Our work

The partners of Phi Finney McDonald have achieved almost half a billion dollars in class action settlements. In 2017 and 2018, the firm was named by Doyle’s Guide as one of Victoria’s Leading Commercial Litigation and Dispute Resolution law firms.

Current Cases

BHP CLASS ACTION

For more detailed information about this class action, and on how to participate, please visit https://www.bhpclassaction.com.

On 31 May 2018, Phi Finney McDonald filed Impiombato v BHP Billiton Limited in the Federal Court of Australia on behalf of all investors who between 21 October 2013 to 9 November 2015 (inclusive) acquired an interest in:

  • BHP Billiton Limited securities traded on the Australian Stock Exchange (ASX); and/or
  • BHP Billiton Plc securities traded on the London Stock Exchange (LSE) and/or the Johannesburg Stock Exchange (JSE).

The class action seeks recovery of investor losses incurred up to 30 November 2015, caused by BHP Billiton Limited’s (BHP) violations of the Corporations Act in relation to the catastrophic collapse of the Fundão dam in Brazil. The proceeding is funded by G&E KTMC Funding LLC.

On 3 August 2018, His Honour Justice Moshinsky made orders for a common fund in the class action. Under the terms of these orders, persons who bought shares of BHP during the claim period will receive at least 82% of the value of any settlement or judgment in their favour.

One result of these orders is that you do not need to take any action at this time in order to participate in the class action. However, if you wish to be kept informed and receive ongoing legal advice, you may register at https://www.bhpclassaction.com.

Background

On 5 November 2015, the Fundão tailings dam at the Germano mine in Minas Gerais, Brazil collapsed, releasing approximately 60 million cubic meters of waste water in the largest tailings dam rupture ever recorded. The mudflow killed 19 people and has had a catastrophic and enduring impact on the surrounding communities and the environment. It is the worst environmental disaster in Brazil’s history.

The disaster has also had a significant financial impact on BHP. The Germano mine is operated by Samarco Mineração SA (Samarco), a joint venture of BHP and Vale SA. Samarco’s mining operations have been shut down since the disaster and, over two years later the mine has not reopened.

BHP is an Anglo-Australian owned multinational and the world’s largest diversified mining and mineral resources company.

BHP has a dual-listed company structure, with two parent companies (BHP Ltd and BHP Billiton Plc) operating as a single economic entity with a unified board and management team. BHP Ltd is registered in Australia and listed on the ASX. BHP Billiton Plc is registered in the United Kingdom and listed on the LSE, with a secondary listing on the JSE.

In the period that followed the dam collapse, BHP’s stock price plunged across all markets, falling 22% in Sydney and 23% in London and Johannesburg between 5 November 2015 and 30 November 2015. The class action seeks to recover shareholder losses incurred throughout this period, during which BHP’s combined market capitalisation fell by more than $25 billion.

Class Action

The class action alleges that:

1. during the claim period, BHP breached its obligations of continuous disclosure of material information to the ASX, by failing to disclose its knowledge of the imminent risk of the collapse of the Fundão dam and knowledge that if the dam failed catastrophic human, environmental, and financial consequences would likely result;

2. during the claim period, BHP engaged in misleading or deceptive conduct in its representations to the market that it put safety first and held itself to the highest standards of environmental safety in its projects across the globe, despite its failure to ensure that basic safety precautions were in place;

3. BHP’s conduct caused its share price to trade at a price substantially higher than the trading price that would have prevailed in a properly informed market (inflated price); and

4. persons who acquired BHP shares during the claim period have suffered a loss by acquiring shares at an inflated price.

The class action is the product of nearly a year of research into the history of the construction of the Fundão dam, the causes of the dam’s collapse, and BHP’s knowledge of the issues with the dam. The claim benefits from the review of thousands of pages of Brazilian documents and technical reports, the engagement of experts and translators, and intensive legal work by senior barristers.

A class action against BHP in the United States on behalf of investors that acquired New York Stock Exchange (NYSE) listed American Depository Shares settled on 9 August 2018. The US proceeding does not (and cannot) recover losses suffered in respect of shares traded on the ASX, LSE or JSE. Investors that participated in the US proceeding, who also acquired BHP shares on the ASX, LSE or JSE are not prevented from participating in this class action.

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RFG CLASS ACTION

Phi Finney McDonald is preparing a class action against ASX-listed Retail Food Group Limited (RFG.AX) (RFG or the Company) on behalf of investors who acquired RFG securities between 18 April 2017 and 28 February 2018 (inclusive) (Claim Period).

IMF Bentham (IMF) has agreed to fund the proposed class action.

For more information and to sign up to obtain funding, please contact IMF at https://www.imf.com.au/rfg.

 

Background

RFG operates franchise networks in Australia and 58 international markets. These include Donut King, Brumby’s Bakeries, Michel’s Patisserie, Gloria Jean’s Coffee, Crust Gourmet Pizza, Pizza Capers Gourmet Kitchen, The Coffee Guy and Café2U. RFG’s Domestic Franchise networks accounted for 49% of Group earnings before interest, tax, depreciation and amortisation (EBITDA) in FY16 and 43% in FY17.

RFG enters domestic franchise agreements with its franchisees and, in so doing, generates revenue through royalties on sales, equipment/brand upgrades, store renewal and various other upfront and ongoing fees (the Franchise Model). These fees and royalties are payable to RFG regardless of the franchise’s profitability.

A series of Fairfax Media articles and RFG announcements from December 2017 to February 2018 revealed that RFG’s franchise model was under stress, that there had been serious structural deterioration in the financial performance of several domestic franchise networks, and that the value split between franchisee and franchisor required a fundamental rebalancing.

