Proportionate liability was introduced to modify the common law
rule of joint and several liability, so that defendants were only
liable for the proportion of the damage that they had caused. The
proportionate liability legislation was intended to prevent one
wrongdoer being held responsible for the entire cost of the injured
party and being unable to recover from the other wrongdoers.
Importantly, these decisions involved proportionate liability
provisions contained in Commonwealth legislation. This meant that
the state and territory based proportionate liability legislation
and court decisions, where recent guidance has developed, did not
The Full Federal Court disagrees with itself
The key question in both decisions was whether, in a claim with
multiple causes of action but only one cause of action that had a
legislative proportionate liability regime, the regime will apply
to all the causes of action?
Wealthsure Pty Ltd v Selig
This matter involved a claim for breach of contract, common law
misleading or deceptive conduct and breach of the misleading or
deceptive conduct provisions of the Corporations Act 2001
(Cth) and the Australian Securities and Investments Commission
Act 2001 (Cth) (ASIC Act). The misleading or deceptive conduct
provisions of the Corporations Act and the ASIC Act contain a
proportionate liability regime.
On 30 May 2014, the majority of the Full Federal Court decided
that all claims were covered by the proportionate liability regime
if they resulted from the same loss or damage that was
apportionable under the legislation. In effect, this involves
focusing on the loss or damage claimed, as opposed to the
characteristic of the cause of action.
Therefore, based on this decision, even if some claims are not
apportionable if they are brought on their own, they become subject
to proportionate liability because the loss or damage caused by
those claims was the same as the loss or damage caused by
contravention of the legislation imposing a proportionate liability
ABN AMRO Bank NV v Bathurst Regional Council
However, a week later, the Full Federal Court handed down a
decision expressly rejecting the reasoning of the majority in
The matter involved a claim about false or misleading statements
(non-apportionable) and misleading or deceptive conduct
(apportionable) under separate sections of the Corporations Act,
with both claims arising out of the same facts.
This time the Full Federal Court (differently composed)
unanimously ruled that claims that do not fall under specific
proportionate liability legislation are not subject to
Accordingly, as the applicant succeeded on both claims, the
applicant could elect the remedy that it wanted. Based on the
nature of the appeal, the applicant was taken to have elected the
remedy that fell under the non-apportionable claim, and the
respondents were liable on a joint and several basis for the full
What this means
With the members of the Full Federal Court disagreeing on this
issue, it is likely that the composition of the Court will
determine whether a claim involving a cause of action with a
Commonwealth statutory apportionment regime will result in all
causes of action arising out of the same facts becoming
apportionable. However, given the uncertainty created by these two
decisions, it is hoped that the matter will be resolved by the High
Court in the near future.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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