Disputes & Investigations

Increase text sizeDecrease text sizeDefault text size

Client Update: Centro settlement approved

26 June 2012

In brief: The Federal Court has approved the settlement of the Centro class actions, the largest settlement in Australian securities class actions history. Partner Ross Drinnan (view CV) and Senior Associate Jenny Campbell report.

The Centro class actions – recap

Briefly, the Centro case involved six class actions by three groups of class members, and related to accusations of misleading and deceptive conduct based on the failure to provide continuous disclosure to the market of maturing debt obligations. For a recap of the structure of, and issues in, the Centro class actions, please see our Client Update: Securities class actions – where are we up to?


The settlement involves the payment of $200 million (including costs). The Centro companies will contribute $133 million of the settlement amount (of which $38 million will come from insurers). The balance ($67 million) will be contributed by PricewaterhouseCoopers.

The settlement amount will be distributed as follows:

  • $150 million is to be paid to a group of approximately 1,000 Centro investors represented by Maurice Blackburn and funded by IMF (Australia) Limited – of that amount, $21.1 million will go to the lawyers and approximately $60 million will go to the funder; and
  • $50 million is to be paid to a group of approximately 5,000 Centro investors represented by Slater & Gordon and funded by Comprehensive Legal Funding LLC – of that amount, $10.06 million will go to the lawyers and, according to media reports, $9 million will go to the funder.

The settlement is the largest in the history of Australian securities class actions. By way of comparison, other major settlement amounts have been (including costs): $144.5 million in Aristocrat, $112 million in GIO, $110 million in Multiplex and $39.5 million in AWB.

The settlement is also notable for the amounts to be recovered by the lawyers and litigation funders. Between them, they will receive just over 50 per cent of the total settlement amount.

Court approval

In order for the settlement to be approved, it was necessary for the Federal Court to be satisfied that it was fair and reasonable, and in the interests of the group members as a whole.

In reaching that conclusion1, Justice Middleton said that the matters he considered included:

  • the complexity and duration of the litigation;
  • the reaction to the proposed compromise by group members – in that regard, it has been reported that no group members objected to the settlement;
  • the stage of the proceedings;
  • the risks involved in the litigation; and
  • the reasonableness of the compromise amount.

His Honour also noted that he took into account that 'establishing liability was necessarily dependent on some difficult and controversial points of law' and that appeals would be inevitable. He went on to say that such a process 'brings greater uncertainty to recovery, and would involve substantial delay even if liability were to be established'.

Although his Honour did not identify the 'difficult and controversial points of law' to which he referred, we expect they included:

  • the appropriate test for establishing causation in securities class actions;
  • the appropriate method for measuring investor loss in securities class actions; and
  • regarding the claims against PricewaterhouseCoopers, the extent to which the knowledge of members of the audit team can be attributed to the statutory auditor.

Please see our Client Update: Centro class actions settled, for a discussion of the 'in principle' settlement in May.

What now?

The approval of the settlement of the Centro class actions is the final public step in these long running claims. It is, as well, the final chapter in the cluster of high-profile securities class actions commenced in the mid-2000s, which also included the class actions against Aristocrat, Multiplex, AWB and Telstra (all of which have been settled).

Attention will now turn to some of the securities class actions commenced in more recent years that are currently working their way through the pre-trial processes, including, for example, the claims against National Australia Bank, Gunns, Nufarm and Sigma Pharmaceutical.

  1. Kirby v Centro Properties Limited & Ors (19 June 2012).

For further information, please contact:

Share or Save for later

What are these?


To save this publication on your smartphone or
tablet for off-line reading (eg on a plane flight),
we recommend Pocket.



You can leave a comment on this publication below. Please note, we are not able to provide specific legal advice in this forum. If you would like advice relating to this topic, contact one of the authors directly. Please do not include links to websites or your comment may not be published.

Comment Box is loading comments...