In a closely watched case, shareholders have won the first class-action lawsuit to go all the way to judgment in Australia. But they are unlikely to recover any damages because the markets did not believe inflated profit forecasts made by the company's chief executive.

In the decision handed down on Thursday, a federal judge found that retailer Myer engaged in misleading or deceptive conduct following a 2014 profit forecast, but ruled against the shareholder class because he said he was not convinced that investors suffered a loss.

Prior to this case, all shareholder class actions in Australia had settled, so lawyers and investors were especially interested in how the judge would rule. And despite the loss for investors, lawyers said the decision on a key legal issue will boost the number of class actions in Australia going forward.

"It is a win for plaintiffs," said Robert Johnson, a partner with Johnson Winter & Slattery.

"The uncertainty has gone and with market-based causation accepted, actions can be filed with more confidence," he added. "So there will be more class actions and higher numbers will be sought in settlement talks. It is not good for corporates."

In his ruling, Federal Court Justice Jonathan Beach said he accepted the theory of market-based causation, under which persons other than the plaintiff rely on the misrepresentation made by a company, which in turn causes the price of its shares to be inflated.

"We now have clear direct authority at a first instance permitting in principle an indirect causation or market-based causation case theory, which at last brings some certainty to the issue of proving damages in shareholder class actions," Johnson said.

However, in deciding against Myer shareholders, Beach said they may not have suffered any loss resulting from chief executive Bernie Brook's "rosy picture" and Myer's subsequent failure to update the market on lower profit guidance, because a lower profit had already been factored in by investors.

"In other words, the hard-edged scepticism of market analysts and market makers at the time of the contraventions had already deflated Mr. Brookes' inflated views," Beach said. "So, any required corrective statement that should have been made at the time of the contraventions, if it had been made, is likely to have had no, or no material, effect on the market price of [Myer] securities."

On September 11, 2014, chief executive Brookes predicted Myer's 2015 net profit to be in excess of the A$98.5 million ($67.4 million) result the company had achieved in the prior year.

Six months later, in March 2015, the company updated the market on its forecasts, flagging that its net profit would come in at between A$75 million and A$80 million, causing a decline in its share price.

Justice Beach said there was no evidence that Myer should have been aware that its profit would be lower than A$98.5 million when Brooks made the statement. But he said that "reasonable expectation" subsequently changed, and Myer should have made "corrective disclosures" of new profit forecasts.

"By not having so corrected at each of these points in time, Myer engaged in misleading or deceptive conduct," he said.

Herbert Smith Freehills class action partner Damian Grave said while the decision accepting the theory might make it easier for shareholders to establish a market-based theory of causation rather than needing to show they relied on a misstatement, "the decision shows that there are still risks for shareholders in these types of matters, given that the court found that in the circumstances of this case no loss may have been established".

Grave said it is too early to assess the precise impact of the decision on the securities class actions landscape, but he expects that for now, securities class actions in Australia will continue.

In a note on market-based causation in June of this year, local firm Clayton Utz – which defended Myer – said the uncertainty about whether it was available to plaintiffs in Australian shareholder class actions is one of the reasons that every shareholder class action before Myer had settled before judgment.

"Market-based causation avoids the need for the plaintiff and each group member to prove that they: (i) monitored announcements made by the company during the period when the relevant information should have been disclosed; and (ii) would not have purchased shares had the information been disclosed," the firm said.

Clayton Utz referred requests for comment to Myer. In a statement, Myer repeated the key details of the case and the judgment. It said it would not provide any further comment.

Melbourne boutique firm Portfolio Law represented the plaintiffs. It could not immediately be reached for comment.