Background
In June 2022, Wiluna Mining Corporation Ltd published an announcement about a capital raising that ASIC alleges omitted material information, rendering it misleading. ASIC also claims Wiluna subsequently failed to disclose the omitted information to the Australian Stock Exchange, breaching continuous disclosure obligations under section 674A of the Corporations Act 2001 (Cth) and engaging in misleading conduct under section 1041H(1).
ASIC brought parallel claims against three defendants: Wiluna itself (the company); Milan Jerkovic (a director); and James Malone (a senior manager). Wiluna admitted ASIC’s allegations and sought an immediate hearing on those admissions. However, Jerkovic contested liability and sought to defend the proceedings, invoking penalty privilege regarding key factual matters. Malone indicated he would abide the outcome.
The central dispute was procedural: whether to determine Wiluna’s admitted liability first (as Wiluna and ASIC preferred) or to hear the defending parties’ cases first (as Jerkovic sought).
The Court’s Holding
Justice Colvin ordered that ASIC’s case against the individual defendants (Jerkovic and Malone) be determined first as to liability, with Wiluna’s case to be heard separately and subsequently. The court rejected the efficiency argument favoring immediate determination of the agreed facts, prioritizing fairness to the defending parties.
The court identified a critical risk: if Wiluna’s case were determined first, declarations of contravention would necessarily rest on findings about what information was omitted from the announcement and whether it was material. Jerkovic’s defense, however, is premised on invoking penalty privilege as to precisely those matters. Determining Wiluna’s case first would therefore force Jerkovic to defend by persuading the court to make inconsistent findings—contradicting conclusions already reached against Wiluna.
Justice Colvin emphasized that the prospect of inconsistent findings between defendants poses serious concerns for the institutional integrity of the court, particularly in cases involving serious allegations and potential civil penalties. The absence of penalty liability for Wiluna does not materially affect this analysis.
Key Takeaways
- Procedural efficiency (finality for admitting parties) must be balanced against fairness to defending parties who may face prejudice from prior adverse findings.
- Risk of inconsistent findings between defendants is a significant independent factor warranting separate and sequential hearings, even where claims against different defendants technically have different elements.
- Penalty privilege claims by defending parties affect the procedural calculus, as they may require the defending party to challenge factual findings the court has already made against another defendant.
- Courts will not mechanically award declarations based on admissions if doing so would create unfair prejudice to other defendants whose liability is still contested.
Why It Matters
This decision establishes important guidance for multi-defendant litigation in ASIC enforcement actions and other regulatory cases. It clarifies that Australian courts will not sacrifice fairness to defending parties in the name of procedural efficiency, even when one party has conceded liability. The risk of inconsistent findings between defendants—and the consequent unfairness of requiring a defending party to overcome findings already accepted by the court—justifies departure from the general public policy favoring prompt finality.
The ruling has particular significance for securities law enforcement, where ASIC regularly brings parallel claims against companies and individual officers or employees. The decision signals that where any defendant genuinely contests liability, courts are likely to order separate hearings to avoid the appearance of prejudging contested issues.