Maurice Blackburn has been conducting two class actions on behalf of Slater & Gordon (ASX: SGH) shareholders:
- a class action against SGH’s former legal advisers, which has since settled and that settlement is in the process of being administered (ABL Class Action Settlement); and
- a class action against SGH’s former auditors (Pitchers Class Action).
A previous class action against Slater & Gordon (SGH Class Action) was settled in 2017.
This page is primarily about the Pitchers Class Action. If you are looking for further information about the ABL Class Action Settlement, please click here.
The Pitchers Class Action proceeded to trial in November 2021 which concluded in late December 2021.
In July 2022, the Applicant and the First Respondent, Pitcher Partners, reached an agreement to settle the Pitchers Class Action for $41,000,000 (inclusive of interest and costs). The settlement was approved by the Court on 28 October 2022. You can view the Court orders regarding the settlement approval under the “Relevant Documents” section of this page.
Previously, in March 2022 the Applicant and the Second Respondent, Ernst & Young LLP (EY UK), reached an in-principle settlement on a “walkaway” basis, with each party bearing their own legal costs. The settlement was approved by the Court on 5 August 2022.
The Federal Court of Australia has ordered that Group Members who are not already registered in the Pitchers Class Action and wish to participate must have registered their claim with Maurice Blackburn by no later than 4.00pm (AEDT) on 21 October 2022. Consequentially, registration to participate in the Pitchers Class Action is now closed, and Maurice Blackburn is unable to accept new registrations.
The Federal Court of Australia has also ordered that the below information be published online by Maurice Blackburn. The information is important and you should read it carefully. If you have any questions, please contact Maurice Blackburn at SGH@mauriceblackburn.com.au or 1800 572 151 or seek your own legal advice.
21 October 2022 – date by which group members must have registered with Maurice Blackburn (if they have not already registered, including for one of the previous class actions)
28 October 2022 – Court approval of the Settlement with Pitcher Partners
Important information about the proposed settlement of the Pitchers Class Action
A previous Court-approved notice in relation to the Pitchers Class Action was sent to registered group members and published on this website and in the Australian Financial Review which set out some of the background to the Pitchers Class Action. That notice advised you of your right to opt out of the class actions if you did not wish to participate. The deadline for opting out has now passed. Accordingly, this information is directed only to those persons who:
(a) have been identified as a potential group member in the Pitchers Class Action; and
(b) did not opt out of the Pitchers Class Action (by lodging an opt out notice with the Federal Court) before the deadline of 8 September 2021 (any persons who did lodge an opt out notice with the Federal Court before that deadline are no longer part of the Pitchers Class Action, and are not affected by the class action (and any references to ‘Group Members’ below should be understood as excluding such persons)).
The Federal Court of Australia has ordered that the following information be published for the information of persons who might be members of the group on whose behalf the Pitchers Class Action is brought and may have their legal rights affected by the Pitchers Class Action.
If you have received the Court-approved notice you did so because you have been identified as a potential group member in the Pitchers Class Action. You should read the following information carefully. Any questions you have concerning the matters set out below should not be directed to the Court. If there is anything that you do not understand, you should contact Maurice Blackburn, whose contact details are set out below, or alternatively seek your own legal advice.
This page provides important information about:
(a) your status as a group member in the Pitchers Class Action;
(b) what you need to do if you have not already registered, but wish to do so in order to participate in the proposed settlement described below (and potentially receive some compensation);
(c) what will happen if you do not register to participate in the proposed settlement of the Pitchers Class Action; and
(d) what you need to do if you wish to object to the proposed settlement of the Pitchers Class Action.
A class action is a legal action that is brought by one or more persons (Applicant(s), being in this case Mr Hall) on their own behalf and on behalf of a group of persons (Group Members) against another person or persons (Respondent(s), being in this case Pitcher Partners), where the Applicant(s) and the Group Members all have similar claims against the Respondent(s).
The Applicants in a class action do not need to seek the consent of Group Members to commence a class action on their behalf, or to identify a specific Group Member or Members. However, Group Members can cease to be Group Members by ‘opting out’ of the class action before the Court-imposed deadline. An explanation of how Group Members could opt out was contained in the previous notice to Group Members and, as noted above, the deadline for opting out has now passed.
The Pitchers Class Action is the second of three class actions brought by the Applicant, Mr Matthew Hall, on his own behalf and on behalf of persons who purchased shares in Slater & Gordon Ltd (ASX:SGH).
