Court thwarts legal tilt at Crown Resorts

The Federal Court has ruled Crown Resort staff jailed for illegal gambling activities in China cannot help lawyers prepare a major class action against Crown.

Crown Casino, Southbank. (AAP Image/James Ross)

The Federal Court has ruled Crown Resorts staff jailed for ­illegal gambling activities in China will be barred from helping lawyers prepare a major class action against Crown in what ­appears to be a major win for the gaming behemoth.

Law firm Maurice Blackburn launched the class action on behalf of a group of Crown shareholders in December 2017, two months after 19 Crown staffers were arrested in China in Oct­ober 2016 and charged with breaching anti-gambling laws.

The shareholders claim they are entitled to compensation after shares went into free fall, plummeting almost 14 per cent.

They say Crown failed to warn shareholders of the risks to the company in continuing to spruik VIP junkets for China’s high rollers, just months after a major crackdown on gambling in China.

The judgment on Wednesday by the Full Court of the Federal Court overturned a May ruling by judge Bernard Murphy, who had ruled that confidentiality contracts between Crown and 18 of the former employees arrested by Chinese authorities were not enforceable.

Maurice Blackburn’s national head of class actions, Andrew Watson, said the judgment highlighted “an absurdity in the law that needs to change”. The decision had “given credence to the continued efforts of Crown to prevent whistleblowers speaking out in these proceedings”.

“It’s ridiculous that a whistleblower can tell their story to the media but they’re prevented from talking to a lawyer to give a witness statement in a court proceeding,” Mr Watson said. “But that’s what this decision means.”

Maurice Blackburn had planned to interview the former Crown employees and prepare witness statements about their activities in China and subsequent prosecutions.

The appeal judgment means they may now be forced to subpoena the former staffers to give evidence at the November trial, without the advantage of assessing their evidence in advance.

All but one of the Crown employees pleaded guilty, 16 of them serving nine to 10 months in a Chinese jail. Eighteen were subsequently made redundant and Crown was fined $1.56m by the Chinese courts.

The setback for Maurice Blackburn comes after the NSW gaming regulator kicked off its no-holds-barred inquiry into ­allegations of “criminal infiltration” of Crown’s gaming operations in Sydney on Tuesday.

The inquisition, led by NSW Supreme Court judge Paddy Bergin, has all the powers of a royal commission.

Counsel assisting, Naomi Sharpe SC, told the inquiry on Tuesday that Crown’s high-­roller operations and activities in China would be a feature of the inquiry, which has been broken up into five separate public hearings. She said among allegations was that Crown had “knowingly broken the law in China” by “incentivising staff to lure Chinese high rollers to gamble at Crown’s Australian casinos”.