The parties have agreed on a proposed settlement of $56.3 million inclusive of legal costs. The Federal Court will consider this settlement on 20 June 2022.
About this class action
In October 2019, Maurice Blackburn filed a class action against Colonial First State Investments Limited (Colonial), the former trustee of the Colonial First State FirstChoice Superannuation Trust (FirstChoice Fund), and its former executive director, Linda Elkins.
It was alleged that Colonial and Ms Elkins failed to meet their statutory obligations in the management of superannuation assets held on trust on behalf of beneficiaries and manage those assets in the beneficiaries’ best interests. This included allegedly failing to:
- exercise the degree of care, skill and diligence required of a prudent superannuation trustee;
- perform their duties and exercise their power in the best interest of beneficiaries; and
- give priority to the interests of beneficiaries where a conflict of interest arose.
The class action alleged that Colonial failed to transition $3.2 billion of accrued default amounts of members within the FirstChoice Fund’s Employer Super division in a way that was both timely and in the best interests of those members. It was further alleged that this resulted in those members paying higher fees and receiving a lower investment return for an extended period of time.
Proposed settlement and approval
On 24 March 2022, shortly prior to the commencement of a three-week trial, the parties reached an in-principle agreement to settle the proceeding (subject to Court approval). The proposed settlement was approved by the Federal Court on 20 June 2022.
The terms of the settlement provide for the payment of $56.3 million by Colonial in full and final settlement of the claims of the Applicant and Group Members, which includes payment of the Applicant’s legal costs of approximately $14.4 million (which were assessed by a court appointed costs referee) and a reimbursement payment to the Applicant, Ms Coatman, of $25,000 for her time and effort providing instructions on behalf of Group Members.
After deduction of the Applicant’s legal costs and her reimbursement payment, the remainder of the settlement money will be distributed in accordance with a Settlement Distribution Scheme (Scheme) (available in the ‘Relevant Documents’ section below). Settlement payments will be distributed by Colonial in conjunction with Avanteos Investments Limited, the new trustee of the FirstChoice Fund. Maurice Blackburn will act as Settlement Administrator and will provide oversight of the settlement distribution.
Settlement payments will be calculated by an independent expert in accordance with the formula set out in the Scheme.
If you are entitled to a settlement payment, the payments are expected to be made by August 2023. Settlement payments will be distributed in one of the following ways:
- If you hold an active superannuation account with Colonial in the FirstChoice Fund, your settlement payment will be paid into that existing superannuation account;
- If you have rolled over your superannuation from the FirstChoice Fund to another superannuation account within the last twelve months, your settlement payment will be paid into your new rolled over account;
- If you have cashed out your superannuation from the FirstChoice Fund within the last twelve months, the compensation will be paid to you in cash; or
- If you do not have an active account with Colonial and have rolled over or cashed out your superannuation from the FirstChoice Fund more than twelve months ago, your settlement payment will be paid to the Australian Taxation Office (ATO). The ATO will then arrange for this money to be deposited into your current active superannuation account or otherwise paid to you.
If you are found to be eligible to receive a settlement payment you will receive notification from Colonial by ordinary mail or email. If you have an active Colonial account, notification of any settlement payment will be made in your periodic member statement. You may contact Colonial on 13 13 36 to update your contact details to ensure that any communications are sent to your current address.
Most Group Members who are eligible to receive compensation under the Scheme will pay tax on their settlement payment. This tax will be paid by the settlement distributors prior to the payment being distributed to Group Members. However, further tax may be payable on any settlement payments depending on your particular circumstances. We encourage you to speak with a financial adviser or tax accountant if you are concerned about tax payable on any settlement payment. Maurice Blackburn cannot offer tax advice in relation to settlement payments.
Our reputation for excellence in class actions is unparalleled, having recovered more than $3.7 billion for clients.
We are the only Australian class actions firm to deliver $100m+ settlements to clients in shareholder and listed securities actions, which we have done on eight occasions.
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