The Full Court of the Federal Court of Australia has handed down a significant decision for shareholder class actions: Crowley v Worley Limited [2026] FCAFC 78 (Worley). The Court ruled in favour of the applicant on both causation and loss, which are the two issues that most commonly defeat shareholder class action claims at a late stage.
This is the second such win for applicants in 2026, following the earlier decision in Brambles . Read together, the two decisions signal a meaningful shift in how Courts approach what have historically been more challenging aspects of shareholder class action cases for applicant shareholders.
Background: What the case was about
Worley Ltd (ASX: WOR) issued earnings guidance in August 2013, to the effect that it had a solid foundation for expecting earnings in FY14 in excess of $322 million. That figure represented Worley's net profit after tax (NPAT) for FY2013. Worley's FY14 earnings guidance was based on Worley's internal budget for FY14 which forecast NPAT of $352 million. Worley reaffirmed its guidance in October 2013. In November 2013, it revised the guidance sharply downward to $260–300 million.
Shareholders claimed that the original guidance was misleading and that Worley had breached its market disclosure obligations under the Corporations Act. Shareholders argued that the share price was artificially inflated during the period 14 August to 19 November 2013, and that to the extent that they purchased or held shares during that period, they suffered loss as a result.
The litigation has a long procedural history. After an earlier successful appeal by the applicant, the matter was sent back to a single judge (Jackman J) to assess liability, causation and loss. Jackman J found that while Worley had contravened the law, the applicant had failed to prove causation and loss for two reasons:
- the contraventions had not caused the market price to be substantially higher than the true value of the shares; and
- the applicant had not adduced sufficient expert evidence to quantify any loss.
After disposing of certain grounds of liability-related cross-appeal by Worley, the Full Court focused on a critical question: had causation and loss been established?
1. Causation and proving "some" loss
Market-based causation confirmed
In shareholder class actions, it is generally impractical for each individual shareholder to prove that they personally relied on the misleading disclosure when they bought shares. Market-based causation is the mechanism that allows applicants to avoid this requirement. Instead of individual proof of reliance, the applicant establishes that the company's misrepresentations inflated the share price generally, and that shareholders paid an inflated price and suffered loss as a result.
Worley challenged the availability of this mechanism on three grounds: (i) that it assumes the fundamental efficiency of markets; (ii) that it reverses the onus of proof onto the defendant; and (iii) that it unfairly compensates shareholders who knew, or did not care about, the true position when they bought.
The Full Court rejected all three arguments. It confirmed that market-based causation is now well-established in Australian law, having been accepted in multiple first-instance decisions including in Brambles. The Full Court described its availability as reflecting "fundamental orthodoxy" in this area.
A low threshold for establishing loss
The Full Court drew an important distinction between two separate stages: (a) whether the applicant suffered any loss at all, and (b) if so, the quantum of that loss.
On the first stage, the Full Court confirmed that the threshold is "relatively low" and "admits of some uncertainty". The applicant does not need to prove loss with precision at this stage - only that a contravention probably (not merely possibly) caused some loss.
Critically, the Full Court rejected Worley's argument (which had been accepted by Jackman J) that the applicant must identify a specific counterfactual disclosure and prove, on the balance of probabilities, what its market impact would have been. The Full Court found that this approach had reframed the question incorrectly. The correct question is: "Did the contravention cause share price inflation?" - not: "Would particular non-contravening counterfactual guidance have caused a drop in the share price?" Reframing the question to focus on a hypothetical disclosure rather than the actual consequence of the contravention, means that a range of relevant considerations were not being addressed.
A purposive approach to causation
The Full Court emphasised a purposive approach: causal language in a statute must be interpreted by reference to the statute’s purpose. Australia’s continuous disclosure regime exists to protect investors by ensuring the market has accurate information. That purpose requires a "steady focus on the actual effects of the actual conduct". This means focusing on what Worley actually did in misleading the market, rather than a mechanical focus on what would have happened under various hypothetical alternative disclosures.
In practical terms, this means that once the contraventions were proved, the Full Court was prepared to infer that it was more likely than not (on the balance of probabilities based on the evidence) that a misrepresentation about Worley's future financial performance was highly relevant to, and would have had some impact on, the price of Worley's securities.
2. Quantifying the loss
The facilitation principle
Once some loss is established, the Court must quantify it. This is the second stage of the analysis. The Full Court acknowledged that in most cases this will be genuinely difficult but emphasised that difficulty in quantification does not excuse a Court from making an assessment as best as it can.
Where the wrongdoing itself has made precise proof impossible, the facilitation principle applies. This principle, articulated by the Full Court earlier in the CBA Shareholder Class Action, allows a court to make assumptions favourable to the plaintiff to bridge the evidential gap. The rationale is straightforward: a defendant (or a respondent company in this case) should not escape liability merely because its own misconduct has made the plaintiff’s (or applicant shareholder's) loss difficult to quantify.
In Worley, the Full Court held that the facilitation principle was directly applicable: it was impossible for the applicant to prove what the market would have done in response to a hypothetical corrective disclosure, and that impossibility was caused by Worley's own contraventions. This "facilitation principle" is a pragmatic solution which is consistent with, and best reflects, the purposive approach.
The counterfactual disclosure
To quantify loss, the court still needed a baseline: what should Worley have disclosed in August 2013, if it had complied with the law?
