Quintis Australia - Case Update

The Federal Court of Australia has awarded costs against the applicants in a failed class action against EY and Frank Wilson—the founder, CEO and managing director of insolvent sandalwood producer Quintis Australia—while also holding the litigation funder jointly and severally liable for the respondents’ costs.

We last wrote about Quintis in July 2024, when the company and several subsidiaries entered liquidation after no DOCA was received for any of them in the voluntary administration process.

In February of this year, the Federal Court found that Mr Wilson had made misleading statements to the market, and that EY’s unqualified audit opinion misled investors. However, it held that the applicants failed to prove causation and suffered no compensable loss.

The parties returned to Court in early May to argue costs. The applicants requested “issue-based” costs orders to reflect their partial success, arguing they had established key misrepresentations and audit failures. The Court refused, emphasising that while the applicants had established some contraventions, they had not succeeded in the core objective of the litigation—compensation.

Interestingly, the Court imposed joint and several liability for costs on LCM Operations Pty Ltd, the litigation funder. The Court noted that LCM had not only funded the litigation for commercial benefit but had actively controlled the prosecution of the claims. As a result, the Court held that it was fair and appropriate for LCM to share responsibility for the costs, irrespective of whether the other applicants were independently capable of satisfying any costs orders.

Read the decision HERE.

Professionals involved:

• Stuart Lawrance SC of Tenth Floor Chambers and James Sippe of Fourth Floor Chambers (instructed by Mizen + Mizen) for the Second Respondent, Frank Cullity WIlson

• Justin Williams SC of Eleven Wentworth, Jerome Entwisle of Banco Chambers and Samuel Gerber of Eleven Wentworth (instructed by Corrs Chambers Westgarth) for the Third Respondent, Ernst & Young

• Chris McMeniman of Tenth Floor Chambers and Thomas Liu of 7 Wentworth Selborne (instructed by Piper Alderman) for the Applicants, Geoffrey Peter Davis and Geoffrey William Davis

• Adam Hochroth and Kate Bones of Banco Chambers for LCM Operations Pty Ltd