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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

Maurice Blackburn has filed a class action against Colonial First State Investments Limited, the trustee of the Colonial First State FirstChoice Superannuation Trust, and its former executive director, Linda Elkins, in relation to alleged contraventions of its statutory obligations under superannuation law in the period of 2013 to 2017. 

We allege that Colonial and its former executive director, Linda Elkins, failed to meet their statutory obligations in the management of superannuation assets held on trust on behalf of beneficiaries, and in the beneficiaries’ best interest.

This includes 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 alleges that Colonial failed to transition $3.2 billion of accrued default amounts (ADAs) 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. This resulted in those members paying higher fees and receiving a lower investment return for an extended period of time.

Colonial First State Investments Limited (Colonial) is one of two registrable superannuation entity licensees within the Commonwealth Bank of Australia Group. It is the trustee of two public offer superannuation funds: the Colonial First Choice Superannuation Trust (FirstChoice Fund), and Commonwealth Essential Super.  The product issued by Commonwealth Essential Super is known as Essential Super. This case is only concerned with the FirstChoice Fund and is not on behalf of Essential Super members.

Proposed Settlement

On 17 October 2019, a class action was commenced by Lesley Coatman (the Applicant) in the Federal Court of Australia against respondents including Colonial First State Investments Limited (Colonial), the trustee of the Colonial First State FirstChoice Superannuation Trust, and former executive director, Linda Elkins (the Respondents).

This action is based on allegations that the Respondents breached their statutory and general law obligations owed to beneficiaries who were members of the FirstChoice Employer Super (FCES) division of the FirstChoice Fund, in relation to the transfer of beneficiaries’ accrued default amounts (ADAs) to the simple low cost MySuper product (which was called FirstChoice Lifestages) in November 2016 and May 2017, by failing to cause those transfers to be made as soon as reasonably practicable. The Respondents deny the Applicant’s claims.

The Federal Court has ordered that the following information be published for the information of group members regarding a proposed settlement which has been reached between the parties in the Colonial MySuper Class Action. If you are a group member in the Colonial MySuper Class Action your legal rights will be affected by the proposed settlement. Please read this information carefully. Any questions you have concerning the matters set out below should not be directed to the Court. If there is anything that you do not understand, you should contact Maurice Blackburn, whose contact details are set out below, or alternatively seek your own legal advice.


This page provides important information about:

  • The proposed settlement in the Colonial MySuper Class Action (see Section 7);
  • What group members need to do if they wish to participate in the proposed settlement (see Section 11 – Option A);
  • What group members should do should they wish to object to the proposed settlement (see Section 11 – Option B); and
  • Information regarding how legal costs will be dealt with (see Section 10). 

A class action is a type of legal action where a claim is brought by one person on behalf of a group of persons (referred to as group members).

The Applicant in a class action does not need to seek the consent of group members to commence a class action on their behalf, or to identify a specific group member or members. However, group members can cease to be group members by ‘opting out’ of the class action before the Court-imposed deadline. An explanation of how group members could opt out was contained in a previous notice to group members. The deadline for opting out of the Colonial MySuper Class Action has now passed. 

The Colonial MySuper Class Action is based on allegations that the Respondents breached their statutory and general law obligations owed to beneficiaries who were members of the FCES division of the FirstChoice Fund, in relation to the transfer of beneficiaries’ ADAs to FirstChoice Lifestage in November 2016 and May 2017, by failing to cause those transfers to be made as soon as reasonably practicable. The Respondents have denied all claims brought by the Applicant.

The Applicant brings the claim under Part IVA of the Federal Court of Australia Act 1976 (Cth) and also in her capacity as a former beneficiary of the FirstChoice Fund. The class action alleges that the Respondents, in failing to cause the transfer of the ADAs to be made as soon as reasonably practicable, contravened the Superannuation Industry (Supervision) Act 1993 (Cth) and failed to discharge certain duties under the general law. On behalf of group members, the Applicant seeks compensation as a result of alleged delay in transferring the ADAs. The class action seeks relief for group members in the form of cash payments or payment into group members’ superannuation accounts.

