- What is the Class Action?
- Are you a Group Member?
- Who is conducting the Class Action?
- Why should I sign a Bannister Law Fee Agreement?
- What Bannister Law will claim for Group Members
- How much compensation will I receive?
- The Bannister Law Fee Agreement says there is a fee – what is this fee?
- What are Bannister Law’s fees?
- Can I terminate the Bannister Law Fee Agreement once signed?
- What if we lose?
- Time frame – how long will the Class Action take?
- What is a litigation funder and who is funding the Class Action?
- What is the funding agreement?
- Do I need to sign the Bannister Law Fee Agreement and the funding agreement?
- Should you sign a funding agreement?
- Significant risks in litigation
- Conflicts management
1. What is the Class Action?
The Class Action is a representative proceeding brought by one individual on behalf of other affected Group Members. The Class Action has been commenced by Mr Andrew Wyma (the Applicant).
The Class Action has been brought against the Respondents. The Respondents are Quintis Ltd (ACN 092 200 854) (QIN) and former director of QIN, Frank Wilson.
TFS Corporation listed on the ASX in 21 December 2004. On 22 March 2017 it changed its name to Quintis Ltd (ASX:QIN).
At all relevant times, QIN’s business included the plantation, cultivation, sale, provision of finance and production of pharmaceutical grade Sandalwood oil and related products.
Each sandalwood tree requires four host trees over a 15-year lifespan to ensure a healthy and potent amount of marketable oil-bearing heartwood. Sandalwood oil is used for rejuvenating and brightening skin, disinfecting skin and protecting skin from harmful bacteria, and alleviating stress and encouraging relaxation.
The Applicant alleges that in an ASX announcement dated 26 February 2016, QIN and Mr Wilson represented that 100% of its 2016 and 2017 Sandalwood harvests were forward sold (Express Forward Sold Representation). It is alleged that QIN and Mr Wilson represented that QIN had entered into a multi-year supply agreement with a buyer in China and that 150 tonne of heartwood was to be shipped from the 2016 harvest (China Agreement). It is also alleged that QIN and Mr Wilson represented that QIN had entered into a multi-year supply agreement with a buyer in India and the Middle East and that 30 tonne of heartwood was to be shipped from the 2016 harvest (India Agreement).
The Applicant alleges that these harvests were, in fact, not forward sold.
The Applicant alleges that by making the Forward Sold Representation, QIN and Mr Wilson implied that the purchasers of these harvests had the financial capacity to purchase the large quantities of heartwood for the 2016 and 2017 years (Implied Forward Sold Representations). The Applicant alleges that the purchasers, in fact, did not have the financial capacity to order the expected quantities of heartwood and that they were not obliged to order heartwood in the quantities represented.
The Applicant alleges that on or about August 2016, QIN and Mr Wilson represented that the Adjusted Cash EBITDA for the 2017 financial year was expected to increase by 25% compared to the 2016 financial year (EBITDA Representation). It is also alleged that from 27 February 2017, QIN and Mr Wilson represented that the total product sales for the full 2017 financial year was expected to be between $45 million and $55 million (Product Sales Representation). The Applicant alleges that the actual Cash EBITDA for 2017 was -$19,396,000 and that the actual total product sales for 2017 was $39,169,000.
On 10 May 2017, QIN announced to the ASX that on 16 December 2016 it had lost a significant contract supplying sandalwood oil to a subsidiary of Nestle called Galderma. Galderma advised QIN of its intention to terminate the sandalwood supply contract on or about 30 November 2016. The Class Action will allege that, due to a delay in announcing this material information, there has been material market non-disclosure in breach of the Corporations Act 2001 (Cth) (Corporations Act).
As a result of the Galderma non-disclosure, the Express Forward Sold Representation, the Implied Forward Sold Representations, the EBITDA Representation and the Product Sales Representation, the Applicant alleges that QIN’s shares traded at inflated prices from 26 February 2016 to 10 May 2017 (the Relevant Period). This resulted in investors overpaying for their shares, thus creating loss.
The Applicant claims that he, and Group Members, would not have acquired shares in QIN and accordingly would not have suffered loss and damage if proper disclosures had been made.
