Commonwealth Bank of Australia v Brown

The Commonwealth Bank of Australia (the Bank) appealed to the High Court of Australia against a judgment of the Full Federal Court which had allowed an appeal by Mr. Brown from a decision of a single judge of the Federal Court. The dispute concerned the Bank's liability for alleged breaches of its duty of care to Mr. Brown, a customer, in relation to certain investment advice and the subsequent management of his investment portfolio. Mr. Brown claimed that the Bank's conduct had led to significant financial losses.

The High Court was required to determine whether the Bank owed Mr. Brown a duty of care in relation to the advice provided and the management of his investments, and if so, whether that duty had been breached. A further issue was whether the losses claimed by Mr. Brown were caused by any such breach, and if so, the extent of the Bank's liability for those losses. The Court also considered the application of the *Trade Practices Act 1974* (Cth) and the common law principles of negligence.

The Court analysed the relationship between the Bank and Mr. Brown, noting that while the Bank provided investment advice and managed Mr. Brown's portfolio, it did not hold itself out as a financial advisor in the strict sense. The judges considered the terms of the agreements between the parties and the reasonable expectations of a customer in such a relationship. They applied established principles of negligence, particularly concerning the scope of a duty of care and the test for causation, distinguishing between advice given and the subsequent performance of investment decisions. The Court found that the Bank had not breached its duty of care in the manner alleged by Mr. Brown, and that the losses suffered were not attributable to any negligence on the part of the Bank.

The High Court allowed the appeal, setting aside the judgment of the Full Federal Court and reinstating the judgment of the trial judge. Consequently, Mr. Brown's claim against the Commonwealth Bank of Australia was dismissed.