Global law firm Herbert Smith Freehills – which represented ASX-listed professional services provider Worley – said that the decision is the first Australian shareholder class action won by a defendant, and only the second shareholder class action in the jurisdiction to reach judgement.

Larry Crowley, a self-funded retiree, had brought proceedings on his own behalf as well as others who purchased Worley shares in the period between 14 August 2013 and 20 November 2013, and who allegedly suffered loss by reason of Worley’s conduct pertaining to its earnings guidance and subsequent performance.

Mr Crowley contended, The Honourable Justice Jacqueline Gleeson noted, that “the August 2013 earnings guidance statement forecast an earnings result that was unreasonably high, having regard to the information available at the time. Alternatively, Mr Crowley argued, even if the August 2013 earnings guidance statement could be justified when first made, by 21 September 2013, Worley was on notice that the year ending 30 June 2014 was tracking far worse than expected and, accordingly, on that day (or in the days following) it should have issued revised guidance to the effect of the November 2013 revised earnings guidance”.

Gleeson J found that Worley had reasonable grounds in making and maintaining its views about its financial year 2014 earnings guidance throughout the claim period, including by reference to its FY14 budget, the firm said, and noted that her honour also found that the process by which the FY14 budget was developed was reasonable (contrary to the applicant’s contention).

The HSF team was led by partners Jason Betts and Christine Tran.

Mr Betts said that the decision marked an “important day” in Australia’s class actions history.

“The Court’s decision represents the first dismissal of a shareholder class action after a full trial, and we are proud to have represented Worley,” he said.

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“This class action was first filed five years ago in October 2015, and the trial itself was heard over five weeks in September and December 2019. It has been one of the longest running shareholder class actions in Australia.

“Christine and I are extremely proud of the work of Herbert Smith Freehills’ market leading class action team in Sydney, and are indebted to the lawyers, paralegals and support staff who assisted on this matter.”

“We are pleased that the Court dismissed the applicant’s allegations and favourably received Worley’s evidence, particularly the evidence of its senior leaders,” Ms Tran added.

“Worley is understandably pleased with the outcome after such a prolonged process, and we congratulate them on this significant win.”