On 23 February 2017, Slater and Gordon Lawyers and litigation funder IMF Bentham Ltd issued proceedings against Bellamy’s Australia Ltd (BAL) on behalf of persons that acquired BAL securities between 14 April 2016 and immediately prior to the commencement of a trading halt in Bellamy’s securities on 12 December 2016 inclusive.
On 27 November 2019, the parties to the class action announced that they had reached an agreement to settle the proceedings against Bellamy’s. Under the proposed agreement, Bellamy’s will pay a total of $49.7 million, inclusive of interest and costs, to settle the claims of group members in the McKay Class Action and the related proceeding, the Basil Class Action, brought against the company in 2017. The proposed settlement remains subject to Court approval.
On 18 December 2019, the Federal Court ordered that the following documents relevant to the Bellamy’s Class Action and its proposed settlement be published and made publicly available:
- Second Further Amended Statement of Claim (PDF 1225 Kb)
- Defence to the Second Further Amended Statement of Claim (PDF 453 Kb)
- Notice of Proposed Settlement (PDF 249 Kb)
Is the McKay Class Action the same as the Basil Class Action?
The claims against Bellamy’s in both class action proceedings are the same. Subject to the orders of Justice Beach of the Federal Court of Australia on 18 August 2017, both class actions were required to be advanced together and the statement of claims in the respective proceedings were aligned. The Applicant parties in both proceedings are cooperating in respect of all the common steps in the litigation.
If you are a group member in the Basil Class Action, please contact the legal representatives for the Basil Applicant, Maurice Blackburn, directly.
I purchased shares in Bellamy’s between 14 April 2016 and 12 December 2016 – how do I participate in the proceeding?
The Federal Court of Australia made orders on 8 December 2017 requiring group members to take steps in relation to their participation in the proceeding. Pursuant to the orders of the Court, all registrations were to be submitted before 4:00pm AEDT on 29 January 2018 (the Class Deadline).
If you are unsure of your registration status, please contact us at 1800 071 827 or at email@example.com.
What are the allegations made against Bellamy’s?
The Proceeding alleges that Bellamy’s:
- contravened its obligations of continuous disclosure of price sensitive information under section 674 of the Corporations Act 2001 (Cth), by failing to keep the market informed of cases relevant to its FY17 financial performance; and,
- made statements regarding benefits arising from regulatory change in China and in relation to its future growth trajectory which amounted to misleading or deceptive conduct in contravention of section 1041H of the Corporations Act 2001 (Cth).
What is the claim about?
On 14 April 2016, Bellamy’s made an announcement to the ASX regarding recent regulatory changes announced in China, titled “Bellamy’s well placed to continue growing in China”, noting that the company believed it was “well placed to transition to the new requirements once they are known”.
On 17 May 2016, Bellamy’s released a presentation to the ASX which detailed the company’s responses to potential Chinese regulatory change and noted that it was “well positioned for potential regulatory changes in China”.
On 19 August 2016, Bellamy’s released its results for the financial year ending 30 June 2016 (FY16), noting, inter alia, that:
- it was “set to benefit from new Chinese regulations"
- it had “strong foundations to continue [its] growth strategy; and
- its EBIT margin had more than doubled between FY15 and FY16 to 22%.
On 19 October 2016, at Bellamy’s AGM, the company reiterated the messages of the 19 August 2016 releases.
The price of BAL shares fell from $12.13 to $6.85 in the trading days following a Business Update released by Bellamy’s on 2 December 2016.
A further market update released by Bellamy’s on 11 January 2017 saw the price of BAL shares fall to $5.35 on 11 January 2017, with a further decline to $4.40 on 12 January 2017.
How much will it cost to be part of the class action?
Throughout the course of the proceeding, IMF Bentham provided litigation funding to the Applicant and the Group Members on the terms set out in the funding agreement and common fund order. Under this arrangement, IMF Bentham:
- indemnified the Applicant against any adverse costs orders;
- executed a deed poll as security for such an order; and
- paid legal costs incurred in prosecuting the proceeding, including the cost of solicitors, barristers and experts.
In January 2018, the McKay Applicant foreshadowed an intention to apply to the Court for a ‘common fund order’. A common fund order would allow a deduction from any settlement or judgment sum recovered for Registered Group Members (whether or not they had directly entered into a funding agreement) as a funding commission to IMF Bentham, in exchange for funding the litigation. This would ensure that all Registered Group Members who stand to benefit from the proceeding would contribute evenly towards the funding arrangements.
The Court made orders approving the common fund order on 3 April 2018. However, the High Court of Australia has recently delivered a judgement that limits the Court’s ability to make common fund orders in the early stages of litigation.
The High Court’s decision will not change the amount that the Applicant will seek to deduct from the Settlement Sum for payment to IMF Bentham, but may change the mechanism employed to effect such payment. In place of the common fund, the McKay Applicant may seek a ‘funding equalisation order’. Like a common fund order, a funding equalisation order addresses the perceived unfairness between funded Registered Group Members (who have entered into a funding agreement) and unfunded Registered Group Members (who have not directly entered into a funding agreement but otherwise benefit from the funding of the proceeding).
The contribution towards the funding commission to IMF Bentham will be deducted from each group members recovery. Therefore, there will continue to be no out-of-pocket costs to group members.