13-158MR ASIC to press ahead with case against Storm Financial founders
Friday 28 June 2013
ASIC today welcomes the Federal Court’s decision to dismiss an application by Storm Financial founders Emmanuel and Julie Cassimatis seeking summary dismissal of ASIC’s case against them.
The decision means ASIC can pursue its civil penalty proceedings alleging the executive directors breached their directors’ duties.
ASIC is seeking to ban the Cassimatises from the financial services industry and disqualify them from managing companies, as well as the payment of pecuniary penalties.
ASIC will now be asking the court to implement a timetable for these proceedings to be progressed to trial.
‘Since Storm’s collapse ASIC has been seeking compensation for investors as well as pursuing regulatory action against those companies and individuals intrinsically involved in implementing the Storm model,’ ASIC Deputy Chairman Peter Kell said.
In May 2013 ASIC secured $1.1 million in compensation on behalf of two former Storm investors, Barry and Deanna Doyle (refer 13-122MR).
ASIC has also appealed a recent decision of the Federal Court to approve the settlement between former Storm Financial clients and Macquarie Bank Limited. ASIC’s challenge is not to the amount of the settlement, rather to the fairness of the settlement distribution among all of the class action members who are entitled to participate in it (refer 13-120MR). This appeal will be heard by the Full Court of the Federal Court in Brisbane on 5 August 2013.
And last year ASIC and CBA reached an agreement for the bank to provide up to $136 million in compensation for Storm investors who borrowed with the bank (refer 12-227MR).
The Cassimatis matter will return to court for a directions hearing on 11 July 2013, at which time the court will order a timetable to progress the proceedings to trial and also hear argument on the question of costs arising from the court’s decision to dismiss the defendants’ application.
Editor's note 1:
The directions hearing has been rescheduled to 24 July 2013.
Editor's note 2:
At the directions hearing on 24 July 2013 the court ordered that the Cassimatises pay ASIC's costs of the unsuccessful summary judgment application. Orders have also been made for a programming timetable, based upon a draft timetable prepared by ASIC, to progress the proceedings to trial. Under these orders, ASIC's affidavit material is to be served by 16 October 2013. The Cassimatises' affidavit material is due on 27 February 2014.
Editor's note 3:
On 28 August 2013 at a directions hearing before Justice Reeves concerning the Cassimatises strike out application, his Honour brought the hearing date for the application forward to 10 Sept 2013. It was originally listed for 18 Oct 2013.
Editor's note 4:
On 22 May 2014 the Full Court of the Federal Court, by consent of both parties, dismissed the Cassimatises' appeal of their unsuccessful application for summary judgment against ASIC. The Full Court also ordered that ASIC amend its pleading in light of issues raised by the court during the appeal hearing. The amended pleading is required to be filed on or before 4 July 2014.
Editor's note 5:
On 4 July 2014 ASIC filed an application seeking an extension of the time for it to file any amended pleading. It is also seeking an order for the proceedings to be referred to mediation. This application will be heard by the Federal Court on 18 July 2014.
Editor's note 6:
On 18 July 2014, the Federal Court granted ASIC's application seeking an extension to file an amended pleading to 15 August 2014. ASIC is to deliver a draft of the amended pleading to the defendants on 1 August 2014. The Federal Court also heard ASIC's application for the proceedings to be referred to mediation and ordered the parties to attend a mediation on or before 19 September 2014.
Editor's note 7:
On 15 August 2014 ASIC filed its amended pleading in accordance with the court's orders. ASIC also filed an application seeking a dispensation of the Federal Court pleading rules in relation to aspects of the amended pleading and orders for an extension of the time required for the parties to attend a mediation. This application will be heard by the Federal Court on 16 September 2014.
Editor's note 8:
On 16 September 2014, His Honour Justice Rangiah of the Federal Court made the following orders:
ASIC be granted a dispensation of the Federal Court pleading rules in relation to a paragraph and a schedule of the amended pleading
ASIC be granted leave to file an amended statement of claim within 14 days
the final date for parties to attend mediation be extended from 19 September 2014 to 10 November 2014, and
ASIC's dedicated Storm website has more information on the proceedings.