Investors that purchased shares in Brambles Limited (BXB) in the period of 18 August 2016 to 17 February 2017 (inclusive) can sign up to retain Maurice Blackburn in a class action to recover losses alleged to have been suffered after Brambles’ share price slumped on the back of its announcements on 23 January and 20 February 2017 that it would not meet its sales and profits forecasts.
On 8 May 2019, the Federal Court of Australia ordered that the class action filed by Maurice Blackburn be consolidated with a separate class action filed against Brambles by Slater & Gordon. The consolidated proceeding is known as Holly Southernwood, and William Vincent Kidd & Mary Agnes Collum as Trustees for the Magness-Bennett Superannuation Fund v Brambles Limited (No VID 972/2018) (Consolidated Proceeding) and will be conducted jointly by Maurice Blackburn and Slater & Gordon on behalf of group members and the lead applicants. Litigation funding is being provided by both Harbour Funding III, L.P and IMF Bentham Limited.
The Court also made “common fund” orders which bind all eligible group members to the Consolidated Proceeding regardless of whether they have entered into funding agreements or legal retainers.
The Common Fund Orders provide that upon a successful outcome in the class action (whether by settlement or judgment), sums recovered for all group members will be used to first reimburse the litigation funders (Harbour and IMF) for legal fees and costs they have incurred in funding the Consolidated Proceeding and to also pay them a funding commission. The lawyers will then be paid their unpaid deferred fees. The balance will be distributed to group members on a pro-rata basis.
The Common Fund Orders do not currently specify the percentage rate of the funding commission payable to Harbour and IMF in the event of a successful outcome. This rate will be determined by the Federal Court at a later date.
Please note that group members will not have to pay any amount of money until and unless there is a successful outcome in the Consolidated Proceeding. Further, the amounts paid to the litigation funders and lawyers in the event of a successful outcome will not exceed the settlement or judgment sum. The operation of the common fund is set out in the “Funding Terms” attached to the common fund and consolidation orders are downloadable here.
What is the Brambles class action about?
On 18 August 2016, Brambles published its Annual Report and gave guidance regarding sales growth of 7% to 9% and profit growth of 9% to 11%.
Brambles repeated this guidance on 20 October 2016 when it published its trading update for the first quarter of 2017, and again on 16 November 2016 at its AGM.
On 23 January 2017 Brambles informed the market that it no longer expected to meet its earlier guidance, and it now expected sales growth of 5% and profit growth of 3% for the first half of FY17; and sales and profit growth for FY17 to be below the guidance previously provided.
On 20 February 2017 Brambles published its results for the first half of FY17, providing revised guidance of sales growth around 5% and profit growth of 0%.
The market reacted strongly, with price drops of almost 16% on 23 January 2017 (with a trading volume of 19.3 million) and 10% on 20 February 2017 (with a trading volume of 21.7 million, around five times greater than the average volume over the previous 12 months).
Companies are required to have a reasonable basis for their guidance and must notify the ASX as soon as they have or ought to have information which would cast doubt on prior guidance. Our investigations raise serious questions as to whether Brambles had a reasonable basis for its initial guidance and whether it should have notified the ASX sooner that it was likely to miss that guidance.
If Brambles lacked a reasonable basis for its guidance, investors may have paid an inflated price for Brambles shares, and they may be able to recover their losses through this potential class action.
Shareholders that purchased Brambles shares between 18 August 2016 and 17 February 2017 (inclusive) can sign up by clicking the Sign Up button.
Institutional investors can request a funding pack by emailing firstname.lastname@example.org.