Ronald Selig & Anor v Wealthsure Pty Ltd & Ors [2015] HCA 18

Legal Directions


The High Court has unanimously allowed an appeal against a decision of the Full Court of the Federal Court of Australia and held that the proportionate liability regime in Division 2A (titled ‘Proportionate Liability for Misleading and Deceptive Conduct’) of Pt 7.10 (‘Div 2A’) of the Corporations Act 2001 (Cth) (the ‘Act’) applies only to claims of misleading or deceptive conduct based upon a contravention of s 1041H of the Act.


Mr & Mrs Selig made an investment in Neovest Limited on the advice of Mr Bertram, an authorised representative of Wealthsure Pty Ltd. The Neovest scheme was, in effect, a ‘Ponzi scheme’. Neovest became insolvent. The Seligs lost their investment and suffered consequential losses.

The Seligs claimed Bertram and Wealthsure (as well as other defendants) had contravened a number of provisions of the Act including s 1041H and its analogue in the Australian Securities and Investments Commission Act 2001 (Cth) (the ‘ASIC Act’), s 12DA. They alleged the same loss and damage flowed from the various breaches.

Section 1041H(1) provides that a person must not engage in conduct, in relation to a financial product or a financial service, that is misleading or deceptive or is likely to mislead or deceive.

Section 1041L(1), in Div 2A of the Act, defines an ‘apportionable claim’ as a claim for loss or damage ‘caused by conduct that was done in a contravention of section 1041H’.

The Seligs also alleged other contraventions of the Act and of the ASIC Act such as breaches of s 1041E of the Act which provides that a person must not make a statement or disseminate information in relation to a financial product that is false or materially misleading and when the person does not care whether it is true or false or knows or ought reasonably to have known that it is false or materially misleading. 

Bertram and Wealthsure argued that Div 2A and the corresponding provisions of the ASIC Act applied to limit their liability to a proportion of the Seligs’ loss and damage, having regard to the comparative responsibility of a number of other parties, including Neovest, the company the Seligs invested in, and its directors.

The Seligs argued the proportionate liability regime applied only to the claims for breach of s 1041H (1) and its ASIC Act analogue so that Bertram and Wealthsure were liable for all of the Seligs’ loss as a result of other contraventions of the Act and of the ASIC Act.

At first instance, the Court found Bertram and Wealthsure and other defendants liable to the Seligs for the same loss or damage. The Court did not apportion the loss among Bertram and Wealthsure and the other defendants, as the Seligs also succeeded on other causes of action (resulting in the same loss) that did not make the claim an apportionable claim. 

Bertram and Wealthsure successfully appealed to the Full Court of the Federal Court. The majority of the Full Court held that the loss should be apportioned among Bertram and Wealthsure and other defendants.

The Seligs appealed to the High Court against the decision of the Full Court of the Federal Court.

High Court decision

The High Court allowed the Seligs’ appeal and held that an ‘apportionable claim’ for the purposes of Div 2A is, relevantly, a claim based upon a contravention of s 1041H. The term does not extend to claims based upon conduct of a different kind, therefore the proportionate liability regime established by Div 2A does not apply to claims based upon conduct of a different kind. The Court held that this reasoning applied equally to analogous provisions of the ASIC Act.


The High Court has thereby resolved a controversial issue which had been the subject of conflicting Federal Court authority (see the Full Court of the Federal Court’s decisions in Wealthsure v Selig (2014) FCAFC 64 and ABN AMRO Bank NV v Bathurst Regional Council (2014) 224 FCR 1).

Interestingly, the High Court also ordered the insurer of the Bertram and Wealthsure, a non-party to the proceedings, to pay the costs of the High Court and the Federal Court appeals. The policy issued by the insurer to Wealthsure provided a capped cover that was inclusive of legal costs. The insurer had the conduct of the defence at trial and made the decision to appeal to the Full Court of the Federal Court.

The High Court held that the insurer’s decision to appeal meant that monies which the insurer would otherwise have been obliged to pay the Seligs had been diverted to meet the insurer’s legal costs. As the insurer was acting for itself in seeking to better its position, the High Court held that the insurer should be ordered to pay the Seligs’ appeal costs. It will be interesting to see how the limits of this approach are determined in future cases.

Authored by Ryan Lee, Special Counsel, Melbourne.

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