Spotless

A big win for litigation funders

Amidst legal uncertainty over the availability of “common fund orders” (CFO’s) and political and regulatory upheaval of the shareholder class action market, Mackay Chapman secured a $19.5 million CFO for the joint funders of the shareholder class action against Spotless Holdings.  

The successful outcome was the product of the right team, a detailed understanding of the legal and political landscape and expert skills.

Facts:

  • Client: an Australian and an International litigation funder jointly funding a shareholder class action against Spotless
  • Location: Federal Court of Australia, Victorian registry
  • Situation: settlement of the class action reached for $95 million subject to court approval.  Open class proceeding.  Funders seeking a CFO at 22.5% of net recoveries, against their contractual entitlement with signed up group members.  Uncertainty cast over CFOs following  Brewster.
  • Outcome: Funders obtain CFO at 22.5% of net recoveries amounting to $19.5 million in funding remuneration, in addition to recovery of legal and related costs of $6 million
  • Key elements of success: upfront assessment; compilation of expert team; strategy; clarity; 

In mid-2020 the shareholder class action against Spotless Group Holdings Ltd was provisionally settled for $95M.  The settlement required court approval, which would consider the amount of recovery and remuneration to be paid to the funders.

The action was jointly funded by Therium, a large international funder, and Investor Claims Partner, an Australian funder.  

The action had proceeded on an open class basis, and Therium and ICP had funded the action on the basis that a CFO would be sought, and at the time of the settlement approval hearing had to make their case for a CFO.  The High Court had recently ruled against early stage CFOs in Brewster., casting uncertainty over such orders and the industry into turmoil. 

Engaged to make the case.

Working with two highly sophisticated clients in a complex and evolving area of law, we put together the best team, including engaging expert Counsel.  We developed a strategy and approach suited to the legal and contextual issues and risks.  In executing that approach we prepared meticulously and sought and obtained the CFO at the rate sought.

Published by Dan Mackay