Selig & Anor v Wealthsure Pty Ltd & Ors [2015] HCATrans 54 (12 March 2015)

Last Updated: 16 March 2015

[2015] HCATrans 054

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Adelaide No A25 of 2014

B e t w e e n -

RONALD SELIG

First Appellant

JANNA SELIG

Second Appellant

and

WEALTHSURE PTY LTD (ABN 3097405108)

First Respondent

DAVID BERTRAM

Second Respondent

RICHARD WILLIAM SPENCER

Third Respondent

SILVANA PEROVICH

Fourth Respondent

PETER MAURICE TOWNLEY

Fifth Respondent

MARK RICHARD NORTON

Sixth Respondent

NEOVEST LIMITED (IN LIQUIDATION) ACN 104 915 906

Seventh Respondent

NORTON CAPITAL PTY LTD (DEREGISTERED) ACN 086 207 169

Eighth Respondent

DANIEL GEOFFREY LILLEY

Ninth Respondent

DAMIEN BERNARD GREER

Tenth Respondent

ROBERT NOEL GALLAGHER

Eleventh Respondent

STEVEN JAMES DICKENS

Twelfth Respondent

MICHAEL JOSEPH CROUCH

Thirteenth Respondent

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON THURSDAY, 12 MARCH 2015, AT 10.00 AM

Copyright in the High Court of Australia

____________________

MR P.A. HEYWOOD-SMITH, QC: May it please the Court, I appear with my learned friend, MR D.G.M. RIGGALL, for the appellant. (instructed by Radbone and Associates)

MR R.J. WHITINGTON, QC: May it please the Court, I appear with my learned friend, MR T.W. COX, SC, for Wealthsure Pty Ltd, the first respondent. I am also in a position to announce an appearance for the second respondent, Mr Bertram, who was bankrupted with the acknowledgment and approval of his Trustee in Bankruptcy. Could I mention a preliminary matter? We have a summons of 23 December 2014 seeking an order that the appeal be declared moot. I am instructed not to pursue that application. (instructed by Cosoff Cudmore Knox)

FRENCH CJ: Yes, all right. Thank you. I note there is no appearance for the third to 13th respondents. Yes, Mr Heywood-Smith.

MR HEYWOOD-SMITH: If the Court pleases. If I could just commence with a bit of an overview and state briefly what we say this case is about, and what the appropriate result is. The question we say that is before the Court is this; whether a claimant - plaintiff or applicant – in any event, the initiator of litigation under the Corporations Act – who brings a non-apportionable claim can be met with a notice under section 1041O, and advised of current wrongdoers and thereby have his or her non-apportionable claim rendered apportionable. The appellant says no.

That there is such a thing as a non-apportionable claim is clear. It is made clear by section 1041N(2) – I will be taking the Court to these sections in a moment – and by a necessity from section 1041L(1) and 1041L(4) and 1041H. Claims in relation to disclosure documents or statements as defined in section 953A are unquestionably non-apportionable claims. If a claimant were to make a non-apportionable claim, as was done here, but join with it an apportionable claim under section 1041H, as was done here, then notice under section 1041O could be given if the defendant or respondent was contesting a non-apportionable claim.

In those circumstances, if the plaintiff failed on the non-apportionable claim, then obviously the apportionable claim would have to be addressed and orders made under section 1041N(1). If both claims succeeded, that is, the non-apportionable and apportionable, orders would be made under 1041N(2). The plaintiff would receive the full amount in respect of the non-apportionable claim, and there would be orders in respect of current wrongdoers on the apportionable claim and it would be a matter of recovery as to what happened ultimately.

We say that all of that is consistent with the scheme, including as implemented in the States – and I will be taking the Court in due course to the New South Wales provision which was considered in Hunt & Hunt. This issue was raised, apart from in this case, before the Full Court in ABN Amro’s Case. In both this case and ABN Amro, there was both a non-apportionable and an apportionable claim. In the case of ABN Amro, it was a claim under 1041E – it was the non-apportionable claim – and as well a claim under 1041H, an apportionable claim.

This issue was not raised in either Hunt & Hunt v Mitchell Morgan or in St George Bank v Quinerts, because in both of those cases there was only an apportionable claim; there was no non-apportionable claim. So those cases will not assist the Court on the principal question which we say arises in this case. We say that that proposition is reflective of the fact that Parliament was entitled to say that there would be some defendants who should not be entitled to the benefit of apportionment in respect of some conduct, such as, as we say here, conduct appertaining to defective statements of advice by financial licensees, or persons who commit offences, for example.

That is our overview. I ask that the Court have our summary of submissions document, a three-page document. I do not propose to take the Court, except in certain specific matters, to the appellant’s summary of submissions but we rely upon that, of course. Coming to the outline of submissions, paragraph 1.1, I think, is clear. Paragraph 1.2:

The Corporations Act recognizes that there are both apportionable and non-apportionable claims –

At tab 6 of the appellant’s book of materials is Part 7.10 of the Corporations Act, and Division 2A commences at page 461 - - -

FRENCH CJ: Your recovery before the trial judge was under 953B?

MR HEYWOOD-SMITH: That is so. Section 1041N(2):

the proceedings involve both an apportionable claim and a claim that is not . . . apportionable –

Clearly, there is the concept of a non-apportionable claim - - -

FRENCH CJ: You will have to speak up a little bit, Mr Heywood-Smith.

MR HEYWOOD-SMITH: I do apologise. Paragraph 1.3 of our outline, it is the appellant’s submission that proportionate liability is not available in respect of non-apportionable claims. Section 1041H(3) specifically excludes – perhaps I should go firstly to 1041L(1):

This Division applies to a claim (an apportionable claim) . . .

caused by conduct that was done in a contravention of section 1041H –

That is reinforced in 1041L(4) –

For the purposes of this Division, apportionable claims are limited to those claims specified in subsection (1).

In section 1041H – noted this on page 456, it is noted that it is a claim in respect of misleading conduct and it is a civil liability claim only, and pursuant to Note 1:

Failure to comply with this subsection is not an offence –

and in subsection (3) –

Conduct:

(a) that contravenes -

certain provisions, including –

(b) in relation to a disclosure document or statement within the meaning of section 953A . . .

does not contravene subsection (1).

We say that that subsection specifically excludes proportionate liability in respect of conduct “in relation to a disclosure document or statement within the meaning of section 953A”; paragraph 1.5 - - -

FRENCH CJ: At this stage, it is – at the point of 1041H, it is a carve-out from the coverage of 1041H(1) - - -

MR HEYWOOD-SMITH: That is so.

FRENCH CJ: - - -and that is on the basis that there are specific provisions to deal with.

MR HEYWOOD-SMITH: That is so.

GAGELER J: Is that relevant in this case? Is the carve-out relevant?

MR HEYWOOD-SMITH: It is relevant in the sense that a claim was brought under 945A and 945B, which are sections that feed into 953A; they are non-apportionable claims. His Honour Justice Lander found those claims made out; there has been no appeal against the findings in those claims, and so the appellant here succeeded in a non-apportionable claim.

In 1.6 of our outline, we draw attention to what we perceive to be a submission by the respondents that 1041H(3) must be considered in the sense that it existed prior to Division 2A being inserted into the Act – that is, the proportionate liability provisions – and we draw attention to the fact that section 1041H(3) was amended in 2012 by the addition of paragraph (iii). That is referred to in paragraph 42 of our outline. It added to the carve-out sections 1021NA, NB and NC, which all pertain to disclosure documents concerning superannuation products; fundamentally similar, however, to statements of advice that existed before.

FRENCH CJ: Just going back to Justice Gageler’s question for a moment, am I correct in understanding that the carve-out from 1041H which appears in subsection (3)(b), that is:

in relation to a disclosure document or statement within the meaning of section 953A –

that that would carve-out the cause of action on which you succeeded under 953B - - -

MR HEYWOOD-SMITH: Yes.

FRENCH CJ: - - - so that, therefore, a cause of action under which you succeeded is not a contravention of 1041H and on that basis is not picked up by the express apportionable claim provision in 1041L and following.

MR HEYWOOD-SMITH: Quite so. That is our submission.

FRENCH CJ: Yes, okay.

MR HEYWOOD-SMITH: In 1.7 of our submissions, we assert that:

The types of conduct found in section 1041H(3) are, when viewed collectively, precisely the type of conduct which might be expected to be excluded from proportionate liability –

and by way of an example, we refer the Court to the provision in New South Wales. If the Court goes to tab 8 of our documentation, we have there Part 4 of the Civil Liability Act (NSW) 2002 No 22, and the Court will see sections 34 to 39 which relate exactly to sections 1041L to 1041S. Now, when I say “relate exactly”, obviously the terms of section 34(1) are different because they are addressing claims brought not under the Corporations Act but pursuant to the general law or the New South Wales fair trading legislation, but thereafter the Court will see section 34(1)(a), for example, is the equivalent of the Corporations Act section 1041L(2) - - -

FRENCH CJ: What is the proposition for which you are taking us to the New South Wales statute?

MR HEYWOOD-SMITH: Simply because, as an example, you will see (3A) – (3A) is a carve-out. It:

does not apply to . . . an action for damages arising from a breach of statutory warranty under . . . the Home Building Act 1989 - - -

FRENCH CJ: How does that help us in the construction of the Corporations Act?

MR HEYWOOD-SMITH: It is, we say, an example of the States with the same proportionate liability legislation carving out a particular cause of action and saying that is non-apportionable.

FRENCH CJ: So there are other carve-outs?

MR HEYWOOD-SMITH: But the point that we make is that in some way the respondent in these proceedings seems to be suggesting that the provisions of section (1)(a) in the New South Wales Act have the effect of preventing a claim brought under a statutory warranty under the Home Building Act from being a non-apportionable claim. Our understanding, such as it is, of the respondent’s submissions is that section 1041L(2) in some way prevents non-apportionable claims from being non-apportionable. This, we say, is simply an example – I do not take it any further than that.

FRENCH CJ: I suspect it might be a bit of a distraction.

MR HEYWOOD-SMITH: Coming back to our submissions, 2.1, we refer the Court to Chapter 7 of the Corporations Act, which was, of course, the result of the FSR Act in 2001 which became the whole of Chapter 7 of the Corporations Act. In tab 2 of our book, we refer the Court to section 760A, the objects section of the chapter, the objects being:

to promote:

(a) confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and

(b) fairness, honesty and professionalism by those who provide financial services –

and in particular (d) –

(d) the reduction of systemic risk –

There are the objects of the chapter, and when the chapter comes in Part 7.7, which appears behind tab 4, and makes provision for certain disclosure by licensees, then the Court, we suggest, can see why Parliament would choose to deny apportionment to certain conduct, conduct which Parliament considers to be of particular significance for the objects set out in section 760. In effect, what we are suggesting is that the financial services provider – that is, the licensee – is the gatekeeper for retail investors, retail investors being persons who require perhaps greater protection in making an informed decision.

