Multiple class actions against troubled sandalwood oil producer Quintis will soon compete to stay alive after a court heard Tuesday the company would bring an application to stay or consolidate the cases.
The cases, filed by firms Bannister Law, Gadens and Piper Alderman, centre on a shock admission by Quintis — which is now in receivership — to the Australian Stock Exchange on May 10, 2017. The company told shareholders that its board and top management had been in the dark for months about a lost supply contract with Nestle subsidiary Galderma.
Three of the four cases are brought as shareholder class actions claiming Quintis failed to meet its continuous disclosure obligations, resulting in a 44 percent share price drop. Piper Alderman’s case, which also names Quintis auditor Ernst & Young as a co-defendant, is brought as a consumer protection class action.
Federal Court Justice Jayne Jagot heard Tuesday at the first hearing for all four cases that Quintis planned to file an application to either stay or consolidate the actions. The date to hear arguments has yet to be set.
Quintis’ bid comes amid a push for courts to choose one among competing class actions, and Judge Jagot will have recent case law to consider, most notably the ruling by Justice Michael Lee to permanently stay two of three competing shareholder class actions against logistics tech company GetSwift.
Bannister Law was the first to file a class action against Quintis, in September last year. Gadens followed with a case in November and another in May this year, after Quintis went into liquidation. Piper Alderman was the last to enter the fray, bringing its suit in late May.
The actions allege that an ASX announcement by Quintis on February 26, 2016 falsely claimed that 100% of Quintis’ 2016 and 2017 sandalwood harvests in China and India had been sold. The company lost a supply contract with Nestle’s dermatology unit, Galderma Laboratories, on December 16, 2016 but only disclosed this to the exchange in the May 2017 announcement, after which share prices plummeted.
“Inadequate disclosure of this type is simply unacceptable in Australia. Continuous disclosure is at the heart of buyers’ confidence in the share market and impacts directly on the share price of listed entities, as this news demonstrates,” Bannister Law principal Charles Bannister said in filing its case.
Bannister Law’s class action centres on information provided by Quintis about pre-sales of sandalwood heartwood to the ASX and is filed on behalf of shareholders who bought in between February 26, 2016 and May 10, 2017.
Gadens’ class action centres on statements made to the market regarding Galderma’s decision to end its contract and covers a wider claims period of July 1, 2015 to May 10, 2017. Piper Alderman’s consumer class action involves alleged misrepresentations by Quintis in its FY2015 and FY2016 financial statements, with a claims period of August 31, 2015 to May, 15 2017.
Former Quintis director Frank Wilson is named as a respondent in Bannister Law’s and Piper Alderman’s class actions.
ASIC has also launched legal proceedings against Wilson, saying he breached his duties as company director.
“ASIC is alleging that by failing to disclose to the Quintis board of directors that key contracts with Nestle-owned Galderma (Galderma agreements) had been terminated, Mr Wilson did not discharge his duties to Quintis with the degree of care and diligence that a reasonable person in the position of managing director would exercise,” the watchdog said last month.
Quintis is represented by Johnson Winter & Slattery, Wilson by Bennett + Co, and Ernst & Young by Corrs Chambers Westgarth.
At Tuesday’s hearing, barrister Madeline Hall represented the Bannister Law class action, barrister Shanaka Jayasuriya represented the Gadens class action, barrister Jeremy Giles SC represented the Piper Aldermans class action, barrister Stuart Lawrance represented Quintis, barrister Michael Bennett represented Wilson, and barrister Brad Woodhouse represented Ernst & Young.
Bannister Law’s class action is Andrew John Wyma v Quintis Ltd ABN 97 092 200 854 & Anor; Gaden’s class actions are Excel Texel Pty Ltd (as trustee for the Mandex Family Trust) v Quintis Ltd and Excel Texel Pty Ltd ACN 082 642 742 (as trustee for the Mandex Family Trust) v Quintis Ltd (receivers and managers appointed) (administrators appointed) ACN 092 200 854; and Piper Alderman’s class action is Geoffrey Peter Davis & Anor v Quintis Limited (receivers and managers appointed) (voluntary administrators appointed) (ACN 092200 854) & Ors. ASIC’s action is Australian Securities & Investments Commission v Frank Cullity Wilson.
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