From 7 to 18 December 2017, various Fairfax media reports and RFG announcements disclosed to the market that:

  • there was significant financial stress within several, if not all, of the RFG franchise networks; and
  • such was the severity of the stress within the franchise networks that in June 2017, the Board had commissioned Deloitte Touche Tohmatsu to conduct a Business-Wide Review of the sustainability of the company’s franchise model and franchise network operations.

During the trading period 11 to 18 December 2017, RFG’s share price fell $1.75 (approximately 40%).

On 19 December 2017, RFG disclosed to the market that its 2018 half year (1H18) net profit after tax (NPAT) would be materially lower than the prior corresponding period. In response, RFG’s share price fell a further $0.67 (approximately 25%).

On 9 January 2018, RFG announced that 1H18 statutory NPAT would be less than the $22m previously forecasted on 19 December 2017. Following the announcement, the share price fell $0.15 (approximately 6%).

On 2 March 2018, in its 2018 half year results, RFG disclosed a significant deterioration in the performance of its domestic franchise division, substantial asset impairments, and a proposal for 160-200 outlet closures by 2019 to address further financial deterioration for the Company. RFG was reinstated to quotation on 5 March 2018. The market reaction was immediate and visceral. By the close of trade, RFG’s share price had fallen a further $0.75 (approximately 36.5%).

Proposed Class Action

The proposed class action will allege that:

  • from at least April 2017, RFG failed to disclose to the market the material financial risks associated with its franchise model and deteriorating franchise networks, and misled investors regarding the Company’s financial position and performance;
  • from June 2017, RFG failed to disclose that it had appointed Deloitte Touche Tohmatsu to review the sustainability of its franchise model; and
  • RFG’s August 2017 profit guidance for the 2018 financial year lacked reasonable grounds.

Class Action Registration

All current and former shareholders who acquired an interest in RFG securities during the period from 18 April 2017 to 28 February 2018 (inclusive) are invited to sign up to the proposed class action. Eligible investors may obtain an information pack by visiting https://www.imf.com.au/rfg.

Contact Us

If you would like to find out more from Phi Finney McDonald about the proposed class action, or have any queries, please contact us at classactions@phifinneymcdonald.com.

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AMP CLASS ACTION

Phi Finney McDonald acts for the Representative Applicant in class action proceedings commenced in the Federal Court of Australia against ASX-listed AMP Limited (AMP.AX) (AMP). The claim has been brought on behalf of investors who acquired AMP securities between 6 May 2013 to 13 April 2018 (inclusive) (claim period).

The class action is being funded by IMF Bentham Ltd.

For more information and to sign up to obtain funding, please visit the website of IMF Bentham Limited.

Background

AMP is an Australian financial services company and is one of the top 50 companies listed on the ASX by reference to market capitalisation.

On and from 16 April 2018, evidence was given by AMP at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) in relation to financial advice it provided.

In summary, it emerged, or was confirmed, at the Royal Commission that:

1. financial advisors employed by AMP (Authorised Representatives) would invest client funds into a range of AMP approved products, in accordance with an agreed investment strategy;

2. when Authorised Representatives depart AMP, in some circumstances, that departing Authorised Representative’s client base continued to be charged ongoing service fees (OSFs) by AMP for financial services not rendered by AMP (OSF Conduct);

3. the OSF Conduct was in breach of the Future of Financial Advice amendments made to the Corporations Act 2001 (Cth), which took effect in mid-2012 (FOFA);

4. AMP was aware that it was engaging in the OSF from at least May 2013;

5. AMP made 20 or more false or misleading statements to the Australian Securities and Investments Commission (ASIC) when questioned about the OSF Conduct or the provision of financial advice by AMP generally; and

6. in reporting to ASIC, in about June 2017 AMP relied upon a supposedly “independent” report into the OSF Conduct produced by the law firm Clayton Utz (CU Report), where it emerged the CU Report was dependent upon AMP for instructions and was the subject of material amendment at the hand of AMP.

On and from 16 April 2018, the AMP share price fell substantially as the above information was absorbed by investors. As a result of the large share price fall, investors have suffered loss and damage.

Allegations

The class action alleges that:

1. at all times from 6 May 2013, AMP knew that it had engaged, and was continuing to engage, in the OSF Conduct, and that this conduct was or was likely to be in breach of FOFA;

2. AMP was under investigation by ASIC in respect of the OSF Conduct, and (from 27 May 2015) repeatedly misled ASIC in its responses to ASIC’s enquiries; and

3. the CU Report which had been presented to ASIC as “independent”, was actually not independent; however

4. AMP failed to disclose the above matters to the ASX and shareholders at any time prior to 16 April 2018, in breach of its obligations of continuous disclosure of material information to the ASX under section 674 of the Corporations Act 2001 (Cth).

Class Action Registration

All current and former shareholders who acquired an interest in AMP during the period from 6 May 2013 to 13 April 2018 (inclusive) are invited to register for the class action.

Eligible investors may obtain an information pack by visiting the website of IMF Bentham Limited.

Contact Us

If you would like to find out more from Phi Finney McDonald about the proposed class action, or have any queries, please contact us at classactions@phifinneymcdonald.com.

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CBA CLASS ACTION

Phi Finney McDonald acts for the Representative Applicant in a class action commenced in the Federal Court of Australia against the Commonwealth Bank of Australia (CBA). This case has been issued on behalf of investors who acquired CBA shares between 16 June 2014 and 3 August 2017 (inclusive) (claim period).

The class action is being funded by Therium Australia Limited (Therium).

Background

On 3 August 2017, Australia’s anti-money laundering authority, Austrac, announced that it had commenced proceedings against CBA. Austrac alleged in those proceedings widespread non-compliance by CBA with anti-money laundering and counter-terrorism financing (AML/CTF) requirements. 

