Australia: Australia´s Largest Shareholder Class Action Payout - Aristocrat Shareholder Class Action Settles

Last Updated: 22 September 2008
Article by Michael Legg

Key Point

  • The payout makes the future class actions more likely, so corporations should get ready.

The settlement hearing in Dorajay Pty Ltd v Aristocrat Leisure Limited, also known as the Aristocrat class action, was held on 28 August. The proposed settlement was approved, resulting in the shareholders receiving $136 million, the end of five years of litigation and the largest shareholder class action payout in Australian history.


The Aristocrat Class Action was commenced in November 2003 and the hearing of stage 1 (liability and the damages claim of the lead plaintiff) by Justice Stone of the Federal Court of Australia concluded on 30 October 2007.

The class action was on behalf of all shareholders who acquired an interest in shares in Aristocrat Leisure Ltd ("Aristocrat") between 19 February 2002 and 27 May 2003 and who suffered loss as a result of Aristocrat allegedly overstating its profits and failing to disclose that it would not meet earnings forecasts. The Aristocrat class action had originally been commenced only on behalf of shareholders who had agreed to instruct Maurice Blackburn but the class was subsequently "opened" to all shareholders.

The class action alleges contravention of the prohibitions on misleading and deceptive conduct in section 1041H of the Corporations Act 2001 (Cth), section 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) and section 52 of the Trade Practices Act 1974 (Cth), and that Aristocrat failed to disclose material information to the market in a timely way in contravention of the continuous disclosure requirements in section 674 of the Corporations Act 2001 (Cth).


The details of the Aristocrat class action settlement that have been made public are:

  • the group was comprised of 556 shareholders represented by Maurice Blackburn and with funding from an IMF (Australia) Ltd subsidiary (the Funded Group) and some 2300 shareholders who only came forward to participate in the settlement (the Unfunded Group).
  • the Funded Group, which was likely to contain a high number of institutional investors, would share in a fund of $109 million.
  • the Unfunded Group would share in a fund of $27 million.
  • the recovery rate for group members in the Funded Group and Unfunded Group is designed to be the same.
  • if group members claims do not result in the funds being completely utilised then any remaining monies in (a) the Unfunded Group fund are returned to Aristocrat; and (b) the Funded Group fund are shared by the Funded Group.
  • the lawyers who ran the proceedings would receive $8.5 million for their fees and disbursements.
  • IMF expects to receive about $37 million from the settlement proceeds.

During the course of the hearing Maurice Blackburn, had estimated a total damages bill as high as $396 million, IMF had estimated a maximum claim of $240 million while Aristocrat had estimated the damages as being between $10 million and $20 million. The reason for that large discrepancy which one would expect to have been taken into account in agreeing the final settlement was uncertainty over causation and the calculation of damages. If the applicant's preferred approach to causation and damages had been accepted by the Court then a larger judgment would have followed.

Aristocrat announced to the market in May that it would fund $40 million of the settlement with the remainder presumably being covered by insurance.

Prior to Aristocrat the largest shareholder class action payout in Australia was in King v GIO where the settlement was $97 million for a final group of 23,099 claimants and the plaintiffs' lawyers received fees of about $17 million (including a 25% uplift of their hourly fee and disbursements).


The Aristocrat class action settlement will:

  • fortify plaintiffs' lawyers and litigation funders who can point to the Aristocrat class action as proof that they can deliver substantial payouts to shareholders. After the Telstra class action settlement where a $300m claim was settled for $5m the credibility of some class action promoters had taken a battering.
  • encourage shareholders, particularly institutional shareholders, to be part of shareholder class actions as a payout is likely.
  • raises for consideration whether the class action exerts undue pressure on a respondent to settle because they face a large but uncertain liability that may linger for a number of years.
  • reinforce the need for corporations to revisit their compliance plans for continuous disclosure in an effort to prevent a contravention.
  • cause corporations to revisit their insurance arrangements to ensure they have adequate coverage.
  • raises the issue of the respective roles of the Australian Securities and Investments Commission and private litigation in relation to enforcement of continuous disclosure requirements and prohibitions on misleading and deceptive conduct.

The main legal issue in the proceedings was causation and whether indirect or third party reliance (also referred to as fraud on the market) would be sufficient to satisfy the statutory causes of action. The settlement means that this important legal issue will await determination in a later class action. It should also be noted that a statutory version of fraud on the market was raised in CAMAC's September 2007 discussion paper. CAMAC has not issued any recommendations to date.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.