HIGH COURT OF AUSTRALIA
FRENCH CJ,
KIEFEL, BELL, GAGELER AND KEANE JJRONALD SELIG & ANOR APPELLANTS
AND
WEALTHSURE PTY LTD & ORS RESPONDENTS
Selig v Wealthsure Pty Ltd
[2015] HCA 18
13 May 2015
A25/2014
ORDER
1.Appeal allowed.
2.Set aside orders 1, 2, 3 and 7 of the orders of the Full Court of the Federal Court of Australia made on 30 May 2014 and, in their place, order that:
(a)order 2 of the orders of Lander J made on 18 April 2013 be varied by substituting "$1,716,680" in place of "$1,760,512"; and
(b)the appeal and cross-appeal be otherwise dismissed.
3.Set aside orders 1 and 2 of the orders of the Full Court of the Federal Court of Australia made on 26 June 2014 and, in their place, order that QBE Insurance (Australia) Ltd pay the costs of the respondents, Mr and Mrs Selig, of the appeal to that Court.
4.QBE Insurance (Australia) Ltd pay the appellants' costs of the appeal to this Court.
On appeal from the Federal Court of Australia
Representation
P A Heywood-Smith QC with D G M Riggall for the appellants (instructed by Radbone and Associates)
R J Whitington QC with T W Cox SC for the first and second respondents (instructed by Cosoff Cudmore Knox)
No appearance for the third to ninth respondents
Submitting appearance for the tenth to thirteenth respondents
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Selig v Wealthsure Pty Ltd
Corporations – First and second respondents provided financial advice to appellants – First and second respondents found to have contravened various provisions of Corporations Act 2001 (Cth) ("Act") and Australian Securities and Investments Commission Act 2001 (Cth) – Whether liability should be limited to proportion of appellants' loss, having regard to comparative responsibility of other parties – Whether application of Div 2A of Pt 7.10 of Act limited to claims based on contravention of s 1041H of Act or also applies to other causes of action.
Procedure – Costs – Costs order against non-party – Where professional indemnity insurer had conduct of respondents' defence at trial and made decision to appeal – Where insurer acting in own interests by bringing appeal – Where respondents' cover under insurance policy was capped – Whether circumstances justified costs order against insurer who was a non‑party to proceedings.
Words and phrases – "apportionable claim", "proportionate liability".
Corporations Act 2001 (Cth), ss 1041H, 1041I(1B), 1041L, 1041N(1); Pt 7.10, Div 2A.
Australian Securities and Investments Commission Act 2001 (Cth), ss 12DA, 12GP(1); Pt 2, Div 2, subdiv GA.
FRENCH CJ, KIEFEL, BELL AND KEANE JJ. The appellants, Mr and Mrs Selig, invested in Neovest Limited ("Neovest") on the advice of the second respondent, David Bertram, who was an authorised representative of the first respondent, Wealthsure Pty Ltd ("Wealthsure"). Wealthsure was the holder of an Australian Financial Services Licence. The scheme proposed in the prospectus…
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- AGLC
- Selig v Wealthsure Pty Ltd [2015] HCA 18
- Case
- [2015] HCA 18
- Decision Date
CaseChat Overview and Summary
The primary legal issue before the High Court was the proper construction and application of Division 2A of Part 7.10 of the *Corporations Act 2001* (Cth) and its analogue provisions in the *ASIC Act 2001* (Cth). Specifically, the court had to determine whether this division, which deals with proportionate liability, applied only to claims based on a contravention of section 1041H of the *Corporations Act*, or if it extended to other causes of action for economic loss or damage to property arising from contraventions of other sections within Part 7.10, such as section 1041E, 1041F, or 1041G, when brought under section 1041I.