CBA was aware or should have been aware of its non-compliance with these requirements, from at least June 2014. Despite that, CBA did not disclose any AML/CTF concerns to investors until they were forced to do so by Austrac’s announcement on 3 August. CBA’s share price then fell markedly. A number of enquiries into CBA’s conduct were announced in the wake of the Austrac announcement, including by ASIC and APRA.

Allegations

The class action alleges that CBA breached its continuous disclosure obligations, and engaged in misleading or deceptive conduct, by failing to inform investors that it had:

  1. failed to assess the AML/CTF risk posed by “intelligent” deposit machines (IDMs) when launched in May 2012 and for three years thereafter;
  2. failed to monitor customer transactions, including potential money laundering and terrorism financing activity, on over 700,000 accounts;
  3. not reported over 53,000 threshold transactions to Austrac on IDMs on time;
  4. failed to report a number of suspicious transactions to Austrac, including some transactions that related to the financing of terrorism;
  5. deficient systems for identifying and managing AML/CTF risks; and
  6. been contacted by Austrac and other agencies in respect of some of the above matters.

It is further alleged that CBA’s share price was artificially inflated because of CBA’s conduct as above.

Class Action Registration

Phi Finney McDonald was approached by significant institutional investors to represent them in the CBA class action, and to source competitive funding arrangements for investors. In April 2018, Phi Finney McDonald announced the proposed class action and invited eligible investors who wished to participate in the class action to register their claims.

Accordingly, on 29 June 2018, the class action was commenced on behalf of investors who acquired CBA shares during the claim period, and who had executed a litigation funding agreement by then.

This case has now been issued in the Federal Court of Australia. This means that the Federal Court is now managing the class action, and no further registrations to join the Phi Finney McDonald class action are available without specific court orders. If you have any queries about this, please contact us at classactions@phifinneymcdonald.com with the email subject ‘Registration to the CBA class action’.

Contact Us 

If you would like to find out more about this class action, you may contact us at classactions@phifinneymcdonald.com.

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GETSWIFT CLASS ACTION

Phi Finney McDonald acts for the Representative Applicant in class action proceedings commenced in the Federal Court of Australia against ASX-listed GetSwift Limited (GSW.AX) (GetSwift). The claim has been brought on behalf of investors who acquired GetSwift securities between 24 February 2017 to 19 January 2018 (inclusive) including via the company’s capital raisings in June and December 2017 (claim period).

The class action is being funded by Therium Australia Limited.

On 23 May 2018, the Federal Court of Australia gave Phi Finney McDonald sole carriage of the GetSwift class action, and permanently stayed the competing proceedings.

To register your interest, please contact classactions@phifinneymcdonald.com.

Background

GetSwift is a technology company that provides software-as-a-service (SaaS) for managing “last-mile” delivery logistics, routing, dispatching and tracking. The company listed on the ASX on 9 December 2016, following an initial public offering at $0.20 per share.

GetSwift’s share price increased rapidly after listing as it announced a series of partnerships/agreements with key enterprise clients, including with the Fruit Box Group, Fantastic Furniture and the Commonwealth Bank of Australia.

On 11 December 2017, soon after announcing agreements with Yum! Brands and Amazon, GetSwift announced the completion of a $75 million capital raising at $4.00 per share. GetSwift’s share price at the close of trade on 19 January 2018 was $2.92 and its market capitalisation was about $550 million.

On 20 January 2018, the Australian Financial Review reported that GetSwift had failed to inform the market of the termination of enterprise agreements with the Fruit Box Group and Fantastic Furniture, and had prematurely announced revenue forecasts tied to the partnership with the Commonwealth Bank. The reports also raised doubts about the company’s disclosure practices in respect of other agreements it had announced.

On 22 January 2018, following these reports, GetSwift shares were placed in a trading halt and two days later were suspended from official quotation pending the company’s response to queries from the ASX. Shortly after, GetSwift announced that they had retained PricewaterhouseCoopers to review the company’s compliance with its continuous disclosure obligations.

The ASX reinstated GetSwift shares to official quotation on 19 February 2018. Prior to the opening of trade, GetSwift released an market update stating that more than 50% of the company’s enterprise contracts were still in ‘pre-revenue generation’ phase.

By the close of trade on 19 February 2018, GetSwift’s share price had fallen by $1.61 (~55%). On 20 February 2018, GetSwift shares fell a further $0.36 (~27%).

Allegations

The class action alleges that:

  1. during the claim period, GetSwift contravened its continuous disclosure obligations by failing to disclose to the market the termination of material enterprise agreements/partnerships;
  2. during the claim period, GetSwift engaged in misleading or deceptive conduct by omitting material information from announcements to the market about enterprise agreements/partnerships;
  3. GetSwift’s conduct caused its share price to trade at a price substantially higher than the trading price that would have prevailed in a properly informed market; and
  4. persons who acquired GetSwift’s shares during the claim period have suffered a loss by acquiring the shares at an inflated price.

Class Action Registration

All current and former shareholders who acquired an interest in GetSwift securities during the period 24 February 2017 to 19 January 2018 (inclusive), including via the company’s capital raisings completed on 23 June 2017 and 11 December 2017, are invited to register for the class action.

To register your interest, please contact classactions@phifinneymcdonald.com.

Contact Us

If you would like to find out more from Phi Finney McDonald about the proposed class action, or have any queries, please contact us at classactions@phifinneymcdonald.com.

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Estia Class Action

Phi Finney McDonald is preparing a class action against ASX-listed aged care facility operator Estia Health Limited (Estia), on behalf of investors that acquired Estia securities between 19 April 2016 to 5 October 2016 (inclusive) (claim period).

