Misleading Conduct, Reliance and Market-Based Causation

Recent Australian decisions have opened the door to the possibility of liability premised on a ‘market-based’ theory of causation. This article is concerned to explore this emerging category of claims, particularly when founded upon an allegation of misleading or deceptive conduct. Specifically, this article is concerned to examine the nature of market-based causation and to consider the role that ‘reliance’ has in a case based on a market-based theory of causation. This article’s core contention is that the enquiry into factual causation has been unhelpfully merged with the scope of liability enquiry in cases involving misleading or deceptive conduct. This unfortunate mix-up has led to a misunderstanding of the role of reliance in cases of market-based causation. This article argues that, in a case of market-based causation, the concept of ‘reliance’ is not always relevant to the factual causation enquiry. Instead, reliance (or the absence of reliance) is best viewed as a normative issue going to a defendant’s scope of liability.