Financial services firm Austock Group intends to vigorously defend a $7.4 million damages action brought against it by the former director of ABC Learning Centres (ABC).
The former chief executive of the failed childcare centres, Edmund Groves, filed the multi-million dollar legal proceedings against Austock Securities Limited in the Supreme Court of Queensland yesterday.
"The proceedings relate to the issues raised by Mr Groves in the letter of demand disclosed to the market on 3 September 2010," an Austock statement to the Australian Securities Exchange said.
"In the proceeding, Mr Groves is claiming damages in the amount of approximately $7.4 million plus interest and legal costs."
In a statement to the market late last month, Austock denied any wrongdoing and said it had responded to Groves' letter of demand.
"Austock denies Mr Groves' allegations. Austock maintains that at no time did Mr Groves instruct Austock to sell his shareholding in Austock," the statement said.
"Austock has retained Arnold Bloch Leibler as senior counsel and will vigorously defend any proceedings brought by Mr Groves."
In early September, Groves sent a letter of demand to Austock alleging that on 27 February 2008 he gave an order to Austock to sell around 5 million company shares at market price.
Groves alleges Austock did not execute the order, leaving him to suffer losses of around $10 million.
According to the company's full-year results, Austock, through its Austock Childcare Fund, leased a total of 519 childcare properties to ABC.
In November 2008, ABC was placed in receivership, effectively freezing the rights of the fund and threatening the fund's income and capital structure profile.
Austock Securities Limited is a wholly-owned subsidiary of Austock.
