Key lessons for listed company boards from three important court decisions on disclosure

1        Brambles

Brambles Limited was the subject of a security-holder class action relating to guidance given on 18 August 2016 concerning financial performance in the 2017 financial year. Judgment was delivered on 10 April 2026.

Brambles gave guidance with respect to 2 metrics: underlying profit and sales revenue. The guidance was withdrawn on 23 January 2017 on the basis that it could not be achieved, triggering a drop in the Brambles share price of more than 15%.

The plaintiffs alleged that the FY2017 guidance did not have reasonable grounds at the time it was given, nor when reiterated at various times until it was withdrawn, and accordingly that it was misleading in breach of the Corporations Act, the ASIC Act and the Australian Consumer Law. The plaintiffs also alleged that Brambles had breached its continuous disclosure obligations.

1.1        Variance from guidance

The court found that Brambles had reasonable grounds for giving the FY17 guidance in August 2016, but that the underlying profit guidance had ceased to have reasonable grounds when reiterated at the November 2016 AGM. The court assessed that Brambles’ underlying profit for FY17 was likely to be under the bottom of the guidance range by about 3.1% (or 2.5% with contingency).

As at 21 December 2016, the court found neither underlying profit guidance nor sale guidance had reasonable grounds. Expected FY17 sales revenue was below the midpoint of guidance by about 1% and only 0.24% below the lower end of guidance. Expected FY17 underlying profit was below guidance but by materially less than 5% and closer to guidance than at the November AGM.  

ASX Guidance Note 8 indicates that a variation to guidance of less than 5% would not ordinarily be required to be disclosed. The court in other cases⁴ has indicated that a reasonable person would not ordinarily expect a listed company to make a disclosure in these circumstances. Yet in Brambles, the court found that the relatively small “miss” on profit guidance as at November 2016 was material in the circumstances, and a failure to disclose was misleading and a breach of continuous disclosure obligations. Whilst the court acknowledged the established metrics in GN8, it emphasised that these are only recommendations for how to assess materiality and that a disclosing entity needs to turn its mind to the question of whether a deviation from guidance could reasonably be material even if it is below the 5% threshold.

In the specific circumstances of this case, evidenced in detailed internal communications, the court found that Brambles should have anticipated that the market would consider even a narrow miss of the guidance as material for the share price.

Accordingly, the court found that the reiteration of guidance and the failure to amend or withdraw guidance from the relevant dates was misleading and in breach of continuous disclosure obligations.

1.2        Officers

Determining who is an “officer” in these cases is important because the company is deemed to be aware of information that officers know or should have known. An “officer” is (relevantly) defined to include a person who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation”. The court applied the definition of officer broadly in this case. Contrary to Brambles submissions, its “officers” were found to include a number of individuals who were not KMP or ELT members.

1.3        Disclaimers

Brambles argued that guidance was qualified or neutralised by disclaimers concerning forward-looking statements. The court did not accept those arguments. In particular, the court found that the disclaimers concerning forward-looking statements were generic, located at the back of documents far removed from the relevant representations, and presented in smaller fonts.

1.4       Lessons for boards from the Brambles decision

The decision on variance to guidance departs from what many listed entities and advisers would regard as accepted practice. The decision may cause boards to be more conservative about updating guidance, or from giving guidance at all.

It is important to keep in mind however, that the circumstances of this case were very specific and that the court determined that there was evidence of internal communications that in the court’s view indicated that Brambles executives were concerned that even a narrow miss of the guidance may be received adversely by the market.

Boards of disclosing entities grappling with continuous disclosure decisions should consider relevant internal communications and whether in cases of a “near miss” on guidance, reasonable investors would expect the “miss” to be material to the share price.

Boards should also review who they consider to be officers of the listed entity, with consequences for the application of their continuous disclosure policies as to whose knowledge is deemed to be the entity’s.  

Finally, disclaimers should preferably appear at the front of documents in which forward-looking statements are made, presented with headings and in reasonably-sized fonts, and tailored to the relevant subject matter of the forward-looking statements.

The Brambles case is particularly notable as it is the first Australian shareholder class action to succeed on both liability and loss at trial. It also affirmed the ‘market-based causation’ theory of loss.

The case may be subject to appeal. 

2        Nuix

Nuix floated in December 2020. The IPO prospectus contained forecasts for the current financial year relating to revenue and annualised contract value (ACV). The forecasts were affirmed at the half year results announcement on 26 February 2021, notwithstanding poor half-year results that triggered a 32% fall in the share price, and again on 8 March. Guidance was revised downwards on 21 April 2021.

ASIC sued Nuix and its entire board in a “stepping stones” case, alleging that Nuix had breached continuous disclosure and misleading conduct laws by failing to update revenue and annualised contract value forecasts in the period from 18 January to 21 April 2021, and that the directors had breached their duty of care and diligence by failing to ensure that Nuix complied with its obligations.

The court dismissed all the allegations made by ASIC against Nuix, and therefore the case against the directors also failed.

The main grounds for the decision were:

• Nuix made no representations about performance at the half year: you can’t apply a “straight line” extrapolation of annual guidance to imply a representation about the position at the half.
• There was no obligation to disclose ACV at the half, because ACV was not an item required to be included in the half-year accounts.
• ASIC failed to prove that Nuix did not have reasonable grounds for its forecasts on 26 February and 8 March, nor at any time prior to 21 April 2021.
• A reasonable investor will be familiar with ASX listing rules and guidance about disclosure and would not expect a variance in guidance of less than 5% to be disclosed, absent particular circumstances affecting investor expectations.

2.1        Lessons for boards from the Nuix decision

There are several lessons for boards from this decision, consistent with the outcome in other recent cases on forward looking statements:

• Regularly assess and require management to document the grounds for published guidance against expected performance for the year and be comfortable that there are reasonable grounds each time guidance is affirmed.
• Reasonable grounds for annual guidance can exist even if performance lags during the year.
• Manage information about progress against guidance – assessments should only be made by senior management.

ASIC is appealing the decision concerning breaches by the company but is not appealing the decision concerning the directors.

3        Worley causation decision

The Full Federal Court delivered a judgment on 28 May 2026 concerning issues of causation and loss in the long-running Worley security holder class action, relating to FY14 profit guidance of $352 million given in August 2013 and revised downwards to a range of $260 million to $300 million in November 2013. The Worley share price fell materially after guidance was revised.

3.1        A brief history

The class action plaintiffs failed at the first trial, decided in 2020, then won an appeal to the Full Federal Court in 2022.

The matter was remitted to a single Federal Court judge, who decided that Worley had engaged in misleading and deceptive conduct because it did not have reasonable grounds to give the profit guidance in the first place, nor at any time until the guidance was revised. The judge also found that Worley had breached its continuous disclosure obligations.

However, the judge found that the class action plaintiffs had failed to establish that Worley’s conduct caused the plaintiffs loss or damage.

Worley appealed the breach findings and the plaintiffs appealed the causation findings. The Full Federal Court (the Appeal Court) decided that Worley’s appeal failed, but the plaintiffs’ appeal succeeded.

3.2        Causation and loss

The question on causation and loss considered by the Appeal Court in the latest proceedings was:  

"did the contraventions cause the market price to be substantially greater than themarket price that would have prevailed but for the contraventions and if so by how much?" ⁵

The remitter judge had answered that question “No”, having found, based on the evidence and a counterfactual realistic level of profit guidance at $317m, that whether Worley’s conduct caused a greater market price was no more than a real possibility and in any event there was no basis to quantify loss. The Appeal Court overturned those findings.

The causation and loss case involved a number of fundamental issues that have been argued in security holder class actions for some time. The Appeal Court judgment provides helpful guidance for boards on those issues.

The first issue was whether it is legitimate to apply the concept of market-based causation and if so, how to assess it.

The remitter judge accepted that market-based causation was appropriate to be applied, adopting the reasoning of Beach J in the Myer class action case. The Appeal Court agreed, and dismissed Worley’s contention that market-based causation was not a valid means of determining causation in a securities class action.

The Appeal Court also concluded that Worley’s actions probably caused the plaintiff to suffer some loss or damage (greater than a mere possibility), explicitly basing that conclusion on the impact of Worley’s contravention rather than a counterfactual. The Appeal Court held that a counterfactual was only relevant to quantification of loss once the probability of some loss caused by the contravention had been established.⁶

The second issue, having determined that Worley’s actions had caused loss, was the method for calculating loss.

The Appeal Court made a calculation based on a counterfactual as to guidance that would have been reasonably based if first given in August 2013, which the Appeal Court determined was $329.5 million (against original guidance of $352 million).  

The calculation was based on a linear analysis agreed by the respective economic experts, assuming economic equivalence in a qualitative sense between the hypothetical guidance in August 2013 and the market impact of the actual revised guidance given in November 2013, using a constant percentage method.

3.3        Lessons for boards from the Worley causation decision

This is a case in which the court found that the company did not have a reasonable basis for guidance when given initially, as well as a failure to update guidance.

Boards should ensure that there are reasonable grounds for profit guidance when it is given, and in that regard, it would be prudent to base guidance on a P50 budget, not a more aspirational budget.