An Update on the Henry Morgan saga
Following the surprise appearance of an article in AFR this morning about the results of a lawsuit against my web host, Dreamscape, and the law firm that represented me, BTLawyers Brisbane, I thought readers might be interested in a brief timeline of events.
Mid-last year I began writing a series of posts about Henry Morgan (ASX:HML), Benjamin Hornigold (ASX:BHD), John Bridgeman (NSX:JBL), and unlisted subsidiaries and investments including Bartholomew Roberts (BRL) and JB Financial Group (JBFG) among others.
Shortly after I began looking, Henry Morgan entered voluntary suspension in June 2017. At the time the suspension was due to a pending announcement relating to an Interim Stop Order from ASIC regarding HML’s proposed options prospectus. ASIC subsequently issued a Final Stop Order for this prospectus. HML has remained suspended since this date.
In August 2017, Henry Morgan published a list of corrective disclosures to the ASX. If you are looking to get a quick handle on the HML story, the corrective disclosure provides an overview of some of ASX’s concerns.
In December 2017 I received an email from lawyers jointly representing HML/JBL/BHD, insisting that I remove my posts, publish an apology, and reveal my identity within a very short deadline.
Without either being a lawyer myself or having a lawyer on retainer at the time, I thought it was best to pull the posts down from my website while I sought legal advice.I would like to thank BTLawyers for their capable advice and for being so quick to respond during what was a time sensitive matter.
After some back and forth between my lawyers and HML’s lawyers, no agreement was reached.
Several weeks later BTLawyers and Dreamscape were served with court proceedings.
Four months after the hearing in April 2018, the court posted its orders and judgement late last week. These are available here:
Lawyer-readers may find part of this case interesting, in that HML’s lawyers attempted to access my identity from before I had signed a fee agreement with my lawyer. When I first approached BT Lawyers for advice on maintaining my anonymity, I gave him my name and details so that he could prepare a fee agreement. Lawyers for HML argued that this information, given before a formal arrangement existed between myself and my lawyer, was not subject to client confidentiality. The court found that in this case it was still confidential. This is what I took away from the judgement:
27 A client’s communication of his or her name to a lawyer is not usually privileged.
41 In this case, one aspect of the state of facts that the publisher communicated to the solicitors was that he , “X”, (i.e., me) was the publisher of the articles. The very purpose for which the publisher communicated his name was to obtain legal advice about avoiding disclosure of his name as the publisher. The communication of his name was inextricably intertwined with the advice he was seeking.
42 The case falls within the exception identified in Coombes where the client’s identity is so intertwined with the confidential communication that to disclose the identity would be to disclose the communication. For the solicitors to disclose the publisher’s name would be to disclose the substance of a confidential communication, namely his identity as the publisher of the blog. For these reasons, legal professional privilege attaches to the publisher’s communication of his name to the solicitors.
There is also this aspect of the judgement:
13 The publisher’s solicitors (i.e., me/BTLawyers) submit that the prospective applicants cannot demonstrate any arguable case of breach of s 18 of the Australian Consumer Law because the material published on the website was not published in trade or commerce. The prospective applicants (HML’s lawyers) concede this point. The solicitors submit that if the prospective applicants sued for defamation or injurious falsehood alone, this Court would have no jurisdiction in respect of the proceeding. The prospective applicants also concede this point. That leaves the question of whether the prospective applicants may have a right to obtain relief for breach of s 1041H of the Corporations Act.
Of course, once HML and co obtain my identity, it may be possible to launch additional lawsuits alleging defamation and what have you. However at this point, this proceeding appears to have hinged on section 1041H of the Corporations Act. Given that this is a corporate case I question whether HML/BHD/JBL shareholders are effectively footing the bill for these proceedings.
In the interim, while this legal action played out, ASX has criticised Henry Morgan on 22 May 2018 for “quibbling“. ASX stated in the same announcement that “ASIC has expressed a number of concerns (which are shared by ASX) about the values ascribed to HML’s unlisted assets in its NTA calculations and the methodology used to calculate those values.”
As of 13 August 2018, Henry Morgan’s voluntary suspension looks to have now become an involuntary suspension at ASX’s discretion under listing rule 17.3.
Henry Morgan itself has noted on 22 August 2018 that ASX is “not minded to lift the suspension at this time”, pending further queries.
Subsequent to this quibbling comment from ASX, another ASX-listed entity Benjamin Hornigold (ASX: BHD) was also suspended on 30 July under listing rule 17.3 pending further queries from ASX.
Food for thought.
I have no, and have never had any, financial interest whatsoever in any company mentioned. I have no financial relationship with, or ownership interest in, BTLawyers, other than the relationship which exists between a fee-paying client and his lawyer. I am not a lawyer so my interpretation of the linked court judgement may be incorrect. This is a disclosure and not a recommendation.
Good on you. Stewy and co have shown they are a joke. 2 companies suspended Ffs!! Reputation in tatters and they want to further waste shareholder funds to achieve what??
Keep it up chief. I’m a suffering shareholder (HML and BHD) unfortunately, but I greatly appreciate your posts.
Good onya buddy. I’m not a lawyer either and I’m not familiar with defamation laws, but I simply regard anything you write as your opinion only. The reaction stinks a bit like bullying, I doubt they’d take action against a high profile blogger with deep pockets.
If you need funds to help fight this set up a gofundme page, I’ll be first to donate I think HML shareholders will queue up to help also.
Companies like Henry Morgan, run by incompetents, are a disgrace to the entire industry. The sooner we can dump this garbage the better.
Hope things work out well for you and you can turn this into a positive.
If your posts persuaded the odd shareholder to sell their HML shares I am guessing they would be happy with their decision right now!
Good work on bringing all this corporate f***ery to light.
Hypothetically speaking – what would you do if you were a shareholder in one of these sinking ships?
The moment I see the name ‘Jenny Hutson’ associated with anybody relating to investing alarm bells start ringing!!
I hold approx 50,000 HML shares. I would be interested in knowing if there is a shareholder group that is taking any action against HML management. Any information you can provide would be appreciated
Hi Mark, I’m not across those events as I’m not a shareholder. However you can contact this email address firstname.lastname@example.org for more information,
judging by comments on hotcopper there may be some efforts to make recoveries for shareholders. All the best.