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SHAREHOLDER CLASS ACTIONS IN AUSTRALIA: UNCERTAINTY FOR THE FUTURE OF MARKET-BASED CAUSATION

SHAREHOLDER CLASS ACTIONS IN AUSTRALIA: UNCERTAINTY FOR THE FUTURE OF MARKET-BASED CAUSATION

The following article was contributed by Nikki Stever and Madison Smith of Australia-based commercial law firm, Piper Alderman. In the third decision delivered in a shareholder class action in Australia,[1] Iluka Resources Limited (ASX: ILU), (Iluka) succeeded in its defence of a lawsuit[2] which failed to prove that the shareholders’ direct reliance on Iluka’s conduct caused their losses. However, the decision in favour of Iluka notably lacked any significant consideration of the second causation argument typically pleaded in shareholder class actions – market-based causation. Background of the matter Iluka is a large mining company and global supplier of mineral sand products. On 9 July 2012, Iluka revised its sales guidance for its products, resulting in a 25% drop in share price. The shareholders alleged that Iluka’s sales guidance leading up to its announcement:
  1. was misleading or deceptive; and
  2. breached their continuous disclosure obligations.
The lead applicant purported that reliance on the sales guidance impacted their decision to purchase shares in the company (direct reliance).  It is not clear to the authors if the lead applicant or shareholders pleaded that the market as a whole was impacted by the sales guidance (market-based causation). The Federal Court of Australia (FCA) rejected both claims on the basis that the representations alleged were not actually made, and were merely statements/guidance about Iluka’s expectations and were not guarantees or predictions/forecasts of future performance. The FCA also found that the lead applicant relied on various external stock reports rather than statements made by Iluka, causing the direct reliance case to fail. Direct reliance and market-based causation Direct reliance in a shareholder class action requires the claimant to prove they actually relied on the contravening conduct (i.e. statements) when deciding to acquire shares in the defendant company, and that the subsequent decrease in share price was directly related to the contravening conduct, resulting in loss to the shareholder. Market-based causation is based on establishing that the price that the defendant’s shares traded on the market was inflated by the contravening conduct, such that the claimant prima facie suffered loss by paying an increased price for the shares. The Court has accepted this proposition,[3] however, also suggested that it may still be necessary for individual shareholders to give evidence that, but for the contravention by an entity, they would not have purchased the shares (or not at the price paid) in order to establish loss.[4] Causation and loss in Iluka Because the Court found that no representations were made (and therefore they were not capable of being relied upon, either directly or by the market), the judgment was relatively quiet in relation to causation. While there is reference to the failed direct reliance case, in so far as it was held that the lead applicant did not rely on the sales guidance issued by Iluka when deciding to purchase the shares, unusually the judgment is completely silent on market-based causation. In previous cases where market-based causation has been alleged by the plaintiff, the but for test has been discussed by the FCA in the context of considering misleading or deceptive conduct claims.  For example, the alleged contraventions in Myer and Re HIH were assessed by considering whether the alleged loss would not have occurred but for the contraventions.[5] The High Court in Australia has offered an alternative approach in cases of proving factual causation of misleading and deceptive conduct generally – the ‘a factor’ test.[6] The a factor test is satisfied if the misleading or deceptive conduct was a factor in the occurrence of the plaintiff’s loss, or in other words materially contributed to the plaintiff’s loss. In Iluka, this test for market-based causation would be satisfied if the alleged contraventions materially contributed to the shareholders’ loss, rather than the more stringent test of whether the contraventions were necessary for the loss. The a factor test, if adopted, arguably offers a more appropriate test for market-based causation in cases of misleading or deceptive conduct. Firstly, it is more reliable and intuitive.[7] For example, the but for test requires counterfactual speculation as to how a market would have responded but for a particular event. This can be a difficult exercise for a plaintiff to speculate and quantify the loss. The a factor test shifts the requirements from necessity to contribution and is not as easily defeated by a claim that it was not the only factor relevant to the plaintiff’s loss. Secondly, the test also avoids duplicative causation, as market-based causation often involves multiple factors that could have affected share prices.[8] The court does not need to assess each separate factor and consider its relative relevance to the causal loss overall, as is required when assessing the causal conduct following the but for test. Finally, the a factor test promotes the deterrence of all misleading or deceptive conduct by providing a broad opportunity for the conduct to be considered misleading or deceptive, regardless of whether it was necessary for the loss.[9] Conclusion By failing to address market-based causation, the Iluka decision has created uncertainty around what causal test the court would be willing to accept for shareholders to succeed with a market-based causation claim. It is only a matter of time before there is a substantial decision on this point, however, until this occurs, the law on market-based causation remains unsettled. About the Authors Nikki Stever, Special Counsel  — Nikki specialises in complex litigation and disputes, with an emphasis on class actions and disputes involving corporations, competition and consumer legislation and disputes concerning breaches of trust and fiduciary duties. Nikki frequently works with litigation funders and is experienced in the structuring and conduct of funded litigation, across all Australian jurisdictions. Madison Smith, Lawyer  — Madison is a litigation and dispute resolution lawyer at Piper Alderman with a primary focus on corporate and commercial disputes. Madison is involved in a number of large, complex matters in jurisdictions across Australia. For queries or comments in relation to this article please contact Kat Gieras, Litigation Group Project Coordinator | T: +61 7 3220 7765 | E:  kgieras@piperalderman.com.au — [1] Following Crowley v Worley Limited [2020] FCA 1522 and TPT Patrol Pty Ltd as trustee for Amies Superannuation Fund v Myer Holdings Ltd [2019] FCA 1747. [2] Bonham v Iluka Resources Ltd [2022] FCA 71. [3] In the matter of HIH Insurance Limited (In Liquidation) [2016] NSWSC 482; TPT Patrol Pty Ltd as trustee for Amies Superannuation Fund v Myer Holdings Ltd [2019] FCA 1747. [4] TPT Patrol Pty Ltd as trustee for Amies Superannuation Fund v Myer Holdings Ltd [2019] FCA 1747, [1671]. [5] In the matter of HIH Insurance Limited (In Liquidation) [2016] NSWSC 482; TPT Patrol Pty Ltd as trustee for Amies Superannuation Fund v Myer Holdings Ltd [2019] FCA 1747. [6] Henville v Walker [2001] HCA 52, [61] and [106]. [7] Henry Cooney, Factual causation in cases of market-based causation (2021) 27 Torts Law Journal 51. [8] Ibid. [9] Ibid.
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Siltstone vs. Walia Dispute Moves to Arbitration

