On 10 April 2026, Justice Murphy of the Federal Court delivered judgment in Southernwood v Brambles Limited (Brambles). Subject to appeal, this decision has the potential to be one of the most significant developments in Australian shareholder class action litigation because it is the first shareholder class action to result in findings of both liability and loss at trial.

This outcome distinguishes Brambles from six earlier shareholder class action judgments in which claims had either failed on liability or failed to translate liability findings into compensable loss.

Despite the potential significance of the decision, it would be premature to draw firm conclusions from Brambles alone until the High Court’s reasons in Zonia v CBA (Zonia/CBA) and the Full Court’s decision in Crowley v Worley Limited (Worley), both of which are expected to be delivered in the second half of 2026.

Insurers and claims managers should treat Brambles as an important decision, but not necessarily a shift in the class action landscape. What the decision does demonstrate, however, is that liability, causation and loss can be established in an appropriate case. In many ways this reflects what defence counsel and insurers have always known and explains the modern shareholder class action landscape as one that continues to be characterised by significant pre‑trial settlements.

The class action was brought on behalf of all shareholders who acquired shares in Brambles between 18 August 2016 and 17 February 2017.

The class action concerned Brambles' FY17 sales revenue growth and underlying profit guidance, as well as statements regarding its medium-term targets for FY19, which were released to the ASX on 18 August 2016. That guidance was reiterated, reaffirmed or maintained in further announcements made to the ASX on 20 October 2016 and 16 November 2016.

On 20 January 2017, Brambles withdrew its FY17 guidance, triggering a fall of approximately 15.8% in its share price. A further guidance downgrade in February 2017 resulted in an additional decline of approximately 11.8%.

The applicants alleged that Brambles engaged in misleading and deceptive conduct and breached its continuous disclosure obligations under the Corporations Act 2001 (Cth) and the ASX Listing Rules on the basis that there were no reasonable grounds for making those representations.

His Honour dismissed the applicants’ case insofar as it related to the announcements made on 18 August 2016 and 20 October 2016, on the basis that Brambles had reasonable grounds to maintain its earnings guidance.

However, his Honour upheld claims of misleading or deceptive conduct and breach of continuous disclosure in respect of two discrete periods:

• 16 November 2016 to 21 December 2016 – in relation to Brambles’ underlying profit guidance for the financial year; and

• 21 December 2016 to 23 January 2017 – in relation to Brambles' sales revenue and underlying profit guidance for the financial year.

During these two periods, in light of repeated budget failures, consistently missed reforecasts, unrealistic second-half recovery assumptions and contemporaneous internal warnings, his Honour found that Brambles did not have reasonable grounds for the guidance it reaffirmed and maintained.

In reaching his conclusions, his Honour followed an approach grounded in "commercial common sense" and held that ASX Listing Rule 3.1 did not permit a "wait and see" approach to the disclosure of relevant information to the market.

Significantly, in relation to materiality, his Honour treated ASX Guidance Note 8 with considerable caution, rejecting Brambles’ defence that the variations did not reach the 5% to 10% thresholds of materiality set out by the ASX. His Honour emphasised that ASX Guidance Note 8 was no more than a rule of thumb and that it did not displace the requirements under the relevant statutes and Listing Rules.

The most important feature of the judgment and the point of greatest significance for insurers, is his Honour’s approach to causation and loss. Each of the prior first instance decisions (including Myer, Iluka, Worley, Insignia, Zonia and Quintis) failed at the causation and quantification hurdle. In each case, the Court concluded that the applicants’ expert evidence was not sufficiently precise to attribute the alleged share price inflation to the pleaded contraventions in circumstances where multiple other pieces of information simultaneously influenced market prices. The Full Federal Court in Zonia/CBA made clear its unwillingness to “strip-out” confounding information in order to isolate a market reaction equivalent to the pleaded disclosure.

In Brambles, his Honour took a materially different approach. Justice Murphy:

• accepted the applicants’ expert evidence on loss, despite acknowledged imperfections in the analysis;

• endorsed the use of “abnormal returns” as an acceptable basis upon which the Court can quantify compensation; and

• proceeded on the footing that the Court can award damages where the evidence, although not mathematically exact, is sufficient to establish that loss was caused by the contraventions.

In particular, in assessing causation and loss, his Honour adopted a "commercial common sense" approach that avoided an "overly technical approach" which focused on a "need to prove exact economic equivalence, or exclude the presence of confounding information which contributed to the price decline. If a share price falls more sharply when [a corrective disclosure] was finally made, that may itself be because the market had been kept in the dark for too long". That is, the sharp drop in the value of shares can be part of the harm caused by not disclosing the information on time.

Rather, his Honour was prepared to accept a less exacting standard, consistent with the so-called “facilitation principle”, namely that where a respondent’s own wrongdoing has contributed to the difficulty of quantifying loss, the Court can and should undertake the exercise of quantification on the best available evidence, rather than permit the respondent to benefit from evidentiary difficulties of its own making.

Insurers should treat Brambles as an important decision, but one that needs to be considered in the context of significant appeals that are presently on foot and which will shape the impact and status of the Brambles decision:

• Zonia/CBA (High Court of Australia): Special leave was granted in February 2026, and the appeal is expected to be heard in mid-to-late 2026. The High Court is expected to consider broader questions of awareness, causation, loss and proof and the application of the facilitation principle to class actions. This will be the first substantive High Court consideration of the continuous disclosure regime in the shareholder class action context; and

• Worley (Full Federal Court): The appeal in Worley remains on foot, having been heard by the Full Federal Court in February 2025, with supplementary submissions received in June 2025 following the Full Court’s decision in Zonia/CBA. Judgment is reserved. The Worley appeal is focused squarely on causation and loss, and is expected to provide further guidance, either before or after the High Court decides Zonia/CBA.

Against the context of Brambles, we offer the following observations of how insurers should interpret the decision:

• Do not over-read Brambles in either direction – It is a significant decision, but it is a single-judge outcome on particular facts and it sits directly in the path of imminent High Court authority. It also goes without saying that Brambles will likely be appealed. Adjusting in response to Brambles would be premature.

• The causation and loss barrier has been lowered (at least for now) – For the first time, a Court has accepted abnormal-return evidence and awarded compensation in a shareholder class action. Subject to any appeal, a quantum hearing for class members is due to follow in the event the parties cannot settle.

• ASX Guidance Note 8 is going to get a lot more attention – His Honour’s comments regarding the nature and reliance of the 5% to 10% thresholds in ASX Guidance Note 8, as it relates to materiality, could fundamentally change the approach by ASX companies to how materiality is assessed for disclosure purposes. Expect appellate courts to be dealing with this issue as a matter of priority.

• Evidence remains the decisive factor – Brambles succeeded because of a rich internal documentary record that enabled findings based on established facts. Cases grounded in regulatory risk, speculative exposure, complex counterfactuals or inferential knowledge will remain difficult paths for plaintiffs.

• The facilitation principle could be transformative – If the High Court endorses its application in shareholder class actions, the threshold for plaintiffs to establish and quantify loss will fall, potentially significantly. If this occurs, it will result in a shift in the risk profile for insurers writing listed company exposures in Australia.

• 2026 will be a big year for class actions – The High Court's decision in Zonia/CBA will set the scene for shareholder class actions for a generation and is likely the most important decision in Australian class actions since the High Court's decision in Fostif that gave the greenlight to litigation funding.

For advice on how Brambles and the forthcoming appeals may affect insurers and claims strategy, contact our Insurance team.