In late 2013, various groups of shareholders commenced legal action seeking to recover losses sustained as a result of their purchase of shares in HIH Insurance Limited (HIH Insurance).
Judgment in respect of those proceedings was handed down by the NSW Supreme Court in April 2016.
The Court found that shareholders who purchased shares in HIH Insurance on or after 25th August 1999 were entitled to claim damages for losses suffered due to the misleading conduct of HIH Insurance in overstating financial accounts released to the market. These damages claims were to be admitted in the Liquidation of HIH Insurance, and the Schemes of Arrangement of HIH Casualty & General Insurance Limited (HIH C&G) and FAI General Insurance Company Limited (FAIG).
The Court found that the quantum of damages in which shareholders are entitled to claim for purchases on or after 25th August 1999 will be calculated based on the inflationary percentage applicable on the date of purchase. In the further reasons for judgment delivered on the 10th March 2017, amongst other issues, the Supreme Court also determined that any subsequent sale of shares purchased on or after 25th August 1999 should be taken into account in determining the quantum of damages suffered.
The percentage rate used to calculate the damages claims when applied to the relevant timeframes is set out below.
Following the handing down of the judgment, dividend payments were made to the successful plaintiffs in September 2017.
In light of the Supreme Court’s findings above, in November 2017, the Liquidators and Scheme Administrators sought Court directions on the implications the judgments may have on all remaining shareholders of HIH Insurance.
In December 2018, the Supreme Court, in summary, determined that the remaining shareholders (excluding shareholders that have been deregistered or judicially dismissed by the Court) who purchased shares in HIH Insurance on or after 25th August 1999, are also entitled to have damages claims calculated in accordance with the methodology adopted for the successful plaintiffs, admitted in the Liquidation of HIH Insurance and the Schemes of Arrangement of HIH C&G and FAIG.
Under the Schemes of Arrangement of HIH C&G and FAIG, the bar date for submission of Final Claim Forms by creditors was midnight British Summer Time on 2 September 2013 (Cut-Off Date). Under the terms of the Schemes, no further claims can be accepted by the Scheme Administrators after the Cut-Off Date.
As the Cut-Off Date has passed for claims to be determined under the Schemes, in the December 2018 judgment, the Supreme Court has:
In light of the Supreme Court judgments received on the shareholders entitlements, the Liquidators and Scheme Administrators have now admitted and paid the claims of shareholders in accordance with the Supreme Court judgments.
Copies of the Supreme Court judgments handed down in December 2018 regarding the treatment and entitlements of the remaining shareholders are available on the NSW Caselaw website at www.caselaw.nsw.gov.au.