The Full Court has allowed the lead applicant’s appeal in the Worley securities class action, confirmed that market-based causation is good law in Australia, and held that a shareholder need not prove a precise counterfactual to establish that a misleading earnings forecast caused some loss. The decision matters to three readers: the general counsel and directors of any listed company that gives earnings guidance; investors who buy on-market; and, on the cause of action, anyone who relies on a forecast given by a company seeking their money. It makes a securities claim harder to defeat on causation and easier to value.
The Case
Citation: Crowley v Worley Limited [2026] FCAFC 78
Court: Federal Court of Australia, Full Court (General Division)
Judges: Markovic, Halley and Owens JJ
Date of judgment: 28 May 2026
Parties: A Part IVA shareholder class action by Larry Crowley, the lead applicant, against Worley Limited (WOR), a listed provider of services to the resources, energy and infrastructure sectors. The class bought WOR shares between 14 August and 19 November 2013.
On 14 August 2013 WOR told the market it expected “increased earnings” in FY2014, above its FY2013 net profit after tax of $322 million. It repeated that guidance through October 2013, then cut it on 20 November 2013 to net profit after tax of $260–$300 million. The share price fell about 26%. Mr Crowley alleged misleading or deceptive conduct (s 1041H of the Corporations Act 2001 (Cth), s 12DA of the ASIC Act 2001 (Cth) and s 18 of the Australian Consumer Law) and a continuous-disclosure breach (s 674 of the Corporations Act and ASX Listing Rule 3.1) (see [3]–[6]).
What the Full Court decided
The cross-appeal failed; liability stands.
WOR sought to reopen the liability findings by arguing that the judge who heard the remitted matter should have departed from the first Full Court’s reasoning where it was, in WOR’s view, wrong. The Court rejected that. A judge hearing a remitted matter is bound by the reasons of the Full Court that ordered the remitter, not only its orders, and cannot depart from them on a view that they are mistaken (see [128]–[133]). WOR had already been refused special leave on the first appeal. The findings that WOR misled the market and breached s 674 remain. Although the “consensus expectations” limb of the continuous-disclosure case was answered “No” on the remitter’s reasoning, the guidance-material-information limb succeeded, so liability under s 674 remained intact.
Market-based causation is available, and orthodox.
Agreeing fully with Beach J in Myer (TPT Patrol Pty Ltd v Myer Holdings Limited [2019] FCA 1747), the Court held that a shareholder who buys in an inflated market can prove causation without proving personal reliance (see [330]–[331]). It needs only an informationally efficient market, not a market that prices shares at their “true” value, and it does not reverse the onus of proof (see [316]–[323]). Guidance that locks in a mistaken market expectation can inflate a price that looks stable (see [334]–[335]).
Proving loss and quantifying it are different tasks.
This is the heart of the decision. The existence of some loss must be proved on the balance of probabilities, but to a “relatively low” standard; the size of the loss is assessed by reference to probabilities and possibilities, and the civil standard does not apply to that hypothetical exercise (see [340]–[342]). The remitter judge erred by collapsing the two. He required Mr Crowley to prove that one specific counterfactual figure ($317 million) would have moved the price, on the balance of probabilities, before any loss could be found (see [360]–[363]).
Some loss was established on the evidence as a whole. WOR was, on its own internal memorandum, good at guiding the market to its budgeted number; analyst consensus tracked its guidance; and the counterfactual guidance figure the Court adopted (about $329.5 million) sat materially below the prevailing analyst consensus (circa $352–$368 million) while still above the prior year’s $322 million. On that evidence, the Court inferred that the impugned guidance maintained an overstated expectation that more likely than not inflated the price; no further expert evidence was required to find that inference open (see [371]–[378]).
Quantification: a counterfactual, a discount, and a fair wind.
The Court fixed the non-contravening counterfactual at $329.5 million net profit after tax, applied the applicant’s linear apportionment of the observed 20 November share-price fall, then applied a broad-brush 15% discount to reflect that the November correction was not strictly equivalent to an earlier, hypothetical disclosure (see [441], [493]–[494]). It invoked the facilitation principle from Cessnock City Council v 123 259 932 Pty Ltd [2024] HCA 17 (a plaintiff gets a “fair wind, but not a free ride” where the defendant’s wrong made proof difficult) and distinguished Zonia [2025] FCAFC 63, where the applicant did not try to separate out unrelated bad news (see [386]–[390], [448]–[451]). The result: share-price inflation of 5.92%, damages of $593 plus interest (pursuant to s 51A(1)(a) of the Federal Court of Australia Act 1976 (Cth) from 4 October 2013) for the lead applicant, and a reversal of costs against WOR (see [494]–[497]).
