AWB's grain of hope as legal obstacle removed LITIGATION ELISABETH SEXTON November 6, 2009
AWB has found a fresh avenue to attack the organisation of a shareholder class action against it two days after the corporate regulator removed an obstacle to the plaintiffs.
The grains trader yesterday began a Federal Court challenge to the legality of the plaintiff law firm Maurice Blackburn's involvement, using a new argument prompted by a recent appeal judgment that a class action against Brookfield Multiplex was a managed investment scheme.
AWB's barrister, Charles Scerri, QC, told the court that the NSW law regulating the legal profession prohibited Maurice Blackburn from conducting a managed investment scheme.
''It's a very serious matter if the solicitors are conducting this proceeding in contravention of the Legal Profession Act,'' Mr Scerri said.
A win for AWB could flow on to other class actions, including those filed in Victoria whose legal-profession regulation contains the same restriction.
Justice Lindsay Foster will hear the challenge on November 24, six days before the main hearing in the shareholder suit against AWB is scheduled to begin.
The implications of class actions being managed investment schemes have been explored since October 20, when a full bench of the Federal Court upheld Brookfield Multiplex's appeal that the funding arrangements and solicitors' retainer in a shareholder class action constituted such a scheme.
The Corporations Act requires managed investment schemes to be registered and operated by a licensed ''responsible entity'' unless the Australian Securities and Investments Commission grants an exemption.
On Wednesday, ASIC took that sting out of the appeal judgment by granting exemptions until June next year to all funded class actions already under way.
The regulator said the exemptions would avoid ''any disruption that could adversely impact plaintiffs in those actions, or interfere with the timely and efficient conduct of the subject litigation''.
AWB initially launched an attack on Monday, alleging the class action was an unregistered managed investment scheme and hence in breach of the Corporations Act.
Yesterday it amended the challenge to claim a breach of section 135 of the NSW Legal Profession Act which says: ''An incorporated legal practice (or a related body corporate) must not conduct a managed investment scheme.''
The NSW law adopts the Corporations Act's definition of a managed investment scheme, allowing AWB to lean on the Brookfield Multiplex decision, which used the Corporations Act definition.
Maurice Blackburn Pty Ltd became an incorporated practice in 2003. Its predecessor partnership was set up in 1919 by a Melbourne lawyer, Maurice McCrae Blackburn.
No orders have yet been made about the consequences of the appeal judgment for the Brookfield Multiplex case.
Submissions on that topic are due to be filed next week.
Source: The Sydney Morning Herald
AWB Price at posting:
$1.16 Sentiment: Hold Disclosure: Held