Paragraph 2.2 of our outline, we suggest, is self-explanatory. Obviously, the proportionate liability regime was to protect tortfeasors who have contributed in a minimal way to the loss but, nevertheless, had deep pockets. However, the situation we say is otherwise where the conduct of the tortfeasor amounts to either a criminal offence or a breach of a civil penalty, or where the Act deems particular conduct to stand in a class of its own, such as, we suggest, conduct of financial services, advisers or licensees to give proper advice concerning financial products.

GAGELER J: Mr Heywood-Smith, can I just ask for a point of clarification really? Is the only non-apportionable claim with which we are concerned that which was successful under section 953B, or can you identify for us the other non-apportionable claims?

MR HEYWOOD-SMITH: There was also a claim pursuant to 1041E.

GAGELER J: I cannot find them identified in any particular convenient place.

MR HEYWOOD-SMITH: I will have my junior find it. It is in the judgment of Justice Lander, but claims were brought pursuant to section 953B in respect of 945A and 945B. They were found, and in respect of - also section 1041E was found - that is, if the Court goes to tab 6 again - - -

MR WHITINGTON: While the Court is doing that - I am sorry to interrupt, but in our oral submissions booklet, we have prepared two tables that were all of the found causes of action, tabs 3 and 4.

FRENCH CJ: So what did you get the money for?

MR HEYWOOD-SMITH: In any event, we succeeded in - - -

FRENCH CJ: What was the money for? What was the money award for?

MR HEYWOOD-SMITH: Of Justice Lander?

FRENCH CJ: Yes.

MR HEYWOOD-SMITH: 1.7 - - -

FRENCH CJ: What was it for, in respect of what - - -

MR HEYWOOD-SMITH: It was in respect of the breaches of 953B and - - -

FRENCH CJ: That was recovery under 953B, was it?

MR HEYWOOD-SMITH: His Honour also found that the plaintiff succeeded under 1041E - - -

FRENCH CJ: What did he attach the damages to?

MR HEYWOOD-SMITH: At 438 of volume 1 are his Honour’s orders, but they do not actually identify the causes of action there. Can I give the Court that in a moment, I will have my junior find the particular provisions - paragraphs. His Honour, of course, also found that the equivalent provisions in the ASIC Act were all made out as well - - -

GAGELER J: But they are apportionable, are they not?

MR HEYWOOD-SMITH: No.

GAGELER J: They are not?

MR HEYWOOD-SMITH: No; some are. The equivalent in the ASIC Act of 1041H, obviously, is - - -

GAGELER J: All I am asking is for identification of those claims that you say are not apportionable claims, on which you were successful.

MR HEYWOOD-SMITH: If the Court goes to appeal book 355, starting at paragraph 903, his Honour finds:

Wealthsure took no steps –

to comply with its obligations under 945A. At 906, his Honour finds –

Mr Bertram and Wealthsure contravened ss 945A and 945B –

At page 358, his Honour makes similar findings in respect of the equivalent provisions under the ASIC Act, and at 359, paragraph 922 –

The plaintiffs also relied upon s 1041E –

and at 925 –

The plaintiffs have made out –

that claim. Paragraph 926 –

The plaintiffs also relied upon s 1041H –

which is also made out. I think that summarises the causes of action in the findings.

KIEFEL J: Were the plaintiff - applicants successful with respect to all of the causes of action that they pleaded?

MR HEYWOOD-SMITH: Yes.

KIEFEL J: I think they are summarised in Justice White’s judgment at pages 519 and 520. Is that a convenient and correct summary, paragraph 125?

MR HEYWOOD-SMITH: Yes, I am obliged to your Honour. We take no issue with any of those findings by his Honour. Part 7.7 of Chapter 7, which I have indicated appears behind tab 4, deals with financial services disclosure and, relevantly, the part addresses the provision of a financial services guide in section 941A and particular obligations on licensees in respect of that document, and a statement of advice in 946A, particular obligations, and Divisions 2 to 4 of that part generally address requirements for the provision of advice to a retail client. Sections 945A and 945B are the provisions that his Honour Justice Lander found to have been breached. I should tell the Court by way of completeness that sections 945A and 945B were repealed as from 1 July 2012 - - -

KIEFEL J: I see Justice White notes that at paragraph 125.

MR HEYWOOD-SMITH: Yes. It does not affect this appeal. They have been replaced by Subdivision C, which broadly covers the same material. The current 945A and 945B, as we understand it, continues in respect of claims brought to 30 June 2008, but it is not a matter which we say need concern this Court.

Division 7 includes section 952A, which is the commencement of the enforcement provisions, and 953A, which is specifically referred to in section 1041H(3), appears at page 270, providing certain definitions appertaining to disclosure documents and statements, and 953B is the section which provides the specific remedy in respect of the defects in relation to disclosure documents or statements.

Coming forward then to Part 7.10, the market misconduct division, the Court will note section 1041E on page 454 deals with false or misleading statements with a particular state of mind of the provider of those statements and appertains to financial products, and it will be noted in Note 1 that:

Failure to comply with this subsection is an offence –

Sections 1041F and 1041G relate to different conduct, but each is an offence, and then we come to 1041H that I have already taken the Court to, which is not an offence.

KIEFEL J: And does not necessarily involve dishonesty.

MR HEYWOOD-SMITH: That is so.

BELL J: And would it be right to say that any conduct contravening 1041E might necessarily answer the description of being conduct done in contravention of 1041H?

MR HEYWOOD-SMITH: Same conduct might also – well, it is likely that it would necessarily be so but 1041H, of course, does not have that mental element.

BELL J: Indeed.

MR HEYWOOD-SMITH: So coming back to the outline, the appellants say that the – I am at 3.1 – the appellants say that the regime is as follows:

Under section 1041L only a claim under 1041I for economic loss or damage to property caused by conduct done in contravention of 1041H is apportionable.

We have already taken the Court to 1041H. Section 1041I(1B) provides for the reduction for contributory negligence – contributory conduct by the applicant in respect of claims under 1041H but not in respect of claims for contravention of 1041E, F or G which is, we suggest, not surprising given that they are criminal offences.

Section 1041H(3) we say expressly excises claims under the indicated provisions. We have taken the Court to that. Section 1041N(2), I have already taken the Court to, recognises both apportionable and non-apportionable claims. Section 1041O is of some significance, we say, and certainly it was found to be significant by the Full Court in the ABN Amro Case. It provides for a defendant to notify a plaintiff of concurrent wrongdoers in order, no doubt, that the plaintiff – if he or she considers it appropriate – to join such concurrent wrongdoer.

Paragraph 3.5 of our outline – our submission is that an applicant who proceeds other than pursuant to 1041H – that is in respect of a non-apportionable claim – cannot be met by a notice under 1041O. An applicant who joins a non-apportionable claim with an apportionable claim could, however, be met with such a notice.

Can I just say something about 1041L(2) because we understand that the respondents place particular significance on 1041L(2). In our submission, this subsection simply means this. When you are considering an apportionable claim – that is, multiple defendants; multiple concurrent wrongdoers – it must be looked at as a single claim. That is, there can only be 100 per cent to be apportioned up in respect of the “same loss or damage”.

Can I give this example? The plaintiff invests in a financial product and he has a claim against the first respondent for perhaps some conduct under 1041H. The value of the shares drop to 50 per cent. He goes to the second respondent who negligently advises him to retain the investment. Thereafter, the investment becomes worthless. In respect of the second 50 per cent, there would be an apportionable claim for the same loss or damage between both first and second respondents. In respect of the first 50 per cent, of course, there is no apportionable claim because only the first respondent is liable for it.

We say section 1041L(2) simply makes it clear that it does not matter that the claim in respect of the second respondent is perhaps in contract or under a State trading act or in respect of some other course of action. That is all we say section 1041L(2) is designed to do and it is not some formula for enabling defendants to non-apportionable claims to suggest that, provided it is the same loss or damage, they can rope in concurrent wrongdoers.

KIEFEL J: You read section 1041L(1) to say that an apportionable claim is a claim to which section 1041H refers, full stop?

MR HEYWOOD-SMITH: Yes.

KIEFEL J: Therefore, you approach subsection (2) with that in mind?

MR HEYWOOD-SMITH: That is so, and of course it is all reinforced by 1041L(4).

KIEFEL J: So you can have - and 1041H allows for different kinds of claims, different causes of action, in that sense.

MR HEYWOOD-SMITH: Yes.

KIEFEL J: And, that is a feature of 1041H to which that part of subsection 1041L(2) refers. So it is saying you may have multiple claims under different headings in 1041H, but so long as they are in respect of the same loss or damage, they are regarded as a single apportionable claim.

MR HEYWOOD-SMITH: That is so.

FRENCH CJ: I notice I think that in Justice Besanko’s judgment it is said that at trial you claimed the same damages under each cause of action. Is that correct?

MR HEYWOOD-SMITH: Yes, that is so in this case.

FRENCH CJ: Yes. So the award of damages did not really distinguish between the different causes of action?

MR HEYWOOD-SMITH: No, that is the case.

FRENCH CJ: So you would say, for example – I am not saying this necessarily follows – that if you succeeded in showing that 953B did not give rise to an apportionable claim, that would be enough, because the damages were assessed on the basis of that cause of action as well as the others.

MR HEYWOOD-SMITH: That is our submission, your Honour. So just turning briefly to the lower courts, Justice Lander found that claims pursuant to 945A and 945B – this is at paragraph 906 of his judgment at appeal book 356 – were made out. He also found, as we have indicated - 1041E at paragraph 925 - it was also made out and was not an apportionable claim; 1041E was not an apportionable claim. He summarised his reasoning from appeal book page 397 at 1099.

He placed particular reliance upon the fact 1041N(2) requires the Court to distinguish between apportionable and non-apportionable claims - that is paragraph 1070. The fact that “an apportionable claim is limited to the claimed specified in section 1041L(1)” - paragraph 1077. The fact that 1041H(3) provides that certain conduct is not conduct that contravenes 1041H – that is 1089.

