Gunns shoot themselves in the foot

In December 2004, Gunns Ltd first initiated legal action in the Victorian Supreme Court against three environmental groups and 17 individuals, seeking $6.3 million damages for unlawful interference with its business. The case was struck out.

Gunns attempted to file again. The case was struck out.

Gunns attempted to file again. The case was struck out. The company was ordered to pay costs to the defendants.

Late yesterday afternoon, Gunns filed its fourth motion in relation to the same matter with the Victorian Supreme Court.

Strangely, although the case involves a number of high profile activists and politicians, and has received wide media coverage, Gunns has never seen fit to mention its litigation activities to its shareholders via an announcement to the ASX. Listing rule 3.1 specifies that:

Once a company is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entities securities, the entity must immediately tell ASX that information.

Many companies make regular reports to the ASX on the progress of legal actions they are involved in - even tiny, straight forward ones. It quelches rumours and stops the punters getting anxious.

A number of factors have materially affected Gunns' share price since Dec 2004; the market is a complex game. However, since Gunns became a vexatious litigant, its share price has fallen 42% - in the middle of one of the biggest resources bull markets in ASX history.

Just to ram the point home, the second graph shows how they performed from the day they first listed right up until the month after they first went to court.