The Respondents deny any wrongdoing or that the ADAs were not transferred as soon as reasonably practicable and deny all alleged breaches of their statutory and general law obligations.

Complete details of the Applicant’s claims (which are set out in the Second Further Amended Statement of Claim and Further Amended Originating Application) and the Respondents’ defences are available below under the section headed ‘Relevant Documents’.  

The “Stronger Super” reforms, including legislation providing for default superannuation products called 'MySuper', came into effect in 2012. The legislation provided that from 1 January 2014, default superannuation contributions were required by law to be allocated to a MySuper product (except where the member has given an investment direction). The purpose of this legislation was to provide simple and low-cost default superannuation products for Australian workers. 

An accrued default amount is the balance of a member’s account where an investment choice has not been exercised by the member, or if it is held in a default investment option of the fund.

A member may have had an accrued default amount if they did not tell or direct their super fund how they want their super invested in writing.

If you recently received a Notice of Proposed Settlement by email, text or mail, Colonial’s business records indicate that you are likely a group member in the Colonial MySuper Class Action.

The criteria to be a group member are set out at paragraph 2 of the Second Further Amended Statement of Claim, which can be accessed below under the section headed ‘Relevant Documents’.

You may be a group member if:

(a) you are or were a member of the Colonial First State FirstChoice Superannuation Trust; and you had an “accrued default amount” (ADA) that was transferred into the FirstChoice “Lifestages” MySuper product on or about 12 November 2016 or 24 May 2017 (FCES ADA Member); or

(b) you received a payment (inherited) from a deceased FCES ADA Member of an amount attributable to their ADA; or

(c)you received a transfer of superannuation interest under the Family Law Act 1975 (Cth) attributable to their ADA.

If you would like further information in relation to whether you may be a group member in the class action please contact Maurice Blackburn at: ColonialMySuper@mauriceblackburn.com.au or by calling 1800 517 371.

The trial of the Colonial MySuper Class Action was scheduled to commence on 4 April 2022. Shortly prior to that date, the parties agreed to a proposed settlement whereby Colonial will pay, without admission of liability or wrongdoing, a settlement sum of $56.3 million inclusive of legal costs and interest (the Settlement Sum) in full and final settlement of the claims of the Applicant and approximately 102,000 group members.Colonial will not use any assets of the FirstChoice Fund, including any operational risk financial reserve, to pay the Settlement Sum or the costs of its distribution to eligible group members.   

The proposed settlement does not come into effect unless it is approved by the Federal Court. If the proposed settlement is approved by the Court, there are likely to be the following deductions from the Settlement Sum before distribution of any funds to eligible group members:

Legal costs and disbursements: Maurice Blackburn will seek payment of the reasonable legal costs incurred in conducting the Colonial MySuper Class Action, including costs incurred in obtaining court approval of the proposed settlement and costs likely to be incurred by Maurice Blackburn in relation to the administration of the proposed settlement (see details regarding ‘How will the Settlement Sum be distributed’ below). Maurice Blackburn estimates these costs will total approximately $14.5 million.

However, the final amount that the Applicant seeks to have deducted from the Settlement Sum may vary from this estimate, because at the present time it is not possible to predict the exact amount of legal costs that will be incurred to the finalisation of the proceeding.

The Court has appointed an Independent Costs Referee to assess whether the legal costs are fair and reasonable. It will ultimately be a matter for the Court to determine the amount of legal costs which it considers is fair and reasonable, and which therefore may be deducted from the Settlement Sum.

Applicant’s reimbursement payment: The Applicant, Ms Lesley Coatman, will seek payment of up to $25,000 for the time, inconvenience and any expenses incurred by her in conducting the Colonial MySuper Class Action on behalf of, and for the mutual benefit of, group members. This amount will be sought to be deducted from the Settlement Sum and is subject to approval by the Court.

If the Court approves the proposed deductions there will be approximately $41.8 million available for distribution to group members (plus any interest accrued in relation to the Settlement Sum). As outlined above, the amount available for distribution to group members may vary from this estimate, and all amounts to be deducted from the Settlement Sum are subject to the Court’s approval. 