The proposed class action is being funded by Investor Claim Partner (ICP).

Background

On 7 December 2015, Estia announced the acquisition of Kennedy Health Care (Kennedy) which owned and operated a large group of residential aged care facilities. At this time Estia provided upgraded FY16 guidance premised on this acquisition, forecasting 25% growth in net profit after tax (NPAT) compared to FY15 (FY16 Guidance). Estia further claimed that the acquired Kennedy sites would be “immediately EPS accretive”.

On 18 February 2016 and 19 April 2016, Estia re-affirmed its FY16 Guidance, and advised the market that its integration of the recently acquired facilities was “on track”.

On 29 August 2016, Estia disclosed that its FY16 earnings were materially lower than the guidance it had confirmed only 4 months previously, with a 7.5% miss on underlying NPAT. Also that day, Estia guided the market to expect 13% growth in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for FY17 (FY17 Guidance), which was ~15% below market consensus forecasts.

On 6 October 2016, approximately 5 weeks after giving the above FY17 Guidance, Estia disclosed that it expected that underlying EBITDA for FY17 would be between -7% to -3% lower than in FY16, blaming increased non-wage costs and lower projected growth in occupancy rates at its aged care facilities.

On 12 December 2016 and 23 February 2017, Estia admitted that it had poorly handled the integration of its acquired Kennedy aged care facilities during FY16, which in turn had impacted negatively on its FY17 performance.

Estia’s FY16 results and below-consensus FY17 Guidance in August 2016 led to a share price fall of ~29%. The company’s subsequent FY17 Guidance downgrade on 6 October 2016 led to a further price fall of ~15%.

Proposed Class Action

The proposed class action will allege that:

  1. during the claim period, and possibly earlier, Estia breached its obligations of continuous disclosure of material information to the ASX, by failing to disclose that it was struggling to integrate the Kennedy sites, with the result that its profit margins were compressed and it had no reasonable prospects of achieving its FY16 Guidance or FY17 Guidance;
  2. during the claim period, Estia engaged in misleading and deceptive conduct by maintaining its prior FY16 Guidance without any qualification, by giving FY17 guidance without reasonable grounds, and by stating that its integration of the Kennedy facilities was “on track”;
  3. Estia’s conduct caused its share price to trade at a price substantially higher than the trading price that would have prevailed in a properly informed market (inflated price); and
  4. persons who acquired Estia shares during the claim period have suffered a loss by acquiring the shares at an inflated price.

Class Action Registration

All current and former shareholders who acquired an interest in Estia during the period from 18 February 2016 to 5 October 2016 (inclusive) are invited to register their interest in the proposed class action. Eligible investors may obtain an information pack by visiting https://www.icp.net.au/icp-claims/estia/.

Contact Us

If you would like to find out more from Phi Finney McDonald about the proposed class action, or have any queries, please contact us at classactions@phifinneymcdonald.com.

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UGL Class Action

Phi Finney McDonald acts for the Representative Applicant in class action proceedings commenced in the Federal Court of Australia against engineering company UGL Pty Limited (previously known as UGL Limited) (UGL), on behalf of investors who acquired shares in UGL during the period from 16 April 2014 to 5 November 2014 (inclusive) (claim period).

The class action is funded by litigation funder IMF Bentham Limited (IMF).

Background

On 30 April 2012, UGL announced to the market that, through a 50/50 joint venture with United States company CH2M Hill, it was part of a consortium that had been awarded a contract worth over $900 million for the construction of a Combined Cycle Power Plant for the Ichthys LNG Project.

On 9 May 2014, UGL’s joint venture partner CH2M Hill filed a negative report with the US Securities and Exchange Commission (SEC) for the quarter ended 31 March 2014, which disclosed that a ‘power project, located in our Asia Pacific region’ was running behind schedule and was subject to increased project costs. No similar announcement was made by UGL on the ASX in relation to the Ichthys project.

On 8 August 2014, UGL’s CH2M Hill filed a further report with the SEC for the quarter ended 30 June 2014, in which it stated that if the joint venture was unable to successfully address cost increases and project delays then the cost overruns could continue to grow and the joint venture could be required to pay liquidated damages to the contract client, which outcomes could be materially adverse to CH2M Hill’s own financial performance.

UGL did not make any reference to the matters referred to in the CH2M announcements at any time prior to 6 November 2014. This period included its full year results announcement for the 2014 financial year on 25 August 2014, and the company’s annual general meeting held on 30 October 2014.

Then, on 6 November 2014, UGL announced to the market that the forecast costs of the Ichthys project had increased and a provision of USD$170m would be immediately recognised.

On 7 November 2014, the ASX wrote to UGL requesting it confirm when it became aware that it may need to recognise a substantial provision in respect of the Ichthys project. On 10 November 2014, in its letter in response, UGL admitted to the ASX that on 14 October 2014 CH2M Hill had notified UGL that it planned to review the Ichthys Project and anticipated potentially booking a provision in relation to the project upon completion of the review.

The market response to the above announcements was severe. By close of trade on 11 November 2014, the price of UGL securities had fallen greater than 25 per cent from the trading price prior to the announcements.

Allegations

The class action alleges that:

  1. during the claim period UGL breached its obligations of continuous disclosure of material information to the ASX, by failing to inform the market of the growing difficulties with the Ichthys Project and the risk that it would need to recognise a substantial provision in respect of its interest in the joint venture;
  2. UGL’s conduct caused its share price to trade at a price substantially higher than the trading price that would have prevailed in a properly informed market (inflated price); and
  3. persons who acquired UGL shares during the claim period have suffered a loss by acquiring the shares at an inflated price.

