NAB v Pathway Investments [2012] VSCA 168

This is an early skirmish in a class action brought by shareholders of NAB who claimed to have suffered loss as a result of NAB’s non-disclosure and misleading and deceptive conduct in relation to $1.1bn losses on certain CDOs held by the bank. The bank sought the identity and very wide discovery in respect of the 20 largest shareholders suing it. The document categories included documents relating to the bank’s exposure to losses under collateralised debt obligations generally, documents relating to all share-trading decisions in the bank’s shares in the relevant period, including strategies, policies and benchmarks.

The trial judge and Court of Appeal refused to grant identity and discovery because:

  • The bank failed to show that the documents were necessary for the preparation of expert evidence. The expert had merely indicated they would be useful and beneficial in the conduct of the bank’s case
  • It was not argued by the bank that the 20 largest shareholders in the group had particular relevant information not possessed by other large shareholders.
  • The court took into account the normally passive role of group members in a class action.

Click here to read full judgment

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