The fact that conduct contemplated by sections 670A, 728, 953B(1) and 1022B(1); they are all the sections specifically referred to in 1041H(3) against particular persons - that is paragraph 1091. He placed significance on 1041L(4) that I have taken the Court to, and he placed significance on the fact that there was no contribution available under 1041(1B) for claims pursuant to 1041E, F and G which he considered would give rise to problems with contributory negligence, given the terms of section 1041N(3) - that is at 1071. So, that is a summary of his Honour’s approach.

Justice White, in our submission, supported Justice Lander - paragraph 369 at appeal book 583. Inter alia, he placed reliance at 362 on his Honour Justice Lander’s reliance upon 1041H(3), and at paragraphs 363 and 364 he relied also upon Justice Lander’s concerns concerning the treatment of contributory negligence.

If I can come now to the Full Federal Court’s decision in ABN Amro – a brief summary of the facts of that case – the Court is no doubt reasonably familiar with it. But Amro Bank put together a defective financial product called Rembrandt notes. It got Standard & Poor’s to give it a AAA rating. Amro then offered the defective notes to local councils through an Australian financial services licence holder – LGFS – which is the equivalent of Wealthsure, in our case. The investment failed and LGFS claimed the benefit of apportionment in respect of claims brought by the councils. The councils had brought a claim under 1041E - a non-apportionable claim - and an apportionable claim under 1041H.

This decision appears in the book of materials behind tab 10, so much of the decision as relates to the issue that this Court is concerned with, and the Full Federal Court saw a difference between sections relating to conduct which was misleading or deceptive but “neither a criminal offence nor a civil penalty provision”, and sections relating to such conduct – this is at paragraphs 1533 to 1535.

FRENCH CJ: At page?

MR HEYWOOD-SMITH: Page 301 of the judgment.

FRENCH CJ: You are not working off the Australian Law Reports?

MR HEYWOOD-SMITH: No. It is 755, I am told.

FRENCH CJ: Thank you.

MR HEYWOOD-SMITH: The Full Federal Court in ABN Amro reasoned, relevantly, that in context the statute might be expected to exclude some conduct from the proportionate liability scheme. I refer the Court to paragraph 1565 which is at page 307 behind tab 10. I will give the Court a moment to read 1565. I would invite the Court to also note the significance which the Full Court placed on section 1041O at paragraph 1551 at page 305, the section requiring a defendant to identify that a claim is an apportionable claim – has to be able to identify that the claim is an apportionable claim in order to know that they are in a position to give that notice.

The Full Court, from paragraphs 1571 to 1573, adopted Justices Lander and White in this matter, and at 1590, the same observation in respect of the concerns that Justice Lander had concerning the contributory negligence provision in 1041I(1B).

As we have indicated, in the event that there is a non-apportionable and an apportionable claim and they both succeed, we say that orders under 1041N(2) would apply and appropriate orders would be made. That was not done by Justice Lander here because his Honour found that in respect of the remoter respondents they also had breached a non-apportionable claim. So, he simply made them jointly and separately liable. That is at appeal book 402.

At 1131 is what his Honour would have – if he was wrong about apportionment, those are the proportions that he would have ordered and, of course, when the matter went to the Full Court and the respondent here succeeded, the Full Court did apportion, as is apparent from appeal book page 479 where the Full Court apportioned the claim. There was a slight reduction in relation to a matter of interest, but if the Court goes to page 479, the Full Court does the apportionment which they said was appropriate.

The Court will see that the addition of the three sums comes to something slightly less than $1.7 million, but that was what was done there. The analysis which we have put forward, we suggest, is consistent with the decision in Hunt v Hunt, whereas I have already indicated there was only an apportionable claim.

KIEFEL J: Do you adopt entirely the approach Justice White took?

MR HEYWOOD-SMITH: I have some reservation about a suggestion in Justice White’s analysis of 1041L(2) that the current wrongdoers, in a sense, as we read his judgment, have been exposed to an apportionable claim under 1041H(3) - that is at paragraph 348.

KIEFEL J: I am sorry, is that page or paragraph?

MR HEYWOOD-SMITH: That is paragraph, I am sorry. We come to appeal book page 565 and then come forward to paragraph 343 on page 576 – sorry, at 346, having referred at 345 to 1041L(2), his Honour says:

The issue is really that of whether the expression “the claim for the loss and damage is based on more than one cause of action (whether or not of the same or a different kind)” refers only to causes of action which are themselves apportionable claims or, alternatively, to causes of action more generally.

His Honour goes on to find that it is the former.

KIEFEL J: You do not take issue with that? You do not take issue with paragraph 346?

MR HEYWOOD-SMITH: Well, at 346 he is not actually indicating what he is finding, which he does at 347. Our position is that we say that he did not need to go that far.

KIEFEL J: Sorry, which part are you saying that - - -

MR HEYWOOD-SMITH: His Honour finds that the reference to damage “based on more than cause of action (whether or not of the same or a different kind)”, whether that refers only to causes of action that are themselves apportionable. Now, His Honour finds they do. What we say is that he did not need to go that far, in our submission.

KIEFEL J: Is not his Honour saying only that they have to be claims to which section 1041H refers?

MR HEYWOOD-SMITH: This is the remoter – the concurrent wrongdoers. If he is suggesting that, in our submission, he is possibly going too far because we can see that there will be other claims in the contract or whatever, that might well be appropriate to be apportioned under 1041L(2). To the extent that his Honour seems to be suggesting, if he is, that it has to be a claim under 1041H(3), then we suggest that he might have gone too far, otherwise we do - - -

FRENCH CJ: You would say, presumably, that subsection1041L(2) is to be read subject to the application limitation in subsection 1041L(1)?

MR HEYWOOD-SMITH: Yes. I do not read paragraph 4 of our oral submissions, but I refer to that in making my final submission. I note that we do not need to respond to the moot point. On the point of costs, which appears by summons, does the Court wish to be addressed now or can that be addressed subsequently?

FRENCH CJ: Yes, all right, you can address us on that now, Mr Heywood-Smith.

MR HEYWOOD-SMITH: Very briefly, if the Court pleases, we refer the Court to the reply filed by the appellant and to page 5 of the reply. We rely upon the affidavit of Mr Radbone of 3 February which was provided. Essentially, the facts in this matter were that Mr Bertram, the second respondent, after his Honour Justice Lander’s judgment and after the notice of appeal had been filed, but only shortly thereafter, he became bankrupt. QBE had indemnified Wealthsure and Mr Bertram. There was a limit of $3 million, including costs, on that insurance. At that point, that is, to the point pre-appeal, the respondents advised the court that the costs were $1.35 million, so that left only $1.65 million to satisfy the judgment of Justice Lander and costs. So, there is obviously a difficulty there.

QBE requested the Trustee in Bankruptcy to approve the appeal on behalf of Mr Bertram. The trustee declined to elect to adopt the appeal, and did so on the basis that QBE declined to indemnify the trustee in respect of any costs orders under the appeal. QBE had the capacity to appeal the decision of the trustee to the Federal Circuit Court within 60 days, but

declined to do so. After the 60 days, the trustee sought a direction from the Federal Circuit Court as to the filing of a discontinuance. That came before the Federal Circuit Court only two days prior to the hearing of the appeal.

The Federal Circuit Court judge ordered that if QBE did not apply to be joined to the appeal, then the trustee was authorised to discontinue. The matter was aired on the first day of the appeal and is addressed by Justice White, and Justices Mansfield and Besanko adopted his reasons at paragraphs 137 to 151 – this is at appeal book 522.

Essentially, what his Honour found was that QBE had a contractual right to conduct the appeal and, although there was an application by QBE for leave to intervene, our learned friends asked that it be left in abeyance. The Full Court allowed that to occur. But the Court will note that Justice White at paragraph 145 indicated that:

Any issues concerning costs arising from the exercise by QBE of its contractual right or from the manner of its conduct in relation to the appeal may be addressed once the appeal has been determined.

Because the appellant was successful, that..... occur and we say that in those circumstance the authorities that we have referred to on page 5 of our reply and our submissions on this - particularly TGA Chapman v Christopher which I will not take the Court to but appears behind tab 13, and Knight v FP Special Assets, behind tab 14 - that this would be an appropriate case, if the appellant is successful, for an order to be made against QBE.

KEANE J: Is the basis for that that you say if your appeal succeeds then, in effect, QBE was basically playing with your money? Is that the point?

MR HEYWOOD-SMITH: That is so. That is essentially the position, if the Court pleases. Those are submissions, if the Court pleases.

FRENCH CJ: Just one matter. I think the actual damages figure was adjusted below, was it not, to a figure of $1,716,680 and that is not disputed?

MR HEYWOOD-SMITH: No.

FRENCH CJ: No. Yes, all right, thank you. Yes, Mr Whitington.

MR WHITINGTON: Yes, just to pick up on that, if the Court pleases, Justice Lander entered judgment for $1,760.512. There was a reduction of approximately $44,000 on the basis that he had included as so-called damages interest an amount of about $44,000 which was not truly attracted because it related to - - -

FRENCH CJ: No, that is not in dispute.

MR WHITINGTON: Not in dispute. That total then – the adjusted total obviously was reduced by 15 per cent for contributory negligence, and then my respondents suffered judgment then for an apportionate amount of 60 per cent of that in the Full Court, which came down, as I have noted it, to $875,500.

We have prepared a book with our oral submissions, I indicated earlier, and I think the Court has it. We also thought it might assist the Court to have a more detailed chronology and we have included that, and then behind that we also have schedules of the causes of action found against my clients and the other defendants.

The significance of that, the Court will see, is that in the case of Wealthsure respondents, there was a finding of a liability for a contravention of section 1041H and the counterpart provision of the ASIC Act; a finding of a contravention of section 1041E, a finding of an entitlement to claim under section 953B for contravention of section 945A and likewise for contravention of section 945B.

Then there was a contravention found of section 12DB of the ASIC Act. There were, in effect, two breaches of contract found - strictly, I am sorry, three. There were two express terms that his Honour found and an implied term which his Honour found on three bases, and also there was a breach of a duty of care.

The schedule in relation to the other respondents is behind tab 3 and in their case there were findings of a contravention of section 1041H, section 1041E, of section 1041F, except in the case of Mr Townley, where his Honour said he was not prepared to find Mr Townley had the requisite knowledge, and section 728, which effectively related to the Neovest prospectus.

Your Honour Justice Kiefel asked about Justice White’s summary of those causes of action. We accept that, for all intents and purposes, his summary is accurate from paragraph 318, but we just sound some notes of caution in our notes 6, 7 and 8. The Court might also note in the summary in relation to the Wealthsure respondents, note one, Justice Lander found at paragraph 913 that the respondents were liable for misleading and deceptive conduct engaged in by the totality of their conduct from the first meeting in, I think it was October 2004, through to the second statement of advice on 15 April 2005, and he found that they were liable under section 1041H for misleading and deceptive conduct in relation to that totality of conduct.

