Corporations Act 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .

PART 7.9 - FINANCIAL PRODUCT DISCLOSURE AND OTHER PROVISIONS RELATING TO ISSUE, SALE AND PURCHASE OF FINANCIAL PRODUCTS  

Division 7 - Enforcement  

Subdivision B - Civil liability  

SECTION 1022B   CIVIL ACTION FOR LOSS OR DAMAGE  

1022B(1)    
This section applies in the following situations:

(a) a person:

(i) is required by a provision of this Part to give another person (the client ) a Product Disclosure Statement or a Supplementary Product Disclosure Statement (the required disclosure document or statement ); and

(ii) does not give (in accordance with section 1015C ) the client anything purporting to be the required disclosure document or statement by the time they are required to do so; or

(aa) a person makes an offer to which Division 5A applies (see section 1019D ) to another person (the client ) otherwise than by sending the client an offer document in accordance with section 1019E ; or

(ab) a person makes an invitation prohibited by section 1019F to another person (the client ); or

(ac) a person:

(i) is required by subsection 1019J(2) , in relation to an offer made to another person (the client ), to send the client a withdrawal document or a supplementary offer document; and

(ii) does not send (in accordance with paragraphs 1019E(1) (a) and (b)) the client anything purporting to be either of those things by the time they are required to do so; or

(b) a person:

(i) is required by paragraph 1012G(3) (a) to orally communicate information (the required disclosure document or statement ) to another person (the client ); and

(ii) does not orally communicate to the other person anything purporting to be the information required by that paragraph by the time they are required to do so; or

(c) a person:

(i) gives another person (the client ) a disclosure document or statement (other than an offer document of a kind referred to in section 1019E or a supplementary offer document of a kind referred to in section 1019J ) that is defective in circumstances in which a disclosure document or statement is required by a provision of this Part to be given to the client; or

(ia) makes an offer to which Division 5A applies (see section 1019D ) by sending another person (the client ) an offer document in accordance with section 1019E , but that offer document is defective; or

(ib) in a situation to which section 1019J applies, sends a person (the client ) a supplementary offer document in accordance with that section but that supplementary offer document is defective; or

(ii) is a regulated person and gives, or makes available to, another person (the client ) a disclosure document or statement, being a Product Disclosure Statement or a Supplementary Product Disclosure Statement, that is defective, reckless as to whether the client will or may rely on the information in it; or

(d) a person:

(i) gives consent to the inclusion of a statement in a Product Disclosure Statement or a Supplementary Product Disclosure Statement as mentioned in subsection 1021L(1) , disregarding paragraph 1021L(1)(c); or

(ii) does not take reasonable steps to withdraw such a statement as mentioned in subsection 1021L(2) , disregarding subparagraphs 1021L(2)(b)(iii) and (iv); or

(e) a person contravenes section 1017B or 1017D ; or

(f) a person is required by section 1017BA to make information publicly available on a regulated superannuation fund ' s website and any of the following circumstances apply:

(i) the information is not made publicly available as required by that section;

(ii) the information made publicly available is not updated as required by that section;

(iii) the information made publicly available is misleading or deceptive;

(iv) there is an omission from the information made publicly available; or

(g) a person is required by section 1017BB to make information publicly available on a registrable superannuation entity ' s website and any of the following circumstances apply:

(i) the information is not made publicly available as required by that section;

(ii) the information made publicly available is misleading or deceptive;

(iii) there is an omission from the information made publicly available.

(h) (Repealed)

In paragraph (c), give means give by any means (including orally), and is not limited to giving in accordance with section 1015C or paragraph 1012G(3) (a).

1022B(2)    

In a situation to which this section applies, if a person suffers loss or damage:

(a) if paragraph (1)(a) applies - because the client was not given the disclosure document or statement that they should have been given; or

(aa) if paragraph (1)(aa) applies - because the client was not sent an offer document in accordance with section 1019E ; or

(ab) if paragraph (1)(ab) applies - because the client received an invitation prohibited by section 1019F rather than being sent an offer document in accordance with section 1019E ; or

(ac) if paragraph (1)(ac) applies - because the client was not sent a withdrawal document or a supplementary offer document as required by subsection 1019J(2) ; or

(b) if paragraph (1)(b) applies - because the information required by paragraph 1012G(3) (a) was not communicated to the client; or

(c) if paragraph (1)(c) applies - because the disclosure document or statement the client was given or sent was defective; or

(d) if paragraph (1)(d) applies - because the consent referred to in that paragraph was given, or was not withdrawn, as the case requires; or

(e) if paragraph (1)(e) applies - because of the contravention referred to in that paragraph; or

(f) if paragraph (1)(f) or (g) apply - because of any of the circumstances mentioned in those paragraphs;

the person may recover the amount of the loss or damage by action against the, or a, liable person (see subsections (3) to (5)), whether or not that person (or anyone else) has been convicted of an offence in respect of the matter referred to in paragraph (a), (aa), (ab), (ac), (b), (c), (d), (e) or (f).

