prospectus to promote and distribute new vehicle-tracking technology which was a single satellite-based tracking device, which could locate vehicles anywhere in Australia. It stated that the technology had been invented and that TrackNet Australia had purchased the technology from a Hong Kong-based company.  The technology was to be used by government organisations or companies with large fleets to help find stolen vehicles or drivers under duress.

It later became apparent that the technology had not been invented and had not been purchased.

The action

On 18 December 2000, Maurice Blackburn filed a class action on behalf of 156 shareholders who had invested in the TrackNet scheme.  The investors claimed unspecified damages against companies Corporate Australia Investment Funds Management Limited ("CIAFM"), TrackNet Australia Limited, Cardinal Financial Securities Limited, and the directors of CIAFM. The claim was that the prospectus was misleading and deceptive, and that the scheme had never properly commenced because various Expenditure Qualifying Conditions were not met.

Judgment and settlement

The preliminary issues as to liability were heard between September and December 2003 by Justice Emmett in the Federal Court of Australia.  Confidential provisional conclusions were published to the parties on 10 March 2004.  On 28 June 2004 the Court approved a settlement with the trustee, Cardinal Financial Securities Limited (In Liquidation).  In that settlement the insurers for Cardinal agreed to pay a total for $4.3million to compensate the shareholders for damages, costs and disbursements.

On 30 June 2004 the Court made declarations that CIAFM, the Manager of the Project, had engaged in misleading or deceptive conduct by publishing the Prospectus and secondly, that CIAFM had breached the Project Deed by treating the Project as on foot when the Expenditure Qualifying Conditions had not been met.  After accepting that these parties do not have any income or assets with which to meet a judgment debt against them, the Court otherwise dismissed the claims against CIAFM, TrackNet Australia Pty Ltd and Garry White, the managing director of CIAFM, with no order as to costs. Two other directors of CIAFM previously settled with the Applicant.