The High Court, by majority, allowed the appeal. The court reasoned that section 1041L(1) of the *Corporations Act* expressly limits "apportionable claims" to those for damages made under section 1041I that are specifically caused by conduct contravening section 1041H. Therefore, claims for loss or damage caused by contraventions of sections 1041E, 1041F, or 1041G, even if brought under section 1041I, do not fall within the scope of Division 2A and are not subject to proportionate liability. The court also ordered that QBE Insurance (Australia) Ltd pay the appellants' costs of the appeal to the High Court, finding that the insurer had acted in its own interests by bringing the appeal.
Consequently, the High Court allowed the appeal, set aside certain orders of the Full Court, varied an earlier monetary order by substituting a reduced amount, and otherwise dismissed the appeal and cross-appeal. The court also set aside other orders of the Full Court and ordered QBE Insurance (Australia) Ltd to pay the costs of the respondents in that appeal.
Orders
Orders of the court
1. Appeal allowed.
2. Set aside orders 1, 2, 3 and 7 of the orders of the Full Court of the Federal Court of Australia made on 30 May 2014 and, in their place, order that:
(a) order 2 of the orders of Lander J made on 18 April 2013 be varied by substituting "$1,716,680" in place of "$1,760,512"; and
(b) the appeal and cross-appeal be otherwise dismissed.
3. Set aside orders 1 and 2 of the orders of the Full Court of the Federal Court of Australia made on 26 June 2014 and, in their place, order that QBE Insurance (Australia) Ltd pay the costs of the respondents, Mr and Mrs Selig, of the appeal to that Court.
4. QBE Insurance (Australia) Ltd pay the appellants' costs of the appeal to this Court.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Established by: GAGELER J
The only presently relevant issue on the appeal from his Honour's decision to a Full Court of the Federal Court was the applicability of Div 2A and the analogue provisions of the ASIC Act. By a majority, the Full Court (Mansfield and Besanko JJ, White J dissenting on the present issue)[4] allowed the appeal. Shortly after the Full Court's judgment was delivered in this matter, a differently constituted Full Court of the Federal Court delivered reasons for judgment in another matter[5], in which the contrary view as to the construction of Div 2A, that adopted by Lander and White JJ, was expressed.[4]Wealthsure Pty Ltd v Selig (2014) 221 FCR 1 at 4-5 [10] per Mansfield J, 19 [77] per Besanko J.[5]ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1 (Jacobson, Gilmour and Gordon JJ).Div 2A of Pt 7.10 of the Corporations Act 2001 The reasons for judgment in the Court below dealt with the provisions of Div 2A on the correct basis that the reasoning would apply equally to the provisions of the ASIC Act. There being no relevant distinction, that course will be followed here. Section 1041L appears under the heading to Div 2A, "Proportionate liability for misleading and deceptive conduct", and provides:"(1)This Division applies to a claim (an apportionable claim) if the claim is a claim for damages made under section 1041I for:(a)economic loss; or(b)damage to property;caused by conduct that was done in a contravention of section 1041H.(2)For the purposes of this Division, there is a single apportionable claim in proceedings in respect of the same loss or damage even if the claim for the loss or damage is based on more than one cause of action (whether or not of the same or a different kind).(3)In this Division, a concurrent wrongdoer, in relation to a claim, is a person who is one of 2 or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim.(4)For the purposes of this Division, apportionable claims are limited to those claims specified in subsection (1).(5)For the purposes of this Division, it does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died." For a claim to be an apportionable claim, s 1041L(1) requires that it be a claim for damages made under s 1041I. That provision appears in Div 2 of Pt 7.10 and provides, by sub-s (1):"A person who suffers loss or damage by conduct of another person that was engaged in in contravention of section 1041E, 1041F, 1041G or 1041H may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention, whether or not that other person or any person involved in the contravention has been convicted of an offence in respect of the contravention." Section 1041I(1) creates a cause of action for contraventions of each of ss 1041E, 1041F, 1041G and 1041H. However, s 1041L(1) nominates only claims for loss or damage caused by conduct that was done in contravention of s 1041H to be apportionable claims.