But as Justice Besanko pointed out, he cannot have literally meant that because some aspects of that conduct fell to be treated under the section 1041H(3) carved-out provisions and therefore could not strictly be contraventions of section 1041H. But in the end nothing really turns on that because there was a good deal of what I might call extraneous conduct, conduct outside that captured by the H(3) carve-out provisions in that whole run of conduct which gave rise to a contravention of section 1041H, in any event.

Now, I think it is necessary for me to return to the legislation to make some points obviously in the way the respondents cast their case, which plainly has a different emphasis from the appellants. If I might go straight to the heart of the matter, Division 2A, a division which was inserted in Chapter 7 in 2004, and we say the fact of its insertion is not insignificant because it was inserted in extant provisions.

It must be conceded it is something of a square peg in a round hole. There have been attempts to smooth off the edges. They may not have been smoothed off in an entirely satisfactory way which gives rise to the constructional choices that this case presents, but we shall endeavour to address what we say are the constructional choices.

The gateway provision obviously is section 1041L and the first point to note is that it identifies claims - characterises apportionable claims to which the apportionment regime applies, and it is significant that it speaks of claims and, in our submission, a claim refers to the object of the claim, in this case, the damages for economic loss or property damage with a particular cause but - - -

FRENCH CJ: Before you go into that, what significance should be given to the heading to Division 2A which is deemed to be part of the Act pursuant to section 13 of the Acts Interpretation Act - “Proportionate liability for misleading and deceptive conduct”. Does that have any implications for, for example, a cause of action under 953B?

MR WHITINGTON: We would say not because - and obviously the Court has seen that Justice White had regard to the heading and said that that was in effect a title, if you like, to the division that confined its interpretation. We would say it really only has a glancing effect on its interpretation but, in any event a number, of the carved-out provisions expressly deal with misleading deceptive conduct, in any event.

I will come to section 8 and the carved out provisions in a moment, but the important point about them is to see them in their historical context. Section H predated the insertion for Division 2A and the carve-outs in section 8(3) clearly have an historical rationale. They carved out particular provisions which had their own very detailed regimes and I will not assay an attempt to summarise them. They are extremely complicated, but they are provisions in relation to disclosure in connection with financial products or services, take-over documents, requisite product disclosure.

They have their own regime of target persons who are liable; in some cases, strictly liable. They have their own regimes of defences and, of course, in a sense it would have made a nonsense to overlay section H on top of those provisions because there would have been a terrible mismatch. Those provisions provide for their own rights, remedies, targets and defences. If you overlay section H on top, which is in the broadest form, a norm proscribing misleading or deceptive conduct in connection with financial products or services, then you have, in effect, subverted the specific regimes in those sections and undermined their specific defences, and that is no doubt why there was a carve-out.

KIEFEL J: Does it matter what the carve-out is or the reason for the carve-out of section 1041H for the purposes of construing 1041L, because subsection (1) refers to claims caused by conduct in contravention of whatever is within 1041H. Is that not all we are concerned with when reading subsection (1)?

MR WHITINGTON: Correct, yes, at the point of subsection (1). But the critical provisions in this regime are subsections (2) and (3) and they were really only referred to in a glancing way by Justice Lander. They are not addressed at all by the Full Court in ABN Amro. Justice White grappled with them, but his starting point, as your Honour Justice Kiefel I think has identified, and I think the Chief Justice has also indicated - - -

KIEFEL J: But subsection (1) informs subsection (2), does it not?

MR WHITINGTON: It no doubt does, but the question is to what extent and whether it controls subsection (2). That is the constructional issue at the heart of this case, whether subsection (1) controls and limits subsections (2) and (3) which are in the broadest possible language.

FRENCH CJ: So, if it does, you lose?

MR WHITINGTON: If it does, it would seem that the solution that Justice White proposed would follow and we would lose but you then end up with a very curious and incongruous position. You end up with all of these causes of action under an apportionment liability regime with one cause of action feeding the claim, the claim being the key concept - one cause of action feeding the claim leading to apportionment, but other causes of action feeding the same claim, not resulting in apportionment, and that creates all sorts of difficulties. It raises the spectre, as you had in this case, of apportioned and non-apportioned assessments, judgment then being taken to the higher amount. It creates problems in the federal jurisdiction.

Bear in mind, we say that this division proceeds on the premise of the application of section 79 of the Judiciary Act, which means that you would attract through subsection L(2) State and Territory-based causes of action, and the effect of this division, we say, is to bring them all together, but in effect disregard the underlying legal basis or causes of action - bring them all together under a claim and, if you have an apportionable claim, then you apply apportionment, whether the basis of the claim is section 1041H or some other Commonwealth statutory right of action or a common law right of action attracted through section 79 or section 80 of the Judiciary Act, and then to apply the Commonwealth regime in its totality to that claim, irrespective of the underlying causes of action, rather than apply State and Territory-based laws, including apportionment laws on a piecemeal basis which for instance in a representative action would create all sorts of difficulties.

So we say that the fundamental philosophy behind this division is to create a uniform and consistent system of apportionment in federal jurisdiction in respect of federal claims and that the key provisions to do that are subsections 1041L(2) and 1041L(3).

FRENCH CJ: Section 1041H, is it right to say, was a transplant of the old 52 from the Trade Practices Act into the context of financial services.

MR WHITINGTON: Correct.

FRENCH CJ: Is it an overgeneralisation to say that as a broad proposition it sets out the broadest base for liability?

MR WHITINGTON: Correct, and that means therefore that a contravention, let us say - if I can use shorthand if I might for 1041 - a contravention of E F and G will necessarily be a contravention of H, but not vice versa, because H does not require the mental elements that E, F and G do.

KIEFEL J: That might explain the concentration on 1041H in subsection (1).

FRENCH CJ: The others having narrower purposes.

MR WHITINGTON: Yes, we understand, and Justice Lander put a lot of weight on that, but in putting weight on that we say he did not distinctly address the effect of the sections I am about to come to; subsections - - -

KIEFEL J: But I thought the point that Justice Lander made was that 1041H clearly can involve numerous causes of action and that is what subsection (2) picks up.

MR WHITINGTON: Justice White says the same thing and Justice White goes further and says the cause of action involves a universe of facts. We say it is only a partial acknowledgment. It is not simply a universe of facts giving rise to rights to relief. It is a universe of legally relevant facts, and so you cannot divorce the facts from the legal rules which make the facts relevant and give rise to the right of action.

So that is what is meant here, we say, in subsection (2) in relation to a cause of action, but the elaboration is “is based on more than one cause of action (whether or not of the same or a different kind). So the focus of this section is on claims, not on causes of action and subsection L(2) is saying in the clearest terms - and of course this Court has said in many times, text is controlling - it is saying in the clearest terms, it does not matter what is the legal basis in terms of legal cause of action for the claim; if you have a claim, underpinned by more than one cause of action, it is a single apportionable claim, and you do not see this expression again in the division.

So what that really means is you roll up a claim and call it an apportionable claim even if it has multiple legal bases, and the important note about section 1041L(2) is that it speaks independently of the number of wrongdoers. In the progression of this section, it has not got yet to the question of the number of wrongdoers,\ so you can have an apportionable claim which becomes a single apportionable claim against defendant one because it qualifies under L(1) and L(2).

GAGELER J: Can I come back to subsection (1) for a moment?

MR WHITINGTON: Yes.

GAGELER J: I am interested in knowing what work you give to the last line or so:

caused by conduct that was done in contravention of section 1041H.

Does the claimant have to assert the claim for damages on the basis of a contravention of section 1041H for subsection (1) to be triggered?

MR WHITINGTON: I will take the Court through the rest of the provisions which we say permit that to be answered, no, but I can point out that the Full Court of the Federal Court did not have to grapple with this because we only touched upon that submission in oral submissions.

We did not have to go that far because in this particular case, as the Court will have seen from our schedules, Justice Lander’s findings – I withdraw that. There was in the claims against all respondents, a claim framed as a contravention of section 1041H. We do put a submission before this Court because in a sense the Court is grappling with the entirety of the meaning of this legislation and there are a number of cogs in the machine and it can be difficult to see the whole machine without understanding - - -

KIEFEL J: May I just interrupt you at that point? Is not the threshold question here whether or not section 1041L(1) is a definition of an apportionable claim? If it is, your construction of subsection (2) cannot run, can it?

MR WHITINGTON: We say it is not a definition. At most it is a partial definition or, put another way, we say it is a gateway to apportionment but it has to be read in conjunction with L(2) and L(3). You cannot read L(1) on its own, but to come back to Justice Gageler - - -

KIEFEL J: But you would accept you cannot read (2) without (1) as well?

MR WHITINGTON: Correct, exactly, yes.

KIEFEL J: But does (1) provide the definition of an apportionable claim, for the purposes of subsection (2)?

MR WHITINGTON: It provides a contingent definition which then feeds - - -

KIEFEL J: What is that? Does the Acts Interpretation Act help us there?

MR WHITINGTON: It is a definition, if you like, in stages, to get to the point where you actually have a claim that can be apportioned. So, for instance, take a claim that qualifies under section L(1). Under section 1041N, there can be no apportionment of an apportionable claim of that kind until you have concurrent wrongdoers and so - - -

KIEFEL J: Well, there is no need for apportionment until you do.

MR WHITINGTON: That is so, but the point is that the scheme works on the basis you do have an apportionable claim before you have opened the way to apportionment, and that is an indication that this is a layered or tiered structure. The bottom tier, if you like, is L(1); it is a partial definition. It then rolls into L(2) and it in effect says that if you have claim against D1, let us say, expressed or framed as a contravention of 1041H and framed as a contravention of section 1041E and framed as a breach of contract and torts, then the focus is on the claim and you have a single apportionable claim. Now, that is just another way of saying it is an apportionable claim. You do not meet those words again. Thereafter the language is of apportionable claim. Now, that is with D1.

Then you come to subsection (3) and the section introduces the notion of concurrent wrongdoers and it is concurrent wrongdoers in relation to a claim, not in relation to a cause of action. So, again the focus is on the claim and it relates to or it requires two or more persons whose acts or omissions have caused the damage the subject of the claim. Now, you would imagine therefore, in the ordinary case that, because you have got two or more persons, two or more wrongdoers, you are going to have more than one cause of action.

