Davis Class Action
This is the online registration portal for group members of the Quintis Limited class action being conducted by Piper Alderman (the Davis Class Action) in the Federal Court of Australia with funding from LCM Operations Pty Limited (LCM), a subsidiary of the listed litigation funder Litigation Capital Management Limited (AIM: LIT).
The Davis Class Action has been brought by Mr Geoffrey P Davis and Mr Geoffrey W Davis as the trustees of the G. P. Davis Superannuation Fund (the Applicants) on behalf of and seeking compensation for certain shareholders of Quintis Limited (Subject to a Deed of Company Arrangement) (Quintis) against Quintis, Frank Wilson (a director of Quintis) and Quintis’ auditors, Ernst & Young (EY).
The group members in the Davis Class Action are those shareholders who acquired Quintis (ASX: QIN) shares listed on the Australian Securities Exchange (ASX) at any time in the period 31 August 2015 to 15 May 2017 (Claim Period) and who suffered loss by reason of the alleged conduct described below.
A different class action seeking compensation for Quintis shareholders is being conducted by Gadens Lawyers, which is being case managed together with the Davis Class Action in the Federal Court of Australia. That class action has been brought by Excel Texel Pty Limited (and another party) against Quintis and Wilson (but not EY) (Excel Texel Class Action).
In July 2019, the Court issued Opt Out Notices to all persons fitting within the definition of group members in both the Davis Class Action and the Excel Texel Class Action which required group members to make a decision as to which of the two class actions they wished to participate in.
The Court ordered Opt Out period concluded on 6 August 2019.
Those group members that have chosen to participate in the Davis Class Action can, if they have not already, register their details using this portal. Please note, if you are planning to register on behalf of more than one person or entity using this portal, you will need to re-load your internet browser before submitting the second and any subsequent registration.
The Applicants in the Davis Class Action allege that during the Claim Period:
- Quintis and Mr Wilson made false or misleading statements and engaged in misleading or deceptive conduct within the meaning of sections 1041E and 1041H of the Corporations Act by overstating in the FY15 and FY16 Financial Reports the value of Quintis’ biological assets, its profit attributable to its recognition of certain establishment fees as revenue, and its recognition of optional annual fees as intangible assets. This had the effect of materially overstating Quintis’ assets and revenue; and
- EY made false or misleading statements and engaged in misleading or deceptive conduct within the meaning of sections 1041E and 1041H of the Corporations Act by issuing its FY15 and FY16 Audit Opinions and representing that Quintis’ FY15 and FY16 Financial Reports did not materially misstate the value of Quintis’ biological assets, its profit attributable to its recognition of certain establishment fees as revenue, and its recognition of optional annual fees as intangible assets, which had the effect of overstating Quintis’ assets and profits.
The Applicants allege that, if Quintis’ FY15 and FY16 Financial Reports had been properly audited, the real value of its shares would have been a fraction of what the market attributed to it. The Applicants claim that they and the group members suffered loss as a result of these alleged contraventions because if the alleged misrepresentations had not been made, and the true value of Quintis’ securities had been known, they either would not have purchased ordinary shares in Quintis or would have paid much less for them. Quintis and Mr Wilson made representations regarding the financial position of Quintis in relation to the financial statements for FY15 and FY16 that were misleading or deceptive, or false or misleading, in breach of the Corporations Act (Act), because the representations were untrue or without reasonable basis. It is also alleged that EY negligently conducted its audit of the financial statements for FY15 and FY16.
Update on the Proceedings
On 12 March 2020, the applicants in the Davis Class Action and Excel Texel Class Action, together with their respective funders, agreed to a confidential settlement of the claims against Quintis (only) (Settlement). This Settlement was predicated on the basis that the entire sub-limit of the relevant insurance policy available to Quintis to meet any claims against it was AUD $10 million (Relevant Sub-Limit). The parties’ application for Court approval of the Settlement, originally listed for 7 May 2020, was adjourned following a review of certain subpoenaed documents indicating that the Relevant Sub-Limit of Quintis’ insurance policy may in fact be AUD $50 million, not AUD$10 million.
Accordingly, the applicants in the Davis Class Action and Excel Texel Class Action (collectively, the Rectification Applicants) initiated proceedings on behalf of Quintis, against certain Lloyds Underwriters, for the rectification of Quintis’ insurance policy to reflect a Relevant Sub-Limit of AUD $50 million (Rectification Proceeding).
The hearing of the Rectification Proceeding concluded on 18 September 2020 and on 28 January 2021, his Honour Justice Lee delivered his principal judgment, which inter alia, found that the Rectification Applicants had succeeded in establishing that Quintis’ relevant insurance cover should be increased by AUD $11.25 million (Principal Rectification Judgment). On 6 April 2021, his Honour delivered his further judgment in the Rectification Proceeding on the issues of relief and costs. The effect of which was that Quintis’ insurance policies were rectified in accordance with the Court’s findings in the Principal Rectification Judgment.
On 4 May 2021, Piper Alderman received notice from the Solicitors for the Respondents in the Rectification Proceeding that appeals against his Honour Justice Lee’s judgments had been lodged with the Federal Court of Australia. The appeals have been lodged by:
- Argo Managing Agency Ltd (Argo) for and on behalf of the underwriting members of Lloyd’s Syndicate 1200 (as subscribing underwriter to policy number B0507N16FA15360); and
- Vibe Syndicate Management Limited (Vibe) as managing agent for and on behalf of the underwriting members of Lloyd’s London Syndicate 5678 (as subscribing underwriters to Policy Number B0507N16FA15370).
Piper Alderman is instructed to act for the respondents to the appeals, and has requested that the hearings of the appeals be expedited and heard together.
Registration for the Davis Class Action
You are invited to register to participate in the Davis Class Action by submitting your contact information and details of your acquisition of Quintis shares in the Claim Period with Piper Alderman.
Group members who choose to participate in the Davis Class Action will be asked (at some stage) to enter into a Representative Proceeding Funding Agreement – Member (Funding Agreement) with LCM.
You do not have to enter into a Funding Agreement to participate in the Davis Class Action. A copy of the Funding Agreement is available to view here.
Registration will be easier if you have the following information ready prior to starting the registration process:
- An email account which you check regularly; and
- Details of your acquisition of Quintis shares in the Claim Period (together with any opening balance and any sale transactions made during the Claim Period).
If you have any questions please contact us by email QINShareholder@piperalderman.com.au.
Piper Alderman and LCM have established policies and procedures for managing conflicts of interest, client confidentiality and privacy. Any conflict of interest (actual, apparent, perceived or potential) will be notified to claimants in a timely manner. Copies of the relevant Conflicts Policies can be provided upon request.
Register for the Davis Class Action by clicking here.