Class Action Materials

In accordance with the Orders of his Honour Justice Murphy dated 23 October 2018, the following materials are made available:

  1. the Amended Originating Application;
  2. the Amended Statement of Claim;
  3. the Amended Defence;
  4. the Further Amended Defence;
  5. the Common Fund Orders of Justice Murphy dated 4 October 2018;
  6. the Orders of Justice Murphy dated 23 October 2018; and
  7. the Notice to group members in respect of common fund, opt out and registration.

Class Action Registration

Please read the Notice to group members carefully (above at Item 7 under the heading Class Action Materials), as your rights in respect of the UGL Class Action may be impacted.

A mediation has been ordered to be conducted by no later than 10 April 2019.

Any group member who wishes to seek any benefit pursuant to any in-principle settlement of the UGL Class Action reached at the mediation or within 3 months after the first day of such a mediation (which settlement is subject to Court approval), must before 4:00pm (AEDT) on 30 November 2018 complete and return a Group Member Registration Form to IMF.

UGL shareholders who acquired an interest in UGL during the claim period should visit the website of IMF Bentham Limited to obtain a Group Member Registration Form.

Contact Us

If you would like to find out more from Phi Finney McDonald about the class action, or have any queries, please contact us at classactions@phifinneymcdonald.com.

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Hastie Group Class Action

Phi Finney McDonald acts for the Representative Applicant in class action proceedings commenced in the Federal Court of Australia against Deloitte Touche Tohmatsu and Deloitte Corporate Finance Pty Ltd (Deloitte Entities), on behalf of aggrieved investors in building services company Hastie Group Limited (Hastie). The class action is funded by litigation funder IMF Bentham Limited.

Background

Until 2012, Hastie was an ASX-listed company providing technical services to the building and infrastructure sectors in Australia and overseas. Deloitte Touche Tohmatsu acted as Hastie’s auditor from 2005 to 2012.

On 14 June 2011, Hastie lodged a ‘Pathfinder Prospectus’ with the ASX for a $160 million capital raising by way of institutional placements and a renounceable entitlement offer. On 17 June 2011, Hastie lodged a largely identical formal Prospectus for the capital raising. The Pathfinder Prospectus and Prospectus each contained pro forma financial statements for the year ending 30 June 2011, and forecasts of Hastie’s likely future earnings. The financial statements and forecasts were reviewed by the Deloitte Entities, which issued reports included in the Prospectus documents in which the entities gave assurances as to the reasonableness of Hastie’s financial statements and forecasts.

In the months following the successful completion of the capital raising, the company announced a series of asset impairments, substantially downgraded its full year earnings guidance, and announced an anticipated earnings loss of $146 million for the half year ending 31 December 2011.

In May 2012, Hastie declared that it had discovered ‘accounting irregularities’ in its services business dating back to 2009, resulting in the resignation of two non-executive directors. The company was placed into voluntary administration shortly thereafter. PPB was appointed as administrators, and later liquidators of Hastie.

On 21 January 2013, PPB Advisory released its Administrators’ Report to Creditors of Hastie. The Report:

  1. confirmed that the Hastie Group was insolvent, and recommended that it be placed into liquidation;
  2. detailed the likely reasons for the collapse of the Group, including that Hastie’s net asset position and likely future earnings at the time of the capital raising each were much lower than the financial statements and forecasts contained in the Prospectus and Pathfinder Prospectus; and
  3. identified a number of potential breaches of statutory and general law duties by the company’s directors, auditor and professional advisors.

In 2016, Hastie’s liquidators issued proceedings against Deloitte Touche Tohmatsu on behalf of the company in liquidation, making allegations including that the auditor firm was negligent in its audit of Hastie’s 2010 financial statements.

About the Class Action

On 13 June 2017, Sadie Ville Pty Ltd (as trustee for Sadie Ville Pty Ltd) issued representative proceedings in the Victorian Registry of the Federal Court of Australia against the Deloitte Entities, on behalf of persons who acquired an interest in shares in Hastie in the period from 14 June 2011 to 21 February 2012 (inclusive) and who entered into a litigation funding agreement with IMF Bentham Limited in relation to the proceedings on or before 9 June 2017 (group members).

The proceedings allege that the Deloitte entities contravened sections of the Corporations Act, the ASIC Act, and the Australian Consumer Law in giving certain assurances contained in Hastie’s Pathfinder Prospectus and Prospectus issued in June 2011, relating to the reliability and accuracy of Hastie’s financial statements and earnings forecasts.

Contact Us

This class action is ‘closed’, meaning that only persons who entered into a funding agreement with IMF Bentham Limited by 9 June 2017 are able to participate.

Phi Finney McDonald will provide regular written updates to all group members regarding the status and progress of the class action.

If you are a group member in the class action and have an enquiry, or otherwise have any questions about this matter, please contact us at classactions@phifinneymcdonald.com.

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Forge Group Class Action

Phi Finney McDonald acts for the Representative Applicant in class action proceedings in the Federal Court of Australia against directors and insurers of Forge Group Limited (in Liquidation) (Receivers and Managers Appointed) (Forge). The class action is funded by litigation funder IMF Bentham Limited (IMF).

Background

Until early 2014, Forge was an integrated engineering and construction company servicing the resources, oil & gas and power sectors in Australia, West Africa and the USA through several subsidiaries.

In January 2012, Forge agreed to acquire CTEC Pty Ltd (CTEC), “a private Western Australian based company providing engineering, procurement and construction (EPC), operations and maintenance solutions to the energy and utilities sectors”. CTEC was Forge’s largest single acquisition to date.

