Largely deducted shareholder class action settlement is approved

Settlement of a shareholder class action has been approved where proposed deductions comprise large proportion of settlement sum

This proceeding was a shareholder class action brought on behalf of persons who purchased shares in an ASX-listed pharmaceutical company, QRxPharma Ltd, during the period 6 November 2009 to 25 June 2012. The applicant alleged that the company, through its directors, and financial and legal advisers, failed to disclose material information to potential investors.

Justice McKerracher noted that the outcome (at [3]):

…has not been as favourable as may have been hoped by some at the outset; despite this, there is no reason, having regard to the steps taken and investigations conducted, to consider that a better settlement would be achievable.

The proceeding was said to be factually and legally complex and encompassed issues concerning pharmacological matters, United States law and regulatory processes, and legal issues concerning the scope of liability of directors and advisors under the law of statutory knowing involvement, together with market-based causation.

The principle issue for his Honour was the fairness of the proposed deductions from the $7 million settlement, which included:

  • the legal costs of the applicant’s solicitor in the sum of $3,435,901.96 (after they agreed to limit their professional fees to 75% of the amount invoiced);
  • payments to the funder in respect of ATE insurance in the sum of $833,859.53;
  • settlement administration costs of $155,000.00; and
  • reimbursement to the lead applicant in the sum of $4,500.

There was also a delay between in-principle settlement and settlement approval, during which time the decision in Haselhurst v Toyota Motor Corporation Australia Ltd (2020) 379 ALR 556; [2020] NSWCA 66 was handed down. That decision held that pre-settlement class closure orders were beyond power, and necessitated an additional registration process to occur in this proceeding.

After the various deductions, the net settlement amount available to class members would be approximately $2,340,837.60, or 33.44% of the total settlement. Although his Honour noted the percentage of the settlement going to class members was towards the low end of the range which courts have been prepared to approve, his Honour held that the proportion wasn’t so low as to not be fair and reasonable.

His Honour approved the settlement and appointed a partner from KPMG as settlement administrator, who agreed to cap their costs at the approved amount.

Kenquist Nominees Pty Ltd atf The Kenquist Superannuation Fund v Campbell (No 6) [2020] FCA 1388

Federal Court of Australia, McKerracher J, 29 September 2020

Applicant’s Solicitors: Corrs Chambers Westgarth;          

First – Third Respondents’ Solicitors: Norton Rose Fulbright;

Fourth Respondent’s Solicitors: Wotton + Kearney;

Fifth Respondent’s Solicitors: Sparke Helmore

Applicant’s Funder: JustKapital Portfolio Pty Ltd

Funder’s Solicitor: Roberts & Partners Lawyers

Austlii link:;query=Kenquist%20Nominees%20Pty%20Ltd%20atf%20The%20Kenquist%20Superannuation%20Fund%20;mask_path


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