New Cap trials end
The Age
Saturday September 5, 2009
THE High Court yesterday turned down an opportunity to consider how "commercial morality" intersects with a director's duty not to mislead investors.In refusing leave for two discrete appeals relating to the collapse of New Cap Reinsurance, the High Court also called a halt to one of the longest and costliest court battles of recent years.The investor Duncan Saville's Ingot Capital funds management group lost $40 million when a series of natural, aviation and satellite disasters felled New Cap in 1999.He was refused leave to appeal a NSW Court of Appeal decision in favour of New Cap's former directors and its legal adviser, Phillips Fox, one of whose former partners was on the board.Ingot did not pursue an appeal involving other prominent original defendants, including New Cap's stockbroker Macquarie Equities and its auditor PricewaterhouseCoopers, who, like Phillips Fox, were involved in the 1998 prospectus for a convertible note issue.New Cap's former managing director, Azmin Daya, separately failed to persuade the High Court that it should hear his appeal against a decision in favour of Ingot.In ordering Mr Daya to reimburse Ingot $38 million, the NSW Court of Appeal ruled last year that Ingot did not need to present its case by expressly claiming investors would have expected New Cap to disclose a blow-out in insurance claims after publishing the prospectus, but before issuing the notes."The inference that investors would expect that, if such events occurred, [New Cap] would inform investors of them is based on commonplace notions of commercial morality," the Court of Appeal said.Mr Daya wanted the High Court to examine whether this "inferred expectation" fell outside the proper legal test for determining when silence amounted to misleading or deceptive conduct.
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