IMF and Maurice Blackburn launch $150m class action on behalf of unitholders in Rivercity Motorway Group
31 May 2012
Litigation funder Bentham IMF (formerly IMF Australia) and Maurice Blackburn Lawyers today launched a claim for damages on behalf of hundreds of investors in the ill-fated Clem Jones (Clem 7) tunnel, built by RiverCity Motorway Group.
The class action lodged in the Federal Court in Sydney today is against engineering consultants AECOM Australia Pty Ltd.
The Product Disclosure Statement (PDS) that was relied on by investors cited AECOM's forecasts for average daily traffic through the tunnel of approximately 100,000 vehicles 18 months after the opening of the tunnel. After the tunnel opened and the toll levied in April 2010, traffic flow averaged just 24,000 vehicles per day over the first six months. It remains around that level today.
Bentham IMF is funding the action on behalf of approximately 700 investors who purchased stapled securities in the Rivercity Group Trusts prior to their listing in 2006.
Maurice Blackburn Lawyers is acting for lead applicant Stephen Hopkins and his wife as well as the 700 other investors, who collectively have lost an estimated $150 million.
Mr Hopkins, on behalf of all the investors, claims that if AECOM had not misled them with its excessive forecasts and had exercised reasonable care and diligence when making its traffic flow projections, the tunnel project would have been seen as unviable from the outset and investors would not have lost the millions that they have.
Bentham IMF's Queensland State Manager, Andrew Charles, said the claim centered not only on the dramatic gap between the forecasts provided by AECOM and volumes actually achieved but also on material matters of which investors were not made aware. Mr Charles said "it would have been material to investors to know that Aecom had provided forecasts of half the number forecast in the PDS when it provided forecasts to the Brisbane City Council less than 18 months earlier."
"Armed with this knowledge, the class members would not have invested in RiverCity. It is appropriate they have the opportunity to seek financial redress," he said.
Maurice Blackburn Senior Associate Richard Ryan, said: "If AECOM had done a reasonable job it would have been quite clear that the tunnel project would fail within months of opening. AECOM claimed to have applied conservative and reasonable assumptions when preparing its traffic forecasts. Our clients' claim alleges that what AECOM did was apply unreasonable assumptions that had the effect of making the tunnel project look viable when it was a dud. AECOM should be held accountable for its misleading conduct and negligence."
Stephen Hopkins said: "When companies encourage ordinary Australians to invest a portion of their retirement savings they should take great care not to mislead them. If they mislead they should be held accountable. I read the PDS for the RiverCity tunnel project carefully and I was impressed with the traffic projections and invested accordingly. I've now lost a lot of money that my wife and I would have otherwise have had for our retirement.
RiverCity Motorway ranks among Queensland's largest initial public offerings, with its float in 2006 raising $690m.