The High Court has unanimously allowed an appeal from a decision of the Full Federal Court relating to the scheme for proportionate liability under pt 7.10 divs 2–2A (ss 1041H–1041S) of the Corporations Act 2001 (Cth). The appellants were victims of a Ponzi scheme that their financial advisers (the first and second respondents) recommended to them using a misleading and deceptive disclosure document, which incorrectly suggested that the financial product was solvent. The advisers accepted some responsibility for the loss, but contended that most of the loss was apportionable to, among others, the promoters of the product. The trial judge held that the financial advisers’ liability was not apportionable and awarded $1.7mil in damages. A majority of the Full Federal Court allowed an appeal against that holding, concluding that the advisers were 60% responsible, and reduced the damages sum accordingly.

The High Court (French CJ, Kiefel, Bell and Keane JJ, Gageler J concurring) held that apportionable claims only applied to contraventions of s 1041H, and does not extend to claims under other sections: [22]. [37]. The Court held that while the FCAFC majority focused on the meaning of ‘claim’ in s 1041L(2), relating to loss/damage requirements and the possibility of multiple claims, the overriding consideration was that s 1041L(1) made it clear that the ‘claim’ could only be on the basis of s 1041H, through the provision in s 1041I: ‘The “claim” in s 1041L(1) is a claim for damages under s 1041I for damage caused by conduct in contravention of s 1041H. When s 1041L(2) speaks of a claim based on more than one cause of action, it cannot be speaking of a claim liability for which arises due to contravention of a norm of conduct different from that which creates liability to a claim for damages described in s 1041L(1), namely s 1041H.’: [29]. The Court rejected the respondents’ arguments that s 1041L(1) offered only a partial or contingent definition (at [30]–[31]) and that a more universal or general application of div 2A (see [32]–[36]). Gageler J concurred with the joint judgment, adding observations on the limited operation of s 1041I(1B). (The appellants also were awarded costs from the first respondent’s insurer, a non-party to proceedings: see [39]–[48]).