Immediately prior to the acquisition, CTEC had entered into two large contracts to construct power stations: one located at West Angelas in the Pilbara, Western Australia (WAPS) and one at Diamantina near Mt Isa, Queensland (DPS). DPS was the single largest project ever conducted by any of Forge’s businesses.

On 7 March 2012, Forge’s then CEO Peter Hutchinson announced that the CTEC acquisition was “expected to contribute annual revenue in the range of $200 to $250 million and EBITDA of between $15 to $20 million in the first full year of ownership”, being the 2013 financial year.

Forge released its 2013 full year results on 29 August 2013, reporting pro forma EBITDA (earnings before interest, taxation, depreciation and amortisation) of $115.5 million. At that time, Forge stated that its order book worth $1.3 billion “provides stability and earnings visibility beyond FY14” (the 2014 financial year).

Then, on 4 November 2013, Forge requested a trading halt in its securities on the ASX, stating that “following its internal monthly reviews and quarterly financial re-forecasts, Forge has identified concerns relating to potential underperformance on the WAPS and DPS contracts”.

Forge remained in a trading halt until 28 November 2013, when the company released a Trading and Financial Update. Forge announced:

  1. a profit write-down of $127m, attributable to problems on the DPS and WAPS projects. That write-down included a reversal of some $50m in previously-recognised profits; and that
  2. pro forma EBITDA for FY2014 was expected to be in the range of $45m to $50m.

Forge attempted to justify the timing and content of the profit write-down on the following bases:

  1. the DPS profit write-down resulted from factors including inadequate allowance for scope growth, large cost overruns in structural, mechanical, piping and electrical works, poor project management and delays in settling a number of claims, as well as the significant acceleration costs required to get the project back on schedule;
  2. the WAPS profit writedown resulted from factors including inadequate allowance for scope growth, significant rework due to design problems, poor project management and a large number of extension of time claims that had not yet been settled.

Forge’s share price fell substantially in response to the Trading and Financial Update. Having entered the trading halt $4.180, the share price fell to $0.685 at the close of trade on 28 November 2013 – a fall of ~84%.

On 4 December 2013, in response to an ASX query, Forge confirmed that:

  1. in late September 2013, management identified the risk of significant margin erosions on the DPS and WAPS projects (resulting from cost overruns and delays) at the monthly financial project review meetings;
  2. in late October, management briefed the Board on the possibility of project writedowns and on a range of potential outcomes pending the determination of the negotiations with the customer and key sub-contractor on the DPS project; and
  3. in early November 2013, Forge management formed the view that a material profit write-down would be necessary.

In February 2014, Forge was placed in administration after its financiers withdrew support for the company. The company was placed into liquidation in March 2014.

Class Action Proceedings

In December 2014, Rushleigh Services Pty Ltd (Rushleigh) issued a representative proceeding against Forge in the New South Wales Registry of the Federal Court of Australia, on behalf of persons who acquired shares in Forge between 7 March 2012 and 1 November 2013 (claim period), and who had entered into funding agreements with IMF (group members).

The class action proceeding alleged that:

  1. on and from 7 March 2012, Forge engaged in misleading and deceptive conduct in breach of the Corporations Act 2001 (Cth), by making statements to the market regarding CTEC’s expected future contributions to Forge’s revenue and earnings performance which lacked reasonable grounds;
  2. during the claim period, Forge breached its obligations of continuous disclosure of price-sensitive information to the market by failing to keep the market informed of the significant problems affecting both the WAPS and DPS projects, and the resulting risks to Forge of margin erosion, losses and project writedowns;
  3. Forge’s conduct caused its share price to trade at a price substantially higher than the trading price that would have prevailed in a properly informed market (inflated price);
  4. persons who acquired Forge shares during the claim period have suffered a loss by acquiring the shares at an inflated price; and
  5. Rushleigh and group members are entitled to recover their loss and damage from the proceeds of a directors and officers (D&O) insurance policy held by Forge which includes coverage for securities class action claims against the company.

As Forge was in liquidation at the time proceedings were commenced, Rushleigh was required to seek the Court’s leave to issue the proceedings against Forge. Forge’s liquidators resisted Rushleigh’s application, primarily on the basis that the liquidators intended to issue proceedings against certain of Forge’s directors and officers on behalf of the company (and its creditors), and seek recovery of losses from the fixed pool of insurance proceeds under Forge’s D&O insurance policy. At as July 2017, Forge’s liquidators have not issued any proceedings against the company’s directors or officers.

In late 2015, Rushleigh obtained the leave of the Court to join two of Forge’s former directors, Peter Hutchinson and David Simpson, as respondents in the proceeding, alleging that Mr Hutchinson and Mr Simpson also made misleading statements regarding CTEC and Forge’s financial position and performance, and were involved in Forge’s breaches of its continuous disclosure obligations.

In December 2016, Justice Foster of the Federal Court issued a judgment denying Rushleigh’s application for leave to proceed. Justice Foster denied the application on the basis that the proceeds available under Forge’s D&O insurance policy were likely to be exhausted by the claims made against Forge’s directors in the class action and in another proceeding in the Supreme Court of New South Wales brought against Forge’s directors by certain of Forge’s project-insurers. On that basis, Justice Foster concluded that it was unnecessary for Forge itself to remain a respondent in the class action proceeding.

In July 2017, Rushleigh applied to join Forge’s insurers under its D&O insurance policy to the proceeding as fourth, fifth and sixth respondents pursuant to section 5 of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW).

In January 2018, the Court granted Rushleigh leave to join Forge’s insurers, and the matter will shortly return for further directions.

Phi Finney McDonald were appointed as Rushleigh’s lawyers in the class action in July 2017.

Contact Us

This class action is ‘closed’, meaning that only persons who have previously entered into a funding agreement with IMF Bentham Limited are able to participate.