If you have opened the gate to apportionment by finding a right of action that answers the description in subsection (1), D2, for instance, need not have contributed to a claim by a cause of action that meets the description of subsection (1). So, the claim against D2 could be simply in tort or contract, for instance, or it could be for a breach of a statutory provision which would not meet the requirements of contravention of H.

KIEFEL J: I am sorry, my mind must have wandered. Could you just explain to me or repeat for me how you say that you get a claim in contract or tort out of (1), (2) and (3) read together; because it refers to any kind of claim, is that it? Is that essentially it?

MR WHITINGTON: It is because there is a distinction between claims and cause of action which found claims, and the key linchpin, the operative provision or concept - - -

KIEFEL J: But the claim in subsection (2) for loss and damage is the broad concept of a claim for $1 million.

MR WHITINGTON: Correct.

KIEFEL J: It can be based upon more than one cause of action.

MR WHITINGTON: Correct.

KIEFEL J: Under 1041H you can have more than one cause of action. It gives rise to any number of causes of action which confound a claim for loss and damage.

MR WHITINGTON: Quite so, but as well you can have cause of action that stand outside 1041H.

FRENCH CJ: But the problem that you face is that in subsection (1), the claim which is designated as an apportionable claim is a claim for damages made under section 1041I, caused by conduct under the contravention of 1041H. So it is the statutory remedy that defines the class of claim. We are not talking here about causes of action where you do not have to specify necessarily what rule of law you are relying upon, so that, when one gets to (2) and one talks about “even if the claim for the loss or damage”, that must surely be a claim for loss or damage made under section 1041I caused by conduct done in contravention of section 1041H.

MR WHITINGTON: Correct. We agree with that.

FRENCH CJ: Yes.

MR WHITINGTON: But it goes on, with respect, with these critical words. Even if that claim, that is, the claim formulated is a claim for loss and damage - - -

FRENCH CJ: The claim under 1041H.

MR WHITINGTON: Well, made under 1041I for a contravention of H, asserting a claim to damages for loss and damage; if that claim also is grounded upon more than one cause of action - - -

FRENCH CJ: That may be more than one set of facts.

MR WHITINGTON: It could be, precisely, and it could be more than one set of facts with - - -

FRENCH CJ: That is consistent with each of those causes of action supporting a claim under 1041I, and thereby an apportionable claim.

MR WHITINGTON: We cannot gainsay it, but that is one possible construction.

FRENCH CJ: Why should one not read it that way? Surely that is a bit more coherent than - - -

KIEFEL J: It is also slightly textual.

MR WHITINGTON: Well, we say textually you would not read it that way because what do the words based on “more than one cause of action (whether or not of the same or a different kind)” mean, unless they mean a cause of action of any kind? Secondly, we say as to coherence, this leads to an incoherent result because it leads to a number of responses. First, if there are claims - a contravention of H under I, but there are claims for contravention of E also under I, and at common law and so on, you end up with a very Barisic-type of problem that Justice White said in certain respects he thought this system was designed to avoid. You end up with differential judgments, when we say that is not the intention of the scheme.

FRENCH CJ: Well, you have a norm against misleading or deceptive conduct which serves a particular statutory purpose and an underlying policy.

MR WHITINGTON: Yes.

FRENCH CJ: The causes of action which arise out of contract or tort or perhaps 953B serve other purposes, do they not? What is incoherent about saying that they are to be treated differently?

MR WHITINGTON: Because I think it is common experience, as we all know, that many misleading and deceptive conduct cases of the section 52-type, or here the section 1041H-type, are also accompanied by claims framed as breaches of contract or breaches of tortious duties of care.

FRENCH CJ: In some cases that is because you get a different measure of damages, which serves a different purpose.

MR WHITINGTON: That may be so, but the result of, if you like, eschewing them on the boundaries of section 1041L is that you now – you only have a partial scheme of apportionment, and the question then arises, well - - -

KIEFEL J: Or could it simply be that the statutes concerned provide apportionment with respect to statutorily-based contraventions of a particular kind and is not so much interested in the personal relationship and the breakdown of personal relationship reflected in contract or tort?

MR WHITINGTON: Well, it might be, but if the object is a uniform and consistent scheme of apportionment, which we say it must be - - -

KIEFEL J: Why? It is a policy choice with respect to particular conduct, ostensibly, looking at the heading.

MR WHITINGTON: We say the more sensible policy choice would be uniformity and consistency and that would be - - -

KIEFEL J: That might not be the choice that is made. I think it was pointed out in ABN Amro, was it not, that this similar kind of dealing with apportionment can be seen in other parts of the Corporations Act?

MR WHITINGTON: With great respect, I missed that. I did not - - -

KIEFEL J: Perhaps my memory is - - -

MR WHITINGTON: Your Honour, I think particular focus was put on the fact that sections 1041E, F and G were both criminal offences – created criminal offences and civil liability provisions, but no justification for saying that is a particular reason that, if you like, marked them out from section 1041L(2) was advanced. We say that is a deficiency in the reasoning in ABN Amro. Moreover, in ABN Amro, the court does not ever grapple properly with sections L(2) and L(3), but if we - - -

FRENCH CJ: So this would pick the seat as well?

MR WHITINGTON: Sorry?

FRENCH CJ: Pick up the seat?

MR WHITINGTON: That is a point I was coming to. I have not developed the point fully but you see there is a coherent scheme here. When you go to section M, you will see that there is then an exclusion.

FRENCH CJ: That relies on the term “fraudulent reports”.

MR WHITINGTON: Or an intention to do the harm. So, if there is a mental element involving an intention to cause the loss and damage, or there is a fraudulent mental element, then the person – a concurrent wrongdoer with that condition becomes an excluded concurrent wrongdoer. There may be a slight error in ABN Amro on this point because the judgment appears then to suggest that you could not have apportionment at all but the effect of section M(3) is that the excluded wrongdoer is excluded from apportionment, but the included non-excluded wrongdoer still gets the benefit of apportionment.

KEANE J: Mr Whitington, in Astley v Austrust this Court held that how one frames one’s cause of action can have consequences in terms of apportioning contributory negligence to be specific in that case, depending on whether you frame your cause of action in contract or in tort.

MR WHITINGTON: Yes.

KEANE J: Why would one not read L(2) as being an anti-Astley provision put in to ensure that however the claim might be framed, whether in contract or tort or as a contravention of 1041H, the apportionment regime will apply. That is to say, that if the claim is framed or based on a cause of action in contract, for example, the apportionment rules will apply although they would not if the case was just regarded as an ordinary garden old contract case.

MR WHITINGTON: I think your Honour has put it far more succinctly than I have. That is what I have been endeavouring to - - -

KEANE J: Well, except that, if that is right, it is actually there to ensure the integrity of the apportionability regime and L(2) does not have the operation that you suggest, because it is just saying if you put a legal description of contract or tort or contravention of statute on the claim, it does not make any difference as to how these provisions operate so long as it is a claim caused by conduct but in contravention of 1041H.

MR WHITINGTON: So long as it is a claim at least based on that.

KEANE J: Yes, so long as it reveals that character that there is a contravention of 1041H that causes the claim, then it just does not matter. Plaintiffs cannot say, “Well, we are going to call it contract”, and avoid the contributory negligence provisions.

MR WHITINGTON: I am starting to doubt my advocacy, your Honour, because I would like to think your Honour and I are at one. That is what I have been trying to say, and that is what I have suggested is the special work that the words “based on more than one cause of action (whether or not the same or a different kind)” have to do”.

KEANE J: But they are talking about cause of action as something different from the claim.

MR WHITINGTON: Exactly.

KEANE J: Apportionability is an attribute of a claim.

MR WHITINGTON: Exactly.

KEANE J: Cause of action is a description, a legal description, which attracts consequences as Astley v Austrust held in terms of apportionability. Is this not just excluding that possibility?

MR WHITINGTON: Your Honour may be putting it far better than I am, but I am trying to say what your Honour is saying. I am trying to say that very thing, that the key - - -

KEANE J: Well, then, I think you are very wise.

MR WHITINGTON: But not very articulate, your Honour.

KEANE J: But I do think we are at odds.

MR WHITINGTON: Well, I am sorry that your Honour should think that because I have been trying to say that the key concept is a claim.

KEANE J: Yes.

MR WHITINGTON: What is apportioned as a claim. We say in our written submission that it is a claim that for these purposes obliterates or disregards the cause of action in the first instance, and what we then say is that, once you find a claim that has about it the character of an L(1) claim, that is, one aspect of its character, and you have opened the gate to apportionment, then thereafter you ignore the causes of action that might support the claim. What matters is the claim.

FRENCH CJ: So if you brought a claim for negligent misstatement against one of two concurrent tortfeasors, simply negligent misstatement of the facts alleged would fit within a contravention of 104 - or would constitute a contravention of 1041H, then the apportionable claim provisions could be invoked by the defendant?

MR WHITINGTON: Yes and no. The direct answer to that is no, and we say that is the effect of L(4). Defendants cannot hijack a plaintiff’s claim by saying, “You have pleaded conduct against me in negligence. I have the right to reframe that as misleading and deceptive conduct, plead that back at you and then apply for apportionment”. We say L(4) means defendants cannot do that. They cannot hijack the plaintiff’s claim.

KEANE J: But why does not L(2) mean that plaintiffs cannot defeat the apportionability provisions by casting their action or framing their action as a breach of contract when it is a case of contravention of H?

MR WHITINGTON: We take an intermediate position. We say that the plaintiff does not actually have to frame a claim by reference to a contravention of section 1041H. However, if they plead conduct which in plain terms amounts to a contradiction of section 1041H, we say L(1) is engaged.

GAGELER J: Do they have to seek damages under 1041I, on your submission?

MR WHITINGTON: No, they only have to pursue a claim and there is rather interesting and difficult issue about these provisions about whether there is a phase shift in them because certainly at the point of section 104L(1) what is being addressed is the claim propounded. You see that from section 1041O which says that when a claim is propounded, then a defendant must do something about it.

There is an interesting question which this Court may not need to delve into about whether when you come to section 1041N, when it uses the expression “In any proceedings involving an apportionable claim”, it means an apportionable claim as propounded or it means an apportionable claim as found. Now, that can have a bearing on construction of section 1041N(3) when it deals with contributory negligence.

GAGELER J: So the claim under subsection (1) can include the causes of action based on common law and breach of statute giving an entitlement to damages? Is that your submission?

MR WHITINGTON: The claim can be supported by those causes of action, yes.

GAGELER J: Then, Division 2A would, what, cover the field to the exclusion of any State proportionate liability provisions, would it?

