Brought to you by:
Zurich
Zurich

Fleet leasing firm settles motor warranty class action

Facebook Twitter LinkedIn Google

Listed fleet leasing company McMillan Shakespeare has settled a motor warranty class action against its subsidiary Davantage.

The business says “the settlement is without any admission of liability and also subject to approval of the Federal Court”.

McMillan Shakespeare declined to reveal the details of the financial settlement except that it has set aside in the past financial year a net charge of $2 million plus legal costs to settle the matter. In its 2020 annual report the business put the post-tax class action provision for possible settlement at $5.1 million, including legal expenses.

A spokesman for the company also declined to provide details about the types of warranty cover affected by the lawsuit, which commenced in 2018.

Baker & McKenzie, the law firm that ran the class action, also declined to comment when contacted by insuranceNEWS.com.au.

The settlement of the lawsuit comes more than a year after the Federal Court ruled the product contracts with plaintiffs had been “intended to operate to permit denial of full coverage” of repair claims.

The ruling did not mention what warranty products have been sold to the class action members. But it says the warranty agreements cover 49 distinct products with each offered pursuant to a separate product disclosure statement.

In a separate decision in April Justice Jonathan Beach denied the plaintiffs access to relevant insurance policies held by McMillan Shakespeare and its subsidiary Davantage, which had sold the products. The lead plaintiff had applied for access to the documents, saying it would help decide if it was commercially viable to proceed with the lawsuit.

In the class action itself the plaintiffs sought orders that the warranties they had bought were void, and wanted either the restitution or a refund of the premium paid and interest on that amount, regardless of whether claims were in fact met and the contracts performed.

According to the court ruling the total amount paid by the 26,000-28,000 class action members for the warranty coverage was about $32 million.