Court throws out ASIC Storm claim

12-Feb-2016

By Elizabeth Somerville

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The Federal Court has dismissed a statement of claim from victims of the Storm Financial collapse that alleged a misfeasance in public office and negligence by the corporate watchdog.

The claim, lodged by Levitt Robinson Solicitors, alleged ASIC’s conduct towards Storm resulted in the firm’s clients suffering financial loss.

Federal Court Justice Jacqueline Gleeson struck out the claims on the basis they failed to disclose a reasonable cause of action.

“None of the cases support a conclusion that it is arguable that ASIC owed a duty of care on the facts pleaded,” Gleeson said.

“The salient features of the case do not reveal a sufficiently close relationship to give rise to a duty of care.

“There is nothing to suggest that the nuances of the plaintiffs’ case may improve their position.”

The case was initially lodged in 2014 and the plaintiffs served a proposed further amended statement of claim (FASOC) last year, which related to ASIC’s failure in late 2007 to impose conditions on Storm’s licence and inform the market of its concerns.

In particular, the FASOC related to what should have happened “had ASIC exercised its powers and/or additional powers”.

However, Gleeson found that allegation deficient as it did not identify precisely the facts on which it was alleged the plaintiffs suffered financial loss due to ASIC’s conduct.

“In order to demonstrate that they have a reasonably arguable case, the plaintiffs would have to identify what ASIC should have done that would have prevented the loss which was sustained,” she said.

“The allegations of causation are liable to be struck out to the extent that they allege that ASIC should have imposed an enforceable undertaking on Storm, when ASIC had no power to do so.

“Further, they are liable to be struck out to the extent that they allege that ASIC should have taken ‘other reasonable action’ without identifying what action should have been taken.”

The plaintiffs were provided sufficient time and opportunity to plead a reasonable cause of action, but were unable to do so, she said.

“There is no reason to believe that the plaintiffs are able to plead additional facts that would support a reasonable cause of action,” she said.

“Accordingly, I will not grant leave to the plaintiffs to file a second further amended statement of claim.

“When all these matters are taken into account, in my view, the FASOC is so deficient that it is liable to be struck out in its entirety, with costs.”

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