Legal reasoning and common law systems: Statute analysis
LЕGАL RЕАSОNING АND СОMMОN LАW SYSTЕMS:
Std. Reg. No:
The key characters in the High Court Principle Case include Luka Margaretic, who is a party to the proceedings as the plaintiff or respondent. Margaretic is a party to the case at an individual level. ING Investment Management LLC and Sons of Gwalia Ltd are the other key characters. The two are a party to the proceedings as the defendants or appellants and they are acting as companies. 1
The litigation involved an action for damages by Luka Margaretic an investor with the Sons of Gwalia Ltd; a public limited corporation listed on the Australian Stock Exchange dealing in gold mining. The suit was founded on an alleged misrepresentation or misleading behaviour and non-compliance by the defendant as to the statutory continuous disclosure responsibility. The misleading behaviour involves proclamations made by the management of the firm to the Australian Stock Exchange concerning the amount of gold reserves in their possession. The truthfulness of this information was important since the defendant organisation had entered into several gold forward contracts whereby they were expected to provide gold to various entities in the future. Nevertheless, dramatic changes in the value of gold in the market occurred. Therefore, the company could incur huge costs if it committed to purchase gold from the marketplace in order to fulfil its onward gold distribution agreements. The company released information afterwards that its remarks about the gold reserves were inaccurate knowing that it had insufficient gold reserves to completely perform its duty. Consequently, the firm’s share price dropped, and the company could not withstand to continue operating into the foreseeable future. The company’s directors were impelled to choose an administrator to take the company through liquidation. The Australian Stock Exchange subsequently unlisted the company’s stocks from the capital market which lowered the value of the plaintiff’s investment to zero. 2
The legal relationship between Margaretic and Sons of Gwalia Ltd is that of plaintiff and defendant respectively. The plaintiff, Luka Margaretic, was a shareholder in the defendant company, Sons of Gwalia Ltd. As a result, he has a right to disclosure of information, to vote at the annual general meeting to elect directors, and a share of the profits made by the defendant. ING Investment Management LLC represents the voluntary administrator appointed by the defendant firm. The administrator brought an appeal against the High Court ruling that had allowed the plaintiff to file a case for damages for the financial loss occasioned by the insolvency of the defendant.
The legal and factual issues covered in this case are that Margaretic who was an investor purchased 20,000 shares in Sons of Gwalia public limited company that engaged in gold mining. His name was included on the register of members several days after the purchase. However, administrators were appointed to the company a few days following his name being entered as a member of the company. The company signed a deed of company arrangement and it was required to set aside a fund that would be shared to creditors in the similar order of priority as if the company was undergoing liquidation.
The investor claimed that the company had contravened its duty to disclose information continuously through its failure to communicate to the Australian Stoke Exchange that it had a shortage of gold supplies to perform its contractual obligation of delivering them to the parties involved. Hence, the company could not sustain itself into the foreseeable future. Margaretic stipulated that the failure to disclose such key information violated the restrictions against misleading or deceptive behaviour.3 He pleaded for damages