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By John Freund |

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]


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:

[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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Leading European Finance Firm Nera Capital to Fund €1 Billion Truck Cartel Class Action

By Harry Moran |

A prominent European finance company has announced it will be funding over 25,000 claims in a €1 billion class action against truck manufacturers, who were part of a price-fixing cartel.

Nera Capital, which has offices in Manchester, Dublin and The Netherlands, is focussing exclusively on group redress claims, helping consumers and small to medium sized businesses, fight for justice against antitrust behaviour by corporates.

In 2016, the European Commission found MAN, Volvo/Renault, Daimler, Iveco, and DAF broke European Union antitrust rules by colluding on truck pricing and on passing on the costs of compliance with stricter emission rules from 1997 to 2011.

The Commission imposed a record €2.93 billion fine on the manufacturers, except MAN as it revealed the existence of the cartel. All companies acknowledged their involvement and agreed to settle the case.

Speaking about this historic class action, Nera Capital Director, Aisling Byrne, said this investment will ensure truck owners receive justice for the damage the 14-year cartel caused. "The agreements covered both medium-duty trucks and heavy-duty trucks and affected the entire European Economic Area. While the cartel stopped running in 2011, the after affect was felt by truck owners in the following years, and it is important that those affected get their chance for justice.”

Nera Capital has appointed a leading German law firm to act for the claimants in the case.

When the European Commissioner for Competition Margrethe Vestager handed down the historic fine in 2016, she said it was not acceptable that the manufacturers were part of a cartel instead of competing with each other. In 2016 she commented on the more than 30 million trucks on European roads, which accounted for around three quarters of inland transport of goods in Europe, playing a vital role for the European economy.

Ms Byrne echoed these comments and said the firm's success is built through its strong industry relationships and a passion for justice. “This is a pivotal moment for corporate accountability,” she added. “Our investment underscores our commitment to supporting small businesses and consumers who have been impacted by antitrust violations. With a strong track record of committing over £475 million, in aggregate, into claims, we are excited to offer our support to truck owners across Europe, because we believe justice should be accessible to all. Nera Capital stands firm in its mission to level the playing field against corporate misconduct. This class action is not just about compensation but also about holding accountable those who undermine fair competition."

About Nera Capital

·       Established in 2011, Nera Capital is a specialist funding provider to law firms.

·       Provides Law Firm Lend funding across diverse claim portfolios in both the Consumer and Commercial sector.

·       Headquartered in Dublin, the firm also has offices in Manchester and The Netherlands.

.     Member of European Litigation Funders Association.


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Nera Capital Funding Truck Cartel Claims

By Harry Moran |

The European truck cartel case has long stood out as one of the most prominent examples of litigation funders looking to support mass claims against large companies over their breaches of competition rules. The latest announcement of a funder supporting such a claim continues to demonstrate the importance of these case types.

An article in Business Mondays highlights a recent announcement from Nera Capital, a legal finance firm based in Dublin, that it will be funding over 25,000 claims as part of the truck cartel case. The claims brought against truck suppliers has been one of the most high profile class action cases in Europe, following the 2016 European Commission ruling which found MAN, Volvo/Renault, Daimler, Iveco, and DAF guilty of breaking EU antitrust rules over their co-ordination of pricing.

Aisling Byrne, director at Nera Capital, highlighted the importance of third-party funding for the claims being brought against these truck manufacturers, stating that “while the cartel stopped running in 2011, the after effect was felt by truck owners in the following years, and it is important that those affected get their chance for justice.” The article also states that Nera Capital has appointed a German law firm to provide legal representation for the claimants it is funding.

Byrne also emphasised that Nera Capital’s investment in the truck cartel case aligned with “its mission to level the playing field against corporate misconduct”, and that this case “is not just about compensation but also about holding accountable those who undermine fair competition.”

Apple and Omni Bridgeway Spar Over Venue for Subpoena Fight

By Harry Moran |

As LFJ reported earlier this month, the world of patent litigation funding has once again generated a high-profile dispute, as Apple pressed a court to enforce a subpoena against Omni Bridgeway over the funder’s alleged role in a patent infringement case brought against the technology giant. The legal fight continues to evolve last week, as the two parties seek to find favourable ground in a venue of their choosing.

An article in Reuters provides a recap of the events that have led up to the current standoff between Apple and Omni Bridgeway, before shedding light on the current state of affairs. At issue is the court venue following Apple’s filing of a motion to compel compliance regarding its subpoena of Omni Bridgeway for information relating to the MPH patent infringement lawsuit. The case had been assigned to the Delaware district’s chief judge, U.S. District Judge Colm Connolly, who has become a familiar name in the litigation funding world over his standing order enforcing disclosure of third-party funding in patent cases. 

Unsurprisingly, Omni Bridgeway filed a motion to transfer the matter to the Northern District of California, stating that this court is the venue which “issued the subject subpoena and that is presiding over the underlying litigation’. The motion argued that this transfer “promotes judicial economy and prevents the risk of inconsistent rulings”, and went on to point out that “Litigating this issue in California is not inconvenient for Apple, a California corporation, with California lawyers party to the underlying California litigation.”

In response, Apple’s lawyers responded to the motion to transfer in a letter to Chief Judge Connolly, “injects unnecessary delay into the briefing, and will likely delay resolution of Apple’s motion to compel.”

Omni Bridgeway’s motion to transfer can be read here. Apple’s letter responding to the motion can be read here.