Selig and Anor v Wealthsure Pty Ltd and Ors

The High Court of Australia considered an appeal concerning alleged misleading and deceptive conduct in relation to financial services. The appellants, Mr Selig and his wife, alleged that Wealthsure Pty Ltd and its directors engaged in conduct that contravened section 12DA of the ASIC Act 2001 (Cth) and section 1041H of the Corporations Act 2001 (Cth). The dispute centred on representations made by Wealthsure concerning the suitability of certain investment products, specifically a managed investment scheme, for the Seligs.

The primary legal issue before the High Court was whether the conduct of Wealthsure and its directors in recommending and facilitating the investment in the scheme constituted misleading or deceptive conduct. This involved determining whether the representations made about the investment's risks and potential returns were such that they were likely to mislead or deceive a reasonable person in the position of the appellants, and whether the respondents had taken reasonable steps to ensure the accuracy of those representations.

The High Court, in its joint judgment, clarified the application of the "reasonable steps" defence under section 12DM of the ASIC Act and its equivalent under the Corporations Act. The Court held that the defence requires a respondent to demonstrate that they took all reasonable steps to prevent the contravening conduct. This involves an objective assessment of the steps taken, considering the nature of the business, the specific contravention alleged, and the circumstances of the case. The Court found that Wealthsure had failed to establish this defence, as the steps taken to ensure the accuracy of the information provided to the Seligs were insufficient, particularly given the nature of the investment and the potential risks involved. The Court emphasised that a mere reliance on a product disclosure statement or a general disclaimer would not, in itself, satisfy the requirement to take reasonable steps.

The High Court allowed the appeal, setting aside the orders of the Full Federal Court and remitting the matter to the Federal Court for determination of the quantum of damages.