“Modest” returns for group members in Hastie Group Ltd Shareholder settlement

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This was a closed class action on behalf of those shareholders in Hastie Group Ltd (now in liquidation) (HGL) who entered into a funding agreement with the funder, brought against the auditors of HGL. In this judgment, Moshinsky J approved a proposed settlement of the proceeding, stating that the proposed settlement was fair and reasonable, having regard to the considerable risks that the applicant faced. His Honour said (at [37]):

The settlement here reflects a modest and probably disappointing outcome for class members. The applicant submits, and I accept, that this is a reflection of the risks that ultimately proved to attach to their claims, and of the costs that had to be incurred in getting the information that finally enabled a full assessment of their prospects. It does not at all negate the fairness or reasonableness of the settlement that has been achieved, when it is measured, as it should be, against a realistic commercial valuation of the claims rather than their best-case potential.

The settlement encompassed the following:

• the total settlement sum was $18.5 million;
• the applicant’s legal costs were approved in the amount of approximately $7.5 million;
• settlement administration costs were approved in the amount of $125,000;
• a reimbursement payment to the applicant was approved in the amount of $30,000; and
• a payment to the funder as commission was approved in the amount of $5.13 million.

After payment of those (and other minor) deductions, the amount available for distribution to class members would be approximately $5.75 million (approximately 31% of the total settlement sum).

Sadie Ville Pty Ltd v Deloitte Touche Tohmatsu (A Firm) (No 7) [2023] FCA 1273

Federal Court of Australia, Moshinsky J,
19 October 2023

Applicant’s Solicitors: Phi Finney McDonald
Respondents’ Solicitors: Clifford Chance
Applicant’s Funder: Omni Bridgeway Ltd

Austlii link

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