SurfStitch Class Action Update

SurfStitch Class Action Update

IMPORTANT NOTICE TO GROUP MEMBERS

Proceedings 2017/193375 & 2017/347082

23 March 2020

On 12 November 2019 the Supreme Court of New South Wales ordered the Plaintiffs in the SurfStitch Class Actions to file all their supporting material in respect of the Settlement Approval Application.

On 11 December 2019, the matter was listed for directions before the Honourable Justice Ball and the Settlement Approval hearing listed for 16 December adjourned for further directions to 7 February 2020. The adjournment was sought and granted for a number of reasons including:

  1. The proposed sale by Alceon of 50.1% of EziBuy to NoniB, the shareholders’ meeting of which was scheduled for the 23 December. The proposed sale was likely to impact the value of the convertible notes available under the DoCAs the subject of the proposed settlement; and
  2. The High Court decision in the appeal of BMW Australia Ltd v Brewster and Westpac Banking Corporation v Lenthall [2019] HCA 45 on the availability of Common Fund Orders. Due to the changed class action landscape, the Plaintiffs required time to consider this decision and its implications (if any) for the proposed settlement.

The deadline for registering to participate in the settlement, opting out, or objecting to the settlement was 4pm AEDT on 11 December 2019. However, the plaintiffs are seeking an extension from the Court. We therefore continue to encourage the return both pages of Annexure A forms (signed) to our firm via vic-surfstitch@gadens.com in the meantime.

On 29 January 2020, the Court made orders by consent of all parties to the proceeding, requiring the SurfStitch Deed Administrators to share with the solicitors for the plaintiffs the share trading data of all group members identified to be potential group members and who received notices pursuant to the opt out regime in early November.

On 31 January 2020, that data was shared with the Plaintiffs. Between the 3 February and 19 February, the plaintiffs’ solicitors worked closely with the plaintiffs’ engaged loss experts to reconcile the share trading data of all registered and funded group members, and otherwise sought proof from those members whose data was not included as part of the set provided by the company (for example, institutional or custodial shareholders who have registered). The Plaintiffs loss experts then proceeded to calculate the registered group member loss for the settlement approval application. A report has now been filed into evidence.

The 7 February directions hearing was adjourned to the 6 March 2020 with the consent of all parties, to facilitate completion of the trading data reconciliation, loss calculations and discussions between the parties about its impact on the settlement application.

At the directions hearing on 6 March 2020 a further amended motion (FAMNOM) was filed with the Court for settlement approval, with the matter being set down for hearing on 22 May 2020. Also filed was as an affidavit in support setting out the reasons the parties now seek an Funding Equalisation Order (FEO), and stating that the Loss numbers had been assessed by McGrath Nicol and were returned to us on 6 March 2020.

At the last directions hearing, the parties appeared before Justice Hammerschlag and agreed that the contradictor would have until 11 March 2020 to consider whether a further notice, and further registration regime to GMs would be necessary (Further Registration Regime). The parties discussed the contents of said notice on 13 March, which was filed with the Court on Friday 20 March for the Court’s consideration. Due to developments with COVID-19, the parties and contradictor were required to file submissions about anything not agreed by 20 March. The only significant item remaining in dispute is that the Plaintiffs have sought that the costs of the Further Registration Regime be shared equally by the SurfStitch Deed Administrators. We are awaiting the Court’s decision. If approved, the tentative further registration deadline will be extended to 17 April, and will require group members (who have not yet registered) to register online.

The SurfStitch Deed Administrators have otherwise re-assessed the value of the convertible notes following the sale by Alceon of 50.1% of EaziBuy to NoniB, following the shareholders’ meeting of NoniB on 23 December 2019, which will be contained in the Further Registration Notice. That figure has significantly changed from the figure announced in the first notice sent in November, and will be confirmed once the Court approves the Further Registration Notice.

Both the Gadens and Johnson Winter & Slattery teams continue to follow up funded group members for unreturned Annexure A forms. Please review our home page, and previous updates for more details about the SurfStitch Class Actions. If you fit the description of a ‘group member’, you should review Annexure D immediately, and decide what to do.

We will continue to keep group members advised via the website, or upon written request as matters progress.

Should you have any queries, please contact a member of our team.

Glenn McGowan QC

Partner & Chief Counsel

Rebecca Di Rago

Associate

VIC-Stitch@gadens.com

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.