This article is more than 7 months old

This article is more than 7 months old

Lawyers acting for shareholders in a class action against James Packer’s embattled casino empire, Crown Resorts, have lost a bid to crack open secrecy provisions in the contracts of company employees who were convicted of gambling promotion crimes in China.

On Wednesday the federal court overturned a ruling last year that the lawyers for the shareholders, Maurice Blackburn, could take witness statements and collect documents from the 19 former employees, who include the whistleblower Jenny Jiang.

Maurice Blackburn now faces the prospect of either calling the witnesses to the stand “cold”, without any preparation, or mounting a fresh attack on the confidentiality provisions of their employment contracts.

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Crown is also preparing to face public hearings in New South Wales into a range of allegations against the group, many of which were aired in Nine newspapers last year, and its fitness to hold a casino licence. The Nine reports included interviews with Jiang.

Maurice Blackburn’s head of class actions, Andrew Watson, said the full court’s judgment “highlights an absurdity in the law that needs to change”.

“It’s ridiculous that a whistleblower can tell their story to the media but they’re prevented from talking to a lawyer to give a witness statement in a court proceeding,” he said.

“But that’s what this decision means.”

In the class action, Maurice Blackburn claims Crown failed to inform the market that its lucrative high-roller business was at risk because of a crackdown by Chinese authorities on illegal gambling promotion on the mainland.

Crown shares tumbled almost 14% when news of the employees’ arrests broke in October 2016.

In May last year, trial judge Bernard Murphy gave Maurice Blackburn permission to ignore confidentiality provisions in the employees’ contracts so that they could take witness statements and collect documents in preparation for the trial, which is set for November.

He said he had the power to do so under the Federal Court Act and there was “a public interest in the fair, quick, inexpensive and efficient administration of justice”.

“In my opinion, if the orders are not made, it may have a serious adverse effect on the administration of justice,” Murphy said.

He said this outweighed “the public interest in maintaining the contractual obligations of confidence between Crown and its former employees”.

However, on Wednesday a panel of three judges – chief justice James Allsop, Michael Lee and Richard White – set aside Murphy’s ruling following an appeal by Crown.

The chief justice devoted much of his reasons to an attack on a ruling made by Victorian supreme court judge Jack Forrest allowing a similar waiver of confidentiality in a case run by Maurice Blackburn against Serco on behalf of people imprisoned at the Christmas Island immigration detention centre.

Forrest’s judgment was followed by Murphy when he heard the Crown class action.

Allsop accused Forrest, one of the Victorian court’s most highly regarded common law judges, of oversimplifying and mis-stating the case law, saying there was “no basis in the authorities” for the approach he took.

The approach Forrest took was “impermissible and contrary to principle”, Allsop said.

Allsop said the question of whether confidentiality clauses in deeds signed by the employees could be set aside for another reason remained open.

“It may be that it is for the applicants to show a prima facie case that Crown engaged in a systematic course of conduct contrary to, and known to be contrary to, the laws of China, or that the purpose and effect of the finalisation deeds and separation deed was to impede or hinder litigation in a court, or in this court,” he said.

“If the facts are sufficient to demonstrate such a prima facie case, it may be open to seek a declaration that the deeds and contracts, or their relevant provisions, were either void or unenforceable on that account as seeking to keep secret a course of criminal conduct by the laws of China which were the foundation of civil wrongs or of contravention of statute in Australia.”

Watson said the class action would go ahead as planned.

“While today’s decision does not affect the confidence we have in our case, it remains disappointing nonetheless that the court has given credence to the continued efforts of Crown to prevent whistleblowers from speaking out in these proceedings,” he said.