In this matter the 3 Councils led representative proceedings or
a 'class action' on behalf of 72 other Councils, charities,
Church and Not-For-Profit groups who collectively lost over
$200million when the products purchased from Grange prior to 2008
either plummeted in value or were completely wiped out during the
global financial crisis (GFC). While only the
claims of the 3 Councils were tested by the Court in these
proceedings, as these are representative proceedings the Court can
resolve issues of fact and law involving the representative
applicants and the respondent that are common to claims that other
group members have against the same respondent.
In a detailed Judgment Judge Rares of the Federal Court held
Grange put itself forward to the Councils as a financial
adviser that understood the investment requirements of local
Grange sold the products to the Councils as highly rated and
suitable for a conservative investment strategy and one which would
provide a greater financial return than traditional methods of
investing ratepayer money such as in bank term deposits;
None of the Councils had officers with any significant
experience in investment or financial products outside limited
classes of simpler investments;
Grange misled the Councils by promising the products had a high
level of security for the invested capital, were easily tradable on
a secondary market and could be readily liquidated for cash;
Grange was conflicted between its fiduciary duty to provide
sound financial advice to the Councils and earning large profits on
the sale of the products that it did not disclose to the
Grange was negligent in recommending to the Councils that they
invest in the products; and
Grange engaged in misleading and deceptive conduct in breach of
s.12D of the ASIC Act by promoting the products as suitable
The Judgment in favour of the 3 lead applicant Councils include
findings of fact and law common to all 72 Councils, charities and
Church groups and those parties may now proceed by either
settlement or a simple claims resolution process.
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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