Pitcher Partners 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.