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 ):
…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;  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)  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
Andrew WatsonNational Head of Class Actions, Class actions, Melbourne
"I'm an experienced litigator in class actions, particularly for shareholders who have been victims of corporate misconduct."
Ben SladeState Managing Principal, Office Leader, Class actions, Sydney
"I am driven to give a voice to those who would otherwise have to suffer because those who have done them wrong are all too powerful."
Kimi NishimuraPrincipal Lawyer, Class actions, Melbourne
"I'm committed to fighting for the rights of victims of corporate misconduct as well as pursuing compensation on behalf of my clients."
Rebecca GilsenanExecutive Director, Principal Lawyer, Class actions, Sydney
"I have extensive experience in running complex and novel litigation, including class actions in the areas of price fixing, failed investment schemes, product liability and securities."
Miranda NagyPrincipal Lawyer, Class actions, Sydney
"I have a strong conviction that the community should be able to expect our governments and the companies we deal with to comply with the law."
Julian SchimmelPrincipal Lawyer, Class actions, Sydney
"Class actions are a unique legal mechanism that have helped hundreds of thousands of people receive compensation after mistreatment at the hands of powerful companies, and it’s gratifying to help people get access to justice when otherwise it would’ve been difficult for them."
Vavaa MawuliPrincipal, Class actions, Brisbane
"The most rewarding thing about my work is the change in scale of what we are able to accomplish."