By John Freund |

Siltstone Capital and its former general counsel, Manmeet (“Mani”) Walia, have agreed to resolve their dispute via arbitration rather than through the Texas state court system—a move that transforms a high‑stakes conflict over trade secrets, opportunity diversion, and fund flow into a more opaque, confidential proceeding.

An article in Law360 notes that Siltstone had accused Walia of misusing proprietary information, diverting deal opportunities to his new venture, and broadly leveraging confidential data to compete unfairly. Walia, in turn, has denied wrongdoing and contended that Siltstone had consented—or even encouraged—his departure and new venture, pointing to a release executed upon his exit and a waiver of non‑compete obligations.

The agreement to arbitrate was reported on October 7, 2025. From a governance lens, this shift signals a preference for dispute resolution that may better preserve business continuity during fundraising cycles, especially in sectors like litigation finance where timing, investor confidence, and deal pipelines are critical.

However, arbitration also concentrates pressure into narrower scopes: document production, expert analyses (especially of trade secret scope, lost opportunity causation, and valuation), and the arbitrators’ evaluation. One point to watch is whether interim relief—protecting data, limiting competitive conduct, or preserving the status quo—will emerge in the arbitration or via court‑ordered relief prior to final proceedings.

ASB Agrees to NZ$135.6M Settlement in Banking Class Action

By John Freund |

ASB has confirmed it will pay NZ$135,625,000 to resolve the Banking Class Action focused on alleged disclosure breaches under the Credit Contracts and Consumer Finance Act (CCCFA), subject to approval by the High Court. The settlement was announced October 7, 2025, but ASB did not admit liability as part of the deal.

1News reports that the class action—covering both ASB and ANZ customers—alleges that the banks failed to provide proper disclosure to borrowers during loan variations. As a result, during periods of non‑compliance, customers claim the banks were not entitled to collect interest and fees (under CCCFA sections 22, 99, and 48).

The litigation has been jointly funded by CASL (Australia) and LPF Group (New Zealand). The parallel claim against ANZ remains active and is not part of ASB’s settlement.

