Engineering company Clough and its former directors have lost their bid to have amendments to Forge Group’s $200 million claim against them struck out, as the legal battle enters its third year.
Engineering company Clough and its former directors have lost their bid to have amendments to embattled contractor Forge Group’s $200 million claim against them for insider trading struck out, as the legal battle enters its third year.
The two companies had been working together to bid on major resources and infrastructure projects when Clough decided to sell its 36 per cent shareholding in Forge Group for $187 million in 2013, three years after making its investment.
Forge Group went into liquidation one year later following significant losses at its power stations and while engaged in multiple contractual disputes and legal claims.
The following year, Forge Group’s liquidators published a statement indicating that they intended to pursue a claim against Clough after receiving financial backing from ASX-listed IMF Bentham to investigate claims of insider trading.
According to a judgement handed down in the Supreme Court this morning, Forge Group began proceedings against Clough Limited, Clough Operations, and its former directors Kevin Gallagher and Neil Siford, for insider trading in March 2019, demanding compensation for the damage suffered by the company as a result.
In February, Forge Group filed an amendment to the claim it had lodged in June 2019, pleading facts relating to the management of the company’s business risks and the alleged failure to address those risks, as well as Mr Gallagher, now managing director of Santos, and Mr Siford allegedly knowing that statements made about Forge’s system of risk management were “unreliable and incorrect”.
According to the judgement, Clough applied to have the amendments struck out on the grounds that they introduced new facts in the case, some of which were inconsistent with those underpinning the original claim.
Clough's lawyer, Matthews + Chew partner Idris Matthews, alleged that the amendments advanced a new cause of action based on fresh allegations outside the scope of the original proceedings and time-barred by the Corporations Act; which features a six-year limitation period on proceedings for compensation.
Justice Rene Le Miere dismissed the application after finding the facts in the amendments were not inconsistent with those in the original claim and did not sufficiently change the formulation of the case in a way that would give rise to a new cause of action.
The matter was adjourned, with the two parties left to determine a date for a directions hearing.