Selig v Wealthsure Pty Ltd

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]).

High Court Judgment [2015] HCA 18 13 May 2015
Result Appeal allowed
High Court Documents Selig v Wealthsure
Full Court Hearing [2015] HCATrans 54  12 March 2015
Special Leave Hearing [2014] HCATrans 251  14 November 2014
Appeal from FCAFC [2014] FCAFC 64  30 May 2014
Trial Judgment FCA
[2013] FCA 348  18 April 2013
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About Martin Clark

Martin Clark is a PhD Candidate and Judge Dame Rosalyn Higgins Scholar at the London School of Economics and Political Science and Research Fellow at Melbourne Law School. He holds honours degrees in law, history and philosophy from the University of Melbourne, and an MPhil in Law from MLS. While at MLS, he worked as a researcher for several senior faculty members, was a 2012 Editor of the Melbourne Journal of International Law, tutor at MLS and various colleges, a Jessie Legatt Scholar, and attended the Center for Transnational Legal Studies Program.