Abrahams v Commonwealth Bank of Australia (2021)
Federal Court of Australia | NSD864/2021
As a result of media enquiries on this matter we provide the information below.
Background
In 2019, the Commonwealth Bank of Australia (CBA) announced publicly its Environmental and Social Framework, which included the following commitment:
“We ensure our business lending policies support the responsible transition to a net zero emissions economy by 2050, by … only providing Banking and Financing activity to New oil, gas or metallurgical coal projects if supported by an assessment of the environmental, social and economic impacts of such activity, and if in line with the goals of the Paris Agreement.”
Our clients, Guy and Kim Abrahams (as trustees for the Abrahams Family Trust), are long-term shareholders in CBA. They became concerned about the veracity of this commitment, after discovering that CBA appeared to be involved in the financing of seven new oil and gas projects as follows:
- providing over US$50 million in September 2019 for a US$545m facility for the development and construction of the new Permian Highway Pipeline, a 692 km gas pipeline that is now complete, transporting 2.1 billion cubic feet per day of natural gas across Texas in the USA;
- as one of the “lead arrangers” in a lending syndicate providing US$1.05 billion debt financing for Gaslog Ltd’s seven new LNG vessels in December 2019;
- as an “arranger” for providing US$629 million in financing for FLEX LNG Ltd’s new LNG vessels in February 2020;
- contributing A$10m to a A$693 million loan in April 2020 to Energy Infrastructure Investments to fund capex of the Tipton West coal seam gas project in Queensland;
- contributing US$48.5 million to a US$713 million loan facility, in September 2020, to Euronav NV for four new “very large crude carriers”;
- as a “mandated lead arranger” providing US$50 million to ASX listed Santos Limited for a US$750m bridging loan that backed Santos’ acquisition of the undeveloped Barossa Gas Field off northern Australia in October 2020;
- as one of seven bank “arrangers” collectively providing a US$550m revolving credit facility, or “Reserves Based Lending Facility”, in December 2020 to Siccar Point Energy E&P Limited, whose development plans include the new Cambo oil field in waters off the Shetland Islands, Scotland.
The Claim
On 26 August 2021, our clients filed an application in the Federal Court of Australia seeking access to internal company documents under section 247A of the Corporations Act 2001 (Cth) (Corporations Act).
Documents were sought in relation to each of the seven projects in the context of CBA’s 2019 Environmental and Social Framework (E&S Framework) and Environmental and Social Policy (E&S Policy), in particular CBA documents created for the purposes of:
- carrying out an assessment of the environmental, social and economic impacts of the projects;
- carrying out an assessment of whether the projects are in line with the goals of the Paris Agreement; and
- discharging any obligation or responsibility that any CBA unit, division or employee has under CBA’s internal E&S Policy.
The plaintiffs also sought documents regarding the adoption or implementation of CBA’s revised climate change commitments. CBA’s revised commitments were published on 11 August 2021.
The Originating Process dated 26 August 2021 can be viewed here.
The request to inspect the books
Section 247A of the Corporations Act allows members (shareholders) of a company to apply to the Court to make an order authorising the shareholders to inspect the books of the company.
Good faith and proper purpose
On 4 November 2021, the matter was listed for a case management hearing before Justice Cheeseman of the Federal Court of Australia. At the hearing, the plaintiffs’ counsel was asked to make short oral submissions to the Court by reference to the evidence as to whether the plaintiffs’ application for inspection was being made in good faith and for a proper purpose. The Court was satisfied on the basis of a limited admission by CBA and the evidence before the Court that the plaintiffs were acting in good faith and that the inspection they seek is to be made for a proper purpose in accordance with s 247A of the Corporations Act (Cth).
Procedural history
The court made orders by consent on 4 November 2021 that CBA produce documents to the plaintiffs for inspection by 10 February 2022
The documents included those relevant to CBA’s assessment of the environmental, social and economic impacts of the seven oil and gas projects and documents on the implementation of CBA’s commitment not to finance new oil or gas projects unless they were in line with the goals of the Paris Agreement. The Court ordered the production of relevant Board documents and documents that related to CBA’s August 2021 amended policy that limited its commitment on new oil and gas projects to only project finance. The consent orders contemplated redactions by CBA with respect to certain types of information and the ability for the shareholders to apply to the Court to access such redacted information.
On 8 July 2022, the shareholders applied to the Court to remove redactions from certain documents.
On 1 November 2022 the Court ordered by consent that CBA provide specified documents to the Abrahams.
The application for further information was then dismissed by consent on 22 December 2022.
Finalisation of the proceedings
The proceedings have now been finalised on the basis that:
- The Abrahams may use certain documents received from CBA for the purpose of further litigation against CBA; and
- The Abrahams may use certain documents received from CBA for the purpose of providing those documents to APRA and ASIC.
The final orders dated 13 April 2023 can be accessed here.
The legal representatives
Guy and Kim Abrahams, as trustees for the Abrahams Family Trust, were represented by Equity Generation Lawyers.
Scott Nixon SC and Alice Zheng were the plaintiffs’ counsel.
