Today, the High Court of Australia heard an appeal in the case of Selig v Wealthsure.


This case concerns Mr and Mrs Selig who sought and relied on financial advice provided by Mr Bertram, an authorised representative of Wealthsure Pty Ltd (Wealthsure). Based upon that advice they invested $450,000 in Neovest Ltd (Neovest). When Neovest failed and the Seligs lost the entirety of their investment.

The Seligs claimed both damages for the loss of their investment and for consequential losses resulting, against several parties, two of which were Wealthsure and Mr Bertram.

The Seligs’ claim was brought for a number of alleged breaches of the Corporations Act 2001 (Cth) (Corporations Actthe Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and in common law for breach of contract and negligence.

The statutory claims included the allegation that Wealthsure engaged in misleading or deceptive conduct in relation to a financial product or a financial service in contravention of section 1041H of the Corporations Act. That claim was accompanied by allegations that Wealthsure had breached other sections of the Corporations Actincluding section 1041E which applies in respect of false or misleading statements to induce a person to apply for, acquire or dispose of financial products.

Similarly, it was alleged that Wealthsure’s conduct contravened section 12DA of the ASIC Act which is the misleading or deceptive provision in that ActThat claim was accompanied by allegations that Wealthsure had breached other sections of the  ASIC Act  including section 12DB of the ASIC Act for false representations in relation to the standard of financial services.

First Instance

At first instance, Justice Lander of the Federal Court of Australia found against Wealthsure, Mr Bertram and two other respondents, ordering they pay a sum of $1,760,512 to the Seligs.

His Honour held that proportionate liability provisions only applied to the cause of action based on section 1041H. Wealthsure brought an appeal before the full court of the Federal Court of Australia.

Appeal to Full Federal Court

The central question arising on appeal was whether the relevant proportionate liability provisions applied to the liability of the respondents to the Seligs, allowing for each respondent to only be liable for a proportion of the damages calculated with reference to the extent of their responsibility. Importantly, it was accepted by all parties that the losses flowing from all of the causes of action pleaded were the same.

The Full Court’s decision ultimately turned on its interpretation and application of the language of Division 2A which is entitled ‘Proportionate liability for misleading and deceptive conduct’.

  1. The majority of the Full Court, constituted by Justice Mansfield and Justice Besanko, held that the legislative intention behind section 1041L(2) was that where:
    1. There is a finding of misleading or deceptive conduct in contravention of section 1041H of theCorporations Act 2001 (Cth) (which is an apportionable claim by virtue of s1041L(1)); and
    2. The losses flowing from that claim are the same as those flowing from other causes of action brought by the plaintiff;
    3. there is a single claim which is apportionable. This is the case even though the other causes of action would not be apportionable claims but for the fact that the defendant had also contravened section 1041H.

At paragraph 10, Justice Mansfield stated:

“Provided that there is a separate cause or other causes of action against the person or persons who have contravened section 1041H [of the Corporations Act 2001] if that other or those other causes of action have caused the same damage, the claim maintains its character as an apportionable claim.”

Even though Wealthsure and Mr Betram committed various contraventions in addition to the apportionable misleading and deceptive conduct provisions of the Corporations Act and ASIC Act, each of those causes of action were held, together with the cause of action under s1041H, to constitute a single apportionable claim.


For a short time the Full Federal Court’s decision appeared to bring some resolution to this vexed issue, which had been previously the subject of a number of conflicting first instance decisions. However the respite was short lived - only days later a differently constituted Full Federal Court bench handed down a further decision dealing with the same issues in ABN Amro Bank NV v Bathurst Regional Council [2014] FCAFC 65.

In that decision, the Court took a narrower view, unanimously finding that the proportionate liability provisions in the Corporations Act only apply to contraventions of section 1041H of the Corporations Act and not to losses flowing from any other cause of action pleaded.

As noted by Chief Justice French, on the hearing of the application for leave to appeal to the High Court, this created a position where there were two conflicting Full Federal Court decisions relating to an issue of significant legal importance.

High Court Appeal

The Seligs sought and were granted special leave to appeal the decision of the Federal Court in December 2014.

In their appeal they claim that it was the clear intention of the legislature, in drafting section 1014L, that only a claim under section 1014I for economic loss or damage to property caused by conduct done in contravention of section 1041H would be apportionable. They submit that this is evident from a proper construction of the legislation and from the legislative discourse which preceded the inclusion of the section into the Corporations Act 2001 (Cth).

Wealthsure and the other respondents, conversely, submit that a purposive approach to the provisions of  theCorporations Act indicates that where the ‘claim’ (being the relief claimed) is the same under a number of sections and where one of those sections is section 101HI, it must follow that the ‘claim’ will be apportionable.


Given that there are equivalent provisions to section 1041L(2) of the Corporations Act in the Competition and Consumer Act 2010 and the ASIC Act, as well as other state legislation, it is likely that the decision, if followed, will have application in a wider context.

If the appeal is dismissed, this will arm insurers with the ability to better anticipate potential future losses and thus, more accurately underwrite risks, as well as limit the spectrum of potential damages to be awarded against defendants who are indemnified by deep pocketed insurers.

Insurance Clarity will report further following the High Court’s decision, which is expected to be reserved.

For a full case note on the full Federal Court Appeal in Wealthsure Pty Ltd v Selig [2014] FCAFC 64 click here.
For a full case note on the full Federal Court Appeal in ABN Amro Bank NV v Bathurst Regional Council [2014] FCAFC 65 click here.
For a copy of the Seligs’ submissions to the High Court of Australia click here.
For a copy of Wealthsure’s submissions to the High Court of Australia click here.