Findlay v DSHE Holdings Limited (Receivers and Managers Appointed) (In Liquidation); Mastoris v DSHE Holdings Limited (Receivers and Managers Appointed) (In Liquidation) [2019] NSWSC 394

Findlay v DSHE Holdings Limited (Receivers and Managers Appointed) (In Liquidation); Mastoris v DSHE Holdings Limited (Receivers and Managers Appointed) (In Liquidation) [2019] NSWSC 394

Although the pleading was not entirely satisfactory and could have been clearer, the case Deloitte had to meet emerged sufficiently from the Amended Joint Statement of Claim. Deloitte was on notice of the alleged failures concerning inventory provisioning, audit procedures, material misstatement and causation, and the pleading did not need to specify the precise enquiries or tests Deloitte should have undertaken or be more precise about the counterfactual. The pleaded claim against Deloitte therefore should not be struck out.

Jurisdiction
Australia
Judgment Date
11 April 2019
Procedural Posture
Representative Proceedings / Notices of Motion by the Fourth to Four Hundred and Fifty Seventh Defendants to Strike Out Parts of the Plaintiffs' Amended Joint Statement of Claim
Outcome
The notices of motion were dismissed.
Legal Topics
['pleadings' 'strike Out Application' 'representative Proceedings' 'audit Reports' 'australian Accounting Standards' 'misleading and Deceptive Conduct' 'causation']
['civil Procedure' 'corporations' 'equity'] ['pleadings' 'strike Out Application' 'representative Proceedings' 'audit Reports' 'australian Accounting Standards' 'misleading and Deceptive Conduct' 'causation']

Case Brief

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Procedural Posture

Representative Proceedings / Notices of Motion by the Fourth to Four Hundred and Fifty Seventh Defendants to Strike Out Parts of the Plaintiffs' Amended Joint Statement of Claim

Legal Issues

  1. 1 ['Whether the parts of the Amended Joint Statement of Claim pleading the claim against Deloitte were defective for lack of sufficient specificity.' 'Whether the pleading gave Deloitte fair notice of the case to be made against it at trial so as to minimise the risk of injustice from surprise.' 'Whether the pleading adequately identified what Deloitte ought to have done but did not do in relation to its audits.' 'Whether causation was pleaded with sufficient precision.']

Ratio Decidendi

Although the pleading was not entirely satisfactory and could have been clearer, the case Deloitte had to meet emerged sufficiently from the Amended Joint Statement of Claim. Deloitte was on notice of the alleged failures concerning inventory provisioning, audit procedures, material misstatement and causation, and the pleading did not need to specify the precise enquiries or tests Deloitte should have undertaken or be more precise about the counterfactual. The pleaded claim against Deloitte therefore should not be struck out.

Court Disposition

The notices of motion were dismissed.

Orders

  • ['The notices of motion filed on 25 March 2019 in each of proceedings 2017/294069 and 2018/52431 be dismissed.']