Mark Elliott vows to fight on as class-action dual role ruled out

LITIGATION maverick Mark Elliott has vowed to continue his shareholder actions despite a Supreme Court ruling.

LITIGATION maverick Mark Elliott has vowed to continue his multimillion-dollar shareholder actions against “the big end of town” despite a Supreme Court ruling unravelling key planks of his contentious new class-action model.

In a blow to Mr Elliott’s controversial attempt to run, lead and fund two shareholder class actions against Leighton Holdings and Treasury Wine Estates, the ­Supreme Court ruled he cannot act as solicitor and plaintiff and must relinquish one of the roles.

“I have concern that, whilst (Mr Elliott’s company) MCI is the plaintiff and Mr Elliott its solicitor, despite their best intentions there is a risk that self-interest will dominate over the interests of group members,” Justice Anne Ferguson found.

Mr Elliott said the findings were “not unexpected” and while his Melbourne City Investments would continue as lead plaintiff, he would appoint new solicitors.

Tan Partners have been appointed to act as solicitors for Treasury Wine Estates while Stewart Peters are the new solicitors for Leighton Holdings.

But in what Mr Elliott called the “law of unintended consequences”, the decision means the corporate law expert can no longer continue to fund the class actions as a solicitor on a no-win, no-fee basis and will now have to approach another funder to carry the case.

“The judge had forced me down the road of litigation funding because if I’m not the solicitor I have to pay another solicitor to do the work and I need money to do that,” Mr Elliott said.

Mr Elliott, a former partner of Minter Ellison, stunned Australia’s class-action landscape last year when he launched several group proceedings using a never-before-seen litigation model.

In four of the five class actions launched by Mr Elliott, he has personally acted as the solicitor while MCI — of which he is sole director, secretary and shareholder — has been playing the role of lead plaintiff and Elliott the wealthy private citizen has been funding the case on a no-win, no-fee basis.

In the judgment handed down last week, Justice Ferguson found Mr Elliott could not give ­detached, independent and impartial advice as a solicitor while his personal company (MCI) was the lead plaintiff and subject to ­potential adverse cost orders.

“(An independent observer) would consider it important that the solicitor who is acting for the plaintiff is independent, so that forthright and strident advice is given, untainted by the personal interest of the lawyer beyond their normal interest,” she found.

“In this regard, Mr Elliott’s ­interest goes beyond that of other solicitors acting for plaintiffs in group proceedings.”

And, in a further blow to Mr ­Elliott’s litigation model, Justice Ferguson agreed with Leighton and Treasury Wine Estates that its predominant purpose was to generate legal fees.

“I have formed the view that MCI commenced the proceedings for the purpose of generating legal fees for Mr Elliott,” she found.

“I agree with (Leighton and Treasury Wine Estates) that that purpose is not a purpose of ­earning legal fees as a desired ­by-product of the litigation. It is the predominant purpose.”

She also said it was reasonable to conclude that Mr Elliott, through MCI, purchased small parcels in listed companies with the purpose of launching a class action based on alleged breaches of continuous disclosure laws.

It is a claim Mr Elliott ­denies.

But, in a win for Mr Elliott, ­Justice Ferguson refused to throw out the class action against Leighton and Treasury Wine Estates, ruling it was a legitimate action, was not an abuse of process and did not bring the administration of justice into disrepute.

“Whether it is good or bad, the reality is that group proceedings are lawyer driven,” Justice Ferguson said.

“They will not, for that reason, be brought to a halt.

“Nevertheless, it does seem to me that the risks associated with entrepreneurial lawyers acting in group proceedings … are ­exacerbated here where the plaintiff and the solicitor are not independent of one another.”