ACN 117 641 004 Pty Ltd (in liquidation) (formerly Vale Pty Ltd) v S& P Global, Inc [2020] FCA 1745

ACN 117 641 004 Pty Ltd (in liquidation) (formerly Vale Pty Ltd) v S& P Global, Inc [2020] FCA 1745

The applicants, in particular Cockburn, established a prima facie case that S&P’s assignment of AA ratings to CDOs (including the Aramis CDO) and the representations of independence and objectivity in those ratings were misleading or dishonest in breach of s 1041F(1)(a) and (b) of the Corporations Act. S&P’s business considerations influenced the ratings process, contrary to representations. Cockburn relied on the representations and suffered loss in Australia. The Federal Court thereby granted leave for service of originating process on overseas respondents under r 10.43 of the Federal Court Rules 2011.

Parties
First Applicant: ACN 117 641 004 Pty Ltd (in liquidation) (formerly Vale Pty Ltd); Second Applicant: City of Cockburn ABN 27 471 341 209; First Respondent: S&P Global, Inc.; Second Respondent: Standard & Poor's International, LLC
Jurisdiction
Australia
Judgment Date
27 November 2020
Procedural Posture
Representative Proceeding (class Action) / Commercial / Interlocutory Application for Leave to Serve Originating Process Outside Jurisdiction
Outcome
Leave to serve originating application, statement of claim, and amended interlocutory application on the respondents in the United States granted.
Legal Topics
Leave for Service Outside Jurisdiction, Contravention of S 1041 F Corporations Act, Tort of Deceit, Credit Ratings, Prima Facie Case Requirement
Practice and Procedure Corporations Law Torts Leave for Service Outside Jurisdiction Contravention of S 1041 F Corporations Act Tort of Deceit Credit Ratings Prima Facie Case Requirement

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Parties

ACN 117 641 004 Pty Ltd (in liquidation) (formerly Vale Pty Ltd)

First Applicant

City of Cockburn ABN 27 471 341 209

Second Applicant

S&P Global, Inc.

First Respondent

Standard & Poor's International, LLC

Second Respondent

Procedural Posture

Representative Proceeding (class Action) / Commercial / Interlocutory Application for Leave to Serve Originating Process Outside Jurisdiction

Legal Issues

  1. 1 Whether applicants demonstrated a prima facie case for leave to serve originating process on foreign respondents under r 10.43 of the Federal Court Rules 2011
  2. 2 Whether applicants established a prima facie case of contravention of s 1041F of the Corporations Act 2001 (Cth) and the tort of deceit against S&P
  3. 3 Whether S&P's representations as to credit ratings and their independence were misleading, false, or deceptive and induced investment in CDOs

Ratio Decidendi

The applicants, in particular Cockburn, established a prima facie case that S&P’s assignment of AA ratings to CDOs (including the Aramis CDO) and the representations of independence and objectivity in those ratings were misleading or dishonest in breach of s 1041F(1)(a) and (b) of the Corporations Act. S&P’s business considerations influenced the ratings process, contrary to representations. Cockburn relied on the representations and suffered loss in Australia. The Federal Court thereby granted leave for service of originating process on overseas respondents under r 10.43 of the Federal Court Rules 2011.

Court Disposition

Leave to serve originating application, statement of claim, and amended interlocutory application on the respondents in the United States granted.

Orders

  • Applicants have leave to serve the originating application, statement of claim, and amended interlocutory application on the respondents in the United States under the Hague Convention.
  • Suppression order: paragraphs 119–121 of the affidavit of Ross Garland sworn on 25 November 2020 and exhibit RG3 to that affidavit are to be suppressed to prevent prejudice to the proper administration of justice.