Prior to this announcement, plaintiffs had publicly floated a more ambitious settlement in the NZ$300m+ range, which both ASB and ANZ had rejected—labeling it a “stunt” or political gambit tied to ongoing legislative changes to CCCFA.

Legal and regulatory observers see this deal as a strategic move by ASB: it caps its exposure and limits litigation risk without conceding wrongdoing, while leaving open the possibility of continued proceedings against ANZ. The arrangement still requires High Court consent before going ahead.

What’s the Smartest Growth Strategy for Law Firms in 2025? Client Service

By Kris Altiere |

The following article was contributed by Kris Altiere, US Head of Marketing for Moneypenny.

The legal sector is already operating against a backdrop of economic unpredictability, rising client expectations, and fast-moving advances in technology. For firms of all sizes, but especially small and mid-sized practices, the pressing question is: what’s the smartest and most sustainable path to growth?

The answer isn’t a new practice management system or a radical shift in service lines. It’s something more fundamental yet far more powerful: client service.

And not the kind that gets lost in endless phone menus or delegated to faceless chatbots. We’re talking about human-led, AI-supported service that’s fast, personal, and friction-free. In today’s legal market, client service isn’t just an operational necessity. It’s a growth strategy.

Trust as the new currency of growth

Clients navigating complex legal challenges are often anxious, risk-averse, and under pressure. In that environment, trust becomes the currency that drives engagement and retention.

It’s no longer enough for firms to offer technically sound legal advice at competitive rates. Clients want to feel heard, supported, and valued throughout their journey. Firms that can embed this into every interaction, whether it’s the initial consultation or a late-night update, are the ones that win loyalty, referrals, and long-term revenue.

This plays to the strengths of small and mid-sized firms. With leaner teams and flatter hierarchies, they’re often more agile and capable of delivering the personal, tailored support clients crave. A partner who picks up the phone, knows the client’s name, and understands the case context instantly builds credibility. In 2025, that credibility is the bridge between staying relevant and achieving meaningful growth.

Smart tech, human empathy

Yes, AI is everywhere. But the firms using it most effectively are those that integrate it where it adds real value while also keeping the human touch where it matters most.

AI can streamline administrative work, speed up intake, and automate repetitive tasks like document review or appointment scheduling. But it can’t replace the reassurance of a lawyer who listens carefully to a client in distress, or the receptionist who ensures urgent calls are routed to the right person immediately.

The winning formula is balance: let AI handle the heavy lifting, while people deliver the moments that build trust. Imagine a litigation funder using AI to flag cases requiring immediate attention, while a trained case manager provides the nuanced support clients need. Or a family law practice using chatbots for document collection but ensuring sensitive discussions are handled by a real lawyer with empathy and tact.

That combination of efficiency plus empathy is what cuts through the noise.

Service as a growth engine

When client service is done well in law firms, it doesn’t just fix problems it drives growth. Every answered call, prompt update, or thoughtful follow-up is a touchpoint that builds brand equity and deepens relationships. 

Great client service is about being reactive, for example, answering questions, but also it is about being proactive, through spotting patterns, identifying sales opportunities, and deepening client relationships. Your service team becomes a source of insight and influence. And often, they’re the difference between a one-time transaction and long-term loyalty.

Take funding conversations as an example. A firm that keeps clients informed on timelines, explains financing options clearly, and checks in regularly is positioning itself not just as a legal advisor but as a trusted partner. That kind of proactive, client-focused service often creates opportunities for cross-referrals and repeat work.

And thanks to modular, scalable tools—from virtual receptionist to live chat—these capabilities are no longer exclusive to the Am Law 100. Boutique firms and regional practices now have access to the same client service infrastructure as the industry’s largest players.

Connection builds resilience

With margins tight and competition fierce, the strongest legal practices in 2025 will be those that build loyalty through connection. That doesn’t mean over-promising or relying on outdated customer care models. It means meeting people where they are, and offering support that’s proactive, consistent and personal.

It also means supporting teams. When lawyers and staff are backed by smart systems that free them to focus on meaningful work, morale improves. And in a small or mid-sized firm, morale directly fuels performance.

Client service is where growth, loyalty and operational resilience meet. For practices looking to thrive this year, the message is clear: don’t see service as a back-office function. See it as a growth engine, a brand differentiator, and one of the most valuable assets a law firm has.

Because in a market full of uncertainty, the one thing that’s certain is this: customers will always remember how you made them feel. And that feeling might just be the difference between surviving and scaling.