Wealthsure Pty Ltd v Selig

Case [2014] FCAFC 64

FEDERAL COURT OF AUSTRALIA

Wealthsure Pty Ltd v Selig [2014] FCAFC 64

Citation: Wealthsure Pty Ltd v Selig [2014] FCAFC 64
Appeal from: Selig v Wealthsure Pty Ltd [2013] FCA 348
Parties: WEALTHSURE PTY LTD (ABN 93097405108) and DAVID BERTRAM v RONALD SELIG AND JANNA SELIG, RICHARD WILLIAM SPENCER, SILVANA PEROVICH, MARK RICHARD NORTON, PETER MAURICE TOWNLEY, NEOVEST LIMITED (IN LIQUIDATION) ACN 104 915 906, NORTON CAPITAL PTY LIMITED (IN LIQUIDATION) ACN 086 207 169, DANIEL GEOFFREY LILLEY, DAMIEN BERNARD GREER, ROBERT NOEL GALLAGHER, STEPHEN JAMES DICKENS and MICHAEL JOSEPH CROUCH
File number: SAD 97 of 2013
Judges: MANSFIELD, BESANKO AND WHITE JJ
Date of judgment: 30 May 2014
Catchwords:

CORPORATIONS – contraventions of ss 945A, 945B, 728, 769C, 1041E, 1041F and 1041H of the Corporations Act 2001 (Cth), ss 12BB, 12DA, 12DB and 12ED of the Australian Securities and Investments Commission Act 2001 (Cth) and contractual and common law duty of care in the provision of advice and disclosure documents in relation to investment – damages for loss of investment and consequential losses – whether findings inconsistent with pleaded case – whether defendants liable for consequential losses – consideration of principles of causation of loss in relation to statutory contraventions

DAMAGES – whether damages correctly assessed on a “no transaction” basis – whether damages correctly assessed on the basis investment wholly lost – whether compound interest correctly calculated – application of contributory negligence and proportionate liability provisions in Corporations Act and ASIC Act – whether “a single apportionable claim” in s 1041L(2) of the Corporations Act and s 12GP(2) of the ASIC Act comprises all claims for the same loss or damage or only those which are themselves apportionable claims under ss 1041L(1) and 12GP(1) – whether allocation of responsibility of loss between parties inappropriate

Legislation:

Australian Consumer Law (Cth) s 236

Australian Securities and Investments Commission Act 2001 (Cth) ss 12BAB, 12BB, 12DA, 12DB, 12ED, 12GF, 12GP, 12GP-12GW

Bankruptcy Act 1966 (Cth) ss 58, 60
Corporations Act 2001 (Cth) ss 278, 283F, 601MA, 601XAA, 670A, 670B, 728, 729, 766A, 766B, 766C, 763A, 769C, 916A, 991A, 945A, 945B, 953A, 953B, 1022A, 1022B, 1041E, 1041F, 1041G, 1041H, 1041I, 1041L-1041S, 1325, 1466
Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (Cth)
Civil Liability Act 2002 (NSW) s 34
Civil Liability Act 2003 (Qld) Chapter 2, Part 2
Federal Court of Australia Act 1976 (Cth) ss 24, 51A
Federal Court Rules 2011 (Cth) r 36.73
Law Reform Act 1995 (Qld)
Law Reform (Contributory Negligence) Amendment Act 2001 (Qld)
Partnership Act 1891 (Qld) s 13
Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 (Cth) s 3, Schedule 3
Trade Practices Act 1974 (Cth) ss 52, 82, 87CB-87CI

Wrongs Act 1958 (Vic) s 24AI

Cases cited:

Ah Toy v Registrar of Companies (1985) 10 FCR 280
Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41; (2009) 239 CLR 27

Allianz Australia Insurance Limited v GSF Australia Pty Limited [2005] HCA 26;

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Wealthsure Pty Ltd v Selig [2014] FCAFC 64
Case
[2014] FCAFC 64
Decision Date

CaseChat Overview and Summary

In the case of Wealthsure Pty Ltd v Selig, the dispute centred on claims of statutory contraventions under the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth), alongside allegations of a contractual and common law duty of care breach in the provision of investment advice and disclosure documents. The plaintiffs sought damages for loss of investment and consequential losses. The court was tasked with determining whether the findings were consistent with the case as pleaded, whether the defendants were liable for consequential losses, and the application of causation principles in relation to statutory contraventions. Additionally, the court examined whether damages were correctly assessed and calculated, the application of contributory negligence and proportionate liability provisions, and the interpretation of certain statutory provisions regarding apportionment of claims.

The court found that the primary judge's assessment of damages was flawed in several respects. Specifically, the court held that the judge erred in awarding compound interest as damages for capital losses caused by the forced sale of the Seligs' apartments. The court clarified that pre-judgment interest should be calculated instead, and adjusted the damages accordingly. The court also found that the primary judge's interpretation of statutory provisions regarding apportionment of claims was incorrect, leading to an inappropriate allocation of responsibility for loss between the parties. As a result, the appeals were allowed in part, and the original judgment was set aside with new orders replacing it.