MR WHITINGTON: Yes, and that is, we say, one of the objects of this because you then have to give consideration to section 79 and section 80 in the exercise of federal jurisdiction. Federal jurisdiction then would attract State or Territory-based causes of action supplemented possibly by statute, so you have recourse to section 79 and section 80, but they come in, as the Court knows, as proxy laws of the Commonwealth. So, you do not have section 109 inconsistency case but you have a section 79 inconsistency case - does the Commonwealth law otherwise provide?

If you decide the Commonwealth law has done what I understand Justice Keane to be putting to me, it appears this is done, that is, to create one overarching scheme of apportionment, it would say that section 79 would not enable any State-based apportionment regimes to be carried over. The matter would have to be dealt with entirely in the federal jurisdiction under Division 2A, and we say that is a logical and coherent approach. As I said earlier, imagine actions involving multiple plaintiffs where the cause of actions arose in different States, or imagine a representative action where some represented plaintiffs were in one State, others in another, others in the Territory. If this Division is not all embracing then the Court has to have resort to section 79 and section 80, bring in different State-based regimes, and you end up with - - -

FRENCH CJ: Then they simply come in as part of the accrued jurisdiction because they are part of the matter.

MR WHITINGTON: Under section 79, yes.

FRENCH CJ: Well, just under the constitutional concept of a matter without any mediation. It was quite customary, for example, in 52 claims to also run a Fair Trading Act claim to pick up natural persons or any possible argument that the defendant was not a trading or financial corporation.

MR WHITINGTON: Yes, but there is a mediation around the matter through section 79 because it does permit and direct the court exercising federal jurisdiction to apply the State-based law. But all I am saying is if you have a representative action you can get a hotchpotch of judgments, whereas the very purpose of section 1041L(2) and (3) is to create one entire apportionment regime provided the gate is opened via subsection (1).

GAGELER J: So, the substantive measure of liability on the common law and State claims would or would not be governed by Division 2A, depending on the choice of the claimant, to link up those claims with a claim for damages under 1041I based on a contravention of 1041H? Is that right? Substantive liabilities under State and common law causes of action would be made dependant on a pleading choice under this law?

MR WHITINGTON: Yes, with one qualification, your Honour, one qualification, and that is this: the Full Court did not have to address this very problem below because here a pleading choice had been made to invoke - specifically to plead an action framed on a contravention of H. As I understand it - and I stand to be corrected at the bar table - at some point in the trial, the trial judge invited the plaintiffs to consider foregoing the claim under H. But there is then a further question whether, if the plaintiff actually pleads conduct in contravention of H, the gateway is opened even if they have not framed their action as a claim under or for contravention of H.

BELL J: Do I understand to avoid the difficulty that Justice Gageler has just identified, your contention is the gateway condition of L(1) is met by a pleading of material facts that, if established, would, amongst other things, amount to a contravention of 1041H?

MR WHITINGTON: That is our submission, yes.

BELL J: The consequence of that is that, for example, I think you might accept Mr Whitington, no claim under 1041E would not also embrace the pleading of facts of a contravention under 1041H.

MR WHITINGTON: That is our submission.

BELL J: So it follows that, to the extent that 1041I makes plain that the provision for contributory negligence is confined to a 1041H contravention that, as it were, will inevitably go out the window?

MR WHITINGTON: Not necessarily. There are two answers to that. The language is the same though arguably that is also picking up on conduct in contravention rather than conduct in contravention under a claim framed around H. That is the first point.

Secondly, there is an important provision in section 1041N(3) that talks about the application of contributory negligence under any relevant law. The effect of the reasoning of Justice Lander and Justice White is really to say, well, “under relevant law” can mean nothing other than under section 1041I(1B). But if that is all it means, then we would expect that the draftsman would have said so.

So, the expression “contributorily negligent under any relevant law” we say echoes and harmonises with section 1041L(2) when it talks about a “cause of action (whether or not of the same or a different kind)”. So, section 1041N(3) is permitting the attraction of a reduction for contributory negligence, whether section 1041I(1B) is attracted, or if there is some other law underpinning the cause of action which has attached to it a defence of contributory negligence. Now, the Court might immediately say to me, “But if the gateway to section 1041L is a claim for contravention of H and if section 1041I(1B) provides or attaches a defence of contributory negligence to our claim for contravention of H, why do you need to refer to any relevant law?”

There are two possibilities. One, there might be a relevant law attached to, say, a State-based cause of action which has a slightly different application to contributory negligence. Then, if there is an issue between section 1041I(1B) and State-based law, there would have to be an issue to work that out. Alternatively, there might be what I have called a phase shift between section 1041L and section 1041N to this extent – sorry, there might not be a phase shift; I apologise.

Our submissions have proceeded on the silent assumption that there is a kind of phase shift between L and N so that, when you come to N, an apportionable claim is one found to be by the court to be an apportionable claim. There is a potential for an argument that in fact there is no phase shift between L and N and that what N is directed to is any proceeding, which is what it says, involving an apportionable claim, sub silentio insert “whether or not actually made out”.

Now, if that is right, that would attract the apportionment regime. There would be no section 1041I(1B) defence of contributory negligence if, in those proceedings, the section 1041H claim failed but on this reading they would still be proceedings involving an apportionable claim and there could still be reduction for contributory negligence and apportionment by the operation of section 1041N.

So we say that the reference in section 1041N(3) to contributory negligence, rather than being I think troublesome, as Justice Lander put it, not troublesome at all. He only found it troublesome because he started with the premise, as did Justice White who adopted Justice Lander’s description - he started with the premise that subsections 1041L(2) and L(3) could only attract claims actually framed by reference to 1041I as contraventions of H. He then said, but if N(3) literally means you apply contributory negligence under any relevant law, then that is, in a sense, contradictory of 1041I(1B). So it must mean you apply contributory negligence under 104I(1B). As I say - - -

KIEFEL J: But accepting on your argument that this might not be talking about - on your hypothesis, that this is not talking just about section 1041H type claims, if, however, there is that type of claim and claim, say, in contract and tort, if there is a finding of contributory negligence under 1041I(1B), whatever, and there is a claim in contract, does that mean that the contributory negligence found under (1B) is then taken into account in the apportionment for the contractual wrongdoer?

MR WHITINGTON: Exactly, that is the effect of - - -

KIEFEL J: And you think that is workable?

MR WHITINGTON: Yes because what it means is – to avoid the Barisic problem. So what it means is you find an apportionable claim, then bring it forward to section 1041N. Assume two concurrent wrongdoers. Assume that one claim against D1 is framed around section 1041H and in contract and the claim against D2 is framed around contract, but it is for the same loss and damage. Therefore, it falls to be apportioned by - - -

KIEFEL J: The outcome might be acceptable from a wrongdoer’s point of view but what does it say about the coherence of a statute which only intends clearly 1041I(1B) for contributory negligence to be taken into account in relation to a claim under 1041H?

MR WHITINGTON: What it says about coherence is that it does not make sense to apportion $100 less $15 for contributory negligence under one head of an apportionable claim, and take another head of an apportionable claim or another foundation, take $100 but do not apply a reduction of $15 for contributory negligence, and then apply the common apportionment provision, as in this case 60 per cent across $85 and $100. You have immediately now got, we would say, a dysfunctional scheme. So, the purpose of section 1041N is to say you apply contributory negligence across the board for the claim, whatever the underlying cause of action, if it attaches as a defence to one of the underlying causes of action.

KIEFEL J: The words “under any relevant law” in section 1041N(3), does that refer to statute law, do you think?

MR WHITINGTON: “Under any relevant law”, I am sorry, your Honour?

KIEFEL J: Yes. Do you think the reference to law is more likely to be statute law?

MR WHITINGTON: Well, I should have thought in the context it must be. This is exhausting my legal knowledge, but I am not aware of any defence of contributory - - -

KIEFEL J: It seems most likely, yes.

MR WHITINGTON: All defences of contributory negligence, I think, have been imported by statute.

KIEFEL J: Perhaps not.

MR WHITINGTON: Well, that is why I am saying the limit of my legal knowledge here, but we say “under any relevant law” is very wide and it marries with the expression of section 104L(2), “based on more than one cause of action (whether or not of the same or a different kind)”. They are both of the..... language and N(3) fits coherently into the scheme as we identify it. That is, if you are going to have apportionment against D1 and D2, it does not make sense as might have been done in this case, for instance, to say, “Well, you take 15 per cent off $1.71 million and then apply 60 per cent, but you do not take 15 per cent off in relation to another cause of action related to the same defendant or a different defendant, and then you apply 60 per cent”.

KIEFEL J: But if your apportionment scheme is narrowed to only claims involving in 1041H, you do not have this problem at all, do you?

MR WHITINGTON: This is where, in a sense, it is chicken and egg. This is the constructional choice and - - -

KIEFEL J: Or it is really, really simple.

MR WHITINGTON: It might be simple, but it might be then practically not very sound in its application. I mean, I accept that the approach adopted by Justice White is, in a sense, quite simple. It says, find a claim which is supported by a pleaded cause of action framed around section H, then only fit within it the claim in the proceedings to the extent that - in relation to other defendants, based upon the same kind of contravention, then in relation to that aspect of the claim apply contributory negligence reduction through section I(1B).

But that ignores the fact that you are actually dealing with a claim and so what you are really doing is bifurcating the claim into those parts of the claim that can be attributed to a contravention of H and those parts of the claim that are attributable to some other legal basis in liability. Then you proceed down the bifurcated path to multiple assessments. I will not say multiple judgments necessarily. You had multiple assessments against the one defendant and then presumably the plaintiff will take the higher assessment and you might end up then with a different judgment against another defendant.

KIEFEL J: Is not that circumstance where there is an apportionable claim and one that is not, so, on the construction we have been discussing, one based on 1041H and other claims dealt with by 1041N(2)?

MR WHITINGTON: Yes, but to this end. The nature of an apportionable claim is quite confined to a claim for economic loss or property damage. So, you can have a claim to damages of some other kind in the same proceedings. Indeed, you had that in this case. The second plaintiff, Mrs Selig, brought a claim for personal injury arising out of the conduct of the respondents, causing her to suffer I think psychiatric harm. Now, that is a case where you would have an apportionable claim and a non-apportionable claim. Or there might be a claim for some kind of loss or damage which was neither economic loss nor property damage which also would be a non-apportionable claim.

So, again we are back to the constructional choice. If we are right, apportionable claim - and this is where your Honour said to me we do not see this in the Acts Interpretation Act; I appreciate that but I will still put the point again, if I might. An apportionable claim is a developing definition through sections 1041L(1) and L(2), and you have to read them in combination to get the complete definition.

