Commonwealth Bank of Australia v Rigg

The Commonwealth Bank of Australia (the Bank) appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales which had found in favour of Mr Rigg. The dispute concerned the Bank's liability for alleged breaches of its duty of care to Mr Rigg, a customer, in relation to a loan facility and subsequent transactions.

The central legal issues before the Court of Appeal were whether the Bank had breached its duty of care to Mr Rigg by failing to advise him of the risks associated with a particular loan facility, and whether the Bank had acted negligently in its dealings with Mr Rigg concerning the management of his account and the realisation of securities. The Court was required to consider the scope of the Bank's duty of care to its customers, particularly in the context of providing financial advice and managing loan facilities.

The Court of Appeal found that the Bank did not owe Mr Rigg a duty to advise him on the wisdom of entering into the loan facility, nor did it owe a duty to advise him on the risks associated with it. The Court held that the Bank's duty of care did not extend to providing investment advice or warning customers about the inherent risks of a transaction they voluntarily entered into, especially when the customer was sophisticated and had sought independent advice. The Court further determined that the Bank had not acted negligently in its management of the loan facility or the realisation of securities, as its actions were within the bounds of its contractual rights and reasonable commercial practice.

Consequently, the appeal was allowed, and the judgment of the Supreme Court in favour of Mr Rigg was set aside.