KordaMentha Partner Owain Stone, leader of
KordaMentha's Forensic practice, reflects on the role that he
and his team played in the recall of the Pan Pharmaceuticals Pty
Ltd ('Pan') products from April 2003 and, most recently,
the class action between various customers of Pan Pharmaceuticals
against the Therapeutical Goods Authority ('TGA') and
'I was first involved in the recall a few days after it
happened. I was engaged by a law firm who, at the time, was
advising a high-profile customer of Pan on the appropriate course
of action for which they could ensure a complete claim. My role at
that stage involved assisting the company to develop a robust and
supportable claim for the costs and loss of profits arising from
the product recall. This included participating in discussions with
Pan's Liquidator and their advisors on a assessment of loss
process in which to measure the compensation for each returned
The loss of profit claim was complex, requiring the analysis of
month by month sales patterns, pricing and profitability,
comparison with forecasts and a consideration of the impact of
changes in product ranges. There were particular difficulties in
sourcing alternative supply and access to supermarket shelf space
in the period after the recall. The quantum of this claim was
eventually agreed with Pan's Liquidator.
KordaMentha has had two subsequent roles arising from the Pan
recall, both in relation to the class action against the TGA and
others relating to the Pan recall.
The first role involved the provision of two Expert Witness
reports that detailed the loss and damage suffered by key
representative plaintiffs in the class action. We were responsible
for analysing the historical performance of the claimants in order
to create an assessment of the likely future performance of the
affected products. I provided Expert Evidence reports in respect to
the loss and damage suffered by two of the representative parties
in the class action, each relating to a different major
Loss assessment process
In late 2010, prior to any hearings, a settlement was reached
between the TGA and the class. This led to KordaMentha's second
and current engagement in which I was appointed forensic
My role is to consider the nearly 100 additional claims made
under the Settlement Distribution Scheme and to assess the amount
that should be admitted for the settlement process.
In total, these claims are valued in excess of $67 million. The
agreed loss assessment process requires that we carry out cost
effective reviews of these claims. Many of them are standalone
claims for either loss of profits after the recall; additional
costs arising from the product recall; or for products that were
either unsold or returned by customers.
Due to the large number of additional claims, we considered the
possibility that there might have been some double counting. To
prevent double claims on the same product, we assessed accepted
claims together, particularly for those relating to the loss of
profits on confirmed but undelivered products, stock on hand, and
the loss of future profits.
The claims posessed varying values and degrees of complexity.
Assessing them has been made more difficult by the passage of time
which has seen a number of the claimants changing financial systems
But our long standing involvement in this product recall, strong
knowledge with the types of issues that arise in claims of this
nature, and size of our Dispute Analysis team has enabled us to
efficiently deal with these multiple claims in a timely
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