Why it matters
For directors and general counsel of listed companies.
The precedent is significant. A securities claim can no longer be answered simply by attacking the precision of a plaintiff’s counterfactual. Once liability and a material overstatement are shown, a natural inference of inflation may be drawn on the whole of the evidence; the practical focus often moves from whether there was loss to how much, with the facilitation principle giving the plaintiff a following wind. Two practical themes run through the reasons: internal documents that show a company steering analyst consensus help prove the claim against it; and witness gaps hurt – WOR did not call several executives closest to the budget, and the Court drew on that.
For investors who buy on-market. The decision confirms a workable route to recovery. An investor who bought in a market inflated by a misleading forecast can establish causation through the market itself, without proving that they read or relied on the specific statement (see [330]). The share price need not have jumped on the announcement; a forecast that confirms a mistaken expectation can hold a price up that should have fallen (see [334]–[335]). A claimant is not shut out because the precise loss is hard to measure: where the company’s own wrong makes measurement difficult, the Court will do its best and assess the loss on imperfect evidence (see [386]–[390]).
The cause of action: misleading conduct and forecasts, beyond listed securities
This was a listed-company case, but the misleading-conduct cause of action the Court applied is general. The FY2014 guidance was a representation as to a future matter, to the extent it conveyed that WOR expected net profit after tax above $322 million (see [44]). A representation as to a future matter is misleading if it is made without a reasonable basis (see [45]). That rule sits in s 4(1) of the Australian Consumer Law and s 12BB(1) of the ASIC Act, and the prohibition itself in s 18 of the Australian Consumer Law, s 1041H of the Corporations Act and s 12DA of the ASIC Act (see [3]).
Three points from the judgment are relevant wherever a forecast is given to investors, including investors in private companies:
Reasonable grounds are judged at the time.
The existence of reasonable grounds for a forecast is assessed at the date of the representation. Later events matter only so far as they shed light on the position at that time (see [51]). A forecast that turns out wrong is not, for that reason, misleading; the question is whether the maker had a reasonable basis when it spoke.
The maker must be able to show its grounds.
The investor carries the ultimate burden of proving that the forecast lacked a reasonable basis. But the maker carries an evidential burden to put up evidence of the grounds it actually had; if it cannot, the inference against it is easier to draw (see [191]–[192], [197]). Contemporaneous budget papers, board materials and the like are where that case is won or lost, as the Worley budget documents and the internal post-mortem memorandum were here.
Causation outside a public market is different.
Market-based causation depends on a security that trades in an informationally efficient market (see [316]–[318]). A private company has no such market price. An investor in a private company therefore relies on the ordinary route: that they would not have invested, or not on the same terms, but for the misleading forecast (see [328]). The standard of proof for loss, and the facilitation principle for measuring it, apply just the same.
A note on limits: this is our reading of what the judgment decided and the provisions it applied. The Court did not decide a private-company case, and nothing here should be read as a ruling on one. The cause of action and the reasonable-grounds test it applied are general; the application to any particular forecast turns on its own facts.
What to do
- Stress-test live guidance against the current budget and known headwinds, and record the reasonable basis for it. Refresh that basis as conditions move; treat a 10% expected variance as material and a sub-5% variance as not, in line with ASX Guidance Note 8.
- Before giving any forecast (guidance, a vendor’s earnings forecast, an information memorandum, a capital-raising projection), document the grounds that support it at the time. That is a record you will need if the forecast is later challenged.
- Audit internal language about “guiding the market” or managing analyst consensus, and make sure the people closest to the numbers are available to explain them. Both were decisive here.
- Reassess class-action and claim exposure in light of the lower threshold for proving some loss and the Court’s willingness to quantify on imperfect evidence.
Frequently asked questions
Further Information
If your board needs a briefing on this decision, or you are weighing disclosure, a forecast you are about to give, class-action exposure, or a disgruntled investor, please contact the author of this article:
