However, this was not enough to convince the court to overturn Justice David Yates’ May 2024 decision to dismiss shareholder class action proceedings, led by Philip Anthony Baron and Zonia Holdings.

“The appeals are to be allowed in part (insofar as the answers to some of the common questions need to be changed to reflect the conclusions), but the primary judge’s orders dismissing the proceedings at first instance remain undisturbed,” Justices Bernard Murphy, Mark Moshinsky and Catherine Button said.

In the original proceedings, Baron and Zonia alleged CBA shares traded on an “artificially inflated price” as a result of the bank’s failure to comply with continuous disclosure obligations.

In his judgment, Justice Yates was satisfied that as of 27 April 2017, CBA was aware but did not need to disclose information about a September 2015 failure to provide about 53,000 transaction reports and a failure to conduct account level monitoring for 770,000 accounts.

The full bench said Justice Yates erred by considering this as a threshold point rather than as part of a materiality analysis.

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“One problem with considering such a contention as a threshold point is that, if it is concluded that the pleaded information is incomplete and therefore misleading, the applicant’s case fails at this point, without even considering the materiality of the pleaded information,” the full bench said.

“This may produce the result that the applicant’s case fails even though, if the pleaded information were considered together with the asserted additional information, it would be considered material and required to be disclosed.”

With that finding in mind, the full bench considered information relating to both September 2015 disclosures was material and should have been disclosed to the market.

If that information had been available, it would have, or would have likely, “influenced persons who commonly invest in securities deciding whether to acquire or dispose of CBA shares”.

The full bench also found in favour of the shareholder’s claim that Justice Yates erred by dealing with the completeness and accuracy of pleaded information as a threshold issue and in concluding the pleaded information was incomplete and/or misleading.

Contrary to the shareholder’s submission that it was the bank that needed to plead the information was incomplete, Justice Yates determined that onus was with the class action side. Justices Murphy, Moshinsky, and Button disagreed.

“Having made clear that he was holding the parties to their pleadings, the primary judge should have not entertained the bank’s threshold point, which was not pleaded,” the bench said.

“With respect, there does appear to be some inconsistency in, on the one hand, holding the applicants strictly to their pleadings while, on the other, permitting the bank to run a defence that was not pleaded.”

The remaining grounds of appeal were not made out, including a claim that Justice Yates erred in his conclusion that Zonia Holdings and Baron had not established causation or loss.

The appeal judgment: Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Limited [2025] FCAFC 63