Grant-Taylor v Babcock & Brown Limited (in liquidation) [2016] FCAFC 60

Grant-Taylor v Babcock & Brown Limited (in liquidation) [2016] FCAFC 60

Information concerning BBL’s technical breaches in dividend and capital reduction provisions, and the associated reporting matters, was not required to be disclosed under s 674 because it was economically insignificant and had no material effect on BBL’s share price from the perspective of the relevant class of investors. Additionally, information about insolvency was not required to be disclosed since the directors did not have (and were not objectively required to have) awareness of insolvency at the relevant time. Consequently, no actionable breach of continuous disclosure obligations occurred.

Parties
First Appellant: Andrew Grant-Taylor; Second Appellant: Craigellachie Pty Ltd (ACN 065 937 966); Third Appellant: Nielma Grant-Taylor; Appellants: Other Appellants (see schedule); First Respondent: Babcock & Brown Limited (in liquidation) (ACN 108 614 955); Second Respondent: David Lombe
Jurisdiction
Australia
Judgment Date
21 April 2016
Procedural Posture
Appeal / Judgment on Appeal From Federal Court (trial Court Decision Dismissing Application for Damages)
Outcome
Appeal dismissed.
Legal Topics
Continuous Disclosure Obligations, Materiality Under S 674 Corporations Act, General Availability of Information S 676, Material Effect on Share Price S 677, Director Awareness (asx Listing Rule 19.12), Unlawful Dividends S 254 T, Reduction of Share Capital S 256 D, Financial Statements True and Fair View S 297, Insolvency Disclosure Requirements
Corporations Law Continuous Disclosure Obligations Materiality Under S 674 Corporations Act General Availability of Information S 676 Material Effect on Share Price S 677 Director Awareness (asx Listing Rule 19.12) Unlawful Dividends S 254 T Reduction of Share Capital S 256 D +2 more

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Parties

Andrew Grant-Taylor

First Appellant

Craigellachie Pty Ltd (ACN 065 937 966)

Second Appellant

Nielma Grant-Taylor

Third Appellant

Other Appellants (see schedule)

Appellants

Babcock & Brown Limited (in liquidation) (ACN 108 614 955)

First Respondent

David Lombe

Second Respondent

Procedural Posture

Appeal / Judgment on Appeal From Federal Court (trial Court Decision Dismissing Application for Damages)

Legal Issues

  1. 1 Whether Babcock & Brown Limited breached continuous disclosure obligations under s 674(2) Corporations Act 2001 (Cth) and ASX Listing Rule 3.1.
  2. 2 Whether information regarding unlawful dividend payments, accounting/reporting breaches and insolvency was required to be disclosed as price sensitive information.
  3. 3 Whether the relevant information was 'generally available' (s 676).

Ratio Decidendi

Information concerning BBL’s technical breaches in dividend and capital reduction provisions, and the associated reporting matters, was not required to be disclosed under s 674 because it was economically insignificant and had no material effect on BBL’s share price from the perspective of the relevant class of investors. Additionally, information about insolvency was not required to be disclosed since the directors did not have (and were not objectively required to have) awareness of insolvency at the relevant time. Consequently, no actionable breach of continuous disclosure obligations occurred.

Court Disposition

Appeal dismissed.

Orders

  • The appeal be dismissed.
  • The appellants pay the respondents' costs of and incidental to the appeal.