KIEFEL J: When you say it is a contingent - I think you said contingent definition - what you are really doing is using the other sections to read the definition down.

MR WHITINGTON: What I am doing is saying that until you have read L(1) and L(2) together, you do not have the complete definition of the concept of an apportionable claim for - - -

KIEFEL J: I am sorry, I should not say reading it down. You are making it wider.

MR WHITINGTON: Yes, we say his Honour Justice White engaged in reading down by limiting subsection L(2) by subsection L(1).

BELL J: What his Honour did was to view L(1) as telling us what an apportionable claim is and viewing L(2) as telling us about a different creature, a single apportionable claim. I have some difficulty, Mr Whitington, with the notion that (1) is what you describe as a partial definition.

MR WHITINGTON: Well, what we are saying is you do not see – I stand to be corrected, but I do not think you see the expression “single apportionable claim” used again the division. So, it is intended to create a concept as much as a definition, and you have to read section 1041L(1) and 1041L(2) together. Now, Justice White read them together but said that subsection (1) is controlling and so an apportionable claim confines a single apportionable claim. We say subsection (2) is expansionary and is making it clear that an apportionable claim, provided it has the character of a subsection (1) claim about it, will continue to have that character, even if it has other characteristics; that is, even if it is supported by multitudinous causes of action which have nothing to do with a contravention of section 1041H.

BELL J: Coming back to the contributory negligence aspect, just to understand how it works on your analysis, in a claim for a contravention of 1041E but which necessarily pleads material facts done in contravention of 1041H, on your analysis there would be an exercise in relation to contributory negligence with respect to the 1041E claim, is that right?

MR WHITINGTON: There would be the capacity to reduce the assessment for contributory negligence but there are two qualifications. First, to get to N you have to go through M. If the contravention is of section 1041E and it has the negative mental elements, then the claim would be screened out, at least as against one wrongdoer or that particular wrongdoer.

BELL J: That is in relation to fraud, is it?

MR WHITINGTON: Or an intention to cause the loss or damage.

BELL J: Yes, but one might have a 1041E claim based on a statement that is materially misleading in circumstances in which the person knew or ought to have known that it was false or in a material particular or materially misleading, or the person did not care whether it was true or false. Now, if that is the claim it would not be excluded under 1041N, would it?

MR WHITINGTON: Probably not, and in this case at least in relation to – I am just trying to remember which of the respondents it was. His Honour said he was only prepared to find that they ought reasonably to have known. He was not prepared to find any higher mental element under E.

BELL J: So, in a statutory scheme that in the case of a claim against a single defendant would not admit of contributory negligence reducing the damages for a 1041E contravention in a case where there is more than one defendant, one then gets an adjustment being made to reduce the award for the 1041E contravention for contributory negligence, how does the judge assess what is just and equitable, having regard to the claimant’s share in responsibility for the loss or damage? That is an exercise that is more readily understood with a 1041H claim than one in which a person has induced another by a statement false or misleading in a material particular when they have been careless.

MR WHITINGTON: Yes. In fact, there might be an argument for saying that the concept for contributory negligence does not fit readily within a claim of misleading and deceptive conduct in the first place. But it is there; it is there at least in relation to contraventions of H. We would give a practical answer to your Honour’s concern, with respect, and that is that that concern would be reflected in the way in which contributory negligence was allocated and if the contravention of E related to an apportionable claim which survived, in the case of wrongdoers, the screening of section 1041M, but it could be said that the plaintiff was fairly induced, really through no fault of their own, by the conduct identified by reference to section 1041E, it would make no award of contributory negligence or some award of some contributory negligence which took account of that.

FRENCH CJ: Incidentally, Mr Whitington, these provisions, that is, of Division 2A, are similar, if not identical, are they not, to provisions in the Australian Competition and Consumer Law Act, 87CB and following?

MR WHITING1TON: Correct - and the ASIC Act.

FRENCH CJ: When were those provisions – were they all brought in at the same time for the respective statutes?

MR WHITINGTON: Correct. This was all part of the CLERP 9 amendment introduced in 2003. We wrongly say in our submission 2004 and we mean 2004 – well, they were introduced into Parliament in 2003 as a piece and they were then implemented by the amending legislation passed in 2004. I have worked my way through the different provisions but I will not say with a fine toothcomb, but they seem to me to be in all respects identical.

FRENCH CJ: Section 18 of the Competition and Consumer Act would seem to be the equivalent of 1041I, and section 236 would seem to be the equivalent of 1041H, that is, the damages liability provision.

MR WHITINGTON: I think it might be the other way around. I think section 18 is the equivalent of H.

FRENCH CJ: I am sorry, the other way around, is it? Yes, okay.

MR WHITINGTON: Section 236 is the old section 82.

FRENCH CJ: Yes, sorry, that is what I meant to say. Section 82 is really replicated here in I.

MR WHITINGTON: Correct, yes. I have not – it tease is out -your Honours would well know that it was said by Justice Gummow in many cases and by this Court that the cause of action is not strictly the contravention of the prescriptive provision; that sets the norm. The cause of action is really the claim for damages under, for instance, section 82, as it was, as a result of the contravention, and so here I suppose if you wanted to frame it this way, you would say the cause of action strictly is for relief under section 1041I for contravention of sections 1041E, F, G or H.

FRENCH CJ: Would one not think, perhaps, that the dropping into different statutory settings of the equivalent of Division 2A rather suggests it is self-contained in the sense that it does not have the kind of flow-on effects that you are suggesting into the rest of the statute?

MR WHITINGTON: Well, we look at it differently. We say that the history of apportionment legislation related to a desire to break joint and several liability down.

FRENCH CJ: Because of the deep pocket problem though?

MR WHITINGTON: The deep pocket, yes, and the targets who were insured often who might have borne a very small share of responsibility, so, of course, auditors were classic examples. Then, it developed from the Davis Report - I think he then referred to misleading and deceptive conduct and I think suggested it would be difficult to apply it to tort and contract without bringing misleading and deceptive conduct. He framed some model provisions and it is interesting that his model provision on this topic referred to a claim for damages for contravention – a claim for contravention of H which was far more direct than it is now; that is, a claim in respect of conduct in contravention.

Then the matter bubbled away, I think, for almost 10 years and, as this Court said in Hunt & Hunt, the reform was substantially recast and it really took on a different and more complex character and, by the way, I should interpolate that in Hunt & Hunt in paragraph 18 in the joint reasons, as we apprehend them, the majority adopted an approach to the equivalent of section 1041L(2) – the New South Wales counterpart being section 34(1)(a) – of the kind that we are advocating, but we accept that Hunt & Hunt did not have to address the very kind of problem we are now addressing.

KIEFEL J: It was concerned only with apportionable claims.

MR WHITINGTON: It was concerned, as we would put it, with the point of pertaining causation when one identified loss and damage, whether it was right at the endpoint or whether it could be a step earlier. But, to pick up on your Honour the Chief Justice’s point, we accept that these three divisions of reform legislation were, if you like, dropped into, or even squeezed into, their respective pieces of legislation. I said at the outset that the dropping in has not in any way been perfect. There are some edges which have attempted to be rounded off, but there are still issues.

One issue is the one that Justice Gageler has directed me to, and that is, do you have to frame a claim as a contravention of H or is it enough that the pleading amounts to a contravention of H? We have put the latter submission but, even if it is the former, we say we should still succeed because here you did have a claim actually framed around H. But we accept this division does not connect perfectly in all respects to the legislation to which it is fitted.

GAGELER J: Mr Whitington, can I ask a question that really follows up a series of questions Justice Bell asked you? It is about the relationship between the gateway to proportionate liability under Division 2A and the gateway to contributory negligence under section 1041I(1B), and particularly subparagraph (a). The language of subparagraph (a) is virtually identical to the language of section 1041L.

MR WHITINGTON: Correct.

GAGELER J: The question is, are you saying that the gateway that you say you get by reading subsections (1) and (2) of section 1041L is wider than the gateway that one gets from 1041I(1B)?

MR WHITINGTON: I think I would be hard put to say that because the language is almost identical and the inclusion of 1041I(1B) was part of this package.

GAGELER J: Well, if you accept that, it would be very hard to read a contravention which is pleaded as relying on, say, 1041E as giving rise to the ability to reduce the damages by reference to contributory negligence under (1B), would it not?

MR WHITINGTON: I understand your Honour’s point. We say not necessarily so. We say that it still turns on the meaning of the expression “conduct under contravention” as opposed to a claim of contravention. There is a material distinction. The language is used conduct “in contravention”. Now, I then appreciate it might immediately be put against me that elsewhere in section 1041I, and in particular in subsection (1), the language is used of conduct done in contravention of the provisions and that ante-dated the 2004 amendment. I accept that. We have to face up to this issue. We face up to it by saying that conduct done in contravention; different from a claim of contravention.

We say, there is a reason for the use of the expression, or the way in which things are cast in subsection 1041I(1). It was to mark out sections E, F, G and H from A, B, C and D. Sections A, B, C and D give rise to criminal offences but not civil rights of action. So that explains, we say, in the first place that early formulation 2001 in subsection 1041I(1).

The language has been carried over but we still say the proper construction of that language is to create a distinction between a claim of contravention and a claim of conduct in contravention. But, even if we are wrong about that, if you do have a case of a claim framed as a contravention of H, as you had in this case, then you pass through the gateway, in any event.

So, we say we can succeed at two levels. We can succeed at the level of the majority judgment in the Full Court, because they did not have to attempt to analyse this issue in an extended way. They were dealing with a case of a claim framed around H and that was enough for their purposes. But in this Court we should have thought we were bound to put the argument about construction in its widest permissible context and that is why we have approached it in the way we have.

BELL J: On that argument, can you explain how 1041L(4) works?

MR WHITINGTON: What we say about that is first of all it is there really, if you like, by way of clarification, but more critically it has a negative effect. It is designed, as I said earlier, to prevent a plaintiff hijacking the defendant’s case. I take Justice Keane’s point that if you actually have pleaded facts that amount to conduct in contravention of H, the defendant is entitled to rely on that and plead back at the plaintiff apportionment.

But if the plaintiff’s claim does not plead any facts which would amount to misleading and deceptive conduct but is simply framed around, say, contract or tort and some other Commonwealth statutory provision, it would not be open for the defendant to say, “Well, I want apportionment. I say your conduct is of this character, although you have not pleaded it this way”.

BELL J: I am sorry to interrupt you, but that would not be a claim under 1041I.

