PROPORTIONATE LIABILITY IN AUSTRALIA - ITS LIMITATIONS

The High Court of Australia has recently confirmed that the Commonwealth statutory proportionate liability and contributory negligence regimes have a narrow reach. A defendant can only rely upon those regimes as a defence to specific claims. 


The proceedings before the High Court arose out of the Appellants failed investment in Neovest Ltd, a Ponzi scheme. The Appellants brought proceedings against their investment advisors. They structured their proceedings to include the following causes of action: 



The Respondents pleaded in their defence reliance upon the provisions of the Corporations Act and ASIC Act which, they argued, entitled them to point to the contributing liability of the Appellants and other third parties to reduce their overall liability to the Appellants on a proportionate basis.


The number of causes of action did not affect the damages claimed. So it was critical for the provisions upon which the Respondents were relying to answer all of the allegations which the Appellants were making. Only then would the Respondents’ overall liability be reduced.


The majority of the Full Court of the Federal Court of Australia controversially said that the provisions upon which the Respondents were relying, answered all of the Appellants’ allegations. The High Court of Australia unanimously disagreed. 



Why ?


The provisions supporting the defences of proportionate liability and contributory negligence specifically identified the allegations to which they constituted a defence. They could only be used as a defence to those specific allegations.


The fact that those allegations might form part of a raft of allegations against a defendant did not mean that the provisions constituted a defence to the entire raft. Reference in the legislation to the bundling up of allegations, was not a reference to the bundling up of allegations that yielded the same damages. It was a reference to the bundling up of allegations which the proportionate liability and contributory negligence defences specifically targeted.


To find otherwise allowed the Commonwealth legislation to trespass into the State or Territory spheres contrary to what the Commonwealth, State and Territory Parliaments had intended when the defences of proportionate liability and contributory negligence were introduced at a Commonwealth level.


The name of the decision is Selig v Wealthsure Pty Ltd [2015] HCA 18 (13 May 2015).

2 views0 comments