The poor traffic flows had a disastrous impact on RiverCity's finances, leading to RiverCity being placed in administration on 25 February 2011 less than a year after the Clem7 tunnel opened with investors' securities rendered worthless. Maurice Blackburn represents over 650 investors and seeks to recover collective losses of more than $150 million. Litigation funder Bentham IMF Limited is supporting the class action.
The case against AECOM Australia and RiverCity
The class action alleges that AECOM made its forecasts without reasonable grounds, and left critical information out of its report in RiverCity's Product Disclosure Statement (PDS). RiverCity investors acquired their units in RiverCity in reliance on the information in the PDS including AECOM's forecasts and were misled by AECOM into thinking that the proposed tunnel project would have a large patronage and accordingly be a good investment.
AECOM failed to reveal earlier traffic forecasts it had developed for Brisbane City Council which produced traffic volumes substantially below those in the PDS. AECOM did the traffic modelling for Brisbane City Council's 2005 Environmental Impact Study and forecast traffic volumes of 57,000 vehicles per day in 2011, well below the forecast of approximately 100,000 presented in the PDS.
The class action alleges that the RiverCity companies (RiverCity Motorway Management Limited and RiverCity Motorway Services Pty Limited) issued, prepared or were involved in preparing a defective PDS, and that group members in the class action suffered loss or damage because they were given a defective PDS.
AECOM has cross-claimed against RCM Management and RCM Services, a former director of RiverCity, as well as seven other companies.
Group members of the class action
Group members are defined as those who acquired an interest in stapled units in the RiverCity Motorway Investment Trust and the RiverCity Motorway Holding Trust on the Allotment Date on or about 4 August 2006; suffered loss or damage because of the conduct of AECOM and others; and had entered into a litigation funding agreement with Bentham IMF by 27 July 2012. Therefore if you are not already a group member you cannot join this class action. You can find out more about the liquidation of the RiverCity Motorway group on PPB Advisory’s website here.
Progress of the case
The RiverCity class action, along with two related proceedings which also concern AECOM’s forecasts for the Clem7 Tunnel, have been set down for a hearing beginning on 7 September 2015.
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