The Applicant seeks orders that QIN and/or Mr Wilson compensate the Applicant and the Group Members for the losses sustained as a result of the alleged contraventions above. Each Group Member’s loss will depend on when they acquired their shares in QIN and whether any shares were sold.
2. Are you a Group Member?
You are a class member (Group Member) if you:
- a) obtained an interest in ordinary shares in QIN by purchasing those shares on the Australian Securities Exchange during the Relevant Period; and
b) suffered loss or damage by reason of the contraventions of QIN as set out in the Statement of Claim.
If you do not meet these criteria, you are not a Group Member and this Information does not apply to you.
If you are unsure whether or not you are a Group Member, you should contact Bannister Law on (02) 8999-2888 or email [email protected], or seek your own legal advice without delay.
3. Who is conducting the Class Action?
Australian law firm Bannister Law has been appointed to act for the Applicant in the Class Action.
For more information about Bannister Law, visit www.bannisterlaw.com.au
4. Why should I sign a Bannister Law Fee Agreement?
You are not obliged to sign an individual fee agreement with Bannister Law to become a member of the Class Action. As a Group Member, you will be informed of matters affecting the class from time to time, in accordance with orders made by the Court.
You have an option to sign up as an individual client with Bannister Law. Signing our Fee Agreement allows us to act for you on an individual basis.
The benefit of signing as an individual client is that we can assess your individual losses, provide tailored advice, respond to your questions and provide you with updates outside of Court mandated correspondence.
5. What Bannister Law will claim for Group Members
The Class Action will seek damages as a result of the alleged misconduct by QIN.
Bannister Law is claiming damages for the following loss suffered by the Applicant and Group Members:
(i) the difference between the price at which they acquired their interest in QIN shares and the true value of that interest;
(ii) alternatively, the difference between the price at which they acquired their interest in QIN shares and the market price that would have prevailed but for the Continuous Disclosure Contraventions (as alleged in the Statement of Claim);
(iii) alternatively, the difference between the price at which they acquired their interest in QIN shares and whatever is ’left in the hand’ or has been realised upon a sale modified to take into account any part of the movement in the market price of the QIN shares which did not result from the Continuous Disclosure Contraventions; and
(iv) in addition to the loss in (i)-(iii), the loss of the opportunity to achieve a reasonable rate of return on the moneys used to purchase the interest in QIN shares.
The Court will decide whether and to what extent any damages claim may be allowed if the Class Action succeeds.
If you would like to receive a copy of the Statement of Claim filed on behalf of the Applicant and Group Members, please contact us.
6. How much compensation will I receive?
At this stage, it is not possible to calculate how much compensation you might receive.
Any potential compensation (or damages) awarded to you will depend on the Court’s findings in relation to the Applicant’s claim and the findings on the common issues, or alternatively the terms of any settlement which may be reached.
7. The Bannister Law Fee Agreement says there is a fee – what is this fee?
The Bannister Law Fee Agreement outlines information about the costs of our legal services to quantify and assess your individual loss as an individual client of Bannister Law. We estimate the fees charged to the litigation funder to calculate your individual loss will be in the order of $300 to $1,500.
The fees charged to you individually will depend on the number of shares held, the frequency of your trading and the work required to calculate your loss. The litigation funder agrees to pay these fees under the funding agreement.
Your estimated legal fees are made up of the individual fees incurred for time spent by our team on work done directly on your claim. This may include correspondence or emails with you and the assessment of your claim. We will claim this amount against QIN if the Class Action is successful.
There are no up-front costs in signing the Bannister Law Fee Agreement.
8. What are Bannister Law’s fees?
Bannister Law will charge fees in relation to work done for the benefit of all Group Members (called common benefit work) and in relation to work done for the benefit of individual group members.
If the Class Action is successful, fees relating to common benefit work are usually recoverable from QIN and, as a client of Bannister Law, the legal fees incurred for work done on your individual claim may also be recoverable from QIN.
If there is a judgment or settlement which does not reimburse you for part or all of your legal costs as an independent element of compensation, any such shortfall may, subject to court approval, be payable from sums you are entitled to receive by way of overall judgment or settlement.
