Dismissal of Worley class action to be appealed
Shine Lawyers has filed an appeal against the October decision by the Federal Court to dismiss proceedings against listed company Worley.
Just under one month ago, the Federal Court of Australia ruled against Larry Crowley, a self-funded retiree, who had brought proceedings on his own behalf as well as others who purchased shares in professional services provider Worley in the period between 14 August 2013 and 20 November 2013, and who allegedly suffered loss by reason of Worley’s conduct pertaining to its earnings guidance and subsequent performance.
The Honourable Jacqueline Gleeson found that Worley had reasonable grounds in making and maintaining its views about its financial year 2014 earnings guidance throughout the claim period, and that the process by which the company’s FY14 budget was developed was reasonable, contrary to the applicant’s contention.
However, plaintiff firm Shine Lawyers has opted to appeal the decision to dismiss the claims of shareholders against the company.
In a statement, Shine Lawyers class actions practice leader Craig Allsopp said there were concerns about a number of aspects of the Federal Court’s judgment.
“The grounds of appeal include that the primary judge erred in failing to find that Worley did not have reasonable grounds for guidance the company provided for FY2014,” he said.
“The primary judge also made a number of errors regarding evidence and the matters that need to be proved to establish wrongdoing.”
Shine Lawyers maintains, Mr Allsopp continued, that company executives “knew at the time their forecasts were unrealistic, resource companies were deferring projects, and its Canadian business was underperforming”.
“Despite this knowledge, the company maintained an overstated profit forecast in contravention of its continuous disclosure obligations and failed to correct market expectations,” he argued.
Back in October, Herbert Smith Freehills – which represented Worley – said the decision to dismiss the proceedings was a “significant win”, with partner Jason Betts calling it an “important day” in Australia’s class actions history.
“The Court’s decision represents the first dismissal of a shareholder class action after a full trial, and we are proud to have represented Worley,” he said.
Fellow HSF partner Christine Tran added at the time: “We are pleased that the Court dismissed the applicant’s allegations and favourably received Worley’s evidence, particularly the evidence of its senior leaders.”