Authors: Katherine Hayes, Partner and Greg Stirling, Senior Associate
The first judgment in an Australian shareholder class action finds that Myer Holdings Limited’s (Myer) non-disclosure and misleading and deceptive conduct did not cause the class of shareholders to suffer loss or damage.
The decision of Beach J of the Federal Court provides valuable guidance on the steps companies are required to take to comply with their continuous disclosure obligations under the Corporations Act and significantly, approves the application of market-based causation which does not require proof of reliance.
Relevant facts
A class made up of Myer shareholders sought compensation for loss and damage arising out of Myer’s alleged non-disclosure as well as misleading and deceptive conduct.
The class was made up of persons who owned shares in Myer between 11 September 2014 and at least 19 March 2015.
On 11 September 2014, in a Q&A session with analysts and journalists, Myer’s then-CEO Bernie Brookes said that in his opinion the net profit after tax (NPAT) for FY15 would be greater than FY14 (September 2014 representation). The NPAT for FY14 had been announced as $98.5 million that same day.
Some months later, on 19 March 2015, Myer announced its expected FY15 NPAT to the ASX as between $75 million and $80 million. Contrary to the September 2014 representation, the expected FY15 NPAT was less than the FY14 NPAT. Immediately after this announcement, Myer’s share price fell significantly.
