The High Court delivered its decision in the Sons of Gwalia case (Sons of Gwalia Ltd v Margaretic; ING Investment Management LLC v Margaretic) on 31 January 2007.
In practical terms, the decision means that shareholders’ claims for damages for misrepresentation, misleading or deceptive conduct and/or breach of the statutory obligation of continuous disclosure, rank equally with claims of other unsecured creditors.
The decision has been commented upon widely, with observations that it has the potential to substantially complicate the process of external administration and increase the cost (and potentially availability) of unsecured debt finance.
Anecdotally, it seems that disclosure is the legal topic of greatest concern to listed company boards at present. And with good reason: the planets seem to be aligning in favour of shareholder litigants, as evidenced by the Sons of Gwalia case and several other decisions upholding the validity of litigation funding arrangements. Like it
