Pan Pharmaceuticals

Corrs acted for the Commonwealth of Australia in the defence of the Pan Pharmaceuticals class action. The class action was one of the largest claims ever brought against the Commonwealth and centred on alleged negligence by a Federal Regulator as well as alleged misfeasance in public office by individuals employed by the Regulator.

The legal principles were complex and their application to a Federal Regulator, and its staff, were largely untested in Australia. Corrs developed and implemented a strategy that led to a commercially successful settlement of the class action at a private out-of-court mediation without any admissions as to liability.

The class action, which comprised 162 members seeking economic loss and aggravated damages, stemmed from the corporate collapse of Pan Pharmaceuticals in April 2003 after the Therapeutic Goods Administration (TGA) ordered a recall of its products and suspended its licence to manufacture therapeutic goods.

The Commonwealth was alleged to have been negligent because of the manner in which the TGA performed its regulatory functions, a number of TGA officers were alleged to have engaged in misfeasance in public office (a personal tort centred on willful misconduct, or reckless indifference, in the exercise of government powers) and the Commonwealth was alleged to have been vicariously liable for the officers conduct. The case was legally and factually complex, requiring management of Government obligations and individual sensitivities.

Corrs worked quickly and efficiently, ahead of a private out-of-court mediation, to limit the scope of the claims against the Commonwealth (successfully striking out large parts of the class action claim), to ensure that the remaining causes of action were appropriately particularised (given the extremely serious nature of the claim – especially as against the individual officers) and to successfully challenge, and have withdrawn, the key expert evidence that the class was seeking to rely upon.

The settlement reached at the mediation was without any admissions as to liability and involved the payment of $67.5m into a distribution fund from which payments could be made to each of the 162 class members. The settlement was formally approved by the Federal Court (a necessary legal requirement for any Federal Court class action settlement) and the approval judgment is one of the most recent judicial decisions in Australia on the factors that are required to be established to obtain Federal Court approval of a class action settlement.

The total quantum of the claims made by the 162 members of the class remains subject to confidentiality, although the Australian Financial Review noted the following in respect of the class action settlement (after it had been approved by the Federal Court):

“It [referring to the class action] was not a lay down misere. The pleadings of the lead applicant and two sample members show each claimed between $1 million and $8.5 million, suggesting the settlement was a small fraction of the total claimed.”

Fortescue’s ASIC appeal

The High Court handed down a landmark decision in favour of Fortescue Metals Groups and Chairman Andrew Forrest regarding the proceedings brought against them by ASIC relating to ASX disclosure obligations.

Corrs Chambers Westgarth advised Fortescue on the successful high profile defence of the allegations by ASIC. The judgement vindicated both Fortescue and Mr Forrest, ruling that neither party contravened the Corporations Act. 

Amcor

Amcor Limited, the world’s largest packaging company, called upon Corrs Chambers Westgarth to bring proceedings against former executives who allegedly set up secret companies to buy Amcor assets at less than their true value. Charges included conspiracy, fraud and breaches of duty.

The offending employees took great pains to cover their tracks, and even obtained legal advice on how to conceal their involvement. 

With Corrs’ help, Amcor reclaimed one of the businesses and sought damages. The Supreme Court judged all six defendants guilty of fraud and found they had breached their duties to Amcor.