If you are a group member in the class action Marcel Eugene Krieger & Anor v Colonial First State Investments Limited (Federal Court proceeding number VID 1141/2019) (Krieger Class Action) against Colonial, it may be that recovery of an amount in the Colonial MySuper Class Action as a result of the proposed settlement, if approved by the Court, may impact on the amount of loss and damages recoverable in the Krieger Class Action to the extent that the same loss or damages are sought to be recovered. If you have any queries concerning the Krieger Class Action you should contact the lawyers conducting it, Slater & Gordon on ColonialFeesClassAction@slatergordon.com.au

The amount of the Settlement Sum which is ultimately available for distribution to group members will be distributed in accordance with a Settlement Distribution Scheme to be approved by the Court, which will include a proposed Apportionment Formula detailing how each group member’s individual entitlement to a share of the Settlement Sum will be calculated.

At the time that this information is published on Maurice Blackburn’s website, the parties are yet to finalise the Settlement Distribution Scheme, however, a copy of this document will be made available in the ‘Relevant Documents’ section below by no later than 6 May 2022.

By way of summary, the Settlement Distribution Scheme will provide for the following:

1. Colonial will be appointed as Settlement Distributor and will be responsible for ensuring that settlement payments are distributed to group members in accordance with the Settlement Distribution Scheme.

2. Settlement payments will be calculated pursuant to an agreed Apportionment Formula approved by the Court. The individual entitlement of each group member will be calculated in accordance with the Apportionment Formula by an independent expert consultant (Independent Expert Consultant).

3. The proposed Apportionment Formula will be published in the Settlement Distribution Scheme on Maurice Blackburn’s website on 6 May 2022, however, at this stage what can be confirmed is that individual settlement payments will vary depending on particular circumstances of each group members including:

(a) the group member’s superannuation balance at the time that the Applicant alleges the transfer to MySuper should have occurred (i.e. on a date between 1 July 2015 and 31 December 2015);

(b) the specific fees charged to each group member before and after the transfer to Colonial’s MySuper Product; and

(c) the particular investment option in which the group member’s superannuation balance was invested before and after their interest was transferred to Colonial’s MySuper Product.

4. It is possible that some group members will not receive a settlement payment because, on the basis of the proposed Apportionment Formula, the group member’s superannuation balance was not, in fact, reduced or was reduced by less than $20 as a result of the timing of the transfer of their superannuation to Colonial’s MySuper Product. More information about how the Apportionment Formula will work will be available in the Settlement Distribution Scheme. The Settlement Distribution Scheme (including the Apportionment Formula) will be made available under the heading “Relevant Documents” by no later than 6 May 2022.

5. Maurice Blackburn is to be appointed the Settlement Administrator. In this role Maurice Blackburn will receive reports from the Settlement Distributor regarding the distribution of the Settlement Sum, consult with the Settlement Distributor regarding communications to group members and together with the Settlement Distributor, seek to have the proceedings dismissed following the distribution of the Settlement Sum. Maurice Blackburn will also be able to approach the Court if needed in relation to the administration of the Settlement Scheme. 

6. Settlement payments will be made to eligible group members in one of the following ways:

(a) by adjustment of units in investment options in active accounts in the FirstChoice Fund (in other words, to increase the group member’s superannuation balance and entitlements in the FirstChoice Fund);

(b) by payment into existing accounts in other superannuation funds where a group member has rolled over or transferred their superannuation out of the FirstChoice Fund; 

(c) by payment in cash where a group member has cashed out their superannuation; or

(d) in relation to inactive accounts, Colonial intends to seek an order that it can make a trustee voluntary payment to the Australian Taxation Office (ATO) in accordance with the Superannuation (Unclaimed Money and Lost Members) Act 1999 (Cth) if Colonial reasonably believes paying the amount to the ATO would be in the best interest of the group member.

If you are unsure whether you have an active member account in the FirstChoice Fund or you have another query about your account, you should contact Colonial on 13 13 36. Please note that Maurice Blackburn cannot provide this information.

7. If Colonial makes a trustee voluntary payment to the ATO in respect of a group member, the ATO will pay the amount to the group member in accordance with the Superannuation (Unclaimed Money and Lost Members) Act 1999 (Cth). Further information in relation to trustee voluntary payments may be found on the ATO’s website.