If the Class Action is successful, Bannister Law will charge an uplift fee of 25% on the unpaid component of our fees. This uplift fee will be claimed against QIN.
9. Can I terminate the Bannister Law Fee Agreement once signed?
There is a 5 business day cooling off period under the Bannister Law Fee Agreement. If you decide to terminate within that 5-day period, you will not be charged anything.
10. What if we lose?
If the Class Action is unsuccessful, you will not be required to pay anything.
This includes Bannister Law’s fees and the fees of the successful party, commonly known as adverse costs orders. Usually the unsuccessful party pays the costs of the successful party in litigation. Any adverse costs orders will be met by the litigation funder under the terms of the Funding Agreement.
11. Time frame – how long will the Class Action take?
At this stage, it is too early to say when the Class Action may come to an end. However, Class Actions of this type usually take two – three years from commencement to approval of a settlement by the Court or judgment.
12. What is a litigation funder and who is funding the Class Action?
A Litigation Funder is a third party who provides financial assistance to enable litigation, such as the Class Action, to be prosecuted.
The litigation funder in these proceedings is JustKapital Litigation Pty Limited (JustKapital).
JustKapital is a wholly owned subsidiary of the leading Australian ASX-listed litigation funding company, JustKapital Limited. For more information about JustKapital, visit www.justkapital.com.au
JustKapital is paying the costs of bringing the Class Action and, if the Class Action is unsuccessful, JustKapital will pay any costs awarded in favour of QIN.
13. What is the funding agreement?
The funding agreement is a standard form agreement between JustKapital and a Group Member.
If you enter into a funding agreement with JustKapital and the Class Action is successful, JustKapital is entitled to be paid a percentage of any compensation awarded to Group Members under the terms of the funding agreement.
If the Class Action is unsuccessful, Group Members will not be required to pay anything to JustKapital.
14. Do I need to sign the Bannister Law Fee Agreement and the funding agreement?
You are not obliged to sign the Bannister Law Fee Agreement or the funding agreement to be a Group Member of the Class Action.
However, if you wish to enter into the Bannister Law Fee Agreement, you need to enter into the funding agreement and vice versa.
15. Should you sign a funding agreement?
The proceedings against QIN have been commenced as an “open” class proceeding. This means that you are a Group Member if you meet the class definition.
You do not need to enter into a funding agreement to become a Group Member in the Class Action.
However, there are advantages to entering into a funding agreement which include:
- receiving regular updates from Bannister Law and JustKapital on the Class Action and any settlement of the Class Action;
- assisting Bannister Law and JustKapital in understanding the potential losses of Group Members at an early stage of the Class Action; and
- assistance with loss assessment and other advice based on your individual circumstances.
In an “open” class proceeding, the Court may be asked to make a “common fund order”. The effect of such an order is that all Group Members (whether or not they have entered into a funding agreement) are liable to pay the funder a funding fee. The amount of the fee is determined by the Court.
In determining the fee payable to the funder, the Court has regard to a range of factors including funding fee rates in the market, the particular risks assumed by the funder, the amount of legal costs expended and any security for costs provided by the funder and the amount of any settlement or judgment.
As an alternative to a common fund order, the parties to the Class Action may agree to a settlement in which the class is closed to all unfunded or unregistered group members. In such a scenario, if you had not:
- Signed a JustKapital Funding Agreement; and
- Signed a Bannister Law Fee Agreement; or
- Registered with Bannister Law,
following a court mandated notice and registration period, you may become disentitled to any benefit from the proposed settlement.
16. Significant risks in litigation
Your entry into the funding agreement will not make you liable for any costs in the Class Action. Under the terms of the funding agreement, JustKapital must pay the costs of the Class Action, whether or not the Class Action is successful.
However, your claim may be unsuccessful which means that you will have lost any time and effort you have put into the litigation. Even if you are successful, QIN may be unable to pay any of or the entire settlement or judgment sum.
17. Conflicts management
JustKapital has adopted JKL’s Conflict Management Policy.
A copy of this policy is available on JustKapital’s website: www.justkapital.com.au.