The final orders of the court included allowing the appeals by Wealthsure Pty Ltd and Mr David Bertram, as well as the cross-appeal by Mr Peter Maurice Townley. The court set aside the original judgment and ordered new judgments against the first, second, fifth, and sixth defendants for specified sums. The parties were instructed to be heard regarding any further orders and costs. This decision underscored the importance of correctly interpreting statutory provisions and accurately assessing damages in investment-related disputes.

Orders

Orders of the court

1. The appeal by Wealthsure Pty Ltd and Mr David Bertram be allowed.

2. The cross-appeal by Mr Peter Maurice Townley be allowed.

3. The second order made by the primary judge on 18 April 2013 be set aside and in lieu of that order there be orders as follows:

(i) Judgment for the plaintiffs against the first and second defendants in the sum of $875,506.80;

(ii) Judgment for the plaintiffs against the fifth defendant in the sum of $364,794.50;

(iii) Judgment for the plaintiffs against the sixth defendant in the sum of $218,876.70.

4. The parties be heard as to any other orders and costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

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

I take the view that it is unnecessary to consider and determine each of these individual complaints. The submissions made on Mr Townley’s behalf did not address all these matters. In some cases, there was no more than a bald assertion that the Judge’s finding was wrong unaccompanied by any attempt to identify the nature of an error, let alone an appellable error. Nor did the submissions indicate that the alleged errors, if established, had had a material effect on the Judge’s findings. The appeal lies against the Judge’s orders, and not against his individual findings.Conclusion The effect of these reasons is that I would uphold the appeal by Wealthsure and Mr Bertram on one ground only, namely, that the Judge erred in awarding compound interest as damages in respect of the capital losses caused by the forced sale of the Seligs’ two Sea Aura apartments. That has the effect of reducing the Seligs’ damages to $1,651,680. However, the Seligs are entitled to interest pursuant to s 51A of the Federal Court of Australia Act 1976 (Cth) in respect of those capital losses. One of the Sea Aura units was sold on 7 December 2007 and the other on 15 March 2010. The Judge considered that the Seligs lost about $135,000 in equity in the first sale and about $200,000 in equity in the second. However, having regard to other contributing causes, the Judge allowed $200,000 for the loss of equity. He did not apportion that amount between the two units. On the basis of the proportion of the overall loss of equity allowed by the Judge, it is appropriate to allocate $80,000 of the $200,000 allowed for loss of equity to the first sale, and $120,000 to the second. On that basis, and using the interest rates specified in Practice Note CM16, I would allow pre-judgment interest of $65,000. This means that judgment should have been entered against Wealthsure and Mr Bertram in the sum of $1,716,680. The outcome is the same in the case of the appeal by Mr Townley. The consequence is that the appeals should be allowed, the judgment in favour of the first, second and sixth defendants be set aside and, in its place, judgment be entered against those defendants in the sum of $1,716,680. In all other respects, the appeals should be dismissed. I would hear from the parties as to costs.

Ratio Decidendi

Legal Principle Established

Finally, a passage by way of obiter in the reasons of Hansen J in Rod Investments (Vic) Pty Ltd v Abeyratne (No 2) [2009] VSC 278 at [43], indicates that his Honour accepted that s 1041L(2) may be invoked when there is at least one apportionable claim within the meaning of s 1041L(1).Consideration The issue is one of statutory construction. In Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, the plurality described the approach to be adopted as follows:[69]The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined “by reference to the language of the instrument viewed as a whole”. … Thus, the process of construction must always begin by examining the context of the provision that is being construed.[70]A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court “to determine which is the leading provision and which the subordinate provision, and which must give way to the other”. Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme.[71]Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision. …(Citations omitted) Emphasis on the necessity for regard to the text of the statute is evident in later decisions of the High Court, for example, Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT) [2009] HCA 41 at [47]; (2009) 239 CLR 27 at 46-7; Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 293 ALR 257. In the latter case, French CJ, Hayne, Crennan, Bell and Gageler JJ said at [39] 268-9:“This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text.” So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.(Citation omitted) As noted earlier, s 1041N is the principal operative provision. Subsection (1) limits the liability of a concurrent wrongdoer for “an apportionable claim” to the amount which the Court considers just having regard to the extent of the defendant’s responsibility for the plaintiff’s loss and damage. Subsection (2) applies to those cases involving both an “apportionable claim” and a claim which is not an “apportionable claim”, stipulating that the liability for the apportionable claim is to be determined in accordance with the provisions of Division 2A and the liability for the other claim to be determined in accordance with the legal rules, if any, which, apart from Division 2A, are relevant.