Mark Elliott’s class action against Myer an ‘abuse of process’

One-man shareholder class-­action litigator Mark Elliott has lost his bid to wage a court battle against Myer.

Class-­action litigator Mark Elliott has lost his bid to wage a court battle against Myer.

One-man shareholder class-­action litigator Mark Elliott has lost his bid to wage a court battle against Myer after the Supreme Court found he used the court for an “illegitimate” purpose and his action was an abuse of process.

The court also found Mr ­Elliott’s statements of evidence “repeated and rehearsed’’.

It is the second time in recent years that Mr Elliott’s business model of buying shares in listed companies and then launching class actions if a profit downgrade sparks a collapse in the share price has come under fire from a judge.

A Supreme Court judge in 2014 argued that Mr Elliott, a former partner with Minter­Ellison, had probably set up his Melbourne City Investments ­vehicle for the purpose of launching class actions to generate legal fees for himself.

Yesterday it was the turn of judge Michael Sifris, who handed down his judgment on MCI’s case against Myer relating to the retailer’s profit downgrade last year that saw shares plummet.

Justice Sifris ordered a permanent stay against the proceedings brought by MCI and ­labelled the case an abuse of ­process.

“Why then has MCI commenced this proceeding?’’ Justice ­Sifris asked in his 37-page ruling. “If the predominant purpose is to generate income for ­Elliott and or his associates, it is an abuse of the process. If however, the income, such as it may be, simply flows from the vindication of legal rights, being, the predominant purpose of the proceeding, it is not an abuse of the process.’’

Justice Sifris found the former to be true.

“In my opinion the court’s process has been engaged for an illegitimate or collateral purpose and accordingly the proceedings is an abuse of process. The predominant purpose of this proceeding is to generate, not legal fees, but income or revenue for interests associated with Elliott.”

MCI had alleged losses and damage resulting from a statement made in the context of Myer’s full-year 2014 results and a public forecast given by former Myer chief executive Bernie Brookes at the company’s full-year results presentation on ­September 11, 2014.

Myer shares crashed in March last year after the company was forced to admit it would not meet its full-year profit consensus forecasts.

Mr Elliott, a one-time senior executive at Computershare, set up MCI to launch shareholder class actions against listed companies. He quickly began scooping up small parcels of shares in more than 145 listed companies, sometimes investing less than $700 in each company.

In 2013 MCI began separate shareholder class actions against Treasury Wine, Leighton and WorleyParsons, claiming failure to properly disclose price-­sensitive information related to profit downgrades as well as misleading or deceptive conduct.