Thousands of shareholders who took on listed property trust GPT Management Holdings Limited and GPT RE Limited (GPT) in a class action will share in $75 million after a conditional settlement was reached today.
Slater and Gordon negotiated the settlement on behalf of more than 2300 class action group members in a deal that followed a four-week trial in the Federal Court of Australia.
Class action lawyer Ben Phi said the settlement was great news for participating shareholders who were awaiting judgment from Federal Court Justice Michelle Gordon following the trial’s conclusion last month.
“This is an excellent result for group members and follows complex and hard-fought litigation,” Mr Phi said.
“The settlement provides a strong return on the losses claimed, and reflects the strength of the evidence presented at trial.”
Slater and Gordon filed proceedings in the Federal Court in December 2011 on behalf of a group of investors who acquired stapled securities in GPT between February 27, 2008, and July 6, 2008, alleging the company had engaged in misleading and deceptive conduct and breached its continuous disclosure obligations.
Mr Phi said the firm would commence contacting those who had registered for the class action in coming days to provide them with details of the proposed settlement and to explain the next steps.
The case was supported by a large group of current and former shareholders, ranging from small retail investors to prominent institutional investors (including banks and fund managers).
Comprehensive Legal Funding (CLF) funded the class action, paying the applicant’s legal costs and providing security against adverse costs. CLF is a US-based litigation funder with offices in Melbourne. Its successful track record includes class actions against Centro, Nufarm, Opes Prime, Sigma Pharmaceuticals and now GPT.
GPT denies liability under the terms of the settlement.
The settlement will be put to the Federal Court for approval in coming weeks.
Slater and Gordon commenced proceedings against GPT in the Federal Court of Australia in December 2011. The claim was brought on behalf of those that purchased shares in GPT between 27 February 2008 and 6 July 2008.
The class action followed a GPT announcement on 7 July, 2008, in which the company downgraded its forecast earnings and distributions for the 2008 financial year by almost 30%. In response, GPT’s share price fell dramatically over the following days.
It was alleged that when GPT provided its distribution guidance on 27 February 2008 it was aware that it faced material and substantial risks that it failed to disclose. Compared to previous years, a much greater proportion of GPT’s forecast income was to be derived from large asset sales. These sales would need to be completed in the difficult market conditions prevailing at that time.
It was further alleged that these risks substantially materialised over the subsequent months. On this basis, the applicant alleged that GPT engaged in misleading conduct when, at its AGM on 1 May 2008, it confirmed its guidance and made unqualified representations concerning its forecast underlying earnings.
On 6 March 2013, the class action went to trial before Her Honour Justice Gordon. In the four weeks that followed, lay evidence was heard from investors, current and former GPT executives, credit rating agencies, and a significant number of independent experts. The trial concluded on 9 April 2013, with her Honour reserving her decision.
The conditional settlement was achieved following further negotiations having regard to the strength of the claims made at trial.