8. The parties have agreed that individual settlement payments will be made to eligible group members within 12 months of the expiry of the appeal period applying to the settlement approval orders, unless exceptional circumstances apply.  In practical terms, this means that if the settlement is approved at the Settlement Approval Hearing on 20 June 2022, settlement payments should be made within 14 months of that date, unless exceptional circumstances apply.   

How much will each Group Member receive? 

At the present time it is not possible to provide an estimate of how much each individual group member may receive following a distribution of the settlement sum. This is because as noted above, the size of each settlement payment will depend, in part, on each group member’s individual superannuation balance at the time that the Applicant alleges the transfer to MySuper should have occurred (i.e. on a date between 1 July 2015 and 31 December 2015). Settlement payments will also depend on the specific fees paid by individual members and the particular investment options in which group member’s superannuation was invested before and after being transferred to Colonial’s MySuper product. Finally, the amount of the Settlement Sum which is available for distribution to group members will also depend on the legal costs and other deductions approved by the Federal Court before distribution to group members can occur (see section 8 below for further information in relation to legal costs).

Why can’t all settlement payments be made in cash?

In Australia, there are specific rules in relation to when a person is able to access their superannuation. Usually, a person is not able to access their superannuation until such time as they stop working or retire. 

If the settlement is approved and you are currently able to access your superannuation (for example, because you have retired) you may be able to be paid a settlement payment in cash from your superannuation account.

If you are not currently eligible to access your superannuation (for example, because you have not yet reached retirement age) any settlement payment will most likely be made into either an active superannuation account in the FirstChoice Fund or into your current superannuation account if you have transferred or rolled over your superannuation to another fund. 

The Applicant has retained Maurice Blackburn to act as her solicitor but it is not necessary for you or other group members to retain Maurice Blackburn to participate as a group member.

The costs of the Colonial MySuper Class Action have been funded by Maurice Blackburn.

If the proposed settlement of the Colonial MySuper Class Action is approved by the Federal Court, it is likely that the Court will order that the Applicant’s fair and reasonable legal costs of conducting the class action be deducted from the aggregate Settlement Sum before calculating each group member’s individual entitlement. The Applicant estimates these costs will total approximately $14.5 million. 

Thus, if you are eligible to participate as a group member in the distribution of the Settlement Sum, your share of the settlement (if any) will be calculated and paid to you after deduction of legal costs. Under no circumstances will you be liable to pay any ‘out-of-pocket’ costs to Maurice Blackburn. 

Option A - Do nothing:

If you are a group member in the Colonial MySuper Class Action (and have not previously opted out of the proceeding) there is nothing you need to do in order to receive a settlement payment. If the proposed settlement is approved, an Independent Expert Consultant will calculate each group member’s individual settlement payment pursuant to a Settlement Distribution Scheme and Apportionment Formula. Further details regarding the Settlement Distribution Scheme and Apportionment Formula may be found above at section 7 above under the heading “The Proposed Settlement”.

Option B - Object to the Proposed Settlement:

If you are a group member you have the right to make submissions as to why the Court should not approve the proposed settlement (or any particular aspect of it). In order to lodge an objection, you must return the Notice of Objection Form available below under the heading "Relevant documents" and at https://mblackburn.com.au/objectionnotice by 4:00pm AEST on 3 June 2022 to:

Any group member who so objects may also (but is not obliged to) appear before the Court at the hearing of the application to approve the proposed settlement at 10:15am on 20 June 2022 at the Federal Court in Melbourne.

Any objections received by the Court will be considered by the Court, along with all of the other evidence and submissions filed by the parties, in determining whether or not to approve the proposed settlement.

If you have any questions about the Colonial MySuper Class Action or the proposed settlement, further information is available from Maurice Blackburn, the lawyers conducting the class action, at ColonialMySuper@mauriceblackburn.com.au or by calling Maurice Blackburn on 1800 517 371. Alternatively you may seek your own legal advice.

Case updates

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.

Contact the team

Call: 1800 517 371

Email: ColonialMySuper@mauriceblackburn.com.au

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