Federal Court to push forward with Crown Resorts class action, despite Covid disruption

After several delays, a judge overseeing a shareholder class action against Crown Resorts says the trial will begin in October.

A long-awaited shareholder class action will begin against Crown in October. Picture: Joel Carrett

A shareholder class action against Crown Resorts that has been three years in the making will go to trial just days after the James Packer-backed group is due to learn the fate of its Melbourne casino, with a judge saying he doesn’t want to see the case pushed back again.

Federal Court Judge Bernard Murphy said on Tuesday that the six-week trial will almost certainly kick off in Melbourne on October 25, whether or not the current Covid-19 lockdown drags on, as proceedings had already been interrupted by lockdowns last year.

“I wanted to run last time, but that view did not prevail,” Justice Murphy told a case management hearing.

“We’re not in control of the virus or what the Victorian government does, but you can take it that I didn’t want it to be adjourned last time, I don’t want it to be adjourned this time, and I am very keen to give the parties their day in court.”

The class action was brought against Crown Resorts in the Federal Court by Maurice Blackburn on behalf of shareholders in December 2017 amid the fallout of the arrest of 19 Crown staff in China for allegedly illegally promoting gambling.

The legal action accuses Crown of failing to warn shareholders of the risks to the company in continuing to promote VIP junkets for China’s high rollers after a well-publicised crackdown was launched on foreign gambling promotion.

Maurice Blackburn claims this led to shareholder losses, as the Crown Resorts share price plunged 14 per cent after the company confirmed the arrests on October 17, 2016.

Originally set to go to trial in May 2020, the case has been pushed back due to a combination of the Covid-19 pandemic and state government royal commissions and inquiries into Crown like the NSW Bergin inquiry, which probed the China arrests issue before revoking Crown’s NSW casino licence in February.

Now the trial is set to start just 10 days after the Victorian royal commission into Crown Resorts is due to report to the state government on whether the company is suitable to continue operating its Crown Melbourne casino, an event that places Crown at risk of defaulting on its almost $1bn of debt.

A royal commission is also underway in Wesytern Australia, where Crown runs a casino in Perth.

The case’s timeline has also been extended by a stoush over whether the employees who were arrested by Chinese police could legally violate the confidentiality clauses they had signed to give evidence.

Justice Murphy ruled it was possible, but that was overturned by the Full Court of the Federal Court in February of 2020.

The case is the first of two shareholder class actions brought by Maurice Blackburn against Crown.

The second one was filed in the Supreme Court of Victoria last December and alleges that the company had inadequate systems in place to ensure it complied with anti-money laundering laws, contrary to shareholder interests.