The applicant argued for a counterfactual NPAT guidance equivalent to the November 2013 figure ($260–300 million), or alternatively, either $284 million or $289 million. Worley argued for a higher counterfactual of $329.5 million. The Full Court accepted Worley's figure.
Economic equivalence and apportionment
Having established the correct counterfactual, the Court then needed to assess what market impact that disclosure would have had and then compare it to the impact of what Worley actually disclosed.
A key concept here is "economic equivalence": the degree to which the actual corrective disclosure (in November 2013) is qualitatively similar to what the counterfactual disclosure would have been. The higher the equivalence, the more reliably the Court can use the market’s actual reaction to the corrective disclosure as a proxy for what it would have done in response to the counterfactual.
The Full Court found that a high degree of economic equivalence existed in this case. "Economic equivalence" in this context referred not to the quantum of the NPAT guidance itself, but rather to the qualitative underlying reasons that accompanied the revised November 2013 guidance and those that would have accompanied any counterfactual NPAT guidance. The Full Court found that economic equivalence was established, as the fundamental reasons for the earnings downgrade were the same in August 2013 as in November 2013. The only real difference was the quantum (which turned out to be worse than expected). This meant the applicant's "linear apportionment" expert evidence, which spread the observed share price reaction across a range of hypothetical NPAT guidance figures, was accepted.
The Full Court applied a 15% discount to account for residual uncertainty (for example, the additional certainty that three months of further trading afforded to the November disclosure), invoking the facilitation principle in doing so. The Full Court therefore awarded the applicant a total of $593 plus interest.
3. How does Worley compare to the CBA Shareholder Class Action?
The CBA Shareholder Class Action currently before the High Court relates to a different type of alleged non-disclosure: the non-disclosure of a risk (the potential impact of multiple breaches of anti-money laundering laws), compared to a later disclosure of the realisation of that risk (the commencement of proceedings by AUSTRAC) alongside other unrelated ("confounding") price-relevant information.
In that case, the Full Court held that the facilitation principle was not available to bridge the evidential gap, because the confounding information in the actual disclosure was clearly responsible for part of the observed share price movement, and the applicant had made no attempt to separate it out.
The Full Court in Worley drew a clear contrast: the applicant in Worley had advanced evidence to deal with the confounding factors, through the linear apportionment methodology.
While the High Court's judgment in the CBA Shareholder Class Action is expected to have wide reaching implications, there are reasons to think that the High Court's decision may not be entirely prescriptive for earnings guidance style cases such as Worley. The CBA Shareholder Class Action, relating to the alleged non-disclosure of anti-money laundering (AML) law breaches, is a "risks versus realisation of risks" case, whereas Brambles and Worley are earnings guidance cases. The applicants in the CBA Shareholder Class Action face materially different challenges in establishing "economic equivalence", given the qualitative dissimilarity between CBA's alleged non-disclosure of the AML breaches and the alleged corrective disclosure of AUSTRAC commencing proceedings several years later.
Implications for listed companies and their advisers
Worley, read with Brambles, represents a clear shift in the legal landscape for shareholder class actions in Australia. The practical consequences are significant:
- Lower bar to establishing causation and loss: once a contravention is proved, the fact of loss is an inference quite easily drawn by the Court (as long as the evidence on the balance of probabilities allows a finding that a misrepresentation about future financial performance was highly relevant to and would have had some impact on the price of securities). Courts are no longer requiring applicants to prove a specific counterfactual disclosure and its hypothetical market impact as a precondition to establishing any entitlement to damages.
- Expert evidence on apportionment remains critical: the facilitation principle is not a free pass. Applicants still need to present a principled, expert-supported pathway through the quantification exercise. The Full Court was willing to invoke the principle because the applicant had engaged seriously with the evidence, not simply because proof was difficult.
- Earnings guidance cases are particularly favourable for applicant shareholders: where the actual corrective disclosure is qualitatively similar to what the counterfactual disclosure would have been (as more often the case in earnings guidance cases), Courts can use the market reaction to the actual disclosure as a reliable proxy. This “economic equivalence” advantage does not exist to the same degree in “risk versus realisation” cases like the CBA matter.
- Companies should continue to review their continuous disclosure practices: the purposive approach adopted by the Full Court means that courts will focus on the actual market effect of misleading conduct, not on technical arguments about what hypothetical disclosures would have said. Liability still needs to be established, but once it has been, the pathway to damages is clearer than before.
What next: The High Court’s decision in the CBA Shareholder Class Action
Attention now turns to the High Court, which is expected to deliver its judgment in the CBA Shareholder Class Action in the second half of 2026. That decision will either consolidate the momentum in favour of applicants or complicate it.
There are good reasons, however, to think that the High Court’s decision may not be fully determinative for earnings guidance cases like Worley. The CBA matter is a “risk versus realisation” case with materially different challenges around economic equivalence, challenges that simply do not arise in the same way in earnings guidance cases. The High Court's judgment (once handed down) will therefore require careful analysis to determine whether the legal principles it articulates are of general application to all shareholder class actions, or whether they are confined to the particular factual matrix of a "risks versus realisation of risks" case – leaving open the possibility that applicants in earnings guidance cases may be able to distinguish the High Court's findings.
We will publish a detailed analysis of the High Court’s decision as soon as it is handed down.
