Caason Investments Pty Ltd v Cao [2015] FCAFC 94

Caason Investments Pty Ltd v Cao [2015] FCAFC 94

It is at least reasonably arguable that a claim for loss under s 729(1) of the Corporations Act need not plead reliance as an element of causation and may proceed on a market-based causation theory. The full court allowed the amendments to plead such a case, finding that the amendments were not futile or bound to fail, and should not have been refused by the primary judge. The amendments would allow real issues to be tried without prejudice to group members who may have direct reliance claims.

Parties
First Appellant: Caason Investments Pty Ltd ACN 089 590 858; Second Appellant: Wise Plan Pty Ltd ACN 007 008 577; First Respondent: Simon Xiao Fan Cao; Second Respondent: Charles Mao; Third Respondent: Larry Marshall; Fourth Respondent: George Sycip; Fifth Respondent: Ji Ran Laurie Kan; Sixth Respondent: Ian Richard Neal; Seventh Respondent: Anthony John Surtees; Eighth Respondent: Simon Jeremy Newton Gray; Ninth Respondent: James Aberdein Harvey; Tenth Respondent: Philip Sydney Paterson; Eleventh Respondent: Dean Lloyd Marsh; Twelfth Respondent: John Steven Westaway; Thirteenth Respondent: Timothy William Murton; Fourteenth Respondent: Darren Craig Klenk; Fifteenth Respondent: Malcolm Steven Wight; Sixteenth Respondent: Dean Brian Crook; Seventeenth Respondent: Dale John Ryan; Eighteenth Respondent: Stephen Harold Kuchar; Nineteenth Respondent: Geoffrey Allan Lloyd; Twentieth Respondent: Justin Luke Humphrey
Jurisdiction
Australia
Judgment Date
03 September 2015
Procedural Posture
Representative Proceeding (class Action) — Interlocutory Appeal / Full Federal Court Appeal From Orders on Interlocutory Amendment and Leave to Appeal
Outcome
Appeal allowed; leave to appeal granted; primary orders varied and amendments allowed.
Legal Topics
Misleading or Deceptive Conduct, Market Based Causation, Amendment of Pleadings, Statutory Construction, Securities Disclosure Liability, Group Member Definition
Corporations Law Class Actions Civil Procedure Misleading or Deceptive Conduct Market Based Causation Amendment of Pleadings Statutory Construction Securities Disclosure Liability +1 more

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Parties

Caason Investments Pty Ltd ACN 089 590 858

First Appellant

Wise Plan Pty Ltd ACN 007 008 577

Second Appellant

Simon Xiao Fan Cao

First Respondent

Charles Mao

Second Respondent

Larry Marshall

Third Respondent

George Sycip

Fourth Respondent

Ji Ran Laurie Kan

Fifth Respondent

Ian Richard Neal

Sixth Respondent

Anthony John Surtees

Seventh Respondent

Simon Jeremy Newton Gray

Eighth Respondent

James Aberdein Harvey

Ninth Respondent

Philip Sydney Paterson

Tenth Respondent

Dean Lloyd Marsh

Eleventh Respondent

John Steven Westaway

Twelfth Respondent

Timothy William Murton

Thirteenth Respondent

Darren Craig Klenk

Fourteenth Respondent

Malcolm Steven Wight

Fifteenth Respondent

Dean Brian Crook

Sixteenth Respondent

Dale John Ryan

Seventeenth Respondent

Stephen Harold Kuchar

Eighteenth Respondent

Geoffrey Allan Lloyd

Nineteenth Respondent

Justin Luke Humphrey

Twentieth Respondent

Procedural Posture

Representative Proceeding (class Action) — Interlocutory Appeal / Full Federal Court Appeal From Orders on Interlocutory Amendment and Leave to Appeal

Legal Issues

  1. 1 Whether leave to amend a statement of claim to plead market-based causation under s 729(1) of the Corporations Act should be granted
  2. 2 Whether reliance is a necessary element for recovery under s 729(1) of the Corporations Act
  3. 3 Whether a claim for compensation under s 729(1) can be based on market-based causation without proof of individual reliance

Ratio Decidendi

It is at least reasonably arguable that a claim for loss under s 729(1) of the Corporations Act need not plead reliance as an element of causation and may proceed on a market-based causation theory. The full court allowed the amendments to plead such a case, finding that the amendments were not futile or bound to fail, and should not have been refused by the primary judge. The amendments would allow real issues to be tried without prejudice to group members who may have direct reliance claims.

Court Disposition

Appeal allowed; leave to appeal granted; primary orders varied and amendments allowed.

Orders

  • The application for leave to appeal be granted and the Draft Notice of Appeal stand as the Notice of Appeal.
  • The appeal be allowed.