Australia and New Zealand Banking Group Limited v Shilton

Australia and New Zealand Banking Group Limited (ANZ) brought proceedings against Mr Shilton seeking to recover moneys allegedly owed under a loan agreement. Mr Shilton counterclaimed, alleging that ANZ had breached its duty of care owed to him as a customer by failing to advise him of the risks associated with a particular investment product, the "Global Fixed Income Fund" (GIF), which he had purchased through ANZ. Mr Shilton contended that the GIF was a high-risk investment and that ANZ, through its employee, had failed to adequately warn him of these risks, leading to substantial losses. The matter was heard in the District Court of Queensland.

The central legal issues before the court were whether ANZ owed Mr Shilton a duty of care in relation to the advice provided concerning the GIF, and if so, whether that duty had been breached. Specifically, the court was required to determine the scope of the duty of care owed by a bank to its customer in circumstances where the bank facilitates the purchase of an investment product, and whether the information provided, or not provided, by ANZ's employee regarding the GIF met the standard of care expected in such a relationship.

Judge Hartnett found that ANZ did owe Mr Shilton a duty of care. His Honour reasoned that the relationship between a bank and its customer, particularly when the bank actively facilitates the purchase of financial products, gives rise to a duty to exercise reasonable care and skill. This duty extended to providing adequate information and warnings about the risks associated with such investments. The court concluded that ANZ, through its employee, had failed to adequately discharge this duty by not sufficiently explaining the speculative nature and potential for significant loss associated with the GIF. The employee's conduct was found to be negligent, as a reasonably prudent bank employee would have provided more comprehensive warnings about the risks involved.

Consequently, the court found in favour of Mr Shilton on his counterclaim, holding ANZ liable for the losses he suffered as a result of the negligent advice regarding the GIF. The court ordered that ANZ pay damages to Mr Shilton in an amount to be assessed.