When disclosure delays become liability: Lessons from Brambles, Crowley and Noumi

Companies and their senior officers should take note of three significant decisions handed down in 2026. Together, these cases increase litigation and regulatory risks arising from continuous disclosure failures, while also highlighting circumstances in which individual executives may face personal liability.

In Southernwood v Brambles and Crowley v Worley, the courts endorsed a market-based causation approach that may increase the viability of shareholder claims arising from disclosure failures, and in ASIC v Noumi, the court went a step further, holding a CEO personally liable in connection with inaccurate financial reporting and related disclosure failures.

Why the Brambles and Crowley decisions increase shareholder claim risks

Brambles Limited (Brambles), a global supply chain logistics company, issued FY17 earnings guidance in August 2016 forecasting 9-11% Underlying Profit growth (FY17 Guidance). Brambles’ largest division, CHEP North America, consistently underperformed against budget. Brambles reiterated the guidance in October and November 2016 without updating the market. On 23 January 2017, Brambles withdrew the FY17 Guidance, resulting in a 15.8% share price decline. The Federal Court found Brambles misled the market by maintaining that guidance without reasonable grounds.

Key takeaways from the Brambles decision

1. Guidance can quickly become indefensible
The FY17 Guidance was reasonable when issued in August 2016. By October, it was still defensible for sales revenue but not for underlying profit. By November, there was no “reasonable pathway” for either measure, and despite this, guidance remained on foot until 23 January 2017 (a two-month delay).The Federal Court found Brambles breached its continuous disclosure obligation from 16 November 2016..

Lesson: Guidance should be reassessed regularly and updated or withdrawn as soon as it is no longer supportable.

2. ASX materiality thresholds are guidance only
Brambles argued its expected shortfall was below the 5–10% threshold in ASX Guidance Note 8. The Federal Court rejected this, describing those thresholds as an “instructive rule of thumb” only. The information was material because of the significance of the underperforming division, repeated guidance confirmations and the subsequent 15.8% share price fall.

Lesson: ASX materiality thresholds serve as guidance only.

3. “Wait and see” is not an option
Under Listing Rule 19.12, “awareness” arises once any officer has, or reasonably should have, come into possession of information, including opinions an officer ought to have formed.

By November 2016, Brambles’ officers had access to information indicating the FY17 Guidance was no longer realistically achievable. The Federal Court rejected a “wait and see” approach, finding an entity cannot delay disclosure while seeking greater certainty.

Lesson: Once officers have sufficient information to conclude guidance is no longer achievable, disclosure obligations arise immediately.  Gaps in internal reporting do not protect the entity.

4. Template disclaimers are insufficient

Brambles’ disclaimers were ineffective because they were not prominent, were standard form, not tailored to the FY17 Guidance and only cautioned against “undue reliance” without explanation. The Federal Court held that a reasonable investor would not view such boilerplate as “gutting the opinion or forecast of meaningful content.”

Lesson: Disclaimers must be prominent, specific and tailored to risks associated with guidance, and generic disclaimers that could apply to any ASX announcement are unlikely to provide protection.

5. Shareholders are no longer required to prove they read or relied on company statements

In Brambles, the Federal Court applied market-based causation to quantify shareholder loss, the first time an Australian court had done so at trial. The Full Court subsequently endorsed the principle in Crowley v Worley. Rather than proving personal reliance on a particular statement (nearly impossible in a class action), shareholders may now establish loss by showing they purchased shares at an inflated market price caused by the non-disclosure.

The decisions also lower the evidentiary burden on applicants. In Crowley, the Full Court confirmed that once some loss is established, quantification may proceed on a “probabilities or possibilities” basis, with “fair wind” afforded where the defendant’s conduct makes precise quantification difficult.

Lesson: Shareholders who purchased during the contravention period no longer need to prove direct reliance on company statements, rather they only need to prove some loss, significantly lowering the threshold for class actions.

What Noumi means for directors and executives responsible for financial reporting

These principles extend beyond earnings guidance. The Federal Court’s decision in Noumi demonstrates that inaccurate financial reporting can expose both companies and senior executives to significant regulatory risk.

In Noumi, the CEO, Mr Macleod, was found to have contravened s 344(1) (financial reporting compliance) and s 180(1) (duty of care) after the company overstated inventory by at least $20 million (unsaleable stock not written off) and revenue by at least $9.3 million (invoices for an unfulfilled lactoferrin sale). Mr Macleod had imposed a standing instruction requiring his personal approval for write-offs and then failed to authorise required write-offs. Each set of undisclosed information was material price-sensitive information, albeit by a “relatively slender margin.”

Noumi reinforces three themes from Brambles:

1. Materiality is evaluative, not formulaic
   The Federal Court preferred the expert who concluded investors would react adversely to evidence of management failures and unreliable reporting over the expert who considered the information neutral.
2. Directors have a continuing duty to correct
   Under s 180(1) of the Corporations Act, a director who becomes aware of inaccuracies in published financial statements must take reasonable steps to qualify, withdraw or correct them.
3. ASX disclosure is the remedy
   The Federal Court found disclosure to the ASX was the “reasonably practicable means” of correcting inaccurate reports, independently of whether the information was material price-sensitive information.

Personal liability remains harder to establish

ASIC was unsuccessful in its claim that Mr Macleod was “involved” in Noumi’s continuous disclosure contravention. To establish personal involvement, ASIC needed to prove Mr Macleod had actual knowledge the information was material price-sensitive information. The Federal Court found the materiality question was “finely balanced” between two credible experts and could not conclude Mr Macleod would have thought like the expert who found it material.

Lesson: The objective test for company liability is easier to satisfy than the subjective knowledge test for individual officers. Companies and directors should focus on identifying and correcting inaccurate financial information promptly, rather than relying on uncertainty around materiality.

What boards should do now

These decisions confirm that liability applies to both companies and individual officers. Brambles and Crowley increase settlement pressure by lowering causation thresholds. Boards should:

• reassess guidance at every board meeting and whenever material operational information arises, as disclosure is triggered by awareness rather than by the calendar;
• ensure internal reporting promptly escalates financial data to disclosure-responsible officers without delay, as an officer who should have received information is treated as having received it;
• build a meaningful buffer between budgets and published guidance;
• replace generic disclaimers with specific, prominent risk disclosures placed near the guidance, identifying the circumstances that make forecasting uncertain; and
• act immediately to correct or qualify published financial reports upon becoming aware of inaccuracies. Noumi confirms this obligation applies regardless of whether the information is material price-sensitive information.

How Macpherson Kelley can help

Market-based causation has been endorsed at the Full Court level in Crowley, which cited Brambles with approval. However, aspects of the Brambles framework, including the application of substantial economic equivalence, may still be tested.

The direction is clear: the Federal Court is entrenching these principles.

Boards should ensure disclosure processes remain robust, guidance is regularly reassessed and inaccuracies in financial reporting are addressed promptly.

For advice on continuous disclosure obligations, governance frameworks or disclosure-related risk management, please contact Macpherson Kelley’s Corporate & Commercial team.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.