Only two shareholder class actions have reached judgment in Australia, both are wins for companies listed on the Australian Stock Exchange (ASX). Neither resulted in an award of damages to group members.
The first judgment, TPT Patrol Pty Ltd as trustee for Amies Superannuation Fund v Myer Holdings Limited[2019] FCA 1747 (Myer) was handed down by Justice Jonathan Beach on 24 October 2019. We discussed Myer in our October 2019 newsletter (click here to read), The second, Crowley v Worley Limited [2020] FCA 1522 (Worley) was handed down by Justice Jacqueline Gleeson (soon to be appointed to the High Court of Australia) on 22 October 2020.
Both judgments discuss the extent of the continuous disclosure obligations imposed on ASX listed companies by s 674 of the Corporations Act 2001 (Cth) and rule 3.1 of the ASX Listing Rules, and the losses which flow from breaches of those obligations.
In Myer the Court found that Myer had failed to correct earnings guidance which it knew it was unachievable. The Court considered a 5% departure from the published earnings guidance statement to be material. However, Justice Beach was not persuaded that Myer’s failure to correct the ASX and the market caused loss or damage to its shareholders. His Honour determined that ‘the hard-edged scepticism of market analysts and market markers…had already deflated [Myer’s then CEO’s] inflated views’. In other words, the market had adjusted Myer share prices down regardless and there was no market-based causation.
In Worley, Justice Gleeson dismissed Mr Cowley’s proceeding and ordered costs in favour of the defendant (WOR). Justice Gleeson determined that:
- WOR had a reasonable basis for issuing the guidance and announcements it issued between August and November 2013; and
- representations made in WOR’s 2013 annual report did not contravene its continuous disclosure obligations.
It is noteworthy that Justice Gleeson followed the approach taken by Justice Beach as to materiality in Myer.
