The High Court has today significantly diminished (and arguably removed) the benefit of proportionate liability provisions in the Corporations Act and the ASIC Act in its judgment of Selig v Wealthsure Pty Ltd  HCA 18.
In this matter Wealthsure advised the Seligs to invest into a “ponzi scheme” that failed. The Seligs alleged Wealthsure made a number of common law and statutory claims, including contravention of s.1041H of the Corporations Act and s.12DA of the ASIC Act. Wealthsure pleaded in its defence that the proportionate liability regime of the Corporations Act and theASIC Act applied to all (statutory and common law) claims by the Seligs.
The argument was not successful in the Supreme Court where Wealthsure (and other defendants) were found jointly liable for the loss suffered by the Seligs. Wealthsure successfully appealed the first instance decision on the application of proportionate liability provisions in the Court of Appeal. The Seligs then appealed the Court of Appeal’s decision to the High Court.
The High Court unanimously allowed the appeal, finding that the proportionate liability provisions in theCorporations Act related only to claims under s.1041H and no other statutory or common law claims, including any other alleged contraventions of the Corporations Act. An analogous finding was made on the application of the proportionate liability regime under the ASIC Act.
In addition, the Court made costs orders directly against Wealthsure’s Insurer, who was not a party to the proceedings, on the basis that it maintained and benefited by the appeal to the Court of Appeal and so should be held accountable for the fallout.
This decision has diminished and possibly eliminated the benefit of pleading proportionate liability provisions under the Corporations Act and ASIC Act in financial planning cases. However, the decision may go far beyond impacting the proportionate liability provisions under only these Acts.
We will report further on the decision and its implications in an upcoming detailed update.