Phi Finney McDonald will provide regular written updates to all group members regarding the status and progress of the class action.

If you are a group member in the class action and have an enquiry, or otherwise have any questions about this matter, please contact us at classactions@phifinneymcdonald.com.

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Track Record

The lawyers of Phi Finney McDonald built one of Australia’s most successful class actions practices, before establishing a boutique firm.

While best known for shareholder class actions, we have a depth of experience in financial services claims, debenture trustee class actions, human rights litigation, and personal injury claims.

The matters referred to on this website are limited to those over which our lawyers had primary carriage or played a substantial role.

Shareholder Class Actions

Vocation Limited // ongoing

Acted for investors in a claim against Vocation Limited from its commencement in 2014 until leaving Slater and Gordon in April 2017. Following Vocation’s collapse in 2015, in 2016 the proceeding was consolidated with a competing class action brought by Maurice Blackburn, and in 2017 auditing firm PricewaterhouseCoopers was joined as a co-defendant in the class action. Slater and Gordon’s class action is ongoing and is funded by IMF Bentham Limited. Click here for the two articles from AFR, AFR.

Billabong International Limited // 2016

$45 million settlement: Acted for investors in a shareholder class action against Billabong International Limited, which settled in 2015 for $45m. The class action was funded by Comprehensive Legal Funding LLC. Click here for the article on News.com.au.

Newcrest Mining // 2016

$36 million settlement: Acted for investors in a shareholder class action against Newcrest Mining Limited, which settled in 2016 for $36m. The class action was funded by Comprehensive Legal Funding LLC.

In the course of the class action, Newcrest sought an order that the claims of two institutional investor group members be dealt with at the initial trial of common issues, arguing that institutional investors have different reasons for investing in listed companies than do retail investors and hence their claims need to be considered separately. Ordinarily, only the claim of the representative applicant (typically a retail investor, as in this case) would be determined at the initial trial. In successfully opposing the application, Ben gave affidavit evidence on which he was cross-examined in Court. The resulting judgment remains the leading authority on the subject of defendant applications for sample group member evidence, making it difficult for future defendants to attempt to force institutional investors to take in an active role in Australian shareholder class actions. Click here for the judgment.

Downer EDI Limited (No. 2) // 2014

$29.75 million settlement: Acted for investors in a (second) shareholder class action claim against Downer EDI Limited, which settled prior to the commencement of proceedings in early 2014 for $29.75m. Although the settlement was confidential, the size of the settlement later became public. The proposed class action was funded by IMF Bentham Limited. Click here for the article on News.com.au.

GPT Group // 2013

$75 million settlement: Acted for investors in a shareholder class action against GPT Group, which settled in 2013 for $75m. The class action was funded by Comprehensive Legal Funding LLC. The proceeding ran all the way to trial before Justice Gordon (then on the Federal Court), and settled shortly prior to judgment being handed down. Click here for the two articles from the Sydney Morning Herald on 24/10/2008 and 08/05/2013

Nufarm Limited // 2012

$46.6 million settlement: Acted for investors in a shareholder class action against Nufarm Limited. In 2011, the class action was consolidated with a similar proceeding conducted by Maurice Blackburn, with both Slater and Gordon and Maurice Blackburn on record as lawyers for the applicants in the consolidated proceeding. Slater and Gordon’s proceeding was funded by Comprehensive Legal Funding LLC. In 2012 the consolidated proceeding settled for $46.6m. Click here for the article from the Sydney Morning Herald.

Sigma Pharmaceuticals // 2012

$57.5 million settlement: Acted for investors in a shareholder class action against Sigma Pharmaceuticals Limited. The class action was funded by Comprehensive Legal Funding LLC. In 2012 the proceeding settled for $57.5m. Click here for the two articles from the Sydney Morning Herald on 01/04/2010 and 02/07/2015 and here for The Australian Business Review.

Centro Properties Group and Centro Retail Trust // 2012

$50 million settlement: Acted for investors in a shareholder class action against Centro Properties Limited, Centro Retail Limited and PricewaterhouseCoopers. The class action was funded by Comprehensive Legal Funding LLC. In 2008, the legal team successfully resisted a stay application brought by the Centro entities and supported by Maurice Blackburn, which had launched a competing class action. The judgment of Justice Finkelstein dismissing the Centro entities’ stay application remains a key authority on the issue of multiplicity of class action proceedings in respect of the same subject matter. The proceeding settled for $50m in 2012, in the middle of the trial before Justice Middleton. Click here for the article from News.com.au and here for the judgment.

Downer EDI Limited (No. 1) // 2008

$20 million settlement: Acted for investors in a shareholder class action claim against Downer EDI Limited, which settled prior to the commencement of proceedings in 2008 for $20m. Although the settlement was confidential, the size of the settlement later became public. The proposed class action was funded by IMF Bentham Limited.

Jubilee Mines // 2006

Individual proceeding: Represented the plaintiff in successful first instance proceedings against Jubilee Mines NL (Kim Riley in his capacity as trustee of the KER Trust v Jubiless Mines [2006] WASC 199), for breach of its continuous disclosure obligations which existed at the time under the Corporations Law (now the Corporations Act 2001). The plaintiff successfully established that Jubilee Mines had failed to disclose material information to the market, which in turn had caused it to sell shares at undervalue and suffer a loss. The plaintiff was awarded $1.86 million. Although the decision was overturned on appeal, it remains significant as the first Australian case in which a Court awarded a shareholder damages for breach by a company of its continuous disclosure requirements. Click here for the judgment.

