A Melbourne investment company has filed a new action against global wine business Treasury Wine Estates after the Victorian Court of Appeal ruled its earlier proceedings were an abuse of process.
Melbourne City Investments (MCI), of which solicitor Mark Elliott is sole director and shareholder, has accused TWE of breaching its disclosure obligations in respect of an announcement in July 2013 regarding its US inventory provisions.
Yesterday, the Victorian Court of Appeal ruled that the proceeding be permanently stayed, saying it had determined that MCI was using the action to create “an income-generating vehicle for its solicitor”.
MCI is a small shareholder in a number of publicly listed companies. Towards the end of 2013, it also began legal proceedings against contractor Leighton Holdings and engineering company Worley Parsons alleging breaches of disclosure obligations and misleading or deceptive conduct.
In July, the Supreme Court of Victoria declared that Elliott should be banned from having dual roles – as solicitor and plaintiff – in some of the proceedings.
In an announcement to the ASX this morning, Treasury Wine Estates said Melbourne City Investments had filed a new action against the company “on substantially the same terms as the proceeding the subject of yesterday’s Court of Appeal decision, but in which MCI is represented by the law firm Portfolio Law”.
“TWE strongly denies any and all allegations of wrongdoing, and will continue to defend the latest proceeding by MCI vigorously,” said the company, which owns the Penfolds, Lindeman’s, Wolf Blass and Rosemount brands in Australia.
The MCI action relates to Treasury’s announcement in July that it would destroy more than $35 million of aged and excess stock in the US and offer major discounts after admitting it overestimated the amount of wine needed to supply its US market, according to AAP.
It said at the time that all the measures taken would cost $160 million in 2012/13 and result in lower shipments to the US in fiscal 2014. Disgruntled shareholders subsequently launched a number of legal proceedings against the company, claiming it had breached its disclosure obligations.
