A class action filed by irate shareholders against engineering services firm Worley has been dismissed for a second time with the company set to recoup its extensive legal bill for the long-running dispute.
A Federal Court judge found investors only succeeded in a "Pyrrhic victory" as they failed to gain any compensation despite proving the company misled the market through financial statements made in 2013.
In the Shine Lawyers-led case, Worley was accused of hyping up its earnings for the 2014 financial year including during an October 2013 strategy presentation for investors.
Two months earlier, it announced an 2013 financial year profit of $322 million which it expected to improve.
In November that year, it downgraded its FY2014 net profit after tax forecast $260 million to $300 million.
The class action, filed in the Federal Court in October 2015, accused the firm of breaching its continuous disclosure obligations because of the hyped-up financial figures.
These statements resulted in a 26 per cent fall in the company's share price, reducing its market capitalisation by $1.375 billion, the class action alleged.
The proceeding was dismissed by Justice Jacqueline Gleeson, now a High Court judge, in a complete win for Worley in October 2020.
However, this decision was overturned on appeal in the Full Court in March 2022 and an application for special leave filed by Worley in the High Court was dismissed in October that year.
A new hearing was scheduled before Justice Ian Jackman in late 2023.
The judge found Worley engaged in misleading behaviour and breached its continuous disclosure obligations.
However, he also found the shareholders, headed by lead applicant and investor Larry Crowley, did not show that these contraventions actually caused them any loss.
In failing to obtain any sort of damages, on Thursday Mr Crowley was ordered to pay Worley's legal bill for the eight-and-a-half year case.
"The applicant’s limited success has not produced any substantial benefit by way of compensation to the applicant or group members," Justice Jackson wrote.
"A Pyrrhic victory such as that would not be a sound basis on which to make an award of costs in the applicant’s favour."
On its website, Shine has promised investors they would not be out of pocket for any costs if the class action was unsuccessful.
Shine and Worley have been approached for comment.