Insolvency Claims and Proofs of Debt

Administration of ION Limited // 2014

$9.4 million settlement: Acted for shareholder-creditors in lodging proof of debt claims in the administration of ION Limited. The $9.4m settlement figure represents the aggregate amount of administration distributions paid to Slater and Gordon clients in respect of their claims, each of which was determined individually. The proof of debt process was funded by IMF Bentham Limited. As part of this process, we obtained and lodged individual reliance evidence from claimants including institutional investors.

Institutional Abuse Class Actions

Manus Island Immigration Detention Centre // 2017

Involved in the inception and investigation of the class action for asylum seekers detained at the Manus Island detention centre, which was commenced in 2014. Click here for the article from The Guardian and two from the Sydney Morning Herald on 17/08/2016 and 14/06/2017.

Fairbridge Farm // 2015

$25 million settlement: Acted for persons who had been victims of physical and sexual abuse as children at Fairbridge Farm, a home established for UK child migrants. In 2015 the case settled for $24m (together with a formal apology), in the largest compensation payment for survivors of institutional child abuse in Australian legal history. The class action was conducted on a No Win No Fee basis. Click here for the two articles from the Sydney Morning Herald on 29/06/2015 and 29/06/2015 and the article from ABC.

Debenture Trustee Class Actions

Australian Executor Trustees / Provident Capital Collapse // ongoing

Acted for thousands of investors (including many retirees) in the collapsed unlisted mortgage fund Provident Capital, in a class action claim against trustee company Australian Executor Trustees, from its commencement in 2014 until their departure from Slater and Gordon April 2017. The class action is ongoing and is conducted on a No Win No Fee basis. Click here for the article from Money Management and The Australian.

Trust Company / Australian Capital Reserve Collapse // 2015

$25 million settlement: Acted for investors (mainly retiree investors) in the collapsed unlisted mortgage fund Australian Capital Reserve, in a class action claim against trustee company Trust Company Nominees. In 2015 the proceeding settled for $25m. The class action was conducted on a No Win No Fee basis. Click here for the article on the Sydney Morning Herald.

Sandhurst Trustees / Fincorp Collapse // 2010

$29 million settlement: Acted for investors (mainly retiree investors) in the collapsed unlisted mortgage fund Fincorp, in a class action claim against trustee company Sandhurst Trustees. In 2010 the proceeding settled for $29m. The class action was conducted on a No Win No Fee basis. Click here for the two articles from the Sydney Morning Herald on 05/12/2008 and 11/05/2011.

Environmental Claims

Parkerville Bushfire Group Action // ongoing

Acted for the Herridge Plaintiffs, until leaving Slater and Gordon in July 2017, in the multi-plaintiff action in the Supreme Court of Western Australia against Western Power, its contractor Thiess, and a private landowner on behalf of residents, business and property owners affected by the January 2014 bushfire in the Perth hills. The case is ongoing and is set down for trial in the first quarter of 2018.

Premier v Spotless Group Limited & Ors // 2007

Successful defendant: Acted for the seventh named defendant, a firm of environmental consultants, in a complex multi-party proceeding seeking damages for loss connected with land contaminated by dry-cleaning chemicals. While the first-named defendant (for whom we did not act) was, in part, unsuccessful, our client successfully defended all claims made against it in the proceeding. Click here for the judgment.

Financial Advice / Improper Lending Claims

Bell Potter Securities Limited // 2014

Confidential group settlement: Acted for a group of invested who were advised by Bell Potter to buy shares in biotech company Progen Pharmaceuticals and suffered loss. The proceeding was initially issued as a class action, was declassed in 2012, and an application to reconstitute the claim as a class action was rejected by the Court in 2013. Our team subsequently took over the case and achieved a confidential settlement of the highly complex case.

Storm Financial Resolution Scheme // 2010

Multiple individual settlements: Acted for bank customers and investors in respect of an alternate dispute resolution scheme with the Commonwealth Bank, relating to the loss of funds lent in connection with collapsed financial advice and investments management company Storm Financial, and associated claims against the banks for improper lending practices. Click here for the article from ABC.

Westpoint Group // 2008

Confidential individual settlements: Represented over a thousand retail investors (mainly retirees) who had lost their life savings following the collapse of the Westpoint Group. Westpoint had raised mezzanine finance for property developments by issuing unregulated promissory notes to retail investors through financial planning firms (often paying commissions of 10% or more). Ben developed the systems and processes through which instructions were taken, cases were assessed and triaged, and common issues were identified among individual financial mis-selling claims. The result was a multitude of individual claims, group litigation via test cases and under case management orders, as well as a number of representative proceedings. One individual proceeding, Dartberg v Wealthcare Financial Planning, generated what remains a founding judgment in the development of the law on the application of proportionate liability regimes in Australia. Click here for the article from InvestorDaily and click here for the judgment.

Royal Commissions / Special Commissions

Special Commission of Inquiry into Medical Research and Compensation Foundation (James Hardie Inquiry) // 2005

Represented the ACTU and asbestos victim support groups in the New South Wales Government’s inquiry into James Hardie. The company, a former asbestos manufacturer, had undertaken a substantial corporate restructure under which its assets were transferred to the Netherlands, while its asbestos liabilities (and AU$293m) remained in an Australian based research and compensation trust. The inquiry established that the trust was grossly-underfunded and resulted in James Hardie agreeing to make additional and on-going payments into the trust in respect of its future asbestos liabilities.

Pharmaceutical Claims

UK Thalidomide Claims // 2017

Represented United Kingdom thalidomide survivors who had never been compensated after suffering life-changing and severe physical abnormalities. Thalidomide damaged unborn children when taken in early pregnancy. Legal proceedings were issued against Grünenthal, the German inventor and manufacturer of thalidomide, and the UK Distillers companies which distributed the drug in the United Kingdom.

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