1022B(3)    
For the purposes of subsection (2), the, or a, liable person is:

(a) if paragraph (1)(a), (aa), (ab), (ac) or (b) applies - subject to subsection (4), the person first-referred to in that paragraph; or

(aa) if paragraph (1)(c) applies and the disclosure document or statement is information required by paragraph 1012G(3) (a) - subject to subsection (5A), the person first-referred to in paragraph (1)(c) of this section; or

(b) if paragraph (1)(c) (other than subparagraph (1)(c)(ia) or (ib)) applies and the disclosure document or statement is not information required by paragraph 1012G(3) (a) - subject to subsection (5):

(i) the person by whom, or on whose behalf, the disclosure document or statement was prepared; and

(ii) each other person involved in the preparation of the disclosure document or statement who, directly or indirectly, caused the disclosure document or statement to be defective or contributed to it being defective; or

(ba) if subparagraph (1)(c)(ia) or (ib) applies - the person who made the offer; or

(c) if paragraph (1)(d) applies - the person who gave the consent; or

(d) if paragraph (1)(e) applies - the person who contravened the provision concerned; or

(e) if paragraph (1)(f) applies - the trustee, or the trustees, of the regulated superannuation fund on whose website the information was required to be made publicly available; or

(f) if paragraph (1)(g) applies - the trustee, or the trustees, of the registrable superannuation entity on whose website the information was required to be made publicly available.

(g) (Repealed)

1022B(4)    

If paragraph (1)(a) or (b) applies, or paragraph (1)(c) applies so far as it relates to information required by paragraph 1012G(3) (a), and the person who would, but for this subsection, be the liable person is an authorised representative, the authorised representative is not the liable person and the following paragraphs apply:

(a) if the authorised representative is an authorised representative of only one financial services licensee - that financial services licensee is the liable person;

(b) if the authorised representative is an authorised representative of more than one financial services licensee:

(i) if, under the rules in section 917C , one of those licensees is responsible for the person ' s conduct - that licensee is the (or a) liable person; or

(ii) if, under the rules in section 917C , 2 or more of those licensees are jointly and severally responsible for the person ' s conduct - each of those licensees is a liable person.

1022B(4A)    
For the purposes of paragraph (4)(b):

(a) section 917C is taken to apply, despite section 917F ; and

(b) section 917D is taken not to apply.

1022B(5)    
If:

(a) paragraph (1)(c) (other than subparagraph (1)(c)(ia) or (ib)) applies; and

(b) an alteration was made to the disclosure document or statement (not being information required by paragraph 1012G(3) (a)) before it was given to the client; and

(c) the alteration made the disclosure document or statement defective, or more defective than it would otherwise have been; and

(d) the alteration was not made by, or with the authority of, the person who would, but for this subsection, be a liable person because of subparagraph (3)(b)(i);

then, so far as a person has suffered loss or damage because the disclosure document or statement was defective because of the alteration, the person who made the alteration is a liable person, rather than the person referred to in paragraph (d).

1022B(5A)    

If:

(a) paragraph (3)(aa) applies; and

(b) the person referred to in that paragraph is not the issuer, or an authorised representative of the issuer, of the financial product to which the required disclosure document or statement relates; and

(c) the required disclosure document or statement was defective because of information, or an omission from information, provided to that person (whether in a document or otherwise) by the issuer of the product;

the issuer of the product is the liable person, rather than the person who would otherwise be the liable person because of paragraph (3)(aa) or subsection (4).

1022B(6)    
An action under subsection (2) may be begun at any time within 6 years after the day on which the cause of action arose.

1022B(7)    
A person is not liable under subsection (2) in a situation described in paragraph (1)(c) if the person took reasonable steps to ensure that the disclosure document or statement would not be defective.

1022B(7A)    

If subsection (5A) applies, the issuer of the financial product is not liable under subsection (2) if the issuer took reasonable steps to ensure that the information provided as mentioned in paragraph (5A)(c) would not be such as to make the required disclosure document or statement defective.

1022B(7B)    

A person is not liable under subsection (2) in a situation described in subparagraph (1)(f)(iii) or (g)(ii) if the person took reasonable steps to ensure that the information would not be misleading or deceptive.

1022B(7C)    

A person is not liable under subsection (2) in a situation described in subparagraph (1)(f)(iv) or (g)(iii) if the person took reasonable steps to ensure that there would not be an omission from the information.

1022B(8)    
This section does not affect any liability that a person has under any other law.