The Federal Court’s April 2026 judgment in the Brambles shareholder class action focused on evidence from internal communications, and also considered market reaction when considering whether a variance to guidance required disclosure. This article outlines the key findings of the decision and explores the practical implications for boards navigating disclosure obligations.
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 The guidance was withdrawn on 23 January 2017 on the basis that it could not be achieved, triggering a drop in the Brambles share price of more than 15%.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guidance did not have reasonable grounds at the time it was given, nor when reiterated at various times until it was withdrawn, and accordingly that it was misleading in breach of the Corporations Act, the ASIC Act and the Australian Consumer Law.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.
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 cases[1] has indicated that a reasonable person would not ordinarily expect a listed company to make a disclosure. 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.
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 the President of CHEP North America (a division of the CHEP Global division), the CFO of CHEP Global, and the Senior Vice President Supply Chain of CHEP Global. None of these individuals were KMP or ELT members.
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.
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.
TPT Patrol v Myer Holdings; ASIC v Nuix Limited
