Brambles class action

What is the Brambles class action about?

On 18 August 2016, Brambles published its 2016 Annual Report and gave guidance for the 2017 financial year (FY17) regarding sales growth of 7% to 9% and profit growth of 9% to 11%.

Brambles repeated this guidance on 20 October 2016 when it published its trading update for the first quarter of FY17, and again on 16 November 2016 at its AGM.

On 23 January 2017 Brambles informed the market that it no longer expected to meet its earlier guidance, and it now expected sales growth of 5% and profit growth of 3% for the first half of FY17; and sales and profit growth for FY17 to be below the guidance previously provided.

On 20 February 2017 Brambles published its results for the first half of FY17, providing revised guidance of sales growth around 5% and profit growth of 0%.

The market reacted strongly, with price drops of almost 16% on 23 January 2017 (with a trading volume of 19.3 million) and 10% on 20 February 2017 (with a trading volume of 21.7 million, around five times greater than the average daily volume over the previous 12 months).

Companies are required to have a reasonable basis for their guidance and must notify the ASX as soon as they are aware of information which would cast doubt on prior guidance.  In the Brambles class action the applicants alleged, among other things, that Brambles did not have a reasonable basis for the FY17 sales and profit guidance which it first published on 18 August 2016; or alternatively, if Brambles did have a reasonable basis, it ceased to do so at various points after that date, and should have notified the ASX sooner that it was likely to miss that guidance.

Case developments

A trial in the Brambles Class Action took place between 8 August 2022 and 9 September 2022, and the parties delivered closing submissions before the Court on 26 and 27 October 2022.

On 10 April 2026 the Court handed down its judgment. In summary, the Court found that:

• From 16 November 2016 onwards, Brambles ceased to have a reasonable basis for maintaining its FY17 profit guidance of 9% to 11% growth, but did not notify the ASX that it was likely to miss that guidance until 23 January 2017.
• From 21 December 2016 onwards, Brambles ceased to have a reasonable basis for maintaining its FY17 sales guidance of 7% to 9% growth, but did not notify the ASX that it was likely to miss that guidance until 23 January 2017.
•  During the period 16 November 2016 until 22 January 2017 (inclusive), investors who acquired shares in Brambles paid an inflated price for those shares, and may therefore be entitled to compensation.

This represents the first occasion on which a shareholder class action in Australia has succeeded (in whole or in part) following a trial.

It is not yet known whether the Court’s decision in the Brambles Class Action will be appealed. If an appeal is filed, the Court’s decision may or may not be varied, depending on the outcome of the appeal.

Consolidation and common fund order

On 8 May 2019, the Federal Court of Australia ordered that the class action filed by Maurice Blackburn be consolidated with a separate class action filed against Brambles. The consolidated proceeding became known as Holly Southernwood, and William Vincent Kidd & Mary Agnes Collum as Trustees for the Magness-Bennett Superannuation Fund v Brambles Limited (No VID 972/2018). The consolidated action was conducted jointly by Maurice Blackburn and Slater & Gordon on behalf of group members and the lead applicants. Echo Law has since replaced Slater & Gordon, such that the consolidated action is now conducted jointly by Maurice Blackburn and Echo Law. Litigation funding is being provided by both Harbour Fund III, L.P and Omni Bridgeway Limited (the Funders).

At the conclusion of the case, it is proposed to seek from the Court a ‘common fund order’, which requires each group member who receives compensation in the Brambles Class Action—regardless of whether that group member has entered into a funding agreement with the Funders—to pay to the Funders a percentage of any compensation to which the group member becomes entitled as commission for funding the proceeding. The percentage funding commission under the common fund order will be determined by the Federal Court following the conclusion of the Brambles Class Action in an amount the Court considers to be reasonable.

Please note that group members will not have to pay any amount of money until and unless there is a successful outcome in the Brambles Class Action. Further, the amounts paid to the Funders and lawyers in the event of a successful outcome will be subject to approval by the Federal Court, and will never exceed the settlement or judgment sum.