The Pitchers Class Action was commenced in the Federal Court of Australia against Slater & Gordon Limited’s (SGH) former auditor Pitcher Partners. The Applicant alleged that Pitcher Partners, in SGH’s FY2015 audit, failed to identify or communicate risks around the likely impairment of the $1.1 billion goodwill asset (associated with the acquisition of the UK-based PSD division from Quindell plc). The result of this is alleged to be that SGH’s FY15 Financial Report and/or FY15 Appendix 4E were materially misstated. This impairment ultimately occurred six months later in SGH’s half-yearly report for FY2016.
Further information about the proceedings, including the Statement of Claim and Defences of both Respondents, is available to be viewed in the ‘relevant documents’ section at the bottom of this page.
You are a Group Member in the Pitchers Class Action if (save for some limited exceptions) you satisfy the following criteria:
(a) acquired an interest in fully paid ordinary shares in SGH during the period between 30 March 2015 and 24 February 2016; and
(b) you suffered loss or damage by, or which resulted from, the conduct of Pitcher Partners alleged in the Pitchers Class Action (and which is summarised above); and
(c) you did not opt out of the Pitchers Class Action on or before 8 September 2021.
You may disregard the information set out below if you do not satisfy the above criteria as your rights will not be affected by the proposed settlement of the Pitchers Class Action which is described further below.
If you do satisfy the above criteria, you should read the following information carefully as it will affect your legal rights.
If you are unsure as to whether or not you are a Group Member, you should contact Maurice Blackburn, whose contact details are set out below, or alternatively seek your own legal advice.
The Applicant and many Group Members have retained Maurice Blackburn to act as their solicitors, but it is not necessary for you or other Group Members to retain (or have retained) Maurice Blackburn in order to participate as a Group Member.
The costs of the Pitchers Class Action have, to this point, been funded in part by International Litigation Partners No15 Pte Ltd (ILP15) and in part by Maurice Blackburn. Funding provided by ILP15 has been pursuant to Funding Agreements entered into between ILP15 and the Applicant and between ILP15 and many Group Members).
Specifically, throughout the course of the class action ILP15:
(a) paid the majority of the legal costs incurred in conducting the Pitchers Class Action (including the costs of solicitors, barristers and experts);
(b) indemnified the Applicant against potential adverse costs orders; and
(c) provided cash security against the possibility of any such adverse costs orders.
If the proposed settlement of the Pitchers Class Action is approved by the Court, it is likely that the Court will order that the legal and funding costs of conducting the class action be deducted from the aggregate settlement sum, before calculating each Group Member’s entitlement. In other words, the legal and funding costs of conducting the Pitchers Class Action will be spread equitably among all participating Group Members. Therefore, if you are eligible to participate as a Group Member in the distribution of the settlement sum, your share of the settlement (if any) will be calculated and paid to you after deduction of legal and funding costs – under no circumstances will you, by registering to participate in the proposed settlement, be liable to pay any ‘out-of-pocket’ costs, whether to Maurice Blackburn, to ILP15 or otherwise.
The parties to the Pitchers Class Action have agreed to a proposed settlement of the class action, where Pitcher Partners will pay a total of $41,000,000 (inclusive of costs and interest) in full and final settlement of the claims of the Applicant and group members in the class action (Pitchers Settlement). The proposed settlement has been reached with no admission of liability by Pitcher Partners.
The proposed settlement does not come into effect unless it is approved by the Federal Court.
If the proposed settlement is approved by the Court, there are likely to be some substantial deductions from the Settlement Sum before distribution of any money to eligible Group Members:
(a) Legal costs and disbursements:
Maurice Blackburn will seek payment of the reasonable legal costs incurred in conducting the Pitchers Class Action. The actual legal costs incurred up to 31 July 2022, are approximately $12.2 million. Those costs comprise approximately $5.4 million for MB’s legal fees, and approximately $6.8 million in disbursements (primarily amounts paid to counsel and to experts on both liability and loss). As stated above, those costs are to be shared on an equitable basis by all Group Members. There will be further disbursements and legal fees for work done after 31 July 2022, including work necessary to obtain court approval of the settlement. It will be a matter for the Court to determine the amount of legal costs which it considers is fair and reasonable, and which may therefore be deducted from the Settlement Sum. Most of those legal costs have already been paid by ILP15 (100% of disbursements and 60% of Maurice Blackburn’s legal fees), and, if approved, ILP15 will be reimbursed for those costs. Maurice Blackburn may also apply for the permitted uplift of 25% of the conditional component of its legal fees, which, if approved, as at 31 July 2022 would be approximately $500,000.
(b) Litigation funding charges:
The costs and adverse costs risks of the Pitchers Class Action have primarily been funded by ILP15 pursuant to various Funding Agreements between ILP15 and the Applicant and between ILP15 and some of the Group Members (Funded Group Members). ILP15 has paid 100% of all disbursements and 60% of Maurice Blackburn’s legal fees to date. ILP15 has also borne the risk of any adverse costs order against the Applicant (the amount the Applicant might be ordered to pay to the Respondent in the case were unsuccessful) and has also provided cash security for those costs in the amount of $4.7 million (in respect of both EYUK and Pitchers). Under its Funding Agreements, ILP15 is contractually entitled to a commission of 28.5-35% of the Funded Group Members’ share (before legal costs) of the Settlement Sum. To ensure that Funded Group Members are not disadvantaged in comparison to Unfunded Group Members, the Applicant will ask the Court to make an order that provides for equal treatment of all Group Members. Courts have typically used either a Funding Equalisation Order (FEO) or a Common Fund Order (CFO) to ensure equal treatment. Depending on the type of order preferred by the Court in the circumstances of this case, in return for ILP15’s funding of the Pitchers Class Action the Applicant may seek Court approval of a payment to ILP15 based on its contractual entitlements from Funded Group Members in an amount of up to $10.5 million (~25.6% of the Settlement Sum) to be equally shared by all group members. ILP15 may separately make an application that it receive an FEO or a CFO in greater amount (of up to $12.3 million, or 30% of the Settlement Sum) based on the complexities, cost, and risks associated with funding the Pitchers Class Action. Again, it will be a matter for the Court to determine the final amount.
If the Court approves the proposed deductions from the Settlement Sum referred to above, there will be approximately $16.5-18 million available for distribution to Group Members (plus any interest accrued on the Settlement Sum, less any further legal costs incurred in obtaining Court approval of the proposed settlement and distributing the Settlement Sum to Group Members (with all such further costs likewise being subject to the Court’s approval)).
At the present time, it is not possible to estimate how much (if any) each registered Group Member will receive by way of a distribution from the proposed settlement because that will depend on a number of factors including:
- the amount of the payments to Maurice Blackburn and ILP15 on account of legal and funding costs which the Court approves as fair and reasonable;
- the number of Group Members who ultimately register to participate in the proposed settlement before the Court-imposed deadline; and
- the time(s) at which, and the price(s) for which, each registered Group Member acquired and sold their SGH Shares during the Relevant Period.
The amount of the Settlement Sum which is ultimately available for distribution to registered Group Members will be distributed in accordance with a Settlement Distribution Scheme to be approved by the Court (Scheme), including a proposed Loss Assessment Formula (LAF) (which details how each Group Member’s entitlement to a share of the Settlement Sum will be calculated). A copy of the Applicants’ proposed Scheme (excluding the confidential LAF) can be downloaded from this page (under the heading ‘Relevant Documents’ below), or by contacting Maurice Blackburn, whose contact details are set out below. If you wish to obtain a copy of the confidential LAF, you may do so by requesting a copy from Maurice Blackburn and by signing and returning to Maurice Blackburn a confidentiality undertaking.
In addition, the settlement deed entered into by the parties to the Pitchers Class Action also provides for all Group Members to release and discharge Pitcher Partners and the Slater & Gordon Parties (being Slater & Gordon Ltd, Andrew Alexander Grech, Kenneth John Fowlie, Ian Robert Court, Raymond John Skippen, Erica Maree Lane, Rhonda O’Donnell, and Wayne Brown) from:
(a) each and every claim made by or on behalf of the Applicant or any Group Member in the Pitchers Class Action, including each of the claims articulated in the Applicant’s Amended Originating Application and/or Second Further Amended Statement of Claim; and
(b) any and all claims arising from, in connection with, in respect of or related to:
(i) any matter which is or ever has been the subject of the Pitchers Class Action, including any matter specified in the Applicant’s original Statement of Claim and/or Second Further Amended Statement of Claim; and
(ii) the Pitchers Class Action itself, including the administration of the Scheme and the costs of, and incidental to, the Pitchers Class Action.
Therefore, if the proposed settlement is approved by the Court, Group Members (whether they register to participate in the settlement or not) will be bound by the settlement and will not be permitted to make any subsequent claim against Pitcher Partners or the Slater & Gordon parties in relation to the above matters.
The Court will only approve the proposed settlement if it is satisfied that the settlement is fair and reasonable in the interests of the Group Members, including as between the Group Members. If the Court is not so satisfied, it will not approve the proposed settlement (in which case, the Pitchers Class Action will continue and there will be no distribution of monies to Group Members unless and until the Applicants are successful in the class action, or a further settlement is reached and approved).
The Court will hear the application for approval of the proposed settlement at 10.15am on 28 October 2022 at the Federal Court in Melbourne. That hearing may take place either in person or by video, depending on the COVID-19 health advice and government requirements in place at the time.
If you are a Group Member in the Pitchers Class Action, you have the right, if you wish, to attend that hearing and/or to make submissions as to why the Court should, or should not, approve the proposed settlement (or any particular aspect of it). If you wish to exercise that right, you need to follow the steps outlined below (under the sub-heading ‘Option C – Object to the Proposed Settlement’ below).
Registered Group Members
As advised in the notice which all Group Members should have received, Group Members who have previously registered with Maurice Blackburn to participate in the Pitchers Class Action need not do anything at the present time. Such Group Members will be entitled to participate in the proposed settlement of the Pitchers Class Action in the event that it is approved by the Court (and provided they otherwise qualify), and specifically need not, and should not, re-register with Maurice Blackburn (as the existing registration remains valid).
Registered Group Members may, however, object to the proposed settlement (or any aspect of it), should they wish to do so, by following the steps set out below (under the sub-heading ‘Option C – Object to the Proposed Settlement’ below).
Unregistered Group Members
Group Members who have not previously registered with Maurice Blackburn to participate in the Pitchers Class Action may do the following three things:
Option A: Register to participate in the proposed settlement of the Pitchers Class Action.
Option B: Do nothing.
Option C: Group Members may (in addition to Option A or Option B) object to the proposed settlement of the Pitchers Class Action.
There are different consequences depending on which option you choose.
Option A – Register to Participate:
Group Members who wish to receive a distribution from the proposed settlement of the Pitchers Class Action must register their claim by no later than 21 October 2022 by completing and submitting the online registration form. Please note that if you have previously registered, including for the SGH Class Action or the ABL Class Action, you do not need to register again. If you are unsure whether you have previously registered, please contact Maurice Blackburn.
If the proposed settlement is approved by the Court, any Group Member who is registered by 21 October 2022 and who provides sufficient information to enable Maurice Blackburn to verify that they are a Group Member (i.e., that they satisfy the criteria set out above under the heading ‘Are you a group member in the Pitchers Class Action?’), may be entitled to receive a distribution from the Settlement Sum. The precise amount of that distribution (if any) is presently uncertain, for the reasons set out above under the heading ‘The Proposed Settlement’ (any such distributions will be calculated in accordance with the Scheme and the LAF as approved by the Court).
There is no cost to register your claim. Your registration must be completed and received by Maurice Blackburn before 21 October 2022. Registrations received after that time will not be accepted, and you will be treated as having not validly registered (see Option B below). Again, if you have previously registered, you do not need to register again.
Option B – Do Nothing:
Group Members who do nothing (i.e., do not register before the deadline of 21 October 2022) will remain Group Members for all purposes, but will not, unless the Court determines otherwise, be entitled to receive a distribution from the proposed settlement of the Pitchers Class Action.
Therefore, if the Court approves the proposed settlement, Group Members who do nothing will be bound by the settlement (and therefore not able to pursue the same or similar claims against Pitchers in the future) but will not be entitled to receive a distribution from the Settlement Sum.
Option C - Object to the Proposed Settlement:
If you are a Group Member you have the right, if you wish, to make submissions as to why the Court should, or should not, approve the proposed settlement (or any particular aspect of it). If you wish to exercise that right, you must complete the Notice of Objection to Proposed Settlement form below, and email it to:
by no later than 21 October 2022.
Any Group Member who objects in this way may also (but is not obliged to) appear before the Court at the hearing of the application to approve the proposed settlement at 10.15am on 28 October 2022 at the Federal Court in Melbourne.
You may make such submissions whether or not you have registered to participate in the Pitchers Class Action.
Any objections received by the Court will be considered by the Court, along with all of the other evidence and submissions filed by the parties, in determining whether or not to approve the proposed settlement.
Former Group Members
As advised in the notice which all Group Members should have received, Group Members who submitted an opt out form prior to the Court-imposed deadline of 4.00 pm (AEDT) on 8 September 2021 need not do anything further. By choosing to opt out of the Pitchers Class Action, such persons are no longer Group Members in the class action, and will not be affected by the class action or the proposed settlement referred to above.
In the News - Australian Financial Review:
Global accounting giant EY has alleged its national rival Pitcher Partners engaged in misleading and deceptive conduct and negligence in its 2015 audit work for Slater and Gordon before its near collapse.
In the News - The Sydney Morning Herald:
Shareholders in Slater and Gordon have reached a $36.5 million settlement with the beleaguered law firm, a move that will pave the way for the group's restructure.
Want to find out more?
If you would like further information regarding the class action, please contact us at SGH@mauriceblackburn.com.au, on 1800 572 151 (+61 1800 572 151 for international callers) or by mail to the address below:
SGH Class Action
Maurice Blackburn Lawyers
Level 21, 380 Latrobe Street
Melbourne VIC 3000
Please note that our response to correspondence by post may be delayed.
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