MR WHITINGTON: Yes, that is my very point. That is the work that this has to do. That is the very point I am making, that if the plaintiff does not frame a claim for relief under section 1041I by reference to conduct in contravention of H, but pleads other causes of action without any pleading of any material fact that bears upon section 1041L(1), then the first thing a defendant, as we all know, would want to do is say, “Hang on, your conduct really was misleading and deceptive” – I am sorry, “My conduct was misleading and deceptive. You have tried to duck these apportionment provisions. I am going to plead back at you that this is the real character of my conduct and it is the real character of the conduct of somebody else and now we want apportionment and I am only entitled, I am only” - - -

BELL J: What the defendant can successfully do in every instance is plead back in relation to E, F and G.

MR WHITINGTON: Yes, but not in a case vacant of any plea by the plaintiff that would qualify under the threshold or gateway provision.

KIEFEL J: On one view, section 1041L(4) is simply an avoidance of doubt provision.

MR WHITINGTON: Simply to say that there cannot be much doubt but - some would say there cannot be much doubt one way and there cannot be much doubt the other. Well, we give it that work to do.

KIEFEL J: It might be directed to those who wish to expand on subsection (1).

MR WHITINGTON: Quite so, and in a sense that is the way Justice White treated it, but there should have been a far easier way to achieve that result in the drafting of subsection (2). If that is the result - - -

BELL J: If we are going down the path of easier ways of drafting, Justice White had a rather powerful point respecting the ease of achieving the result that you say necessarily follows under L(1) read with (2) by simply making it a claim for damages made under section 1041I in relation to any of the claims, all of which will necessarily have a dependent 1041H claim.

MR WHITINGTON: Yes, but - - -

BELL J: It just seems to me the argument about, well, the draftsman could have achieved this effect more readily, is one that runs both ways in this case.

MR WHITINGTON: It certainly does run both ways, and so I am not sure whether I am allowed to say it in light of that, but if I might be permitted, if the draftsman had intended more than one cause of action, whether or not of the same or a different kind, to mean brought under or framed under H, then it would have been easy enough to say it and if the draftsman had intended that section 1041N(3) intended to refer not to contributory negligence “under any relevant law”, but to contributory reduction by reference to section 1041I(1B), then you might have expected that would have been said.

This Court has instructed us many times that you start with the text and finish with the text, and we say if you start with the text and finish with the text here and read these words literally, you do not read them down; you read them expansively. The words “any” and “whether or not of the same or a different kind” must mean what they say, we say, and we then put this as part of a coherent scheme.

Now, can I then briefly tell the Court where you find the essential reasoning of the judges below? Perhaps there is no need for me to recapitulate it, but in relation to Justice Mansfield, it is in paragraphs 6 through to 15, and in particular at paragraph 10. That is appeal book 2, pages 482 to 483, and essentially he says the proper focus is on a claim and subsections L(2) and L(3) mean what we have said they mean. Justice Besanko, in his judgment at paragraph 73 through to 85 - appeal book 2, pages 505 to 508 - when you boil it down, comes down really - - -

KIEFEL J: Do not both their Honours say that it is, I thought, not so much the claim, but the identity of the loss or damage which was the key?

MR WHITINGTON: Yes, they do, but that is, in a sense, the claim. The claim is for the loss and damage, and if the claim seeks the same loss and damage, then the regime is triggered. Justice Besanko’s critical paragraph, I think, is paragraph 77 at page 506 and on to paragraph 79 on the same page.

KIEFEL J: Where do their Honours give effect to section 1041L(1)?

MR WHITINGTON: Well, for instance, at paragraph 74 - - -

KIEFEL J: Seems to accept it as a definition.

MR WHITINGTON: Yes, but Justice Besanko then goes on to treat subsection 1041L(2) as, in effect, supplementing subsection L(1), and in Justice Mansfield’s reasons at paragraph 10 he starts by saying – he focuses on subsections 1041L(2) and (3) and he says they:

indicate that the appropriate focus is upon whether the claim or claims made in a particular matter . . . The focus is upon the nature of the loss or damage . . . rather than upon the nature of the cause of action . . . That is fortified by the parenthesised words in s 1041L(2) –

He then goes on to subsection L(3), and then says:

The combination of those two subsections, in my view, indicates a legislative intention that an apportionable claim is one where a claim is one where a claim for damages for economic loss caused by a contravention of s 1041H succeeds.

and the rest of that paragraph. He says –

Provided that there is a separate cause or other causes of action against the person or persons who have contravened s 1041H, if that other or those other causes of action have caused the same damage, the claim maintains its character as an apportionable claim.

and perhaps the rest of that paragraph and over to paragraph 13. Justice White’s reasoning in dissent is at paragraphs 346 through to 369 in the second volume of the appeal book, pages 577 through to 583. I might just pick up on certain aspects of his reasoning. We might start at paragraph 346. The Court has been taken to this. My learned friend expressed some doubt about this paragraph. I do not think there can be any doubt. His Honour correctly framed what I have called the constructional choice. Then at paragraph 348 at line 40, the sentence:

It seems improbable that a claim which is not, by definition, an apportionable claim should be regarded as part of a single apportionable claim.

Now, that is, in effect, the key link in his reasoning and that is why he treats subsection L(1) as controlling, but it is our respectful submission that in these two paragraphs his reasoning displays a confusion between the notion of the claim as the one claim in the proceedings for the same loss and damage, whatever its underlying legal basis, and the underlying causes of action. Then at 349 in the first sentence he refers to section 1041L(4), then at 350 says:

This [Wealthsure] construction might be more obvious if s 1041L(1) referred to claims for loss or damage resulting from contraventions of two or more provisions in the Corporations Act or otherwise to claims arising under the common law or - - -

FRENCH CJ: You can read slabs of the judgment; you are taking us to propositions critical of it, I presume.

MR WHITINGTON: Yes. All right, well, I will not dwell on that. At paragraph 351 he says that subsection (2) is:

a facilitative, rather than a substantive, provision –

and, of course, we put a radically different argument. Then in the middle of that paragraph he explains what he means and he draws in the Barisic example, but we say his approach actually creates the Barisic problem rather than eliminates it. Then at 353 he says:

It is commonplace for judges and lawyers to use the term “cause of action” as a reference to the nature of the right of action asserted by a plaintiff.

He then goes on to say by reference to Torrens Aloha that the concept of a cause of action is simply a fact or combination of facts which gives rise to a right to sue. Now, we say that is only a very partial description of a cause of action, and the Torrens Aloha Case was a very unusual case. The Court might remember that was a case where a party plaintiff had paid commissions and taxes, as I recall it, to the defendant over many years by mistake of law.

The High Court then held I think in 1996 in David Securities that a mistake of law gave rise to a right to restitution. The plaintiff then sued and was out of time. They said, “Well, I should not be out of time because the High Court has changed the law”, to which they were met by the response in this case, “Well, really, whether or not you adopt a declaratory theory of law, the facts have always been there and known to you. Whether or not you appreciate you had a cause of action, you could have brought it, so you are out of time”. That is a very different case. Then in paragraph 359, his Honour refers to the effect of a heading, and I have alluded to that already. Then in paragraph 360, he says:

The references to “a claim” and “the claim” in s 1041L(3) must be a reference to a claim to which the Division applies, that is, “an apportionable claim” under s 1041L(1).

Well, we say that ignores the effect of the intervening, subsection L(2) and, in a sense, what his Honour does there is assume his answer to the meaning of subsection 1041L(2), but if the very purpose of subsection 1041L(2) is as we contend, then there exists in the proceedings a claim which is an apportionable claim - - -

FRENCH CJ: Are you doing anything more in responding to this than really rehearsing the arguments you already put to us?

MR WHITINGTON: No, I am not. Can I just finish very briefly 362, 363 and 365 and in ABN Amro – I am sorry, Justice Lander’s reasons - I think I have sufficiently rehearsed what we say about the issues which are generated by his reasons. They are substantially the criticisms we make of Justice White’s reasons, although he was, perhaps shall I say, more technical in his analysis. It is his paragraphs 1055 to 1102, the first appeal book, pages 385 to 397, and the critical reasoning is particularly at paragraphs 1084 to 1098.

Then finally in ABN Amro in the reasons of the Full Court - it is from paragraphs 1558 through to 1609 - the Court will see there that the essential focus of the reasoning was to meet a contention – the broadest contention I have put, that is, that what matters is pleaded conduct in contravention of section 1041H, not a claim framed in contravention of section 1041H, and the Full Court addressed themselves to that contention and sought to answer it and in particular placed particular reliance on the fact that section 1041H(3) had the carve-outs and also that sections 1041E, F and G were different from section 1041H in that they created offences.

But they did not ever explain why that was significant in this scheme, nor did they refer to the screening effect of section 1041M in this context, and they did not ever distinctly deal with the effect of sections 1041L(2) and 1041L(3). There are the barest references to those sections in their reasons, but no analysis, so we say this Court would not be assisted by that judgment on the analysis of what we have posed as the critical constructional issue.

Now, briefly on costs, if I am required to put a submission now, although we might have wanted to dwell on it, our position is that this is simply a conventional case of an insurer under an insurance policy funding the defence of its insureds, and it has been perfectly entitled to do that. It, in a sense, has no particular interest in the action except, I suppose, to the extent that it may limit the amount it has to pay out under the cover, although my learned friend has indicated that on their assessment things are near the limit of the cover.

I am instructed that the position is that the outgoings under the policy are near the limit of the cover but they have not exceeded the cover, and I stand here representing in the first instance Wealthsure who has a very material interest in this action because, based upon the submissions you have heard from my learned friend, if this Court reinstates Justice Lander’s award, slightly modified, then on my learned friend’s figures, in all probability the cover we exceeded and Wealthsure will be uninsured for the balance.

So we say this is no more than a typical case where assureds have been assisted in running their defence of an action and there has been no submission put by my learned friend that suggests that that assistance afforded by the insurer, as was its contractual obligation, has expanded any costs in either the Full Court appeal or the application for special leave or this appeal.

GAGELER J: So your submission is that costs should be awarded against your client?

MR WHITINGTON: Well, I am not in a position to make any submission to suggest that costs should be awarded against the insurer. They are my instructions. I cannot take it any further than that. If the Court pleases.

FRENCH CJ: Yes, thank you, Mr Whitington. Mr Heywood-Smith.

MR HEYWOOD-SMITH: Yes, we have no further submissions in reply, if the Court pleases.

FRENCH CJ: Thank you. The Court will reserve its decision. The Court adjourns until 9.30 tomorrow morning in Adelaide and 9.30 tomorrow in Sydney.

AT 12.38 PM THE MATTER WAS ADJOURNED